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Dec 03

The Future of Asia: Whither Nation or State?

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I will present my conference notes in my next entry, but first, here are the remarks I delivered during my portion of the Asian Thoughts Leaders Forum held under the auspices of the Arts House of Singapore. The forum, the first of its kind held by the Arts House as part of its Asia-on-the-edge Festival, had the theme, “The Asian — Past, Present & Future.”

The opening forum was held on Friday, November 28, in The Arts House, located in the Old Parliament of that City-State. I had the delicious good fortune to be seated in the front bench and in no less than PM Lee Kwan Yew’s own seat.

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The keynote address was delivered by Prasenjit Duara (India), Director of Research In Humanities and Social Sciences at NUS; Emeritus Professor of History and East Asian and Civilizations at the University of Chicago, US; Author. His paper was titled “Origins and Beginnings: Where Do We Start?” And the discussion afterwards was moderated by Professor Wang Gungwu, Chairman, East Asia Institute.

Here it is.

Publish at Scribd or explore others: Asian History

There were other presentations, as well, although the one by Mechai Viravaidya on “Privatizing Poverty Alleviation” had to be cancelled, because he was unable to leave Thailand due to the closure of Bangkok’s airports.

And so here’s what I said on Sunday afternoon.

***

THE FUTURE OF ASIA: WHITHER NATION AND STATE?

Manuel L. Quezon III

Abstract:

This is the first time in the history of our nations that leadership has passed to a generation with no memory of what it was like not to be free citizens of independent nations. The challenges and call of achieving independence has been a reality for a full generation for some; for others, close to three.

Whichever way you measure it, the struggle for independence is passing from living memory and so are the emotions and motivations of our independence struggles. Instead the call of our times is to be worthy stewards of that independence and to build societies in which each and every citizen is truly free: in terms of their health and wealth and, increasingly, in terms of individual liberties and participation in the political process.

Independence as our birthright means that for the generation of the children of the “independence generation”, they in turn, hear the siren call of global opportunity and challenge their elders and the societies that they built, which put a premium on stability, consensus, and domestic economic growth. The challenge they put forward is for heir elders to validate validity the notion of nation and nationalism.

Even as we build bridges between our nations, engaging in cooperation and mutual assistance that’s also unprecedented, our young people ask whether nation, nationhood, nationalism and even citizenship are even relevant labels in their lives. Considering the limits imposed on their peers who remain at home, in nations concerned not with individual freedom, but national stability.

IAN McKellen, the actor known to teenagers and those who adore Shakespearean drama alike, once said, “Actors don’t describe – they inhabit.” This gathering of thinkers has proposed something similar: that while those of us who think and write for a living, obsess over who or what we are, the majority of our countrymen and our fellow Asians just are – and that it takes a summoning of the imagination for us to grasp what is immediate, what is real, for the rest.

This would have suited the great players of the game of realkpolitik in the past—the European past that subdivided us. “The word ‘Italy’ is a geographical expression,” Metternich wrote, in a letter to the Austrian ambassador in April 1847, “ a description which is useful shorthand, but has none of the political significance the efforts of the revolutionary ideologues try to put on it, and which is full of dangers for the very existence of the states which make up the peninsula.” And so the Roman Pontiff drew a line, cleaving the world in twain, so to speak, and the Spanish derived legitimacy to declare dominion over the Philippines on one hand, and Portugal claimed the Moluccas, on the other. The British, from their East India Company headquarters in India then seized Manila briefly, and their compatriots then painted the region pink, adding Burma and what they then called Malaya, and Singapore, to their dominions while France’s ouvre civilsatrice carved out its mission in Indochina and the Dutch displaced the Portuguese and declared dominion over their Dutch East Indies.

You and I all know this, it was in the textbooks we read in school; and from those colonies arose the nations whose passports we individually carry, whose flags we salute and wave with pride, and whose anthems we sing in languages our colonizers considered unfit for political consumption. Around us continue to stand monuments to imperial self-satisfaction and permanence, now reduced to whitewashed artifacts of antiquarian, mainly tourist, interest. And inexorably in our nations the buildings of truly Roman braggadocio—because such clearly structural representations of pretentions to Roman-inspired imperial cultural pride—have been reduced, as this building has, to enclaves where the past is preserved but no longer exclusive enclaves where all the truly momentous decisions are made. Those decisions are now made in postcolonial-era towers of glass and steel, by young men and women under the watchful eyes of middle aged men and women who have never known what it was like to be a colonial subject.

And yet, the era of direct foreign rule was not so long ago, that it has passed beyond living memory. There are still quite a few among us who were born and raised the subjects of a foreign power. To be sure, to still be with us, means that they were only in their teens or at most, in their twenties or thirties at that time; but they can all remember that defining moment when the flag of the foreign power was finally lowered and the new flag of a new nation hoisted, waving alone over territories over which the imperial or colonial sun was never supposed to set.

In 1939, my grandfather, then President of an autonomous republic four years into what was expected to be a decade-long transition to full independence, remarked in a speech that he wondered what would happen once the unifying influence of the independence cause was lost. With independence, he asked, would the various ethnicities then resume squabbling among themselves, according to loyalties that had predated the colonial powers and whose rivalries and jealousies the colonialists had so superbly harnessed to–as the Romans put it—a “divide and rule”? His answer was to centralize authority, to build an army, to create a one-party state and to focus public attention on spectacles of state: parades, speeches, flags, anthems, banners, slogans. To begin refocusing the energies of the rulers and the ruled, on themselves, since the others, the foreigners, were scheduled to depart the scene.

Yet two years prior to his inauguration the first popularly elected President of his country, the British and the Americans had concluded a treaty further refining the territory between the southernmost territories of the Philippines and the British territories in Malaya and Borneo. Thus it was, for the Filipinos that their national territory was defined by the colonial powers: as it would be for the Indonesians, as it would be for the Malaysians, the Singaporeans, the peoples of Laos, Cambodia, and Vietnam, and to a certain extent, the Thais with relations to the Burmese.

Much has been made of Benedict Anderson’s thesis that nations are fundamentally “imagined communities,” but for us Southeast Asians, at least, and to a certain extent for all Asians, particularly East Asians, we are all geographic expressions, trying to translate our vernacular cultures and identities into the high language of state and statecraft, imposing reason into often unreasonable -because arbitrary- negotiated borders arrived at without either consultation or reference to our precolonial histories. As it was in the Empire of India, about to be cleft, in twain, between India and Pakistan, and where the borders between the two was being penciled in on a map by Sir Cyril Radcliffe, literally lives and treasure on the line—a British-drawn line to the end!

Still: if, for prestige and profit, the region had been subdivided and parceled out among the great and mediocre powers of the West, it was in each parcel that there germinated and thus, sprouted, the concept of a national identity.

My grandfather’s anxiety over whether the often fractious independence movement of his country could survive the sobering reality of independence was not unique; what he could not foresee was that after the formalities and full panoply of independence was achieved, our respective Asian countries all then began to wrestle with another struggle altogether, the fight against Communism. And after that, or to be precise, inspired by that ideological fight, another preoccupation became central in the minds of what I call our independence generations: the question of social order and material progress.

When Suharto of Indonesia died, Lee Kwan Yew of Singapore went to pay his respects; Mahathir of Malaysia paid tribute, too. The elaborate courtesies they exchanged were courtly; and criticized in the West as a kind of last hurrah of Asian Values, the exact sort of values the West of course viewed as essential during the heyday of these statesmen: but the era of statesmen seems to have passed, and in its place we have the much more modest or perhaps it is more accurate to say, definitely merely as large-as-life, politicos-cum-technocrats of today. In all our countries, the passing of a Suharto, and the shuffling out of official retirement of a Lee or Mahathir, is worthy of a kind of momentary pause; I daresay we all gawked at the goings on during those Indonesian state obsequies, because we fully well know no such political giants shall ever walk our respective lands again—whether we loved them, feared them, hated them, admired them.

These men—they could only have been men, in their times and respective places—were statesmen in the broadest sense of the word; with the exception of Lee, they were more properly the heirs of the generation that had actually secured independence, but they were the generation that had turned the formality of sovereignty into a living and functional reality. They also had the advantage, in the main, of political longevity, and thus an unrivaled—possibly, unsurpassable—record of institutional incumbency. Marcos was as to Quezon as Suharto was to Sukarno, and as Mahathir was to Tunku Abdul Rahman, or even as Indira Gandhi was to Pandit Nehru. The transformation of colonial government and territory to national state and national territory may have been for the first of the independence generations to achieve; the transformation of that state into a nation: it may be that for better or worse, it was the second of the independence generations that achieved that, with leaders creating what Pierre Bourdreau described as a “State nobility” for each country: those we like to call, in more pedestrian fashion, technocrats.

With independence achieved, the Cold War at an end, in many cases the economy either transformed or permanently stunted, whether rich or poor, groaning under poverty or enjoying unprecedented prosperity, Asians, in particular Southeast Asians, have run out of causes to which entire peoples can find a collective reason for being in unity with their leaders. Is it no wonder then, that in countries where prosperity has eluded governments, or where political legitimacy is fragile, two, sometimes three, generations after independence, literally—from the perspective of our present nation-states- campaigns are launched, whether on the ground or simply in the feverish imaginations of rabble-rousers?

Claiming temples, disputing the old colonial boundaries, encroaching on modernity by disputing bedrock principles of the modern nation-state, like secularism, and challenging notions of national identity by repeatedly invoking the communitarian, sectarian, and ethnic divisions of old: all are, in a sense, the rituals and aesthetics of what the present-day State Nobilities in the clubs, churches, and schools of that nobility, consider the primitive, the dangerous, the subversive. And, alas, the thrilling and inspiring for everyone else. A specter is haunting Asia, to freely borrow the tired old rhetoric of Karl Marx: it is the specter of militant theocracy. But this is, in many ways, truly Asia, with all due respect to the Malaysian tourism authority. For it is the Asia of emperor-kings, riding on war elephants, where those God-like kings trampled the alien neighbor, and where the rulers and ruled were united in fealty and tradition; and where the world, in a word, operated to the true rhythms of nature and not the enforced, artificial, distinctions of Western time and the calendar of the secular state.

So long as you could remember what it was like to see your part of the world considered yet another province, colony, protectorate or even department of a foreign metropolitan power, the incentive for you to set aside difference with your neighbor in recognition that ultimately, to the foreign ruler, they saw no differences among you except that you were all inferior, was irresistible. You would speak more eloquent, elegant English or French; you would learn Latin and the law, you would master metallurgy and engineering, you would learn military tactics and political economy, you would draft a constitution, design a flag, make speeches, write books, sing songs, declare loyalty that set yours apart from what was expected of you by the Governor-General, the Regent, or the puppet emperor.

You would fiercely defend that against the Japanese, against returning colonialists, against Marxists; you would come up with plans superior to any Socialist Five Year Plan, you would have children who knew not hunger, nor thirst, nor malaria nor beri-beri. We have, to a certain extent, even in the poorest of our respective countries, accomplished all that; and yet, for the generations who never knew that, there is, -what?

When Megawati Sukarnoputri became the first President of Indonesia not to have been born a colonial subject, I found it a truly remarkable thing. And even more remarkable, to me, was that Gloria Macapagal-Arroyo is only the first president my country has ever had, who hadn’t been born under a foreign flag. Chances are, for my country, the next head of state would also have been born a free Filipino, just as Megawati’s successor, Yudhoyono, was also born a free Indonesian—indeed, born in the year the former colonial power reluctantly recognized his country’s independence. Whether one speaks of Najib or Anwar in Malaysia or Lee Hsien Long in Singapore, the inevitable transition to a purely post-independence-born leadership is at hand; and everywhere else, the generation of the War, the veterans of long marches and Dien Bien Phus and even of Khmer Rouge, are passing from the scene.

Just as many of the bright, well-fed, well-educated, well-accomplished of the generation of their sons and daughters and grandchildren are passing from the scene –passing from the national to the international, from the domestic to the global; inspired not with nationalist yearnings but globalized appetites for the glitter of career and its material manifestations. There is no thrill in anthem, no particular stirring invoked by flag, certainly nothing but a skepticism in the concept of army or national service, no attitude towards the state and the law but hurdles to overcome, in this and these generations. The blessings of independence seem so mixed, so hollow, in this sense: of a failed promise for countries like Indonesia and the Philippines, where nationhood is an obstacle and it seems, often an imposition; of fulfilled promises but one which has been superseded by personal ambition, in the case of Singapore or even Japan, where the countries have material prosperity but are grappling with the frightening possibility of being unable to, literally, procreate to continue the family of the nation.

Ask any Asian and I think you will hear them say, our respective nations all face problems. The problems may differ, as I pointed out, but they all point to a similar phenomenon of a political and administrative, educational and entrepreneurial, class of leaders all wondering why their sons and daughters would rather live elsewhere than at home.

There is no consensus on what to do, not least, because increasingly, consensus seems more and more difficult to reach in these countries.

The problem of arriving at a consensus is more serious in some places than others: it may be, the longer the history, the more difficult consensus is to reach.

There is no consensus, in the Philippines, for example, on our national beginning. There is little consensus, on where the Philippines is, though a broad but shallow consensus that the Philippines has not met its national potential. There is even less consensus on where the Philippines ought to go, much less where it’s headed. Though being the perennial optimists that we are, there seems no consensus that we are or will be, a failed state.

But then, consensus seems more and more impossible in Thailand, which has never formally been under foreign rule. And the old certainties of one party rule seem more and more endangered–the consensus-building within the political class, more and more tenuous and thus, fragile—are vanishing in Malaysia.

But what we have are young people armed with truly astounding practical gifts, incredible mastery of tools and machines, and who now instill a kind of terror in the West that the West used to instill in our forefathers; where the West once sneered at us as old, tired, degenerate cultures, now our young people can sneer at the West for the same things—yet irony of ironies, the baubles of Orientalism now have their equivalents in our young and their Occidentalism.

And everywhere, it seems, whatever the economic accomplishments or lack of them in nations considered Asian, a problem confronts nations that are embarking on anywhere from their second to third generation of existence as independent nations. We all have a nationality; a defined sovereignty; an entrenched political class. All under leaders who are, themselves, products not of the colonial era, but of the nationalist regimes born out of that era. For the first time in our own individual national existences, a majority of both the leaders and the led have no living memory of what it was like to be colonial subjects or be pondering either the desirability, or inevitability, of a sovereign national existence.

Was it all a Pyrrhic Victory, then? We have independence, but the free peoples of the East now want to make a living as freely as possible—or sometimes, unfreely but profitably—in the West? And even as our best and brightest desire to go elsewhere, who is left? Those that never bought into the concept of Western time with its linearity, its evolutionary aspirations, its developmental and institutional delusions? They seem to be ever growing, ever demanding, ever-headed for a direct confrontation with the state and its institutions.

The techocentric concern of governments: as was demonstrated in Meiji Japan and Kuomintang Taiwan, industrialization superseding the development of a civil society can result in either a nation of drones marching to destruction or to a despotism accomplishing material comfort for all, to allow the former despots to become mere politicians. We overlook the essential flaw in the design—because the design of our respective states conform to the clockwork mechanism views of polities, politics, and peoples in the era of the Enlightenment, with its underlying assumption that nations fully adept at engineering then become capable of transformations that improve, and do not wreck, the body politic.

On one hand in nations where the blueprints are beautiful but the executions is slovenly or where the design and execution really have zero tolerances for human error, the end result is the same. Millions taking to planes and making plans in a manner their ancestors long ago would have found similar, as they embarked on finding new homes in new lands, and by so doing became the mythical founders of our respective imagined or shall we say, arbitrary and accidental nation-states.

Singapore has wrestled with this problem, of technological proficiency versus the imagination—and yet the imagination, political and social creativity, with their necessary ferment, create not a new problem, but a new concern: that imagination and initiative are antithetical to the orderly industrialization so craved and sought as a measure of national success and stability. The Philippines, on the other hand, sees its evolution in devolution, in ignoring the grandeur of even imagining a nation-state, but instead, adoring the domestic, the local, even the feudal: autonomy under caudillo democracy.

However in the end it is the legalism and legalities of nationhood, the bureaucratic trappings of nationality, that are inescapable: passport, identity card, they are what we are born to, and what, if necessary, we must exchange, but which we cannot escape producing, whether in East or West. The documents of colonial control, refashioned, redesigned, but ubiquitous: they continue to circumscribe what for all of us, are our national identities and the tangible signs of that identity.

***

Ill try to give a synopsis of the discussion that followed, to the best of my recollection, in my next entry.

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  1. hvrds

    It is interesting to see after years of the struggles for independence amongst Asian countries that the states that cut themselves off from their colonial masters to a great degree are the same countries that are leading the way to modernizing their societies.

    The only exception would be North Korea that still resists the idea to a great degree of a market economy.

    As far as the West was concerned then all of Asia was simply a bunch of “coolie nations.”

    Except for the Brits who were very class conscious who allied themselves the more formal feudal rulers and played them off against each other for control of trade.

    In the Philippines the old Spanish colonial rule wherein the elite were dependent on the crown mutated into a system of mendicancy and dependency on the state by the ruling class.

    Hence capture of state power became the primordial concern to maintain and further familial interest.

    The ideas of this primordial self interest became the rationale for the culture of corruption which is rationalized as a formal way of life. We are ruled by an entitled class who actually make no bones about promoting their idea that their power comes from God directly as GMA is fond of doing.

    Hence the initial distribution of factor endowments was skewed in favor of a few. This has given rise to well established constituencies that maintain the system along the previous colonial structure of trade and commerce.

    The elite simply filled the shoes of the previous colonial masters.

    Economic policies which were decided by Spain were transferred to the U.S. The elite have prospered by simply following the policies framed by foreign interests.

    The country thus has become strategically dependent on foreign capital. The key foundation of nationhood of establishing a viable domestic market formation leading to productivity and creating a pool of domestic surplus or savings have been subverted by sticking to the old colonial framework. Filipinos at least the majority are not vested within their own country.

    A study just released shows that only 3% of the worlds population live in countries not of their birth. That would mean that the idea of the global citizen is still far from being reached.

    The incident in Mumbai recently clearly shows that till today even aberrant forms of nationalism framed by so called religious fundamentalism still is a force to reckon with.

    The young men who would kill civilians without batting an eyelash all believing that they are fighting to liberate their homeland under Indian oppression.

    What is scary about this situation is the fact that hopelessness and despondency can lead to disaster on a broad scale.

    Failed states usually are preceded by the breakdown of ethical and moral standards that destroy communities forced in a brutal struggle for survival.

    It is important to note that most enlightenment philosophers worked for the state. They were all voracious readers and avid supporters of education.

    Feeding the brain became as important as feeding the body.

  2. d0d0ng

    Filipinos having big time identity crises?

    Wow.

  3. hvrds

    LONG TERM CAPACITIES FOR NATION BUILDING?

    “Some theoreticians may still talk about Platonic concepts like realism and neoconservatism, but the actual foreign policy doctrine of the future will be hammered out in a bottom-up process as the U.S. and its allies use their varied tools to build government capacity in Afghanistan, Pakistan, Lebanon, the Philippines and beyond. Grand strategists may imagine a new global architecture built at high-level summits, but the real global architecture of the future will emerge organically from these day-to-day nation-building operations.” DAVID BROOKS

    http://www.nytimes.com/2008/12/02/opinion/02brooks.html?_r=1&hp

  4. UP n grad

    Between all these items for which there seems to be no consensus :
    — (i)… no consensus, in the Philippines in our national beginning.
    –(ii) …little consensus, on where the Philippines is, (though a broad consensus that the Philippines has not met its potential);
    –(iii) … even less consensus on where the Philippines ought to go (much less where it’s headed.)

    My belief is that the latter — where the Philippines ought to go — is the greater of the three. One would think that there will be one strong political organization built on a principle of “…going that-away” and another also strong political organization built on a principle of “… going errr that-a-way”. Apparently and most unfortunately, consistency to a principle is an avoided methodology. Filipino political leaderships (both politicians and NGO’s) prefer to befuddle the multitude.

  5. hvrds

    “China and India boast incredible potential. At the moment, they are teaching investors a course in Economic Whiplash 101. One lesson is the risk of developed nations relying heavily on developing ones. Another is the folly of less-advanced economies thinking they can thrive as the biggest ones plunge. Our world is too interconnected for that.”

    “The U.S. started this mess, yet Asia’s shiniest growth stars may be among those paying the biggest price. The only real winners are likely to be neck-pain therapists.”
    WILLIAM PESEK, BLOOMBERG

    http://www.bloomberg.com/apps/news?pid=20601039&sid=aiFx.vaF6eXs&refer=home

    WHEN ONE TALKS ABOUT THE WORLD ECONOMY ONE IS TALKING MAINLY OF THE G-7 ECONOMIES.

    GLOBALIZATION WAS MAINLY THE INTEGRATION OF THE LESS DEVELOPED WITH THE MORE DEVELOPED. HOWEVER COUNTRIES THAT TIED THEIR DEVELOPMENT MODELS ALMOST EXCLUSIVELY WITH THAT IDEA ARE NOW SCRAMBLING AS THE MORE ADVANCED ECONOMIES ARE REELING FROM THE REPEATING CRISIS OF CAPITALISM IN THE VERY CORE OF THE MOST CAPITALIST OF ECONOMIES.

    Even China and India are looking very much Third World as their economies will reel from the serious slowdown still in process.

    The risk aversion feedback loop is moving and creating havoc with the main economy and very soon it will be up to governments itself to allocate resources as the private sector is almost totally adverse to investing in the real economy.

    The entire world economy is moving towards negative growth by next year.

    While short term interest rates in the U.S. is moving towards zero and even long term rates are moving dangerously low signaling strong risk aversion the specter of deflation taking hold is getting closer.

    Bernanke has signaled that the federal reserve will do all including buying U.S. treasuries long to try to keep long term rates from falling and thus create inflationary expectations to combat deflation.

    Meanwhile here in a country that is almost dependent on foreign savings the problem remains to be preventing a collapse of the peso as the BSP has to keep interest rates high to forestall inflation.

    Now more than ever the OFW’s are critical to the salvation of the economy and the country. If there is a serious degree of loses in the overseas labor markets the country will reel from a most serious balance of payments crisis.

    There is almost nothing in the domestic economy that can be pump primed as the supply side is almost primitive in nature.

    The U.S. it seems is more interested in their own problems and their intentions in the Philippines is more or less geared to prevent the country from becoming a failed state by intervening in the Mindanao problem.

    Now we can clearly see why the U.S. wanted that MOA-AD signed. They are putting in funds for building state capacities in the Bangsa Moro areas while providing the military cover for these attempts top work.

    A combination of hard and soft power at work.

  6. hvrds

    The major difference between a BOP crisis and a country whose domestic economy is subject to the vagaries of an economic business cycle.

    The Philippine economy is immune to a recession based on the economic business cycle. Being a third world economy is a natural impediment to it.

    However all boom and busts of the Philippine economy is traceable to a balance of payments crisis or a foreign exchange crisis. An import dependent economy agriculture based country cannot go into recessions or depressions based on debit deflation.

    There are no macro economic fundamentals to speak of.

    Fiscal and monetary policies which form the heart of macro economics is still in the embryonic stage.

    Big Mike and GMA run fiscal policy while the multilaterals run monetary policy.

    Big Mike and GMA were struggling landlords before joining the government.

    They are part of the present ascendant entitled class.
    The opposition are simply another bunch of the same.

  7. Bert

    We have no one to turn to then? Our nation in a quagmire, headed towards nowhere?

    There is no light at the end of the tunnel for us?

    huhuhuhu, hikbi.

  8. PhilwoSpEditor

    Bert,

    There might be an end of the tunnel… That is of course, if the Philippines would be an Anarchy. I’d plant Kamote all year long, I wouldn’t mind.

  9. UP n grad

    while the Phlippines remains in the tunnel, it should be aware that anarchy is less likely than : (i) a worm within — separatist movements; (ii) future — new (Mumbai-in-Makati) or old(-SuperFerry).

    Another worm-within: failing health-infrastructure. Future — epidemic.

    And as above happens (and amidst the lamentations), a segment of the nation worms itself out —- education, then migration.

  10. BrianB

    Anarchy? It’s the politicians that make trouble. On their own, Filipinos are a peaceful people. Besides, we’re too unsystematic as a collection of individuals for anarchy to be possible.

    The second definition here:

    http://en.wikipedia.org/wiki/Anarchy#cite_note-1

  11. hvrds

    “Alarm raised over energy, population
    By Doreen Yu Updated December 04, 2008 12:00 AM”

    “HONG KONG – Before an audience held in rapt attention, Minister-Mentor Lee Kuan Yew of Singapore painted a dire world scenario, both in the short and the long term.”

    “In a dialogue with former US President Bill Clinton at the Clinton Global Initiative-Asia here last Tuesday, Lee said he believed the current financial crisis will not be a short one, but whether it will be of medium or prolonged duration depends on what the US economic team tasked to sort out the mess will do in the next three to six months.”

    “The unorthodox must be considered,” he said when asked about prescriptions to fix the problem.”

    “The danger now is not inflation but deflation. People feel poor and so they don’t spend. Assets lose their value. You have to put a floor on this,” Lee said, even as he expressed confidence in the economic team that US President-elect Barack Obama has put together, including Larry Summer and Paul Volcker.” Minister Mentor from Singapore from the Philippine Star

    Singapore suffered the worst downturn in all of Asia in the third quarter. (- 6 %) contraction…

    Our ‘hacendera’ economist should take heed as the world is headed on the road to depression…

    While most of the advanced economies will be busy creating inflation to save their economies, the Philippines is still stuck in fighting structural inflation.

    That is what our Assumption trained hacendera economist does not understand.
    In case all fails in the spiral of deflation Keynesian economic policies were prescribed when all else had failed. It was only to be used in extreme emergencies. That time has come.

    “From Plan A to Plan G”
    “The US has tried to stave off depression in half a dozen ways. Will partially nationalising America’s banks do the trick?”

    http://www.guardian.co.uk/commentisfree/cifamerica/2008/oct/16/us-economy-banks-nationalisation

    “But would that have been worse than what we face now? The failure to sacrifice the subsidiary objective of keeping the private sector private meant that the Fed and the Treasury lost their opportunity to attain the principal objective of avoiding depression.”

    “Of course, hindsight is always easy. But if depression is to be avoided, it will be through old-fashioned Keynesian fiscal policy: the government must take a direct hand in boosting spending and deciding what goods and services will be in demand.” B. DeLong

    http://guatemala-times.com/opinion/syndicated/anatomy-of-the-global-economy/570-the-road-to-depression.html

    “Embracing inflation
    This once-in-a-lifetime global economic recession requires a unique response. Inflation is needed to combat the crisis”
    Kenneth Rogoff

    http://www.guardian.co.uk/commentisfree/cifamerica/2008/dec/02/global-economic-recession-inflation

  12. UP n grad

    hvrds: I guess it is fair to say that you don’t believe the news, where GMA is preparing a plan G:

    http://www.philstar.com/Article.aspx?ArticleId=419411&publicationSubCategoryId=66

    —————
    GMA contingency plan : … a fiscal stimulus package where much of the public spending will go to infrastructure to promote more investments.

    . . . .

    She said the infrastructure is needed because “at the end of the day, we want the private sector to continue to invest and they need infrastructure.”

    Budget Secretary Rolando Andaya Jr. said the government is readying a P230-billion “infrastructure war chest” under the proposed P1.4-trillion national budget for next year. This is on top of the various joint projects the government will be undertaking with the private sector, he said.

  13. leytenian

    I hope the billions for infrastructure will not go somewhere. Let’s be vigilant.

  14. hvrds

    “Of course, hindsight is always easy. But if depression is to be avoided, it will be through old-fashioned Keynesian fiscal policy: the government must take a direct hand in boosting spending and deciding what goods and services will be in demand.”

    Is the Philippine government ready to take control of deciding which goods and services are to be produced in the economy?

    Is the Philippine government ready to allocate resources when the private sector is moribund and decaying.

    The U.S. government will surely announce the allocation of resources to retool and reconfigure the entire U.S. automobile industry to meet the challenges of peak oil. They have announced an allocation of $25 billion for the U.S. car companies to produce hybrid cars.

    Obama has announced that part of the fiscal stimulus plan of the state will be to allocate funds to establish an inexpensive national broadband system for each household as part of the digital infrastructure for the new digital economy. Do you think the U.S. will give those contracts to ZTE or to Cisco and ATT?

    Normal infrastructure spending is the ordinary job of government.

    The Philippine government will be running a small budget deficit which is normal. 1-2 %

    The U.S. budget deficit for the year 2009 could reach $2 trillion+. Over 10%

    Which is normal and which is abnormal or unorthodox for extraordinary times.

    Bakit mahihina ang mag ulo nang marami?

  15. hvrds

    http://www.businessweek.com/magazine/content/08_49/b4111000652752.htm?chan=magazine+channel_top+stories

    Can Obama Keep New Jobs at Home?
    Massive fiscal stimulus could wind up creating jobs offshore as funds are spent on imports

    By Michael Mandel

    “President-elect Barack Obama has made a promise: to save or create 2.5 million jobs over the next two years. Estimates of the cost of his high-powered spending program to rescue the U.S. economy start at $500 billion and go way up from there.”

    If one is to produce a stimulus for domestic production to maintain or create new jobs then obviously one has to look inward and create the products and services of a post industrial economy.

    What about an economy that is still based on the carabao, fish balls and tricycles. Is there a collapse in demand for these that we might have to pump prime demand and stimulate the carabao, the fish ball vendors and tricycle drivers?

    Please note that percentages mentioned earlier above are percentages of deficit spending based on GDP.

  16. UP n grad

    Phil-govt can do FDR-type — just build highways (broadband and/or cement), reforest the forests, ditch-dig for irrigation.

    Or… the Phil-government can just give each Filipino — man, woman, child (flying-voter-types will be accepted) — peso bills in the amount of P3,000 plus 7% of their 2008-income (max of P80,000 per head), with MILF’s or friends-of-the-MILF being allowed to receive merchandise namely 7.62×39, 308 or .223-ammunition.

  17. leytenian

    hvrds,
    are you aware of the JPEPA agreement? what’s your opinion on the treaty. i will give you mine after you 🙂

  18. hvrds

    JPEPA based on which tangential perspective?

    Trade in goods and services, labor markets or capital flows?

    Or in terms of domestic political economy relative to Asian political economy in consonance with global political economy. (Peaceful conquest)

    or do we simply talk about how we would really like to export fresh young virgins to Japan in line with Bernardo Villegas proposal to repopulate Japan with hybrid Pinoy-Jap kids.

    Keep in mind all government policies regarding treaties with other countries are the results of power struggles between those that have and those that do not.

    Japan has been in a period of deflation for over ten years.
    Their interest rates are close to zero and have been for a while. They need to start making babies.

    While here we have many excess babies.

    My suggestion instead of JPEPA is simply to have Japan clearly take over the country. I think they would be preferable to the Korean or Chinese.

    That brutal samurai spirit has been hopefully expunged from their character and they would be good for this backward bunch of islands in the sun.

    We cut down almost all our trees for them to rebuild their country right after the war.

    They have tasted the fruits of a nuclear explosion. They may be a good choice rather the other powerful countries.

    China and Korea are still un-evolved compared to the Japs. The Japs like Pinay women because they are not as servile and docile and are Western in their ways compared to Japanese women.

  19. PhilwoSpEditor

    hvrds,

    Better the Japanese than the Koreans, but not necessarily the Chinese, because the Chinese are already here before and have multiplied here too. So there…

    UP n Grad,

    “Phil-govt can do FDR-type — just build highways (broadband and/or cement), reforest the forests, ditch-dig for irrigation.

    Or… the Phil-government can just give each Filipino — man, woman, child (flying-voter-types will be accepted) — peso bills in the amount of P3,000 plus 7% of their 2008-income (max of P80,000 per head), with MILF’s or friends-of-the-MILF being allowed to receive merchandise namely 7.62×39, 308 or .223-ammunition.”

    How about the commies? [Not pointing fingers here], but why do those guys who ran amok in Mindanao get bullets and the NPA folks don’t? Moving on to something serious, the stimulus package thing Gloria says she has doesn’t really hold water for me, since I don’t know where the heck would she get that much money, knowing we’re heavily indebt because of her.

    I hope that infrastructure plan is the one they go for though… Then again, that plan has more chances for politicians to increase their war chests and loot. The b*****s.

  20. hvrds

    hvrds,

    “Better the Japanese than the Koreans, but not necessarily the Chinese, because the Chinese are already here before and have multiplied here too. So there…”

    The largest bilateral creditor and investor in the Philippines are the Japanese.

    Most Chinese in the Philippines are heavily leveraged with domestic debts against their holdings off shore mostly in HK and Sinagpore.

    Ty’s and Gokongwei ‘s are dependent on Japanese capital.

    Our resource based markets are more integrated with Japan.

    Do you see Chinese or Korean cars, trucks, buses on the roads. or are they Japanese?

  21. hvrds

    How does one explain the ramifications of a zero interest rate policy in the more advanced economies to a country that is greatly dependent on 5/6?

  22. PhilwoSpEditor

    hvrds,

    Its a mixture of both I see Korean (Hyundai) cars too, plus the Koreans are coming here in droves…. Kinda reminds me of the old joke my friends and I say. “The Koreans are invading us.”

    But remembering a bit of history, didn’t Rizal said that we should ally ourselves with the Japs, instead of anybody else, because of their discipline?

    I admit, you do have a point with the fact that the Japs have more investments here than most nationalities. But I’m not sure whether anybody would be warm to the idea that we sell ourselves to the Japs. Even I have my reservations about it, no matter how tempting the thought maybe.

  23. Bert

    “Budget Secretary Rolando Andaya Jr. said the government is readying a P230-billion “infrastructure war chest” under the proposed P1.4-trillion national budget for next year. This is on top of the various joint projects the government will be undertaking with the private sector, he said.”-UP n

    aay, diosme, UP n, just one ZTE deal lang got us reeling na to the ground, dadagdagan pa? hindi kaya kukuha lang sila rito ng pang-gasolina sa chacha train?

  24. PhilwoSpEditor

    Ditto on Bert’s statements… I’m expecting the same thing, if not Cha Cha, their bloody never ending junkets. On the flip side, they’d do projects before the elections, 2 months before the elections, not caring if it’s finished.

    Sigh, when will the cycle end?

  25. UP n grad

    You folks are aware of GMA Executive Order No. 758 P200Million-per-foreigner who wants to stay in the Philippines?

    —————-

    Executive Order No. 758, which has the effect of a law, prescribes guidelines for the issuance of a special visa to non-immigrants.

    Immigration Commissioner Mar­ce­lino Libanan said it would be now easier for foreigners to do business in the country as the new executive order waives the requirements for visa applications, and encourages foreigners to bring their investment to the country.

    http://www.manilatimes.net/national/2008/nov/18/yehey/metro/20081118met4.html

  26. Bert

    That’s a lot better, UP n. Let’s give credit where credit is due.

  27. UP n grad

    to Bert: hvrds can point to it if it is so, but my impression is that the Lozada-broadband-thing —- lots of hot air media posturing — did not cause even one-twentieth-of-a-percentage-point change in GDP or similar economic metrics.

  28. UP n grad

    I was disagreeing with “…reeling to the ground”.

    On the other hand, there will significant positive fall-out if half of the P230-billion “infrastructure war chest” gets spent for rural 2- or 4-lane highways (should be good for over 3,800 kilometers!!!).

  29. UP n grad

    to hvrds: what’s this question about 5/6 versus zero-interest loans. Are you implying that all Filipinos in the Philippines are tanga? You are extraordinarily wrong —- Filipinos understand this percent-percent loan-thing-y, even the evangelicals!!!

    Practically guaranteed that many Filipinos will grab the opportunity for an under-15-percent annual-rate loan so they can go to college (or get retrained in nursing-, seaman-, electrician- or investment-management-school), get prepped for a job in Dubai, Singapore, London, Manhattan or Sydney, and then be an OFW.

  30. UP n grad

    but admittedly, there are some Filipinos who insist that an interest-free all-free university education is a human right. And the loudest proponents are some (professors and students) of UP-Diliman.

  31. supremo

    P230 Billion will not do much. Print P1 Trillion for infrastructure projects and forget inflation and dollar exchange rate. Everyone is doing it anyway.

  32. hvrds

    to hvrds: what’s this question about 5/6 versus zero-interest loans. Are you implying that all Filipinos in the Philippines are tanga? You are extraordinarily wrong —- Filipinos understand this percent-percent loan-thing-y, even the evangelicals!!! Truly Ignorant pundit

    It is extremely distressing that critical thinking is almost absent in the above comment.

    The state in the more advanced economies is moving to institute a zero interest rate policy to forestall a depression while in the Philippines which is still a primitive backward economic country where the informal sector plays a large role in the so called national economy usurious rates prevail. That includes the smugglers.

    It is a more an example of the reality of the utter backwardness of the economic system and structure of the country. When one proposes a theory one must show facts to back up ones theories. Look at the title of this present thread… What is this thing about weak states?

    For that reason I have copied and pasted this entire comment of why Japan has to make babies to solve their economic problems.

    Now why does’nt Loren Legarda simply open up a marriage bureau for Pinays to marry Japs.

    Japanese Must Have More Sex for Economy’s Sake: William Pesek

    Commentary by William Pesek

    Dec. 5 (Bloomberg) — Jim Rogers probably didn’t set out to make 500 bankers blush at a recent conference in Seoul. The well- known investor did just that when he encouraged South Koreans to have more babies.

    “Anyone who hasn’t done it, I urge you to get home and get on with it” said Rogers, chairman of Singapore-based Rogers Holdings, who co-founded the Quantum Fund with George Soros in the 1970s. He joked that folks should take a day off, if necessary.

    Urging Koreans to procreate is about more than Rogers’s love of parenthood: Korea needs to increase its birth rate for the sake of the economy. So do Japan and other key Asian nations, he said.

    South Korea’s birth rate (1.2 children per couple) is the second lowest in the world after Hong Kong, according to a recent United Nations report. Hong Kong, South Korea and Japan all have lower birth rates than North Korea.

    Such demographic trends are a widening crack in Asia’s potential. Nowhere is this issue more acute than in Japan. And if Rogers made Koreans blush, he annoyed some Japanese in 2006 when he said: “If the current birth rate, which is the lowest in the major developed countries, continues, there will be no Japanese. Who will pay the enormous debt?”

    That question, demographically minded investors like Rogers will be happy to hear, is suddenly getting more traction in Tokyo. Keidanren, Japan’s biggest business organization, is urging its 1,632 member companies to encourage employees to have more sex.

    More Than Feelings

    Just how creepy that sounds was summed up yesterday in a Japan Times cartoon. It depicted a couple lying in bed, lamenting the dark-suit-wearing Keidanren official underneath singing: “Feelings. Nothing more than feelings …”

    Yet working too much is, according to surveys, why many Japanese don’t have more sex and, by extension, babies. A recent survey by condom maker Durex found that Japanese couples have sex 45 times a year, less than half the global average of 103 times.

    Japan’s birth rate has been falling since 1972, and in five years, people over age 65 will outnumber children by two-to-one. Add an aversion to increased immigration and Japan is looking at a future without enough labor. So, Keidanren wants workers to have more time off to, well, be together.

    That’s all well and good, but Japan needs to do much more. Here’s an idea: Why not effectively pay families to have more kids?

    Worsening Recession

    Keidanren does have a point. Japan is a place where vacation days often go unused and the vocabulary includes a word for death from over-work — “karoshi.” Things will get worse as the global crisis and Japan’s recession deepen.

    Toyota Motor Corp. will cut half its 6,000 temporary workers by the end of March. As more major companies shed “non-regular” workers, full-time staff will be under greater pressure to produce more.

    If this really is the worst global slump since the 1930s, companies also will be under pressure to trim the ranks of the “salaryman,” that fabled overworked corporate apparatchik. The notion that employees worried about their jobs will voluntarily leave the office for family time is a reach.

    Some companies are pushing the issue. A recent article by Bloomberg News reporter Megumi Yamanaka said that Nippon Oil Corp., Japan’s largest refiner, is forbidding staff to work on weekends. Workers also must get permission to stay past 7 p.m. Textile maker Toray Industries Inc. and All Nippon Airways Co. are holding “family weeks.”

    Cost Issue

    Japan’s demographic problems are far bigger than politicians realize.

    Sexism is part of this story. Because Japan isn’t geared toward women having both a career and a family, many delay child birth. Improving Japan’s daycare infrastructure alone might increase the number of babies born each year. Politicians should demand that companies offer women more flexible work schedules.

    Yet cost may be the key problem. A 2006 study by the Cabinet Office found that it costs about 23.7 million yen ($255,000) to raise a child to age 18. And that’s probably a conservative estimate. Still wondering why the number of two- or three-child Japanese families is dwindling?

    Japan should offer far bigger tax incentives for having children, particularly for families that have more than two. France, for example, has done just that. Japan should consider generous subsidies for education and daycare as well.

    The Health, Labor and Welfare Ministry is increasing aid temporarily for small- and medium-sized enterprises subsidizing employees who hire a babysitter or use non-government-authorized nursery schools, according to the Daily Yomiuri. It’s a good idea, but Japan needs to think bigger and throw some serious money at the problem.

    Spend It Now

    An obvious counterargument is how to pay for all this. With the largest debt among developed nations, Japan has less cash to spare. Yet as the population shrinks, there will be less tax revenue to pay for everything else in the years ahead. Money spent now will save it later.

    Nothing less than Japan’s future is at stake. As more investors such as Rogers realize it, concerns about demographics in the long run will undermine growth in the short run. That won’t help put anyone in the mood.

    (William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

  33. hvrds

    “Better the Japanese than the Koreans, but not necessarily the Chinese, because the Chinese are already here before and have multiplied here too. So there…” another silly comment

    it is not about whether there are more Japs her or Chinese. it is about the economic interest of the Japs over the Chinese countries here.

    That would mean Greater China and the PRC. Japan is still the largest economy in our neck of the woods. Their surplus (excess production and excess savings) is what is driving growth in most Asian countries.

  34. hvrds

    “MANILA, Philippines—The usually low-key Manila Archbishop Gaudencio Cardinal Rosales Thursday spoke up to denounce the renewed plan of administration allies in the House of Representatives to amend the 1987 Constitution by themselves through a constituent assembly (Con-ass).”

    “In an interview with the Church-run Radio Veritas, Rosales said the job of amending the Charter could not be entrusted to those in power because of their vested interests.”

    “Who should do the work? Not those in power or those in Congress. Why? Because they are the ones to be affected. They shouldn’t do it,” he said in Filipino.”

    If the so called representatives of the people in a representative form of democratic government cannot be trusted to work for the common interest then what form of government does the country have?

    Archbishop Rosales should ponder his words.

  35. The EQualizer

    “In the past few days, however, it has become evident to me that I no longer have a strong enough political base to justify continuing that effort. As long as there was such a base, I felt strongly that it was necessary to see the constitutional process through to its conclusion, that to do otherwise would be unfaithful to the spirit of that deliberately difficult process and a dangerously destabilizing precedent for the future.”

    http://mav-equalizer.blogspot.com/2008/12/resigning-presidency.html

  36. hvrds

    Waiting for collective action in the Philippines for meaningful change will have to depend once again on external forces.

    The present ongoing global economic meltdown might eventually affect the oil producing countries. The business news headlines in the Inquirer today already is reporting the large drop in loan applications from OFW’s seeking to buy real estate.

    Meanwhile it will still take some time for fiscal stimulus packages to work itself into the system in the more advanced economies.

    Prices for oil and other commodities are dropping as demand destruction works it sway through the system.

    When large swaths of the polity in the country are dependent on foreign earnings domestic politics are meaningless.

    When these earnings to a great degree will be uncertain than the polity affected will naturally be a little more agitated. For the now the prevailing apathy in the country is a plus plus for the present government. We are presently islands of calm in a world that is being wind swept.

    Now if one were with the opposition you have to pray that the efforts at avoiding a deep downturn abroad do not work to a great degree and this in turn will affect OFW earnings.

    The government on the other hand is praying that the Central banks and the Treasury officials of the advanced countries get to pull up their economies..

    Hence the sordid attempt to amend the constitution to allow foreigners to buy land is critical as all those distressed assets from the last crisis are sitting in special purpose vehicles with highly leveraged foreign loans. Those debts have to be turned to equity positions.

    The matter of the constitution rule on foreign ownership is in the way.

    During the last Asian financial crisis it was Japan who led the call for the establishment of an Asian Fund.

    The U.S. strenuously objected.

    Meanwhile Japan has gone ahead and signed free trade agreements with a lot of Asian countries including the Philippines. What they have done is essentially get national treatment privileges to expand their cheap production bases and access to markets to match China’s. (Asean)

  37. Jon

    I personally agree that ownership of land and businesses should be opened up. But is it going to be absolute and without limits? I don’t think so.

    In case this amendment will come to pass, property prices will definitely move up. Who are going to benefit? If the poor can’t afford to buy their own land today, what are the chances they are going to be able to do so in the future?

    This issue is not as simple as it seems. Intelligent and reasonable men should study, discuss, and put this in place. I don’t trust our current set of Congressmen are capable of doing this.

  38. UP n grad

    Very rare those analysts and Investment advisers who sensed 5 months ago that oil will be under $50-a-barrel, right, hvrds? And I still have not “encountered” a blogger who can explain lucidly why diesel is priced like it is in metro-Manila.

    ————-
    SINGAPORE – Oil prices were steady near four-year lows below $44 a barrel Friday in Asia as more bad U.S. economic news soured the outlook for global growth and demand for crude.

    Light, sweet crude for January delivery was down 3 cents at $43.64 a barrel in electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract fell overnight $3.12 to settle at $43.67, the lowest since January 2005.

    Oil prices have fallen about 70 percent since peaking at $147.27 in July.

  39. hvrds

    When you have steep declines in a short period companies that bought contracts at a high level are stuck with their high cost inventory.

    The deleveraging process in the futures market meant that speculators and hedge funds from the time that Lehman and AIG went down have all been unwinding their positions.

    The purchase of the diesel you are consuming today was contracted for months ago.

    Just think months ago the world was experiencing price inflation and in just a few months the world is facing deflation.

    Experts are fixing the date of the seminal shift in September. That was only over two months ago.

    Only New Thinking Will Save the Global Economy

    By Mohamed El-Erian

    Published: December 3 2008 18:32 | Last updated: December 3 2008 18:32

    History books will document that the global economy experienced a sudden stop after September 15. In accentuating long-standing structural weaknesses, the manner in which Lehman Brothers failed disrupted the trust that underpins the smooth functioning of market economies. As a result, virtually every indicator of economic and financial relationships exhibits characteristics of cardiac arrest.

    The situation will get worse before it gets better and it will only get better if there is a shift in thinking in both the private and public sectors: away from comforting yet unrealistic notions of a return to “business as usual” and towards the more nasty reality of a volatile journey to a different destination. The implications are far-reaching as they speak to more market accidents, disorderly sectoral realignments and additional shifts in policy.

    Up to September 15, debate focused on moral hazard, or the extent to which government bail-outs encourage irresponsible behaviour. The need to signal the government’s seriousness about market discipline partly drove the decision to let Lehman fail. What was less well understood was that it matters a great deal how an institution’s failure affects the capital structure.

    The way Lehman failed disrupted payments and settlements. Around the world, market participants stepped back in mass from what, up to then, were standardised, routine, predictable transactions. Not surprisingly, all main indicators are now violently heading south. It is not just about consumption, investment and employment in the US, which will result in a 4 per cent plus contraction in gross domestic product in this quarter alone. It is also about pressures on production in Brazil, China, Japan and Russia, as well as the slowdown in construction in the Gulf.

    What we are witnessing goes well beyond a cyclical economic shock and a consolidation of the financial sector. We are also in the midst of a prolonged increase in precautionary behaviour among entities that have suffered massive wealth destruction and face a multi-year clean-up of assets and businesses. Without further adjustments, there will be an aggravation of the negative feedback loops that have been so detrimental to global welfare.

    It is time to suspend unquestioned faith in a quick return to the past and adjust to the reality of change. The shift in thinking means spending less time looking for a market bottom and more ensuring that cash and collateral management keeps pace with disruptions that are global in nature and indiscriminate in impact. It calls on policymakers to eschew simple local optimisation between policy alternatives (for example, capital injections versus asset purchases) for a holistic response – including more of what we saw last week in the US in the form of large co-ordinated multi-agency steps to compensate for dysfunctional credit markets.

    In continuing with a bolder policy approach to offset chaotic economic deleveraging, governments should be clear about four principles.

    First, intervention should be limited to sectors at the centre of the healing process, thereby supplementing recent success in the commercial and money markets with the gradual normalisation of the housing and financial sectors.

    Second, wherever they can, governments should partner the private sector which, in most cases, would involve voluntary co-investments, but in some cases (such as US cars) may require co-ordinated burden-sharing among stakeholders. Third, they should address upfront exit mechanisms. Finally, they should not let the best be the enemy of the good: crisis management inevitably results in inconsistencies that a subsequent reconciliation and reform effort must address.

    Aggressive government involvement runs counter to the basic tenets of a market system. It should be minimised. But, when it is required because of massive and cascading market failures such as those of today, it should be subject to these principles. The weaker the adherence to such principles, the greater the cost to human welfare and the lower the likely effectiveness of any policy action. Coming to grips quickly with this brutal reality is crucial for safeguarding the longer-term sustainability of market mechanisms, both domestically and globally.

    The writer is co-chief executive and co-chief investment officer of Pimco, and author of When Markets Collide: Investment Strategies for the Age of Global Economic Change, winner of the 2008 FT/Goldman Sachs

  40. hvrds

    In a world of light speed communications confidence can turn on a dime.

    Europe’s Central Banks Slash Rates

    By Ralph Atkins in Brussels and Miles Johnson in London

    Published: December 4 2008 12:47 | Last updated: December 4 2008 20:40

    Interest rates were slashed on a historic scale across Europe on Thursday as central banks reacted aggressively to the sudden and brutal deterioration in the economic outlook since the autumn.

    “If zero is the floor, there is no reason not to go there immediately. The recession in the US, the UK, the Eurozone, Japan and the rest of Europe is, with probability verging on certainty, going to be so deep and so prolonged, that the zero lower bound will be reached even by the most anal-retentive gradualist central bank before the middle of 2009. So why not get it over with in December 2008 and possibly do some good in the mean time?” Willem Buiter FT

    http://blogs.ft.com/maverecon/2008/12/it-is-time-for-the-monetary-authorities-to-jump-into-the-liquidity-trap/

    “The threat of stag-deflation (my label for a combination of recession/stagnation and deflation) and of debt deflation has already forced the Fed into a liquidity trap. The Fed funds rate is effectively close to 0% and an informal policy of “quantitative easing” has already started as the Fed has flooded financial markets with over $2 trillion of liquidity. And as argued here last week, the Fed would be forced into more radical and unorthodox “crazy” policies to prevent deflation, debt deflation and a nasty credit crunch.” Nouriel Roubini

    http://www.forbes.com/2008/12/03/global-financial-fed-oped-cx_nr_1204roubini.html?partner=alerts

  41. hvrds

    Why government should be wary of financial crisis no matter how small when it hits a sector of the community.

    A classic Ponzi scheme happened in Columbia and the government is suddenly on the defensive.

    In the more advanced economies it was a sophisticated Ponzi scheme.

    http://www.washingtonpost.com/wp-dyn/content/article/2008/12/04/AR2008120403545.html?hpid=topnews

  42. hvrds

    “That today’s global financial meltdown is the direct consequence of the West’s worship of false gods is a proposition that cannot be discussed, much less acknowledged. One of its leading deities is the “efficient market hypothesis” – the belief that the market accurately prices all trades at each moment in time, ruling out booms and slumps, manias and panics. Theological language that might have decried the credit crunch as the “wages of sin,” a come-uppance for prodigious profligacy, has become unusable.”

    “But consider the way in which the term “debt” (the original sin against God, with Satan as the great loan shark) has become “leverage,” a metaphor from engineering that has turned the classical injunction against “getting into debt” into a virtual duty to be “highly leveraged.” To be in debt feeds the double temptation of getting what we want as quickly as possible as well as getting “something for nothing.”

    “Financial innovation has enlarged both temptations. Mathematical whiz kids developed new financial instruments, which, by promising to rob debt of its sting, broke down the barriers of prudence and self-restraint. The great economist Hyman Minsky’s “merchants of debt” sold their toxic products not only to the credulous and ignorant, but also to greedy corporations and supposedly savvy individuals.”

    “The result was a global explosion of “Ponzi” finance – named after the notorious Italian-American swindler Charles Ponzi – which purported to make such paper as safe and valuable as houses. By contrast, the virtuous Chinese, who save a large proportion of their incomes, were castigated by Western economists for their failure to understand that their duty to humanity was to spend.”

    “The key theoretical point in the transition to a debt-fueled economy was the redefinition of uncertainty as risk. This was the main achievement of mathematical economics. Whereas guarding against uncertainty had traditionally been a moral issue, hedging against risk is a purely technical question.” Robert Skidelsky

    http://www.project-syndicate.org/commentary/skidelsky11

  43. hvrds

    New Growth Area for Pinays. Please pass this on to the bright boys in the BOI. Real Sunshine Industry…

    India has it already… Rent a Womb…. Surrogate Motherhood for foreigners whose wives do not like to go through the trouble of child birth.

    Outsourcing carrying a child to term.

  44. Bert

    “to Bert: hvrds can point to it if it is so, but my impression is that the Lozada-broadband-thing —- lots of hot air media posturing — did not cause even one-twentieth-of-a-percentage-point change in GDP or similar economic metrics.”-UP n

    UP n

    hvrds’ comment will be most welcome, but between kleptomaniacs and foreign investors I have a feeling it’s pretty easy deciding which is lot better.

    The ZTE Broadband deal plus more of it in the future will surely prove you wrong re:GDP if squealer and hot air media posturing are just myth.

  45. Bert

    and “reeling to the ground” refers to what could have happened if Neri supported his man instead of chosing the lower ground.

  46. UP n grad

    That Colombia-experience should be a challenge 💡 to the intelligent and financially-savvy of the readers of this blog thread. The challenge is to get rich by swindling local Filipinos of hundreds of millions of US dollars via a Ponzi scheme. Do it for the greater good of the country, since an effect will be to do an Uribe to GMA and put a roadblock 😛 against extending GMA’s stay in Malacanang. The Washington Post article has this :

    Indeed, a proposed constitutional change 👿 that would permit Uribe to run for a third four-year term could be sunk by the scandal, as members of Congress have withdrawn their support for it, citing the government’s inability to protect poor investors.

    As Abe Margallo consistently propounds, conformance to the Constitution and the law can be set aside for the greater good.

  47. hawaiianguy

    what’s this new cha-cha express that misguided congressmen are flaunting again?

    there are a lot more problems to deal with than their perpetuation in office and eternal glorification. foreign investments are fairly small and would come almost seamlessly, if the govt solves the corrupt bureaucracy first rather than change the constitution. just read randy david’s take on this, and one will know how ordinary people out of that messy hall called “congress” see the situation.

  48. UP n grad

    I am kind of amused that discussion about “Privatizing Poverty Alleviation” had to be cancelled because of a PeoplePower surge-the-gates type activity in Thailand, especially because the Thai “surge-the-gates” is only by the NationalCapitalRegion of Bangkok (and contrary to the wishes of the majority of rural Thailand).

    Methinks this is one of those worm within that weaken the future of Asia.

  49. Bert

    By comparison, the King there is vastly popular with the people, rural or NCR, while the Queen here is not in all sides.

  50. Bert

    The King is popular because he’s trusted by his people. The Queen has very low trust rating, so talk of “Poverty Alleviation” measures is being interpreted as perpetuation of tenure, heheh.

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