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Posts Tagged ‘credit’

Aurelio “Gigi” Montinola III is the president of the Bank of the Philippine Islands, and one of the most respected bankers in the Philippines. He wrote the following messages, which I find as the most sober and forthright thoughts in this financial crisis.

Fellow Unibankers,

Attached please find a piece that I was supposed to write for an outside publication – unfortunately, I cannot submit it as the ending is perpetually changing.

What I thought to be a gathering storm to hit in the first quarter of 2009 has hit our beaches yesterday – the Philippine Stock Exchange had its highest (12. 27 %) drop in history a single day, and the Peso Dollar exchange rate is creeping back from around P 41: $ 1 to almost P 50 : $1. Like other markets in the region, the PSEI has dropped 50% ytd, and people are getting nervous.

It has now become a Fundamentals versus Emotion issue – Philippine economic fundamentals relative to the world and even Asia are good, and the banking system is stable, but Bloomberg 24×7 Television, local media reports, and cocktail party talk make people fear the worst, and then expect the worst.

We know however from experience that Filipinos are resilient and have survived the economic crises of the foreign debt moratorium in the 1980s and the Asian Crisis in the 1990s.

BPI remains well capitalized, strong, and prudent – and both our customers and the market analysts appreciate this. 2008 will show lower earnings than our banner year in 2007, and we must now worry about what 2009 will bring.

As in the past, this negative cycle will eventually pass, but in the meantime, we will have to prepare for the typhoon.

Let us all work together to take care of our customers, and in the process, keep BPI strong and our employees safe and secure in their jobs.

All the best,

Gigi Montinola

His message follows:

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Veteran interviewer Charlie Rose features legendary bond trader Michael Milken (of the 80s junk bond era) and economist and 2006 Nobel Peace Prize recipient Muhammad Yunus who founded Grameen Bank which pushed micro-credit in Bangladesh.

These two distinguished individuals share fantastic insights on the Bangladesh micro-credit experience and how lessons from self-employment are relevant to the global financial crisis and credit crunch of 2008.

A taste of some topics covered on the interview:

  • The problem caused by credit rating agencies.
  • How leverage and margin have contributed to the crisis. Also the problem with loans higher than collateral.
  • How micro-credit experience in Bangladesh translates to insights on where the global financial system went wrong.
  • What are ways forward to restore confidence in the financial system and avoiding future repeats of the crisis.
  • And much much more.

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Bill Moyers interviews Soros. In this illuminating chat, Soros talks about the state of the financial system, and the prevailing belief of “Market Fundamentalism” which is: markets correct themselves. He disagrees with this and encourages more market regulation otherwise markets left on their own are prone to bubbles and crashes.

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Unlike goldilocks, it isn’t a question of too hot, too cold, and just right.

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It’s often said that Money Is the root of all evil. Why is this so, and more to the point: what is the root of all money? Is it Gold? Is it the sum of all goods and services in an economy?

Paul Grignon produced an animated documentary about money and banking in the modern society which is a must see for everyone who is trying to make sense of why financial crises happen with ever greater scale and frequency, and the intentions and motives behind the money system–most of which will shock those who have never encountered these concepts before.

Check out this fascinating documentary here.

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