US financial crisis set to impact India's real estate sector

The crisis in the US financial market will hit the Indian real estate sector hard. The sector was already reeling under tremendous pressure as RBI increased the interest rates to contain inflation, besides restricting the fund flow in it. Consultants said that in the present circumstances the real estate prices will go for a sharp correction in the short to medium term.

The financial crisis in the global market will affect the availability of fund for the domestic realty sector. As RBI has already put restriction on Indian banks to finance real estate companies in the country, they are depended on foreign funds through FDI route for their fund requirements. But, a senior consultant said following the development in US, many of the private equity funds are returning back to their mother countries.



http://economictimes.indiatimes.com/Real_Estate/US_financial_crisis_set_to_impact_Indias_real_estate_sector/articleshow/3496683.cms

Sensex plunges by 940pts on global financial crisis

The delay in passage of a US bailout package for ailing financial markets and shut down of America's second largest bank caused a global meltdown with Indian bourses crumbling by a huge 940 points, biggest point-wise fall in the last 25-week, in the week under review.

Even as the US administration continued its debate on a $700 billion rescue package for the shattered financial system, the on-going credit crisis claimed yet another victim leading to across the board sell-off in the stock markets.

Investors looked unwilling to carry forward their long positions in the light of lingering worries about an imminent US economic slowdown even as the first-time jobless data in America jumped to its highest in seven years, pointing to a recession.

IT and realty sectors were under tremendous pressure on concerns about the US recession leading to a global slowdown. The equity markets witnessed heavy capital outflows as Foreign Institutional Investors pulled out billions of dollar in September following the on-going credit crisis.


No, Really, How Much Is $700 Billion?

Just how much is $700 billion?

A lot, or not that much. There are about 300 million men, women, and children currently living in the United States, so the bailout is equal to roughly $2,300 per person. That's right around what each paid, on average, for gas and oil in 2006 ($2,227) and a bit less than average personal tax burden ($2,432).

Stepping away from average Joes, $700 billion is equal to about 12 Bill Gateses. The assembled net worth of the Forbes 400 is $1.57 trillion, or more than twice the cost of the bailout. Titanic, one of the highest-grossing movies of all time, raked in $1.8 billion from the worldwide box office, so James Cameron would have to make roughly 381 Titanic-sized blockbusters to settle Wall Street's debts. According to the Centers for Disease Control, the single-year cost of obesity in the United States was $117 billion in 2000, or about one-sixth the bailout—although that number has been disputed.

If the federal government siphoned off Florida's gross domestic product, we could cover the bailout. Invading the Netherlands might be advisable—that nation's GDP was $768.7 billion last year and it is 50% of India’s GDP . Of course, invasions cost a lot of money. Back in 2003, the Bush administration told Congress that the Iraq war would cost between $60 billion and $100 billion, but it's estimated that, so far, we've spent about $600 billion. Should the Treasury receive authority from Congress to borrow $700 billion, the national debt will rise by only about 7 percent. Right now, it's sitting at $9.6 trillion.

Let's say Slate charged its advertisers $30 per 1,000 ad impressions, a common industry rate. And let's imagine for a second that the federal government decided to nationalize Slate in order to pay for the bailout. We'd need our readers to rack up enough page views to see 23.3 trillion banner ads before the feds were satisfied.

For historical perspective, consider that the Marshall Plan, which helped finance the recovery of Western Europe after World War II, cost the United States about $13 billion. Of course, in 2008 dollars that's more like $100 billion. And Niall Ferguson has estimated that as a comparable share of the U.S. GDP, it's more like $740 billion.

Lastly, in apocalyptic terms, $700 billion really isn't all that much. If nothing is done to change the way we finance Social Security, the trust fund reserves will be exhausted by 2041. This means that, in 75 years, there'll be a shortfall of $4.3 trillion—or about six bailouts. According to the Stern report (issued by U.K. economist Sir Nicholas Stern), global climate change could cost the planet $9 trillion (or 12.86 bailouts) if we don't address the problem within the next decade or so.


Cheers!

Quote from Krazzyfour

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Just how much is $700 billion?

A lot, or not that much. There are about 300 million men, women, and children currently living in the United States, so the bailout is equal to roughly $2,300 per person. That's right around what each paid, on average, for gas and oil in 2006 ($2,227) and a bit less than average personal tax burden ($2,432).

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Actually I read another report based on cost per working person head and the amount was less than $5,000 and still the person said that was peanuts.

If I find the link I will post it.

Can you post the link to your quote or is that your diagnosis?
Thanks for posting this perspective.

Quote from Investpro

Can you post the link to your quote or is that your diagnosis?
Thanks for posting this perspective.


Here you go Investpro

http://www.slate.com/id/2200718/

We bankers didn't lose money because we are using clients' money and on a day like this too, we earn money through commission. We made money! My own terminal had 10,000 trades worth over $40 million. We are not worried about what happened today.

Thats the statement from a leading officer of Bank of America see link.

http://www.rediff.com/money/2008/sep/30bcrisis5.htm

Despite so much profit, they still make 'bad decisions' and want the common man/investor to donate another $5000 to 'bail' him out???

We should give the Nobel prize to all those top of the league business schools from where these 'smart executives' graduate...they sure have a 'failproof' plan.

The bulls are 'thick' skinned, just for these kind of ruthless decisions.

Investor all over the world are being given 2 choice these days : commit suicide or we will hang you to death. Either bail us out or forget your future earnings (that includes the past investments).

Hiren