Financial Crisis: The Philippine Version

[jpdm]

The financial crisis that hit the US brought alot of negative effects in Europe especially Iceland, one of the worst hit.

In the Philippines, PGMA keeps on assuring Pinoys that we can weather this financial storm because our macroeconomic fundamentals are strong.

But What happen to the PSE recently sends chills to alot of investors and economists in the country...

plus, the weak performance of BDO due to its exposure to Lehman...

Are we really ready (our financial system) to withstand this contagion and survive as what PGMA is saying?

Business Mirror
October 28, 2008

[SIZE=3]PSE Uses "Circuit Breaker" for First Time as Index Dips by over 10%
[/SIZE]
written by Honey Madrilejos-Reyes and Mia Gonzales

IT was a bloody Monday for the local stock market after the main Philippine Stock Exchange index (PSEi) shed off 239.66 points, or 12.2683 percent, to 1,713.83, the lowest close since September 20, 2004, wherein the benchmark index plunged to 1,702.21. Less than an hour before trading ended, or exactly at 11:23 a.m., the stock exchange automatically imposed a 15-minute trading halt following a 10-percent decline in the main index. Trading resumed at 11:38 a.m.
Monday somewhat marked a history for the PSE because it was the first time a trading halt was implemented to arrest the falling main index.



“The market swayed heavily down due to heavy foreign selling. This stems from the mandate to raise cash abroad and thereby liquidate global assets. With the heaviness still persisting, it may buckle further as fears usually cause markets to break support.




But PSE president Francis Lim remains optimistic of the sound macroeconomic fundamentals of the country.


“Our banking system is also healthy and the corporates are doing well. It’s just an effect of the contagion due to the financial crisis,” he said in an interview.



“The problem with panic selling is that investors are selling out of pure emotion, rather than based on fundamentals. Almost every market crash is a result of panic selling. Many stock exchanges utilize circuit breakers or trading halts to limit panic selling, to allow investors time to absorb information on why the selling is taking place, and to help restore normalcy to the market,” he explained.



Meanwhile, Malacañang on Monday sought to ease concerns over the suspension of trading and reiterated that the country is properly geared to weather a global financial crisis.



“It’s being addressed by our economic managers. The central bank is there. But we have to recognize the fact that these are local trends....But let’s not lose sight of the fact that our economic fundamentals are strong.”
Asked whether the incident at the PSE belied government statements that the Philippines is better prepared than others to face a a global financial crisis, Dureza said: “There is present volatility, not only in the Philippines. That’s more serious abroad and we are just responding to an international event.”

Dureza said the government has always said the global credit crunch would likely affect the Philippines, though it would not be as hard-hit as others.

[tidus1203]

The REAL ECONOMY will survive. Stock markets are just money flows, falling stock prices does not mean the SM of the world will just suddenly not do business anymore or the Jolibee's of the world will suddenly not do business.

[True Faith]

Yup this is definitely disturbing.

Just a few weeks back, press releases from Malacanang assured us that we are ready.

And yet, our PSE is suffering despite the seemingly good macro economic fundamentals of our country according to our economic managers..

[Gen. Miting]

ang tingin ko lang talaga dito sa mga financial crisis (whether asian or global or subprime o recession) terms na 'to was an invention by investors kung gusto nila mangdamay sa sad fate nila ngaun.

the common person will get affected, I agree. but in another light, you just have to go back to basics. pure hard work and perserverance, cut austerity and other taken for granted conveniences. lowering pride can also help, I believe.

[Gen. Miting]

Yup this is definitely disturbing.

Just a few weeks back, press releases from Malacanang assured us that we are ready.

And yet, our PSE is suffering despite the seemingly good macro economic fundamentals of our country according to our economic managers..

like i said earlier, this is perhaps another scheme by "pyramiding influenced" foreign investors that nobody is immune to this crisis. they feed on the hype, that's what they always do. and to make it realistic, they bluff pull-out their investments regardless if a country has no or has good economic fundamentals. they are feeding on the panic signals.

if we are really in trouble, we are going to see local banks going down.

it's all just bluff. i say let them pull-out their money. ang tanong ngaun hanggang sa'n sila makakatagal knowing that their money is just earning bank like interests in govt. bonds and other low-risk investments. yan ang fix nila eh make money make more money. takot lang nila patulugin pera nila in more than a month or so. para na din nila tinanim sa ilalim ng lupa ang pera pi-nullout nila.

as common citizens, we should not be swayed and affected by this kung hindi naman tayo affected directly, as in today na or at present na. and even if we're affected, what's to lose sanay naman tayo sa hirap or we are used to working for money. unlike them, they just want to make money work for them. malas lang nila, money is lazy nowadays

[CVT]

Yup,- investors are pulling out.... Consolidation......

6909:seehearspeak:

[jpdm]

Well, our BSP is now admitting that we are not immune.....

Another minus for PGMA and his economic team....

Manila Times
October 29, 2008

Global Financial Contagion Hits RP, says BSP
by Maricel Burgonio, reporter

THE Bangko Sentral ng Pilipinas (BSP) on Tuesday said the US financial crisis has spread to the country and other emerging markets, citing the slump of the peso and the local stock market.

“The recent movements in the financial markets reflect that the financial turmoil has indeed moved further away from its epicenter in [the] US and Europe and may be casting a wider net of contagion,” BSP Governor Amando Tetangco Jr. told reporters.
Tetangco said the Bangko Sentral is monitoring developments in the financial markets to temper any negative impact on the real economy.

[tidus1203]

Bakit sino bang immune? Even remote Iceland got hit. Even China is getting hit by all of this. No one is immune so stop feeling na hindi tayo tatamaan tapos pag tinamaan blame it on the government.

[Monseratto]

This is why it's called a GLOBAL Financial Crises. Everyone will sooner or later feel the pinch. When Wall Street sneezes, everyone catches a cold...

[jpdm]

Bakit sino bang immune? Even remote Iceland got hit. Even China is getting hit by all of this. No one is immune so stop feeling na hindi tayo tatamaan tapos pag tinamaan blame it on the government.

--well, who said that we are immune?

---who said we are definitely ready?

---who are those people who bought a full page ad in the Philippine Daily Inquirer that we can easily weather the crisis (read: an island of calm etc...stable immune) ....

--galing din naman sa gobyerno...

Anyway, you are right, we have to brace ourselves for this contagion....

[tidus1203]

Mga militante kasi laging asa sa gobyerno di marunong umasa sa sarili. I think what the government is saying is we will not see massive layoffs here. And wala nga naman so far... Only the stock markets got hit but its only the rich who gets hit anyway normnal folks don't own stocks.

[jpdm]

Mga militante kasi laging asa sa gobyerno di marunong umasa sa sarili. I think what the government is saying is we will not see massive layoffs here. And wala nga naman so far... Only the stock markets got hit but its only the rich who gets hit anyway normnal folks don't own stocks.

Yup not only militants but also those rich people who keeps on robbing our public coffers dry...

At least militante, barya barya..500 pesos, NFA rice, dole outs....

E yung mga hindi militante, mga mayayaman, nakabarong, naka SUV pa nga e ....mas malaki asa sa gobyerno...

...ZTE deal....

...Comelec's palpak na 1.2 billion peso computerization

...and other rigged contracts and government biddings

...large scale smuggling sa free ports...

....large scale technical smuggling using custom bonded warehouses or plain misdeclarations.... (with approval from corrupt BOC men)

....tax evasion and tax avoidance....

.....unauthorized used of public funds ( transport allowance, food allowance, travel allowance)

...100-200 million tongpats...

...6.9 million contigency fund sa pasyal nila sa Moscow...

...800 million fertilizer fund para sa kampanya....

...di ba...

...isipin mo kung yung bilyones na yun napunta sa real investments tulad ng infrastructure and security (equipments for our PNP to maintain peace and order and make the investment climate in the Philippines alot better)..

...di ba, e di mas matibay Pinas sa financial contagion na yan...

[tidus1203]

Well those are the government officials who are robbing the coffers and I am not for them too! But what can you do? Life goes on. Kaya wala na akong pakialam dyan as if naman may magagawa ka. I only care about how I can uplift myself and rather spend time on that rather than waste time on the government and other people.

[jpdm]

Well, this is OT sa kabilang thread, e di magdasal ako together with the bishops who are denouncing the large scale corruption in the philippines...


Anyway,

in the end, ang gobyerno takbuhan...

...lkatulad sa US.....

[jpdm]

Well those are the government officials who are robbing the coffers and I am not for them too! But what can you do? Life goes on. Kaya wala na akong pakialam dyan as if naman may magagawa ka. I only care about how I can uplift myself and rather spend time on that rather than waste time on the government and other people.

Will you not care about your love ones?Kapibahay?kaibigan? kapwa Pinoy?

Di ba dapat tulong tulong tayo as a nation to survive these contagion...

Paano kung may business ka, ang bumibili lang mga kapit bahay mo...dahil di mo tinulungan walang pera..paano pa sila bibili sa iyo?

[uls]

hehe

what they're doing isnt right (the corrupt govt people)

but that's their diskarte

they have something the poor, the powerless, the militants don't have

they have high positions in govt... that's their survival advantage...

They got to be in those positions by fighting their way to those positions.

They won elections... they bought elections... they cheated... whatever... they simply beat their opponents...

Whichever way you look at it, it's still Darwinian natural selection.

You can deny it all you want.

But the fact is, it is survival of the fittest out there.

It aint pretty

It's harsh, it's brutal

but that's the way of the world.

[jpdm]

hehe

what they're doing isnt right (the corrupt govt people)

but that's their diskarte

they have something the poor, the powerless, the militants don't have

they have high positions in govt... that's their survival advantage...

They got to be in those positions by fighting their way to those positions.

They won elections... they bought elections... they cheated... whatever... they simply beat their opponents...

Whichever way you look at it, it's still Darwinian natural selection.

You can deny it all you want.

But the fact is, it is survival of the fittest out there.

It aint pretty

It's harsh, it's brutal

but that's the way of the world.

So corruption and this financial contagion can be explain by your Darwinian Theory on Capitalism and Corruption....

[tidus1203]

Will you not care about your love ones?Kapibahay?kaibigan? kapwa Pinoy?

Di ba dapat tulong tulong tayo as a nation to survive these contagion...

Paano kung may business ka, ang bumibili lang mga kapit bahay mo...dahil di mo tinulungan walang pera..paano pa sila bibili sa iyo?

No I don't. I care about my love ones but only them. To hell with the guy on the street if he dies of hunger. People buy my products for my products but not because of me, so as long as my products are top notch people will buy. There will always be people who will have the money and it might not be my neighbor. I may sound cold, but the world is cold.

[uls]

So corruption and this financial contagion can be explain by your Darwinian Theory on Capitalism and Corruption.... Darwinian natural selection explains everything

Corruption:

Where can u steal the most money?

At the top. (president level)

How do get to the top?

You fight your way to the top.

sa 2010, ilan ang tatakbong presidente?

ilan ang magiging president?

hindi ba survival of the fittest yan?

[niky]

Ahem... seeing as we're veering off-topic... (and such topic of rich versus poor should be in another thread... and as to whether I'd pay revolutionary taxes or government taxes? Seeing as I benefit from neither? Hmmm... let me think about it... )

While I have often been outspoken in my criticism of PGMA's policies... the whole crisis thing can't be blamed on them... it really is a global catastrophe in the finance markets, and not something we are in a position to stop.

But it also exposes the fact that a lot of the gains touted by the administration weren't as big as they'd lead us to believe.

The fundamentals are also not as strong.

But still, I believe the Philippines can weather this storm... we already hit basement level in the 80's once... when we got hit with the massive debt the Marcoses left behind... then in the mid-90's with the Asian financial crisis... our position now is bad, but not as bad as those two previous times, and not categorically worse than it is for all the countries around us.

The current government could have minimized this by controlling currency. Let it float to a high level then allow that to encourage investors to come in... foreign businesses to set up shop locally and hire local labor.

There's something that was also exposed in the escalation of food costs that accompanied excessive fuel demand last year... the utter lack of spending on development for agriculture here in the Philippines.

On projects which would empower the regional poor... instead of patently expensive ones (ZTE) that would benefit only government contractors.

Oh... hell... thinking of those billions lost to kickbacks and useless projects... billions that we now don't have to shore up our economy... yeah... maybe it would make sense to get pissed at the government right now...