Contrast this with the situation in the US, the bastion of free markets of the world.  One by one the icons of Wall Street are being nationalised in rapid succession.  First it was the rescue of Fannie Mae and Freddie Mac.  Now, its AIG. Initially the US government refused to step in.  Now, its out of compulsion that its buying out the free falling companies.  Letting them crash to the ground and bankrupt would mean a sure shot meltdown of the US economy.

Just 6 months ago, who would have thought that financial powerhouses like Lehman Brothers would collapse and Merrill Lynch be gobbled up by Bank of America ?  Earlier, the Federal government helped JP Morgan buy up the ailing financial powerhouse Bear Stearns.  Now the only 2 major investment banks that are left are Morgan Stanley and Goldman Sachs.  Already indications abound that Morgan Stanley is the next in line for a collapse. Though economists are secretly happy to see the collapse of these investment banks as they are the prime reason for the subprime bubble in the first place.  Just 10 months ago, Goldman Sachs was in the news for doling out billions of dollars as performance bonus for its employees. How ironical.

These are the bigger ones to fall.  There are lots of smaller banks, financial institutions across the US of A which are either closing down or they might be soon gobbled up by the few surviving institutions. According to this report, almost 100 banks in the US might close down by July 2009.  Can there be a more frightening thought?

Only time will tell how much this financial tsunami is going to affect the world market. Btw, did anyone say that we are already decoupled from the US economy?  Even iam guilty of believing that the two alternate markets (China and India) would soak up some of the pressures built by the sliding US economy.  How naive was i.  It would take years if not decades for the rest of the world to even hold a candle to the US economy.

So, when the ride is rough, the only intention should be to try to keep the head above water.  There are lots of companies on the Bombay Stock Exchange available for cheap.  Companies that are still growing at 10-20% per annum and with lots of cash to spare.  Many companies, available at their cheapest prices ever.

If only i had some spare cash to buy now

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One of my most favourite blogger, Amit Varma of IndiaUncut has won the 2007 Frederic Bastiat Prize for Journalism. Varma is known for his satirical take on the various issues that plague Indian society in general. The 3 nominated essays of Amit were:

Where’s the freedom party

A beast called Government

The Devil’s compassion

Varma received the Prize of US$10,000 and an engraved crystal candlestick, evoking Frédéric Bastiat’s satirical essay in which the candle makers of France petition the government to block out their competition: the sun.

Above picture of Amit Varma courtesy: Ultrabrown

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