Spend! Spend! Spend!

"Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990." (Click here for the rest.)

I think we're in too much of a panic over this economic crisis. Things won't get worse than they already are. Our economy has been in a rut for the longest time, so it will be more of the same. How can you believe that Filipinos are so hard up when they're still at the mall eating, watching movies and shopping? Heck, even our househelp who comes in three times a week has bought a new TV recently! How? She sells Avon products. And according to her, people are still buying the products.

Unless you are in the export business, or in garments, or semi-conductors, you will still have a job tomorrow. But of course, you won't get a raise this year. Let me rephrase that...there are some exporters who will fold up this year, but some will keep growing. I've already interviewed two separate exporters who are projecting more than 10% growth in 2009. (Will post their stories soon.)

So if you have enough financial resources, go ahead and spend. Don't be shy if you are among the privileged class. But instead of buying foreign brands, may I encourage you to go local? You will help keep the economy afloat. Consider it your patriotic duty.

The audacity of hope*

THE second day of the New Year and I’m in a virtual coma. Too much food, too much to drink, and too many yappy relatives. You can understand why my brain is half-functioning today.

I could bore you with the details of my family’s Christmas Eve celebration (basically, it was eating, opening gifts, eating, drinking, more opening of presents, eating again, then sleep, only to be repeated the next day), or I could make up my New Year’s resolutions (stop eating pork, go to yoga class three times a week, walk more, read more books, less computer time, etc. etc. etc.). But what would that accomplish?

Mercifully, I read a news story about Filipinos feeling more hopeful for 2009. According to the latest survey from the Social Weather Stations, 92 percent of its respondents said they would be welcoming the New Year “with hope”, while only 8 percent said they would be entering 2009 “with fear.” Of course, we’re only talking about 1,500 respondents here, mostly living in Metro Manila, thus hardly a representative sampling of us 76 million Filipinos.

Still, I tend to believe the results. Sure the entire economy is pretty much in the dumps, no thanks to the presidentita, and her continued machinations to extend her term beyond 2010. But Filipinos are very much the contrapelo in any situation; even in tragedy, we smile our sadness away. Beaten down by economic and political burdens, we still crack jokes and laugh. When the stacks are all against us, we will try to find some way to be more optimistic.



I suppose we have no choice; we need to trust that our desperate lives or any negative situation will turn around, or we would all fling ourselves off the San Juanico bridge. The alternative is just too depressing to even think about.

Being mostly Roman Catholics and believing in some Higher Power who listens to our prayers and pleas for succor and comfort also help us banish whatever gloom threatens to engulf our being, especially during the critical days of Christmas. I know for a fact that many people who normally don’t go to Sunday Mass usually go to Church for midnight Christmas Eve Mass, ardently praying for more blessings in the New Year. (“Lord, I need a better job. Lord, I need more money to be able to buy food for the kids. Lord, I need you to inspire my son to study harder. Lord, I need you to make my husband stop fooling around. Etc. etc. etc.”)

And then my cynicism surfaces and I think, maybe it’s because we’re so used to being at the bottom of the barrel, that we think there is no way but to reach up and out. Consider rich countries like Germany, whose own “hope” survey results were also published by the SWS on its web site. Compared to most Filipinos, Germans seem to be extremely fearful of their future. Every year from 2001 to 2007, their survey showed 50 percent or less of German citizens entering a new year with hope. (There were no results yet for 2008 entering 2009.) In contrast, Filipinos were very much above 80 percent on the “hope” meter every same year.

If you’re used to being on top, being rich, and powerful, and then you lose all your money because of a mistaken investment, how hopeful would you feel about the New Year? Already, there have been reports of a couple of suicides from the sub-prime mortgage crisis in the U.S. and the Bernie Madoff ponzi scheme.

Perhaps it is all a matter of trying to readjust one’s attitude as well, and finding out one’s priorities. If it’s money that moves you, having it will give you a perpetual high and makes you want more. Losing it, will push you off the edge. But you and I know (though we do sometimes forget especially when confronted by the latest Prada bag in the shop window) that there are more important things in life than money – like family, moral values, and spirituality.

So whatever ill or mean thing which may have happened to us in 2008, or no matter how disgusted we are with how our country has plummeted to the dark abyss of nothingness, we’re still here, alive. We have our good health, a roof over our heads, and are still able to eat three square meals a day.

Personally, I felt extremely blessed that during Christmas, my entire family was together despite earlier events in the year pointing to what could have been a tragic disunity amongst us. And I prayed hard every day that all the hurts and pain amongst the family members would be healed. With that prayer answered, how can I not feel anything but even more hopeful of what the New Year would bring? How audacious is that?

Most of you readers also realize that like me, our families are still better off financially than 70 percent of our kababayan, so how dare we be depressed or sad or fearful for 2009? We should in fact give thanks that He has not forgotten us, and that even though we sometimes think we don’t deserve it, we continue to get the good stuff from Him.

Of course, in the same breath, we should maybe pray some more for those less fortunate than us – like those who were not able to be with their families last Christmas, for our kababayan abroad who have lost their jobs because of this global economic crisis, and especially for those who are in poor health, that their situation will turn around in the New Year.

I don’t mean to sound preachy, but really, we have so many things to be thankful for. List ‘em down. 2008 may have been awful year for a number of us, but hey, we’re still standing! Who was it who said: “What does not kill us makes us stronger”?

And I firmly believe that 2009 will turn out just splendid. For one, it’s a year before the next presidential elections, and we have the power to change our country’s direction. So that is something to look forward to. (Register to vote people!)

So in the same joyous spirit and ebullient words of a good buddy of mine, I wish you all a Happy New Year. Let’s rock and roll, baby!

(*With apologies to the U.S. president-elect. Photo from www.5pie.net. Btw, this piece would have been my column for today in BusinessMirror, but someone decided to close shop earlier than usual. That's the New Year for you. Something Like Life is usually published every Friday in the BusinessMirror, unless someone throws a fit. As you can very tell, "stop being bitchy" isn't part of my New Year's resolutions.)

No stopping Christmas

Something Like Life
Dec. 12, 2008

I finally sat down last Tuesday and started to wrap the gifts I would be giving to close family and friends this Christmas. As many of you probably know, I finished most of my Christmas shopping a long time ago, organized person that I am. But I never really found the initiative to actually wrap them until a couple of days ago. In the past, my gifts would be all wrapped as soon as December 1 kicked in. This year I just didn’t feel as excited as in previous years.

Maybe it’s because of all this talk of the global economic crisis. I can’t help but be fearful of what next year would bring. While the Bangko Sentral and the local banks continue to reassure us of the soundness of the banking system, small savers like me can’t help but still feel a bit unsure.

So I’ve postponed some necessary repair work for the house in favor of waiting it out next year. We just might need the extra cash next year. Being a small country, the Philippines, no matter how fundamentally sound our government economic managers would like us to believe it to be, will be affected by the turmoil in the bigger economies like the United States. If Americans stop buying our goods, a lot of people here may find themselves out of work. (The rest of my column in BusinessMirror. Photo from www.lumesoft.com)

Marc Faber on the global economic meltdown

DR. Marc Faber of Marc Faber Ltd,. has been a favorite guest on many business shows on cable TV because of his often shoot-from-the-hip comments and contrarian investment advice. He was in Manila last Thursday as keynote speaker of the 8th annual Asia Pacific Regional Investment Conference which I attended. His often tongue-in-cheek humor about the global crisis sent many conference tittering. It was of course, pure entertainment. Faber also publishes a regular newsletter called the Gloom, Boom, Doom report available on the web.

Here are a few choice quotes from Dr. Faber regarding the global sub-prime credit meltdown:

WHO TO BLAME: "The Federal Reserve's highly expansionary monetary policy in 2001 to 2007 led to strong money supply growth and storng credit growth.... 70% went to housing and real estate investment. Home prices rose steadily and went way above the trend."

THE DOMINO EFFECT: "Regardless of policies followed by the U.S. government and its agencies, the consumer is in recession and the recession will deepen. Trade and current account deficits will shrink further and diminish international liquidity. The shrinkage of global liquidity is bad for asset prices, including commodities. Also, deleveraging is occurring among financial intermediaries. This is extremely negative for an economy addicted to credit growth. We had an unprecedented global economic boom. A global bust is likely to happen."

ON THE $700-B BAILOUT PACKAGE: "If (Federal Reserve chair Ben) Bernanke wants, he will print money. You just throw money in system. Buy up the bond market and real estate mortgages. You create inflation....The bailout package won't address the real problem, which is too much debt. The debt bubble has already burst."

ON THE U.S. RECESSION: "A U.S recession is not bad. Americans will eat 5% less, obesity goes down."

THE IMPACT ON ASIA: "Where it hurts, will be the people who produce for the U.S. economy (Asia).... Decoupling will not likely to occur. There is a correlation in asset markets. If the S&P drops, most markets will go down. If S&P is up, markets are up. If the U.S. goes into a recession, China and India's growth will probably slow down to 3%. But coming from a fast growth to a slowdown, it will feel like a recession [in these countries]."

WHY ASIAN BANKS ARE BETTER: "Asian banks are in much better shape than U.S. banks. I suspect this is because most Asian bankers are just too stupid to understand structured products. Compared to U.S. banks, Asian banks are rock solid. Even Philippine banks, because they've invested domestically."

IMPACT ON THE PHILIPPINES: “Only a Filipino will believe that the Philippines will be immune from a global slump. Of course it will affect the Philippine economy as already reflected in the decline in share prices already. The Philippine market has been down 60% from its peak in '97. It's not terribly expensive. But before a new bull market emerges, a lot of base building will happen."

WHERE TO INVEST:

• Real Estate: In resource rich emerging countries
Avoid real estate in financial centres

• Healthcare: Pharmaceutical, hospital management companies

• Local Brands: May displace some international brands

• Commodities: Volatile, but uptrend intact. Corrections of 50% are common.
Caution about industrial commodities is warranted

• Tourism: Hotels, casinos, airports, beach resorts. Potential problem is oversupply.

• Financial Services: Banks, insurance companies, brokers in emerging economies

• Infrastructure: Bottlenecks everywhere. Potential problem could be cancellations

• Plantations and Farmland: Indonesia, Malaysia, Latin America, Ukraine

• Japan: Very depressed, banks look interesting

• New Regions: Cambodia, Laos, Myanmar, Mongolia

• Africa as a play on Asia

• Gold and Silver

(Click here for another story from the investment conference.)