Genesis of a Recession

A recession is a period of sustained falling GDP rates for two consecutive quarters. The Global Economic Recession or the Global Financial Crisis, as it is called in india, is caused when there is a lack of aggregate demand. Aggregate demand is the total demand for final goods and services in an economy at a given time and price level. It is the amount of goods and services in the economy that will be purchased at all possible price levels. This is gross domestic product of a country when inventories of the country are static.

The current financial crisis has often been compared to the Great Depression of the 1930s US. This is because markets then, as now, collapsed; banks had to file for bankurptcy; and thousands of people were left jobless, with nations reporting double digit or near double digit unemployement figures for their populations and workforce. This current economic recession was caused due to the bursting of a housing "bubble" which started in 2005-06. The housing bubble was a bubble which was created because of unsound loans and financing of houses way beyond their real woths. People were pushed into buying houses they couldn't afford, using financial loans and schemes which were dodgy at best and criminally negligent at worst. As a result, in 2005, housing prices peaked, and in 2006 they began to decline, and ultimately collapsing. Suddenly, the best of houses in the best of locations were worthless. People defaulted on their loans, the financial structure shivered massively, threatening to bring the entire financial superstructure down. Greed in the housing sector was now threatening to toxify everything it touched. Banks were scared of lending. Credit was in crunch. A vicious cycle was playing out: banks were unwilling to lend to businesses, these businesses were unable to pay their employees, and employees were now losing their purchasing power, thereby putting the entire economy, including its vangaurds- the banks- in grave jeopardy. Liquidity dried up, loans were defaulted upon by those who were never eligiblefor them in the first place, and banks now stood on the percipice of bankurptcy. Indeed, Lehmann Brothers, Bear Streams, Merrill Lynch, Northern Rock and countless others, in a scary but faricial reenactment of the "Great Depression", collapsed. Innovative money making devices- securities, derivatives, credit default swaps, subprime mortgages and loans- heretofore the shining stars of capital, were now its biggest, most vile criminals. These were primary causes, along with the Federal Reserve and SEC'S negligence to respond to frequent warnings and red flags.

There is a difference between economic recession and slowdown. A slowdown is when the industrial production dips whereas in a recession the whole economy comes to a halt. So what India is experiencing right now is an economic sslowdown wherein we are seeing that only the industrial production is going down and the GDP of the country is positive. But in the US the GDP had been negative for two consecutive quarters and the industrial production has been very low for 6 quarters and hence we can say that US, along with a large part of the world, is experiencing recession.

Independence Day: The challenges the country Faces

India is going to turn 63 on August 15 this year. Many things that were supposed to change have not changed, infact, there are added challenges to this country which is so diverse that sometimes it becomes difficult for the government to manage.
The first challenge for the country is maintaining unity in diversity. Today there are many secessionist movements that are taking place to create a seperate state. This is challanging the basis of what is mentioned in constution where it is said that India is unity in Diversity personified.

Our secular credentials also face a grave challenge. Both the major parties of the country should think before calling themselves a secular country. Secular does not mean that you cut a hand of a Muslim or that you crush a person under the roller. I think it is high time we revisited the constititution and get the definintion of secular clear in our heads. Secularism means that there is mutual peace and coexistence between all member communities and that the government does not interfere unnecessarily. Secularism doesnot mean that u deny a house to Emraan Hashmi just because he is a Muslim.

Our judicial system is down in the doldrums. We have to seriously think about bringing reforms in our bureacracy so that justice can be provided to every victim. It seems the judiciary has forgotten for what purpose it was formed. How many times have we seen that courts take endless years to conduct trials and in the end leave the accused scottfree to roam in the country because according to the judiciary there is a lack of evidence. Take for example the acquital of Sajjan Kumar and Jagdish Tytler in the anti sikh riots of 1984 for lack of evidence. Take the most recent example of Professor Sabharwal's perpetrators roaming around freely because again the prosecution failed to give enough evidence to convict the accused .

Unless these challanges are met and unless there is equitable distribution of wealth in the country till that time we cannot say that the country is progressing and we can keep dreaming of becoming a superpower one day.

JAI HIND!!!

Rita Bahugana's Remarks regarding Mayawati

I think Rita Bahuguna made a really irresponsible remark regarding Mayawati. Although i agree that Mayawati is not doing enough in Uttar Pradesh to help its people but i think we could have avoided this unnecessary comments and unnecessary controversy as this will prove to be a setback to the congress as it was gaining advantage in the states where BJP was losing ground. As it is politicians can do anything to gain political mileage and this was also done to gain political mileage. I hope the Congress takes action against this so that it can maintain its high moral ground.

Kapil Sibal's Proposals

I think Kapil sibal's proposals regarding education reforms are good. He wants to abolish class 10th boards which will reduce pressure on students, he wants to abolish all state boards and have one central board which is good as it will reduce the difference between marks obtained by students giving cbse examinations versus students coming through state boards. However the third proposal regarding abolishing 12th boards are not rigtht since now according to the proposal students will have to give a competitive exam for admission to college which i think is going to put extra pressure on the students to perform well. But the challange for the govt will be to implement these decisions and given our history of non implementation it is going to be an uphill task for the government.