A large US $ 700 billion payoff is under negotiation in the USA. Most economists / financial analysts are opposing this payment to big banks. President Bush has said that this needs to be done urgently or 'America will face a painful recession.'
While the Americans will finally decide on what they will do with their financial institutions, the entire world will be affected by the events in the USA. India will also have to face the fallout, if any, of the ongoing crisis.
The Coupling of economies.
No, we are not decoupled. Stocks will be adversely affected if the US markets fall. if the US Markets rally, we should go with them.
End of the Broker - Dealer
In the USA, the Investment Bank model has abruptly ended. In my blog, I have warned earlier of the risks associated with brokers who trade on proprietory accounts. I will explain in some detail.
The Brokerage business will see a major change. Two different segments will survive.
First, the Broker - Banker. This includes all brokerages sponsored by banks. HDFC , ICICI and so on. They have to be sponsored by a Bank. The Broker - Banker will become increasingly important.
Second, the boutique brokerage. This is the small brokerage where all clients know the broker. They have the broker's cell number. The Broker knows them by their first name. This segment will survive and prosper. The Broker offers top class brokerage services and does nothing else.
The Segment which will NOT survive is the broker who acts like an investment banker. (remember Lehman Brothers ..). This group is in proprietary trading, branch expansion, wealth management, .. You name an activity, they have their fingers in it. If you have a broker who resembles this profile, you may like to shift to any of the two segments described above.