The casualties of the Lehman collapse are popping up, one by one.

First, the Philippine economy. Socioeconomic Planning Secretary Ralph Recto now has a worst-case scenario forecast of 4.7 percent to 5.5 percent for gross domestic product for the year, down from an already revised 5.5 percent to 6.4 percent.

You know already that two of the nation’s biggest lenders, Metropolitan Bank & Trust Co. and Banco De Oro have hits on their portfolio. Rizal Commercial Banking Corp. (RCBC) today also revealed its exposure to Lehman. Together, the three banks have set aside $120 million in provisions—meaning there’s cash made available for any write down in the future.
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Now it’s no longer just a rumor. The US Fed is bailing out American International Group with an $85-billion package (you read that right). Apparently, AIG is indeed too big to fail.

I tried to camp out of Philamlife chief Joey L. Cuisia’s office this morning (well, I really meant sit really demurely in the lobby) just in case he has time to talk to a lowly journalist. Understandably, however, he was up to his ears with teleconferences and board meetings with this new development, but I’m on call the whole day.

Some thoughts that come to mind: Wall Street’s latest convulsions show there might be more casualties out there and all that’s part of the restructuring happening in financial markets. I’ve heard the phrase “the market corrects itself” too many times that it hardly means anything anymore. Now, I think the great white economists might not be speaking in tongues, after all.

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Like dominoes, the effects from convulsions in the US financial system will begin unraveling and regulators, investors and market players are hoping there will be more pieces left standing than those that are toppled over.

Late breaking news that the Federal Reserve is now considering providing a bailout package for American International Group is providing a soothing balm to Wall Street, especially after the company was downgraded yesterday by major ratings agencies. We will know more as the day unfolds whether the “unnamed source” in Bloomberg’s report has just given markets an early Christmas gift.

Because Lehman Brothers, Merrill Lynch and AIG are all complex financial companies, the reckoning may take months, not days. AIG’s dilemma, in particular, has had everyone’s knickers in a twist because its demise will hit every big Wall Street name and is expected to have huge ramifications all over the world. Government economic managers are largely expected to talk about this issue during their mid-year economic briefing at the Shangri-la Plaza in Makati at 10 a.m. today.

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Wall Street giant Lehman Brothers has fallen, Merrill Lynch has sunk into the arms of Bank of America and traders smell blood from global insurer AIG. Who’s next?

The New York Times has called this one of the most dramatic days in Wall Street’s history. The whole thing brings ominous tidings, says Fortune magazine. Expect more dramatic articles in the coming days as the media is whipped up into a writing frenzy.

Lehman employs around 3,000 staff in Asia and everyone must be on pins and needles waiting to find out what will happen to them. On the local front, only AIG among the big names mentioned in the news today, has a big consumer base in the Philippines, Philamlife being a member-organization of the insurer. (UPDATE: My local source says Philamlife has its own financial resources and will not be affected much by AIG’s troubles. I am waiting for an official statement from the company.)

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Gotcha!

Here’s a snappy secret from publishers. Use words like “how to get rich in ten simple steps” or “secrets of wealthy people” in title and promotional materials. Never use “retirement.” Malayo sa bituka. (Far from the gut).

Like everyone else on this planet, Filipinos don’t like to think about the future. But think of this: it wasn’t too long ago when Bill Gates was a young upstart who started Microsoft in his garage at 17 years old. Yesterday, he clocked in his last full day of work at the office after 33 years of building that icon of technology.
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Vote:

a) Of course not! Subsidies are baaad.
b) It’s a source of corruption. Mark my words!
c) It’s a band-aid solution, but a few pesos are better than nothing.
d) Everybody’s doing it. The US and other countries are giving subsidies. Sige na nga, pwede na (It’s okay).
e) Hey, let’s not look a gift horse in the mouth!

A lot has been said about the government’s decision to give out cash transfers or subsidies to the poor. Comments range from the totally absurd to pure wisdom.

There have been three forms of subsidies thus far: the P500 cash transfer to households that consume at most 100 kilowatt hours a month which will cost government P2 billion, a P2-per-liter discount for drivers of jeepneys and other public utility vehicles, and a P300 subsidy for every child that goes to school.
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We answered this question in our personal finance feature today:

Question: I am one of the thousands of people who live in Quezon City but work in Makati City. That means I drive some 20 kilometers to work every day, and that’s just one way. I tried commuting but it’s impossible during rush hour. With the price of gasoline going up, travel to and from work makes a huge dent in my budget. Is there any relief in sight for us? – Josephine P.

We all will have to deal with the rising cost of gas, whether or not we are from Quezon City, Bulacan, Cavite, Cebu or Davao. The most terrible forecast I have heard so far is for a full tank to cost P30,000. That’s almost the take-home pay of senior call center agents.
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Inflation clocked in at 9.6 percent in May, a 9-year high, says our banner article today. Citigroup expects inflation to reach 8.3 percent for the entire year. At the core of this economic indicator are two basic things: prices are skyrocketing and our savings and investments are getting squeezed.

Should you be worried? What does a 9.6 percent figure mean?

First, it’s just a hair’s breadth away from double-digit inflation and is the highest since January 1999.
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Do you listen to economists? They will have kilometric things to say about the 5.2 percent gross domestic product announced by the government yesterday. Listen closely and see if they sound like this hilarious interpretation of Alan Greenspan’s latest comment on the economy by one of my favorite bloggers and Fortune columnist Stanley Bing.

“First we have Alan Greenspan whose further additions to his previously stated opinions about the situation is dutifully reported in the Financial Times and quoted in today’s Daily Briefing. Apparently we have a 50% chance of being in a recession… It seems, he says, that there is data indicating things are stabilizing, but it’s too early to tell. If we do have a recession, it won’t be that bad though, probably. He says. Unless, you know, a bunch of other stuff happens, in which case things could get worse.

Nyahaha. Sounds familiar?
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(Photo from Agence France-Presse)

We hardly think about the few mouthfuls of rice left on our plate. Taken together, this daily rice wastage average 15 grams per head, or 1,280 tons per day and cost Filipinos P23 million. Did I say “daily”?!

Mind-boggling.

These are official figures from the Food and Nutrition Research Institute (FNRI), the principal research arm of the government on food and nutrition, that I caught this morning from the television show “Mornings on ANC”.
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