Date: Fri, 3 Oct 2008 23:28:38 -0400
From: "Goanet News Service" <[EMAIL PROTECTED]>
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India's outsourcing bubble is bursting
By Saritha Rai, silicon.com
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Bangalore, India--Once a high-flying tech hub, Bangalore is seeing more
sober days in the wake of the credit crisis.
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It looks like the global economic turmoil and the dramatic Wall Street
meltdown is beginning to hit Bangalore.
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Mario responds:
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This is the inevitable result of the end of a business cycle in the US, the
economic engine of the world economy, the economic turmoil in Europe, and
inflation in India.
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Before 1992, before outsourcing and globalization caught on, a US business
cycle was three to four years. The last two have been seven to eight years.
These cycles never last for more than six months, and there is no reason to
believe that this one will be any different, since the excesses of the banking
industry are already shaking out and the US always addresses its problems
rather quickly.
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What will be bad news for India will be if Barack Obama is elected this
November for several reasons, a) his policy of raising taxes, he says he will
cut tax rates for 95% of income earners, but some 40% of income earners pay no
income taxes to begin with, b) his policy of using expensive and inefficient
government programs as opposed to the private marketplace to solve social and
economic problems, c) his policy of trade protectionism to maintain his
political support from the American labor unions, which will directly impact
outsourcing, and d) the relative lack of checks and balances on his policies
because the Congress is likely to be controlled by his own party.
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