Own Some Loan Some

Issue 10  — February 25,2009

 Hindu Mythology describes loan as one of the prime vices which every human should avoid . Thus loan finds its place amongst ego ,anger , pride, jealousy and ingratitude.Often it is result of them . The capitalist theory though encourages it on the premise that it fuels ambition and encourages efficiency .The pressure of an additional interest burden makes you  work that much more effectively. Besides it gives the necessary filip to the financial sector and thus the economy. Those who lend get richer and those who borrow just feel richer . Socialists draw solace from the fact it creates more jobs in  the financial sector and aids the poor who are more often than not starved of cash. It seems like a win -win until you have a sub prime crisis. Over enthusiasm coupled with greed defeats the win win . Then when the best go bust the government is forced to bailout with tax payers money . Ironically  those who are honest pay for those who are not , those who are regular pay for those who are reckless. So the question which draws maximum interest is —-in whose interest is lending –more so when the interest cost becomes unreasonable     

In these times of recession though, focus on growth tends to overlook fiscal deficits brought about by borrowing. Thus governments  borrows more to invest into growth . Interestingly the cost of this borrowing prevents lower interest rates and  tends to retard  growth. Both India and the Netherlands find themselves caught in this trap as they try to fight the recession. So as they say life doesnt give you everything . You win some , you lose some . Thats why reality makes you own some and loan some   

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