effects of the US recession

bad news for investors

the Philippine stock exchange index fell to 24.19 percent from its peak. stock watchers called this as "bear market" where the prices of securities decline by at least 20 percent from the peak.

the market capitalization of listed companies shrank in the past seven days by P528.35 billion or $14 billion at the current exchange rate according to the Philippine Stocks Exchange (PSE).

these losses were caused by heavy selling in global markets due to apprehensions over where the world's largest economy is headed given a slump in the housing market and a credit crisis that has led to billions of dollars of losses among major US financial institutions.

a ray of light at the end of the tunnel

analysts are hoping that a $145 billion economic stimulus plan announced by President George W. Bush that calls for tax relief to boost consumer spending and help thwart an economic recession.

they are also hoping the US Federal Reserve Board would cut key interest rates by more than 50 basis points when the policy setting body meets on January 30. this may address the recession but the US banks need to clean up and the Fed should help the financial system implement controls.

but Finance Secretary Margarito Teves said yesterday that "the Philippines will likely withstand the adverse effects of a recession in the US largely because of its improving economic fundamentals."

meanwhile, President Gloria Macapagal-Arroyo is pushing for the implementation of all the projects to sustain the economic growth in spite of the various threats to the international economy.

also, the Arroyo administration is seeking to improve relations with other countries so the Philippines does not become too dependent on one country and over-reliance on our relations with the United States.

hint: for now, i'll transfer my stocks funds to bonds funds just for awhile. but before everything is over, i'll make sure that i return my investments to stocks funds.

source: Inquirer.net and Philstar.com