Wednesday, October 29, 2008

few questions

So the Diwali, Laxmi Poojan has given some upswing to BSE, NSE index and built some good hopes for the upcoming period.

For last few days (or weeks) I had been as curious as many others regarding the subprime crisis, bankruptcy and recession. I read few articles about all this, in newspapers and online. The more I read about it, the more I got confused, and worried too. :-s

I couldn't understand few things. May be my brain is too small to understand these complex topics like economy, finance and so on ;). So thought of sharing my doubts with you. Here it goes...

1. Can a person or financial institution declare bankruptcy even if he (or it) is holding some assets, that may or may not be worth of loan amount (debt)? What are the rules related to declaring bankruptcy?

2. US government considered some bailout package that will help the banks that have gone bankrupt. What I understood is, it is the money that government has collected in the form of tax from all the people. Is it the only way to handle this? This will reduce the money that the government has. I guess thats the same as the net assets of the country? If so, instead of reducing the money that you are holding, isn't it possible to print few more currency notes ;) [ssshhh... don't laugh] What are the rules related to printing new currency notes (or coins)?

btw: I had received a mail couple of months back in which it was mentioned that to handle the inflation some country has printed notes with denomination of 100 mln, 250 mln etc. This has added to my confusion. [I'll find that mail and post it on]

I'll be glad if someone of you can clarify my doubts.

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