By Mon Casiple
In the light of the failure to rekindle market confidence of the passage of the US law authorizing up to US$700 billion bail-out and the deepening global financial crisis, the recession scenario cannot anymore be brushed aside and it may arrive sooner than later. The Iceland bankruptcy, the EU bank bail-outs, plunging world stock markets, US job lay-offs, and continuing tight credit regimes all point to the increasingly precarious global financial system. It is a matter of time that the real economy–the daily economy of societies and peoples–will be affected. We are looking at the opening maw of the abyss called global recession.
The Philippine authorities desperately tries to draw attention from this grim scenario with endless assurances that we are not affected. It would have been better if they started telling the people the truth and prepare them for the hardships ahead. It is not fair nor prudent to mask the reality–when it hits with no preparations, psychological or otherwise, it will simply swamp those unprepared to survive the economic blows.
The real economy and the “virtual” economy of the financial system, the economies and financial systems of almost all countries, and the global villages that we have become under globalization all cannot be separated nor isolated from each other–we are all connected and intertwined. It is simply not true that the Philippine economy or financial system can be protected or distanced from the recession.
How may Filipinos be affected by recession? Let me count the ways: 1) you may lose your job in the global job market, whether it be in the call center here or your overseas job; 2) you may lose the foreign market for your goods; 3) you may lose your credit card, your insurance plan, and/or your bank account; 4) you may not be able to get loans or credit for your business or other needs; and 5) your foreign investor partner may leave and saddle you with the remaining liabilities.
A second round where the local economy contracts in sympathy will do the following to you: 1) your business may fold up with the shrinkage or disappearing foreign market, lack of capital, or bad debts; 2) you may not have the necessary reserves to weather the slowing or stopping of the business cycle and consequent loss of earnings and profits ; 3) you may lose your job; 4) your peso may not be worth much as exchange rates deteriorates; and 5) you may not have the money at all to buy basic necessities.
Time to plant camote–the old saying goes. Prepare for days of survival ahead. GMA and rosy drumbeaters be damned!
Whatever preparations there are to be made, governments can only do so much. This crisis is just about to exit its preliminary stage that is why many of the developing economies are not yet experiencing real significant impact as what the major developed economies are already beginning to experience.
Developing economies (like our Philippine economy) are somewhere near the lower portion of the world economic structure. The scenario can be likened to an iceberg. The upper portion of the iceberg are the world's major economies, the lower portion that is submerged comprises the minor economies. When the globe warms up some degrees higher than normal, the top portion of the iceberg melts first because they are most exposed to the warming surface of the ocean. At preliminary stage, the melting process starts slow and almost undetected. It continues for some length of time until the process is recognizable. As the melting process progresses to the secondary stage, there is a point where it suddenly accelerates. The iceberg divides into multiple smaller sizes then later on, at the final stage, breaks down into even smaller chunks and dissolves within a short period of time.
Will this current "meltdown" continue all the way to the final stage, or will it stop at some point ahead? It will only stop when its purposes are completed. Plant camote if we must because it is not for everyone to know all the reasons for the season.
Necessary difficulties are not just simply allowed to happen by the All-knowing Power for no unnecessary reason. Operating in the principle of "hitting many birds with just one stone", there are deeper objectives that this particular "difficulty" is meant to accomplish which are not obvious. Just as the draining of a pond exposes submerged objects, also in like manner, this crises will "quietly reveal" things but only to those who are called and prepaired to do their tasks so that they will know what to do when their time comes.