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Meltdown On Wall Street:
Grave Warning For India

By Partha Banerjee

17 September, 2008

Brooklyn, New York: On September 15, the house of cards starts falling down on Wall Street. Lehman Brothers goes for bankruptcy protection, Merrill Lynch goes for a shotgun marriage with Bank of America, AIG is about to unravel, later to be nationalized by the U.S. Just last week, Fannie Mae and Freddie Mac were bailed out by the U.S. govt. CEO's and big investors get out okay; ordinary employees and little people on the street suffer heavily.

Stock markets fell sharply as investors reacted to some of the most dramatic economic news in recent U.S. history. The Dow Jones industrial average closed down 500 points in their worst drop since the September 2001 terrorist attacks.

The developments took place as U.S. voters, who rank the economy as their topmost concern, get ready to elect a new president in six weeks. Presidential candidates Republican John McCain and Democrat Barack Obama reacted strongly.

Obama called the news "the most serious financial crisis since the Great Depression" of the 1930s. McCain, however, announced that the fundamentals were still strong. Bush declared that the U.S. economy "is healthy enough to withstand the adjustments that are taking place" in the financial markets. Adjustments? To millions who lost everything, it sounds surreal, cruel.

The collapse of the Wall Street giants comes six months after the meltdown of Bear Stearns and a year after the start of the credit crisis, set off by bad mortgage financing and real estate investments: none of which can be blamed on ordinary investors or home owners -- it's the latter that suffered the greatest (countless people lost their homes). In spite of an outpouring of help from peer institutions, the U.S. market took a great hit and pulled the global markets down. On September 16, the FTSE-100 share index went down 4.07 percent in London, the Paris CAC-40 was off 4.5 percent and Germany's DAX 30 index tumbled 3.23 percent. India's Sensex also crashed 3.4 percent.

The crisis is major, as it's evident by the somber tone of market experts in the U.S. "It's clear we're one step away from a financial meltdown," said Nouriel Roubini, chairman of the consulting firm RGE Monitor.

The end of Lehman Brothers, a 150-year-old corporation, may not stop the financial crisis that has gripped Wall Street for months, analysts said. "More investment banks could disappear soon."

The independent broker-dealers "are going the way of the dodo bird," said Bert Ely, a Virginia-based banking consultant.

Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicted that “approximately 110 banks with $850 billion in assets could close by next July. That's out of 8,400 federally insured institutions, which together hold $13 trillion in assets,” he said.

It's a major debacle for U.S.-style corporate capitalism that thrives on empowering the most powerful and enriching the richest. Nowhere in the world -- even in other market-driven economies such as Europe, Canada or Japan -- a country is run under the guise of democracy, yet power never percolates down to the ordinary people.

India is perhaps the only exception -- a country that copycats the U.S. model without having strong safeguards. Unless we stop the massive and lightening-speed Americanization of the economy, India is sure headed for a similar disaster. I have every faith and trust that Indian media would expose the Wall Street scandals and warn the ordinary people about putting all their life's savings in the hands of big corporations.

Whether it's the dotcom bust or banking sector collapse, always it's the ordinary, disempowered people like us who suffer -- Indian or American people that neither the media nor the political leaders care or talk about. We never hear organized labor's point of view about the crisis; we practically never hear from the people on the street who just lost their jobs, health care or retirement.

Okay, maybe, we hear from some of them in India, but they hardly speak up about their fear, anger or hopelessness: that's how consent for a broken system is manufactured.

Especially since the terrorist attacks of September 11, this administration of Bush, Cheney and McCain, with active help from a self-censored media, lied to us both about the war and the status of the crumbling economy. On one hand, a trillion dollar war destroyed two ancient civilizations called Iraq and Afghanistan and killed countless men, women and children; at the same time, the enormous cost of the war emptied precious resources from within the U.S. -- resources that could well have been spent on jobs, health care, education, housing, environment, energy, immigration and other top priorities.

I pray to God that Americans now find the courage to stand up against the lies, distortions and censorship. I pray to God that Indians now find the courage to stand up against a mindless mimicking of a failed and exploitative economic and political system.

[Note: the quotations are taken from MSNBC, Reuters and AP news pieces.]

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