Shopping Spree – local action, global reaction !!

Last week my friend Mr. Atul  was on a shopping spree ahead of his visit to his hometown. I don’t know whether  the word ‘spree’ is the right fit or not , but the way he was buying things ,even when they were not needed ,it was not less than a blitzkrieg. 

On our way back , I asked the reason for this indulgence & he very candidly replied :

 “Dude, I have got the Visa power !  “, referring to his credit card as if he is blessed with Divine power.  

So my next question was, “Who is going to pay for the ‘powerful’ bill for using this so called visa power ?“. .Pat came the reply with a rider “ Me,but only if I’ll have the money to pay .” 

“ Its people like you who are responsible for the big mess in which world economy has been pushed today .” I told him. 
“ Yaar, now  what this has to do with the world economic problem. How suddenly you have brought  world economy into this ?  I am totally confused . ” he said. 

Seeing his spending habits , I couldn’t resist the temptation to relate it the current world economic problem which has forced many European economies are on the verge of bankruptcy. 

Although my friend does not fall under the NINJA ( for beginners , NINJA is a description of type of loan or credit given to people in US with No Income No job No assets  which created turmoil that threatened  some of the biggest financial institutions of the world ) category but such type of  spending  habits have  surely  created deep fissures in the global economy.
For an individual it might be an easy & best  thing to do what we call as ‘credit default’  but in an integrated economy & in an integrated world ,what is best for an individual or institution is not always best for the system.  And the fault lines which have resulted in the present economic crisis are very systemic & each individual or institution has acted as a tectonic force which led to these fissures in the world economy.  

A wider cast of character shares responsibility for the crisis : it includes regulators, policy makers , people like Atul  & me. It’s a collective effort which is all set to take the World’s economy to the brink of disaster.  The danger of Greek default is looming large & if this happens , a chain reaction will start which is sure to engulf the other European economies like Italy,France ,Germany etc.  The picture of US economy is also not that rosy as its total debt is 96% of its GDP  & the sheer size of this debt can send shivers down the spine of even the most optimistic economist hoping for the global economic recovery.

Tough time calls for tough measures & hopefully US will rise to the occasion & take measures to check the turbulence and widespread fiscal strain threatening the global economy.