Opinion - Letters to the Editor   

U.S. economic crisis

This refers to the article “Wall Street transforms U.S. presidential race” (Sept. 29). America’s federal debt is just under $10 trillion, not $12 trillion. Of the $10 trillion, some $5.5 trillion are held by non-U.S. government entities and the public. The rest is intra-governmental debt, held by the Social Security trust, for example, and other such governmental accounts. The proposed bailout bill seeks to raise the gross federal debt ceiling to $11.3 trillion to accommodate the debt the federal government would have to issue in order to buy distressed assets at deeply discounted values from various financial institutions. The purpose is to hold these assets just long enough to permit an orderly sale of all of them. Since these assets do have some value (which is difficult to estimate at this stage) and an orderly sale should yield higher proceeds than a fire-sale, it is expected that the federal government’s eventual cost will be well under the $700 billion authority that the bill seeks. The sellers of these assets have already written down their values and, in all likelihood, would have to take a further hit as the government buys them at even lower values. They are unlikely to be laughing all the way to the bank.

N. Bala Ganesan,

Chennai

India should learn a lesson or two from the economic crisis in the U.S. We should halt our reckless pursuit of liberalisation and privatisation in the name of reforms. The collapse of behemoths like Lehman Brothers should serve as an eye-opener. India, originally a socialist state, is now at a crossroads. It should adopt the right mix of capitalism and socialism to prevent any serious crisis.

M. Krishna Prasad,

Chennai

D. Venkiteswaran,

Nilambur

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