I have been in the States for the past week, and I have seen the slowdown of their pace there.

While property prices, especially in the bay area of San Francisco, have not fallen off the cliff; sales of homes have definitely been on a standstill. This is not because of the lack of buyers who are looking for bargains. This is basically brought about by the absence of credit. Now foreigners cannot borrow from local banks, unlike in the past years. Bank funds have also been limited as their previous practice of monetizing bundled securities and paper assets have obviously stopped by now. Stores that I used to visit, like Circuit City, are closing. Mervyns and so many retail shops are also starting to close. The Apple Stores are one of those that seem to still have a lot of people.

For those who think that America is at the tail-end of its problems, they are wrong. Even with Obama as the new US President and even with greater hope, America has to realize that this will take time. If they will be rescuing every company or industry out there, then the cleansing process for companies to bring down their cost structure will never happen.

With the three big car makers facing huge challenges mainly brought about by car financing offers that vanished, the great debate is whether to save them or not. I personally think that they should not be saved, so these companies can either come out stronger or not exist anymore. But, entrepreneurs will also come out to buy these assets and brands. They will recreate a new business model for American cars.

Unfortunately, America is composed of small and medium enterprises and many of these negosyos will be hit with a tight credit market. Unfortunately, there is no other way for corporate America to come out of this stronger if the companies do not reinvent themselves to the right size and bring down their cost structures. More and more jobs will go to Asia through outsourcing, because American wage rates are relatively less competitive.

Citibank in America has already announced that 50,000 jobs will be cut. This is part of building stronger companies in the future. Labor rates will have to come down. This is what happens when over time labor demands become too excessive, rendering companies uncompetitive. Eventually the country becomes uncompetitive.

Even worse, the American dollar has become stronger, since it is the world’s currency of trade. Until now as people unwind their investments, they have no other alternative but to leave them in US dollars, which is even making America less competitive. The Japanese car companies continue to do well in America, beating the American car manufacturers. They have developed hybrid cars and also have a low cost structure.

Moving forward, the possibility of a depression is getting higher. But, maybe it will not be as severe as the 1929 depression, since central banks and governments of the world are playing a very proactive role.

For the Philippines, I have to say that we still are insulated to some extent, as local consumer spending is still good. As long as people are still employed, whether here or as OFWs, we can expect a softened impact of the global turbulence on our economy. Admittedly, the influx of BPOs, no matter what critics say, still provides hundreds of thousands of employment and purchasing power even to college students who want to go part time, and I am sure this has helped in bringing down the jobless rate to 7.4 percent, from 7.8 percent last year.

Our real estate is still relatively cheap, compared to what is out there in other Asian countries. Bank lending has always been very strict since the Asian crisis. Many people can avoid borrowing to buy a house and pay in cash. The requirement of a higher down payment has always been there as a discipline in order to avoid being too leveraged.

As long as America is unable to realize the importance of allowing industries to correct themselves, the emerging markets of China, India, and the Philippines will continue to benefit. While I am quite pessimistic about America in the coming months, I am more optimistic about Asia. This may be the time when Asia can come out of this world financial crisis much stronger. This is also not to say that China and the rest of Asia will not feel the economic slowdown, but our country has the right cost structure to compete.

In our country, we should continue to find ways to bring down the cost of doing business. Make laborers realize that what happened to America because of high wages has caused their country to be less competitive. Let us push for the lowering of interest rates to spur growth and lending. At a time like this, more than monetary actions, we should encourage government pump priming of the economy and allow for a bigger budget deficit. We need to spur government spending on basic infrastructures like roads, airports, and seaports that will improve the logistics for negosyos to transport goods.

This will also allow more tourists to visit the Philippines. The multiplier effect is greater at this point. There should be sustained assistance to specific and targeted poorest of the poor sectors and more financial support to micro and SMEs. As government spends, it helps in pushing the Philippine Inc. to grow. See what the Chinese have done with their $500-billion stimulus package. We should have our own mini version, but of course properly funded and done well. I have recently landed in the new Iloilo airport and even the new partly opened airport then was already world class standard. We should have more of these kinds of projects in key priority areas.

In the end, our take on these challenging times is to always keep up the high entrepreneurial spirit, and continuously search for pockets of opportunities that crop up amidst the crisis. Entreps are used to challenges but we must be reminded of the need for non-stop learning and cleansing process. Search for innovations that will excite the market. There will be no let up on cost reduction efforts if we are all to survive and even grow bigger.

[For feedback, email me at gonegosyo@yahoo.com or thru SMS at 09175591245. For free business advice, visit www.gonegosyo.net. Watch the Go Negosyo Bigtime Show in its new home, QTV, every Saturday and Sunday 8 to 8:30 a.m., with replays in NBN every Sunday 9:15 to 10 p.m.]