But the boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation, which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion and thus bring about the crisis. The depression follows in both instances—Ludwig von Mises
In this issue
Bullseye! The BSP-Led FSCC’s Financial Stability Report Confirms Almost ALL the Risks I Raised on the Banking System and on Asset Bubbles
-Bullseye! Boxed into a Corner: Repricing, Refinancing and Repayment Risks (3Rs) Could Result in Systemic Risk
-CPI Surge: Philippine Assets Thrown Under the Bus, Politicians Spin the Statistical Inflation
-Bullseye! CPI Surge, Peso Fall: Yes, A lot of Money Funded By the BSP Flowed into Demand on Build, Build, Build Projects
-Bullseye! FSCC’s Financial Stability Report Confirms Bank Losses On HTMs, Higher NPLs
-Bullseye! FSCC’s Financial Stability Report Confirms US Dollar Shorts and Mounting Concentration Risks
-Bullseye! FSCC’s Financial Stability Report Confirms the Frantic Race to Build Supply, Massive Debt Build Up in the PSE, and Corporate Bond Leveraging!
-Giving Credit to FSCC and Questioning the Motive for FSR; Forced Savings Equals Malinvestments
-Seen in the Context of FSR: BSP’s Panicky Actions Walks the Proverbial Tight Rope
Bullseye! The BSP-Led FSCC’s Financial Stability Report Confirms Almost ALL the Risks I Raised On the Banking System and on Asset Bubbles
Given its insistence for boondoggles and for shifting the political-economic landscape to a centrally planned framework, policies of the Bangko Sentral ng Pilipinas (BSP) and National Government (NG) will operate under the sphere of limited choices.
1) If the NG uses the capital markets, rates will have to reflect the avalanche of supply. Moreover, NG spending will increase pressures on real economy prices.
2) If the NG will use the BSP option, the peso will fall steeply and inflation will rise, which again will ricochet or boomerang on bond yields.
3) If the government stops from its current undertaking, it will severely slow the GDP, prompt for a fall in tax revenues which should spike deficit as well. Credit risk will surface and subsequently impact the banking system. Markets will demand more collateral or increases in credit risk premium (higher yields!).
4) If the government should use or depend on external sources for its financing, they should see the same dilemma: rates have been rising too!
5) The last option would be for the NG and BSP to manipulate markets and statistics in the hope that the markets will conform and comply with their political targets.
[See Why Interest Rates Will Rise: 1Q Fiscal Deficit Blowout Financed by BSP’s Debt Monetization (QE) and Spiking Public Debt!May 6, 2018]
Bullseye! Boxed into a Corner: Repricing, Refinancing and Repayment Risks (3Rs) Could Result in Systemic Risk
And it must be pointed out that given the still RECORD low-interest rates, RECORD high in the use of BSP debt monetization and RECORD fiscal stimulus, aside from the RECORD use of derivatives by the BSP to prop up its GIRs(upper window figure 1), policy tools to “resuscitate” the economy in the event of an economic shock will have been exhausted.
Put this way, the BSP and the NG have painted themselves into a corner!
Figure 1
And with accelerating and intensifying pressures in the periphery, there will be scores of emerging markets that have been under financial and economic strain in need of bailouts. The increased competition means that the room for an economic and financial rescue from multilateral institutions grows smaller by the day. And if developed economies fall into a recession or a crisis, international bailouts or rescues can be expected to vaporize.
The full concluding quote from Chapter 3: CURRENT RISKS IN THE FINANCIAL SYSTEM of the BSP-led Financial Stability Coordination Council’s (FSCC) recently released 2017 Financial Stability Report
While there is no definitive evidence of a looming crisis, it is also clear that shocks that have caused dislocations of crisis proportions have come as a surprise. What is not debatable is that repricing, refinancing and repayment risks (3Rs) are escalated versus last year and this could result in systemic risk if not properly addressed in a timely manner. (p.27)
The outlook that I recently sent omitted the bold portion. As yields continue to rocket, the macabre scenario which the BSP-led FSCC’s hopes to avoid will emerge: an escalation in repricing, refinancing and repayment risks (3Rs) that “could result in systemic risk” (lower window Figure 1)
CPI Surge: Philippine Assets Thrown Under the Bus, Politicians Spin the Statistical Inflation
A rewind on the August 6.4% CPI.
First, the market’s response: Philippine financial assets endured a pummeling. As shown above, sovereign fixed income securities, particularly the short end, had been smacked hard. The peso scuttled to a 13-year low. Despite the cumulative three-day fabulous end-session rescue pumps of 2+%, the sails on the bids in the PSE retrenched.
Liquidations signify as typical outcomes from collateral calls in a highly levered system.
Interestingly, the BSP led FSCC incorporated segments on the Nassim Taleb’s Black Swan and Hyman Minsky’s Instability theory as part of their risk analysis! Austrian economics had been part of the footnotes too!
No wonder the FSR report have shown amplified apprehensions of the current backdrop!
Next, the political response: the spin on the CPI!
“There is no reason to panic”, reassured the administration’s spokesman, “because it’s high but it’s not ridiculously high”.
“Inflation during the time of former President Gloria Macapagal-Arroyo”, the incumbent house speaker, was “even in double digits”, noted the spokesman.
You see what I mean by arguing from statistics?
For sure, the CPI rate had been much higher than either 6.4% or 7% (from the base reference of 2006) for most of the time in Philippine economic history.
In fact, in the framework of historical averages, today’s CPI would be relatively inconsequential.
The CPI rate “averaged 8.41 percent from 1958 until 2018”, wrote the tradingeconomics.com, “reaching an all time high of 62.80 percent in September of 1984 and a record low of -2.10 percent in January of 1959.”
Global CPI and interest rates began to move lower in the mid-1990s due to the productivity growth brought about by globalization and technological progress. Post-2008 central bank activism also contributed to the downtrend in inflation-interest rates trend.
The same applies to the Philippines.
So from a statistical standpoint, the better the current picture will look like, the longer the comparison. On the other hand, the current CPI picture would look bad when compared from a shorter time frame. Seeing different perspectives depending on reference point used is called the contrast effect.
Statistics can acutely mislead in another way: the Base Effect.
For instance, though the percentages may be the same, the base rates used for their calculations have been variable.
A 5% change from a Php 100 base and a Php 200 base would yield different results, in particular, a nominal Php 5 and Php 10 change respectively.
Since in general, the CPI increases over time, the same percentages would mean higher increases in current nominal values. And higher percentages amplify such nominal increases.
Such partly explains the stunning magnitude in the coverage of inflation-related issues. Since the breakout on September 6th, the US peso had been included.
I provided article links from the September 3 to 5, the next:
September 8
September 7
September 6
At the very least 61 articles on inflation and the peso in 6 days (25 from September 6 to 8)! That’s mostly from the Inquirer only. Incredible.
So when the administration assuaged the public not to panic, it was an admission of the current political state of affairs: Inflation has grabbed the center stage of the political economy! Yes, politicians, bureaucrats and media have been panicking!
And they are panicking over a CPI number of 6.4% or 7%, a number which is low by historical standards????
In my eyes, these serve as evidence that the CPI number have been vastly understated!
5) The last option would be for the NG and BSP to manipulate markets and statistics in the hope that the markets will conform and comply with their political targets.
Bullseye! CPI Surge, Peso Fall: Yes, A lot of Money Funded By the BSP Flowed into Demand on Build, Build, Build Projects
Since politics thrives on the zero-sum concept, the soaring CPI has resulted in a wild blame game.
TRAIN, Trump’s tariffs, the opposition’s grandstanding, hoarding, poor infrastructure, NFA fund diversion, self-infliction, were among the many more that had been attributed to it.
However, aside from mollifying the public, the Presidential Spokesman cited the economy's high demand as the main reason for the elevated inflation pressures. “We are addressing the issue of inflation. It will not happen overnight. A lot of money is circulating in our economy right now,” Roque said.”
And in pointing to the peso’s weakness from inflation, high demand “was caused by importation of construction materials for the ‘Build Build Build’ infrastructure program. That’s a natural consequence because we are allotting, for the first time, the biggest bulk of the budget towards public infrastructure,” he pointed out.”
Figure 2
The USD peso surged to 13-year highs (up +.48% for the week, +7.6% year to date)
Since demand doesn’t spring from a vacuum, such requires funding.
Without going into funding details, Mr. Roque is dead-on accurate strictly from this perspective.
Yes, there has been “a lot of money is circulating in our economy right now…”
And yes, much of these money flows have financed political demand that pushed street prices higher. Rising CPI thus had been “caused by importation of construction materials for the ‘Build Build Build’ infrastructure program. That’s a natural consequence because we are allotting, for the first time, the biggest bulk of the budget towards public infrastructure”
For the seven months of 2018, the BSP’s net claim on National Government (NG) spiked by a remarkable 352% in 2017 to Php 219 billion which helped financed (an estimated 78.4%) the record deficit of Php 279.4 billion.
Changes in inflation rates and the USD Php have closely tracked, or have been tightly correlated with, the BSP’s record monetization of the record national government’s deficit since 2015. (see above chart). The USD peso has risen in conjunction with the BSP’s subsidies to the NG.
As previously noted, the NG cannot rely on debt financing alone for its record deficit spending. In doing so, market-based debt financing would siphon liquidity in the system that would send interest rates higher significantly.
Thus, the BSP offsets such partial liquidity drain by financing the NG directly, in the hope that through its inflation targeting measures it can disseminate inflation moderately without rousing the public's attention.
But complexities have emerged from these. Or the cumulative effects of current and previous policies have surfaced via the law of unintended consequences
2) If the NG will use the BSP option, the peso will fall steeply and inflation will rise, which again will ricochet or boomerang on bond yields.
Boom!
Bullsye!
Bullseye! FSCC’s Financial Stability Report Confirms Bank Losses On HTMs, Higher NPLs
Current events showcase the BSP’s policy dilemma that has been implicitly encapsulated by the FSCC’s 2017 Financial Stability Report.
Now to the “dislocations of crisis proportions” that “have come as a surprise” [all bold in quotes mine}
The FSCC attributes rightly ballooning debt to low-interest rates.
The low interest rate environment greatly encouraged the search for yield as greater risks were taken in exchange for higher returns. However, the change in market prices (i.e., rising interest rates and depreciating peso against the US dollar) could trigger negative outcomes which, if not properly addressed, would amplify into systemic consequences. (p .24)
Why did it take them so long to recognize this?
Answer: Because low-interest rates serve as adirect subsidy on liabilities of the National Government, as well as, functions as an indirect subsidy to revenues. The free lunch from Financial repression is addicting
Banks face marked-to-market (MtM) losses from rising interest rates. Higher market rates affect trading since existing holders of tradable securities are taking MtM losses as a result. While some banks have resorted to reclassifying their available-for-sale (AFS) securities into held-to-maturity (HTM), some PHP845.8 billion in AFS (as of end-March 2018) are still subject to MtMlosses (Figure 3.8). Furthermore, the shift to HTM would take away market liquidity since these securities could no longer be traded prior to their maturity p.24
I wrote that the banking system had been cramming the asset side of their balance sheets with HTMs.
Needless to say, because the HTMs don’t reflect on the market value of the underlying security, it can be an accounting means to camouflage losses.
See Philippine Banking System: In Bad Shape or in Trouble? August 25, 2018
Boom!
Bulleye!
The FSR report validates my analysis that bank profits are a mirage. Faltering liquidity are mounting sign of losses.
Figure 3 (FSR 3.8 and 3.9)
More from the FSR…
The higher debt levels must now be managed against rising interest rates and peso depreciation. Several studies17 suggest that higher levels of debt relative to economic output generally leave the financial system to be more vulnerable. In particular, debt servicing capacity of highly leveraged borrowers becomes progressively more sensitive to drops in income and sales as well as increases in interest rates. For a given shock, higher debt could result in a higher probability of default. As deleveraging starts to unfold, consumption and investment fall, ultimately affecting economic growth (Cecchetti et. al., 2011). Box Article 5, meanwhile, provides a discussion of how Hyman Philip Minsky argued that a long period of economic growth could translate into unsustainable leverage for overly optimistic borrowers. (p.24)
While it may be true that Minsky, as a neo-Keynesian, saw a transition of leverage from hedging to speculative to Ponzi, leveraging is a function of incentives provided mainly by policies. Low-interest rates, for instance, feed on this dynamic. Regulations and taxes may also influence the direction and scale of credit issuance and use.
Another from the FSR…
The concern on the sustainability of debt is magnified by the increasing level of delinquent loans. The non-performing loans (NPLs) level of the banking system was generally declining at the onset of the GFC but has increased since late 2015 (Figure 3.9). The rising amount of NPLs does not, however, suggest that the credit market is already at the point of imminent collapse. Instead, it is simply pointing out that classifying an account as “non-performing” is already an ex post facto indicator of a borrower’s payment capacity which could eventually weigh on the balance sheet of lending banks, the magnitude of which is unknown in advance (p.24)
Go back to figure 2. The BSP launched its stealth stimulus, the QE in 2015, as non-performing loans (NPLs) “increased since late 2015”
Recall that the BSP launched QE in late 2015 to combat disinflationary pressures? Now it has been clear that this was in response to the banking system’s profitability which had been adversely affected by disinflation
See Philippine Banking System: In Bad Shape or in Trouble? August 25, 2018
Boom!
Bullseye!
If low-interest rates back then have already spurred an increase in NPLs, why won’t sheer volume, which sacrificed credit quality, compounded by rising rates lead to “the point of imminent collapse”?
Bullseye! FSCC’s Financial Stability Report Confirms US Dollar Shorts and Mounting Concentration Risks
The banking system, as the principal provider of credit in the economy, indeed, is the most vulnerable to the potential default of borrowers. While the actual impact is yet to be assessed due to absence of granular information on borrowers’ income and the resulting debt servicing capacity, this warrants possible preemptive intervention given that market conditions tilt the risks to the upside. NFCs have brought down their USD borrowings but bank borrowings have pushed up overall debt. While the USD debt of NFCs has actually tapered to USD17.1 billion at the end of 2017 (Figure 3.10), the higher USD borrowings of banks effectively raise the overall debt servicing of Philippine corporates. This is not an immediate concern and depends on the deployment of the funds. However, unless the borrowers are generating USD incomes sufficient to cover debt servicing, on balance, the higher overall debt puts pressure on USD liquidity in the country.
Rampant bank borrowing has been in the news. Or go to the EDGE.PSE.com.ph or look at the pds.com.ph.
To shore up its liquidity, the banking system has likewise indulged in borrowing. (figure 3, lower window) The lender is a borrower. Though bank leveraging has shifted from bills (short-term) to bonds (long-term) in 2018 and grew by Php 115 billion or 2.5%...
Why has the banking system been engaged in continuous funding programs in the form of issuance of equity, bonds or notes? Where has all the money gone?
See Philippine Banking System: In Bad Shape or in Trouble? August 25, 2018
Boom!
Bullseye!
The FSCC has some idea of the “dollar shorts”: “unless the borrowers are generating USD incomes sufficient to cover debt servicing, on balance, the higher overall debt puts pressure on USD liquidity in the country.”
Each time that the BSP engages in money printing operations, it crowds out the older pesos with newly issued pesos. So US dollar debt will have to be paid for with MORE pesos. The lower peso, thereby, “puts pressure on USD liquidity”
And since inflationism signifies a policy of redistribution, profits generated in such a system, particularly in bubble industries, depends on the sustainment of such policies. These industries will not have ballooned to inordinate proportions under free markets and sound money policies.
That said, in general, the misallocation of resources under such environment ensures that there won’t be enough pesos to pay for burgeoning real (inflation adjusted) and nominal (changes in borrowing) US dollar liabilities.
Now Concentration risks from the FSR…
Concentration of credit to specific sectors amplifies credit concerns. As of end-March 2018, about 60 percent of loans were extended to five of the 21 economic activities, i.e., Real Estate Activities; Electricity, Gas, Steam and Air-Conditioning Supply; Loans for Household Consumption; Wholesale and Retail Trade; and Manufacturing(Figure 3.11). While there is recognition that outstanding balances across economic activities continue to expand, this fairly heavy concentration makes the banking system prone to risks that could influence the five economic activities. This is a concern because, already, it is noted that four of these economic sectors (except for Electricity, Gas, Steam and Air-Conditioning Supply) account for almost 70 percent of the NPLs of the banking system.
I have long been saying here that debt numbers mislead because of the sparse distribution of formal credit. And because of it, banking loans tend to amass to entities with access to formal credit. And it naturally follows that bank credit financing will reveal itself on areas where they have invested and on areas which tend to benefit from interest-rate subsidies.
And I have similarly discussed that the banking system’s expressed shift towards depending on interest rate income since 2013 have rendered them vulnerable to credit impairments.
By switching to concentrate on loans, the banking system essentially placed its proverbial eggs into almost a single basket. Thus, concentration risks from excessive dependence on loans have rendered vulnerable the domestic banking system. The extended profit drought signifies a symptom of such risks.
Three, the banking system pivoted towards interest income or concentrated on the loan portfolio when interest margins spiked in 2013. (see middle pane, figure 2)
See Philippine Banking System: In Bad Shape or in Trouble? August 25, 2018
Boom!
Bullseye!
Bullseye! FSCC’s Financial Stability Report Confirms the Frantic Race to Build Supply, Massive Debt Build Up in the PSE, and Corporate Bond Leveraging!
And the real estate bubble, from the FSR…
Figure 4
Particularly for the real estate industry, balance sheet data of major real estate developers19 show a collective increase in real estate inventories since 2013 (Figure 3.12). Colliers International Philippines Research has reported that there is an expected additional supply in the different segments of the real estate market for the succeeding years. This supply-side factor suggests that the vulnerabilities may not necessarily be evident in sharp upward price movements. The Residential Real Estate Price Index, in fact, shows that real estate prices have increased across all types of housing units, except for prices of condominium units (Figure 3.13). Some caution should nonetheless be taken since risks may come from the build up of supply rather than an outright price bubble. (p .27)
“Risks may come from the build up of supply”
Haven’t I been eternally pointing to the frantic race to build supply?
Boom! Bullseye!
Figure 5
On corporate bonds and the PSE’s debt…
Continuous demand for credit by corporates and households is evident in the domestic economy. This funding strategy is a clear positive vote for local economic activity. Specifically, non-financial corporations (NFCs) and households account for a significant portion of the incremental loans provided by the banking system. As a matter of fact, firms listed in the PSE exhibited a rising debt-to-equity ratio, from about 45 percent in 2008 to more than 86 percent as of end-March 2018 (Figure 3.4).
Apart from bank loans, NFCs have also resorted to the bond market for their financing needs. Figure 3.5 shows increasing levels of corporate debt issuances, both in LCY and in US dollars. The level of corporate debt issued in US dollars, in particular, had increased since 2010, reaching USD11.2 billion as of end-March 2018 after tapering in recent periods. (p.22)
The FSR here confuses credit from the seduction from low-interest rates with “clear positive vote for local economic activity”.
If this is true, there would be “no shocks that have caused dislocations of crisis proportions have come as a surprise”. Investments would have been productive, liquidity will remain naturally abundant, and there wouldn't be a sizeable build up on credit impairment and losses. Besides the FSR won’t be talking about the risks from 3Rs: “What is not debatable is that repricing, refinancing and repayment risks (3Rs) are escalated versus last year and this could result in systemic risk if not properly addressed in a timely manner”
So aside from banking loans, the FSR points to mounting risks in the bond markets and at the PSE.
You’d be shocked to know how the FSR thinks of the local stock market. I will send it in a different mail
Giving Credit to FSCC and Questioning the Motive for FSR; Forced Savings Equals Malinvestments
To give credit where credit is due, the FSCC, I believe, have been generally forthright in parts of the report that I have read.
Of course, although manifestly absent here has been the mention of their extensive use of the nuclear option to save the banking system, as well as, its critical contributions to the substantial maladjustments in the economy.
One can’t have it all.
The sad part is that while they have identified significant segments of financial tinderboxes, they haven’t admitted to their role in it. Likewise, they haven’t been clear on how to deal with them.
The escalation of repricing, refinancing and repayment risks (3Rs) that “could result in systemic risk” is a creation of theirs. And yet, what they perceive as risks, have actually signified market forces attempting to reassert its role as a coordinating mechanism designed to rebalance the system.
Basically, the elementary laws of economics have been exposing the unsustainable asset (something for nothing) bubbles financed by credit, a product of the BSP’s easy money policies.
The motive for the publication of this eye-popping and sharply contradictory theme of the establishment’s “sound macroeconomic fundamentals” meme is unclear too.
That segment of the report demolishes the mainstream’s perception of the supposed invincibility and resiliency of the economy.
I suspect that the FSCC consortium—the BSP, Department of Finance (DOF), IC, PDIC, and SEC—are onto something. They may know something untoward headed our way and would like to whitewash their hands from it. Hedging themselves (career wise) may be another possibility.
Of course, I also understand the consensus will ignore or dismiss this report. It would not be profitable. It goes against the premise: sell, sell and sell. Clients be damned!
The remarkable thing is that the FSR required an assembly of an army of analysts, economists, statisticians, accountants, lawyers and other experts from a consortium of the BSP, Department of Finance (DOF), IC, PDIC, and SEC to see what I have predicted long ago.
This lowly analyst pitted against an army of at least a thousand government experts
I’ll end this segment with a quote from Spain’s leading Austrian economist Jesús Huerta de Soto*
Instead, regardless of the final amount of saving and investment in society (always identical ex post), all that is achieved by an attempt to force a level of investment which exceeds that of saving is the general malinvestment of the country’s saved resources and an economic crisis always destined to make it poorer
The Philippine savings rate growth has been vastly lower than the bank credit growth, signifying, through its ratio, the scale of malinvestments embedded into the system (see Figure 5 lower window)
*Jesús Huerta de Soto, Artificial Booms and the Theory of "Forced Saving" Mises.org
Dislocations of crisis proportions will soon be a reality.
Seen in the Context of FSR: BSP’s Panicky Actions Walks the Proverbial Tight Rope
The FSCC’s FSR reveals the extent of the FRAGILITY of the Financial System.
It implicitly sounds the alarm bells while simultaneously not wanting to trigger a stampede. It proposes to its audience hope of resolutions from its actions.
Given the political trajectory, the FSR report reinforces my proposed operating spectrum of 5 choices for the NG and the BSP
Because inflation and the peso has become the cynosure of the political spectrum, the BSP has embarked on several measures.
The two Reserve Requirements Ratio cuts appear to have been designed to place more money into the banking system to alleviate the industry’s tightening liquidity.
Nota bene: banking liquidity isn’t the same with government liquidity.
The 100 bps hikes in 3 meetings have been intended to raise the price of credit, thereby partially withdrawing financial accommodation to the economy
With the banking system being pushed to reduce credit, the BSP has essentially been tasked as the primary provider of liquidity to the financial system and to ensure the financing of the NG’s deficits.
The amplified use of the BSP’s nuclear option confirms this path.
That said, if the BSP continues with its direct subsidies to the NG, pressure the peso and inflation rates will persist. Though actions to remedy supply side may be of some help, demand-side pressures from the Government will remain significant enough that would offset the former.
The BSP’s actions will predominate unless the mess in the banking system becomes pronounced.
As I have been saying, the peso will serve as the sacrificial lamb to the altar of politics
Borrowing foreign exchange from external and or domestic creditors, including banks, retail bonds, OFWs, et.al., would increase its external debt risks and heighten its “dollar short” fragility.
To contain the peso’s fall, the BSP has recently
-required all entities with plans to acquire foreign loans to submit their foreign borrowings plan for 2019 to the BSP not later than 30 September 2018.
Not only does the BSP want to know the identities of the borrowers, such knowledge to my impression would provide them access to the USD acquired by such borrower/s. Monitoring may likely transform to controls and prohibitions. Access to the USD has been drying up fast. Capital controls next?
-announced the reactivation of the Currency Risk Protection Program (CRPP). “First introduced in December 1997, the CRPP is a non-deliverable forward hedging facility which is aimed at alleviating demand pressures in the foreign exchange spot market from borrowers seeking to hedge their future foreign exchange exposures. Under the facility, parties agree that, on maturity of the forward contract, only the net difference between the contracted forward rate and the spot rate shall be settled in pesos. The BSP will make the CRPP available to eligible borrowers through the commercial banks.”
A tool used in the 1997 Asian crisis revived! An affirmation of “shocks that have caused dislocations of crisis proportions have come as a surprise”.
-warned that it will go after currency speculators.
This, of course, represents public relations baloney.
Who said this?
Money shocks, however, often have fiscal origins. If the government has a persistent deficit in its budget that is accommodated by the monetary authority, money growth tends to be excessive. In this context, money shocks stem from fiscal shocks.
Well, Dr. Dante Canlas UP and BSP Sterling Professor and former NEDA chief. Yes, BSP bigwigs like the former Governor Tetangco and present Governor Espenilla knows this.
Business Fluctuations and Monetary Policy Rules in the Philippines: Lessons from the 19841985 Contraction, May 28-29, 2012
-mulls that it would hold an “extraordinary policy meeting ahead of its scheduled review on Sept. 27”.
This emergency meeting strengthens the panicked ambiance of the BSP.
Surely, gone are the days of free money.
And considering the degree of accumulated malinvestments, a disorderly market clearing process should be expected
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