Brother saleem i really appreciate ur concern.
first of all it is very basic of economics that something cannot go wrong all of the sudden, and if does it is very temporary eg) crash after 9/11 incident.
Basics of economics ... you mean, 10 percent for Zardari, 10 percent plus a bit for Nawaz ... and liars like Ahsan Iqbal and Ishaq Darr to cover things for some bones? :) Well, when thieves are on loose in a country, basics of economics do not work.
And yea, nothing went wrong all of a sudden, economical condition is fine but deteriorating fast as trust on those running the country is not there, so people are cashing their assets and running out of country, so country is getting poor day by day. Due to appearance of thugs like 'NS' and 'Z' in the corridors of power, an estimate is that Pakistan lost around $60 billion (foreign currency from open market) in flight of capital. That caused not only rupee to devalue around 45 percent (Rs 60 to Rs 85) in last 6 months, but Pakistan state bank had to pay cost of imports (something Pakistan was paying from open market), causing state bank reserves to deplete.
Now do not tell me that you do not know how much is $60 billion dollars and what havoc such flight of capital could do to the economy of Pakistan, with exports of around $20 billion a year ($60 billion is 3 years export for Pakistan ... or approximate value in dollars of Pakistan entire wheat production during last 10 to 12 years ... or for that matter, Pakistan total external debt until last year was $40 billion). Today, Pakistan is begging for few million dollars from every passerby Pakistan could find. [In 1999, Pakistan export was $7.4 billion]
[Another fact is that Zardari this time is doing everything to save Pakistan from collapsing, but his reputation and reputation of PMLN thugs are scaring people and their money away from Pakistan. On top of that, PMLN thugs have not learned and since these mega crooks lowly people do not care for Pakistan or poor of Pakistan, they are doing their best to destroy Pakistani economy].
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it was a bubble economy that was supposed to burst anyways. normal citizens of pakistan heard that economy is booming and there is alot of money in stock market and they put there savings in to it and all the stocks went up (specially banks, oil/ gas, and fertilizers) and when big saith's did profit taking the economy came down.
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Did liars and donkeys like Ishaq Daar, Ahsan Iqbal, Nawaz Ganja, etc ... told you that development and progress of last 8 years in Pakistani economy was bubble? :) I think that you should stop taking classes in economics from people who are world known crooks and thugs. Fact is that only idiots, liars, or completely ignorant could say that last 8 years of development and progress that Pakistan made in economy was bubble.
In bubble economy, prices go up but profits of businesses, that depends on real output of goods and services, and income from those businesses do not go up. In such economy, businesses work on 1 or 2 percent return, not on return of 10 percent or more. If Pakistani economy was bubble, it would have shown in p/e of Pakistani stocks ... or if p/e is high than in devaluation of rupees. Reason is that, even if rupee return may go high, it is impossible for companies to give huge return in dollars (foreign currencies) if economy is bubble economy. Since Pakistani rupee did not lose its value and exchange rate was stable, than if Pakistani economy was bubble then stock market dividend would not have increased (especially in dollars). For instance:
Let give you example of NIT (for convenience ... something that can be checked from newspapers too ... or from anyone who hold NIT) as it is mutual fund and represents how average shares did ... that means, how average shares were performing and if the economy was bubble or based on real return. For instance, whatever dividend NIT was paying, they were getting it from companies they had, and it was not Musharraf who was giving them from his own pocket to pay people. NIT dividend payments and unit price represent average returns of Pakistani shares (as theit unit price is related to their Net Asset value).
In 1999, their dividend was around 40 paisa and value of NIT was around Rs 7.00, but dividend in 2008 was Rs 6.50 and NIT unit price increased to Rs 64.00.
Now only an idiot (a person with no ability to think) would think that NIT (Pakistan largest mutual fund) that was worth Rs 64.00 at one time in 2008 was bubble price when dividend it paid was Rs 6.50. Anyhow, because of these crooks and thugs in power, even when dividend was Rs 6.50 paid in July 2008, NIT unit price gone down to Rs 33 and expected to open at Rs 25 when stock market would start doing normal business.
This is their record of dividend per unit and NIT unit price: ...
2002: Rs 1.20 dividend ($0.02) ... NIT unit in June Rs 10.89
2003: Rs 1.75 dividend ($0.035) ... NIT unit in June Rs 20.58
2004: Rs 2.55 dividend ($0.042) ... NIT unit in June Rs 30.53
2005: Rs 3.30 dividend ($0.055) ... NIT unit in June Rs 38.12
2006: Rs 5.80 dividend ($0.093) ... NIT unit in June Rs 43.07
2007: Rs 6.20 dividend ($0.103) ... NIT unit in June Rs 62.38
2008: Rs 6.50 dividend ($0.109) ... NIT unit in June Rs 56.18
Now, does it look to you that price of NIT was bubble price? Since NIT has shares in almost 90 percent of KSE companies, one can say that their return (dividend and price) fairly represents stock market and that if prices of shares were bubble or real.
I would leave rest of your post without going through it, as I know that with mind of propagandist or one who may have set mind of 'may na manu', one cannot explain anything :) Anyhow, if you want to talk about any specifics, please be free to ask for explanation.
