Hope

The SWS reports that 92% of Filipinos enter the new year with hope rather than fear. This piece addresses itself to the 8%.

You are right to be fearful. 2009, from every available indication, will be a difficult year. The toxic fallout from the global economic crisis of 2008 will be felt in its full gravity over the next few months.

The global economy, over the past few months, has begun to resemble a treacherous minefield. We do not really know what we will trip over in the next turn.

The financial meltdown we experienced was most unjust. It penalized those who saved and invested — in a word, those who provided the fuel on which growth runs. By their frugality and self-discipline, they raised the capital that enabled economies to be capitalized.

Investors might have become a highly caricatured word, used to refer to the tycoons and the taipans. That is not right. 99% of investors are small people, like you and me, who put aside part of their earnings for a rainy day, who invest them in stocks and bonds, in hedge funds and trust accounts, in retirement plans and insurance cover. All those who did this saw their savings melted down in varying degrees the past year. No one emerges from a financial plague completely whole.

But that does not invalidate the need to save and invest. In this modern financial world, the larger the base of savers and investors, the more prosperous a country will be. Saving and investing are eminently patriotic acts.

The next few months could be perilous ones.

The deep recession now sweeping the most advanced economies will cause a spike in unemployment. That could force many of our migrant workers off their jobs.

A sharp rise in unemployment in the advanced economies could also produce unexpected economic aftershocks. For instance, we know that in countries like the US and Singapore, individual consumers have become highly leveraged. These consumers have piled up indebtedness to the credit card companies. A large wave of defaults in credit card payments could set off bankruptcies among finance companies heavily exposed to consumer loans.

The tremors created by a credit card crisis could bring us into a second-round crisis in the weakened global financial system. No one wants to imagine what that could do to a global economy already reeling in the midst of a severe recession.

Those with money invested in the stock markets have lost substantially the past few months. Nearly all the stock markets of the world have lost value running into the trillions of dollars. The Tokyo exchange, for instance, closed the year down 42%.

We do not expect quick recovery in the lost value of stocks — not until we see the end of the present recessionary episode. Millions of small investors — directly or indirectly exposed to the equities markets worldwide — will simply have to write down their investments. That in turn will reflect in a substantial drop in disposable incomes, which will, in turn, reflect in the viability of many retail companies. This is why we saw, in the last week of 2008, several large retail chains in the UK folding up one after the other.

Those who might avert layoff will often have to accept pay cuts. The once powerful United Auto Workers based in Detroit, for instance, have signaled readiness to accept pay cuts to improve the viability of the US auto industry. They have little choice: either pay cuts or lost jobs. That phenomenon of diminished pay will be replicated in many other industries and many other countries.

Life will simply be a bit harder this new year. All of us will just have to work harder to maintain the same quality of life.

Those who fear the new year might be harsh nurse sentiments that are well-founded.

Fear is good. It is the most basic of instincts. It primes us for the demands of survival. It causes us to be more alert for opportunities.

But the crucial line must be drawn between fear and despair. Fear inspires us to act. Despair cripples us.

We can be fearful but not desperate. It is one thing to be aware that circumstances will be direr and quite another thing to be psychologically immobilized by that awareness.

Things will be direr in the new year. That is the greater likelihood. And there is reason to be quite anxious.

If there is anything that should cause concern in that most recent SWS report, it is that so few Filipinos seem to be fearful of what the new year might bring and so many blissfully hopeful. The ratio among Filipinos of those who hope rather than fear is nearly twice that of respondents elsewhere, in countries as stable as Germany for instance.

Maybe that is because we, more than the others, are more fatalistic. Or maybe because we have endured too much and surmounted so many episodes of challenge. Or maybe because the harshest edges of the current global downturn has spared the Philippines so far.

We have not compounded the current downturn with self-inflicted political uncertainty as the Thais have. We are not so dependent on exports as the Japanese and the Chinese are. We have not had to endure terror as the Indians have only last month.

Because of that, we do not feel as imperiled as the others. And because of that, it is so much easier for us to welcome the new year more joyfully.