Adams Myth on the global financial meltdown: Bad news, good news
The holidays are over, everyone’s gone back to work, sobriety is kicking in. It’s time to ask the question: Should we be having nervous breakdowns over the global financial meltdown?
I put the question to the esteemed economist Adams Myth. His treatise The Wealth Of This Nation, serialized in Flip magazine, appears in its entirety in The Flip Reader. It’s a must-read for people who want to know why the Philippine economy is the way it is.
Adams Myth’s day job
Adams Myth’s night job
Q: How will the financial meltdown affect middle class working Filipinos and how bad will it get?
A: There are first and second-round effects of the crisis. The first, the collapse in asset prices, has already happened and affects only owners of disposable assets (e.g., stocks, bonds, second homes)—in the Philippines, typically no more than 1% of the population. Hence, the ambivalence of most towards the unprecedented tremors in the stock, commodity and currency markets we saw last year.
The second-round effect, economic slowdown, will occur this year and will affect everybody, albeit in different ways. For starters, here at home, job-creation will slow. Mass lay-offs are even a possiblity, depending on the severity of the crisis. Pity this batch of college graduates come March. Few jobs await them, even at the call centers.
On the positive side, the sharp slowdown in economic activity will mean lower prices. Note the fall in the prices of gasoline, transportation and construction materials resulting from what Bloomberg commentators call “demand destruction”. With Christmas over, one might expect to see heavy discounting in clothes, computers, television sets and software items, like DVDs. One should buy slowly. It will be a buyer’s market for sometime. Sales promotions will intensify in line with the crisis.
In sum, the crisis won’t be so bad for those who’ve got jobs, tough for those who haven’t got one.
Do you have a question for Adams Myth? (Is it a good time to buy a condo? Should I sell my designer bags? Should I put my money in dead animals preserved in formaldehyde by famous artists?) Post it in Comments.
Meanwhile, here’s a letter from Apple CEO Steve Jobs. He’s not dying.
Answers to questions you might be asking, unless you wandered onto this site purely by accident >>>
January 7th, 2009 at 07:21
Our yayas are coming home. Their amos can’t pay them anymore. The most potent troops of the Philippines, dispersed all over the globe, have been trimmed down.
My question: Will the global financial crisis adversely affect your world domination agenda?
January 7th, 2009 at 11:50
Mr. Myth, are you an economist of the Keynesian school or of the Austrian school? Do you think Keynesian economics is finished?
January 7th, 2009 at 13:58
Is it good to save money during a financial crisis? Or is it better to spend more?
January 7th, 2009 at 17:22
My fiance’ and I has decided to buy a house. We are still in the process of completing the down payment. Is it a good idea to buy a house at this time?
January 8th, 2009 at 00:37
Hey Mr Adam’s Myth, if we stop buying new cars, will the dealers be forced to peddle them to us at ridiculously low prices just to make a sale? For instance, the darn sheiks at OPEC realized that when gas prices reached almost 4 dollars a gal in the US, everybody stopped using gas guzzling SUVs, hence the demand for gas dropped, meaning Arab oil producers will go bankrupt, and they got scared. So they re-flooded the market with the oil they were hoarding in the first place, and now, we’re back at 35 to 36 per liter here in RP. I wish the geniuses at Honda, Toyota and Mitsubishi take this cue. Who knows, if they do, I just might be lucky enough to insert a brand new Mitsu Evo X in my garage,beside my aging Corolla.