Don’t b*&^h out just because it’s a bad economy!

I remember talking to a friend two years ago, basically discussing the possibilities of an economic downturn in India (a phenomenon un-heard of back then) and saying that the services sector is going to get hit and our services economy is too dependent on American prosperity levels and that this surge in economic activity is soon going to be in for a rude shock. Well, I am sure you have heard such stories all over the place in your workplace, on the news, in your home. Your home budgets are stretched, inflation is hurting and all those splurges you made on that new LCD tv and other such luxuries, well, you probably should’nt have made them.
The Global Economic Crisis is very real. I was in the US recently, and even seeing beyond the media hype and constant flashes of “Breaking news” about the economy, one would be quite certain that this crisis is going to last for a while, at least in the US. They are looking at this mess lasting for atleast another 2 or 3 years, because the US is sitting on approximately $7 trillion of bad debt because of these complex mortgage backed securities. This is soon going to lead to Bad debts on retail loans like credit card debt. A lot of US companies and individuals will go bankrupt and this will lead to “The Great Indian Outsourcing Dream” being brought to its knees and looks like a bleak 2009 for the rest of the world as well.
Lets see what you and I can do to counter the effect of this crisis. How do we make sure that this “thing” does not get the best of us and somehow manage to pass over as just another bad phase? Here are my thoughts….

1) Ignorance is bliss: Try not to read too much about the economy and the global credit crisis. I am sure you will be tempted to view your TV screen when it flashes “Breaking news” because of a large point drop in the Sensex. Don’t try and get too hassled about this entire media blitz which causes more harm than anything else. Don’t try and get too deep into the reasons for this mess. Most of the issues which have led to this crisis all over the world is the result of too many variables and a set of complex linkages. Even guys like me, who possess some very respectable degrees in Finance and economics all over the world, find it hard to understand and devise solid solutions. Don’t look for someone to mollycoddle you and advise you on another speculative move. Just focus on doing your job well and make sure that you slog your a** off to keep that job. Remember, the days of easy jobs will not be an option anymore. Otherwise, remember, you most probably will only be in way deeper muck than you already are.

2) Adopt a !American outlook to life: I feel that the biggest issue with urban India is the false need to ape the US. We try and emulate everything from their retail sector to the way we spend our incomes. Yes, BPO and IT people, I am talking to you. Your credit card bills will come back to haunt you. Don’t buy that Honda City on an income of Rs.30k, the fuel is not cheap either and your salary will usually equal the EMI. Don’t go on that Europe trip because you some bank is advertising boldly, telling you to take that trip and “make your dreams a reality” with their personal loans. The Interest rates are going to eat you alive. Always remember that the Americans are in an economy, which is based on a totally different set of factors and concepts. They are highly consumption driven, free market economy which is measured in the amount of spending and ours is a mixed model economy and a country which is still very much in the early stages of growth. If you think that we are a “developed country”, I would advise very much that you look at our per-capita income, and standard of living statistics. (Per capita chart). By the way, for those who didn’t understand why I put the ! before America. The !, in Software Development terms means “NOT”.

3) Don’t try and pull off Super-Speculator moves: If you invest in stocks as an investment and dabble in it from time to time, chances are that you have made some neat profits on speculative transactions and quick sales of stocks. My advice is to stop it and focus on a Long term perspective. Don’t try and pull off some cool stock market moves like you see in Wall Street (the movie, Watch the movie to keep your mind off the economy, just kidding). Don’t try and pull a fast one on the market with high-stakes transactions, you will get f***ed. The market is always smarter than you.

4) Black Money is the way to go Baby!!!: This will probably be one of the most iconoclastic of suggestions I give out. Black money is one the reasons why most of us aren’t too deep in this mess. (read this).

5) Have a roof over your head? Cool it: If you are paying off home loans, I hope you have had the good sense to consider your ability to pay them off. If you are planning to rent or renting already, stay that way. Even though you might have seen home loan rates coming down marginally, Indian economic policies are quite confusing right now. We are trying to curtail growth by raising rates and we are also trying to spruce up the economy by slashing required rates for banking liquidity. Hold on to your horses. If you are careful, you will get some sweet deals on purchase of property that you would have never gotten earlier. All good things come to those who wait.

6) Practice being happy every day: This is quite simple. Do what the senior citizens do. Join the neighbourhood laughter club. Watch a lot of funny, senseless Hindi flicks (they are enough in number, but not in the expensive multiplexes). Cultivate cheaper habits (substitute Coffee Day and Barista Coffee for local road-side chai wala). Although boozing would seem like the ideal way to get over your economic woes, remember, it would be murder on your pocket.

These are my 2 cents for you. Hopefully you can implement some of these steps and ride safely through the rough roads to economic prosperity once again and unlearn whatever you had learned from the down-turn.

May common sense be with you.