Sunday, April 5, 2009


There are a few inescapable attributes to a college life. One such attribute that cuts across all lowest common denominators is Udhari (Credit, for the more anglicized..)

Udhari finds a natural place for itself in a system that engulfs a college guy's de facto pauperized state. A dude is always in state of economic recession during his college phase and udhari is that, much needed lubricant that keeps his system going.

For example for us when I was in college there were two principle credit centers. Ganpat and Sanju. Ganpat was the owner of a small and shady wada-pav and tea shop outside the hostel and Sanju was the owner of a STD booth (again STD = Subscriber Trunk Dialing, for all the dirty minds out there ). Both these men catered to products / services that were essential for a hosteler's survival. The oily-greasy-unhealthy wada-pav of course being the substitute for staple diet and STD booth, the sole connection point back home.

We depended on Ganpat's and Sanju's largesses to survive and they in turn depended on us for their business. This mechanism of udhari that got built over the period of time became so seamless that both these people would trust us, the consumers, to make entries into their books each time we utilized their service. It was just trust essentially.

And trust is actually another name for Udhari. Because there was no legal contract on us to "pay off" the debt. It was only faith (and may be hope and pray on their part) that we would "some day" pay off our respective udharis. [It is little surprise then, that the word 'credit' itself comes from the Latin word Credere, which means trust.]

Our credit worthiness and our credit history was never really investigated by the Ganpats and Sanjus of the world.

It is pretty apparent to me that credit is the necessary evil for a financial system to function. Without credit there's loss of trust and without trust there's loss of confidence.

What happened in the Americas last few months can be explained using Ganpat and us. Ganpat kept giving udhari to us students and students kept eating and over leveraging their trust. At some point a bulk of dudes got indigestion and stopped eating, while still others started defaulting. At a certain threshold of defaults, Ganpat could no longer sustain credit and the system collapsed. No wada-pavs and no Tea.

Will China be USA's Ganpat? Who the f knows.

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