How do you think the Economic Crisis will affect the Phils?

[gearhead]

Hello. Just a question from one not as versed as our financial experts out there regarding the issues on the US economy which is becoming a global concern.

There is talk about preparing for a Global Depression. Were we affected by the Great Depression before? How will we be hit this time? What would the suggestions be for the still employed Juna dela Cruz to be best be able to ride it out. Of course belt tightening will be necessary. But any other advice?

[tidus1203]

People reliant into exports to the US and Western Europe will surely suffer and job losses can happen in that sector. People who rely on domestic consumption might be spared although everyone will experience little difficulties as people feel they are not as wealthy and cut back on spending. Our banks looks like they have very small exposure to these US mortgage paper so that is encouraging. Economic slowdown is ok, I know some people will get hurt but after a boom there should be a bust. Preventing a bust is even worse in the long run. Just like having LBM, instead of releasing it you just keep taking Imodium just to delay it.

[uls]

First, hihina exports natin. the US is our largest export market. US and global economic slowdown = less exports

The govt already has data showing our exports are down. Our main dollar earner is OFW remittances.

Then our stock market. just look at our pathetic Wall Street-tracking stock market. Down, down, down.

So anyone or any fund that has money in stocks is taking losses.

Local mutual funds, local insurance companies, pension funds etc...

Then our financial institutions...

Local financial institutions who have money in foreign financial institutions are at risk of taking losses.

Has anyone noticed foreign financial institutions can just fail overnight?

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This year, we already feel the effects -- high fuel and food prices.

Our inflation rate is above 10%.

[gearhead]

Will people employed in the BPO industry suffer? Or would they generally be unaffected? What about people in multinational companies? What type of industries here will be most affected and have possible lay offs. Just to be better prepped. There is talk of detroit getting hit. Does that mean Ford Phils will be in danger? General Motors? Airlines?

What will it mean for the employees of companies? Any advice for the everydayman/woman? What can a normal person do to ride the storm? What will you do?

How will imports be affected? Will we have to take in more China made products.

Am just asking on behalf of the people who are not too familiar about a crunch such as this.

[uls]

BPO -- depends on the US companies who the local BPOs do business with.

If u own a call center, and the US company you do business with declares bankruptcy... well, lagot.

Just hope the US company who pays u stays in business.

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Multinationals -- depende sa sales nila dito. Basta kumikita ung local unit nila dito, no problem.

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Detroit is hit bad. It just got a $25B loan from the US govt.

Ung local Ford, GM, Chrysler... basta kumikita sila dito, no problem.

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Airlines -- Ang pumapatay sa airlines is fuel cost.

Looks like the local airlines are doing ok.

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Imports -- mas mahal. Peso-USD P47 something. the Bangko Sentral had to sell dollars today to defend the peso. It's that bad today.

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what can we ordinary people do?

umm... magtipid.

no unnecessary spending.

things are gonna be bad.

hang on.

[tidus1203]

Ay alam ko Washington Mutual yung customer service nila outsourced yan sa isang local call center dito.... While this might be Tsikot and what I will say may be booed upon, maybe buying high ticket items (ie cars) should be delayed unless you really have a strong financial backing that if you can easily buy it in cash and still have so much money left then I guess go ahead pero kung tipong you can only afford a 30% DP tapos more than 3 years na loan ay wag na better save money muna during this uncertainty.

[jeDi13]

Has anyone noticed foreign financial institutions can just fail overnight?

IMHO, it didn't happen overnight. It was just the day the the company quit in trying to survive. Bad corporate decisions and poor risk management everyday were just some that contributed to the company's crisis and eventually its bankruptcy.

[uls]

^^

yes i know they made bad decisions and they had it coming...

i just used the term "overnight" to signify things can happen fast...

Like Lehman's bankruptcy and AIG's near bankruptcy.

Everyone knew Lehman was next after Bear Stearns.

But it took 6 months for Lehman to die.

Even if there was a lot of talk that Lehman would fail, many were still surprised by Lehman's failure.

Up to the last minute, there were still companies doing business with Lehman.

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AIG...

i knew AIG was in trouble when i read that AIG sold bond insurance... that was way before it got bailed out.

Things happened so fast...

I remember we were just posting stuff in the AIG thread here in tsikot...

everything was fine, AIG was just having liquidity problems... no news that AIG was near bankruptcy...

then in the afternoon, the ratings agencies started downgrading AIG...

Then that night, things got really bad for AIG... bailout or bankruptcy na ang pinag uusapan...

the following day, AIG got bailed out.

Though we can't call that an overnight thing...

AIG was in trouble already for some time...

But when ur following that stuff so closely, it's amazing...

one day AIG was sort of ok, the next day AIG was sort of different na...

hehe

[tidus1203]

Sometimes the stock market or the stock price is a good indicator of a company's health. Although AIG and Lehman are quietly rowing along pero behinds the scenes they have problems their stock price just continues to go down and down as months passed. Kaya I am a true believer of the markets, the markets does not lie because when it comes to people fear and greed no one lies.

[gearhead]

So advice would be to stay as liquid as possible? If so what mix of currencies. Obviously need pesos for day to day spending. Would it even be wise to keep other currencies tucked away or should one just focus on day to day?

What financial tools are viable? Should one be wary of funds? People selling insurance? College plans? Should it just be cash in bank with some in a TD that rolls over easy in case?

Is it a bad time to bet a house on a bank loan? How will real estate fare? Wil it suffer here?

We have to imagine different scenarios for the many out there.

[gearhead]

Will real estate here suffer? I see a lot of condos being made. They say it is for the overseas Pinoys too who make up a chunk of the buying market. They may be affected. Also isnt it speculation fueled too? Will there be a drop in real estate prices? Did it during the Asian crisis?

What is the outlook?

[Bogeyman]

Will real estate here suffer? I see a lot of condos being made. They say it is for the overseas Pinoys too who make up a chunk of the buying market. They may be affected. Also isnt it speculation fueled too? Will there be a drop in real estate prices? Did it during the Asian crisis?

What is the outlook?

Banks here are pretty cautious when it comes to lending and protecting themselves against defaults, which supposedly allows them to be strong even as the US is experiencing the subprime crisis. They say this was a result of the lessons learned during the financial crisis of the 90s.

Financial experts also claim that because there's a huge housing backlog in the Philippines, real estate here will continue to boom, especially as the BPO industry continues to have a strong appetite for property developments.

[tidus1203]

Bottomline, Don't spend money beyond what you can chew. The Americans learned it the hard way buying things they can't afford with money that they don't have...

[CVT]

Financial experts also claim that because there's a huge housing backlog in the Philippines, real estate here will continue to boom, especially as the BPO industry continues to have a strong appetite for property developments.

Iyan nga ang masaklap, IMO. Real estate prices are rising faster than what the locals can afford, as the former is mainly driven by outside factors, not by internal capacity...

It is a good thing that there are still Filipinos who value savings vs. loan. But, in the face of unaffordable housing or car prices for example, they're forced into borrowing money...

6808:frenchyf1: