OTHER PEOPLE’S MONEY

The blood bath of money going on all over the world is depressing and people around the world have started losing faith from financial institutions and markets. The losses being accumulated are huge and unimaginable. Amidst all this different governments are trying different ways to safeguard their people and institutions money and life. Quite ironic but yes the governments are literally trying to save life’s of thousands of people and through monetary support they are getting them back to business. So it is something which comes naturally during all this bailouts and waivers going around in the world that it’s all about Other People’s Money (whether it is being lost or being used to safeguard).

In early 2008 Government of India passed a Bill in the Parliament to waive of loans worth sixty thousand crores of millions of farmers throughout India. There was a huge hue and cry throughout the country for and against the bill passed during the budget for financial year beginning April 2008 but none of the political parties dared to oppose it since it was a matter of millions of votes and the bill got successfully passed with another increase in the waiver amount later which required beyond seventy thousand crores in total. And as per my assumption the waiver scheme must be going on well and a good amount of the fund should have been cleared of by now as it has been more than 6 months since everything was approved.

Now lets come to the latest rescue operation which got approved by the Fed and Government of United States of A. US has approved a bailout plan worth $700 billion to save various financial giants in the US of A including insurance companies, investment banks, government agencies and so on. Again the bailout plan was being contested by various parties as being unnecessary and huge. The bailout has just been approved so it may take some time to actually see how well it is being executed and how much does it help those institutions to get back on track and make a living on their own.

It seems individuals and institutions make mistakes or fall prey to circumstances and lose huge money and then governments have a huge role to play in their rescue. Could these individuals and institutions have been more cautious when they made such huge investments, or is it just that the circumstances led to their current situation. In all the arguments for and against these rescue plans one underlying feeling among the people is, whose money are they using in rescuing these individuals and institutions, it’s the tax payers’ money! Where else will the government get money from. So it seems logical for the governments all over the world to be more proactive and have better mechanism to handle such situations. What if the 60K crore waiver does not improve the situation of the farmers of India, what if the $700Bn bailout does not improve the condition of the financial giants of US. Is there something that these governments have thought about for such negative outcome, or is it just that they feel once they rescue these institutions from their liquidity issues their role is over. Or will these governments again in the future go for few more such waivers or bailouts. It’s important that everyone understands that when we talk about all these rescue operations, we are talking about “OTHER PEOPLE’s MONEY” so we better deal with it appropriately.