Tuesday, January 22, 2008

Go, freeze your balls at Davos

And you thought yes, the US has problems, a credit crunch brought on by reckless mortgage lending - and maybe in commercial property and credit cards, too - but we are safe. Not just us, China, Singapore, Korea and the oil rich Arab neibhors are all doing well. In fact, their Sovereign Wealth Funds are so strong that they are busy bailing out failing Wall Street banks. We are convinced. The global prospects could weather an American storm.

Before we could say `decoupled', the Asian stock markets crashed again. The two-day sell-off in Asian markets is a reminder that the world has been dragged along by the insatiable desire of the US consumer for stuff, much of it made in China. If the US really does slow down, so - goes the fear - will all those factories up the Pearl River Delta whose wages are keeping millions of Chinese happy. To meet the margin calls, traders exited their positions at huge losses and even sold gold and commodities. They fell too. Domino effect. Do you still say we are decoupled...?

Meanwhile our economic chieftains are busy freezing their balls at Davos. Few of them are already there, as seen on TV this morning struggling to part their frost bitten lips to talk to the media. Rest of the pack will be off soon. The theme at Davos is interesting this time around – "the power of collaborative innovation". (If Wall Street catches cold all markets should sneeze… that’s collaboration for you. Isn’t that innovative?) For Chidambaram, there’s no better way to escape the political heat than head for the Alpine ski slopes.

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