In the light of the failure to rekindle market confidence despite the passage of the US law authorizing up to US$700 billion bail-out, and in the light of the deepening global financial crisis, the recession scenario cannot anymore be brushed aside. 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 stocks may plummet in value and 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 disappearance of your 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!