Tuesday, June 14, 2005

Optimistic India

Via The Economist, here are results of a survey, by NOP World, of consumers in 30 countries on whether they thought their economic situation would get better over the coming year, and whether now was a good time to spend money.

India ranks 2nd, ahead of even United States & China. As an instinctive contrarian, this blogger worries that this might indicate a (short-term) bubble -- whose bursting, whenever it comes, will likely be very painful. Why? Because optimistic young Indians have been borrowing to consume conspicuously, without the benefit of collective & inherited wisdom on managing debt effectively. In the US, a similar consumption pattern works because such wisdom exists and the personal bankruptcy process is highly streamlined -- it's not clear what might happen if, in an economic downturn, millions of young Indians cannot service their ever-rising debt burdens.

We hope we are wrong, but ...

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