Wall Street Dilemma

I usually sleep at around 1am and the last thing I normally do before I pray and sleep is watch CNN, Lifestyle Network and Good Morning America. On September 15, while watching the frantic news about the collapse of the 158 year-old Lehman Brothers in the world’s biggest ever bankruptcy story, Merrill Lynch having sold itself to Bank of America, and the loomed insurance giant AIG, I immediately checked out the website of Sun Life Financial and googled its status. The funny thing is on the same day at around 11:05 am, republican presidentiable John McCain delivered a speech mentioning that the US Economy is strong. After an hour, the news showed Lehman Brothers employees packing up. While an extraordinary distraught series of events is happening, I thought in the first place that it is going to be a domino effect. The only question would be if all the local companies who invested in Lehman will be transparent and if the Philippine government will not cover up the news to protect the reputation of the local involvement and to prevent the disrupting behavior of the bank depositors.

I signed up again and opened a new account and bought bonds with Sun Life last month while having been a living testimony of its reliability. It is one of the better dispensers to rest your hard earned money. I worried a little (not because of a very little investment in Sun Life…but because of the position of our multinational clients who rely on the regions’ decisions) and thought of its effect to our country. I continued watching ANC to monitor the local business news until after 2 days when BDO, Metrobank, and Sun Life Financial announced that they invested in Lehman. The news says that Philippines is not much affected with the Wall Street’s rippling depression after the company executives and local government officials guarantee Filipino people not to worry as such companies’ investments are very small compared to their equity and reserves.

Incidentally, I caught up a frame while scanning our video taken in New York last August. Our tour guide was pointing to the location where The Great Depression struck Wall Street and stock market crashed on October 27, 1929. The great depression, however, lasted for ten years. After a couple of years, WWII began.

Surely our government’s press release is true that bank depositors need not to worry because the local banks’ investment to Lehman Brothers will not tremble them. What if big investors withdraw their money out of these banks and insurance agencies? Press release may be, “local banks and insurance agencies slide down from the brink not because of the Wall Street crisis, but because of the diversification made by the investors and million-peso depositors”. Then the ordinary depositors will panic. So what will you do? Perhaps nothing, if you think that the interest and your average daily balance in the bank are negligible. Some may be talking to private bankers already. Some of us may be thinking how are our friends and relatives doing in California and other states. Some may be opening up new accounts in different banks. Others start investing in real estate instead of having their money sleep in banks. Buying a condo unit as a halfway house at the home of fashionable Manila may be a good option.

What matters now I think is to hold on and be smarter. You wouldn’t know if what happened in 1929-1939 will strike again and how it will affect our country. We had been tested with 1997 Asian financial crisis. It was the period when I would share my salaries to my employees to keep them work for me, motivate them, and had myself convinced that there is still future.

Some of us may not be experiencing the same as Americans do now. But I believe that staying humble and having a positive perspective in life will make us live better.