General Motors declared bankruptcy on June 1st, 2009. Yet another giant got sucked into the recession wave that the United States is in at the moment. GM will shed its Pontiac, Saturn, Hummer and Saab brands and cut loose more than 2,000 of its 6,000 U.S. dealerships by next year. That could result in more than 100,000 additional job losses if those dealerships are forced to close. The employees, the retired and the stakeholders are obviously the ones who are worst hit in this crisis. GM will be yet another company that will receive a bail out from the government. Many white collar jobs are lost. More and more executives forced to work in restaurants they used to dine in, gas stations they used to visit to support their families. I know an architect who works as concierge in an apartment complex. Many heart rending stories we hear on a day to day basis!
What does this mean to the US economy? Is this the end of capitalism where the government owns more than 60% of the company? It is interesting to see how capitalism fell prey to itself. Most companies today which are on the brink of collapse are taking the help of government to rise again. The ills of capitalism are slowly coming into picture. There are several other factors apart from just capitalism that are responsible for the financial mess US is in right now. War can be one of the many reasons why US is struggling. The other day in our university people were rallying against war in Iraq and Afghanistan not just because of the death of civilians and US soldiers in the war but also the amount of resources and cash being pumped into these wars which could have been used to generate jobs and improve the economy. Now US has also decided to help Pakistan to fight Taliban.This means giving monetary help to Pakistan.
India on the contrary can boast of a very stable economy. Except for periods of inflation where the consumers and suppliers are hit, India has never witnessed recession. There is no denying that the recession in US has hit the Indian IT companies. But the impact is negligible compared to the US markets. That may be because India is not solely relying on US for boosting its economy. India still depends on agriculture, manufacturing while making giant leaps in other industries. Global sourcing is not the major contributor of Indian economy. India, since the beginning, has embraced the positives of capitalism and socialism and discarded the evils of both.
Only time will decide the fate of many of the companies (Citi group, Chrysler, AIG, GM to name a few) that are seeking the help of government to pick the pieces and move on. This in turn will decide the fate of the bleeding US economy while the rest of the world must wait and watch if they will catch a cold while America sneezes.
June 5, 2009 at 11:20
That was very well written. Yes, US is slowly moving towards a mixed economy. But we have to keep in mind that it is the capitalistic way that made US powerful and prosperous. It will be interesting to see how long this nationalization will last as the Americans oppose it.
June 6, 2009 at 13:57
hello lekha,
The idea that Gm is getting nationalised is just hot air.In Fact GM has been a favored company by the US govt who supported its ineffciency , lousy technology , lousier vision etc for many years and thus was in one way nationalised many years ago by american neglect and the creation of irrsponsible free enterprises and more irresponsible financial systems which allowed may hem in the name of freedom!!!
Capitalism in its unbridled form is as bad a communism , and this is what is being proved now.
However American spirit of enterprise , their ability to resurrect , their innovative and amazing linkages between educational institutions and industry , etc etc will definitely bring the economy back on a firm capitalistic and successful track.
Only we must hope that human greed , regulatory follies , governmental lack of vision and clarity , and misadventures of the financial system are all curbed and watch dogs become more effective.
The key to american success is make education and health care cheaper for its own citizens or other wise the andhra rich will soon buy up white house and finally turn american capitalism into andhra feudalism and then GM will be renamed Gongura Motors.
suri uncle
June 8, 2009 at 10:23
Dear Lekha
Its good to read ur views on the current economic crises.We have a female SURI in the next gen!
suri’s closing quip of course was delightful!
lOVE UMA AUNTY
June 9, 2009 at 02:38
Well quite an eye opener on the global meltdown. I seriously think you must think of an alternative career in writing.. who knows u might be making millions…don’t get caught in the wrong job lekhu.