What happenned to USA, the most powerful and the richest country in the world, running out of cash and shutting down the government?

Ateneo Professor on Entrepreneurship


                     

Christine Lagarde of IMF warns of massive global disruption

At the IMF meeting, its President Christine Lagarde and the rest of the central bankers warned USA leaders of the dire consequences of their intransigence in passing the budget and debt limit law.  It will severely affect the finances of USA:  possible downgrade, increase of interest rates, currency devaluation, with severe consequences in developing countries who still heavily use the US dollar for trade and reserves.

As if IMF was talking down to a less developed  country like PHL?  But they are talking to the 2nd largest economy in the world (Lagarde said that - China is the largest now?)  USA was a very rich and powerful country.  And they seem to be helpless now in determining their own destiny and the rest of the world.  Democracy is wrecking havoc on its economy.

Of all the events in the world:  volcanic eruptions, cyclones in India, typhoon in the PHL, radiation from Fukushima nuclear reactors, this is the most worrisome.  It is going to affect the social and economic situation of millions of people around the world.  It worst than a  neutron bomb?

Has leadership something to do with this?  The bell tolls and the end will be on October 17;  many predict that running out of cash entirely for the US govt will kick in as early as that date.

Will the Republicans and Democrats care for their country and the rest of the world?

From Globe and Mail - IMF warning

US to lose safe haven status? Bill Gross

Ateneo Professor on Entrepreneurship

From Moneynews

US may soon lose its safe haven status for currency and investment, according to Bill Gross of Pacific Investment Management Co, unless US addresses its problems of  deficit spending and propensity (addiction to debt)

The Congressional Budget Office, the Bank of International Settlement, the International Monetary Fund all agreed that a gap on spending on borrowing must be cut;  otherwise, US will continue to print more money, inflating the dollar, losing its value and US bond will lose its value.

PIMCO cut its holdings of US treasuries from 33% to 22% (lest its bonds burn to a crisp)

Why are we writing on this?  What is the relationship to entrepreneurship ecosystem?

Will this problem affect PHL businesses or it is too far away to singe PHL investors/entrepreneurs?

 Read more on Bill Gross comment on US addiction

What?! PHL now a Creditor Country?

The AGSB Advantage

What? PHL now a creditor nation?

The Philippines officially became a creditor nation by contributing $25l.00 million to IMF FTP (Financial Transactions Participation).  Half of that amount will be used to bail out Greece and other distressed Eurozone countries.  This is a far cry from the Philippines of yore whose debt instruments are discounted at the world market, when IMF was imposing belt tightening, when activitists were always shouting that IMF is a tool of imperialists......

In 2006 PHL prepaid all its debts to IMF;  making an early exit.  GIR of PHL stands at $7l billion which could go up to $77B by year end.

What is the significance of this change of status to the PHL?

What is the impact to PHL economy and entrepreneurs.?

Will this increase our nationalistic fervor?  Our pride of our country?

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?