What’s wrong with these banks?

According to this report from Inquirer.net, 9 banks are being investigated by the Bangko Sentral ng Pilipinas for “potentially unsafe and unsound banking practices”. The report said that the BSP has been monitoring these banks well before the global financial turmoil because of the said potentially unsafe and unsound banking practice.

 

We also know of the move by PDIC to increase the deposit insurance up to 1M to boost confidence among depositors amid the global financial crisis. Many countries have already adopted this strategy as well.

 

Moral Hazards

 

Usually, a policy decision does not end up in a win-win solution. Sometimes, policy makers have to choose which has more benefit than damage. While increasing the deposit insurance will certainly give confidence to depositors as this would mean a sovereign guarantee on your money, it gives a false impression that we can put our money to any other bank. We should always be careful in examining the track record of a certain bank before we trust them with our hard earned money. Few people realize that once a bank goes on a forced holiday and put under the receivership of PDIC, it takes time before you can redeem your money.

 

It also gives false hope to the bank that whatever they do to their banking operations the depositors money is safe under government’s care. Stricter rules and heavier punishment should be applied to banks that have been playing around with depositors’ money like a ponzi scheme.

 

However, too much regulation scares off businessmen. They wanted a free market environment that will dictate business and not a regulatory hand that will tell them what to do. But I think that if regulators are fair and just then businesses won’t have to worry about anything.

 

Always remember to look out for yourself. Go with the bank you trust and not just about the promo they are offering. In the end, your actions with your money should not be blamed to anyone but to yourself only.

Fearless Forecast 2009

And I’m talking about the economy. Unlike visionaries, economic predictions are based on assumptions, usually a scenario building. The phrase “ceteris paribus” is used to hold everything else constant, which means that a scenario will hold true if other events are kept at bay. For me, this phrase is used as an excuse when the prediction did not materialize.

 

While I’m no economic expert, I will try to answer the question whether our country is bound for a bumpy ride in 2009 or are we just encountering humps as we enter an exclusive subdivision known as Economic Growth.

 

Signs

Good forecasters usually rely on signs. Doctors look for symptoms to strengthen its basis for an impending disease. In economics, it is hard to establish a general rule or rule of thumb as economies differ from one country to another. But let us try to establish a gauge to predict our economic performance next year.

1)     Remittance. Last year’s GDP growth of about 7%was said to be anchored from Remittances. In a consumption driven economy, the continuous remittance from parents or relatives abroad will ensure ample liquidity to be consume locally. From 6 billion in 2000, there has been no sign of slowdown in inflows of remittances, reaching more than 200% growth in 2007. So far, remittance level is still healthy, although signs of slowing down are peaking in recent months. In October, remittance only grew by 3.3%. October marks the BER month and the Christmas season, when relatives abroad usually sends home money for the holidays. In the past years, we enjoyed double digit growth in October remittance, reaching as high as 36% in 2006. There are several reasons for the slowdown in remittance, but the obvious reasons would be that economic crisis has caught the Pinoys abroad, thereby keeping themselves liquid and limiting excess funds to send home.

2)     External Trade. Our biggest export is electronics trade. While the growth in Trade should be a good economic indicator, export numbers has been a suspect of overstatement for the past years. But let’s put the benefit of the doubt on export numbers for this discussion. With the global crisis, people will surely scrimp on buying the latest Nokia cellphone or the high-tech laptops. To my knowledge, microchips for laptops and Nokia cellphones are being manufactured here. Current Trade numbers shows that our export growth decelerated to negative 15%, with electronic products at negative 20% growth. Year-to-date, we only grew by 2%. With these numbers, I do not think Export will carry us through the stormy 2009, unless we promote exporting something that the whole world cannot refuse to buy (can we export Manny Pacquiao to save our economy?).

3)    Inflation. Inflation measures “acceleration: of price changes. Take note that a small inflation rate does not mean prices are falling, but rather increasing at a slower pace. Since 1995, we have seen all time highs in inflation rate, to as high as 12.4 percent in August 2008. Remember that it was in July 2008 when oil prices were in all time high as well, pulling up prices even in basic commodities. Now, inflation rate is back to single digit of 9.9% (would you believe it? A mere 0.1 difference?). People believes that all time highs in inflation is over, but I can feel that we will still experience increases in oil, not due to demand but due to supply as refiners will definitely cut down production of petroleum due to weak demand. I can sense that oil price will settle at $80/barrel, and if there will be increases in local pump prices, it would be on small amounts (P1.00/Li) on a monthly basis. Therefore, expect inflation to hover and play around the double-digit barrier.

4)     Employment. While the government promised to create 1 million jobs yearly to narrow down unemployment numbers, the government never lived up to its promise. So if the government is really serious in dealing with the impending crisis, maybe it’s time it should look at the employment situation more seriously. Give people the opportunity to earn so that they can go on with their lives even in crisis. With the global crisis, prospects abroad will be limited, even the private employment will be gloomy. It is the government’s pump priming efforts on infrastructure that will save people from going hungry.

 

If we don’t see any improvement in the indicators above, prepare yourself for a bumpy ride. Save and earn more in any way possible. Postpone grand expenses like a grand vacation abroad or a brand new car. Chances are that we will be hit hard if external conditions do not get better. We have been a very passive economy as far as I can remember. Look out for the signs I have mentioned and monitor latest developments. DO NOT GET CAUGHT OFFGUARD. You have been warned.

People’s Champ

It was a day when I’m very proud to be a Filipino.

 

A night before the fight, I watched HBO’s 24/7 special coverage of Dela Hoya and Pacquiao. In between commercials, I happen to see the preview to the fight of Solar Sports. There were quotes and lines from the bible of the famous tale of David versus Goliath.

 

I told myself that it is very fitting metaphor to the fight, literally and figuratively.

 

I was hoping Pacquiao would win, even a split decision. And that he would not suffer a terrible beating should he loose.

 

But like David, God is with Him – one thing that other boxers always forget to bring in the ring. Pacquiao showed us that with God, everything is possible. And that famous saying in Filipino – “Nasa Diyos ang Awa, Nasa Tao ang Gawa” through his painstaking training.

 

Protect yourself at all times, but do not wish for your opponent’s demise.

 

Just like what he showed against David Diaz in their WBC lightweight title bout, he showed how a fighter should be transformed once the boxing match is over – be human again. Show compassion and respect to your opponent as if he’s your brother. Pacquiao still admires Dela Hoya even if he defeated the legend to a pulp.

 

This attitude and work ethic will bring back the glory of boxing. MMA is popular because even if the fight is more gruesome than boxing through different application of martial arts, they would respect each other after every bout.

 

But I think Manny has got only two more fights before hanging the gloves. There’s no more out there to challenge. He has proven himself already. His remaining tests are against Hatton and Mayweather. After that, it’s time to bid the sport good bye.

 

May you still be as classy and as humble as before Manny. You are truly the People’s Champ.

Understanding Inflation Report in the Philippines

What is inflation?

According to the National Statistics Office (NSO), inflation is the rate of change in the Consumer Price Index (CPI) over a specific period of time (usually a month or a year). The CPI is most widely used in the calculation of the inflation rate and purchasing power of the peso. The CPI measures the changes in the price level of goods and services that most people buy for their day-to-day consumption.

 

Inflation is equivalent to a decline in the purchasing power of peso (PPP). The PPP gives an indication of the real value of the peso (how much it is worth) in a given period relative to its value in a base period. To get the PPP, you just need the reciprocal of the CPI multiplied by 100, or 1/CPI*100.

 

Contrary to common knowledge, low inflation does not connote that prices of commodities are falling. It means that prices continue to increase but at a slow rate.

 

Responsible Agencies

The National Statistics Office (NSO) and the Bureau of Agricultural Statistics (BAS) collect price data for the index. The BAS is responsible for collecting prices for agricultural commodities in Metro Manila and in the provinces. The NSO, on the other hand, collects prices for the non-agricultural commodities all over the country and all other commodities not covered by BAS. The computation of the CPI is the sole responsibility of the NSO.

 

Components of CPI

In the computation of the CPI, price quotations for goods and services that are included in a pre-determined or “fixed” market basket are being collected every first and third weeks of each month. The market basket refers to goods and services that are commonly purchased by consumers in a particular area. However, the market basket cannot and does not contain all the consumer goods and services in the economy but consists only of a sample of commodities which are used to represent all consumer goods and services in a given area.

 

Weights

The weights for the 2000-based CPI were derived from the expenditure data of the 2000 Family Income and Expenditures Survey (FIES), a nationwide survey that covered 41,000 households.

 

Core Inflation

On 3 February 2004, NSO released monthly core inflation rate alongside the existing headline inflation rate. Headline inflation refers to the year-on-year change in the overall Consumer Price Index (CPI). On the other hand, core inflation is the rate of change in the headline CPI after excluding selected food and energy items.

 

The introduction of core inflation rate has been approved by the National Statistical Coordination Board (NSCB) in its resolution dated 23 June 2003 through a TWG including NSO, the NSCB, the National Economic Development Authority (NEDA), the Statistical Research and Training Center (SRTC), the National Wage and Productivity Commission (NWPC), the Department of Trade and Industry (DTI), and the Bangko Sentral ng Pilipinas (BSP) . It aims to provide a complementary measure to the headline inflation and to serve as a better gauge of the overall state of the economy. This development is in line with the statistical practice of many industrialized and developing countries. The official methodology for computing core inflation also follows the common international practice of excluding food and energy-related components of the CPI. It also marked the start of inflation targeting of BSP which uses monetary policy tools to manage and stabilize prices in the market. Usually, the monetary action of the Monetary Board has a lag effect on the prices that could take months. Information about the general or underlying trend in consumer prices is a valuable input to economic policy, particularly monetary policy, which seeks to respond only to long term or permanent movements in prices and aggregate demand

 

What is really happening in prices?

Please note that inflation is more of a numerical value than anything else. It is objective and cannot be manipulated. To report it side by side with a subjective survey asking respondents what they felt a month earlier is I think inappropriate. However, the government releasing inflation data should be responsible in reporting the events that happened on the coverage of the report rather than describing the numbers itself. “Annual inflation in the National Capital Region (NCR) likewise continued to move at a slower pace of 6.8 percent in November from 8.0 percent in October due to the slower annual price increases in FBT, housing and repairs (H&R) and services index” is more of an empty statement. It could have been “prices of rice remained stable” or construction materials like cement, nails, etc is cheaper now by x%”.

 

 

 

Stolen credit cards selling on the Web!!!

Read this report from Inquirer about credit cards selling in the Internet for low as 10 cents (about P5 pesos)! But it was reported that fraudsters is raking money out of it!

Worst case is that if your credit card was used for illegal purposes. You can be held accountable for it since its your data that will reflect!

So check the sites you are visiting and make sure the website is trustworthy and secure. The extra ’s’ in “https://” stands for security. Do not divulge personal information, not even the card number unless important.

Better yet, make use of your credit for certain purposes only. That way, you can put a trait of your credit card and you can easily spot if your card was used by others. Say you use it strictly only for grocery and a fraudster used it to buy a Digital SLR over the Internet.

In this age of technology anybody can do anything to do illegal. An ounce of protection is better than a ton of cure.

What’s your PIN

 

I discovered a very cool feature of my new blackberry curve. It’s the blackberry messenger! If I’m not mistaken, it is free, or costs much cheaper than regular text message. What’s more, you can send attachments like pictures, voicenotes, etc. All you need is the blackberry pin (which comes with the box of your blackberry together with your IMEI) of the one you want to talk to. Add as contact in your messenger, and that’s it! You’re connected! Great way to save money on text messages.

Advantages and Disadvantages of BlackBerry Messenger
BlackBerry Messenger can be a definite asset, if you want to exchange messages with other Blackberry users. With it, you can:

* Carry on a real-time conversation with friends and colleagues in several different locations — or carry on several conversations simultaneously.
* Chat with a group.
* Send and receive an unlimited number of messages worldwide for free with no per-message charge.
* Get messages without filling up your inbox.
* Know whether a buddy is online, available or busy.
* Let your contacts know your own availability for instant messaging.
* Manage log-in and contacts as you would if you were using an IM program from your PC.
* Continue using other programs and send and receive e-mails while BlackBerry Messenger is running.
* Invite someone to join your buddy list and start communicating without setting up a separate IM account.
* Be notified by a specific ringtone or vibration setting each time a message arrives from a particular person.

[sources: BlackBerry Connection, BlackBerry Messenger User Guide and CrackBerry]

One disadvantage of BlackBerry Messenger is that you can’t send an instant message to someone unless you know his or her PIN code, the eight-digit letter-and-number code assigned to that particular Blackberry device.

However, the biggest disadvantage of BlackBerry Messenger may be that it only allows you to exchange instant messages with other BlackBerry users. Introduced in early 2006 as a feature of BlackBerry Enterprise Server 4.1, BlackBerry Messenger isn’t compatible with popular IMing programs. That’s because it works differently.

With most instant messaging services, you download software that becomes the client on your computer or smartphone. That client connects to the provider’s server, using a proprietary protocol for communication. Once you’ve logged on, the client sends the server your connection information (IP address), your computer port number and the names of everyone on your contact list.

The server creates a temporary file with connection information for you and your contacts. Then the server determines which contacts are logged on and sends that information to your client, as well as letting the contacts know you’re available. After that, the server is no longer involved, and all communication is between your client and that of your message recipient.

With BlackBerry Messenger, however, the server stays involved as it would if you were sending e-mails. All communications go through parent-company Research in Motion’s servers as you continue to exchange messages. That also means you can’t use BlackBerry Messenger unless you have a BlackBerry Internet plan, or data plan .

So, what’s your blackberry PIN?

How not to make a bazaar successful

1) Invite exhibitors and leave them after.

2) Use word of mouth only to invite shoppers. Better yet, give the exhibitors free tickets and leave it to them to invite people to come.

3) Prepare several numbers of Magic Show even if kids are nowhere to be found

4) Hire an emcee that can turn the raffle prize of water kettle into water kitten. (Is she a magician?)

Doing part-time business such as joining bazaar is a great way to augment meager income especially during Christmas Season when people are eager to buy. Do this regularly, even during Christmas season only, and you will find yourself more to give or have enough funds for the coming year. However, be very cautious in joining bazaar. Check the history of the organizer first before joining and paying exorbitant rental fee for your stall. The job of the organizer is to draw people. Your job is to sell your products.