THE HECK WITH COMPLACENCY

(Perspective on the 2008 Global Financial Crisis)

When it broke out, the 2008 global financial crisis was big news. But my attitude was:  Who cares? Economists are saying that the worst financial crisis since the Great Depression of the 1930‘s will not adversely affect the economy of our country. They were right. I didn’t bat an eyelash.

Fast-forward few years later, with a growing sense of concern and vigilance over societal and economic woes and I realized that complacency is not rational in critical times like this. The rippling effect of the crisis may have been minimized by the rather conservative economic policy of the country but still, the domino effect made itself felt among the business community. Unquestionably, undue stress was placed in the country’s equity market, with heightened risk aversion and uncertainty. Stocks were placed in the sidelines, waiting for an organic environment where they can thrive again. As a result, the capacity to raise capital was dampened.

The anticipatory measures the country’s premier bank, the Bangko Sentral ng Pilipinas, undertook is a justification of the point. First, their cutting down on interest rates lowered the rate of slowdown in lending and borrowing activities. It maintained consumer confidence and generated a positive feedback cycle between the wary financial sector and the strained economy. Second, their liquidity enhancing measures kept the economy moving forward through trimmed reserve requirements, liberalized rediscounting measures, etc. An example would be the increased maximum deposit insurance coverage, from P250,000 to P500, 000.

Whatever the effects of the global financial crisis on the economy was, it is heartening to know that our country was not complacent enough to rest on the rather positive outlooks of economists on our country’s economic standing vis-à-vis those of the directly affected. Had they assumed the same stance I had and shrugged their shoulders, there’s no telling what would have happened with our economy that time, considering that the administration the crisis came to be was riddled with accusations of graft and corruption. Negative speculations might have increased and we might have gone down the brink, too. Bank bail-outs? I’m afraid it could have been a possibility.

 

Well, those are now the imaginary what ifs of the past. What we have now is a plethora  of information that we can use to guide us in the next economic years. And though we are not wishing for it to happen, the possibility of another financial crisis lurks in the corners. We just have to be cautious and be vigilant. Complacent? Big No. As they say, let’s learn from our history. So be it.