The Coming Crisis of 2009: Some Thoughts (Part 2)

I am continuing this series in order to provoke some thoughts. In this way we might have a better understanding of the crisis that is coming to our shores.

Finance capital, monopoly capital, “hot money”. What do these all mean?

Finance capital is basically wealth producing wealth. Investors lend money for profit and it will always seek the greatest return. Monopoly capital and finance capital are similar up to a point. “Hot money” is the behavior of finance capital.

In the later stages of capitalism finance capital dominated industrial capital. The industries are now at the mercy of banks, finance houses and more lately by various kinds of funds including hedge funds. Their “worth” now rise and fall with the movement of finance capital. “Bubble”. Just like Henry Sy “earned” S1.1B in the first 9 months of the year and his fellow taipans “lost” hundreds of millions of dollars.

Finance capital can also be exported. And withdrawn. And that is the problem of national economic planners. In the development of a country more and more its planners and its legislatures are no longer the dominant factors. Their economies shrink and expand and their exchange rates change with the movement of “hot money” finance capital. The size of this money dwarfs the national savings of nations.

And that is the reason why our exchange rate is on the downslide. “Hot money” is being withdrawn. Our equities and stock market earned 30% per year from 2003 ton 2007. All because of the “bubble” created by the inflow of “hot money”.

Our local economy was not responsible for that “prosperity” (but it certainly helped Mrs. Arroyo survive). But woe to those that do not understand this kind of “investment”. They will have to be content with the 3-4% interest the bank gives for time deposits which is not even enough to cover inflation.

In the competition of nations, we will be left by Vietnam, a country ravaged by war not so long ago. Our $1B direct foreign investment (DFI) per year is but a fraction of their $7B. And we better learn how to kowtow to China which receives $1B a day at its peak. They will be our investors and buyers in the future.

How do we catch this elusive “hot money”? It is simple as long as one country’s economy can guarantee it will earn handsomely. That is why former developing countries like China and India are fast becoming powerhouses. They will not be left holding the proverbial empty bag because they have real wealth–their manufacturing sector, export market, capital market and technology is own the way to development and they can now absorb flights of “hot money”.

“Hot money” without outlet is a dangerous thing. Arbitrageurs and fund managers became too “creative” in inventing new kinds of investment vehicles and this led to the “sub-prime” woes in the US. They have to show enough “profits” so that they wont lose their (finance capital) investors. After all their earnings are based on percentage and on the rise of their own shares.

And this is the reason for the rise of Madoff schemes (seems Madoff is on the way to replacing Ponzi in the dictionary). We can just speculate how many Madoff schemes are out there in the world.

Whatever financial conflagration that will happen finance capital will find a way to seek profits in all parts of the globe. It won’t even matter if it is a conflict area, a dictatorship for as long as there is reasonable guarantee they will get their money back with interest.

So this crisis, in essence, is just a temporary thing. The world economy will “recover” when finance capital gains enough “confidence” again. But it is gullible, the suckers and the small fries that will bear the brunt of their activity.

Is this what is meant by greed?

[photo credits:huffington post, wired newyork]

On Philippine Corruption And Our Being Inure To It

When I tell younger people that it was much better 40 years ago, I usually draw raised eyebrows. Then I tell them that it might be broken in places but the system of checks and balances were still functioning then. That politicians can still be booted out of office because of perceived corruption. Not now.

Younger people no longer heard of line-item budgeting, a system destroyed by Marcos during martial law so he is free to divert (euphemistically called re-align) public funds as he sees fit. In line-item budgeting all items to be budgeted is given an amount by Congress and funds for it are identified. In this way no significant diversion of funds is possible, hence, corruption is also minimized. This was when Congress still held the full power of the purse. Not now. Everybody has to kowtow to Malacanang and Cory failed to realize the importance of re-setting it.

Now is it a wonder why all the congressmen act like running dogs of Malacanang? Mind you, the term tuta (running dog) has already disappeared from the vocabulary as if it was interred with Marcos. But I remember even at the worst time of his regime, he had still principled people around him who will not dip their fingers in the public till and he always had capable and competent people who are free to say no (but of course it is another matter if he will listen to their counsel). Now all I see around Malacanang are plain running mongrels. Even calling them dogs might be an insult to our loyal canine friends.

There were “commissions” (takes) during Marcos’ time. But if it was probably in the vicinity of 10-20% now it is probably in the realm of 30% or more. All the powers-that-be dips their hands in the projects, from the bureaucrats to the elected officials but it is the latter that are “grabe” (too much).

Corruption is escalating but protest against it is practically a whimper now. It seems we are simply too inure about it now or feeling too powerless to stop it. But at least, the silver lining, if it can be called such, is we have not yet reached sub-Saharan African level where more than 40% of the public funds disappear to only reappear later in European banks.

Where did this all began? Our public dealers (leaders kuno) should certainly be blamed. With a massive mandate all Cory understood was to restore “elite democracy” and its trappings (like the old Congress) and restore Marcos-seized oligarch properties (like Meralco) and reimburse those who were squeezed by Marcos like Joecon Concepcion (by funneling to them low-cost loans extended to us by other countries which was meant to jumpstart our post-Marcos economy).

Cory’s successors were also remiss in reigning in corruption. Ramos and de Venecia like pork barrel immensely so that they can buy off Congress. Making Congress their running dog was the greatest “legacy” of Ramos. And his second-greatest “legacy” is appointing an Ombudsman which will simply cover their tracts.

Arroyo, the protege of Ramos and de Venecia, certainly learned well this “statecraft” and even did one better than them. The protege got too good that she had the temeriry to dump her mentors once the mentors started signalling “sobra na” (too much already).

Erap was content with jueteng money and that’s according to him. But like the others he also cannot say no to friends. But at least he can say no to relatives.

Sometimes I wish the First Quarter Storm will come again. But rules of assembly are different now. And if the youth then had the feeling that they have to set aright their home country now the feeling is to get the necessary degree and experience needed in the least time so they can work abroad. Anyway there is always the Popovism to lull the people that the Philippines is a “great” country as if we are a “blessed” country and people to begin with. And so the circus goes round and round and round.

Bless Henry Sy! He makes us forget our problems with his malls. Who said the best things in life is not free? (Just look at Malacanang and the congressmen).

(Image credit:Wikimedia)

Are The Filipinos Simply Inure?

My colleague’s post (Me Barko Na Naman Na Lumubog”, 11/26/08) provoked in me a different reaction. It made me think of the usual police alibi, “We cannot solve the case because there are no witnesses”. The next murder will come and the said excuse will be cited but with a different spin, “We are still investigating the case”.

There is a lawyer that said that unlike in bus accidents where passengers died, there is yet a ship captain or ship owner that has been convicted of the case “homicide due to reckless imprudence”. Maybe that is why Sulpicio maritime incidents continued for a very long time.

I wonder if the Camarines Sur killings will be solved and the perpetrators brought to justice. I am watching. But I do not know if the people of Camarines Sur is watching and will do something. Or if they will learn the lesson.

If the recent murders in Camarines Sur are not solved (like the murder of the market administrator of Naga City or the mediaman that was gunned down in a town north of Naga City, it will probably be the criminals who will learn the lesson–that they can get away with murder in Camarines Sur. If so, I assure you it will happen again and again. I have seen it here in Mindanao where violence just lurks below the surface. Time might come when contending forces will simply settle matters with a bullet like what is prevalent here.

Over the years I have seen Filipinos becoming more inure. The Nani Perez case was dismissed (while it had a money trail and a witness). Where is the outrage? The first couple is obviously a beneficiary of the ZTE-NBN deal. Where is the outrage? Documented impeachment complaints just get thrown out like garbage and there is also no outrage. There was a documented fertilizer scam which was a means to buy congressmen’s support. Where is the outrage? A president is caught lying and cheating and trying to steal the election. That president is still safely ensconced in her throne.

Life just seem to go on and on.

I think Henry Sy should be given a gold medal by the crooks. For keeping the people entertained and content without any controversy and for free through his malls.

Rising executions in Saudi Arabia, RP’s ritzy rich & Filipinos rooting for artificial contraception

72

This is the number of government-sanctioned gruesome executions in Saudi Arabia this year according to the count of Associated Press. The Amnesty International (AI,) a human rights watch group however says in 2008, there have been 158 executions, a four-fold increase from last year’s count. Amnesty International (AI) decries the outrageous killings especially among foreigners including those who are underaged. In spite of Pres. Gloria M. Arroyo’s plea to spare OFW Venancio Ladion, he was beheaded this week on charges of murder.

US $3.1 billion

The estimated net worth of Henry Sy, the Philippines’ most rich man according to Forbes Asia 2008. Business wizard Lucio Tan comes second with a net worth of US $1.5billion.

P48.10

Amid fears of worldwide economic recession, the Philippine peso tumbled to a new low of P48.10/dollar and the Philippine Stock Exchange (PSE) index fell by 5.18%. Eddie Gobing of the Lucky Securities Inc feels “the worst is not over” for the peso’s downward trend. This comes on the wake of about $521.7 million in investment outflow leaving the country in the first 9 months of this year. The highest net outflow was in September coincident to the economic meltdown in Wall Street.

50,000 OFWs

The Filipino workers who could prematurely return home from jobs abroad in case a US recession occurs and affects the economic stability of other countries.

70%

From the Social Weather Stations’ (SWS) survey on September 24 to 27, 2008, 7 of 10 Filipinos (70%) support a law that will allow the government to dispense condoms, IUD’s, and contraceptive pills to people who request for them. Contrary to the Roman Catholic Church’s teaching which advocates for natural family planning method, the public now shows growing support for artificial contraception.

This reflects a shift in favor of the House Bill 5043 (Rep. Edcel Lagman’s Reproductive Health Bill) to institute artificial family planning methods in the country—a long-drawn contentious issue between traditional religious belief and government policy to control population. (Photo Credits: Citizensugar; MsWong-scribbles.blogspot.com)=0=