Would crisis in US on debt limit and budget be averted?

Ateneo Professor on Entrepreneurship



 


From Fox News | October 15, 2013

From Washington Post workblog

The Republicans abruptly cancelled plans on vote on budget, apparently lacking the votes, and now focus on bipartisan negotiations that would have spending budget through December l5 and borrowing till February 7. The negotiation is now between democratic leader in the Senate Henry Reid  and  his counterpart Sen Mitch McConnel.  (The house is controlled by Republicans and the Senate by Democrats, hence the deadlock.  The agreement would not cover the tax on medical device and funding for the Obamacare.

As this is happenning, one the 3 rating agencies Fitch warned of possible downgrade of US Treasuries from 3A.( From Huffington Post | October 15, 2013)






Payables of US Govt needing funds from additional borrowings:

Dragon Outlook for the Philippines?

An Ateneo Graduate School of Business Advantage

Aside from the long shot prediction that PHL could be an N-ll until 2020, and one of the l6 largest economies of the world by 2050, things are looking up for PHL:

l.  Our banks have been seen as stronger than European counterparts;

2.  OFW remittances are up in December 20ll compared t the same period last year.

3.  The Eurozone worries has been dampened by IMF move to raise $600 billion as part of rescue package.

4.  The PHL is next in line for Moody's credit upgrade.   In January last year, Moodys upgraded PHL credit rating from positive to stable.  This year, it may go to 2 notches below investment grade. In December , S & P likewise upgraded PHL from positive to stable.   While Fitch, based in UK upgraded PHL from two notches to one notch below investment grade.

5.  And oh, yesterday PHISIX was at 4,700 its highest performance so far;  first time to breach 4,700.  This was led by energy and mining sectors.

6.  And oh yes, BSP cut, after a long time, interest rates by 25 bpps to cushion impact of recent world developments.

What is behind this rally?:   political climate, global developments?

Will PHL be able to sustain such robust performance?

However, ADB in its recently held briefing tends to be more cautious on the prospects of PHL for still having structural weaknesses.  ASEAN would grow at 7% while PHL will manage only 4.8%.

Why is ADB correct or wrong?

What can we as entrepreneurs, contribute to this continued positive development in PHL?

Eurozone Debt Concern is Worrisome

An Ateneo Graduate School of Business Advantage

Dark clouds loom ominously in Europe.  With the Greece debt problems still at hand, the concern is the Italian debt amounting to Euros 1.9 trillion or $2.5 trillion.  The European leaders agreed to lend to IMF $259.99 billion to help the struggling countries (roughly l0% only of Italian debt).  They have encouraged other non European countries to do the same.   Asian capital markets and that of US showed  rebound because of fewer job loss in the USA ever (since May 2008 only 366,000 -  that is still a lot!!) Other good news:   oil price went down to $95.00 per barrel (down from $l00.00+ last week)

However Fitch downgraded several American and European banks:  Bank of America Corp, BNP Paribas, Citigroup, Deutsche Bank AG and Goldman Sachs group.  Barclays and Credit Suisse went down from A to -AA.   Long term ratings of A were maintained on JPMorgan Chase and Co, Morgan Stanley, and UBS.  Societe Generale is A+

What do you think of these developments?   Are they worrisome?   What can be done to soften the impact of these development locally?