Illustration courtesy of Y-not

This email is supposedly from a financial consultant in Dubai. It has been making the rounds:

Recession is coming. Make your own judgment. Don’t panic! Do what is wise.

The recession looks very eminent [sic]. It is really time to take proactive steps to avoid a painful time in the next two years, which is how long the recession is expected to last.

Suggestions:

1. Don’t take any loans; don’t buy homes, properties with loans, or even cash. Keep as much cash as possible.
2. Pay off as much of personal loans, private loans, as debt collection will be hastened.
3. Sell any stocks you can even at lower prices.
4. Take money off from Trust Funds.
5. Don’t believe in huge sales forecast from customers, be extremely prudent, lowest inventories, reduce liabilities.
6. Don’t invest in new capital.
7. If you are selling homes/ properties/ cars, do it now, when you can get good prices, they are going to fall.
8. Don’t invest in new business proposals.
9. Cancel holiday plans using credit cards.
10. Don’t change jobs, as companies will retrench based on ‘last in first out’.

Stay cool, wait, and if you took all of the above actions and more, you probably will be better off then many. This is not a rumor.

Bear Stearns is the first of many banking and financial institutions that will start falling in the not too [sic] future. If Bear Stearns can fall, so can JP Morgan, Citibank, HSBC, and the whole world. US economy falls, the rest will crumble.

India and all those self economies [sic] will be the most protected, but not gullible. Europe may be a little stronger, but not China, another giant place! Malaysia will see significant impact.

Be alert and pass this to your friends!!!

Notice how cleverly misinformation has been woven with good ol’ natured advice like “pay off as much debt,” and “be extremely prudent.” After I read the email, I sat back in amazement at how it initially seemed to be merely warning readers to get ready for tough times, but in the end the tone turned turbid by implying that the fall of Wall Street will result to the end of the world and Armageddon.

Fact is, Bear Sterns HAS fallen, but JP Morgan, Citibank, HSBC and the whole world is still standing. Yes, the US is already teetering in a recession—and that means at least two quarters of negative growth.

Let me explain that a little bit. Economists are very economical when it comes to words. When they say the economy grew 1%, the figure seems downright depressing. But that still means the economy grew. Products and services churned out are larger in number compared with previous periods. A negative growth on the other hand means the economy has shrunk, and therein lies the problem of a recession.

The common forecast right now among analysts is that it will probably take the US at least two years to start crawling back up, but whether or not Asia will get dragged in the mud all the way is, amazingly enough, still an open discussion. Five years ago, the word “decoupling” from the US has not been invented, and now, there’s a hint of color that says Asia will get hurt, but not as bad as if this crisis happened 10 years ago.

There’s another interesting aspect to this crisis, as pointed out to me by new Chartered Financial Analyst of the Philippines president Vandermir Say. It appears that the more wealth you have, the more pain resulting from the crisis.

The more exposure you have to exotic derivatives, investment banks, stock and bond investments, the more pain you will be suffering—at least in the short-term. Perhaps ye gods are leveling the playing field a little bit between the haves and the have nots. Whatever is happening, my good friend and artist friend from high school said it best: We don’t have these things in the hinterlands where we live. I don’t own stocks; I don’t have big money in the bank. What recess I know means snacks!

That’s the spirit! Prepare for the worst but hope for the best. Letting the dirty R word result in fear brings recession even closer.

Meanwhile, the INQUIRER.net has created a special site on the current global financial crisis for readers who want to read everything related to it. There’s a timeline to help you put everything in perspective. Click here for THE FINANCIAL CRUNCH.