Despite assurances from American mortgage bankers that it was averting the US subprime crisis into a full-blown recession, the danger of governments and private corporations being dragged into the mess remains persistent.

According to the Group of Seven, it could be possible that because of the subprime crisis in the US, losses could reach a record high of $400 billion in unpaid housing and credit-card debts, thereby exposing financial markets in the Asia-Pacific region to a new regime of loan defaults.

The Philippines doesn’t seem to believe that the US subprime crisis would severely affect the country. For instance, while an ING investor sentiment index points out that investor confidence levels across Asia had dropped in the last three months in 2007, Philippine investors continue to be optimistic this year.

But the Group of Seven, referring to the seven most industrialized countries of the world, is having its doubts.

It says, as stated by German Finance Minister Peer Steinbrueck, banks worldwide are likely to suffer an estimated $400 billion of credit-related writedowns.

The G-7 that met in Tokyo over the weekend also showed concern over the fear that Asia-Pacific’s economies might slowdown as a result of the subprime crisis that wouldn’t go away.

ING itself charged that the G-7 “did nothing to allay fears” of a possible regional loan default, as recalled by ING head of Asian research Tim Condon.

Nonetheless, ING said that although its sentiment index reveals that the subprime-led credit crunch and political uncertainties have made investors more cautious, core sentiment remained positive in the regional as 2007 came to a close.

According to the sentiment index, 59 percent of Filipino respondents expressed confidence that the local economy would continue to improve in the next three months, while another 29 percent said they did not expect any change. Still, 12 percent of the respondents believed the economy would deteriorate as a result of the subprime crisis.

Another credit analyst, Brett Williams of BNP Paribas of Hong Kong, said, “Sentiment remains fragile on last week’s weak US labor, services and consumer-borrowing data.”

In a statement, the G-7 also noted that “the world confronts a more challenging and uncertain environment than when we met in last October, though its fundamentals as a whole remain solid.”

The G-7 said that in the United States, output and employment growth have slowed considerably and risks have become more skewed to the downside, but long-term fundamentals remain sound and we expect growth to continue in 2008.

“In all our economies, to varying degrees, growth is expected to slow somewhat in the short term, reflecting wider global economic and financial developments. Emerging market economies are forecast to continue robust, if slower, growth,” the G-7 said.

It also conceded that the group noted that downside risks would still persist, which include further deterioration of the US residential- housing markets; tighter credit conditions from prolonged difficulties in the financial markets; high oil and commodity prices; and heightened inflation expectations in some countries.

If it was of enough consolation, the G-7 said its members “stand ready to take any further action necessary to enhance stability in the financial market and to ensure that international integration of financial markets and financial innovation continue to bring about benefits to the world economy.” 

E-mail: raulbvalino@yahoo.com.ph

ONE of the hard-hit casualties in the ongoing national broadband network (NBN)-ZTE controversy must even now start to pick up the pieces of its tattered reputation, if we are serious about the future of the Philippine bureaucracy.

It is highly probable that every person you meet in the street has a relative, a friend, a neighbor or an acquaintance that has fallen victim to a pyramid or Ponzi scheme.

In 1803 Napoleon Bonaparte reportedly said, “China is a sickly, sleeping giant. But when she awakes, the world will tremble.”
His knowledge of China came from Jesuit priests who held high positions in the Chinese court. After 200 years, that giant has awakened and there may well be good reason for the world to tremble.

Mirror on the wall: RP, other Asia-Pacific debtors in danger of default

Despite assurances from American mortgage bankers that it was averting the US subprime crisis into a full-blown recession, the danger of governments and private corporations being dragged into the mess remains persistent.

Sen. Edgardo J. Angara: Commercializing ideas

Commercializing ideas is both tedious and costly.  To illustrate, for every 333 ideas generated in United States universities, only 23 may be original and six may be patentable.

Omerta: $12-B bonanza from Malampaya

The newspapers didn’t give the event much of a play, and the radio and television networks all but totally ignored it—probably because on the surface, it looked like it was about an issue that only the people of Palawan would care about.

Philip M. Lustre Jr.: A post-GMA alternative

One of the reasons why the antiadministration forces have not been persistent to push for President Gloria Arroyo’s immediate ouster is the possibility of a Noli de Castro takeover. The constitutional-succession mechanism is not that palatable to their political senses.