Overnight, oil prices lost 10% to settle back well below the psychological $100 a barrel benchmark. I was about to admonish not to open the champagne bottles when the prices clawed back above $100, but I was overtaken by events in the last few hours.
At Wall Street, it was a massacre worse than any ethnic cleansing or pogrom. The Dow Jones Industrial Index--the most widely followed financial index globally--tumbled a record-breaking 777 points.
The immediate cause was the rejection by the U.S. House of Representatives of the $700 billion bailout of the American financial sector. Stalwart Democrats and dissident Republicans combine to bury what ought to be the biggest bailout plan ever hatched since a similar crisis in the 1930s.
The legislators simply realized that their government cannot afford to foot the bill. And why should the government intervene on a massive scale at the expense of the taxpayers' money failing private financial institutions?
The specter of a financial meltdown is staring at every one's face. But the price to pay was simply too much, the legislators decided.
The financial tremors have already been felt in Europe. Fortis, the biggest European bank is being resuscitated by three countries to the tune of 11.2 billion euros. Mid-sized UK bank Bradford and Bingley is being nationalized by its government while pieces of it are offered to outside investors.
Back home our leaders are putting up a sham face, saying that our financial institutions are intact and robust, which of course rings hollow in the face of global connectivity. Our banks' capitalization is puny compared to even Singapore's or Malaysia's banks.
We are not Mali, Albania or Tuvalu which are almost isolated from the world.
An hour ago, a supposedly analyst from a brokerage house proclaimed in effect, that the local bourse won't be affected much since our local banks do not have significant exposures to AIG, Lehman Brothers, Merrill Lynch or Fortis. he must have forgotten that foreign funds still dominate the stock market, and any asset devaluation globally would hit us hard.
How naive can we get?
While Philamlife may have mostly local clients, still it is a unit of AIG. When the parents tremble, it is the minor siblings which are first to go. AIG is reported to be in negotiations for buyers of its local unit.
Remember the electricity generator Mirant Philippines? The local unit kept on harping that their operations won't be affected by the troubles of its parent. Weeks later, all of Mirant's assets were put up for sale.
We will be sucked into the eddies of a financial meltdown. Much more than our resilient neighbors.
When the 1997 financial crisis unravelled starting with the deflation of the Thai baht, our leaders were then singing the same tune that we have better fundamentals. We ended up being one of the worst hit.
We don't want to appear a doomsayer. But it is better to realize that a storm is approaching.
At least we can start anchoring our houses and filling up the sandbags. It these are not enough we can start packing ready to move to high ground.
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