My column for today is The aesthetics of redemption. It’s as much a response to items such as this one, see Clarissa Ocampo vs. Jun Lozada, as anything else, but also a reiteration of a point I’ve felt strongly about for some time, see She is as they are, from March 2, 2006.
In the news, Think tank to draft 10-yr economy blueprint: it’s about time such a think tank buckles down to work. What can we see, 10 years ahead? A provocative article in The Asia Sentinel says, a peso-dollar rate of 56 to 1! See Philippine remittances could slow: The global slowdown may mean a fall in remittances, the Philippine lifeblood, and an end to the party for the peso :
That said, the trend is clear and at some point it is likely to impinge on all remittance sources to varying degrees. High and rising energy and food import costs are also likely to erode a Philippine current account which has been in a healthy surplus for an almost unprecedented time. Looking ahead, the issue will be whether remittances will stagnate because of the US (and probably very slow growth in Europe), resulting in a weaker peso and the unwinding of a cycle that has taken the usually sickly peso from 56 to 40 against the dollar over the past three years, the fastest rise of any Asian currency.
Many would argue that the strong peso has been damaging the wider economy, encouraging imports, reducing the peso value of remittances, deterring investment in industry and agriculture, helping rentiers at the expense of productive capitalists. But to politicians, not least Arroyo, it is a virility symbol.
The nation has become so dependent on the seemingly endless increase in inflows which created the strong peso that any major reversal or even slowdown will be shock to the system. Don’t be surprised if the peso is back at 56 before the decade is out.
In History Unfolding, historian David Kaiser ponders the collapse of Bear Stearns in the context of the Baby Boomer Generation to which he belongs:
The Boom generation has never believed much in restraint, least of all in the economic field. We have cut marginal tax rates from 91% in 1963 and 50% in the late 1970s to 35% now, vastly increasing the incentive for managers to increase profits as much as possible–partly by cutting the labor force–because they can keep so much more of the proceeds. We have chpped away at the Depression-era restraints, allowing commercial and investment banks to combine during the late 1990s. (The Clinton Adminstration did impose fiscal discipline–probably its one real domestic achievement–but it paved the way for the coming crash in many ways as well.) We have developed new financial instruments like bonds backed by sub-prime mortgages that have been every bit as seductive as the Mississippi bubble in the early 18th century or prime Florida land in the 1920s. And by creating new institutions not subject to regulation, such as hedge funds, we have allowed clever Boomers and Xers to avoid the regulations that their parents and grandparents so wisely put in place. Last Friday almost became the Black Friday of a new generation when Bear, Stearns melted down. Bear Stearns, the New York Times informed me, works on 96.66 margin–of every $1 million it invests, $966,000 is borrowed. Much of those investments have now collapsed along with the subprime market, undoubtedly threatning a whole range of banks, hedge funds, non-profits and pension funds as well as Bear Stearns itself (since they are presumably the ones whose money Bear Stearns was playing with.) The Federal Reserve stepped in to ward off the catastrophe, but it will not be able to continue to rescue failing firms that way without implicating the whole nation in the potential crash.
The Warrior Lawyer points out why the Bear Stearns collapse matters to us:
Why should we care then if another capitalist enterprise should go under ? Banks like Bear Stearns serve a worldwide clientele of corporations, institutional investors, governments, and wealthy individuals. Its almost a given that the Philippine government has done business with investment banks like Bear Sterns and its kind and will continue to do so in the future. In a globalized economy, the fallout from a U.S. financial crisis will impact us adversely. The resulting volatility and panic in the US stock market will send shock waves to European and Asian markets. These fears and uncertainties are driving world stock markets to their recent lows. Furthermore, the US, one of our major trading partners, is already experiencing a de facto economic recession. This will dampen our prospects for continued economic growth.
Incidentally, remember the foreign analyist I met, back in 2005? See The President’s “sweet spot,” from July 28, 2005. He was from Bear Stearns.
During an economic downturn, or worse, in times of an actual shortage in basic commodities, a government has to wield its authority and at the same time, appeal to a reservoir of good will and expect a certain amount of instinctive obedience on the part of the population. You have to wonder what reservoirs the present administration has left.
In Already we have riots, hoarding, panic: the sign of things to come? by Carl Mortishead (hat tip to Thoughtcrime), there’s this:
The President of the Philippines made an unprecedented call last week to the Vietnamese Prime Minister, requesting that he promise to supply a quantity of rice.
The personal appeal by Gloria Arroyo to Nguyen Tan Dung for a guarantee was a highly unusual intervention and highlighted the Philippines’ dependence on food imports, rice in particular.
“This is a wake-up call,” said Robert Zeigler, who heads the International Rice Research Institute. “We have a crisis brewing in rice supply.”
Look at the sugarfields of Negros Occidental, where you still see to this very day, poor and uneducated laborers being paid so much less than minimum wage for backbreaking work. Look at the farms and haciendas that conveniently side-stepped coverage from CARP by allegedly growing “cattle” and having “agricultural corporations” on their land. Go to the farmlands of Capiz where in this age of tractors and the scientific method of farming you still see farmers tilling the land with the lowly carabao and drying their grain by the roadsides where it may be swept away by strong winds and rain.
You see, the problem is not that our population is too big for our food production to supply to. Our problem is that our current agricultural system for the whole country is still stuck on methodologies and farming techniques used at the turn of the 19th Century, which does not yield enough to feed our starving nation. Hence, we have to import food at a higher premium when we have the capacity to solve our own problems with the right farming science and technology.
A U.P. professor I talked to a few weeks back bluntly told me that our agricultural productivity is still at 1940’s levels while our neighbors have vastly increased theirs. And recall, as well, the observation by Dr. Michael Alba that the government isn’t keeping track of formerly agricultural lands being lost to real estate development, because of a change in methods (instead of having people actually conducting a periodic inventory of land, less precise aerial surveys, I believe, take place).
And, as usual, the problem’s compounded by another reality: that one of the many criticisms leveled against this administration is how smuggling is not only rampant, but allegedly condoned at the highest levels of government.