Yesterday I was having this conversation with a friend regarding the economic boom in India. As a disclaimer I am not economist, but just someone who has a birds eye view.

Lets go back to the real estate and economy collapse of the early 90s. The inflation in property prices was due to domestic demand ie. Indians living in India were buying property at high prices, since the Share Bazaar was booming. Then, due to scams or any other reason, the share market saw its share of drop, and that started a chain reaction. Everyone wanted to sell their property, since, they were getting over a Crore for a flat in Mumbai, that they had paid on 20 Lakhs a few years back. Supply increased tremendously, and housing market collapsed at the same time.

Fast forward to today. Foreign investments in India is flush. Just earlier this month, the government passed a law that will allow Indians to LEGALLY send $100,000 USD (approx 40 Lakhs) overseas. Why is this being done? Because the value of Indian Rupee is increasing, and this in turn is hurting the exports. I also believe that the housing boom today, is due to the fact that a lot of foreign companies and NRIs are throwing money, and paying the ridiculous prices for property. Many if not all, with the purpose of investment.

Now here is the scenario:

1. What happens if the US economy really tanks?

• Job cutbacks by US companies, in US and India. Resulting in shortage of disposable income.
• Investment cutbacks in India, for business and property. Decrease in the value of Rupee.
• Property sell offs by NRIs and foreign companies. Possible bust in the property and housing market due to the increase in demand.

Here is the question - How long before the s**t hits the fan?