Till Debt do us part..
Buy Bonds, ..it’s but the start,
Need of Equity to infuse..
More Capital & Cash, for Big Projects to Start..
Till Debt, do us part..
BusinessWorld reported today, September 23, 2013, that “The peso might enter the P42:$1 level for the first time in three months this week after the US Federal Reserve unexpectedly decided to delay the tapering of its stimulus program.”
The local currency finished at P43.055 on Friday, gaining almost 81 centavos from its P43.86-a-dollar close the week before.
The peso is expected to trade against the dollar within the P42.80 to P43.20 band this week.
“The decision of the US central bank to postpone the tapering brought relief to the market,” a trader said in a phone interview last Friday.
“The peso could get stronger and even go lower than P43.”
In its policy meeting last Thursday, the Fed announced it would not yet wind down its $85-billion monthly bond-buying program, as officials said they still needed more evidence that the world’s largest economy can get by without the stimulus.
The bond purchases have helped keep interest rates near zero since 2008 to help spur consumption and employment.” Reported by Diana Jean B. Evite.
Sometime last July, I wrote, “What happens when Hot money turns Cold..” We predicted then the crush of the Philippine Stock Market, from a high of over 7,000 in the price index to a big drop to a low of about 6,000.
We came up with this conclusion after reading about the plans of the U.S. Government, to build up its Federal Reserves and help ” bail out” it’s sick , and fragile Economy.
Fortunately, As of early last week, the U.S. Federal Reserves, plan to scale back its massive Bond buying program. They will meet this coming October to see the results of the positive effects to the U.S. economy in general.
James Bullard said in an interview with Bloomberg, last Friday, Sept. 20, 2013 , that the authorities of the Federal Reserves decided not to taper its $85- Billion U.S, Dollars- per – month, Bond buying program , amidst the worries about the health of the World’s biggest economy.
However, I am still skeptical about the way the U.S. can manipulate the Capital Forces. We in the Philippines are very much dependent on American Trade, Capital, and other “Friendly” bilateral agreements.. (no strings attached.. Only the ” chains ” – conditions for US Defense forces , or The need for us to purchase made in the USA products or services)
So, here we are with Billions of Pesos lost to PPP ” projects” Pork, for Politicians & Powers that be… PPP.
Here we are as a Nation in need of hard earned money, that goes to the Government via. taxes, and just to painfully see it being stolen by the super rich congressmen, senators, and government officials, who do not even care of the sad misery of our Poor, homeless and hungry citizens..
For us in Business, we are aware of Corruption, but the magnitude of this economic plunder, can mean a total loss of confidence in the public sector, who has been short and wanting of basic social Services.
With Billions of Funds Gone, We have reasons to believe, and get worried, about the need of the Banko Sentral Ng Philippinas ( BSP) for at least Ph 150 Billion pesos. This according to NEWS reports is necessary, for our Central Bank to “better” perform its functions, in promoting monetary and price stability.
Just last Saturday, Sept. 21, 2013, Deputy Governor Vicente S. Aquino, said in a forum that the BSP, is in need of additional Capital.. They are preparing for payables due by 2017.
Here it’s important to “read between the lines” and I quote, Mr. Aquino, “The scale and complexity of the responsibilities of the BSP have magnified by growth of the Philippine economy, and the expansion of its Financial system”.
No doubt, that the BSP, needs to pump up its financial resources, for its been twenty ( 20) years now, since R.A. 7653, or the New Central Bank Act, that mandated a Ph 50 – Billion capital infusion.
And, in that 20 years the Philippines has gone through very difficult times. Form the Asian Financial melt down, to currency losses, huge debts, and all sorts of natural, and man – made disasters of Greed, Corruption and Self – Distraction.
However, even with these horrors and chaos, I salute , congratulate and commend our officials and the Governor of BSP, and the Monetary Board for having Managed our Monetary system in a Brilliant way, given all the challenges, form with-in , and other external forces beyond our control, the still managed to keep our Economy Growing, Resilient and Strong.
For the BSP to effectively function, and improve its financial stability, it is necessary to amend their charter and R.A. 7653. In this way the BSP may reinforce corporate and financial viability .
WOW! Imagine, if our Central Bank has fears of monetary “instability” and “viability” … So, what more our business sector? Financial Market? Commercial banks?
That is why, I see the big banks, conglomerates, development corporations, with huge appetite for more cash. Even if our financial system is very liquid, these Banks, Giant Corporations, Conglomerate Development Groups , are all scrabbling for more, more, more.. as if there were no tomorrow.
That’s understandable. For these “dinosaur” needs tons of cash, funds, be it in credit, equity and/or debts.
Let’s go back to the situation in U.S knowing that the American economy and its financial policies may have strong effects for us in Asia.
To end this article, I would like to quote some parts of BusinessWorld’s Reuters report. Economists criticize Fed for being ’unclear’.
An outspoken US Federal Reserve hawk warned last Friday that the central bank had harmed its credibility by delaying a highly anticipated reduction in monetary stimulus this week, but another official argued it had been the right thing to do.
Policy makers hit the speech circuit as financial markets continued to puzzle over last Thursday’s shock decision by the Fed not to scale back its massive bond-buying program after allowing the impression over the summer that it would do so.
Kansas City Fed President Esther George said “The actions at this meeting, and the expectations that have been set relative to how markets were thinking about this, created confusion, created a disconnect,”.
The Fed’s Web site says clear communication is “always important in central banking, and is especially important in the present circumstances when the economy requires further policy stimulus.”
According to majority of economists polled by Reuters, the Fed has failed to communicate policy clearly in the months leading to last Thursday’s surprise decision not to taper.
Investors and analysts, in nearly a dozen consecutive Reuters polls, had bet the taper would happen this week.
Some respondents were more strident in their criticism. One described the Fed’s recent communication of policy as “buried under a pile of horse dung.”