This time, if only for this time, I wish and hope to high heavens that President Gloria Macapagal-Arroyo is right with her pronouncements. She said that the recent Asian stock slide could not in any way throw the local economy into disarray—like it did in the late 1990’s—since the fundamentals of our economy are all set in the proper places. I am not well-adept in the nitty-gritty of economics, how it (the economy)is being run and kept afloat or being pushed forward; so probably just like most of you, I could merely rely on the analysis of so-called financial experts on this issue, and even on President Macapagal herself, she with the Harvard University degree on economics.

It could not be helped to be reminded about the dreary episode in 1997, when Asian stock markets went on steep downward spirals one after another, like dominoes falling helplesly on each other and saw how the economic gains of countries like the Philippines and Thailand (gained painfully over the years), virtually razed like paper bursting into flames. It actually took 16 Billion Dollars worth of IMF money to bail out Thailand then, which lost 75% value of its stock market in just days. The Philippines were badly affected too by that crisis although no IMF fund came rescuing our pains; and that was a little painful to recollect and to be reminded of the fact that it seems to be that only countries like Thailand deserves to be saved from economic ruins by the famous three letter bank in New York. This sort of remind me that Germany did deserved 20 Billion worth of Marshall Plan funds for it to recuperate from devastation during World War II and the Philippines—despite Manila being virtually leveled to the ground by Japanese bombers—-had not deserved any “marshalling” from them rich and first world countries; and banks.

The 1997 Asian stock crisis was very terrifying to say the least and the Philippines got so affected by it that then President Fidel V. Ramos had suddenly stop calling our nation a ‘new tiger economy’ or ‘an economic miracle’. The crisis had virtually silenced his once well-known braggadocio about what he had done to the Philippine economy. “Kaya natin to”, he was always saying then.

Now, the 8% steep decline in the entire value of the Shanghai stock market should be dangerous enough since its effect had been felt globally, inciting huge stock sell-offs from Wall Street to Rio de Janeiro and towards European markets. In fact, the first time I had known about it—about three days ago from the Internet—I was able to exclaim in my mind “Oh no, here we go again!”.

Most financial analysts had blamed over-speculation on stocks as the culprit behind the China stock slide. This must be the most correct analysis since the China stock market had grown by a whopping 140% from last year, that’s more than double its size a year ago and that’s really abnormal; very abnormal I shall say. Foreign funders certainly had infused so much money in the China market in such a short period of time that it won’t take a rocket scientist to presuppose the idea that there would be overheating of the market sooner or later—and that now, it had finally happened.

At 140% growth in just one year, it would not be shocking to find out that there could be a sizable number of overpriced or bloated stocks in the Shanghai Stock Exchange, having prices that are way above its real value. Some unscrupulous speculators do this, to bloat the prices (speculation is not really a crime since it’s a way to make money in the market) by inappropriately creating misinformation in order to make certain stocks very attractive to would-be buyers and then afterwards, these speculators will sell such stocks previously bought at cheap prices at premium tags. And when the real value of said stocks become gradually apparent (like when it yields low dividend incomes based low corporate income) then stock owners would become jittery and be insecure with the stocks in their hands, that at the littlest hint, they will sell such stocks hastily, resulting in panic selling, therefore lowering demand for said stocks which will in turn result to radical lowering of stocks prices. If a lot of this kind of speculations hounds a market at any given point, it will create massive insecurity and snowballing of stock prices in general. Then a stock crisis occurs. Like a hurricane that comes once in a while but when it comes, it really ravages.

While the speculators had already made their profits and laughing all the way to the bank, those who were victimized by the stock price manipulations had only their tears to assuage their losses.

In theory, it would only take several persons to destroy a nation’s economy, and even that of the world’s that burgeoning markets like Shanghai should be more stringent in their regulations concerning stock and capital trade and not be caught off guard anytime. In 1997, one person named George Soros was blamed by then Malaysian Prime Minister Mahathir Mohammad for single-handedly ruining the Malaysian economy by heavily speculating on the Malaysian Rupiah.

For now, I do hope that the alleged speculations in China would be duly investigated and be smoothened out and hope further that dollar remittances from abroad and the so-called strong micro-economics in the countryside would effectively shield our economy from erratic capital situation in nearby markets, especially that of the giant Shanghai stock exchange.