Growth to Recession --> Globalization to Protectionism –>Tax breaks to Stimulus packages and Bailouts

“Polite Indian voices answered when we rang our banks. Spanish firms owned our airports, the Germans bought our water, Dubai controlled our ports. Our homes were flooded with cheap imported clothes, toys and electronic appliances from China. And, anyway, we were like an orchestra being conducted by an invisible hand” wrote Times columnist Janice Turner.

But now that music has stopped , the orchestra is coming apart. Suddenly Protectionism is the buzz word replacing Globalization.

Italy has threatened to retaliate against British workers if the Italian company in Britain is forced to sack its Italian and Portuguese staff.

Barrack Obama’s Buy American plan makes it mandatory for US companies taking bail out plans to purchase all goods and services from domestic supply has triggered a shock with the supporters of Globalization... Banking firms which have been bailed out have been asked not to issue H1B visas – a majority of H1B visa holders are Indians working in IT industry.

The debate has started… The debate is no longer about the merits of free markets and globalization but how to stop them from causing further havoc. The mood is now about protecting national interests and rights of local workers, farmers etc. A diplomatic row is simmering between US and Europe over the Buy American plan.

Paul Krugman, noted economist in his column on New York times Who will stop the pain? quotes from the minutes of a meeting of US Fed officials - “All participants anticipated that unemployment would remain substantially above its longer-run sustainable rate at the end of 2011, even absent further economic shocks; a few indicated that more than five to six years would be needed for the economy to converge to a longer-run path characterized by sustainable rates of output growth and unemployment and by an appropriate rate of inflation.”

Every day you hear governments bailing out one industry after another and recession in Europe is spreading. Anti government street demonstrations, sparked by mounting job losses and fear of an uncertain future has erupted across Europe in the face of a deepening economic crisis. The anger has been fuelled by by the perception that governments are too busy bailing out banks and big businesses and not bother about the common man. Its a tough call for governments as well.

This morning got a call from a friend working as a techie and he painted a gloomy picture about the impact of recession on IT industry in India. He predicts darker days ahead for the Indian IT companies and this might go on till the end of 2010.

What lies ahead for Indian IT industry… IT bubble bust in 2001 was largely attributed to dot com bubble and it was specific with IT sector. But todays depression has not spared any sectors. Its pervasive..

Well i advice passing graduates not to waste time and do a PG or Masters abroad so that when the industry picks up they are qualified to take up the opportunity. But there will be cut throat competition and the survival of the fittest will hold good in future...

If Indian IT industry starts laying off in a large scale i do predict a sub prime crisis (people defaulting on housing loans because of layoffs) in India and banks would be the first victim. One of my colleague predict that Banks will face pressure if students who do not get jobs and who have taken educational loans start defaulting. Though its too early to conclude this, things certainly look gloomy.

Looks like the mother of all depression is round the corner..