Here's another reason why the global economic recovery may still be vulnerable after all. Money, the raw material that helps produce virtually all of the nation's goods and services is still in short supply in US, the world's largest economy. As per CNN, the 21 biggest recipient of the government's capital injection also known as TARP funding reduced their lending to American consumers and businesses by 7% in the month of April. While the banks argue that there aren't just enough people to lend to, the borrowers on the other hand argue that credit is indeed tough to come by. Whatever be the case, the one who is clearly suffering is the US economy, as slower lending and higher GDP growth do not necessarily go hand in hand.
It is important to look at the holistic picture and have an individual opinion rather than get swayed away by the public consensus. This is the view of the man who pioneered the retailing boom in India - Mr. Kishore Biyani, the founder of India’s largest retailing company - Pantaloon. In an article in the Wall street Journal, Mr. Biyani wrote, "Almost daily doses of bad news on television screens and newspapers have possibly done as much damage to the economy as the events on either side of the Atlantic." I completely agree with him. Mr. Biyani’s predicament is based on the fact that an overwhelming majority of Indian consumers are self-employed, who can neither get laid off nor can have pay cuts. Consider some statistics he has provided. The share of the national income represented by proprietor-run concerns and partnerships is 35%. The share of companies is around 15%, government around 25%, and agriculture around 25%. Combine agriculture and the self-employed in industry a...
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