Consuelo de bobo

New York – Only when you get to New York will you begin to realize just how serious the financial crisis really is. As they say, “to see is to believe.” Just a couple of days ago, 375 homes were put up for auction at the Javits Center, described as the city’s biggest foreclosure sale ever. Starting bids were at 60 percent off the homes’ value, like a $700,000 house getting an opening bid of $149,000. Some 30,000 homes were reportedly auctioned off last year. This year, nine million Americans are in danger of losing the roofs over their heads. One of the unmistakable signs also seen by New Yorkers that things are not going very well is New York Metropolitan Opera’s decision to use Marc Chagall paintings as collateral for creditors. Met staffers took a 10 percent pay cut, and artists are being asked to lower their fees.

Analysts say the situation is not yet as bad as the 1981-1982 recession, but if the downturn continues until next month, this recession could go down in US history as the longest ever since the postwar period. Unemployment rose to 8.1 percent in February with 651,000 jobs lost. In December, 681,000 jobs were cut while another 655,000 Americans lost their jobs in January. People become unemployed almost everyday, and the number of jobless Americans has reached 4.4 million since December 2007. Today, there are over 12.5 million unemployed Americans.

The US financial sector triggered the global crisis, but the most affected city has been New York, with more than 50,000 Wall Street jobs disappearing. All over the US, white collar workers are getting laid off, with 180,000 getting the pink slip last month, compared to 168,000 job cuts in manufacturing and 104,000 in construction. While Obama has been trying to keep hopes up, he is pragmatic enough to temper his speeches with cautionary messages, telling Americans that things could get worse before they get any better. After unveiling his recovery plan, he warned that it “won’t turn the economy around or solve every problem. All of this takes time and it will take patience.”

A close friend of mine, Larry Martinez who is an old timer living in New York for over 30 years confided to me that he has “never seen anything like it.” Most Filipinos like him who have been thinking of retiring have no choice now but to push back retirement plans for another four or five years because their 401ks or retirement funds have greatly diminished in value, in fact by almost 60 percent.

Those planning to go back to the Philippines and have put up down payments for retirements homes or condominiums are now in danger of foregoing this kind of commitment because of job losses becoming imminent. Already there are so many Filipinos losing their homes after 20 years, which is adding to the uncertainty. A lot of them are so scared of losing their jobs. Many are also thinking of moving out of New York which is one of the most expensive cities in the world. Perhaps the only ones who are relatively secure are Filipinos working at the United Nations which we assume will not close shop – unless it’s already the end of the world. 

The American Institute of Certified Public Accountants said 35 percent of those approaching retirement age are delaying retirement plans, with more than 60 percent planning to work for another five years. As a matter of fact, “the new 65 is now 70.” The unemployment rate for those over 65 reached a 31-year high of five percent in December. Many are also taking part-time work to survive the crisis, which the US Labor Department says increased by 3.7 million in the last 12 months.

The problem in the US has reached Philippine shores as seen in the diminished number of “balikbayan trips” to the country and lower remittances from US-based OFWs, but the effects of the global financial crisis have not been felt as much. In the first place, the jobless rate has been at double digit levels most of the time, plus the fact that home credit is not as readily available as in the US. Perhaps it’s also the inherent Filipino trait of being frugal and the fact that people feel uneasy getting into debt - which is why a relatively large number of Filipinos are not living on borrowed money.

While there have been a number of job losses in the past few months, there are still some bright spots in the horizon. A couple of weeks ago during the PEZA forum hosted by the Manila Overseas Press Club, PEZA director Lilia de Lima disclosed a four percent increase in the number of locators during the first quarter this year. In fact, she is so optimistic that 2009 targets will remain, with an increase by as much as 10 percent since last year. She also downplayed job losses brought by the closing of Intel, a US microchip company, saying that other locators will eventually absorb these job cuts.

And whether we like it or not, credit should really go to GMA and the tough fiscal reforms she initiated a few years ago that helped make the Philippine economy more resilient as compared to some of our Asian neighbors. Financial analysts I talked to in New York admit that major reforms undertaken by GMA’s administration helped cushion the impact of the global financial crisis – coupled by the fact that we were not really in the realm of big-time borrowers who now face the severe effects of the meltdown.

There are some who say this is consuelo de bobo (a Spanish phrase loosely interpreted as “a fool’s consolation” and normally used to describe a prize that is worth very little). You can call it consuelo de bobo or whatever – but at the end of the day, the fact is the Philippines is still considered lucky and perhaps God has been relatively good to us.

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