Ghost places and obligations
There is only one big mall in Baguio City and the number of people there is a bell weather on tourist arrivals. Now it is like a ghost town compared to how it used to be the past weeks and months. With a good number of new restaurants that just opened and the features it offers which naturally attract tourists from the lowlands, it still became that—a ghost town– the past days. It might even become worse in the coming days due to the advice to avoid crowds or to just stay at home.
Taxi drivers are literally crying as their daily take depends on their gross revenues. Many of them were unable to take home any money and others practically lost money after about 24 hours of hard labor looking for passengers and ferrying them to every nook and cranny in the city. As one of them said, “We honk our horns on anything that appears to be a passenger on the sidewalk. To our chagrin sometimes, the apparition turns out to be a pile of garbage bags.”
In short, all businesses are really down. So many of them in town that are renting might not make enough to pay this month’s rent. Perhaps all of the businessmen had not factored in the arrival of Covid-19 or the world pandemic it has caused in their business plans or forecasts. Everybody was caught flatfooted.
The most hardly hit or to be badly hit would be those who have to amortize for anything like a car, a house and lot, big machinery or other major or big acquisitions. The financing companies might be able to give them a leeway for a month on their periodic payments, but nothing more than that. These institutions progressed in their line of business because they can be heartless.
In our legal books, if memory serves, only a calamity like a war justified the suspension of obligations. Natural calamities might be a cause for a short reprieve to settle obligations, but anything beyond that would be a miracle.
Those on the other side of the spectrum, the banks and other financing companies, will also be battered. If defaults on loan payments will be massive many of these companies will turn belly up in no time. What will a bank do if nobody would be paying their loans? They can foreclose on collaterals but they might end up with zero liquidity. With no cash, they would have no other choice but to close their doors, if the Central Bank did not already do that due to bank runs..
So many borrowers and lenders will end up in the same boat called “Problematic.” Most other businesses are already in that boat.**