The global meltdown is great for me

Bangalore, India, April 13 — Global meltdown, pink slips, stocks tumbling, real estate prices crashing, offshore tax evasion, Fannie Mae, AIG, the G20 summit, bailouts, etc. The list related to the current economic crisis is endless.

But as an Indian with a monthly pension of Rs. 21,800 (US$500) per month, this meltdown has been good for me. It has brought down the cost of a flat-panel HDTV to Rs. 38,000 ($76), the cost of a camcorder to Rs. 14,000 ($280), and all-in-one color printers to only Rs. 3,000 ($60). The price of airfare from Bangalore to Delhi has dropped from Rs. 8,000 ($160) to nearly Rs. 2,500 ($50). Even all-inclusive European vacations, which used to cost nearly Rs. 200,000 ($4,000), are now available for Rs. 90,000 ($1,800) for those who can afford it.

While the USA is printing nearly US$2 trillion and giving it to its banks and big cats of industry as a bailout, the Chinese are jittery as they will finally be getting these bills for exporting their goods and labor. Their foreign exchange holding may rise, but the underlying problem of the inability of the US to export anything worthwhile to China, except for their planes, is going to exasperate this problem. Unfortunately, China does not buy U.S. arms, so the US has to create conditions for the export of its arms. Pakistani Army-trained Taliban are doing just that for India, while North Koreans are doing it for Japan and South Korea. The option of Special Drawing Rights (SDR) from the International Monetary Fund, which would be like a new currency, was raised at the recent G20 summit, but it has died down.

The election team of Manmohan Singh and P. Chidambaram could not have asked for more during the upcoming election, with inflation dropping almost to zero without much effort on their part. Even the opposition BJP is forced to turn to Hindutva or “Hinduness” instead of to the issue of rising prices, which used to be a common whipping boy all these years. I think the new Nano car is also coming at the right time. The electric Reva should also make its mark, as a result of aggressive research and cost cutting. It is the future. Our poor know how to survive, and I hope that our rich also learn from this to innovate, to go to new nations, to capture new markets, and to make India a leaner, tougher nation.

My only personal regret is that I blew Rs. 60,000 (US$1,200) on my desktop two years ago, which looks like ugly junk now when I look at the sleek Apple desktop being shown off at the Forum Mall in Bangalore. By the way, I purposely dropped that old Yera glass set, earning a scolding from my wife. I really like that Luminarc glass set that they were selling at the mall. Men have a natural inclination to go for bargains and to buy better machines. Already, Chinese touch-screen mobiles are being prohibited under the pretense that they do not conform to 16-digit mobile numbers. How much longer these good times will last, I do not know, but I am going to enjoy them as long they do, even if my wife scolds me for buying lots of junk.

Chateaubriand, in his Memoirs from Beyond the Tomb, wrote: “There are two consequences in history: one immediate and instantaneously recognized; the other distant and unperceived at first. These consequences often contradict each other; the former comes from our short-run wisdom, the latter from long-run wisdom. The providential event appears after the human event. Behind men rises God. Deny as much as you wish the Supreme Wisdom, do not believe in its action, dispute over words, call what the common man calls Providence 'the force of circumstances' or 'reason'; but look at the end of an accomplished fact, and you will see that it has always produced the opposite of what was expected when it has not been founded from the first on morality and justice.”

Treasury Secretary Timothy Geithner told the U.S. Congress that the United States would “launch a new initiative to address prudential supervision, tax havens, and money laundering issues in weakly regulated jurisdictions.” He said, “President Obama will underscore in London on Apr. 2 at the Leaders’ Summit the imperative of raising standards across the globe and encouraging a race to the top rather than a race to the bottom.”

But top bankers in America met President Obama and gave him the red line. Former SEC chairman Arthur Levitt, who is now with The Carlyle Group, said: “It is terribly important that an environment of consensus replace the polarization of recent weeks.” The bankers went out of their way to emphasize their hostility toward any regulation that even remotely smells of the Glass-Steagall Act of 1933 − which implemented reforms to control speculation − like separating investment banking from commercial banking.

We know the bailout is not based “on morality and justice” and is therefore bound to fail. In the meantime, we middle-class Indians should learn to enjoy the bargains.