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Lehman Collapse of Investment No Cause For Alarm

September 19th, 2008

I am not a financial analyst or an economist, but I really don’t think creating panic over this will help any economy in the world. So let’s just remain optimist and keep our money where it is really needed and safe.

Today it was just reported that stock market’s all over the world picked up after an initial fall-out reaction to the report that Lehman Brothers, the fourth-largest investment bank in the US, declared bankruptcy. It’s just a common reaction, investors were shocked and haven’t analyzed the long-term effect of this.

But now since Lehman Brothers already announced that Barclays PLC will now acquire its businesses and assets, there’s no need to worry. Do you think so?

Well, how many in the world own investments at Lehman? How many people in the world own stocks to any biggy corporations in the world? Not many I suppose.

Here’s the breakdown of the population : U.S. has 305,193,471, the world has 6,724,523,073, Philippines has 88.57 million people.

Based on a confidential Bangko Sentral ng Pilipinas estimate obtained by the Philippine Daily Inquirer, retail tycoon Henry Sy’s Banco de Oro Unibank has the biggest exposure to Lehman at $134 million, followed by the state-owned Development Bank of the Philippines at $90 million, Metropolitan Bank and Trust Co. at $71 million, Rizal Commercial Banking Corp. at $40 million, Standard Chartered Bank (Manila branch) at $26 million, Bank of Commerce at $15 million and United Coconut Planters Bank at $10 million.

At present the Philippines has 17 universal banks, 23 commercial banks, 84 thrift banks, 711 rural banks, 44 credit unions and twelve non-banks with quasi-banking functions, all licensed with the Bangko Sentral ng Pilipinas.

Meanwhile in the US, a consortium of 10 global commercial and investment banks announced plans to provide 70 billion dollars to help offset a credit squeeze.

Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, and UBS, said in a joint statement they “initiated a series of actions to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets.”

They also said they would work together “to help facilitate an orderly resolution” of the derivatives exposures between Lehman Brothers and its counterparties.

What do you think of the proposal to give the 13th month/ Christmas bonus pay earlier this year to cushion this economic fall-out all over the world?

Well I think it’s great, sure give the money now. People have this one-day-millionaire attitude so surely this will help cushion the blow for now. But after a month or so the people will have no money to expect to spend for Christmas so will we expect a not so Merry Christmas then? I don’t want that either.

Besides, this is not so bright of an idea because this is actually encouraging expenses and money to go out instead of flow back in.