| Depression
By Antonio C. Abaya Written on Feb. 04, 2009 For the Standard Today, February 05 issue The sky seems to be falling. Last year, 2.6 million Americans lost their jobs due to the financial meltdown. In one day alone last month, 75,000 were laid off from their jobs in the US and Europe. In the month of January, 200,000 were terminated jobs in Spain. Our own Department of Labor and Employment warns that 200,000 will be laid off from their jobs this year. In the next two years, some four million Americans are expected to have their homes foreclosed. According to a report released last week by the International Labor Organization, as many as 51 million will lose their jobs by end of 2009, if the situation continues to deteriorate. This could raise the number of unemployed worldwide to as high as 230 million Special attention is being focused on China where thousands of factories have been forced to close down due to the financial and economic meltdown, and tens of millions of workers have been laid off. The Chinese economy is expected to post a rise in GDP of "only" 8 percent in 2008, compared to 13 percent in 2007. The fear (or hope, depending on one's view of China) is that the sudden and massive job losses will ignite social tensions and cause political problems for the ruling Communist Party. There is concern that massive job losses around the world will lead to protectionism as individual countries strive to save domestic jobs and domestic producers from foreign competition. This has been dramatically shown by wide-scale strikes in the United Kingdom last week by workers in the oil refinery and related industries protesting the importation of 300 Portuguese and Italian workers for the construction of a new refinery. This has resonance for labor-exporting countries like the Philippines whose economy is largely dependent on the remittances of overseas contract workers. The fact that the Philippines did not develop exports and tourism to the same extent as our more successful neighbors did, has saved us from precipitous economic decline as suffered by, say, South Korea and China. Our weakness has ironically become our strength, even if only temporarily. But if hundreds of thousands of Filipino workers abroad were suddenly rendered jobless and were forced to come back, then we join the rest of the world in a spiral into what could become a Depression. While a recession is technically defined as a contraction of an economy for two consecutive quarters, there is no quantitative measurement of what a Depression is. In its website, the New York Times defines a Depression as "a severe economic downturn that lasts several years. Fortunately, the US economy has not experienced a depression since The Great Depression of 1929, which lasted ten years. The GDP growth rates were of a magnitude not seen since: 1930 (-8.6%), 1931 (-6.4%), 1932 (-13%) and 1933 (-1.9%). "During the Depression, unemployment was 25% and wages (for those still had jobs) fell 42%. Total US economic output fell from $103 to $55 billion, and world trade plummeted 65% as measured in US dollars��" (The current US and EU unemployment rate is 8%, expected to climb to 10% by end of 2009.) "In 1932, Franklin Delano Roosevelt was elected President based on his promise to create federal government programs to end the Great Depression. Within 100 days, the 'New Deal' was signed into law. This created 42 new agencies to create jobs, allow unions and provide unemployment insurance�. "However the extent of the Great Depression was so great that government programs alone could not end it. Unemployment remained in double digits until 1941, when the US entry into World War II created defense-related jobs. Could it happen again? "A Depression on the scale of 1929 could not happen exactly the way it did before. Central banks around the world, including the US Federal Reserve, are so much more aware of the importance of monetary policy (interest rates, money supply) in regulating the economy. "However, there is only so much monetary policy can do to affect fiscal policy (government tax collection and spending)�." Contrary to the monetary policy in 1929 when banks raised interest rates higher and higher, central banks in 2009 have lowered interest rates around the world, in some cases to almost zero percent. But so far corporations are not borrowing to expand their businesses. They instead continue to shed workers and employees as demand for their products and services continue to decline. And consumers are not buying because they want to conserve their funds out of fear that they may lose their jobs. The vicious cycle rolls on and on. Where and when it stops, no one seems to know. Except perhaps our very own President Gloria Macapagal-Arroyo who has chosen the World Economic Forum in Davos to lecture President Barack Obama: "What we want is for America to do something because the last thing we want is for America to do nothing. You may be vague on what should be done, but the worst thing is for it not to do anything." President Arroyo, who has been in power since January 2001 (or for about 2,920 days) and whose most noteworthy economic achievement has been to send ten percent of the Philippine population to work abroad, because they could not find jobs in her domestic economy, deigns to hurry up President Obama, who has been in power only since January 20 (or for about 15 days) to "do something about it." Yes, how about starting World War III with ten percent of the US population � or about 30 million Americans.- forced to "work abroad" with the US military? That should mop up all those who have lost their factory, store and office jobs, as an earlier war did in 1941. *****ine. Reactions to [email protected]. Other articles in acabaya.blogspot.com. in www.tapatt.org. To subscribe, send a blank email with the subject heading Subscribe. To unsubscribe, send a blank email with the subject heading Unsubscribe. . OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Reactions to "Depression" More Reactions to "What Better Choices?" 'Philippine Countdown' On Exorbitant Credit Card Rates On the Liberation of Manila On the Training of Iraqi Troops 'The Challenge' The Philippines under this "evil" "bitch" and master-deceiver will definitely suffer in this global economic crisis and not surprisingly, the government is ill prepared. As you have cited in your column, Gloria Arroyo's "most noteworthy economic achievement has been to send ten percent of the Philippine population to work abroad, because they could not find jobs in her domestic economy" and many companies where we have OFWs, are starting to lay off workers. Even in our Export Processing Zones, several companies are slowing, if not shutting down, their operations. This government has its economic stimulus plan whose funds would be coming from government corporations and agencies like the SSS and Land Bank, which is causing an uproar and raising the question of whether it is in violation of the Constitution. Gloria Arroyo cannot expect any help from President Barack Obama who should by this time with the World Bank Report know that her administration is plagued with corruption and who might even stop the entry of foreign workers like nurses, doctors and teachers to US. Narciso Ner, (by email), Davao City, Feb. 05, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww. Wow! Mrs Arroyo is becoming so swell-headed she is already lecturing President Obama? As if her words matter to anybody who matters. My gulay, ang tapang naman ng apog nya. Nakakahiya. Ed Valenciano, (by email), Feb. 06, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony: Ask PGMA to be more loyal to the Filipino people, specially the poor, to embark in creating roads, bridges, school houses to create employment opportunities for able bodied and skilled workers. Where to find the funds? Ask her the billions of $ or trillion of pesos that she is hoarding in her discretionary funds. Ask her to stop buying and bribing her way to get the loyalty of high ranking army officers and police. Also ask the Senators and Congressmen to stop milking the people with their billions of fat pork barrels to contribute to public works project. Will the people have the power to force the President and other mammoth grafters to release their hoarded people's moneys? Well, the people can if we adopt the jury systems. I recommend that we now create the grand jury and trial jury systems so that on their sovereign power the people can secretly investigate and indict through grand juries and to try hear and convict by the trial juries send to jail said grafters by the decision of the people in justice. Jail term service is the only rule of law corrupt high officials will recognize and respect. For sure. If we want to survive as a nation with some relative peace, unity and stability like the U.S., for over two hundred years, then we must adopt the jury systems from that same country where we copied our democratic form of government. A U.S. type democracy does not function without a U.S. type jury system. Marlowe Camello, (by email), Homeland, CA, Feb. 06, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony, Contrary to what political economists and government officials are predicting about the labor situation in our country, I don't think that DOLE and other self-proclaimed messiahs have provided us the correct picture of the labor market for our skilled and professional workers. Just last Feb.3, 2009, my son, who got his license as a civil engineer last year, together with a batch of Filipinos workers were deployed in Singapore by a construction company. Here in Middle East, in spite of media news that there will be scaling down of expatriates, the Saudi government is planning for the first time to hire medical specialists like doctors and specialists to replace Western physicians who are highly paid with lucrative benefits. Here in the government hospital alone where I am working now, we are in the process of hiring more staff this year for the expansion of building another medical facility and universities for health science which will require additional technical and skilled manpower. Even our labor attach� here in our embassy knows that a big industrial city in the north eastern part of Saudi Arabia is in the pipeline which will require the deployment of Filipino workers. Again, despite the over-supply of nursing graduates in our country, a big opportunity is available to them since Middle East governments and even Japan, now with the passage of JPEPA onerous law, are still eyeing and luring our nurses, care givers and medical technicians to man their medical institutions. So what's the big depression looming in the horizon for the labor sector of our economy? Jojie Umali, (by email), Riyadh, Saudi Arabia, Feb. 06, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Greetings, Mr. Abaya, Thank you for your insights shared in this article. Actually I have read a lot of similar predictions presented in varying context that what is going on in the global economy may eventually lead to war. If we have to factor in other issues such as terrorism, Al Queda threat, the agenda of Iran to became a nuclear player and others, World War III is not a remote possibility. Driggs Matabaran, (by email), Feb. 06, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Hi Tony, While the whole world is suffering from recession and companies are laying off thousands upon thousands of workers due to heavy losses, oil companies are raking in record profits. http://news.yahoo.com/s/ap/20090130/ap_on_bi_ge/earns_exxon_mobil George W. Bush did his job. Mission accomplished. For his oil buddies. Thanks. Chito Salalac, (by email), Mississauga, Ont., Canada, Feb. 06, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Our politicians are gearing for victory in 2010. Time is spent on merging talks and there will be compromises and tradeoffs. Hardly any of them will be awakened to this economic scenario. All those will be on hold. Their concern will be : to remain atop and/or for party mates to win so that the gang will be the same, stronger than ever. Last in the discussions, after the mergers, alliances, nominations, etc.., are concluded will be how to win and what lies to sell to the people , and never mind the economy because there is a wide world outside to absorb our skilled unemployed. They will market the country's image in various packages so that investments will flow in and contracts can be made so that more contractors can collude and help the greedy in government to improve on their wealth. Depression will for now be something they cannot understand, because they will have more than enough to weather those times, if and when Depression affects the world . Oh no, not them. Victor Ma�alac, (by email), Feb. 06, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww The only good thing that seems to be holding a steeper decline is that most are still hopeful. Hope that feeling lasts and lingers. Cesar Sarino, (by email), Ayala Alabang, Feb. 06, 2009 Former Secretary of the Interior and Local Government wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony, We've been on life support for so long that we can't tell the difference any more, no thanks to the masters of illusion and deceit. Now that the illusions are gone, only the delusions are left like: "it can't get any worse for us" or that "this crisis won't last long" or "we're better off than others" notwithstanding the unabated crime and corruption in high places because the criminal justice system has long turned criminal. I remember our economic crises in the 70's caused by the oil shock and how it impacted on the sugar industry in Negros which, on top of it all, was in Marcos' hate list and crosshairs. The poor slid from the margins to the depths, while the well-to-do turned to paupers. Hunger, malnutrition, disease and insurgency rose in proportion to kleptocratic abuse and repression. We've been sliding comparatively in many aspects of nation-building, from the time I was born, yet, our consistent underperformance has been trumpeted all this time as growth and development. What I'd like hear from the government beyond the mantra "economic stimulus package" and what could be, is a real sensible plan that aims to effectively shield the nation against further harmful effects of global recession/depression; transform the economy into an innovative, productive dynamo; and prime it for recovery in time for the world's economy's gradual return to health. I fear though that the economic stimulus package is a euphemism for an election / chacha budget, thus, the nation will, in the main, stay on life support. More than that, it will fuel the insurgency and lawlessness. Fool the people, buy the people, poor the people is what our sham democracy is all about. In strong societies, this will never be tolerated. In weak ones who broke free, the rivers ran red. Best, Raffy Alunan, (by email), Feb. 06, 2009 Former Secretary of the Interior and Local Government wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww "Recession is when my two neighbors lose their jobs. Depression is when I lose my job too." Rue R. Ramas, (by email), Gen. Santos City, Feb. 07, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Mr. Tony Abaya, I always enjoy your interesting and perceptive columns, especially your Feb. 5 column on "Depression". I'm just curious, I'm sure you were not yet born then, but what happened to the Philippine economy and our local businesses during the Great Depression of the early 20th century? I wonder how my paternal forebears, Chinese entrepreneurs in the lumber and sawmill business then, survived that era? Do you have information on this period of Philippine economic history, perhaps we can learn lessons for any possible challenges in the coming months? I'm now in real estate and I hope this sector isn't going to be hit so hard, because from USA to Europe to Singapore and Japan, real estate businesses are not good. However, the only positive I could think of is that perhaps a real estate industry slowdown here could lower real estate prices, thus making them more affordable for end-users in the Philippines and ease any unhealthy realty speculations? Another question in my mind if the world goes into recession, what industries or businesses will thrive in the Philippines? Maybe the entertainment industry because people need to be less stressed or have to forget problems? My new hobby is being editor-in-chief of S magazine, a glossy showbiz mag of the Mega Publishing Group. I believe that even in hard times, people in the Philippines can survive resiliently and maybe even still thrive due to music (entertainment) and through prayers (Christian faith). More power to you and keep on writing courageously about the truth! Best regards Wilson Lee Flores, (by email), Feb. 08, 2009 Columnist, Philippine Star Editor-in-Chief, S magazine Executive Editor, Celebrity Living magazine (Frankly, Wilson, I do not know how the Philippines survived during the Great Depression, which is when I was born. Perhaps economists like Cielito Habito and historians like Ambeth Ocampo can educate us on this matter. As for the businesses that will prosper in a recession, food production and food processing should thrive since people cannot stop eating. To some extent, domestic tourism, entertainment and some real estate sectors should continue to thrive. The ones who will be the most ecstatic will be the corrupt politicians and bureaucrats � and their lawyers � to whom the $330 billion stimulus package will be manna from heaven. ACA) wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Hi Tony, Clinical or mental Depression often also results from an economic Depression. There are many who have died from either depression UNLESS treatment is sought AND applied. Do you know that there is an increase of visits to the psychiatrists during a RECESSION? Please enjoin your readers to attend the Makati Med Mood Harmony Group Lecture Series every 1st Saturday, 10am to 12 noon at the OUT-PATIENT DEPT. Next month, I will be one of the speakers, like last year. I hope you can write about the OTHER depression. Interested people can contact Rocel Mesoza at [email protected] or me, at [email protected]. Your faithful fan, Cita A. Dinglasan, (by email), Feb. 08, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony, You are totally right, GMA is a super economist who seemingly does not understand much about the economy, or she created a special Arroyo economy. . Besides of all the already mentioned problems, she is surely the only economist in the world who improves a local economy by creating more and more non-working days and special holidays. If one counts all the state, provincial, municipal, Barangay, christian and other days of not working or being absent, the Philippines might easily be the world champion in not working. Not counted the millions of lost working hours through the daily prayer interruptions. I think, even Philippine officials and employers should know the biblical rule "Ora et labora", pray and work. But here, it is rather pray and stop working, then wait for the heaven to shower the goods which should come from working instead. Compare the "rich" countries like in Europe, they have maybe 10 or 12 non-working holidays a year. The really rich Switzerland only eight and all other local occasions have to be compensated by additional work time, often just few minutes a day stretched over the year. And to fight economic problems, to remain competitive, many businesses work now some hours more every week without extra pay. Are they all dumb to do so, if GMA can improve the economy by working less? Have a nice day! Kurt Setschen, (by email), Tagbilaran City, Feb,. 08, 2009 Swissa resident of Bohol wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Tony: How truly depressing that the direction we seem to be headed is toward World War III or something like it. Enclosed is my own take on where we may be headed in the Philippines. Tito Osias, (by email), Feb. 05, 2009 Philippine Countdown In the last two days, GMA's people have been floating many trial balloons. A few try to get US Pres. Barack Obama to give her an audience. Others probe possible reactions to amending the Philippine constitution. By taunting the Obama camp about how GMA can teach Obama something (per GMA Exec. Sec. Ermita) or how Obama must do something (GMA herself at Davos), GMA is clearly trying to get Obama's attention or trap him into meeting her. The GMA syndicate is especially panicked by the US-RP Balikatan theater being moved from Mindanao to Bicol: this is now too close to Manila for GMA's taste since she had sent the Philippine Marines to Mindanao so they couldn't be close to any Manila action. The reaction from Obama's side has either been silence or worse: one rumor is that an Obama insider attended a meeting of the Liberal Party. This may have been the trigger for GMA's people to make congressional moves to amend the Philippine Constitution. Rep. Victor Ortega, who chairs the House Committee on Constitutional Amendments, has made an announcement on this � and House Speaker Prospero Nograles and Senate President Juan Ponce Enrile confirm that the Cha-Cha train is getting into gear. This may be the admission that GMA's syndicate has no chance to win the 2010 elections, at least not without massive cheating. So the 2010 elections have to be sidetracked. The balloons, tests and probes suggest that GMA and her criminal syndicate are now really worried and realize that their time is running out. And in their desperation, they are likely to make even more mistakes. Three (3) such blunders are: 1) the DoJ-PDEA fight over drug payoffs; 2) the World Bank blacklisting of contractors identified with the First Gentleman who is also rumored as being wanted in the US for money-laundering; and 3) DoE Sec. Reyes's LPG boo-boos. The first two (2) show how focused the GMA syndicate is on generating cash that they'll badly need for Cha-cha payoffs to Congressmen, Senators and Supreme Court Justices. The second exposes how the country has just been allowed to drift under the rudderless GMA crime syndicate. With all these happenings, it's unclear what Philippine scenario will come to pass. Is it the 2010 elections? Since GMA's people prefer Cha-cha, that may derail the elections - but the COMELEC budget will be passed anyway, increasing the GMA cheating kitty and making Congressmen, Senators and Justices salivate. Will it be the Cha-cha and then 2010 elections under a new constitution? That may be � if 2009 doesn't bring either a bloody revolution or a military uprising. And given the way that people are now suffering, more bets are being placed on something happening in 2009. GMA feels confident that she'll get her Obama audience. After all, Hillary Clinton isa now Obama's State Secretary � and weren't GMA and Bill Clinton Georgetown friends and classmates? With that connection and a lot of money to spend, GMA feels confident that Obama will eventually have to talk to her, so she can buy just a little more time and fool the Filipinos and the world one more time, with corruption, deceit and the silencing of dissent that has made so many Filipinos disappear. With such a GMA mindset, it appears that the countdown for a Filipino revolution or a military uprising has begun. It's going to be a close race as to what happens first. Tito Osias, (by email), Feb. 05, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww More Reactions to "What Better Choices" (Jan. 30, 2009) Dear Sir Tony, Sorry, I've been away. Had to attend to my father's funeral. I think based on all the replies, the best song for most Filipino politicians is the song by Tears for Fears - "Everyone wants to rule the world." - I honestly don't see anyone qualified enough if the basis is integrity, moral values, transparency and pure desire to see this country rise up from the ashes left behind by such futile and infantile-minded leaders. Regards, Jenifer A. Xavier, (by email), Feb. 13, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony, I am sick of our politics and lack of values. I am for any initiatives that seek to find the best (in terms of values followed by competence) from among us to lead us ... not just those who are popular but have nothing in between their ears ... or the political dynasties whose only claim to "leading" is being of the same bloodline as the one before and do not even bother to first prepare themselves before assuming office (from 'good for nothing' to suddenly becoming the mayor or governor or congressman --- sickening) ... or the 'oligarchs' who possess no concept of sharing but only greed --- I was a soldier for 27 years and if ever I realized anything, it is that I will no longer risk my life for these people who wallow in the freedom I allow them with my blood but will leave this country at the slightest hint of revolution and hardship ... etc ... etc .... I know it is hard but there is no other choice. Otherwise, it is more of the same sick and shallow status-quo. Whatever ... however ... let us all join hands to seek out the best from among us to lead us. "Best" means moral ascendancy, not power, ambition, wealth, and fame at all or any costs. God help us. Regards, (Col.) Dennis Acop (Ret.), (by email), Feb. 13, 2009 US Military Academy, '83 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww On Exorbitant Credit Card Interest Rate I dont know where to give this suggestion to help ease our countrymen's economic woes! Could some law be passed that the exorbitant interest rate of 3.50% charged by credit card companies be cut in half! thanks and more power. Carmita Franciisco, (by email), Feb. 02, 2009 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww On the Liberation of Manila Tony, I shared your reply to a reader on the Liberation of Manila, particularly on the UST Internment Camp to Roderick "Rod" Hall who donated 600 books on WWII in the Philippines to the Filipinas Heritage Foundation. Rod is the eldest nephew of Joseph R. McMicking and Chairman of the foundation that bears his uncle's name. I am forwarding to you his email to me. Rick Ramos, (by email), Sta. Rosa, Laguna, Feb. 08, 2009 wwwwwwwwwwwwwww Rod, I asked you before why you think the Japanese did not give up Manila like what they did in other capital cities in Southeast Asia. You made reference to a Japanese officer who was in charge and his background as the possible reason. I read in a friend's website that during the Liberation of Manila the areas that were severely damaged were those South of the Pasig River like Ermita and Malate (i forgot the third. perhaps Paco or Intramuros). However, the areas North of the Pasig River like Sampaloc, Manila and the contiguous areas were unscathed because the Japanese just left and did not put up a fight. He cited the Santo Tomas (UST) Internment Camp which the Americans liberated without a fight from the Japs. It was located only two blocks from their house. Perhaps the Japanese strategy was to concentrate their defense in Malate and Ermita and fight to the death there. That is why they abandoned other areas like those in the Santo Tomas internment Camp. Rick wwwwwwwwwwwwwwww The Japanese were surprised by the First Cavalry column that liberated Sto Tomas, and the Americans arranged a truce for the Japanese soldiers who were trapped in one building in Sto Tomas. They were led to safety across the river. I think that this changed all the defensive plans they had. They concentrated their defense in Intramuros, Ermita, Malate and Paco. It was only in the middle of January that they started to defend the area around Paranaque. My contention is that if MacArthur had planned a two-pronged attack on Manila, from Lingayen, and had brought forward to early January the landing at Nasugbu, then Manila would have been saved.. Rod wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww How did that line about Manila being the most devastated city next to Warsaw enter our history books? That is found in our Philippine history textbooks as written by Gregorio F. Zaide. I felt a rush of nationalistic pride when reading this � matapang talaga ang Hapon, pero mas magaling ang Pinoy at Amerikano. Now it seems that I have been taken for a ride all along. Has this been corrected already, or are our students still fed with this lie? Thanks and best regards, Bong Alba, (by email), Feb. 02, 2009 (The concrete buildings south of the Pasig River that were destroyed in February 1945 were demolished by American artillery fire from north of the Paisg River, because the Japanese made their Last Stand there. There was no Filipino participation in this episode except as civilian victims of Japanese massacres. ACA) wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww (Forwarded to Tapatt by E. J. Tirona) On the Training of Iraqi Troops � Why it is taking so long Since the fall of Saddam, the US has spent billions of tax payers dollars training the Iraqi forces to be combat-ready and be able to defend their country from any terrorists attack or enemy aggressions. It's more than five years now and US armed forces are still heavily involved in Iraq's military program. Here's one of the reasons why the Iraqi soldiers are hard to train. Let's start from the basic...the morning exercise. Watch the video taken by a French press photographer and you'll see the reason why... Why_Iraq_Is_Taking_So_Long.wmv 1694K Download wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww The Challenge Dear Tony, Too long for your replies, but some thoughts. Alan Attitude. Something the world lacks at the moment. Recession is the buzzword of the period we live in. We have all accepted the 'experts' words that we are in a 'recession'. People are urged to batten down and try to survive, as though recession was a typhoon. Governments around the world are trying to intervene by redirecting taxpayers money into areas that will save the banking industry as primary and provide employment as a secondary target. They all will fail. Why? Because the directions they are taking are those recommended by modern-day economists who created the problem in the first place. Any economist who was educated from the 1970s on does not have the tools to deal with the realities of today. Those few adherents to the commonsense teachings of Adam Smith may still have value. The fact is that globalization and concentrated capitalism as failed, miserably. We have passed through a period where governments no longer controlled their countries, but suffered the dictates from the boardrooms of major banks, including those of the World Bank, IMF and ADB. Who ever decided that these anonymous geeks had the wherewithal to determine what was good for the populace of the world? We have passed through a period where ordinary investors trusted their money to banks, insurance companies, et al. They in turn, trusted 'investment experts' employed by companies such as Lehman Bros., Meryll Lynch, HongKong and Shanghai Bank, et al, who, in turn employed high flying pimps to gamble with others money, and if they won, to receive huge bonuses, and if they lost to receive smaller bonuses. Where did they gamble, at betting shops all around the world called Stock Exchanges. Buy, sell, buy, sell in existing up-and-running operations, very rarely in new companies. An international game of Monopoly, where everybody wins, except the people who provided the money in the first place. The priority of the players? Simply commissions and bonuses for themselves. Instead of the money opening new ventures and providing more jobs, only gambling on the performance of established ventures, who never received any benefit apart from an increased asset value on their books, dividends only being a measure of the worth of the share. The whole thing became a casino instead of a conservative place of business. Shares were purchased gambling that they would be able to be sold at a higher price. Because shares were being purchased they became more valuable and therefore more wanted them. This increased their price and so the prophesy was always self-fulfilling, until the bullshit bubble burst when, because of over-valued lending, the banks could no longer take part in this game. They had run out of money to play. So, why not let the Philippine Stock Exchange start a second board of new companies seeking investors. Who knows? Some of the gambling pesos may just be diverted into companies that can provide employment and profits. The very youthful economists who caused this problem, are now receiving high rewards for informing governments how to save their citizenry from destitution. Their solution is to borrow more and spend more, which is fine, if the spending is on the right things and not just useless handouts or token work. What is the right thing? Every country has its own problems depending on what they have been relying on in previous years for sustenance. Those whom we envied because their positive grasp of both industrialization and globalization made all of their citizenry far better off than Filipinos, now find themselves with bigger problems that the Philippines. Their wealth depended upon exports to countries who are now in deeper recession than most. Their income has been, if not cut off, at least substantially reduced. They will have to accept that the golden days are over, but at least they experienced party time, something that bypassed us. For us, this recession is a challenge, as long as we ignore international economists and return to basics. It is an opportunity for the Philippines to first, become self-sufficient while creating wealth, and secondly, to expand the export market, which includes tourism. Instead of bemoaning the international economic crisis, of all countries, the Philippines should use it as an opportunity to be taken while the rest of the world takes a breather. First, it should use the injected money not as write-offs but as invested capital. This entails having a clear picture of how can the country benefit tomorrow from using this money today. For this, it should go back to basics. For money to freely circulate, a large number of people need to be employed. This cannot happen in factories producing goods that others either do not need or cannot afford. It is said that it is an ill wind that gives nobody any good. Well, the ill wind was massive deforestation in the countryside. Forests were destroyed, but in the main, were not situated on commercial quality soil suitable for farming. Drive anywhere in the Philippines and be confronted with ranges of denuded hills. These could, of course, be replanted with trees, but unfortunately, many years will pass before a financial return can be garnered from the timber. The price of imported oil, may be low now, but will not remain so for long. The high price was formed by the Wall Street wise boys in gambling on the future possible price of oil so that it soared to an artificial high. Reality is that the costs of getting out of the ground and transported to markets will still increase and so a rise is inevitable. However, within three years of planting, jatropha, a bush that thrives in poor-quality soil, can produce sufficient seeds to be commercially viable as a diesel substitute that is 80 percent less polluting that fossil diesel. Money invested by the government will therefore be regained many times over. More importantly, jatropha is a labor-intensive industry. Those working in it will garner regular wages, which they will spend on others goods. It has been estimated that for every five people employed, one job is created elsewhere. Rice and corn production should be another area of government interference. Legislation should allow government to freely utilize vast privately owned lands that currently lie fallow � unused, in order to produce more rice and corn. Funding should be provided to universities to research into more effective organic fertilizers to replace imported fossil-oil based Urea, and others. Again, employment in the country will produce jobs in the cities. To increase productivity in the country, the practice of land distribution for free must be stopped. Government should not cease the compulsory purchase of land, but from the land should carve out housing lots for free distribution, but lease the balance to a purposely formed cooperative. Millions of minute farms cannot be productive or upgraded with the necessary machinery. Leases should be able to be cancelled in the event of the land not being worked. The government should have fertilizer and seed monies available at reasonable rates of interest. They should not be a monopoly, but be available in order to stop the private sector from abusing the system. There is obviously something very wrong at the price differential between farm gate and retail prices of all foodstuff. If food prices are kept under control, then labor becomes less expensive. In spite of the recession, tourism will not die, but those potential tourists who are still employed will just seek better value for money. This means that tourist development must become more realistic. Although local tourism can create jobs, the real income is from overseas tourists. To get these requires concentrating on certain areas. Much as though many provinces have the required basics for an excellent tourist destination, most of them lack the most important � accessibility. For an area to be successful, an international airport nearby is needed. Proof of this is Bali. Virtually all of its resorts are less than 45 minutes from Denpasar, its international airport. Thus, before pouring money at the request of provincial governors, the first priority would be to determine how far and more importantly, how long will it take to transport guests from the nearest airport. Those are the areas in which to concentrate infrastructure spending. Tourism is a tremendous area of employment, in both construction and the service industries. Finally, mining. It has been reported that the Philippines has more value in gold beneath its oils than Saudi has in oil. So, let's go for it. Listen to investors, provide the necessary security and dig. All proposed infrastructure development proposals should be accompanied by an audited cost/benefit assessment rather than the political clout of the proponent. There are many lesser areas, such as proper training and salaries for teachers, etc. but thee are for another day. Every Filipino should realize that downturns are times of opportunity That is only a problem of 'seek and yea shall find,' Come on Filipinos. Let's go. Alan C. Atkins, (by email), Paranaque City, Feb. 14, 2009 British resident of Metro Manila. OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Reactions to [email protected]. To subscribe, send a blank email with the subject heading Subscribe. To unsubscribe, send a blank email with the subject heading Unsubscribe. |
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