Financial Storm

The financial storm has arrived in great fashion. It shook the world with tenacity that it spared no one that came against its tide. On September 2008 the most shocking news came and was heard around the globe. Lehman Brothers, a company that has been in existence for more than a hundred years has declared bankruptcy. This investment bank has been ranked 4th biggest in the United States was rocked by the financial storm and was never able to recover. AIG also announced that it will be selling some assets to pay its ballooning debts causing panic among its investors. Merrill Lynch was rescued and sold to the Bank of America. The major banks in Europe have signaled that they are also in trouble and Iceland nearly went into bankruptcy. How did this happen? Will this global phenomenon affect the Philippines? How can we as ordinary worker survive this storm?



An initial study shows that the primary reason for the financial bubble can be attributed to the relaxed banking system of the US and the UK. The current policies of easy credit (1 % US Fed rates) and the commercial banks (Zero down payments) policies are encouraging sub prime borrowers (minimum wage earners) to borrow money and invest on sub urban homes on the premise that home prices will forever increase. Home ownership has been always the dream of the American middle class families. It has been part of the becoming “rich” dream together with a bad financial management concept. Americans are considered to be the world’s biggest consumer of cheap products making China its biggest supplier of cheap goods.


The Philippines is a small country, it is considered to have a stiff regulations on its banking and financial system. Its investors are more cautious due to the erratic situation in the west. Liquidity and Solvency should be manageable for as long as Filipinos continue to Trust the banking system to function normally. The asset of the Philippines is the contribution of OFW’s which help sustain the dollar fund strain. A fearful situation would be a trade cut offs of our trade partner countries that will cause mass lay off of workers on our side.


For the ordinary workers the best thing to do is to control spending and save money as of the moment. The storm has just begun and we don’t know what lies ahead. Our country depends on the financial policies of the west to survive. We must be careful on spending our cash and think a lot of times before buying something we don’t need.