We were right after all.

Confirmation at last! For months we have been saying that there is an enormous property bubble, financed by speculators with cheap loans, which is why the government is desperate for the RBI to lower interest rates and prevent a collapse of the bubble with resultant hit on banks. Today's TOI carries the story of how diamond exporters obtained loans for the export of the same set of diamonds many times and diverted most of the money into real estate. Since the loans were ostensibly for export they were 5.5-6% cheaper than would otherwise have been the case. Around Rs 300 billion was misused. Now that the property market is frozen they are unable to pay back the loans and banks are unwilling to lend to other diamond merchants. Sanjay Kothari, Vice Chairman, Gems and Jewellery Export Promotion Council said," The export of $28 billion worth of polished diamonds and the import of $20 billion worth of polished diamonds in 2010-11 was the classic example of round-tripping. India is a diamond exporter and there is no need for importing polished diamonds. This shows how the " black sheep " have played the trick to misuse the bank finance." It was not just diamond merchants but every business tycoon, whether in consumer goods or in finance, became property developers, greedy to get a piece of the action as prices zoomed by more than 1000% between 2002 and 2011. Anand Shah, RBI Deputy Governor said to Economic Times," NPA ( bad loans ) levels have become higher than they were a while back. So there is definitely a stress in the system. The amount of restructured assets has gone up." Banks restructure by giving more loans to repay old ones so that they do not have to show them on their balance sheets. In the US, UK, Ireland and Spain property prices collapsed in 2008 but in India they kept on rising. While share markets around the world are beginning to recover the market in India made a V shaped recovery and is above 17000 today. Immoral politicians have decided to sacrifice common people to save their business friends, who finance their elections, and their own black money. To snare the ordinary public into buying shares the Securities Transaction Tax has been reduced, the only tax to be reduced when all other taxes have gone up. Up to Rs 50,000 of money invested in shares can be reduced from taxable income and the Securities and Exchange Board of India is looking to make companies guarantee for 6 months a portion of the money they raise in Initial Public Offerings from retail investors. Since a lot of IPOs are rigged investors have lost their savings when prices plunged once the stocks were listed. This is an effort to lock in small investors who, being ignorant of market trends, will be hammered when the market collapses. Politicians are also pressuring the RBI to reduce interest rates to support the property market. Trouble is that 2014 is too far away and unless the boil is lanced there cannot be any growth. We were right but we will suffer. The criminal buffoons will be unaffected.