When Manny Pacquiao recently cut short his boxing training in the US to reportedly do a quick check on his deposits and investments held by his banks here in the Philippines, there was no denying that the waves of the toxic US contagion had washed upon our shores.
Now, not only are insurance plan holders and investors of Philamlife quaking in their shoes, other Filipinos who have their hard-earned savings or retirement pay in any bank or investment instrument are also starting to ask THE big question.
Philamlife, the local representative of the financially beleaguered American International Group, Inc. (AIG), has been quick to issue statements detailing its financial strength while at the same time stating its arms-length business relationship with its mother firm.
Even the Insurance Commission has joined in by coming out with its own assurance to the public, even to the extent of guaranteeing that they will make sure every policy in force “will be served.”
AIG, a blue chip company based in the US with operations in over 130 countries, was just recently bailed out by the Federal Reserves after it failed to raise quick cash ($40 billion) to cover for losses, largely in the US home mortgage sector.
The AIG failure is so much like that of our College Assurance Plan and other failed educational insurance schemes, only of a magnitude far wider in reach.
Assurances, however, no matter how strongly worded or delivered, are no consolation when you find yourself crowding to get in a bank with a multitude of other depositors trying to withdraw their life savings.
We are certainly living in times of uncertainty, where most everybody is thinking of or actually rushing out to secure their money in investments more tangible – like property, or commodities like gold – or to just keep their cold, hard cash in their home safe.
So many questions
Actually, there are so many questions that need to be answered, and top of mind is: Where will this all end?
What started as simply bad guarantees on housing loans to high credit risk Americans some 15 months ago is now turning out to be a financial tsunami of sorts that is pillaging even the reputed pillars of exemplary sound and prudent business practice.
The big cracks started to show in March when Bear Stearns was bought by investment banker JPMorgan for a bargain price of $2 per share. Later in July, the US government stepped in to rescue the mortgage finance companies Fannie Mae and Freddie Mac.
This month, the world was caught by surprise when Lehman Brothers announced its bankruptcy. Bank of America was next reported to have taken over troubled Merrill Lynch; and the US central bank approved an $85-billion rescue package to keep AIG afloat.
Many are now saying that this financial crisis is worse than America’s Great Depression of 1929. In fact, the best evidence perhaps of the severity of the problem is the almost instantaneous response of central banks worldwide to pump billions of dollars into money markets to prevent the global financial system from seizing up.
As the US Congress continues to debate on whether they would let loose $700 billion to supposedly stop the rampaging bleeding of its financial institutions, the latest being the closure of the Washington Mutual, known as the largest US savings bank, the whole world can only wait and hope the dam doesn’t burst.
How bad?
Economists seem to be at a loss for words on how to read the drama that is unfolding in the world. No one knows for sure where all of this is leading to. No one can say how long this period of uncertainty will last. These are extraordinary times, indeed.
As the US economy continues to slow down, there will be more pain – and this could come as job cuts that would likely affect our OFW numbers, harsh pay slashes at a time of rising prices of basic commodities, and a growing numbers of rural families going hungry.
But this is jumping the gun. So while waiting for the worst to blow over, the best recourse would be to keep your house in order. No doubt, our government will play a big role in keeping any pain to a minimum.
The local banking system still seems to be unperturbed despite the reported exposure of Banco de Oro and Metro Bank. But again, no one can give a categorical assurance if there will be a next financial implosion or where or when this would happen. Will the Philippines get hit? We may be lucky to surface relatively unscathed, as when the Asian contagion that rocked Thailand’s real estate property sector in 1998.
In the meantime, our best advice is to be extra cautious when dealing with your money particularly on schemes that promise big quick returns. And be very prudent with your spending. We may indeed be in for a mega-challenging time.
Collegiate Champions League update
Ateneo Blue Eagles, De La Salle Green Archers, San Beda Red Lions and the Jose Rizal Heavy Bombers have formalized their entry into the FilOil Flying V “Sweet 16” Final Challenge of the SMART-PLDT-Champions League 2008 Philippine Collegiate Championship games.
Ateneo, the UAAP champion, is seeded in Group X and De La Salle is in Group Y. San Beda and Jose Rizal U are disputing the NCAA crown, with the winner to join Group Y with De La Salle while the runner-up joins Ateneo in Group X.
The champion teams of CUSA, NAASCU, CESAFI and NCRAA/UCAA are also seeded, and together with the eight winning teams from the zonal games will complete the elite “Sweet 16”. Each group will have eight teams and the top team of the group will dispute the Philippine Collegiate title.
At stake in the Philippine Collegiate Championship games are grants for scholarship and athletic equipment worth over a million pesos. The Champion team will also represent the Philippine in the Universiade games in Serbia.
More regional championship games are scheduled in the coming weeks. This is the second phase in the search for qualifiers to the zonal games and to the “Sweet 16” Finals. The following are the schedules and venues: Region 9 (Zamboanga Provinces), Oct. 4 to 6 at the Zamboanga City Coliseum; Region 1 (Ilocos/Baguio), Oct. 6 to 7 at the University of Northern Philippines gym, Vigan City; Region 2 (Pangasinan/Pampanga), Oct. 9 to 10 at the Divine World Gym, Dagupan City; and Region 8 (Davao/GenSan), Oct. 9 to 10 at Gaisano Gym, Davao City.
For more details about the biggest collegiate basketball event for the year sponsored by SMART and PLDT, visit the official website, www.CollegiateChampionsLeague.net
Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.