They have been hogging the limelight for the past few days. It really makes you worry. Not that worrying helps.
Maybe worrying helps if you are the Federal Reserve Chairman or the Secretary of Treasury of United States of America :- )
Some "worry facts" from CNN: US dollar reserves now is less than the dollar reserves of Poland and of Brazil. It also does not help that what we have now is something similar during the Great Depression of late 1920s to early 1930s.
Hmmm, what does that mean to me?
Well, the economic system that we all subscribe to and embrace centers on the ability of people to consume. If we can not consume anymore (out of fear or worry, like what we have now) or we are stopped to consume (like in a case of a terrorist attack), then we are into trouble. Recessions and depressions abound.
This is a Tondo boy's take on this matter. The technical stuff maybe a bit off but the soul will be spot on. So here goes,
Someone needed the money to build something. They needed a loan, a mortgage. The agencies that needed to decide who suppose to get these financial services (e.g. loans and mortgages) relaxed their controls a bit. They saw something in the economy that justifies relaxing those controls. (Mind you these are "really smart people" who listened to their "bias" and who got found out just now!)
Thus, people who were supposed to be disapproved for loans got approved. Thus, the seed for a crisis was planted.
And when the world view of those "really smart people" came crushing down because it is really a "groinial bias", the system that came "alive" from that bias obviously came crushing down, too. Thus, the headline news. It also does not help that the system we are talking about grew that big and that wide, thanks to globalization.
Common wealth, common poverty ;- )
Actually, 1st world wealth, global trouble :- )
Now, the Fed and US Treasury are busy in the ICU trying to stabilize the "patient", the global economy. Doing a Dr. House on us. In monetary terms, around $700 billion. But do not be overwhelmed by the number. In the long run, the US will make money out of this "blip". That's the beauty of our present day economics.
They, the US Treasury and Federal Reserve, need to stabilize us, the whole world, because if they are in the ICU longer, the whole world starts to not consume thus we spiral into the dreaded economic comma. They need to stabilize us so that we can consume so that the global economy continues to roll and the benefits distributed. Equitably, hopefully.
And what has this got to do with Filipinos? Well, the United States of America is really the primary engine of the whole economic system. And the USA is the major trading partner of the Philippines. Most of our exports find its way to US. If that engine bogs down, the US economy, longer than it should be, then our economy also goes into the emergency room, operating room or even the ICU. If the US is in trouble, Europe will be in trouble. Japan will also be in trouble as well as India and China. Why? Because the US is the major trading partner of the whole world :- )
But here's the silver-lining on all of these, the prices of oil will go down because right now the number one consumer of oil, that's the US, does not have the appetite for it. As simple economics states, when supply remains constant and demand decreases, prices goes down. Thus, the Philippine transport sector should applaud this Lehman-AIG-Merrill Lynch news. They will now have more money on their pockets, thus a Merrier Christmas to them! :- )
My point, not all bad news is bad news. It could be bad news for some but it good also be good news for some. Think it through. Do not ever take what the talking heads say as fact. Think. Gokongwei started to build his empire during World War II :- )
And times like these, makes the jobs of teachers easier. Students are suddenly made aware of something other than texts, facebook accounts, multiply and friendster. Something like, the world economy and how it affects our lives.
Lastly, I love what a CNN anchorwoman ask the writer of Rogue Economics, "Can we regulate greed?"
Greed is good. It is good because it is logical.
Love of money is the root of all evil.
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