America on New Path>>>>

Now Mr. Barack Obama and John McCain along with US financial minister Mr. Henry Paulson are in favor of tightening the operations of banks and financial institutions in USA. Intention behind is if they would have controlled the operations of banks earlier then United states may have saved itself from Sub-Prime and economic slowdown. But in my opinion this fact seems not to be truth… The truth is that actually US government has praised Banks to lend loans to non-creditable customers… 3-4 years back in US there was a slowdown in the production and service sector so FED has praised/ promoted several banks to lend housing loans heavily. At that time FED has cutted interest rates on its housing loans. In effect Banks landed money to cheap customers and they have not returned back money to banks.

If US govt had controlled banks at that time then possibility was that banks may have not faced financial crisis, but SLOWDOWN in US economy has to happen in any case. The reason being that if banks had given less loans that would be resulted in less demand of raw material and hence retardation in domestic growth.

The TRUE FACT is that US govt tried to increase the domestic demands by giving the loans to non-eligible persons.

Now US govt is saying that they will buy out all loans in bond format and will reduce the financial burden on banks, but this is not the solution of the problem. Now citizens of US will born that by paying higher taxes

Now a Million Dollar question: (I bet you can’t find this anywhere else….)

Four Years back why there was drastic slowdown in domestic production and services sector of USA? This praised the banks to lay down loans to those customers who were non-eligible.

The ROOT cause was Cheap Man power and high technology in INDIA and CHINA. Now you must be thinking how it can be. Due to globalization US has transferred its technology to India and China which results in a new economic architecture. Example is outsourcing… now US companies are lacking behind in global competition and to overcome this FED has designed to lend housing loans very easily. The results of that now Banks are paying.

To be continued……..