One rule of thumb I have is never to assume that exposure in one medium will result in exposure in another. What you write in one area may never be read in another, which provides a wonderful (because necessary) justification for repeating yourself. Hence yesterday’s column, which essentially introduced the newspaper audience to something that’s been on this blog for some time.
Calling attention to the idea of the Mandate of Heaven was inspired by Time Magazine’s pointing to the ominous nature of the cyclone that struck Burma:
The people of Burma take omens seriously. For centuries, the paths of planets and vagaries of weather have been scrutinized by astrologers, who divine a relationship between celestial irregularities and earthly mayhem. So when Cyclone Nargis tore across the country on May 2 and 3 – killing tens of thousands of people and leaving hundreds of thousands more homeless - Burmese couldn’t help but note the curious timing: exactly a week later, on May 10, the country’s thuggish ruling junta was set to hold a constitutional referendum, a step toward what the military has called a “discipline-flourishing democracy.”
See Despite Disaster, Burma Has a Forced Vote.
As mentioned in the recent Inquirer editorial, Asean to the rescue, there’s this poignant passage from:
“The River of Lost Footsteps: A Personal History of Burma” (Thant Myint-U)
concerning Thibaw, the last King of Burma, and his decision to accept a British ultimatum:
The Burmese forces in the area were told to lay down their arms, but the lord of Myothit (the fort commander) refused to accept the authenticity of Kyauk-myaung’s message and insisted on a direct order from his king… Only when a telegraph in Burmese Morse code was received at Ava, signed by Thibaw himself, did Myothit agree to stand down. His men then melted away into the surrounding villages, leaving behind piles of Martini rifles. Myothit himself stayed and wept as he saw the steamships slowly make their way the ten miles to the royal city itself.
The Burmese remember that the entire evening, from around seven o’clock until dawn the next day, the sky was filled with thousands of shooting stars and meteors, falling in all directions, appearing and disappearing as people wondered what these clear omens could mean. These were actually the Andromedids in one of the great meteor storms of recent times, seen all over the world. Those learned in astrology prophesied that the country and the Buddhist religion would soon meet hard times.
So it was that a meteor heralded the Norman Conquest, and an earthquake shook Bataan on the night of its surrender to the Japanese. The cyclone could be viewed as an omen for Burma’s junta; and when news began to spread, yesterday, of the massive earthquake in China, I immediately thought of something that seems to have struck other people, too. See The Warrior Lawyer and see Richard Spencer in his Daily Telegraph blog, who points to the enduring power of superstition in China:
A friend points out that this may be a test of residual feudal superstition in China. The Tangshan earthquake in 1976 was said to be an omen of Mao’s death two months later. This would be a bad year for a repeat, though there are no indications this is anything like on that scale.
(nearly all account’s I’ve watched or read of Mao’s final months always includes that earthquake as a foreshadowing of the end of the Great Helmsman)
Spencer, who’s in Beijing, said he wasn’t surprised to feel the earthquake -until he released how far away the epicenter of the quake was. Apparently the quake could be felt as far away as Bangkok.
James Fallows notes how Chinese state media’s covered the disaster and thinks the absence of video hints at the government being unsure how to handle the story.
It will be interesting to see the consequences, economically, of the earthquake. China financial markets provides a snapshot of where things were, a day or two prior to the quake:
April’s CPI numbers were released earlier today and, as the pessimists among us expected, inflation came in at 8.5% year on year, quite a bit higher than most analysts’ predictions. March’s year-on-year inflation was 8.3%. Probably in response to the higher-than-expected numbers, late in the day the PBoC announced that minimum reserve requirements were going to be raised by 0.5%, to 16.5%.
Throughout the past two weeks we had been getting a lot of soothing noises about inflation and confident predictions from analysts and even from Governor Zhou of the PBoC that it would come in at 8% or just above — Bloomberg’s poll of 22 analysts predicted on average that year on year CPI inflation for April would be 8.2%. Even Credit Suisse’s Dong Tao, who has normally been very pessimistic — and very right — about inflation, predicted that April’s CPI number would come in at 8% year on year. It took a bitter, twisted guy like Stone & McCarthy’s Logan Wright, who refused to bask in the good feelings and insisted on counting the numbers up for himself, to throw in an 8.5% prediction. He was right, thereby reinforcing my claim a few days ago that for the past six months you would have always done best by betting on the most pessimistic prediction.
Month-on-month inflation rose by 0.1%. This means that inflation for the first four months of the year is running at an annualized 9.9%. At this rate we would need inflation for the next eight months of the year to be 2.4% on an annualized basis to bring us to the government’s 4.8% target for 2008. Clearly this is very unlikely, and even government officials have acknowledged that the official target is intended more for signaling purposes than as a real statement of government intentions.
Concerning the ongoing drama of Meralco, see this article from the Philippines Free Press, Malacañang vs. Meralco, January 30, 1971:
In Malacañang, Marcos pointed to Meralco’s high rates as one of the principal factors in the rise of prices.
Meralco, of course, did not take Malacañang’s charges lying down. Its board chairman, Emilio Abello, was ready with answers. At the same time, Malacañang strategists got some labor leaders and consumer groups to their side. Their obvious purpose was to show that it is the public itself, not just Malacañang, which is fighting Meralco. The major issue of Malacañang against Meralco is Meralco’s alleged high rates. It is now established, said Marcos, that Meralco’s annual income is P93 million. Which means that the light firm, controlled by the Lopezes, is earning more than it should, in the view of Malacañang. Therefore, it should not have increased its rates last year – the floating rate notwithstanding.
Even the rhetorical flourishes and official argumentation evokes the past: see Political War and Martial Law? January 23, 1971. Later of course, Marcos would kiss and make up -on the eve of plunging in the knife. See FM’s March 12, 1972 diary entry in The Philippine Diary Project.
Meanwhile, the cat’s out of the bag. See Meralco breakup eyed: GSIS chair bares plans to lower electric rates:
The GSIS president and general manager said in a phone interview Sunday that he would cut up the P75-billion power distribution company the same way the Manila Waterworks and Sewerage System (MWSS) franchise area was divided after it was privatized in 1997.
“We are very much interested, we think Meralco is a good investment,” Garcia said. “My plan is to take full control of Meralco and split it up into two or more sub-franchises. This worked very well in the MWSS privatization.”
Elpi Cuna, Meralco vice president for corporate communication, doubted the company’s 50-year franchise could be subdivided. “It’s a total package and the way it is worded, you have to go back to Congress to get permission,” said Cuna, speaking for Meralco, not for the Lopez family.
The other day, the Inquirer editorial pointed out that what’s going on is a patently political campaign against the Lopezes, who are an easy target because high prices haven’t endeared them to consumers.A pretty thorough report on why electric rates are the way they are, appeared in BusinessWorld, see Expensive Meralco power justified? (alas, a subscription is required; they ought to consider that the subscription-only model for news has failed).
Tongue In, Anew, takes a comprehensive look at the energy sector, and read, in particular, his conclusion, too long to quote here. Basically he points out that the entire energy policy of the government needs to be revisited, and that there are groups close to the President poised to benefit from dismantling Meralco as Garcia plans to do. A taste of what he dishes out in the entry:
The Power Sector Assets and Liabilities Management (PSALM) another product of EPIRA now headed by former Soriano protegé, Jose “Nono” Ibazeta, drew flak recently when it disqualified a consortium headed by mining magnate-brothers Buddy and Manny Zamora who pre-announced their bid of $6B for the whole of TransCo apparently after sensing that the Bid Committee is hell bent on demolishing all threats to the victory of Monte Oro Resources and Energy, known widely in the energy and mining business as the “Mafia Team” composed of FG’s golf and business buddies (and former Ibazeta partners whom we now know bought out Broadband Philippines from Joey De venecia III, among other ventures) Ricky Razon of ICTSI, Endika Aboitiz of the second biggest private energy operators under the flagship Aboitiz Energy Ventures, Andy Soriano III and other small fish collectively called the “Malacañang Mafia”.
The superior bid of $6B notwithstanding, PSALM awarded the prized trophy, TransCo to Monte Oro for a measly bid of $3.95B!
Prior to that PSALM experienced 3 failed biddings in two years. No one was bidding for Masinloc unless there was an assurance of a buyer of its power output. Napocor of course turned to Meralco, I presume, with special power rates just so the bid pushes through. That turned the tide and AES, a US-based corporation won the Masinloc plant for $930M, which I must say is too steep for an old coal plant that operates only at 25% of its capacity. Rule of thumb price for a similar plant is $1 Million per Megawatt. At 600MW, $930M is a jackpot. That’s not all, AES claims it needs to pour in additional $1B to rehabilitate the plant and double its present capacity. Unbelievable. Now where do they plan to get the money to pay their loans to IFC for that purpose? Correct, from generation charge. And since the power sector will not be deregulated anytime soon, it smells like a possible loan default would be inevitable. Hey, don’t tell me this loan is covered by another sovereign guarantee, please!
[email protected] Holdings also points to the entry above but asks whether Winston Garcia, indubitably gifted as a corporate raider, is pursuing the best interests of the GSIS.
Meanwhile, stuart-santiago subjects your monthly Meralco bill to a thorough dissection.
I have a hunch that we don’t hear enough about all sorts of ways to generate power, such as wind farms, solar panels, utilizing energy from tides, and biogas, because they skirt the way big money’s made in the energy sector, and so those with the means to invest in it, don’t (and neither is the government backing alternative sources of power in a big way). Read about Daniel Co in Tarlac, from Fortune’s Carbon finance comes of age:
Daniel Co and his family raise about 10,000 pigs on a farm called Uni-Rich Agro Industrial in the province of Tarlac in the Philippines. Until recently pig manure was shoveled into concrete ponds, where it decomposed, emitting methane, a potent greenhouse gas, and a putrid smell. Daniel Co knew that he could install biogas technology to seal the ponds, trap the gas, and produce electricity, but he didn’t want to spend the $200,000 or so it would cost until he heard that pig farms could collect money from Europe for capturing methane: He would be paid not to pollute.
The Uni-Rich farm is a very small player in a very big global experiment that was set in motion when the Kyoto Protocol was ratified in 2005. Thirty-six industrial countries (but not the U.S.) have agreed to reduce greenhouse gas emissions over time; they can do so, in part, by financing “clean development” projects in the developing world. This has led to a global scramble for cheap ways to reduce emissions, like Daniel Co’s biogas project; the invention of a new tradable commodity, called a Certified Emissions Reduction, or CER; the development of competing markets to buy and sell CERs; and the rise of an army of regulators to oversee the entire business.
Daniel Co got involved when he was approached by EcoSecurities, an Irish company that has developed more carbon-mitigation projects than any other firm. Its experts calculated that trapping his farm’s methane would generate 2,929 CERs a year. A CER is created when the equivalent of one ton of carbon dioxide is prevented from entering the atmosphere. (Because methane creates more global warming than carbon dioxide, trapping one ton of methane generates 21 CERs.) CERs are sometimes called carbon credits.
EcoSecurities offered to pay Uni-Rich $4 per credit, or $12,000 a year, every year, until Kyoto expires in 2012, and to handle all the paperwork at the UN, which registered the project late in 2006. Uni-Rich then installed the methane digesters.
Now, thanks to the magic of carbon finance, Daniel Co and his family treasure their pig waste. They use it to produce electricity, which has reduced their utility bills by about $48,000 a year. They collect their $12,000 a year in carbon revenues. EcoSecurities, in turn, will sell the credits for about $18 each, or $54,000 a year, to a big French bank called Caisse des Dépôts. Caisse des Dépôts can hold onto the CERs as an investment, betting that their value will rise, or sell them to a client, most probably a European power generator or industrial firm that needs credits to meet its regulatory obligations.
You’d think that environmentalists, often at loggerheads with hog breeders because of all the poop pigs produce, would be hailing this example; any reasonably progressive government would have given this swine breeder a medal and tried to replicate his achievements throughout the hog raising industry; hell, such pooptastic news should have sparked a proposal, crazy as it might sound, to attend to the -what is it, 5 million?- shortage of toilets for Metro Manila residents by building communal toilets where human waste can be turned into biogas. But I’ve been asking around for over a month now, and no one, it seems, even noticed the Fortune story.
Am I the only one who thinks the government has been strangely quiet, despite being confronted with the strong possibility that the Burma cyclone has swept aside assumptions that rice supplies will stabilize? A Canadian paper published a rather lurid article, All eyes on price of rice, which however does point to something the opposition, if it did its homework, could legitimately take the administration to task -neither calming people at home and spreading panic overseas.
Mon Casiple ties things together:
The question therefore arises. What for did the GMA administration drum up the rice “crisis”? The only logical answer I can find–apart from the political distraction–is that somebody or somebodies are making a killing in the rice market. The price of rice is shooting through the roof. Yet, the mystery tales from the farmers are that the middlemen are not buying in extraordinary quantities in these times of an alleged demand market. The inescapable conclusion is that the same somebody or somebodies already had the supply before it happened–probably through technical smuggling (NFA conduit) or direct smuggling. They are now reaping the superprofits.
These acts, particularly of government people, are simply treason.
The sudden interest by the administration in Meralco, on the other hand, provides an interesting insight into the problems of the transition from power of the GMA administration. The Lopezes are both an economic and a political giant with capability for major intervention in the presidential elections in 2010. They have the connections to all the presidentiables.
Throw in the current situation where none of the presidentiables have even intimated–despite prolonged negotiations–their openness to give the Arroyo people a practical immunity from suits once they are out of power. Add the debatable–and increasingly narrowing–charter change option. Time also ticks towards a political lameduck scenario. You have the ingredients for many desperate moves. The Meralco arm-twisting is one of them.
Apart from it, however, there is the real desire to get hold of Meralco itself–the same ambition that only Marcos was able to bring to reality during his heyday as a dictator. It is an economic jewel and in the EPIRA aftermath, the apex of ambition for GMA cronies in the industry (remember the Transco bid).
What ties together the rice “crisis” and the Meralco arm-twisting is the observable trend since the Garci tapes scandal emerged–to make considerable hay while the sun shines (or before it inevitably sets). This is supposedly the major reason for the Cabinet revamp, but that’s another story.
In other news, Gen. Hermogenes Esperon retires: but never fear, A post awaits Esperon and Arroyo pardons 9 Magdalo rebels as gift to Esperon; the MILF, Palace in word war over peace.
A big deal gets consummated: PNOC approves Petron sale to hedge fund firm, Roxas questions move. And LTFRB chief: P0.50 jeepney fare hike ‘reasonable’.
Conrado de Quiros and John Nery with contrasting views on the ongoing schism within Couples for Christ and the direction Gawad Kalinga should take.
The joys of gerrymandering: House panel OKs bill creating 2 districts for Camarines Norte. Systems 101: P15-M hi-tech House voting system fails test . Taxation 101: House okays tax relief bill:Exemptions raised for wage earners; stricter limits for professionals (obviously, the following is of interest to people like me):
The bill amends the Tax Code by increasing the personal tax exemption to P50,000 for all workers, whether single, married or a breadwinner. It is currently at P20,000 for single workers, P25,000 for a family head, and P32,000 for married individuals…
…Aside from the increased tax exemption, it also increased exemptions for up to four dependents, to P25,000 each from P8,000. However, the fourth child born after Dec. 31, 2010 and a third child born after Dec. 31, 2012 cannot be claimed as dependents…
…Also adopted in the tax measure was the Simplified Net Income Taxation Scheme, which would simplify the income tax for self-employed individuals but limits allowable deductions.
Under the SNITS, individuals engaged in trade, business and the practice of a profession, such as lawyers, doctors, dentists, certified public accountants, architects, artists and athletes, may deduct a standard 40% from gross income instead of the current 10%.
At only 10%, taxpayers would rather itemize their deductions via various business expenses that tax authorities found hard to check. For those who do not want the 40%, the itemized listing is stricter under the proposed bill…
While 80% of government revenues come from individual wage earners, only 20% is collected from self-employed individuals and professionals… “And while the effective tax rate of wage earners is 15.25%, for the self-employed and professionals it is measly 1.14%, because these self-employed individuals are usually over-deducting,” he said.
Under the approved measure only the following deductions will be allowed:
* reasonable allowances for salaries of officials and rank-and-file employees occupying administrative and selling positions;
* reasonable allowances for supplies, telecommunications, electricity, fuel, light and water;
* reasonable allowances for rentals;
* interest paid or accrued within a taxable year on loans contracted from accredited financial institutions; and
* taxes paid or incurred within the taxable year in connection with the taxpayer’s trade, business or profession.
Rhetoric 101: Teodoro Locsin Jr.’s response to Sen. Miriam Defensor Santiago, Proving we are idiots, well worth quoting in full:
When Sen. Miriam Defensor Santiago called the House “idiots” in connection with the Spratlys/baseline issue, I trembled for my beloved chamber. Miriam knows an idiot when she sees one. After all, she has worked with the idiots close at hand, especially in the Senate, most of her political life. But now she was accusing us of being idiots. Did she have proof? Not yet.
But this chamber is about to furnish her with some. It seems we are taking seriously her jocular proposal to junk the House version on its third and purely formal reading, and substitute a joint commission to study the matter all over again; in the case of the Senate, for the first time. Only idiots will accept that idea. For two reasons:
Uno. She doesn’t even speak for the Senate since it hasn’t even started to craft a version, least of all adopt her own. So what is there to jointly study? Our completed version and the Senate’s nothing?
Dos. Nowhere and at no time has the abortion of a bill on third reading ever been superseded by a joint commission – or anything else for that matter – just to take it back to square one, before first reading. Except in one 17th matriarchal society in South Africa whose elders adopted a proposal to enlarge the territory of their kraal and the Queen ate them.
But this is now and this is here. There is no precedent in parliamentary practice anywhere and at anytime when a measure was aborted to make way for study period.
Besides, Miriam’s proposal is a redundancy. When and if she ever gets a version passed in the Senate, we can both meet at the bicameral conference committee as a joint commission, for as long as it takes to convince ourselves which version would be best for the country. Once we agreed, we wouldn’t have to go back to square one and reintroduce the common version in both chambers. We would merely take it back for our respective ratifications. That way we will have more time to re-study, in the case of the House, and to finally study, in the case of the Senate, an issue which would be high treason to mishandle.
I know Miriam was just baiting us. That is why I love her mischievous sense of humor. Let us not take the bait and prove we are her idiots after all. Thank you.
In his column, Joaquin Bernas, S.J. discusses the problems caused by our sloppily-written Constitution, particularly when it coems to figuring just how, exactly, Congress should go about deliberating on proposed constitutional amendments. He thinks the courts will have to weigh in. For those with stars in their eyes over Federalism, a timely reminder: Texas to look into requiring Amazon to collect sales tax.
And Malaysia Ponders How to Handle its Bloggers.