Bonanza

I hope their petition prospers: Manila poor seek end to anti-birth control policy.

BusinessWorld begins a series with Mining site ‘under siege which focuses on a mining operation recently attacked by the NPA. In the House, Solon hits plan to allow mining firms to have militias.

Speaking of the House, Palace pacifies but critics say odds now high vs JDV  even as the sons also rise: Kampi, Arroyo sons vote to oust De Venecia.

Meanwhile, Congress rushes aviation authority approval.

My column for today is Surprise! , and took its cue from my entry yesterday, as well as the headlines for today: Senate issues arrest orders; Lozada flies to London (see also Neri, Lozada keep affidavits for safety:Testimony of 2 execs also put on videotape).

The column makes reference to a couple of articles in Newsweek, first The U.S. Economy Faces the Guillotine and Goodbye to the Bulls? Fifteen key economists, policymakers and strategists weigh in on a week of volatility and economic turmoil.

My theory is that the stimulus package announced by the Palace, besides being difficult to challenge because it’s a copy of Bush’s stimulus plan, also makes perfect political sense, as it keeps Congress where the President likes it: on its knees, groveling, and keeps local officials in a groveling posture, too, extending her lease on political life and by so doing, keeping her options open while narrowing those of her critics. Its a big injection of political steroids.

Yet Salceda’s ostensible economic assumption is that a one year, one-time-only special appropriation of this short, will be in keeping with a US Recession that might be sharp, but not protracted, either.

Interesting to me is Alex Magno’s almost groveling appeal (in his column, today, “Counter-cylical”), addressed to no one specifically but you know it’s meant to catch the eye of the President, where basically he twits her subsidizing electricity rates for the purposes of her election campaign in 2004. He reminds her of the costs of electioneering because he thinks the Salceda stimulus package is simply a bad, irresponsible, idea:

A similar stimulus package has been proposed by one of President Arroyo’s economic advisers. This package involves giving out tax and electricity discounts, among other measures. This package, according to a statement coming out of the Palace, will cost about P75 billion.

There might be some convincing arguments about the “counter-cyclical” merits of such a spending package. But the magnitude proposed implies that we will not meet our promised balanced budget target this year.

As things stand, there is enough anxiety about the fact that the major items of privatization will run out this year. After that, we might not be able to meet our revenue targets due to slow progress in tax collection efficiency. If we give out tax discounts, the whole edifice of fiscal discipline could collapse on our heads.

We have already reduced tariff on imported oil to appease the populist mob. Some politicians, enslaved by their ambitions, have begun talking about taking the VAT out of fuel products. The opportunistic leftist groups are calling for fuel to be subsidized. That will produce a huge deficit that will cause everything else to go awry: the deficit, the inflation rate, the confidence of investors, the strength of our currency.

The net result will be an economy in chaos, with unemployment and poverty rising instead of falling. Investments will slow down, stagnation will set in. We will all end up more miserable that ever.

Before the 2004 elections, government decided to under-price electricity rates. That did not make consumers happy but it kept them from becoming too angry. The Napocor, however, was left holding the bag. It took large losses that required large borrowings.

Please, let’s not do that again. Our utilities are now profitable. As such, it is easier to push forward privatization.

Let’s not put political convenience ahead of fiscal sanity.

There is enough spending involved in the infrastructure program to provide counter-cyclical relief. Anything beyond that requires some hard thinking that looks long into the future.

The irresponsibility of past governments was that, due to political expediency, they spent garrulously and borrowed heavily, putting future generations in hock. They condemned us to a debt crisis that hobbled our ability to grow.

Let’s not do that again.

But what if she does, because the whole thing seems so “win-win”?

Not that Salceda’s alone: see Badawi’s State Of Euphoria, which argues Malaysia’s leader is being unduly optimistic about his country’s economy being immune to a downturn in the US. For the Philippines, Philippines Without Borders is fairly non-committal, in large part because he says we’ll need official government statistics, not yet fully released, to see how we did in 2007 and in what shape we’re going to face 2008.

Even as Salceda’s chirpy view is the official one, The Financial Times reports that US slowdown deals surprise blow to Canon. And that FBI in subprime crackdown In the same paper, Robert Reich says America’s middle classes are no longer coping:

The fact is, middle-class families have exhausted the coping mechanisms they have used for more than three decades to get by on median wages that are barely higher than they were in 1970, adjusted for inflation. Male wages today are in fact lower than they were then: the income of a young man in his 30s is now 12 per cent below that of a man his age three decades ago. Yet for years now, America’s middle class has lived beyond its pay cheque. Middle-class lifestyles have flourished even though median wages have barely budged. That is ending and Americans are beginning to feel the consequences.

The first coping mechanism was moving more women into paid work. The percentage of American working mothers with school-age children has almost doubled since 1970 – from 38 per cent to close to 70 per cent. Some parents are now even doing 24-hour shifts, one on child duty while the other works. These families are known as Dins: double income, no sex.

But we reached the limit to how many mothers could maintain paying jobs. What to do? We turned to a second coping mechanism. When families could not paddle any harder, they started paddling longer. The typical American now works two weeks more each year than 30 years ago. Compared with any other advanced nation we are veritable workaholics, putting in 350 more hours a year than the average European, more even than the notoriously industrious Japanese.

But there is also a limit to how long we can work. As the tide of economic necessity continued to rise, we turned to the third coping mechanism. We began to borrow, big time. With housing prices rising briskly through the 1990s and even faster between 2002 and 2006, we turned our homes into piggy banks through home equity loans. Americans got nearly $250bn worth of home equity every quarter in second mortgages and refinancings. That is nearly 10 per cent of disposable income. With credit cards raining down like manna, we bought plasma tele vision sets, new appliances, vacations.

With dollars artificially high because foreigners continued to hold them even as the nation sank deeper into debt, we summoned inexpensive goods and services from the rest of the world.

But this final coping mechanism can no longer keep us going, either. The era of easy money is over. With the bursting of the housing bubble, home equity is drying up. As Moody’s reported recently, defaults on home equity loans have surged to the highest level this decade. Car and credit card debt is next. Personal bankruptcies rose 48 per cent in first half of 2007, probably even more in the second half, which means a wave of defaults on consumer loans. Meanwhile, as foreigners begin shifting out of dollars, we will no longer have access to cheap foreign goods and services.

In short, the anxiety gripping the middle class is not simply a product of the current economic slowdown. The underlying problem began around 1970.

The Economist , in It’s rough out there, is more reserved in stating the extent of the fallout, so far, but is quite obviously concerned that Central Banks will have to be very prudent in handling policy henceforth: if Central Banks get spooked, they can turn predictions of economic disaster into sudden reality:

Across the globe, more than $5 trillion has disappeared from the value of public companies in the first three weeks of January. Many markets are 20% or more below their highs, the informal definition of a bear market. On January 21st share prices plunged from Brazil to Britain in the worst day of trading since September 11th 2001.

Although America’s exchanges were closed that day, its policymakers’ response was more than commensurate. Before Wall Street opened on January 22nd the Federal Reserve announced an unscheduled rate cut of three-quarters of a percentage point, to 3.5%, its fastest easing in a quarter of a century. A day later the New York insurance regulator and leading banks began work on a multi-billion-dollar plan to rescue the country’s teetering bond insurers. As the markets pitch and yaw the pressing question is whether central bankers and regulators have acted with swift prudence, or ill-judged panic…

Rather than chasing the market’s tail, the Fed ought to be asking what the markets’ fall really signals. The answer is: unsurprising judgments that should not have led it to panic…

…For much of last year, stockmarkets ignored the bad news from the credit markets, thanks to three assumptions. First, that policymakers, led by the Fed, would avert recession in the United States. Second, that even if America stumbled, the rest of the world economy was “decoupled” and would carry on growing healthily. And third, that the credit mess would be confined to areas related to subprime mortgages.

These assumptions were always over-optimistic. America’s economy has stalled as the building bust deepens and consumers cope with the triple whammy of falling house prices, tighter credit and dearer oil. The labour market is weakening at a pace that has in the past heralded recession. The rest of the world, meanwhile, is slowing. Europe’s outlook has darkened. Its banks are embroiled in the credit crisis; and one of them, Société Générale, has lost €4.9 billion ($7.1 billion) in a fraud. Japan is weak; even turbo-charged China may cool.

And the credit crisis has continued to spread. Corporate lending and parts of consumer credit, such as credit cards and car loans, are wobbly. The looming downgrades—and possible bankruptcies—of the “monoline” insurers of some $2.4 trillion of bonds boded worse until Mr Dinallo moved. They would have hurt states and municipalities that are their biggest customers; and banks that had bought insurance in credit-derivative trades would also have been hit. A further round of losses at the banks could have been catastrophic. With the system at risk, no wonder stockmarkets swooned…

As to decoupling, although the rest of the world remains somewhat vulnerable to America’s troubles, most rich economies are in a slightly better shape than the United States, and most emerging ones are better able to withstand an American downturn than they were (see article). Many have plenty of reserves and flexible exchange rates, making a rerun of the 1997-98 crises unlikely. Many are growing nicely on the back of rising domestic demand and regional trade links. And many have strong budget positions, leaving room for fiscal loosening to offset weakening exports.

American policymakers also have tools to cushion—if not forestall—the downturn…

Taken together, the signs from the world economy are troubling. The credit binge will not unwind quickly or gently. Asset prices will fall. But central bankers and regulators have the tools to stop a downturn from becoming a slump, so long as they use them sensibly. Reacting to market panic with panicky rate cuts is likely to make things worse rather than better. The Fed should always be the calm centre of a financial storm.

Just the other night, a friend working for a multinational company focused on the parts-sourcing industry has begun to talk quietly (so as not to spook staff) of a slow but measurable decrease in ad placements. These are the first signs that with shrinking consumer demand in America, interest and orders for parts produced in Asia are gradually being affected; this affects, in turn, the industries that form the parts-sourcing economic foodchain, from the copywriters, editors of trade magazines, to those who put together supplier’s roadshows and conventions, etc. This situation came to mind upon reading this Economist article, Hard sell: Ad-spending usually plunges when economic growth slows. Will it be any different this time?

Similar thoughts were expressed by some people from an outsourcing company I talked to last Saturday, who briefly described the various scenarios their bosses are playing out, to see if an economic slowdown will have serious effects on the whole company, or its various parts, only.

Also, from Newsweek, The Slow Fall of The Greenback: The dollar is as weak as it’s been in more than three decades. Its slide is ushering in a new economic era:

Clearly, times have changed. The dollar—along with America’s economic place in the world—has been on a well-documented downward spiral since 2002. Back then, a euro was worth 86 cents. Today, it buys $1.46. Of course, the euro’s relative youth makes talk of “historic lows” easy to dismiss. More telling is that the U.S. Dollar Index, a futures contract reflecting the dollar’s strength against six other major trading currencies, hit the lowest mark in its 35-year history just before Christmas.

The shift will of course have major ramifications. Countries are beginning to de-link their currencies from the dollar, as inflationary pressures make it difficult to implement effective local monetary policy. Large global creditors like the Chinese have announced their intent to scale back on dollar reserves. European Central Bank head Jean-Claude Trichet is grousing about “brutal” movements in the dollar-euro exchange rate slashing profits at Europe’s biggest firms. Just last week, Airbus CEO Tom Enders warned that a weak dollar threatened the long-term existence of the Continental aerospace giant. Japan’s new Prime Minister Yasuo Fukada worries that the plunging greenback will bring back deflation. And OPEC is studying the possibility of pricing oil in euros—a move that would not only amount to a vote of no confidence from some of America’s largest creditors, but would also make energy much more expensive for the United States, compounding the economic troubles which led to a weak dollar in the first place.

Venuezuelan president and Bush-basher Hugo Chávez recently gloated, “The empire of the dollar is crumbling.” But that’s not quite right. The majority of the world’s financial assets and central bank reserves are still held in dollars. It will take years for the euro to become a real rival; the renminbi will rise over decades. Still, what’s clear is that we have entered a new era. The United States can no longer rule the world on credit.

The blog Uniffors tackled the absence of the President’s husband who was in Switzerland for “bonding and other personal reasons.” The irrepressible blogger then observed,

Malicious minds concluded immediately that the Pidal brothers were checking on their bonds, hopefully not notes invested in sub-prime funds.

The Pidal brothers will come home soon because Jun Lozada is not going to testify on the ZTE-NBN deal anymore.

Lozada is the reason why the Pidals stayed away. If Lozada had testified and dropped a bombshell even bigger than “BACK OFF!” and “Putanginang Abalos yan sinabi pa kay Mike na may $70 million siya ….”, the Pidals would have stayed away until the whole thing blew over, no matter how long it took.

If Lozada had testified, what would the Palace have done to kill the story?

Estrada has been pardoned. Who will they pardon next, Trillanes, Lim, and Querubin? All together or one at a time?

Or maybe Gloria Security Adviser Bert Gonzalez, formerly of Light a Fire Movement, will send out teams of pyromaniacs to identify methane-filled shopping mall basements all over Metro Manila.

The most likely headline grabber, I think, is unseating Speaker De Venecia. It’s been simmering for days. The Palace could have ordered it at any time but why waste a weapon of mass distraction?

Why shake the tree if plans aren’t ripe yet.

Interesting reading, too, in Global Complications for Sovereign Wealth Funds: countries like Singapore, which administer enormous state portfolios, are facing demands from the Western countries they invest in, to make the manner in which these national funds are administered, more transparent.

And a nifty read in Why Caroline Backed Obama:

One intriguing element of Obama’s family history that resonated with Caroline was a long-buried story that was brought to her attention last summer. It drove home for her how history replays itself, how two generations of two families—separated by distance, culture and wealth—can intersect in strange and wonderful ways, and how people have no idea that their good deeds may come back to them someday.

Two weeks after he was nominated for president in July 1960, then-Senator Kennedy received a visit at his vacation home in Hyannis Port, Mass., from a Kenyan educator, Tom Mboya, who told him that more than 200 African students had received scholarships to American universities through the African-American Students Foundation but did not have the $100,000 for air transport. Despite efforts by Vice President Nixon (whom JFK would face in the November election), the Eisenhower State Department would not pay for what was described as “the African airlift.”

With only weeks to go before the school year began, Kennedy quietly tapped his family’s Kennedy Foundation, which agreed to raise the necessary funds privately. Upon learning this Nixon, seeking black votes, quickly convinced the State Department to reverse itself and offer the money, then arranged for one of his best-known African-American supporters, retired Brooklyn Dodgers star Jackie Robinson, to write a newspaper column praising him for coming to the aid of the African students.

But Nixon didn’t stop there. Sen. Hugh Scott, who headed Nixon’s campaign “truth squad,” took to the Senate floor to denounce JFK for “plucking this project away from the U.S. government” in a “misuse of tax-exempt foundation money for blatant political purposes.” Kennedy replied that this was “the most unfair, distorted and malignant attack I have heard in 14 years in politics.”

When the truth finally emerged, Robinson wrote a column saying, “I don’t mind admitting it—I was wrong.” The airlift money came through from the Kennedy Foundation, and the students arrived. Barack Obama Sr. went to the University of Hawaii, where he met and married a young white woman from Kansas.
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Their son, born the following year, arrived in the United States Senate in early 2005 and found that the antique desk he had been assigned on the Senate floor had once belonged to JFK, whose initials were carved inside. Obama learned only recently how his father’s dream of studying in the United States had been fulfilled. A “young senator from Massachusetts” made an effort, Obama told the crowd at American University. “And because he did, I stand before you today.”

Nifty.

Technorati Tags: Blogging, philippines, politics, president

Another happy ending for the Palace

My Arab News column for this week is The Same Mistakes Eventually. A further reflection on this past entry.

The Inquirer editorial takes a look at Suharto’s legacy. In his column, William Pesek does the same in Suharto’s corrupt legacy lives on in Indonesia, and says a lack of enthusiasm for investing in Indonesia is one of them. See Orde Baru for a timeline of the Suharto years.

Oh: and my gosh, he’s lost! Where in the world is Mike Arroyo? Maybe Austria? Lichtenstein?

A few days ago, Ricky Carandang, in his blog, said that the testimony of a new witness regarding the ZTE affair, would be used as an excuse to declare the leadership of the House vacant, and thus pave the way for a new Speaker. He predicted that the consensus candidate would be Mandaluyong Rep. Neptali Gonzales, Jr.:

When Congress resumes sessions at the end of the month, the Senate is expected to quickly resume hearings on the ZTE Broadband deal. A former associate of Romulo Neri, Jun Lozada, who was brought in by Neri as a consultant on technical matters, will provide more details based on first hand knowledge, about how the  ZTE deal was clinched.

The ZTE hearings will be used by members of the House majority as a trigger to the call for a change in the House leadership. It will be recalled that it was the Speaker’s son, Joey, who accused presidential husband Mike Arroyo of  intervening in the ZTE deal, thus opening a rift between Gloria Macapagal-Arroyo and JDV that never really healed.

Sources tell me that sometime after the resumption of the Senate hearings, a member of the House coalition will take the floor to ask that the speakership be declared vacant. He will supposedly have the numbers.

I’m told further that backroom talks have nearly settled the matter of who takes over from JDV.

In a response to a readers’ comment, Carandang predicted,

He’s in a position to corroborate previous testimony. He has first hand knowledge. I’m not sure what his agenda is, if any.

But whatever he has the Palace is trying its best to keep him from talking.

as I mentioned the other day, scuttlebutt was that if Speaker de Venecia’s removal is in the cards, it’s scheduled for the end, and not the start, of this year. But there are those who’d like to accelerate the transfer of power: Mindanao solons uncloak selves, bare oust-JDV plot. Or do they? It could simply be posturing to extract concessions, or as a rear-guard action to save face.

After all, the Palace could be working at cross-purposes when it comes to congressmen who want to topple the Speaker sooner rather than later. But, as the next portion of this entry suggests, if the pretext for the toppling’s removed, then people have to sound the retreat while still banging the drums.
De Venecia, Nograles draw up battle lines for speakership. Maybe. But what if, as Carandang says, neither one will be the winner?

The news today began with the breaking news, New witness backs off NBN deal probe. This, despite Senate offers witness protection to Lozada. The Philippine Star has to have absolutely the worst -because utterly useless- system for online articles, you can never link anything! So I’ll have to quote from Jarius Bondoc’s column today, without providing a link.

His column, “Lozada was in Palace meetings on NBN,” accuses Sen. Cayetano (Allan Peter) of turning Lozada, who was supposed to be a surprise witness, into a non-surprise and thus, giving the Palace time to put pressure on him. This what Bondoc wrote today:

It’s all the fault of Blue-Ribbon Committee head Alan Peter Cayetano, according to Sen. Panfilo Lacson. Lozada allegedly had wanted to tell all he knows about the deal from which kickbackers would have got $200 million, three-fifths of the contracted price. But then, Malacañang operatives got to Lozada and convinced him to shut up with a combination of death threats and blandishments, Lacson lamented. And how did Palace men find out about Lozada? Well, by Cayetano’s own admission, he revealed the name of the secret witness last weekend. He had to, he said, for transparency, since the subpoena he issued Lozada last month was a public document signed not only by him but also Senate President Manny Villar, and Mar Roxas and Rodolfo Biazon of the two other committees investigating the fraud. Cayetano nonetheless acknowledged to being the leak. He told reporters he purposely had avoided them during the Christmas break so that they wouldn’t force him to break secrecy — until days ago. And so was redefined the meaning of secret witness.

What would Lozada have revealed had he not been put in jeopardy? The answer lies in part in the testimony of Joey de Venecia III, who blew the lid off the $330-million cheating. Roxas had asked him in a hearing in Sept. if he knew a certain Jun Lozada. De Venecia said yes, and that Lozada was present in some meetings with ZTE executives, presidential spouse Mike Arroyo, and then-Comelec chief Benjamin Abalos.

Lozada was no longer mentioned after that. But Lacson and Roxas apparently continued to receive more info. Word reached them that Lozada was conscience-stricken seeing Joey and other whistleblowers lay their lives on the line while he who knew more about the high crime was comfortably silent. And so Lozada decided to talk.

The first senator Lozada approached to tell his story was not of any help. If at all, it only proved to him that some opposition figures have been co-opted, although it’s not readily seen through their pretentious posturing. That senator allegedly told Lozada to not bother testifying because the tri-committee already was wrapping up the probe and drafting a report. (Cayetano said Monday he definitely will set more hearings if new evidence turns up.)

Lozada reportedly then prepared an affidavit of what he knows. The most telling segment allegedly is about a meeting in Malacañang on Apr. 19, 2007, two days before Arroyo witnessed the signing of the DOTC-ZTE deal in China. (That’s also the day then-Economic Secretary Romy Neri told me he nearly resigned due to unconscionable terms of the telecom supply.) Luzon’s main water source would have been sacrificed, along with soldiers’ housing, just to accommodate the overpriced deal.

What else is in the affidavit, the few remaining truly opposition senators prefer that Lozada himself say under oath. They’d rather not jump the gun. Too often have witnesses recanted testimonies freely given, because Palace fixers also got to them.

This is all very tantalizing, but now moot and academic -as it has been, since Cayetano gave the Palace a free pass by wrapping up the hearings before the holidays. We shall have to see if Senate to order arrest of Lozada, Neri has any effect, and how many in the Senate will stand by their institution or cave in to the Palace.

The Business Mirror editorial points out that Congress has abandoned trying to hold the budget hostage, because it only enabled the executive department to spend without congressional oversight by doing so:

Time was, not too long ago, when lawmakers tried to put the squeeze on the Executive branch by prolonging their budgetary deliberations. Opposition senators, in particular, made the debates and discussions drag on—if only to press the point that the legislature possesses the power of the purse. Unfortunately for them, the dilatory tactic tended to backfire.

Instead of being intimidated by Congress’s authority to withhold funds, Malacañang simply resorted to realigning the previous year’s appropriations. The Executive prerogative to adopt “reenacted” budgets merely gave the Palace a free hand to dig into the national coffers—then spend billions of taxpayer pesos as it saw fit, with members of Congress unable to do anything about it save for rant and rave before the media.

As one pundit pointed out, a reenacted budget is nothing more than a huge pork barrel that Congress—intentionally or otherwise—gifts to the incumbent administration. During an election year, in particular, congressional dereliction of its duty to produce a budget often left the Palace crying all the way to the bank.

This time, Congress has managed to pass the national budget pretty much on time. Along the way, the editorial points out that one tangible benefit of the appreciation of the Peso was freeing up 16 billion that would otherwise have gone to foreign debt payments. It also praises Senators Trillanes and Lacson for saving the government 300 million pesos, the amount of the pork barrel they gave up.

But there remain some causes for concern, as these stories indicate: Budget OK ‘pleases’ Palace, but realignment veto looms. From the same article, a glimpse into the revenue-raising problems the government faces:

[S]enators put the burden on the government to boost revenue collection in order to bankroll the recently-ratified P1.23-trillion budget for 2008.

Senators cautioned that the P1.226-trillion national budget bill ratified by both chambers of Congress Monday night relies heavily on the state’s ability to finance the annual spending measure through more efficient revenue collection.

Stressing that a key element of this is “the capture of tax lost to smuggling,” Sen. Francis Escudero, Senate ways and means committee chairman, noted that “budget funds can only flow if the tax leaks are plugged.”

In order to finance the spending measure, Escudero said government must raise the corresponding amount in tax, plus P10 billion more, as the total cash budget of the government for the year is actually P1.236 billion.

According to him, the P10 billion is the projected cost of the planned 10-percent hike in the basic pay of 1.1 million national government workers that takes effect July. This amount, while factored in this year’s public expenditures, was not included in the budget. “This means that government must raise an average P3.386 billion daily to finance its operations,” he added.

The burden of raising this amount would fall on the Bureau of Internal Revenue, which is targeting to collect P844.9 billion, or 68.3 percent of total requirement, and the Bureau of Customs, whose assigned target of P254.5 billion makes up 20.6 percent of overall, or a combined P1.099 trillion.

And P75-B stimulus plan OK’d in principle; DBM balks. According to the article, Albay Gov. Joey Salceda is the guy behind the President’’s stimulus package, meant to help overcome whatever economic challenges will arise from the Subprime contagion (by the way, Manuel Buencamino in his column distills what the whole mess overseas is all about):

The country’s economic managers and Albay Gov. Joey Salceda, the President’s economic adviser who presented the proposal to the President and her Cabinet that day, will meet on Thursday to study the feasibility of such a scheme and to see how it can fit into the administration’s fiscal framework.

This, amid contradictions in principles between the budget secretary and the stimulus-package proponent, Salceda…

…Salceda’s package includes P16 billion in tax rebates for middle-class working families and P8 billion in power rate discounts for those consuming a maximum of 200 kilowatt-hours per month; and increased spending for agriculture (P15 billion), food-for-school projects (P6 billion), education (P6 billion), health (P4 billion), housing (P4 billion) and infrastructure (P16 billion).

He said among the funding sources mentioned were the privatization of the remaining shares of the government in San Miguel Corp., Food Terminal Inc., and other government assets; and, for the power rate discounts, the government royalties from Malampaya…

…The proposed package is suited for a “sharp but short” US recession, he added…

…Salceda said former President Estrada took the same tack to minimize the impact of the Asian crisis on the country by releasing P40 billion for priming activities in 1999; Mrs. Arroyo released P60 billion for the same purpose to help the Philippines cope with a US recession.

“They were very successful in reversing a growth slowdown into an acceleration,” Salceda said. But Andaya said such schemes had also led to the ballooning of the budget deficit beyond what was expected: in 1999, the target deficit was P17 billion but swelled to P114 billion because of pump-priming activities; in 2002, the target was P40 billion but the deficit at year-end was over three times higher at P150 billion.

See also In rare moment, Tetangco cites fiscal concerns.

You might have noticed, above, that Salceda proposes that Malampaya royalties be put on hold. He has backing for this: Competitiveness council wants Malampaya royalties halted. To do so, however, would further endanger the precarious situation local governments are finding themselves in, because of gerrymandering.

In his column today, Quagmire rule, Juan Mercado not only says “I told you so” (he’s been a long-time opponent of creating new provinces and cities motived by gerrymandering) but points to the very real fiscal problem city governments are facing:

Mayor Celestino Martinez prints new letterheads for Bogo City in Cebu. The bill is dumped on others, including next-door Toledo City. Instead of a P307-million IRA check, Mayor Arlene Zambo will get P277 million – a hefty P31-million cut.

From Iloilo to Davao and Jolo, IRAs are being castrated sans anesthesia. Puerto Princesa in Palawan is hemorrhaging from a P144 million cut. Instead of receiving P146 million, Mayor Edward Hagedorn may get only P1.7 million. This is a policy for upheaval.

He asks, how did it happen? By juggling the figures and granting exemptions too freely and too often:

How did we stumble into this quagmire? We, Filipinos, have a nasty habit of meeting high performance standards by lowering them instead, noted Viewpoint (Cebu Daily News & Inquirer, Feb 12, 2007 ). Thus, Congress “exempted” 16 towns from criteria that other cities met.

This wont for self-delusion infects other sectors. Juggling statistics on class sizes “solved” the shortage in classrooms. Flunkers in National Elementary Achievement Tests wrestled the passing mark down to 50 percent. That wasn’t low enough. So, they wangled a “bonus” of 60 points. “This meant the criterion passing score was 37.5 percent,” Philippine Human Development Report notes. “Whom are they kidding?”

Many lost count in the frenzy to set up city halls. In 1991, we had 60 cities, many of dubious viability. By 2003, that had ballooned to 114. “National government’s ability to finance such local government units… is strained,” the World Bank and Asian Development Bank cautioned. “The small size of LGUs prevents them from generating their own resources.”

Finally, Mercado points out something long a-borning:

Migrants swap rural penury for urban penury. In 2005, six out of every ten Filipinos lived in urban sprawls. By 2030, urban residents could crest at 85 million.

In the 1980s, Rigoberto Tiglao had already theorized that the “surrounding the cities from the countryside” Maoist strategy of the CPP-NPA was doomed to fail, because even then the majority of Filipinos were urban and not rural dwellers; he ended up leaving the party because of his challenge to its political orthodoxy. I point this out because to my mind, gerrymandering and the atomization of the provinces is a grave problem.

A very curious story in Nonong Guyala’s column, Poetic justice.

And for the record, the gist of the petition various people (including myself) filed before the Supreme Court: Media ask SC to stop gov’t threats, arrests: 70 journalists sign petition vs top gov’t execs. The rationale of the case in Maria Ressa’s statement, “We Have Press Freedom or We Don’t. There is No Middle Ground.”

Technorati Tags: Blogging, economy, House of Representatives, ideas, philippines, politics, president, Senate

The Long View: Individualistic yet part of the whole

The Long View
Individualistic yet part of the whole 
By Manuel L. Quezon III

Let me try to stitch together two books and three conversations. Five years separate the publication of “In Search of Heroes,” by the FILIPINO Foundation in Cebu, and “Profiles Encourage,” a joint endeavor of Pagbagago@Pilipinas and Anvil Publishing. Both books are slim volumes, and chronicle the stories of many people who’ve had a positive impact on their communities, whether in a personal or organizational capacity. The two volumes don’t look for greatness in the grand manner of the past, but instead, look to unheralded people in unnoticed places, doing hitherto unremarked-on things. By such examples is the path to the future supposed to be illuminated.

These books are truly in keeping with the spirit of the times, where moving great numbers of people is not only seen as impossible, but somehow suspect.

A decade ago, when the new Ninoy Aquino statue was about to be inaugurated in Makati (replacing the one now transplanted to Hacienda Luisita), I had a conversation with an industrialist. I made a passing remark that the era of great monuments has passed, and the industrialist seemed rather taken aback. At the time, I’d meant it more as an aesthetic criticism—we simply seem incapable of mustering the genius of, say, a Guillermo Tolentino, and most new monuments are hideous—but I’ve since come to think that indeed, we’re in a kind of waiting period, where the old models of greatness have ceased to have the power to inspire and move people.

Over the past few years, I’ve exasperated friends devoted to Gawad Kalinga because of my misgivings over a movement that seems inclined to studiously ignore the political sphere. At the heart of the movement lies the belief that collaboration with anyone from government is OK, so long as government participation is not central, because the Catholic Church is what should be central. And that furthermore, it is somehow beneficial to concentrate purely within the borders of a small community, while setting aside the question of what happens after the houses are built, and the tiny pocket of change must then come to grips with it having to sink or swim in a vast sea of politics-as-usual: when the volunteers leave, is the community prepared to resist the mayor who will insist on a command vote?

It is reasonable to assume that a family secure, at long last, in its own home, presumably armed with rosaries, could then draw strength from the family being part of the broader community of the faithful. Armed in turn not just with a horror of condoms, but a dedication to applying the principles of faith in political life, believers could then have tremendous political clout. But at a recent discussion, a Pampanga resident pointed out that Gov. Ed Panlilio didn’t get the vote of the very poor he’d devoted years to working with: which suggests that GK communities organized by similarly minded people will produce babies and prayers, but not reform-oriented votes.

Which brings me to another conversation.

A few months ago, during an informal talk held at an ambassador’s home, one Filipino remarked that he was frustrated by the inability of the Catholic hierarchy to speak with an uncompromising voice. I ventured the opinion that perhaps it’s healthy that the Catholic bishops are divided. It’s time, I suggested, for us to develop a more fully secular society, and that includes looking on the bright side of bishops being incapable of deciding great political issues.

I couldn’t help but recall a talk I gave at a meeting of concerned citizens in a parish, where one of them, almost in tears, said, “I wish Cardinal Sin were still alive, then I wouldn’t hesitate to go to the streets—but he’s dead and I don’t trust any of our political leaders.”

And again: the era of not just monuments, but of monumentality, of wanting momentous change, has not only passed but been substituted by an attitude that anything that smacks of it is somehow suspect.

The substitution of “circles of influence” for “belonging to a movement” is actually healthy, I think; but only to the extent that a desire for individual independence isn’t overcome by a parochial obsession with “circles of influence.”

In our political life, it’s the fanatics or the pimps who hold sway, each worshiping at a particular altar, whether of God, or Marx, or the Pork Barrel. Dogma and rituals may differ, but at the heart of each lies the iron discipline that comes from demanding total obedience, which is made possible by ruthless and unyielding leadership—and which guarantees them success. Randy David, during the launch of “Profiles Encourage,” boiled down the task of democracy to a very simple question—determining who is the majority, and who is the minority. The fanatics and pimps may never have really constituted a majority, anywhere, but according to the rules of the political game, not just those with the gold, but also the numbers, make the rules.

For this reason the Iglesia ni Cristo may not really reflect anyone’s opinion but the head of the church, or the NDF anything more than the will of the politburo, or Lakas-CMD anything beyond motivational power of cash-as-swill; but they can deliver, and thus help constitute a majority.

Great leaders at the heart of great movements, inspiring great masses of people to move in a particular direction: does this image move you, or turn you off? There are those who are pining for a return to the era when politics was like a symphony orchestra, blasting dramatic music under baton of a fierce and uncompromising conductor. On the one hand, there are those who’d be happier with a folk festival reality, where a rather disorganized, but enthusiastic and individually gifted group of groups gets together to make music of uneven but impassioned quality. If most of us find ourselves wanting one or the other, for a time, why not ask, why can’t we accomplish both?

Two discouraging signals

The Inquirer editorial yesterday (Queendom for a horse) took a critical look at AFP chief’s term extended.The editorial says the possibility that Esperon will serve longer than an additional three months should be considered. The editorial cites the following laws and decrees: Presidential Decree 1638 as amended by Presidential Decree 1650, and Republic Act 8186 as amended by Republic Act 9188, as well as the provisions of the Constitution (since Esperon term extension possible only in case of war – Palace). It also makes reference to GMA’s speech during the AFP Change of Command Ceremony, November 28, 2002.

Today, the news is Esperon: 4 months ahead may be bloody: General expects stiff NPA resistance. Whether this is posturing or Esperon’s real intention, remains to be seen. But if he really does believe the AFP is capable of liquidating the NPA in the hills, what would be his basis for this?

Randy David gives us a clue. In The tragedy of the rural poor, says something unprecedented is going on. We’re used to the sight of people moving to the city from the province, attracted by the glitter and opportunity of life in the big city. David says what’s going on today, though, is that people are moving to the city not because they are attracted by opportunity, but because they are fleeing the collapse of rural life in the provinces. There is a difference, he says, and it is troubling -an unintended consequence, he says, of defective land reform. This reminds me of an assertion by the economist Mike Alba who pointed out no one is quite sure, because the government mechanisms for monitoring it have broken down, of how much formerly productive agricultural land has been converted to real estate and other purposes. He also points out, and if he knows it the military knows it, too, that efforts to organize the peasantry are at their lowest ebb since the 40’s and 50’s.

On a related note, see Solita Monsod’s Two challenges, where she says the ranks of the truly poor have shrunk while most Filipinos have become slightly poorer across all classes.

Politically, the weekend had news that Arroyo douses plot vs Speaker via phone call — Ermita and that as Congress resumes session, GMA tells Rainbow Coalition to stand by JdV. The scuttlebutt, however, is that the changes in the executive and legislative departments are scheduled for later this year. Among the targets are Lakas stalwarts. Supposedly Executive Secretary Ermita will finally be eased out around May, to be replaced by the current DILG Secretary, Puno. Speaker de Venecia, on the other hand, will be removed from the speakership near the end of the year. Meanwhile, attempts to amend the Constitution will gather pace in the middle of the year.

Now this is what interests me about the other big weekend news, Melo named Comelec chair. His appointment, to my mind, can’t be evaluated properly until the other presidential appointments to the Comelec are announced. And even then, it all depends on whether the administration will then send signals it wants stability until 2010 or will pursue constitutional amendments aggressively. If it pursues amendments then the first task of the new Comelec Chairman and the new commissioners will be to preside over a plebiscite that will be manned by the same mid and lower level Comelec people tasked with the 2004 and 2007 elections. Which means individuals like Christian Monsod, groups like the PPCRV, and even the Cardinal Archbishop of Manila (who strongly backs the candidacy of Howie Calleja, for example, for a Comelec commissioner slot) might find themselves quite disappointed with their nominees, after Appointment of Melo as COMELEC head welcomed. But if constitutional amendments don’t take off, there is room for moderate optimism for 2010.

My column for today is Individualistic yet part of the whole. One of the books I mentioned, Profiles Encourage, is reviewed by Rodel Rodis. See also two commentaries in the papers: Filipino Diaspora as a Form of Revolt and Going beyond ‘Same same’. You may also want to participate in Janette Toral’s Important Issues on Philippines 2010 Election.

Speaking of elections, overseas, Obama’s big win keeps his hopes alive. Interesting reading in Slate’s The Super Tuesday Strategy Guide.

Concerning the prospects of an American recession affecting our part of the world, see Asia Won’t Get Away Clean in The Asia Sentinel, as well as Live it Up, Asia! (which doesn’t apply to us).

And for future discussion: Parag Khanna’s Waving Goodbye to Hegemony:

At best, America’s unipolar moment lasted through the 1990s, but that was also a decade adrift. The post-cold-war “peace dividend” was never converted into a global liberal order under American leadership. So now, rather than bestriding the globe, we are competing — and losing — in a geopolitical marketplace alongside the world’s other superpowers: the European Union and China. This is geopolitics in the 21st century: the new Big Three. Not Russia, an increasingly depopulated expanse run by Gazprom.gov; not an incoherent Islam embroiled in internal wars; and not India, lagging decades behind China in both development and strategic appetite. The Big Three make the rules — their own rules — without any one of them dominating. And the others are left to choose their suitors in this post-American world.

The more we appreciate the differences among the American, European and Chinese worldviews, the more we will see the planetary stakes of the new global game. Previous eras of balance of power have been among European powers sharing a common culture. The cold war, too, was not truly an “East-West” struggle; it remained essentially a contest over Europe. What we have today, for the first time in history, is a global, multicivilizational, multipolar battle.

In Europe’s capital, Brussels, technocrats, strategists and legislators increasingly see their role as being the global balancer between America and China. Jorgo Chatzimarkakis, a German member of the European Parliament, calls it “European patriotism.” The Europeans play both sides, and if they do it well, they profit handsomely. It’s a trend that will outlast both President Nicolas Sarkozy of France, the self-described “friend of America,” and Chancellor Angela Merkel of Germany, regardless of her visiting the Crawford ranch. It may comfort American conservatives to point out that Europe still lacks a common army; the only problem is that it doesn’t really need one. Europeans use intelligence and the police to apprehend radical Islamists, social policy to try to integrate restive Muslim populations and economic strength to incorporate the former Soviet Union and gradually subdue Russia. Each year European investment in Turkey grows as well, binding it closer to the E.U. even if it never becomes a member. And each year a new pipeline route opens transporting oil and gas from Libya, Algeria or Azerbaijan to Europe. What other superpower grows by an average of one country per year, with others waiting in line and begging to join?

With the new Big Three, the author then says the task is to identify the “Second World”:

To really understand how quickly American power is in decline around the world, I’ve spent the past two years traveling in some 40 countries in the five most strategic regions of the planet — the countries of the second world. They are not in the first-world core of the global economy, nor in its third-world periphery. Lying alongside and between the Big Three, second-world countries are the swing states that will determine which of the superpowers has the upper hand for the next generation of geopolitics. From Venezuela to Vietnam and Morocco to Malaysia, the new reality of global affairs is that there is not one way to win allies and influence countries but three: America’s coalition (as in “coalition of the willing”), Europe’s consensus and China’s consultative styles. The geopolitical marketplace will decide which will lead the 21st century…

Second-world countries are distinguished from the third world by their potential: the likelihood that they will capitalize on a valuable commodity, a charismatic leader or a generous patron. Each and every second-world country matters in its own right, for its economic, strategic or diplomatic weight, and its decision to tilt toward the United States, the E.U. or China has a strong influence on what others in its region decide to do. Will an American nuclear deal with India push Pakistan even deeper into military dependence on China? Will the next set of Arab monarchs lean East or West? The second world will shape the world’s balance of power as much as the superpowers themselves will.

As for our part of the world,

America may seek Muslim allies for its image and the “war on terror,” but these same countries seem also to be part of what Samuel Huntington called the “Confucian-Islamic connection.” What is more, China is pulling off the most difficult of superpower feats: simultaneously maintaining positive ties with the world’s crucial pairs of regional rivals: Venezuela and Brazil, Saudi Arabia and Iran, Kazakhstan and Uzbekistan, India and Pakistan. At this stage, Western diplomats have only mustered the wherewithal to quietly denounce Chinese aid policies and value-neutral alliances, but they are far from being able to do much of anything about them.

This applies most profoundly in China’s own backyard, Southeast Asia. Some of the most dynamic countries in the region Malaysia, Thailand and Vietnam are playing the superpower suitor game with admirable savvy. Chinese migrants have long pulled the strings in the region’s economies even while governments sealed defense agreements with the U.S. Today, Malaysia and Thailand still perform joint military exercises with America but also buy weapons from, and have defense treaties with, China, including the Treaty of Amity and Cooperation by which Asian nations have pledged nonaggression against one another. (Indonesia, a crucial American ally during the cold war, has also been forming defense ties with China.) As one senior Malaysian diplomat put it to me, without a hint of jest, “Creating a community is easy among the yellow and the brown but not the white.” Tellingly, it is Vietnam, because of its violent histories with the U.S. and China, which is most eager to accept American defense contracts (and a new Intel microchip plant) to maintain its strategic balance. Vietnam, like most of the second world, doesn’t want to fall into any one superpower’s sphere of influence.

It’s a lengthy article but well worth a read.

Technorati Tags: CBCP, Charter Change, constitution, economy, elections, House of Representatives, ideas, law, media, military, philippines, politics, society

Book of the week

“Brains of the Nation: Pedro Paterno, T.h. Pardo De Tavera, Isabelo De Los Reyes and the Production of Modern Knowledge” (Resil B. Mojares)

Democracy with Southeast and East Asian characteristics

Today is the 75th birthday of Corazon C. Aquino, who was the Free Press’s Person of the Century. A welcome move: Chief Justice Puno: Fine will do for libel (see also SC to release circular on libel). Concerning another Supreme Court initiative, see www.soriano-ph.com on Habeas Data. Naturally, it;s driving Philippine Commentary bananas.

In other news, Ayala offers more proof of G-2 bombing.

In Davos, Finger Pointing, Preserving Legacies, Looking for Leadership engages those present. In his blog, Stuart Santiago tackles the possibility of a global recession.See also Joblessness seen rising in 2008.

The debate continues: New ‘PI’ eyes revision, not amendment. Just a distraction, so Talks on with foreign firms on NBN can proceed? Or part of a broader effort to keep relevant, as Mon Casiple suggests:

Charter change–in these end-game times–requires extraordinary measures in order to neutralize the overwhelming public opposition to a GMA charter change. The 2006 Cha-cha debacles are still fresh in the minds of both proponents and oppositors.

President Macapagal-Arroyo should stop all these political maneuvers by her subordinates to maintain her in power after 2010. It only make more difficult for her to concentrate on a legacy agenda and for her coalition to maintain its unity. One can discern already the separation of interests between her and some of her advisers.

If proponents of amendments have given up on the parliamentary option as too alien -and alienating of the electorate- they continue to flog Federalism (which I am interested in, too). Miriam Coronel Ferrer in Cutting up the Philippines dissects the issue, but points to how the proponents generally envision a kind of consolidation of existing provinces into federal states:

In two House Bills filed in 2004, Luzon will have the five federal states of Metro Manila, Northern Luzon, Central Luzon, Southern Tagalog and Bicol. Visayas and Mindanao will each have three: Eastern, Western and Central Visayas; and Northern Mindanao, Southern Mindanao, and Bangsamoro Federal States. In all, 11 federal states.

The Citizens’ Movement for a Federal Philippines’ draft constitution aims for 10 states, with Visayas divided into only two states: East and West. The current Western Visayas provinces of Aklan, Antique, Capiz, Guimaras, Iloilo, Negros Occidental will be boosted by the inclusion of Palawan, currently under Southern Tagalog. All the other Visayan provinces will make up Eastern Visayas.

A trimmer proposal recommends only eight states – Northern Luzon (including the Cordillera), Central Luzon (including provinces in Southern Luzon and Metro Manila cities except Manila, Makati and Quezon City), a single Visayan state, Bangsa Moro, Northern Mindanao, and Southern Mindanao. In this proposal, the federal capital will be made up of Manila, Makati and Quezon City. Jose V. Abueva suggests transforming the Clark Economic Zone into the federal capital instead.

She then tackles the opposition of other places to these proposals (for example, Palawan, which wants to be its own federal state), and gives proposals of her own, such as dropping proposals for a Bangsamoro state; her proposal’s very interesting but bucks the conventional wisdom too much, or rather, takes the inclusive rhetoric of its proponents too seriously.

My view is that proponents of Federalism from outside government view it far differently than its supporters within government. People outside government, it seems to me, view Federalism as a means to give greater freedom to local governments, but also, that provinces need to be reconsolidated into larger, self-sufficient territories. Proponents from within government, who have already gerrymandered many provinces into existence, aren’t interested in consolidating the resources and territories of their fieffoms.

This passage from “Rome and Jerusalem: The Clash of Ancient Civilizations” (Martin Goodman) struck a chord:

Government without bureaucracy could operate successfully only if it was government with consent -even if the motivation for consent was ultimately the fear of extreme violence by the state as penalty for open opposition. Much administration, such as the collection of taxes at  the local level, was in effect carried out on behalf of the state by local urban elites in return for Roman support of their local status. The success of government thus depended upon acceptance by provincial aristocrats of the value of honors and tites bestowed by local people and recognized by Rome. Much of the extant evidence for this “empire of honor” appears to confirm such a consensus. Inscriptions on monuments from all over the empire boast about the status of local magistrates and the favors granted to them, and through them to their communities, by governors and emperors. Such evidence suggests an integrated society of provincials willingly cooperating with a benevolent and responsive state. But of course only those individuals who accepted and benefitted from the system will have paid for such monuments to be erected…

…More significant than the overt recognition by provincials of their place in the Roman system of power was the nearly universal practice of patronage to give individuals of all backgrounds a sense of connection, however tenuous, between themselves and the emperor. Almost everyone in the Roman empire knew someone who knew someone who might be able to intervene, through however many links in the chain of patronage, at the center of power in the state…. But for the provincials far away from the locus of power in Rome, the most effective invocation of patronage ties was acheived either by traveling to Rome in person or sending an embassy.

I wish more people would explore the political goings-on in other countries in our part of the world, to see if some sort of patterns emerge to show whether or not politics as our part of the world practices it, has common characteristics. I believe it does: dynasticism, the single-part urge, tight connections between business and the political class, to name just three.

See also Sycip pitches Asian democracy model, more power to technocrats:

Although he was cut short of advising that the government should do away with the elections as this will curtail the rights of the people to vote, Sycip said legislators should be stripped off the powers concerning the economic matters of the country.

This would mean the rise of the technocrats, who should be insulated from the politicians. These select people will run the country’s economy and will have the necessary powers to immediately effect change or react in cases of emergency, such as the recent move of the US Federal Reserve to cut its interest rates by three quarters of a percentage point.

Sycip, 87, said these technocrats should be given powers like those of the Bangko Sentral’s, that can either raise or ease interest rates immediately without getting the nod of Congress or consulting the President.

He said with this type of system, the technocrats can even go against the teachings of the Roman Catholic Church, especially on family planning, in order to reduce the country’s population of close to 90 million.

Reading the dynamics of Japanese politics, see Japan’s Dilemma, where basically they have had single-party governance for close to six decades; or of the Taiwanese, see Taiwan Does the Presidential Math, where after decades of dictatorship they have developed a vigorous democracy, or Malaysia, see Malaysian Yumpies Just Wanna Have Fun (which suggests Tim Yap represents a regional Zeitgeist);  or Thailand, see Thaksin’s Friends Are in Power, where they’re confronting the failure of their own version of Edsa Dos; the list goes on and on, as far afield as India.

In the blogosphere, Danton Remoto has a blog. His recent entries gives a pretty exhaustive list of senatorial candidates being proposed by the various parties. What’s amazing to me is that the parties are actively speculating on their senatorial bets -another sign of Arroyo fatigue? Or simply an admission by the entire political class -the leaders of all the parties- that they don’t intend to get anything done between now and 2010, so better to fuel speculation on elections they don’t even intend to have?

Torn & Frayed says the number of people who read books is dwindling:

Nevertheless and despite the terrible implications, I can’t help thinking that this is indeed “the twilight of the books”. As Samuel Johnson said, “people in general do not willingly read, if they have something else to amuse them”.

smoke takes a skeptical look at Christian Monsod.goodbye blue monday and Studentstrike continues the debate on the Left and Edsa Dos.. Re: the former, who asserts,

Sa paggamit ni MLQ3 ng resulta ng nakaraang eleksyon upang masukat ang laki at lakas ng Kaliwa kumpara sa mga dominante at pangunahing partido ng bansa, nakalimutan ata niya ang konsepto ng dagdag-bawas kung saan nabiktima ang mga kaliwang partylist at tumabo ng ganansya ang mga kandidato at partido ni Gng. Arroyo.

Uh, no. I considered that when I wrote:

Let’s argue the Left had only 1 out of every 4 votes cast for it actually counted, a potential constituency of 9,732,680. That puts it on parity with: Prospero A. Pichay, Jr. TEAM Unity – Lakas-CMD 9,798,355

She asks,

Sa mga komento, binaggit din ni Manolo na “in retrospect, the resign all call was the correct one to make.” Hindi ba’t ito ay dogmatismo sa pinakapayak na depinisyon ng salita?

No. That’s an opinion, a change of mind because a reflection made in retrospect -the opposite of dogmatism which never permits the changing of one’s mind or opinions.

As for her assertion,

Salamat kung inyong kinukundena ang pamamaslang. Subalit hindi rin naman nakakatulong upang matigil ito kung patuloy na ilalagay sa margins ang kaliwa. Kung patuloy silang ikokonsiderang insignificant. Kung patuloy na sasabihin na hindi pa sila tanggap ng mamamayan kahit na ang kasaysayan na ang magpapatotoo sa kabaliktaran nito.

The following readings will be relevant. See the columns of Juan Mercado: Guarded skepticism, from June 20, 2006, Have-gun-will-tax collection, September 5, 2006;  Cry of the widows, September 6, 2007, Those grisly secrets, September 12, 2006, and Those sealed graves, September 14, 2006 (which may or may not include information presented in The CPP-NPA-NDF “Hit List” – a preliminary report).
(As for Jose Ma. Sison himself, he says Three Governments Persist in Persecuting Me. And there’s a dossier on why Romulo Kintanar’s death shouldn’t be blamed on the politburo. And much exculpatory material.)

But the ultimate point comes from Miriam Coronel Ferrer’s presentation (in the Forum on Violence Against Movements, Movements Against Violence), reproduced in PATH sums it up perfectly:

The language of anti-communism remains effective, given a general antipathy to communism, and an increasing alienation of the citizenry to national politics. To those who have fallen for this anti-communist rhetorical hysteria” (defined by Wole Soyinka, first African to win the
Nobel prize for literature, as the one-dimensional approach to all faces of reality, however varied or internally contradictory), the killings are not a case of “slaughter of innocents” given that these people are somehow allied with the CPP-NPA. They don’t think much about the fact that slaughter remains slaughter; that the basic principle of respect for human life and human dignity is for everyone, including the enemy number one of the state, and yes, including terrorists; that there are rules even in war that must be followed, notably distinction between those who carry arms
and those who do not. Meanwhile, businessmen and professionals may be morally aghast at the unabated killings of alleged communists, but are not motivated enough to put pressure to stop it, until somehow, it starts hurting their economic interests, or their immediate environment. The middle class will continue to fight for their own means of survival regardless of the course of Philippine politics.

However, class analysis alone cannot explain part of the lingering potency of anti-communism. Part of the effectiveness of the language of
anti-communism and resultant alienation is also due to the CPP-NPA-NDF themselves – their excesses (revolutionary taxation of rich and poor, infliction of punishments), own pandering of violence and machismo, their inclusivity and dogmatic framing of Philippine society and politics, and their counter-monologue to the state’s anti-communist mantra. The purges, the CPP-NPA-NDF hopefully recognizes by now, cannot be simply forgotten without full retribution and honest accounting before former and present comrades and the greater public. The ghosts of murdered comrades will haunt the party forever. And though not particularly convincing to explain away the recent spate of political killings among those who study their politics, and revolting for the disrespect shown the dead lying in mass graves, the purges of the 80s and 90s will remain scraps (war material) to poke around with, in the AFP and police forces’ psywar ops.

In all, taken in the context of an untransformed state and reform-resistant state elites, the language of anti-communism coupled with anti-terrorism is actually anti-left (because the communists do not alone make up the Philippine left), and even more broadly, anti anti-status quo. Thus while we have our differences with the communist left, and as human rights advocates, oppose terrorist methods, we cannot tolerate the rhetorical hysteria of anti-communism/terrorism. We cannot be unconcerned with the killings of branded communists/terrorists, because the label easily includes all of us unhappy with the status quo, and exercising our rights to express our beliefs.

That razor-sharp statement of essentials having been made, what now do we make of scuttlebutt that a retired general linked to the time of the fast and furious and plentiful liquidations of activists, has now received a new lease on life -as the Deputy National Security Advisor. This man, when still in the active service, seems to have born command responsibility for some of the killings. Back in the saddle again, is it open season on the Left once more?

Postcard Headlines on land reform.

And finally, a UP Student’s Manifesto.

Labor out of the picture

Check out today’s Business Mirror editorial, on some interesting stock market-friendly legislation poised for passage. In the news, Palace fiat jump-starts national identification system plan (I support a national ID system). Also, Bishops in Palace: What’s wrong with it?True. It’s not as if any should doubt those bishops are Palace acolytes.

Meanwhile, Southeast Asia Vulnerable To Us Recession–Imf. See The Economist’s Next stop Asia? How an American recession might hit Asia:

Asian stockmarkets were until recently big fans of the “decoupling” theory: the notion that Asian economies can shrug off an American recession. This week’s plunge in shares, taking the MSCI Emerging Asia Index down by 25% at one point from its October high, suggests they have changed their minds. But the fact that Asian markets have not decoupled does not necessarily mean that their economies will follow America’s over a cliff.

Decoupling was always a misnomer, seeming to imply that an American recession would have no impact on Asia. In fact exports and hence profits would certainly be reduced. The pertinent argument is that they would be hurt by much less than in previous American downturns.

As well as hitting exports, America’s troubles could affect Asia through various financial channels. Asia’s exposure to the subprime mess is thought to be much smaller than that of American or European banks. Even so, Chinese bank shares tumbled this week on rumours that they would have to make much bigger write-downs on their holdings of American subprime securities. And if stockmarkets slide further as global investors flee from risky assets, this could dampen business and consumer confidence in the region.

Some Asian economies are more vulnerable than others: Singapore, Hong Kong and Malaysia have exports to America equivalent to 20% or more of their GDPs, compared with only 8% in China and 2% in India. There are already some ominous signs. Singapore’s exports to America are down by 11% over the past year, while Malaysia’s fell by 16%. Exports to other emerging economies and to the European Union surged, so total exports still grew by 6% in both economies. But that was much slower than at the start of the year, and the worry now is that demand from Europe has started to flag.

The growth in China’s exports to America slowed to only 1% (in yuan terms) in the year to December from over 20% in late 2006. So far the impact on GDP growth has been modest. Figures on China’s fourth-quarter GDP are to be published on Thursday January 24th and most economists expect growth to slow to a still healthy 9-10% this year.

China’s economy would probably still expand by around 8-9% even if export growth dried up. During the 2001 American recession China’s GDP barely slowed. In contrast, Hong Kong, Singapore, Taiwan and Malaysia suffered full-blown recessions. America’s recession this time is likely to be deeper than in 2001 and Asia is now more integrated into the global economy. Doomsters conclude, therefore, that these economies could be hit harder this time.

The main reason to be more optimistic is that domestic demand (consumer spending and investment) is likely to remain strong and governments have more flexibility. Last year, despite a slowdown in America’s imports, most Asian economies grew faster as domestic demand speeded up. Robert Prior-Wandesforde, an economist at HSBC, says that those who argue that Asian economies cannot decouple from America are ignoring the fact that they already have. Take Malaysia: exports to America plunged, yet its GDP growth quickened from 5.7% at the end of 2006 to 6.7% in the third quarter of last year.

Something an Israeli businessman asked me about before Christmas, and which turns out to be true: Oil smuggling costs govt P16B yearly.

My column for today is, A familiar passage, more in a Suharto-esque vein. See “Memory holes” by Juan Mercado, too:

Filipinos have “a very special problem” in recalling, Ateneo de Manila University president Bienvenido Nebres, S.J. observes. “It is not just wrong memories. It is the lack of a national memory… The consequence is, we tend to live in a perpetual present. We have little collective memory of the past and thus we can not see well into the future.”

In his novel “1984,” George Orwell depicted a country where citizens thrust into a “memory hole” anything that crossed the whim of rulers. As “memory holes” shredded remembrance, wrong became right, lies replaced truth, and freedom turned into slavery.

Like malign genies, blotted-out memories don’t stay bottled up. They deform daily life. Thus, Imelda Marcos insists that Ferdinand Marcos’ dictatorship was the “most democratic period in our history.” The communists claim that “majority of (pogrom) victims decided to continue their work,” even praising the carnage. Estrada? Well, some days he can’t recall if his name is Jose Velarde.

All the hullaballoo about the 50th anniversary of SM (see SM through half a century), oddly enough, never mentions how salespeople remain contractual, and have had their contracts reduced to 3 months instead of 6 months as before. As the different political groups start marshaling their forces in preparation for the political engagements to come -whether a referendum campaign for or against constitutional amendments, or for the 2010 elections- the labor vote will be courted.

Yet the labor force, perhaps well-organized for certain unions, remains relatively small and if the May 1 mobilizations are any guide, seem to be shrinking. Unions didn’t prevent the collapse of certain industries, such as textile factories, have remained static in others such as the transport industry, and has no presence in growing ones such as call centers or the hi-tech manufacturing ones; they can’t have a presence in other countries yet sympathetic groups have been marginally successful in terms of mobilizing the OFW vote (potentially immense).

For example, would any effort to mobilize contractual workers at SM result in anything but opening up more contractual jobs? A strike would simply create huge lines for other citizens eager for any sort of SM-related job. Workers picketed PLDT for months but the country shrugged off the news, even when some of the workers claimed they were assaulted.

As entrepreneurship is encouraged, so will an anti-union mentality. And the unions themselves, how can they muster the clout necessary to cater to their members’ needs, when unemployment is so high, which makes any kind of employment desirable and permanent employment a losing proposition for most employers?

On a related note, Filipino entrepreneurs lack ‘culture of innovation’–DOST.

Let me play catch-up with stories that deserve to be followed, but which I haven’t had time to tackle.

1. The revival of Constitutional amendments proposals

Dan Mariano in his column points to

At the Kapihan sa Sulo media forum Saturday, Bataan Gov. Enrique “Tet” Garcia unveiled what he described as a “workable proposal” for Cha-cha through a second PI.

The Union of Local Officials of the Philippines (ULAP), he said, is “seriously considering [another] people’s initiative in proposing amendments to the Constitution to change the present [bicameral] Congress into a unicameral legislative body. That’s all.”

Garcia said that the presidential form of government “shall be maintained to uphold the right of voters to directly elect their chief executive.”

This is just one of several trial balloons. There’s Malacañang ally files House bill making all elected terms 5 years, and there are other proposals to Federalize the country, etc: Philippine Government Drafts Constitutional Amendment to Create Muslim Homeland. See also Gonzales for scrapping Comelec through Charter change. And Nograles proposes election of Con-con delegates in 2010.

Cities reel from unseen IRA cuts suggests one motivation for amendments moves: the expenses of the 3 year term and frequent elections, a business class increasingly able to say no to political demands, at least during campaign season, may be conspiring to push local government leaders to pursue brinkmanship in terms of constitutional changes. The different proposals emerging (trial balloons, as I’ve said) all seem to have gotten the hint from last year’s Cha-Cha debate: no one seems to be seriously proposing parliamentary government, but having thrown in the towel as far as trying to scrap the presidential system is concerned, unicameralism and federalism are being put back on the table.

Meanwhile, Cito Beltran has a point that in places where it’s needed, the national government lacks the political will to confront what Beltran calls Little republics of anarchy. Still, gerrymandering will continue apace, it seems: Mayors oppose bill relaxing cityhood: Local officials contend creating more cities will reduce IRAs for existing cities.

Fr. Joaquin Bernas SJ recently discussed Surgical constitutional change. Reforms enabling state subsidies for political parties, and bloc voting, don’t require constitutional amendments, though.

2. The downgrading of our airport rankings

Let’s start with What US air inspectors found unsafe (most embarrassing of all, on the eve that the unfavorable findings were released, Naia circuit box stolen, which had left the fence beside SLEX without lights for two days). The result? Arroyo fires aviation chief: US Embassy tells citizens to avoid RP airlines (and which derailed PAL’s expansion plans). Meanwhile, damage control: NAIA complies with ICAO standards–MIAA.

So, could it be,  Aviation deficiencies resolved by April? Yet RP air talks mostly in limbo. But in the meantime, Another blow to PAL: Forwarders migrating.

For a thorough look at the situation, see this feature by Recto Mercene, who used to be an air traffic controller (of whom we have too few, and who are overworked): Dreams a-crashing to the ground.

3.ZTE continues to fester

While DOTC pushes ‘broadband’: New name, new partners, same network project, the autopsy of ZTE proceeds slowly. A comparison of ZTE’s prices, compared to prevalent prices in the industry, only appeared last Wednesday in the column of Jarius Bondoc (see the informative table in his column). You can verify, for yourself, if you’re technically inclined, whether Bondoc is on to something, or not. See the long-awaited NBN Contract Annexes (for example, in Yugatech’s initial NBN contract reaction, he mentioned that the annexes would be crucial to determining if the contract was really fishy or not).

4. Zubiri in trouble

Last August, in Newsstand, John Nery wrote this, concerning Juan Miguel Zubiri:

He has filed an absurd counter-protest against rival candidate Aquilino “Koko” Pimentel III before the Senate Electoral Tribunal, contesting the results of a jaw-dropping 73,000 precincts. (That’s one-third of the entire country.)

I do not know if the SET will give his counter-protest due course; considering that Pimentel didn’t even have enough campaign funds to show more than a handful of TV spots featuring top celebrity endorser Angel Locsin, the claim that he cheated massively is preposterous.

But Zubiri does not need to prove his allegation of election fraud. All he needs to do is tie up the SET in an interminable recount. Pimentel, who believes he was cheated in 2,680 precincts in a total of seven provinces, is confident that the review of election returns he is contesting would be completed in half a year or so. Zubiri’s protest, on the other hand, would take years to resolve.

Redemption? More like a ruthless gaming of the system. The “Senator from Maguindanao” has cynically exploited the limitations of our election rules, to hold on to his job.

Pimentel’s protest has creaked along and while Is it hello Pimentel, goodbye Zubiri? Not quite, it’s enough to have An OFW in Hong Kong comment, sarcastically, he’s convinced Zubiri won -by cheating:

Now that the ballot boxes are being opened for revision (examination to establish correctness), it has even become clearer that all accusations made against Zubiri (and this administration) regarding manipulation of election results in many parts of Mindanao were true.

For how can you explain (a) empty ballot boxes? (b) Ballot boxes containing ballots filled up by one distinct handwriting only? (c) Ballots inside those boxes without the security seals? It’s clear as day, cheating was done!

As expected, the winning senator will not easily abandon his post. That was part of the sham: to be proclaimed as fast as possible because they know that election protests are decided only after soooo looong! Zubiri is now counting on that proven way to cling to a stolen post.

Hence Lakas-CMD projecting Zubiri as one of its spokesmen, as the party wrestles with its lack of real presidential timber, and the “going on leave” of the President’s son, and fresh rumors of the Speaker being toppled when the House resumes its sessions.

In the blogosphere, The Philosophical Bastard reflects on a comment in this blog. Thoughts on what should government’s role be,  in Willing Exile:

If we are to look closely at the things that work for us — private initiative in providing services for those who can afford them, courage and determination to work overseas to make extra dollars, contributions by the sectarians in moving education to a higher level (memo to UP on the celebration of your centennial: in five years, if not less, DLSU will overtake you as the pre-eminent Philippine university in terms of academic reputation, quality of graduates, and infrastructure. Accelerate reform now!), innovation and ingenuity in micro-level enterprises — is that in an environment where individual effort and contribution, fairness, excellence, and quality are observed, we do well.

Government’s role has expanded to that point where it has to intervene in everything. When it does that, it tends to stultify initiative and individualism and thus promotes mendicancy and stagnation. Instead of helping themselves, our people point the finger on others, and mostly on the government. Unfortunately, despite our socialist policy efforts, we cannot aspire to become a welfare state like those in Scandinavia. Given the mad scramble of these states to enlist foreign workers to support their retiring citizens, that system is flawed as well.

Methinks the government’s role in most public spheres is to generate consensus to reduce duplication of activities, support innovation, set fair standards. and then punish violators vigorously. This model will definitely work in business, education, sport — while the government can focus on securing our borders within and without, fostering healthy international relations, and promoting cultural identity.

Still, while we can go on theorizing models of government, it still bears to remember that without a proper culture of public service, any model is guaranteed to fail, as it is doing poorly right now in the Philippines. Change must come from the top, while those below must keep on pushing to ensure that happens. To be a truly “strong republic” the citizens will have to be “strong” in mind themselves.

Basapa tackles Why the Philippines Government Can’t Stop Filipinas from Having an Abortion.

And Gridcrosser Files on the Comedia.

Arroyo’s Ghost

Aside from the death of Heath Ledger, it’s stocks and currency that hog the headlines: On Wall Street, a Day of Frayed Nerves. In our neck of the woods, Asia recovers after Fed move, rupiah jumps. In Slate, Panic at Davos! the Global Financial Meltdown Intrudes on the World Economic Forum. I wonder, did the President notice?

Making sense of it all in The Economist in Desperate measures, from George Soros writing in The Financial Times: The worst market crisis in 60 years, and from Dr. Nouriel Roubini, who was predicting this all along, in The Coming Economic Recoupling and Financial Contagion in Global Stock Markets and Financial Markets: When the U.S. Sneezes the Rest of the World Gets the Cold:

The collapse of global equity markets on Monday January 21st is not just an episode of financial contagion from the US stock market to other stock markets.

It rather signals that global stock markets are now beginning to price the following things.

First, the US recession is unavoidable and has already started; and this recession will be ugly, deep and severe, much more severe than the mild 8-month recessions in 1990-91 and 2001.

Second, the rest of the world will not decouple from the US since – as discussed in detail below – many trade, financial, currency, policy, confidence links – lead to a transmission of negative growth shocks in the US to the rest of the world that will lead to a sharp global growth slowdown: 2008 will be the year of recoupling rather than decoupling.

Third, the US stock market has already started to reflect in the last few weeks the consequences on earnings and corporate profitability of a severe US recession.

Fourth, a growing realization that even aggressive Fed easing will not prevent this severe recession, i.e. that we are at the last leg of the stock market’s sucker’s rally and that the Bernanke put has very little value as massive financial losses will increase regardless of what the Fed does.

Fifth, now other global stock markets are now starting to price the effects of the US hard landing on the rest of the world growth, the phenomenon of recoupling.

Thus, the Monday Massacre in global stock markets is – more than a case of financial contagion – a revenge of economic fundamentals as investors are waking up from the delusion that the US would avoid a hard landing and that the rest of the world could decouple from such hard landing. A reality check is now occurring after stock markets remained for too long in the delusional triple dream of a US soft landing, of a Fed being able to ease and avoid the hard landing, and of a world miraculously decoupling from the US hard landing. As predicted here at the beginning of the year 2008 will be ugly bearish for US and global equity markets.

In terms of “decoupling” -the domestic adherents of which pooh-pooh the effects of a US recessions on the argument that we’re more closely tied to the Chinese economy, for example, Dr. Roubini debunks the idea; or, as he puts it, what’s happening is “recoupling”:

There has been a debate for the last year on whether the rest of the world would decouple or recouple from the US economic slowdown. If the US were to experience a soft landing – i.e. a “soft patch” period of slow growth followed by a recovery – then the rest of the world has enough growth momentum and domestic demand to decouple from this US slowdown. But if the US experiences a hard landing – an outright recession as now unavoidable – then the rest of the world cannot decouple and it will experience a serious economic slowdown as well. The US consumer spends about $9 trillion; the Chinese one only $1 trillion; and the Indian only $600 billion. And consumers in Europe and Japan have been cranky as low real income growth and growth insecurities has led them to save more rather than spend more. So there is not enough dynamic and fast growing domestic demand in the rest of the world to take the slack of a now faltering US consumer.  An unbalanced global economy where the US was for the last few years the consumer of first and last resort – spending more than its income and running a current account deficit – while China and many other countries were the producers of first and last resort – spending less than their income and running large current account surpluses – needed the sustained growth and spending of the US consumer to maintain its unbalanced growth momentum.

Specifically, the recoupling of the rest of the world to the US hard landing will be due to variety of channels of interdependence and linkages among increasing integrated economies in a world of globalization:  trade channels, financial channels, currency channels, investment channels, confidence and policy channels drive a transmission of negative economic and financial shocks from the US to other economies all around the world.

How can things spill over? He says:

* Financial Contagion:

Financial contagion occurs through stock markets: days when the US stock market plunges are followed by similar sharp falls in Asian and European stock markets when such markets open next: part of this high contagious correlation of markets is due to the rise in global investors’ risk aversion when markets are in turmoil and volatile that leads them to dump risky assets – such as equities – from their portfolios.  In recent years this correlation of global stock markets has significantly increased especially in periods of high volatility, risk aversion and financial markets turmoil.

But a more important part of the “contagion” is due to the fact that bad economic news in the US – such as signals of recession – that trigger a fall of the US stock market also lead to expectations of lower growth in other economies that triggers in turn a weakening of their stock markets.  Thus, the recent sharp fall of global equity markets is a signal that investors are now realizing that the rest of the world cannot decouple from a US hard landing.

* Direct trade links:

Since the U.S. is running a current account deficit that is still close to $700 billion this year, the effect of a U.S. slowdown on its imports is likely to be larger than its share of the global economy. Also, note that a number of countries are heavily dependent on exports to the U.S. (both as a share of their total exports and as a share of GDP). These economies include obviously Canada and Mexico but also China, Japan, Korea and a significant part of the rest of Asia (Singapore, Hong Kong, Malaysia, Philippines, and Thailand). China is particularly at risk in the case of a US slowdown as so much of its recent growth has relied on the growth of exports, and of exports to the US of consumer goods that are now at threat as the US recession will be driven by a fall in private consumption.

* Indirect Trade Links:

If US imports fall and thus Chinese exports to the US fall, the Chinese demand for intermediate inputs from the rest of Asia falls and thus – indirectly – the growth of demand and exports of these Asian economies falls.  Some have incorrectly argued that the large growth of inter-Asian trade in the last decade makes this region’s growth less dependent on US growth. But studies have suggested that this argument is faulty as the cyclical and structural dependence of Asia on US growth is now larger than a decade ago. The reasons is as follow: its used to be the case that Asian countries such as Korea, Taiwan and others  produced final goods that were exported directly to the US. But with the rise of Chinese competitiveness in such goods the pattern of trade in Asia has now changed: increasingly these Asian countries produce intermediate inputs – such as computer chips – that they export to China and then China assembles them – into final goods (say consumer electronic goods) – and then exports them to US. So greater inter-Asian trade does not mean less dependence – rather greater dependence – on US growth.

* Effects on commodity prices:

Since the US and China have been the two major drivers of global growth in the last few years –  the former as the consumer of first and last resort and the latter as the producer of first and last resort – the slowdown of these two locomotives of global growth – following a US hard landing – will seriously affect the rest of the world; in particular, there will be a sharp drop in the demand for commodities – oil, energy, food, minerals – and in the price of such commodities that had surged in the last few years following the high growth of China and, in part, India and other economies..  The ensuing fall in commodity prices will hurt the exports and growth rate of commodity exporters in Asia, Latin America and Africa. For example Chile’s exports of copper and its price will fall as both the direct demand from the US and the indirect demand from China will fall in the context of a US recession and of a global economic slowdown.

* Global Deflationary Effects of a Weaker US Dollar:

The US economic slowdown and the ensuing reduction in US policy interest rates has led to a sharp weakening of the value of the US dollar relative to many floating currencies. While this weaker dollar may stimulate US export competitiveness it is bad news for other countries that export to the US as the strengthening of their currencies relative to the US dollar increase the price of their goods in US markets and makes their export competitiveness lower. So a weak dollar is bad news for the exports and economic growth of many countries that depends on the fast growth of exports to the US as an important engine of their growth.

* Common Shocks such as high oil and energy prices:

A high correlation of growth rates of the US with that of other countries can also be due to common shocks such as high oil and energy prices that slow down growth among all oil importers. Such negative shocks hurt not just the growth of the US; they also hurt the growth of other oil importing regions such as Europe, China, India, emerging Asia and parts of Africa.

* Bursting of Global Housing Bubbles:

A cycle of housing boom and bubble followed by a bust has occurred in the US.  But similar booms and bubbles did occur in many other parts of the world as easy money, low long-term interest rates and financial innovation occurred in many countries. We have seen such housing booms in Spain, UK, Ireland and, in smaller measure in Italy, Portugal, Greece, France; in Central and South Europe (the Baltic nations, Hungary, Turkey); in Australia, New Zealand and parts of Asia (China, Singapore and parts of India). With a lag we are now observing the beginning of the bursting of such bubbles outside of the US, especially in the UK, Spain and Ireland. Such bust will lead to a domestic economic slowdown in these countries and outright recession in some.

*Effects on Consumer, Firms and Investors’ Confidence:

Bad news from the US and falling confidence of US consumers, firms and investors can be transmitted to a fall of confidence of similar economic actors in other countries: confidence is contagious. Global investors become more risk averse and dump risky assets (equities, credit instruments, etc.) not just in the US but across the globe; large international multinationals may decide to cut back new capital spending on factories and machines not just in the US but also in other countries as losses on their US operations lead to more caution and less internal funds available for global capital expansion (a “corporate boardroom investment strike”). Consumer confidence outside the US – especially in Europe and Japan – was weak to begin with; it can only become weaker as an onslaught of lousy economic and financial news in the US affects the “animal spirits” of consumers worldwide.

* Constraints on Monetary and Fiscal Policy in Counteracting a Global Economic Slowdown:

…today the ability of policy authorities around the world to use monetary and fiscal policy to stimulate their economies and dampen the effect of a US and global demand slowdown are more limited than in 2001 recession. Then, the Fed slashed rates from 6.5% to 1%, the ECB from 4% to 2% and the Bank of Japan cut its policy rate down to 0%. Today the Fed is easing again but it cannot ease as aggressively as in 2001 as it has to worry about inflation and about the risk of a disorderly fall of the dollar that may lead foreign investors to reduce their financing of a still huge US current account deficit. While in Europe and Japan monetary policy had been recently tightened or, at best, kept on hold and the ECB is in denial of the serious downside growth risks in the Eurozone. Similarly, in 2001 there was a massive fiscal stimulus in the US (as we went from large budget surpluses to large budget deficits), in Europe where the 3% deficit limits were breached in the major eurozone economies and in Japan where the deficit went as high as 10%. Today instead, the existence of large structural budget deficits – and high public debt – in the US, Europe and Japan limits the fiscal stimulus that policy authorities can afford.  Finally a weaker dollar is a zero-sum game: it may benefit the US but it hurts the competitiveness and growth of the US trading partners.

Noubini then concludes by saying,

2008 will be the year of re-coupling rather than de-coupling both in financial markets and the real economies; and the effects will be painful for the US and global economy. So, as Bette Davis warned in All About Eve: “Fasten your seatbelts as it’s gonna be a bumpy ride!” Not just bumpy; rather very ugly and scary as the risks of a systemic financial meltdown – that would seriously worsen the economic downturn and around the world – are seriously rising. As argued in detail in the past in this column this is the first crisis of financial globalization and securitization, an episode of a severe and worsening liquidity and credit crunch, a most severe case of systemic risk that will have dire consequences for the growth rate of the US and the global economy.

An additional, cautionary note, in Prof. Michael Pettis’ blog, China Financial Markets concerning the exposure of Chinese banks:

Chinese banks, much to the surprise of many, are among the most valuable in the world in terms of shareholder market value, even if the their assets or annual earnings are far lower those of other large international banks.  Partly this reflects their bubble-like Shanghai-market valuations, but even abroad they are highly valued.  A lot of very misinformed comment explains the value as somehow reflecting the market’s opinion that Chinese banks have cleaned up their portfolios, improved their management, and are now on a substantially sound footing.  The high market values, they say, reflect the market’s evaluation of Chinese banks as solid, healthy, and rapidly growing (although few go so far as to say prudent).  I was told this just last week during an investor dinner, when one investor hotly disputed my claim that Chinese banks still had serious problems with non-performing loans by pointing to their extremely high valuations.  “Are you saying that the market is wrong, and if so why don’t you short their shares?”

Tempting as it is to say the market is indeed wrong, and often is, I actually think the market is making a realistic assessment of value, but we need to be careful about what exactly what that assessment is.  As I have argued in earlier posts and in a number of publications (for example see October 3: “Should Chinese banks acquire banks abroad?”), markets value shares both as a function of intrinsic value and time value, and whereas the intrinsic value reflects assessment of the quality of a company and its management, the value of its assets, and the expected growth in earnings, time value is valuable almost exclusively as a reflection of underlying economic volatility, of which Chinese banks have a lot.

Chinese bank shares have extremely high time value and very little intrinsic value.  They are expensive, in other words, not because the market gives high intrinsic value to the banks but rather because a rapidly reforming, rapidly growing economy is extremely volatile, and purchasing shares in low-capitalized banks are typically the best ways to purchase options on this volatility.  In fact nearly every country going through substantial political and economic reforms during the past two decades has seen extremely high valuations placed on their bank stocks, even when, as is usually the case, the banks are bankrupt or near bankrupt.

Time value is extremely sensitive to change.  As a consequence any shift in perception of asset quality or growth expectations will have a disproportionate impact on the stock prices of banks that have high time value.  This makes them extremely volatile, and the recent subprime-related gyrations shows just how volatile.  I remember when Mexican banks (also nearly bankrupt and also benefiting from an economy undergoing massive political and economic reform) went from having the highest valuations in the world in 1993 to some of the lowest in 1995.  Chinese banks are not going to be noticeably different.

Here at home, Karina Constantino-David bows out: Outgoing CSC chief: Bureaucracy remains corrupt.

Here’s something novel: Supreme Court adopts Writ of Habeas Data (the problem is, the notoriously bad record-keeping of government agencies). And DoJ absolves Ayala Land in Glorietta 2 mall gas explosion.

Curious: Lass with curly hair being tagged Faeldon’s angel. The Inquirer editorial says it’s in government’s interest to remain vague.

A very interesting column on onions and agricultural prices by Marichu Villanueva:

At first, I thought it was just a case of mishandling inventory by the store manager when onions suddenly went out of stock in the market section in one of the malls in Metro Manila where I do my weekly marketing. I became alarmed something was wrong when it turned out that onions cost me more when I bought it from the wet market. Two weeks ago, it shot up to P80 per kilo, or double from the previous year’s price. When onions reappeared in the market section of the same mall, four medium-sized red onions had a price tag of P54. In simple arithmetic, each bulb was P13.50. Yesterday, I went to Chinatown in Binondo and I was able to buy red onions at P100 a kilo after much haggling. The white onions are more expensive at P120 to P140 per kilo.

I felt good that I got a good price after all when I heard a survey of prices of vegetables over the radio yesterday that onions sell in Paco public market at P140 per kilo. So upon seeing yesterday Agriculture Secretary Arthur Yap in our Tuesday Club breakfast gathering at EDSA Shangri-La, it was the first thing I asked him about. Yap told me I was lucky that I got P100 per kilo because at one time, the price of onion in some parts of the country even went as high as P180 per kilo.

Only last Monday, Yap even called for a full-blown press conference where he presented a very rosy performance report on how the Philippine agricultural sector fared from January to December 2007. Yap reported that the country’s farm output rose 4.68 percent last year despite the combined effects of typhoons and dry spell that damaged many agricultural farmlands. Philippine agriculture accounts for almost one-fifth of the overall economic production, with rice and corn as our country’s basic staple products.

From the vegetable produce for 2007, the DA reported that onion registered “dramatic output increments” of 92.29 percent. Onion growers in Batanes, Ilocos Sur, Ilocos Norte, Nueva Ecija, Pangasinan and Mindoro Occidental enjoyed good market price during the first semester of 2007.

Yap readily admitted, though, there is really a problem in onion supply. Obviously, Yap declared, this is the result of the policy decision by the DA to suspend the issuance of permits to import onions that has been in effect for the past five months now. The suspension was in consonance with the request of local onion growers to the government to give them some “breathing space” from undue competition of imported onions coming into the country at much cheaper prices. Without elaborating, I could sense that the DA Secretary has been under pressure from both sides of the supply chain, the local onion growers and the import traders.

Yap was already turning red as we needled him yesterday that agriculture’s best output last year was not good enough if we have soaring prices of onions. We teased him that he was being so “onion-skinned” if he gives in too much to our local onion growers at the expense of us consumers. Actually, the phrase “onion-skinned” traces its roots among our more popular Tagalog idiomatic expression that means a person who is overly sensitive.

He conceded that there is a crying need to strike a balance between these competing needs. Such government intervention could be construed as an unfair trading practice under the Philippine government commitments with the World Trade Organization (WTO). Unfortunately, since imported onions, rice, corn, fruits and vegetables and other agricultural products now flooding the Philippine markets that come in cheaper consequently displace our homegrown agricultural products. This is not to mention the problem of smuggled agricultural goods.

Today is the anniversary of the inauguration of the Malolos Congress, a subject I tackled in a column, last week, Mixed and muddled dates.

My column for this week in the Arab News is: Leave Those Giant Boots Unfilled.

It refers to Suharto, From Verge of Death, Is Making a Recovery by Seth Mydans, The ties that bind by Jim Studwell (as reproduced in The Straitjacket Times) and these articles from the Asia Sentinel. First, The December of Indonesia’s Patriarch, from which comes this remarkable passage:

Singapore’s Lee Kuan Yew provided the hypocrisy. This is the “minister mentor” who has virtually created a leadership cult from his aversion to corruption, a man of famously high morals who encouraged pursuit of an opposition leader to bankruptcy for his alleged abuse of $140 worth of university postage. And yet here he was rushing to the deathbed of a political contemporary regarded as the 20th century’s biggest thief, who the World Bank and UN said stole as much as $35 billion, more than $1 billion for each of his 32 years in power in one of the world’s poorest countries.

“I feel sad to see a very old friend with whom I had worked closely over the last 30 years not really getting the honours that he deserves,” said Lee, who at 84 to Suharto’s 86 is perhaps sensing his own mortality. “He deserves recognition for what he did,” he told the Singapore media at the republic’s embassy. “That’s why I came here to visit him.”

After visiting the old man’s bedside, Lee clarified his position on the morality of theft: “What’s a few billion dollars lost in bad excesses?” he told reporters, comparing Suharto favorably to Ne Win of Burma, who took power three years before Suharto and drove his country to absolute penury. “He built hundreds of billions of dollars worth of assets.”

Lee, a member of JP Morgan Chase’s international advisory board, earlier had a unique take on Indonesia’s economic ills.

“From ‘67 when he became president right up to ‘97, the economy grew and Indonesia was on the point of taking off the economy. (That) it didn’t take off (is) not because of his fault (but) because Bank Indonesia’s interest rate was too high, and so the companies borrowed in US dollars for low interest rates.”

“When confidence was lost after the Thai baht crisis and people wanted to pull their money out, the whole thing collapsed. It was not his fault.”

Much of that is nonsense. Suharto’s legacy was a collapsed economy, utterly dysfunctional state institutions, a putrid judiciary, radicalized mosques, a nation in an advanced state of break-up and a culture of corruption so deeply inculcated, indeed so normal to many Indonesians, that it will take generations to properly cleanse. It is bizarre to suggest that the mid-1990s financial crisis was caused by Bank Indonesia’s interest rate policy as if it was somehow independent of the palace.

And then Death won’t End Suharto’s Malign Influence, which strikes an uncannily familiar chord:

Rather than a historic relic, Suharto, the bland general who emerged from the shadows to dominate his country, remains the most influential figure in Indonesian politics even after a decade of seclusion. The cries of “reformasi” that accompanied his downfall went largely unheeded. Suharto’s influence will survive his burial and haunt Indonesia for years. In truth, Indonesia now is not so different from Indonesia under Suharto.

Yudhoyono and company promote the view that Indonesia is long past Suharto because, like most members of the ruling class, they have a long Suharto past. That’s principally because Suharto didn’t tolerate opposition or develop heirs. His last vice president, BJ Habibie, was chosen mainly for his wildly unconventional views and was intended to function as an insurance policy against his boss’s ouster. Nearly all of the politicians available as Suharto’s successors have been his collaborators.

Despite the sweeping changes in political language and banquet seating, Indonesia’s mentality of governing hasn’t changed. Political office is seen as an opportunity to benefit yourself, your family and your friends – as Suharto reportedly did to the tune of billions of US dollars – rather than serve the public.

At least under Suharto there was order in the corruption: if you paid the right people, things got done. Today, with decentralization and no strongman at the top, corruption is more chaotic and widespread and payoffs less effective.

In 1999 Time Magazine estimated Suharto’s wealth at Us $ 15 billion, that furthermore

at least $73 billion passed through the family’s hands between 1966 and [1998]”. In a May 27, 1999 article, Time noted thus: “In July 1998 the U.S. Treasury’s attention was caught by reports that a large sum of money linked to Indonesia had been shifted from a bank in Switzerland to one in Austria. As part of a four-month investigation that covered 11 countries, TIME has concluded that $9 billion of Suharto money was transferred from Switzerland to a nominee bank account in Vienna. Not bad for a man whose presidential salary was $1,764 a month when he left office.” Suharto himself “denies he has any bank deposits abroad and insists that his wealth amounts to just 46.9 acres of land, plus $2.4 million in savings.

And the list goes on:

According to TIME’s investigation, the six Suharto offspring have significant equity in at least 564 companies, and their overseas interests include hundreds of other firms, scattered from the U.S. to Uzbekistan and Nigeria. The Suhartos also possess plenty of the trappings of wealth. In addition to a $4 million hunting ranch in New Zealand and a half share in a $4 million yacht moored in Australia, youngest son Hutomo Mandala Putra (nicknamed “Tommy”) owns a 75% stake in an 18-hole golf course with 22 luxury apartments in England. Bambang Trihatmodjo, Suharto’s second son, has an $8 million penthouse in Singapore and a $12 million mansion in an exclusive neighborhood of Los Angeles, just up the street from his brother Sigit Harjoyudanto’s $9 million home. Eldest daughter Siti Hardiyanti Rukmana (“Tutut”) may have sold her Boeing 747-200 jumbo jet, but the family’s fleet of planes included, at least until recently, four other jets.

Transparency International, citing the Daily Telegraph and other papers, reported in May, 1998 that

Ex-President Suharto and his family have homes in Bermuda, the Cayman Islands and Hawaii as well as a multi-million dollar mansion outside Los Angeles and a ski ranch in the New Zealand Alps. The value of their treasure in Indonesia may have declined with the collapse of the rupiah in recent months, but much of it is believed to be invested abroad. Suharto’s youngest son, Hutomo Mandala Putra (known as “Tommy”) boasted about this last autumn when one of his banks was closed. He did so at a press conference at which he arrived in a Rolls Royce. Recently the reviled “Tutut”, daughter Siti Hardijanti Rukmana, chartered a plane for a shopping trip to the USA at a cost of US$ 100,000. Much of the wealth comes from franchises and monopolies granted the children by their indulgent father, funded through soft loans from banks whose heads have been appointed by the ex-President. Suharto has defended his family’s vast business empires as being good for the country, but there is little evidence that any of this has trickled down. Rather, much of the country has been impoverished and excluded from the economic advances of the past 30 years.

To be sure, nothing has been proven, not least because President Habibie called an for end to investigations. In 2000, investigations were resumed under President Wahid. But in 2006, Suharto was found unfit to stand trial.

In 1998, the ex-dictator said, “The fact is I don’t even have one cent of savings abroad, don’t have accounts at foreign banks, don’t have deposits abroad and don’t even have any shares in foreign firms.”

At one point, Tommy Suharto owned Italian sports car maker Lamborghini.

President Wahid believed the fortune amounts to $45 billion. In 2000, the BBC reported “Much of the Suharto wealth is thought to be in overseas bank accounts as well as tied in to property in London and Los Angeles and golf courses.” Suharto sued Time for libel. He lost.

Ferdinand Marcos was our Suharto, but Marcos has been dead twenty years, and what the Indonesians are only beginning to contemplate, we’ve been living out. Some time ago I wrote that it’s only now that we’re beginning to see life beyond those who surrounded Marcos; the political torch is being passed to the generation that grew up during martial law and which had no recollection of life before the dictatorship. In a sense, my generation is the one most influenced by Marcos because of the absence of any personal recollection of the Third Republic. Someone, during a conversation, asked me what I felt this implied, and I said the internalization of a basic lesson: it’s not how you play the game, but winning that matters, because my generation only knew Marcos at the height of his dictatorial powers, and his cult of success at all costs. In contrast Marcos’s contemporaries still had to wrestle with the old concepts of gentlemanly politics, which, whether clung to or rejected, involved a conscious choice. Together with that win-at-all-costs mentality comes the mentality that nice guys finish last (something that, in off moments of psychologizing, I’ve always felt was the embittering lesson the President learned at an early age with her father’s defeat).

But as Marcos recedes beyond the living memory of the Edsa Dos generation, we also have to contemplate the eventual haunting of our political life by Arroyo’s ghost.

The other night, I saw a documentary titled Oswald’s Ghost (see reviews here), a trailer for which and supplementary material can be found over at The American Experience. One of the things that struck me most was the inclusion of Norman Mailer. His novel, Harlot’s Ghost, had been an enjoyable read for me back when I was still in college, and his thoughts provide a kind of ending theme for the documentary: how Oswald remains a kind of ghost, who haunts all investigations of the Kennedy assassination, but who, being a ghost, can never answer the question everyone wants to ask the most (did Oswald really do it, and alone?).

The PBS website includes an extract from Mailer’s Oswald’s Tale: An American Mystery: the following passage, I think, was more eloquently expressed by Mailer in the documentary, but this is what he wrote:

…Oswald had a choice. He might not only be the instrument but the leading man. That presented a new conflict — to be the instrument of history or the leading man? The latter could occur only if he was captured and stood trial. If he succeeded in the act but managed to remain undiscovered, obscurity would be his lot again. He had learned as much from his attempt on Walker.

Capture, however, would guarantee him a very high level of attention. And if he was convicted, he had the temperament to live alone in a cell; he was more than half habituated to that already. He could even view his life up to this point as a preparation for spending many years in prison.

Indeed, it may even have been the thought of his trial that fired him on. What a podium! Such a trial could alter history, stimulate the stupid, rouse the lethargic, confound the powerful. So he had to feel divided between his desire to escape and his recognition that capture, trial, and incarceration might generate a vastly larger destiny.

His personal attitude toward Kennedy had little to do, therefore, with his act. In war, one may execute a man for whom one feels respect or even personal affection; Oswald saw it as an execution. One mighty leader was going to be dispatched by another high and mighty personage — of the future. The future would preempt the present.

If he failed to escape, well, he could tell his story. He could becloud the issue and possibly be acquitted, and if it came to twenty years of prison, he would be able to forge his political agenda — even as Hitler, Stalin, and Lenin had done. Should he face capital punishment, then, at the least, he would be immortal. He would take care of that at his trial. He would expound his ideas.

What he may never have taken into account is that the furies he set loose would devour him before he could utter one idea. The first element in the loss of an heroic trial became the four shots he fired into Tippit. There can be little doubt that he panicked. As soon as he killed Tippit, the mighty architecture of his ideology, hundreds of levels high and built with no more than the game cards of his political imagination, came tumbling down. He knew Americans well enough to recognize that some might listen to his ideas if he killed a President, but nearly all would be repelled by any gunman who would mow down a cop, a family man — that act was small enough to void interest in every large idea he wished to introduce. By killing Tippit he had wrecked his grand plan to be one of the oracles of history. Now he had to improvise a defense: I’m a patsy.

It may never have occurred to Oswald that the obfuscation and paranoia which followed the assassination of Kennedy would contribute immensely to the sludge and smog of the world’s spirit.

Mailer said that most people think Oswald was some sort of feebleminded crank, but that his life proved that the man, though not well-educated, was quite intelligent, and had managed some rather difficult transitions on his own, without connections or patrons. Mailer said, then, that the real question that should be asked is, why did Oswald kill Kennedy, what did he hope to achieve. Describing Oswald as an utopian, and one who’d studied Hitler’s life and career not because he sympathized with Nazism, but rather, as a kind of case study for how poor, obscure individuals can, by sheer force of will, become great and powerful figures, Mailer then says that Oswald saw killing Kennedy as the chance to make himself a great world-historical figure himself.

Now what struck me about the documentary was how in it, three assassinations -JFK’s, Martin Luther King’s, and RFK’s- served as kind of psychic bodyblow on American social cohesion and public morale: Kennedy had been the first US President born in the 20th century, himself pointing to the passing of the torch of leadership from the last American President born in the 19th Century (Eisenhower) to himself; a generational shift as dramatic as any. But then he would slain, the Dr. King was murdered, and finally, in the crucial political year, 1968, Robert Kennedy was assassinated, too; and in the Chicago national convention of the Democrats, old-time American politicians like Mayor Daley sent out the troops to assault a young generation for whom the still-youthful Kennedy’s were their elder mentors. It was as if the old ward bosses had mugged the country and stolen back the torch of leadership.

Which brings, curiously, to something here at home. The past few days have seen more articles on Edsa Dos, and the question asked time and again (see The Lonely Vampire Chronicles): does a plot to remove Estrada diminish the importance of the People Power aspect of the whole thing?

Relevant readings from From Amando Doronila in Edsa II unwanted child of RP history, and from Randy David in Forgetting EDSA II :

Ms Arroyo has shown us the limits of people power. We now know that as a moral force, people power will not succeed in shaming an amoral president out of office. We also now know that as a political force, people power cannot topple down a president without the consent or collaboration of the military. This realization, more than anything else, has diminished our people’s enthusiasm for mass protests. I think that what we should realize is not the futility of people power, but rather its eventual impotence if it remains unorganized and naively dependent on spontaneous sparks of moral outrage.

To forget EDSA II is to give up the quest for accountable governance. Estrada and Ms Arroyo both want us to feel bad about EDSA II. Why? Because they are twins. The memory of our struggle against the former sustains our struggle against the latter.

And Conrado de Quiros in Postscript, ante-script:

That brings me to my thesis: Contrary to rumor, in a country like ours People Power does not weaken democracy, it strengthens it. It does not impair democratic institutions, it repairs them. Or where they do not exist at all, it builds them.

That is patently so in the case of illegitimate leaders. Ousting unelected leaders does not deny democracy, it affirms it; it does not destroy the institutions of democracy, it restores them.

It’s so even in the case of elected leaders grown tyrannical, though that is less patent. Or so for countries like ours. In other countries like those of the West, the democratic institutions work in practice and not just in theory (in the United States, for example, a Kiefer Sutherland could be thrown in jail for drunk driving). Where the institutions truly, or reasonably, represent the general interest (that’s why it’s called “representative democracy”), you mount direct citizens’ intervention in the political process only at your own peril. In countries like ours, the democratic institutions exist only on paper — convicted ex-presidents are pardoned and political activists are shot to death; the vote, the most basic democratic institution of all, can be stolen at will. Where the institutions not only do not reasonably represent the general interest but exist to unreasonably thwart it, the law being used to justify, and foment, lawlessness rather than justice, you mount direct citizens’ intervention only at your own benefit.

You never experienced the utter pits this country found itself in during Estrada’s time and you’ll see a seemingly indulgent effort to oust a formidably elected president like him as mob rule. You saw what it was then and you’ll see the desperate effort to oust him as ridding this country of mob rule.

The dynamics of Edsa Dos were confusing: the commingling of the business leaders, the political veterans, the generals, the priests, the teachers, lawyers, middle class and the masses, all trying to figure out what to do about a President who simply refused to do some basic things: his paperwork, and refereeing competing parties wanting to influence policy -only to discover policy was liable to be overturned or modified during all-night drinking sessions.

But all the critics go about their organizing and plotting in the manner that an alumni homecoming associations puts together class reunions? Those on the outside can’t see the nuances that exist in such gatherings, the various subcultures of the professional classes at play, sometimes at cross-purposes.

In his blog, Red’s Herring tackles some of my previous comments and past thoughts on plebiscitary democracy and People Power, and the contending views of those who insist that protests are an evil. He says that constitutional mechanisms are the default option, but only if adhered to by officials themselves, otherwise People Power serves as a corrective mechanism of sorts:

People elect officials both on self-regarding and other-regarding concerns. The former serve the individual’s interests and wishes, the latter the common good. The elected officials have incentives to fulfill both concerns because they want to get elected again (if re-election is allowed) or, otherwise, keep in power the political organization or party they are identified with (with the expectation that even when out of office their interests will continue to be protected by allies).

When public office is tenured, the exercise by the people of their power to hold public officials immediately accountable is held in abeyance until the next election. During the inter-election period, aside from the fact that the individual electorates would go about attending to their personal needs such as earning a living, their voices are effectively muted unless they combine to coordinate their efforts or form “interest groups.” By contrast, under our constitutional system, for example, the president has full discretion to fire any member of her cabinet who has lost her trust and confidence; that same discretion, by the fact of auto-limitation, may not be exercised by the people as regards the president who may have breached her electoral promises or is not performing according to their expectation. Reckoning will have to wait for the next election.

Historically, the “office” that had filled the gap was the newspaper (of the “mucrakers” who leaked the truth – before, of course, the media took on the corporate form) through which the people expressed their individual concerns and frustrations during the inter-election period…

My thesis is this: Impeachment (which I also call the un–election process), initiative, recall, or “the way datus were chosen and replaced” as well as “muckracking” is of kindred mechanism with plebiscitary democracy that refreshes, revalidates or proves mandates in the interim.

Indeed, substantive democracy (or people power per se), as opposed to procedural democracy, predominates if political sovereignty (or the power of the people to have effective control over leaders) is maintained throughout.

And in light of the above, there’s a relevant quote of the day from Postcard Headlines.

In the blogosphere, Verisimilitude and a blog about nothing on monkey business.

Welcome debate

Last Monday, the Inquirer editorial tackled the question of whether “they are all the same, anyway.” Recent news, economics-wise, brings to mind a recent column by Tony Abaya.

First, the economics-related news: we’re seeing Won, peso slide on equities rout, risk aversion as Stock rout deepens; the panicked flee to bonds, with this, shall we say, being the money quote:

“I am sure we are in a bear market, because the mood is very negative. People no longer believe that stocks are the road to riches,” Cannae Capital Partners managing director Hugh Giddy.

“This may be a long slow grind down because earnings expectations will start to fall.”

See also Stocks mark 7th day bloodbath (in light of the above, it will be interesting to see what bloggers like stuart santiago, who’s been keeping tabs not only on the implications of the appreciating peso, but also, what economists think should be done, will have to say about this). Now I’ve heard it said, that goings-on in America are less relevant to us, than they used to be, because our economy is now more closely aligned to China’s than the USA. But even in China, all doesn’t seem to be well. See A Recipe for Disharmony:

An Asia Times article by Martin Hutchinson paints a very sobering picture about China’s bad debt situation. The latest estimate is reported to be between US$1.2 trillion and US$1.3 trillion, which would make the often touted sovereign wealth fund of US$200 billion look almost paltry, not to mention that one-third of this fund is slated for the purchase of bad loans from Chinese banks and another third to recapitalize China Agricultural Bank and China Development Bank which are destined for privatization. What is even scarier is that, according to Hutchinson, all of China’s foreign exchange reserves, to the tune of US$1.4 trillion, might be needed to plug holes in the banking system when the inevitable liquidity crisis occurs. The article also says that China’s banking system bad debts account for about 40 percent of her GDP and are in real terms about five times those of the United States, given her economy is around one-fifth the size of the latter’s.

The article then goes on to draw parallels between Latin America and China in terms of very high inequality, persistently high inflation and rampant corruption, highlighting the fact that China’s government lacks any genuine understanding of the free market and her economy is increasingly dominated by special interests, with a small entrenched elite gorging themselves (immorally and illegally) with the fruits of economic growth at the expense of the disfranchised masses.

Which brings us back to the Inquirer editorial and Tony Abaya. In his column, GMA’s Successes, he writes:

Under Cory, the Philippine GDP grew 3.5 percent in 1986. 4.3 in 1987, 6.8 in 1988, 6.2 in 1989. The coup attempt in December 1989 by then Col. Gringo Honasan and then Capt. Danilo Lim dragged the GDP down to 4.4 in 1990, and subsequently to negative 0.6 in 1991. The average GDP under Cory was 4.1 percent.

Under President Fidel Ramos, GDP grew 0.3 percent in 1992, 2.1 in 1993, 4.4 in 1994, 4.7 in 1995, 5.8 in 1996, and 5.2 in 1997. The Asian Financial Crisis that started in July 1997 dragged the GDP down to negative 0.6 in 1998 as it devastated economies all over the world. The average GDP under President Ramos was 3.1.

It should be mentioned that the low GDPs in 1992 and 1993 were due, not just to the coup attempts of Honasan-Lim in December 1989, but also to the daily power outages of up to 8-hours that plagued the economy.

And the power outages were due largely to the mothballing by President Aquino of the 620 mw Bataan nuclear power plant just before it was to be commissioned, a concession to the anti-US bases and anti-nuclear agitation of the Communist movement. The slack would have been taken up by the 300 mw Calaca plant and the 300 mw Masinloc plant, both coal-fired, but the commissioning of these plants was blocked by environmentalists.

The net effect was that thousands of businesses and industries, and tens of thousands of families were forced to buy and operate their own generators, thus creating as much pollution as, or even more than, Calaca and Masinloc put together. There is a lesson to be learned here, but I doubt if Filipinos have learned it. But I digress.

Under President Joseph Estrada, GDP grew 3.4 percent in 1999 and 4.0 in 2000, until he was deposed from office in January 2001 by a military coup d’etat pretending to be people power. The average GDP under President Estrada was 3.7 percent.

Under President Arroyo, GDP grew 1.8 percent in 2001, 4.3 in 2002, 4.7 in 2003, 6.0 in 2004, 5.1 in 2005, 5.6 in 2006 and 7.1 in 2007. The average GDP under President Arroyo was 4.94 percent. Forecasts for 2008 range from 5.0 to 6.7 percent.

(It takes GDP growth rate of at least 8 percent per annum for 20 years for an economy to reach First World status. This is the level of the achievement of South Korea, Taiwan, Hong Kong and Singapore, from the 1970s to the 1990s.)

Having compared the economic performance of recent administrations, he goes on to point out that,

Under President Arroyo, the economy has developed an upward momentum. And the biggest element in this upward momentum is the remittances from overseas contract workers, which will reach $14 to !5 billion in 2007, compared to practically zero in the 1970s..

The corollary is that if Presidents Aquino, Ramos and Estrada enjoyed a $10 to $15 billion annual OCW windfall during their watch, the GDP during their presidencies would have been substantially higher. (If any reader has the annual figures for OCW remittances staring in 1980, I would appreciate receiving them.)

The other corollary is that if President Arroyo did not have this $10 to $15 billion annual OCW windfall, the Philippine economy under her management would not have grown as much as it has in the past five years.

Which is not to say, as Abaya points out, the President’s taking credit for things not entirely of her own making:

Whis is not to say that President Arroyo did not make any substantial contribution to economic growth from her own initiatives. Far from it.  Her biggest success, in my opinion, is the growth of the call center-business outsourcing industry, which now employs more than 200,000 young, urban middle-class Filipinos, and is still growing fast.

If one were to revisit her Mid-term Development Plan, which was drafted at the start of her presidency in 2001, one would note that it had three major foci: agriculture, tourism and information technology or IT. So the call-center phenomenon was an Arroyo initiative and it is a major success, for which she deserves full credit.

The passage and implementation of the EVAT. is also an Arroyo success, which substantially increased government revenues, enabling it – theoretically at least – to invest more in infrastructure and social services…

….President Arroyo has also achieved moderate success in tourism, one of the three foci in her Midterm Development Plan. Tourist arrivals topped three million in 2007, for the first time ever. I say ‘moderate’ because Thailand drew 13 million tourists, Malaysia 16 million, in the same period.

In 1991, Indonesia and the Philippines drew more or less the same number of tourists: one million. Since then, Indonesia’s tourist arrivals have reached five million, despite the Bali and Jakarta bombings, while we are celebrating only three million. Don’t look now, but tiny Cambodia just topped two million in 2007, and Vietnam is investing heavily to develop its entire South China Sea coast into a tourist magnet..

President Arroyo’s third economic focus: agriculture is, in my opinion, a mixed bag. Even assuming that production has increased in some sectors, the stark fact remains that we are not self sufficient in such staples as rice, corn, sugar, poultry, etc and must import several billion dollars worth every year to meet domestic demand.

This by the country that set up the UP College of Agriculture in Los Banos (when the Americans were running this place), and hosts the International Rice Research Institute (also established by the Americans), both of which trained the agriculturists of Vietnam, Thailand, Indonesia etc, which ironically now surpass us in agricultural production.

Perhaps the weakness of our agriculture is not a paucity of modern technology, but an oversupply of people, because of a galloping population growth rate. In the 1970s, the Philippines and Thailand had more or less the same population size: 45 million.

Because it had a population management program all these years, in 2007 Thailand had only 65 million people, while the Philippines had 89 million. By any yardstick of commonsense, it is easier to feed, clothe, house, educate and find jobs for 65 million people than 89 million.

For this, President Arroyo must share the blame with Presidents Marcos, Aquino and Estrada, for their wishy-washy attitude towards population management and their fear of offending the Roman Catholic bishops. (Only the Protestant President Ramos dared to defy the bishops on this issue.)

But, Abaya argues, the policies for which the President deserves credit have reached their own limits:

But this has its limits, which may have been reached already, judging from the frantic efforts to sell government assets, such as those in the power sector. Without the sale of government assets, the government seems to be running out of money. Economists tell us that a government’s tax collection efforts should amount to at least 16 percent of GDP.

Even with his dictatorial powers, President Marcos could manage only 9 to 12 percent. Presidents Aquino and Ramos were able to raise it to 13 to 14 percent. President Arroyo may have been the first president to raise that percentage to 15-16 percent, but apparently not much more than that, which suggest unresolved problems from chronic tax evasion and smuggling.

And so, his conclusion?

In summary, it can be said that President Arroyo’s relative success in managing the economy can be credited largely to the $10-$15 billion windfall from OCW remittances.

Therefore it is not accurate to claim that there is no alternative to or substitute for her. In fact it can be said that the increase in workers deployed abroad – about one million a year – is due to her failure, and the failure of her predecessors, to create enough jobs in the domestic economy, forcing millions of Filipinos to seek employment abroad.

This means that she can be replaced by such reasonably qualified wannabes as Mar Roxas, Manuel Villar, Richard Gordon, Loren Legarda, or Panfilo Lacson – even by Governor Fr. Ed Among Panlilio or Antonio Meloto – and the economy would still chug along at least at the same pace as it does today, as long as whoever succeeds her enjoys the $10-$15 billion windfall from workers’ remittances.

The consequences of a recession in the USA at the start of an election year, are tackled in  Economic crisis, political rebirth? in History Unfolding:

The week’s economic news makes clear that a new flock of chickens–not perhaps as large as the one that appeared in 1929, but large enough–is finally coming home to roost. The credit collapse that has begun in the housing market (and, the papers tell me, threatens to spread through unpayable credit card debt) is lowering employment, and it may get much worse. Like the two previous crises in our national life (1860-8 and 1929-45), it has been largely brought about by the unbridled ideological or economic excesses of a Prophet generation–the Transcendentals (b. 1792-1821), the Missionaries (about 1863-1884), and now, the Boomers (1943-1960.) Born into as secure an environment has humankind has been able to create, such generations begin disrupting it in young adulthood, have eaten away the foundations by mid-life, and, as they reach elderhood, have to try to find a few surviving members who can help build a new order with the help of the younger generations.

His generational approach to American politics is one that I find very attractive, since I’ve taken a similar (though far from as highly developed) one concerning our own. This is how he connects the past to the American present:

We should keep in mind that this relentless drive by people who are already rich by any standard to gain yet more money is behind our present predicament–and that it will be harder to climb out of it because the mass of people who really need more money have been getting less and less of it. The Boom generation of managers has also avenged their missionary grandparents by finding new weapons against organized labor–most notably, the weapon of outsourcing.

It is not clear that the political process is ready to deal with the crisis. Last week, Boomer Mitt Romney, who fallaciously claimed that he would bring manufacturing jobs back to Michigan, defeated Silent John McCain, who courageously recognized that those jobs are not coming back. On the Democratic side, as John Edwards fades, identity politics have taken the place of any serious discussion of issues. The question I have been pondering is whether Barack Obama, who will turn 47 this year, is really the counterpart of Abraham Lincoln (who was 51 in 1860 when he was elected), or of John Charles Fremont, the 43-year old Republican candidate in 1856, who was defeated by Compromiser James Buchanan. (If McCain should beat Obama, the parallel would be exact.)

On to other things…

Tonyo Cruz once again takes exception to my response to his comment/entry: see The difference between discreet and central. Let me work backwards and answer his question, what do I mean by “public acceptance” of the Left? Very simply: public acceptance is the refusal to condone the killing of a civilian, simply on the basis of the person being accused (and not even self-proclaimed) by the authorities of being a Leftist.

The constituency of the Left is large, indeed, per official party-list election figures for winning parties (the inclusion of Akbayan won’t go down well with some groups, so the total without it is in parenthesis, for comparison):

Bayan Muna 976,699
Gabriela Women’s Party 621,086
Anak Pawis 369,366
Akbayan ! Citizens’ Action Party 466,019

Total: 2,433,170 (1,967,151)

Comparable national election figures (NASSA-NAMFREL quick count):

Left > Gomez, Richard Independent 2,308,620
Left < Singson, Luis Lakas-CMD 3,468,039

If you use Comelec figures (PDSP is the party of Norberto Gonzales et al., you could argue also technically part of the Left):

Left = Sultan Jamalul D. Kiram III TEAM Unity – PDSP 2,488,553

Let’s argue the Left had only 1 out of every 4 votes cast for it actually counted, a potential constituency of 9,732,680. That puts it on parity with: Prospero A. Pichay, Jr. TEAM Unity – Lakas-CMD 9,798,355

The dictionary says,

dogmatism |ˈdôgməˌtizəm|
noun
the tendency to lay down principles as incontrovertibly true, without consideration of evidence or the opinions of others : a culture of dogmatism and fanaticism.
DERIVATIVES
dogmatist noun
ORIGIN early 17th cent.: via French from medieval Latin dogmatismus, from Latin dogma (see dogma ).

Which suggests that even if contrary evidence were presented, the assertions of the incontrovertibly trueness of essential principles, would continue, anyway.

Let me just point out that “revisionism” is not just any word, but a word rich in meaning for the like-minded:

revisionism |riˈvi zh əˌnizəm|
noun often derogatory
a policy of revision or modification, esp. of Marxism on evolutionary socialist (rather than revolutionary) or pluralist principles.
• the theory or practice of revising one’s attitude to a previously accepted situation or point of view.
DERIVATIVES
revisionist noun & adjective

The Master Storyteller and thus, the living magisterium of the Left, demonstrates ther rigorous use of such words in intramural Left debates (and more) and extramural debates with those who aren’t affiliated in the party.

Essentially this is arguing apples and oranges but this is one statement that, again, belongs to the Q.E.D. department:

Public intellectuals should also take note that attempts to airbrush the Left out of Edsa 2 and the body politic has resulted in an ongoing massacre (nearly 900 extrajudicially executed, and another 200 involuntarily disappeared), in the arrest and detention of Satur Ocampo and Crispin Beltran, and in the filing of spurious charges against the legal Left which Arroyo considers a considerable threat. In the official script, the airbrushing is most intense. As if no legal movement exists, and as if Arroyo did not work with, sat with, conferred with, cooperated with the same movement she now wishes to kill after airbrushing operations.

Now that is revisionism. From culpability fully belonging to the administration, now even those opposed to it but who aren’t part of the Left, are assigned responsibility for the murders of members of the Left (or those merely suspected of belonging to the Left, particularly as the state definition is broader than some Leftists would admit the Left to be). It ignores the non-Left voices raised in indignation and protest over the killings, the efforts of those who tried to bring the situation to the attention of the world, since Filipinos were proving pretty much unmoved.

And this is what I mean by dogmatism. Tactical considerations aside, much as the Left will criticize those it considers non-Leftists for branding them with certain names, it is something they do so, all the time: distinctions are only to be made by the Left but non-Left-originating distinctions on the other hand, are simply unacceptable. the underlying message is pretty much the same as the administration’s: same-same (and I won’t go into the public support given by some members of the Left for Joker Arroyo’s senatorial reelection in 2007).

Now what did I mean when I said, “Since 2001, however, the Left has found itself unable to really find a place for itself in legitimate politics”? First, legitimate politics for me are obviously non-revolutionary politics, that is, participation, without molestation, in electoral politics; and as for not really finding a place, by this I mean that the government has, with some success, mobilized public opposition to the Left by calling all Leftists communists, and by generally showing itself unmoved by local opinion in contrast to the way it’s been disturbed by foreign concern over the liquidation of Leftists. And again, in the absence of a nationwide poll specifically asking people how they feel about the Left, one can only go by what one hears and reads, and that has been on the whole unsympathetic to the Left.

What is my factual basis? The murders. The indifference far too many, and outright delight far too many, have shown; the concern far too few have demonstrated. the support, tacit or overt, for the “all-out war” policy.

Again, this is a question of interpretation, not of “truth.” The truth is obvious. Civilians are being killed, on the pretext that it is justifiable to kill them based on their ideological beliefs. This is wrong; those who justify it, are wrong.

Tonyo ends with,

I hope Manolo will be kind enough to recognize the advances made by the Left not just in mobilizing “warm bodies” for elite-led mobilizations, but also in public discourse, in reframing the public debate, in offering the public some alternatives to the status quo, among others.

This is not mine to recognize, out of the kindness of my heart; it’s to be assumed. My criticism of where we are, now, is that we’re far off from assuming what Tonyo wants recognized. But it is a wonderful thing that he takes the time to painstakingly point out where my assertions may be too sweeping, or demanding that they be clarified. It is an exercise not only in public debate, but in fraternal correction; certainly, our exchange is something the administration, for one, would rather not happen at all, and most certainly wouldn’t want repeated by members of the public.

In his blog entry Death of a cycling companion (and the latest activist killing), Howie Severino describes how a statistic for officialdom is a tragedy, for him. And points to what separates Tonyo from those he disagrees with: it is his comrades who are being killed.

Philippine Politics 04 reiterates his disagreement with my views concerning the victory of Joseph Estrada in 1998.

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Conspiracy theories

Over the weekend I watched an entertaining documentary titled Who Really Runs The World. The documentary says that events of great emotional significance cry out for grand explanations. And that as trust in authority weakens, so does the willingness of some people to accept simple, but emotionally unsatisfying, explanations. The documentary says conspiracy theories as we know them, began with the assassination of John F. Kennedy.

In the beginning of the documentary, it makes two assertions (based on surveys of British people):

* If you trust friends and family, you probably won’t believe in conspiracies.

* The poorer you are, the more likely it is you’ll believe in conspiracy theories.

Then the documentary focuses on four particularly popular conspiracy theories in the UK, based on surveys:

* 58% of people think that President Bush wanted 9/11 to happen.

* 45% believe Diana was murdered.

* 15% of people think the British government planned the London Bombing.

* 32% of young people believe the government have hidden evidence of alien landings.

These numbers are significant (the larger figures, for example, represent portions of the population large enough to say, elect a government). Since perception is often the only thing that matters politically, governments have to wrestle with a problem whenever significant tragedies take place: how do you balance the need to dominate the reporting of an emerging story, with the duty to be prudent and responsible about the kind of data released, and how it’s interpreted to the public?

The Glorietta blast is a case in point.

Two Saturdays ago, the Inquirer editorial said the government continues to suffer from a credibility gap, because of the eagerness with which it wanted to explore the terrorism angle (Adventures of Isabel has a video clip to prove it).

Investigations take time. The National Institute of Standards and Technology (NIST) Federal Building and Fire Safety Investigation of the World Trade Center Disaster came out in late 2005, for example, and wasn’t discussed widely in public until 2006. However, the original theories proposed soon after the event, not all of which may have been proven true later on, probably dominate public thinking on the matter up to now. In that time, conspiracy theories -and sites, such as 9-11 Research- abound, and much energy is spent Debunking the 9/11 Myths.

As for myself, I’ve tried to refrain from providing an opinion on what happened in the case of the Glorietta Blast. My past entries, Testimony and Evidence, sum up what was known, then (and remains known, as far as personal testimonies are concerned, which still have to be reconciled with the physical evidence). My script for The Explainer, episode 64, focus more on the lessons that could be learned from the tragedy.

At the start of the year, the issue came to the fore, once more, with the authorities saying they were due to release their report on January 4. What followed was a p.r. shot across the bow from Ayala Land, and then a delay in the release of the government’s report, as well as something like back-pedaling on the part of the authorities, in terms of the charges they intended to file. Implications were made, all around, that one side, or both, were basically engaged in trying to extort a more favorable report. In its entry on the subject, The Daily PCIJ did its own sniffing around:

Another well-known security expert told the PCIJ that the government seems to have pulled a clever cover-up, as high-ranking police officials allegedly even threatened Ayala Land Inc. (ALI), asking the mall owner to choose between protecting the company’s reputation or sacrificing the country’s economy.

Ayala Land’s version is that the explosion was due to a bomb. The authorities insist it was a gas explosion. The government’s evidence is in the PNP Final Presentation, available on line. Ayala Land’s counter-arguments are also available online, through its 3-D walk-through. The Ayala media offensive included, as the authorities prepared to wrap up their (delayed) work, a visit where a Security Expert Doubts Gas Theory in Glorietta Blast. This was followed by Ayala releasing information beyond the original report it had commissioned, debunking the methane angle. All sides have their fierce advocates: see Tongue In, Anew, who compiled the reasons for supporting the bomb angle; see The Journal of The Jester-in-Exile who seems content with the official explanation, as does reason is the reason.

Others, though, think both sides have provided only partial answers.

Tony Abaya (whose professional background is chemistry), in a recent column, thinks it was gas, but not methane:

But I disagreed and still disagree that the gas was methane. I still think it was LPG. The PNP based its methane theory on the fact that the pumps in the sub-basement – which were supposed to pump out the mostly liquid waste from the building’s toilets and restaurant kitchens to the city’s sewerage line – had malfunctioned the previous five days and thus may indeed have caused methane gas to build up in the basement. I argued in my articles that five days were not enough time for methane gas to accumulate to the volume needed to cause such a large explosion. Solid waste takes about ten days to generate methane; waste diluted by the toilets’ flush water and the kitchens’ wash water would take much longer.

The PNP claims that the Federal Bureau of Investigation, the Australian Federal Police and an Israeli security consultant employed by the NAIA all concurred that it was a gas explosion, not a terrorist’s bomb. But only the Israeli has been directly quoted. Why? What did the FBI and the Australians actually say in their reports? Did they disagree with the PNP on which gas caused the explosion?

The PNP also said that there were two explosions (which is correct), but that one minute and 45 seconds separated the two blasts. This long time gap seems to have been inserted to explain that the methane blast caused the standby generator’s diesel fuel – which does not vaporize or gasify at room temperature – to also explode.

But the maximum temperature in the basement and sub-basement would have been reached at the moment of the explosion, not one minute and 45 seconds later, by which time the room temperature would have gone down appreciably. Besides the lone survivor who was interviewed on ANC by Chiqui Roa talked as if the two blasts occurred one after the other, not one minute and 45 seconds apart, which is quite a long time in the sequence of events..

According to my informant, who has done contractual repair work for Ayala Land and its lessee, Makati Supermarket Corp. in the premises, there were LPG cylinders in the basement, to which the kitchens of at least three busy restaurants – Luk Yuen, Kimpura, and Peking Garden – were connected by copper tubing. Considering how busy these restaurants must have been at 1;30 pm on a Friday afternoon, it is reasonable to assume that there were at least ten restaurant-size 50 kg LPG cylinders in the basement on that day. Enough to cause the severe damage that the shopping mall suffered, plus the death of 11 persons and the injuries to 108 others.

My informant also said that all those who had done work in the premises were required by Ayala on Oct. 22 to sign a written promise not to talk to media about the incident. But, of course, that is mere hearsay. Ayala has always insisted that it was a terrorist’s bomb that blew up, apparently for insurance liability purposes.

Just last Christmas Day, a suicide bomber exploded his vehicle next to a truck delivering cooking gas cylinders in the city of Baiji in northern Iraq. The twin explosion killed 25 people, injured 88, and severely damaged buildings in the immediate neighborhood.

On June 29 in London, two Mercedes-Benz sedans, parked in the Haymarket theatre district and nearby Park Lane, were each found to contain cooking gas cylinders, plus cans of gasoline and tens of thousands of nails. That the two improvised explosive devices failed to explode – the bomber was apparently an amateur who may have made the same mistake in the wiring of the two bombs – can be ascribed to pure luck. According to British police, if the two bombs had exploded, “hundreds of people” would have been killed.

This is not say that the Glorietta explosion was set off by a bomb. In the absence of bomb fragments or shrapnel, a bomb crater and/or substantial nitrate deposits in Ground Zero, one cannot conclude that it was a bomb, especially since no one has claimed credit for it. But it does say that cooking gas – whether methane or butane/propane in LPG – can be just as lethal.

People like Philippine Commentary (a scientist) insist that the absence of a crater trumps any assertion that the explosion could have been caused by a bomb. As Ricky Carandang reported in his blog,

I don’t know enough about physics or forensics to refute or agree with the conclusions of the Inter Agency Task Force, but they did take me down there and showed me where the bomb was supposed to have been planted. It was an area just under the stairwell. Forensic investigator Fennimore Jaudian is the PNP’s go-to guy for these things and he says if there had been a bomb planted there, there should have been a crater. He also says the staircase would have been obliterated, which it wasn’t.

The Arroyo government has never been known for its commitment to the truth, but they have also cited reports by the FBI and the Australian Police. The Aussie investigators who examined the blast site and concluded that the explosion was not caused by an explosive. I’ve spoken to the Aussies and they back up the official findings. I feel they would have no reason to lie.

The FBI also examined the site, but according to Metro Manila Police Chief Geary Barias, they have never provided the IATF a copy of their final report.

But Carandang says that beyond protecting its ass, the Ayala Land counter-arguments can’t be ignored:

The IATF has never satisfactorily explained why RDX and HMX were present at the blast site. RDX and HMX are explosive substances used by the military. They are not available commercially, and their sale is restricted by the US government.  And contrary to what the PNP says, they are not present in ordinary household items like deodorants or cosmetics. The PNP admits there was RDX found at the site, but they say this could have been due to contamination.

In her own report, Ayala Land’s investigator has concluded categorically that the blast was caused by an explosive. Aini Ling is an acknowledged expert in investigating explosions and fires. She has even assisted Philippine authorities in a number of investigations, most notably in the Superfery 14 bombing in 2004. It was Ling who concluded that Superferry was a bombing. The samples she took were examined by Armstrong Forensic Laboratories, a US government accredited forensic lab with 25 years of experience.

This resulted in Carandang going to Malaysia to interview the forensic investigator named by Ayala Land (refer back to the PCIJ report which summarizes, and links to, the two sets of samples taken, and the lab analyses, conducted by that expert) . In an update to his entry, he wrote,

OK everyone, I’m back.

Aini Ling says she can’t explain why there was no crater without a more thorough look at the blast site. She says her conclusion that it was a bomb or bombs was based on the results of the swabs that she took and she won;t speculate on anything beyond the report.

Aside from the RDX and HMX, there were other chemical substances there that are components of an explosive. She added that none of these materials are easily obtained in the open market. I prodded her to say who could have access to those explosives and she said the immediate answer would be military.

I find her credible. I don’t think she would sacrifice her good name or her career to falsify a report just for Ayala. When I met up with her she and her colleagues from Forensic Services Bhd were in the middle of giving a lecture on arson and explosives to a groups of insurance investigators. If she turns out to be wrong, I believe it would have been an honest mistake.

For me now the next step is to get a copy of the Australia Federal Police report. The Aussies have concurred with the PNP findings, and like Aini Ling, I believe they have no reason to lie.

I have hard copies of Ling’s report and the Armstrong lab results and will try to find way to encode them and post them here or send anyone a copy if they’re interested.

Beyond getting the Aussie report I don’t know what more I can do to get to the bottom of this.

These latest Ayala-inspired revelations, then, may serve to keep the question bubbling, but have not been definitive enough to debunk the authorities conclusively, but haven’t been definitively been debunked, in turn. In a comment on Carandang’s blog, Philippine Commentary (aka DJB), says,

The biggest problem for Ling and Collier is there ain’t no hole in the ground full of RDX whose radius for a known material is even directly related to the mass of the high explosive’s TNT equivalent.

Just between us girls, I think Aini Ling KNOWS this was not, could not have been a bomb and she’s really making those who’ve indulged her look like fools. She is basically a high powered lawyer with a PhD in forensic chemistry.

She gives eternal life to the Conspiracy Theorists and govt skeptics in preparation for a long court battle, who’s ground she is cleverly preparing.

Unfortunately, the local Mass Media have been duped and used by these “foreign experts”.

I do think smoke has jumped the gun, a bit, in assuming the only way this will get resolved is in court:

Let’s not blindly assume that the PNP was correct, fine. But let’s also not let our jaundiced view of the PNP – and the government – blind us to the necessity of taking Ayala to task as well. What was RDX doing in their basement? What use was RDX being put to in a mall that receives thousands of people on a daily basis. For Ayala to just stubbornly maintain that it was a bomb and not negligence is tantamount to an unsubstantiated general denial that, in court, doesn’t hold water at all.

If Ayala wants to prove the PNP wrong, it should eliminate all possible alternative explanations for the presence of RDX in its basement. But so far, no one has asked this of Ayala. Not the crusading media, not the NGOs, not the human rights groups who have so far remained silent about this fatal breach of respect for the right of people to life. I have to wonder: is it because government is such an easy target that people forget that big corporations can be at fault as well?

Jumping the gun, because assumptions are made about the RDX although she is correct in pointing out that this could be a neither-side-is-right situation.

Personally, what puzzles me, since all angles ought to be considered, is why Tony Abaya seems so alone in pursuing the LPG angle; or why a confluence of events hasn’t been considered: what if it was a small bomb, with psychological shock in mind, but which ended up triggering a gas blast (whether methane or LPG) that was completely unintended, because unforeseen?

It could be both sides are covering up, and that while both are proposing diametrically opposite explanations, there’s a confluence of interests in wanting lots of heat, but little light.

But to think that would be to indulge a conspiracy theory.

So for now, it’s back to what I think ought to be the case: a more rigorous comparison of what we know, and what remains to be discovered, if an iron-clad explanation’s to be made.

Both sides leave me unsatisfied at this point.

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