How Did RP Managed To Escape The Global Recession?

The Economy, Current Events | Comments (4)

By MAJOR TOM | September 24, 2009

I came across a very informative article of former NEDA chief Cielito Habito “Where Did the Growth Come From?”, discussing the very current debacle of global recession and how the Philippines have somehow found a way to snuggle away from it, insulating itself from it effectively and even posting growth figures as opposed to other contracting economies worldwide. This situation had even gained the Philippines some notable commendations from veritable financial institutions abroad.

However, Mr. Habito pointed out mainly to 'government spending' as the main and only instigator of such growth, increasing demand through construction activities thereby allowing job generation as such. In fact, significant sectors like agriculture and manufacturing had contracted or decreased.

This tells us how fragile is the basis of our economic growth even to the extent of artificiality, when purely government spending is mostly depended on and none much else. As Mr. Habito had pointed out, increased government spending means increased government debt and this is not a good situation at all.

Somehow, this kind of strategy is deemed commendable as even America implements the so-called stimulus fund to augur in public consumption, in order to enthuse market activities. It was smart maneuvering on the part of our government.

Although in simpler mathematics, it would still be a negative. How long can we lift up the economy using artificial means and planned intervention?

Public consumption aside from those generated by government spending should be instigated by all means.

Mr. Habito views the housing sector to be one good area where government should focus on as it has that multiplier effect of generating more jobs (being labor intensive) and encouraging increased manufacturing activities.

The Daunting Noynoy Aquino-Mar Roxas Tandem

Philippine Politics | Comments (12)

By MAJOR TOM | September 21, 2009

Even Malacañang seems especially daunted with the now official Noynoy Aquino-Mar Roxas tandem for next year’s presidential elections, now that Senator Roxas has officially accepted the vice-presidential candidacy slot for the Liberal Party, presumably through the personal invitation of Noynoy himself.

Actually the team not merely daunting, what with the recent survey results out, the duo could be quite formidable --- not merely a winning team but one that could be unbeatable.

In the days of old, we used to say about up and coming politicians to be “so young and yet so corrupt”, but these two young candidates are “so young and yet so capable”.

If the two can hold their cards well, not bungling their chances just for several months from now, then they’d surely find themselves sitting in the palace by the river next year.

Well of course, none of this election thing should be considered a done deal and deemed final not unless, as they say, the fat lady sings. We still have to have an election on May of next year for one.

Despite the roaring entrance of Noynoy Aquino into the election fray, other candidacies remain to be on the radar, waiting for the banana skin that could lay to naught the Aquino-Roxas team.

For one, the administration bet in Defense Secretary Gilbert Teodoro becomes now a wise selection as his qualifications and intellectual capacity comes now to the forefront, his exceptional academic achievements slowly seeping into the public consciousness.

Also, Senator Many Villar – the erstwhile topnotcher in polls and surveys before Noynoy came into the scene --- is still looming large out there, still looking for that lucky break (or lucky combination) and desperately aiming to escape the stranglehold of a recent real-state controversy that had suddenly stained what was once an impeccable motive and intention to run for the presidency.

Senator Chiz Escudero on the one hand is still out there flaunting the very wide and sizable networks that he had built from the grassroots in the past several years, through frequent countrywide visits and guesting sorties, and not to forget his very brisk Internet networking activities. That aside from his well-known reputation for boisterous outcries against anomalies in the present government.

And who else, uhmn, maybe former President Estrada still holds that celebrity charisma that had catapulted him to the topmost position of this land in 1998.

It could be a wide open race, despite the ferocious strength and railroading entrance of Liberal Party’s Noynoy Aquino-Mar Roxas presidential team.

The Missile Game

Global Politics, Current Events, News & Info | Comments (2)

By MAJOR TOM | September 19, 2009

Decades after the so-called “Cold War Era” had perceived to be ended; right about the time when the former U.S.S.R. was dissolved by Perestroika and Glasnost, here we are again hearing some kind of buzz about arms build-up from America and then from Russia, with U.S. President Barack Obama starting it all with an announcement of a missile defense system aimed at shielding Europe, purportedly from Russia and its close allies.

Isn’t this some kind of a nuclear déjà vu?

What comes to mind immediately is the almost mythical but flimsy “Star Wars” shield program or otherwise known as Strategic Defense Initiative of former U.S. President Ronald Reagan, a hollywoodish grand ambition of networking the skies with military satellites, those that could supposedly anticipate and neutralize any major nuclear strike against America.

Of course Russia immediately felt threatened by the Obama missile defense plan in Europe that it almost automatically announced that it would likewise be deploying Iskander missiles in Poland, in order to counter what it perceived to be as an apparent threat to its security.

President Obama had to cancel the missile defense plan so that Russia would backed-off from the missile deployment in Poland. Now, that’s more like it. Tensions would have gone high and relations between the two nuclear giants would have deteriorated to a great extent.

All’s well that ends well.

Yet, I could deeply infer on the whole situation as there could be more profane motives other than what we see on the surface of this issue. The fact that it was planned at all --- the Europe missile defense plan should be a high indication that volatility within that region is still high. Such plan could have probably been instigated and resultant of incisive intelligence data gathered or why else would America put it up over there if Russia is as lame as we all thought it to be at present --- harmless like a sheep. Just when we all thought that Russia was not an enemy but a friend of America, it’s coming up as if it is becoming a monster once again, threatening to gobble up Europe. For wealth or power --- we exactly could not know.

Or maybe President Obama just wanted to play the role of grand old American presidents of years past, talking big in terms of missiles and nuclear warheads, ala Reagan or Nixon. Could he be so inclined in opening old wounds with Russia?

America voted for him because the population there had gotten so turned-off by former President George W. Bush’s perceived warmongering in Iraq and elsewhere. Why would he be so careless in instigating an arms race --- that’s the least the world needs right now.

We hope President Obama chooses so well and very deliberately the international actions that he makes; and he shouldn’t be playing missile games.

RP Now a Key Emerging Market for Global Investors

The Economy | Comments (2)

By MAJOR TOM |

It’s about time that Philippines have a respite from perennially being included in those notoriously vicious lists that state the who’s who or what countries are among the most corrupt or in violation of human rights and some other negativity --- even just for a while.

You know, RP would be a hall-of-famer by now, having performed so well in those listings in recent years.

Philippines had just been singled out by the United Kingdom Trade & Investment office to be remarkably 9th in rank as a key emerging market for global investors, up 14 spots from last year’s 23rd.

This should be one better news, aside from recent business reports of an ever-increasing forex reserves and improving credit ratings from Moody’s.

This is fairly a well-studied economic assessment since actual global business entities have been surveyed for this listing.

That’s unparalleled investor confidence for us.

It’s to be pointed out that UK remains to be the top source for foreign direct investments in the Philippines (this is unexpected for me; I had always thought U.S. or Japan to be leading in this category).

One wonders why Philippines place well in investor confidence despite the many negative happenstances within our midst and of course the global economic downturn still not settling down completely.

What I see is the kind of ‘ballooning’ and eventual ‘burst out’ that almost always happens in finance. We all know what they say about increasing numbers in terms of production and manufacture, quality suffers and deteoriates. Over-investment in areas like China and India (as well as Asia strong contender Vietnam) must have led to a ‘bursting’ situation that other locations like the Philippines now becomes more and more attractive to investors who are batting for more ‘quality’, and steadier ground, those that are not in danger to boiling over.

Over-investment (when mismanaged) might possibly lead to overheating and this is a great hazard that global investors are trying to move away from.

The Darkhorse in Gilbert Teodoro

Philippine Politics, Current Events | Comments (7)

By MAJOR TOM | September 16, 2009

I remember how Lakas-NUCD was such a formidable political party several years ago. But that is just merely a memory today. One such manifestation is apparently the lack of talent within its midst that now it has to parade a thoroughly greenhorn nominee for next year’s presidential election.

Defense Secretary Gilberto Teodoro comes to me like a very unassuming name and one without a certain face that when the boisterous pronouncement of his nomination by Lakas came out on the morning news today, I wasn’t able to immediately put a face behind the name, despite that of course, his name had been in the current news every now and then, being defense secretary at present.

So I had to immediately surf the net and browse for his person and that was the only time I was entirely assured of his person, in name and face.

Now let me take a step backward, it seems to me that the party has some sense and wisdom after all in its selection of Mr. Teodoro for per my research, Gilbert Teodoro is actually someone who could not be faulted for wanting to aspire for the topmost position of this country. His scholarly record is impeccable, almost to a fault. He topped the bar examinations and went to Harvard for graduate studies. Definitely, we see lots of potential in this guy (to be so cliché about this) and if he becomes president, we might just as well possibly have the most intelligent president ever; although we had such a miserable experience with one. And besides, we are yet to hear anything controversial about him.

With the Noynoy bandwagon coming up so strong and so fast, Teodoro’s presidential run is at most a wild card affair.

In conclusion, Gilbert Teodoro might just be merely a face in the crowd today, but with enough effort in his campaigning, he could be the dark horse in next year’s presidential race and can give Sen. Noynoy Aquino and Sen. Manny Villar a worthy run for their money.

Del Potro Becomes Federer Tamer

Sports | Comments (5)

By MAJOR TOM | September 15, 2009

This is so big news in the sports world, where the up and coming Argentinean tennis player Juan Martin Del Potro finally tames the unbeatable Roger Federer. (Not that Roger is so absolutely unbeatable, he loses sometimes).

Nobody expected Federer to lose, not in this fashion, in New York, in the most patronized Grand Slam of all, the US Open and to a very young player in Del Potro.

At a very young age of 21, Del Potro showed the guile and dexterity of a true champion, the one that Andy Roddick failed to develop fully and Rafael Nadal just fell short.

I always thought that the one that could beat or at least matched Federer’s extraordinary tennis prowess is someone who moves like a cat on the floor, or a cunning jaguar to be exact, not heavy like Andy Roddick or static like Rafael Nadal --- someone who has the unique abilities of Boris Becker and Andre Agassi --- both combined.

And that maybe, Juan Martin Del Potro is that person who can beat Federer now that he overcomes Federer on the most intense Grand Slam series of all.

For a long time, Roger just demolishes the field and finds no worthy rival, somehow turning ATP tennis into some kind of doldrums., full of tournaments where Roger was hands down winner even before the first serve is made. Now perhaps, Del Potro can make ATP tennis much interesting once again.

Entering Top 10 ATP ranking only last year, Del Potro was seen by many to be having great potential as a Grand Slam winner, and this time, he proves this prediction true, in the most dramatic fashion, winning it over the already-legendary Roger Federer.

So this Del Potro win must have turned the entire sports world all abuzz. When the finals for this year’s U.S. Open was announced – right about the time Nadal lost in straight sets to Del Potro – I immediately felt that since Nadal or Roddick is out of the way (Nadal suspected to be nursing some slight injury), the finals was certainly to become a mere ceremonial walk for Federer. He was that awesome and menacing.

But the surprise of all surprise happened, Federer falls down and Del Potro wins his first Grand Slam.

And mind you, the championship match was the best tennis match I’ve seen in a very long time, ever since Pete Sampras had retired would you believe?

I was actually watching the live coverage of the championship match so early in the morning but fell asleep when the fifth and final set was about to start.

The crowd roared when Federer had hit those ‘fascinatingly exact’ return volleys. But I could hear more applause every time Del Potro makes some smart points. Could there be lots of Argentineans in the Artrhur Ashe Stadium during the match? Maybe not.

I felt that the audience wants something unusual to happen, something that is atypical; so perhaps they had rooted for a Federer lost and a Del Potro wins.

But maybe Federer was just tired of winning (coming of a great and historic run in Wimbledon last month) and that Del Potro was just one very lucky tennis player today.

The drama unfolds now and it remains to be seen if a new and interesting rivalry is born.

Shall We Celebrate Our Huge FOREX Reserve?

Philippine Politics, The Economy | Comments (4)

By MAJOR TOM | September 11, 2009

I was going to blog about this current item some days ago, but I was so busy then. It was a notable report about our economy about three days ago, where our foreign exchange reserve stood at record-high 41.3 Billion in U.S. dollars. Otherwise known as Gross International Reserve (GIR), forex exchange reserve is one good indicator on the health and vigor of the economy, simply stating how much dollars or foreign currency flows into the country at a certain point.

At this level, the Philippines maintain the 10th largest reserve in Asia according to the report and about 37th in the world.

It’s a bit of a downside however to learn that other countries in Asia like Thailand (US 125 B), Malaysia (US 91.4B) and Indonesia (US 57.4B) are so far ahead of us in this aspect. But knowing that we have gained great strides in this matter is already one reason to feel uplifted, somehow.

To clarify some point, the GIR does not ultimately reflect the real account or level of an economy of a nation and remains highly debated as to its significance is assessing a nation's actual economic strength. Too much of it could actually be harmful to the dynamics of currencies as central banks could easily masked flailing currencies resulting to the hazards of misrepresented values of items and commodities, a situation that could easily lead to explosive inflation and sharp contraction in economy.

Consider that other notable rich countries like Australia (US 40.9B) and Spain (US 27.6B) are far lower than us but for certain, these countries’ economy are so much bigger than ours.

The highest level in GIR is held by China at $ 2.1 Trillion while America is merely 20th at $ 78 Billion. Now, at least we see the gigantic irony about foreign reserves.

But all in all, GIR level is greatly indicative of our nation’s health or any form of upswing on it, in the most basic sense. America and other rich countries could well afford to maintain reasonably lower amount of reserves since their liquidity issues are not as much a problem, and besides America’s dollar remains to be the currency of choice for almost all countries, meaning all those held in reserves in many central banks across the globe emanates or is directly connected to the U.S. economy, signifying its enormous strength as a financial hegemony (giant) in the global trade.

Other forms of reserves are in gold, that’s why central banks all over the world store bullion of gold somewhere underneath their premises.

What is most significant about our GIR level is the sharp increase it had gained from last year, almost $ 10 Billion all in all, from a mere $ 32 B in 2008.

Apparently, this strong inflow of forex exchange should be credited primarily to improving remittances from OFW’s abroad (showing how they are truly heroes of this country) and some from foreign direct investment and capital.

Some sectors says and ask, “What shall we do with these dollar reserves? Shall we just store it or make use of it?”

Some even suggested that we use half of it to pay our fast accumulating foreign debts. Some say we use some of it to build houses and roads.

Maybe we can we use some of it to "keynesially"upstart our economy, increasing government spending through salary increases to the government sector, embark on huge infrastructure projects like public housing, farm-to-market roads and bridges, allowing more access to farms and other potential areas.

But doing that might just harm our economy instead, decreasing credit confidence and would make our economy more likely to be fragile against currency crisis, like the Asian Financial Crisis of 1998.

That’s one of the most important purposes of stable and wide FOREX reserves, in order to shield us from currency fragility that often hounds the global economic system, attacks that are so debilitating that it could tear down an entire economy into bits in just a matter of days.