The present crisis which broke out in September with the failure of investment bank Lehman Brothers in the US actually has its roots in the era of cheap money starting in the 2000s. The rapid economic growth seen globally was fed by low cost of capital and was boosted by all round optimism, the euphoria of the positives of globalization and confidence of policy makers that markets would lead a sustainable growth path.
Yes no one can be in complete control of the situation. Neither can the Indian government. As Lorenzo Bini Smaghi said, ‘ Restoring confidence in markets is the biggest contribution that the state can make to get the economy back on track.’ Clearly, even if outcomes are uncertain, our confidence in our abilities should not be inhibited. And for that the government needs to be seen taking credible, and domestic economy oriented, action.