If you have been, following news and updates from last year... you should be aware of Subprime crisis and Why US and other economies got push into Recession. Post World Trade Center attack, US economy was into trouble and there was a nation wide movement to motivate buying, due to which spending will increase and the economy will be out of recession. It worked. All went good. People started understanding economic terms and started spending in national interests. Every one was buying and spending, loan interests were low, and getting loan was much easy. Slowly it improved the situation and people kept spending. However, in this due course, the eligibility checks for getting loans disappeared. Those with sub-standard documents and with no guarantee of repayment were also getting loans. People thought that this upturn will remain forever and the housing market turned into an attractive option for investments and earning. However when housing market came down after its normal tenure, people lost those attractive prices and were unable to pay those hefty EMI. As the standards and rules were not followed while granting loans, the repayment became impossible. Many of the banks suffered heavy losses and filed bankruptcy. The vicious circle started here.
If we compare Indian situation to the above situation, we are exactly at the same point. To boost the market, we will have to increase the spending. However, eligibility criteria’s should be strictly followed or after ten years we will be in a bitterer situation than US is currently.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment