The world should be watching with dismay the consequences of the largest municipal bankruptcy in U.S. history of Detroit (Business Line, July 24). The plight of all stakeholders including bondholders and pensioners is pitiable.

Then, as early as December 2010, in an article the paper had listed, besides Detroit, New Jersey and Florida in the US, Florence, Venice, and Naples in Italy, and Madrid in Spain as cities in deep debt trap and possible centres of financial disaster. Not unexpectedly, the fundamental cause for such a sad eventuality in all these cases is “spending too much on everything; spending more than what is being earned (by way of tax revenues) and borrowing money crazily.” In is lack of prudence and foresight. These are all avoidable.

K. Gopalan

Bangalore

More FDI homework

This is with reference to the article “Govt opens the FDI floodgates” (Business Line, August 2). Had the government done some in-depth preparatory work and had been more decisive and imaginative before putting out its original version of FDI policy, it would have been a lasting benefit to the economy. There could have been adequate response and flow of investment from abroad. Its wavering policies more governed by political considerations, have created a sense of uncertainty, probability and doubt in the minds of all concerned.

In this context, the new policy relaxations should be followed up to their logical end and the government should ensure that the FDI policy is made authentic and capable of standing the test of time.

K. U. Mada

Mumbai

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