Thursday, August 09, 2007

Credit Crunch

Here is a damn good article on the credit crunch scenario. While most other stuff make a hue and cry scenario of the situation, this article looks at the good points of the situation. The way i look at it is this - excess credit in the market at a macro level is somewhat like excess money at a company level. We all know at the company level this leads to agency costs and bad capital allocation decisions. With excess liquidity, the same thing happens at a macro level. This is what the article is trying to point out. At the india level I still think the underlying story is strong. I think the RBI has done well albeit a bit late on some of the issues - but as they say - better late than never

1 comment:

Feather in the breeze said...

I believe the hue and cry is because it is supposed to hurt sentiments. How I wish people look at fundamentals rather than getting sentimental. I too believe that a squeeze is in order.