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Scrutiny
  
Quantum of so less?
Despite the cheap simile, the fact is that over-lending hits more than...
27/11/2008

If you loved our playing to the gallery in the previous story, we take a bow, and do an about-turn. Here comes the serious stuff! The world is consuming more energy than it can generate, emitting more carbon than the earth can absorb, cutting more trees than we are planting, pumping and draining more water from the rivers than the earth can replenish, and so on so forth. What has gone unnoticed is the fact that over the last few decades, the concept of ‘extremism’ has become a way of life not only in the context of terror attacks but also in the context of our consumption and spending. If you thought it was just about borrowing beyond one’s capacity that we wished to churlishly discuss, perish the no-brainer thought! People – and institutions – are, in a new context, even lending beyond their capacity, despite clear warning signs about the borrower’s limits! The World Bank, IMF and other similar institutions have played their clarinet in making the credit culture so important and integral to the world economy. To reconfirm our gallery-playing mentality, the US is an easy hit.

The US hosts around 5% of the world’s population, but consumes over 25% of the world’s resources and is responsible for a whopping 44% of the carbon emissions in the world. Similarly, 23% in the developed world consume over 66% of the world’s natural resources, while the third world countries consume only between 0.5 to 5%. Bank lending in the US now is astoundingly around $7 trillion – almost 58% of its GDP (GDP being around $12 trillion in real terms) – according to the US Federal Reserve. The same in a poorest of poor country like Nigeria was around $41.97 billion in 2007; and in India at over $500 billion; again almost half of their respective GDPs, and that too in a situation where half of the population does not have access to bank credit. The corollary is quite straightforward. It’s not just the borrowers, but the lenders too who’re to blame. Hey, wasn’t the sub-prime crisis about that only?

By:- Akram Hoque
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