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Crisis in USA and Effects in India

Investment bank Lehman Brothers, the 158 year old investment banker fourth largest in the U.S. is declared bankruptcy after concerted efforts of a rescue attempt. With total assets of $ 640 million, which would be called the largest bankruptcy filing in history. Insurance company American target = "_top" International Group (AIG) America's largest insurance, the company received> $ 85 – billion as a bailout of federal authorities prevented an imminent collapse of the company. Bank of America is buying investment bank Merrill Lynch. All three of these companies at the center of the storm have been damaged by the relationship mortgage and credit crisis and all three have lost much of its stock market value.
The potential consequences of the Lehman bankruptcy has had huge impact leads to a major crisis in stock exchanges around the world including India. Significant movement by the U.S. Government. including a bailout fund of 700 thousand million dollars over the hand holding the private sector measures, can be praised as a timely intervention intended to mitigate the potential risks and disturbance to the global financial markets and have good intentions towards the development of a plan to cushion the global financial system.
Of particular concern in this issue is the sharp weakening in the U.S. labor market along with continued rapid decline in home prices that have eroded the principal source of the U.S. average wealth and financial security and threaten its solvency. The severe strains in the financial system (as underlined by the fact that several major regional banks and investment), and the perpetual volatility in the stock market has led to a record low in consumer confidence.
The question that most we want to do right now is that what the long-term consequences of such precipitation being in the Indian financial system, given the fact that some of our banks India in particular high technology in the private sector have exposure on equity, debt and interest rate swaps to Lehman India.
A New Look globalization policies of India and economic reforms adapted after 1991, which provides for accelerated growth, greater stability and strengthening financial sector now can lead us to believe that our trade and financial policies are fairly well integrated into the global economy. Second, prudence of India towards opening the capital account (partially convertible at the time) and viewing liberalization of capital accounts as a process depends certain preconditions has stood India in good position in the sense that we are well insulated from such financial debacles. The current global financial crisis that will undoubtedly see an exodus of Indian professionals running back home in search of new ways the Indian markets (popular acronym … back to Bombay B2B and B2C … back to Chennai, says it all), giving local markets some brownie points.
Although economic growth in India has declined from 9.6% in FY 2006-07 to 8.7% last year (2007-08), perhaps due to the impacts caused by recessionary trends in the worlds markets, rupee appreciation and inflation due to rising oil prices and raw materials, consumption, savings and investment are still quite strong. Moreover, the needs of large India's infrastructure continue to provide a further increase, both in Government. and private sector spending, increasing the stock of physical capital, increase investment and consumption and have a long-term positive effect on aggregate demand.
In analyzing the enormity of the situation from a global perspective, it is essential to understand market dynamics, with care and enter the equity markets with a long-term three to five years. People who are risk averse can be a good option to invest in gold because it acts as a hedge against inflation. Infrastructure, banking, media and consumer goods are areas continue to be invited to the demand and can not be prone to fluctuations in interest rates.
In the final analysis, India unfailingly continues his trip to growth amid global financial uncertainty, demonstrating his generosity and determination to meet the rigors of domestic as well as pressures external and thrive in the chaos.

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