Rich and The Responsible - I

This post comes out as a reaction to the recent downgrading of Indian Outlook by S&P and Moody. These two are organizations that do the Risk rating operations and analysis on investments, credits and everything they feel like. Like India for example. 

To throw light on what I’m talking about, just last week the S&P downgraded the Indian outlook to negative from being stable. In simpler terms, it’s branding India to be a Risky place for investments. This might not come as a surprise to some and they might even agree to this as the Indian markets haven’t showed a lot of stiffness, some of the big bosses have drawn graphs crossing the red line. To add, there’s the rupee losing ground on the US dollar. From this point, it sure seems like Indian economy is risky. 

To add to this one flamboyant “rating” the Moody has come out and done more act of downgrading India. Well, this time they’ve taken on 3 private banks; HDFC, ICICI and Axis Bank have been given bad ratings by moody and there is a speculation over LIC; India’s biggest PSU insurance provider. 

Why!!! Why are you throwing stones at me??

Let’s take a deep breath and do what a glass house dwelling stone pelter deserves.

Looking back into very recent history, wasn’t it the S&P and Moody who gave a triple A rating for the Housing Credit Securities? They said that the money lent on houses was insured as they had the house in possession which could be sold to a new customer if the loan was defaulted.  Seems sensible, and so thought the countries who bought these sensible “securities” what happened later?? The housing prices started falling, people couldn’t sell houses, they had to take fresh loans to pay out to their housing loans. This debt after debt burst the housing bubble and everything was ruined. Billions of dollars were lost, people came to the streets and no one had money. All this was in the USA, what about the countries who bought these “insured securities”?? The rest of the world laughed at them and they lost all their money, and more than half the world had to apply for loans from the world bank. That was the beginning of the recession era.

What brought all this? The AAA rating by S&P.

Economists, or in general anyone with common sense across the globe believed that the system of rating itself was corrupt. The US govt. must have been at bed with S&P and Moody and forced them to give an AAA rating so as to be able to sell their rots to the rest of the world. 

Now, just about 6 months back when the S&P gave USA a bad rating, everything went haywire, like hell had descended over earth. At that time, the head of S&P who was an Indian was sacked and the rating was reversed. After 6 months, we see that these very respectable organisations are throwing stones at the Indian economy. My take is, that after the Indian Head had been sacked from S&P and an American past VP of Citi Bank had been made the new head, they went back to sleep with the Fed govt of USA. 

It’s only fitting that the federal govt of USA and these rating organisations are playing this game of downgrading India together. With the presidential election looming close, and Obama’s failing promise of providing jobs and curbing outsourcing, this might be his last ditch effort of bringing money back to the USA. By defaming India, they are hoping to suck money and investors off India. Will this pump money back into USA? Only time can tell. But is this the right way to become rich? 

I wasn’t sure of the answer myself. Until I met a Hijada on the street this Wednesday.