2008: Strategic perspectives

DIE HARD III
Herman Tiu Laurel
1/2/2008



In a year end survey reported on December 29 SWS reported that 91% of Pinoys enter 2008 with hope - very characteristic of the Filipino. Does objective reality portend such sanguine probabilities in the coming year? In a sharing of participants Fr. Robert Reyes requested during a mass at the custodial center almost every one of the forty participants wished for: the triumph of truth (from Gen. Danny Lim), freedom for the detainees and family unity, the victory of the cause. My wish was the shortest, “A new, New Year”. My New Year text greeting was, “In the Philippines things haven’t changed in 45 years since Dado Macapagal sold out the country. May a final revolution change that this 2008.”

As year 2007 ended the worse drop in Christmas consumer spending will be recorded, as the report of the assessment from the Philippine Retailers Association (PRA) chairman Samie Lim portends: “Christmas shopping came in very late this year with people wary of uncertainties… Industry sources claim that the strong peso helped dampen holiday sales as families of overseas workers get less pesos for the dollars they receive… Lim said even sales of consumer durables, which are traditionally high during the holidays, are flat.” The statistics are in yet but from my direct interviews with retailers the fall from Christmas sales last year amounts to almost twenty-five percent.

The impact of the floating and rising peso, oil prices and others factors on the domestic economy (thirty percent of which depend on OFW spending), caused this consumer spending fall. Another thirty percent, the export sector, is also reeling and Gloria simply refuses to take radical steps, leaving them with palliatives. Philexport News of the Philippine Exporters Confederation, Inc. Internet newsletter reflects the crisis with these headlines in its year ender: “1) Strong peso crisis prompts institutional reforms to address common exporters’ woes… Things may get worse for exporters before these get better next”.

“2) Filipinos with dollars will soon be allowed to invest in foreign blue chip stocks; 3) NCC optimistic on government’s approval of Malampaya royalties suspension” as the export industry leaders like Sergio Luis-Ortiz scramble to present solutions to their dire problems. These proposed solutions compounds their problems: investing dollars in blue chips stocks in the midst of impeding U.S. and global recession is stupidity, and reducing government Malampaya royalties will simple mean greater government revenue losses that will be made up for with more taxes. The Peso should be fixed at least at P 47.00 and Royal-Dutch Shell Malampaya profits should be drastically cut.

More year-enders predict worse for 2008: “Manufacturing posts year-on-year drop in output Production volume slips 1.7% in Oct.” and that the month when manufacturing companies should be upping its volume in preparation for the December holiday splurge. This October drop followed at least six months of declines of up to six percent a month, and with it countless jobs have evaporated - irrefutable proof of Philippine economic tailspin. On top of these economic reversals the privatized public utilities are jacking up rates as Meralco is poised to raise power charges again and Manila Water starts its 65% hike with an initial P 5/cu. m. increase with P 10 more to follow.

As 2007 ended Gloria’s finance managers announced 2008 revenue target cuts, admitting that local business is so bad they cannot squeeze more from stone. Instead, more privatization of crown jewels (non-tax revenues) is in store in the New Year; that is, more plunder of the national patrimony. So this is how the economy will continue to be run, which offers no hope of things changing in the country. Savings in debt servicing coming too late after forty years, is obliterated by all these. New debts come up. As a texter to us said, echoing the last lines in my December 29 column: “Unless the Magdalo dream comes true, next year is more of the same and worse again. That’s why the dream should never die.”

The global conditions are ready for a historical maelstrom as the U.S. recession gathers full force and continue for at least five years of unabated collapse as consumer spending, then automobile companies, then the banking system collapse with more pumping of bubble cash already becoming ineffective. US holiday sales lowest in 5-years, the Bloommberg reports, which describe the Commerce Department latest figures that reinforces the deepest US housing recession in 16 years. The report said, “The slump may worsen as discounts fail to lure buyers and mounting foreclosures swell the glut of unsold properties.” There goes the “market of last resort” of Philippine exporters too.

As the World Superpower reels, it’ll export its crisis - as in Pakistan. Benazir Bhutto’s saga the past month reminds me of Ninoy Aquino whose passport to the Philippines was provided by the U.S. authorities which wanted to “restore democracy” in the country after its tiff with Marcos over U.S. bases rentals and the Eleven Industrial Projects. Musharraf signed the Iran-Pakistan-India natural gas pipeline deal the U.S. opposed vehemently, after that Bush started the “return democracy to Pakistan” call, brokered the Bhutto-Musharraf deal, then assassination followed. Musharraf did it? Did Marcos kill Ninoy? It would be like shooting themselves in the foot! Al Qaeda did it! Whose Al Qaeda, CIA’s or Musharraf’s?

(Conclusion next column; tune in to 1098AM, 6-7pm, M-W-F)