Gloom

Gloria Macapagal Arroyo’s favorite student, now governor of the province of Albay and still her economic adviser, Jose Sarte Salceda, was heard on television recently saying that "if the US economy will experience a tidal wave, what we will have in the Philippines is a tsunami".

His principal of course, does not agree, publicly at least. She keeps telling everyone who cares to listen, guys like Donald Dee and Mike Varela and Serge Ortiz-Luis, that we will weather the US-initiated economic recession. She keeps mouthing the mantra that "our fundamentals are good." Her financial factotums pat themselves on the back, and tell us that the expanded VAT has proven itself as our economic salvavida. We should thank them, and their GMA, for what they consider prescience, what they banner as bold economic vision done with utmost political will.

They forget to tell the people, always conveniently of course, that had their principal not embarked on reckless borrowings in the first three years of office, all with electoral "victory" in 2004 goading her, we would not have had the kind of massive deficits that we had to address by taxing consumption more in 2005.

But never mind that. We have survived the expanded VAT, even if we all are the poorer because of it. The bigger problem is the descending gloom. And there is no escaping that gloom. That it may likewise be portent of doom depends on whether leadership can give us a glint of the light at the end of the tunnel.

Salceda likens the Philippine economy to a car "running flat, but still running." The problem, he adds, is that the nearby gasoline stations are closed." So what gasoline station, er, economic power do we run to so as to fix the flat tire? Frankly, none. The big economies will be looking inward, with their domestic markets needing to be primed, and their finances requiring intravenous fluids. Gloria’s favorite student, now her guru in situ, is disturbed that "domestic complacency in government is not acting quickly enough to shore up the country’s defenses against the global meltdown." He simplifies the choices for government as "pain now and more pain later; or more pain now and gain later".

But the truth is that his president is still in denial mode. She would rather cha-cha now, more interested in perpetuating power than curing the malady of economic gloom.

She flies to Hong Kong to hob-nob with Bill Clinton, hoping to curry favor with the husband of the new Secretary of State, with whom she will have to deal with in the remaining 18 months of her term. Condoleezza Rice finally warmed up to her now that her boss Dubya is on the way out, now that she really needs them least. But Bill is not likely to get Hillary or the new president, Barack Obama, to be interested two whits in these impoverished islands at a time when their domestic economy is as pale as pale can be. She will now fly to Qatar and tell us natives when she returns that those sheiks have promised her they will invest their waning petrodollars in these benighted parts. Ah…promises, promises, and little else.

Next year, after the tinsel on the Christmas trees have been removed, the reality will descend upon us. Retailers already reeling from low holiday season sales will look forward to little more in the new year. Many will close, unable to pay rent. Export-dependent factories that did not have to double-time for the seasonal rush in 2008, will find fewer and fewer export orders in the coming year. And OFW’s have been given their termination notices, renewals not to be expected, until better times come. When, nobody knows.

Even the International Monetary Fund’s chief economist, Olivier Blanchard, warns that the global financial crisis is set to worsen and is not likely to improve until 2010. President-elect Barack Obama, who seems to have aged considerably since the magnitude of America’s problems descended upon his shoulders, has likewise said that the economic situation will worsen before it improves. He tells the truth.

Blanchard says "the worst is yet to come…and a lot of time is needed before the situation becomes normal," estimating that "growth would not kick in until late 2010, and it will take another year (2011) before the situation becomes normal." His assurances are actually more hopeful than other economists, who predict a longer period of gloom.

Even the World Bank warns that "many developing countries are moving into a new danger zone, with heightened risk to exports, investment, credit, banking systems, budgets, balance of payments, and the most vulnerable – the poor." Countries dependent on exports, foreign remittances, foreign investments (which will shrink), and which exhibit high current-account deficits or rising inflation, and those with extensive fuel or food subsidies are the most vulnerable to a sharp slowdown, especially if accompanied by a significant tightening of financial market conditions".

That is exactly where the Philippines has chronically been. That is what our economy is right now, and will continue to be, because present leadership has neither offered solutions nor inspired reason to hope.

As more and more are pushed into poverty, as more and more lifelines are extinguished, either because the OFW saviors start losing their jobs, or the marginally-earning locals are likewise deprived of livelihood opportunities, then peace and order problems multiply exponentially. The sadder reality is that because the very rich live in gated exclusive villages and have personal bodyguards to boot, they should be the least affected by crimes against property. Instead, it will be the middle class, living in what used to be peaceful neighbourhoods, driving cars which have yet to be fully paid, with possessions they have had to scrimp for to enjoy, who shall be the victims of increased crime.

So then, will Gloria Macapagal Arroyo and her rotten regime be able to tide us well through the crisis? Clearly not.

Her factotums would go on last-two-minutes "tongpats" orgies, and be obsessed with how to hide their loot elsewhere in the world. Already she has announced a hundred billion peso infrastructure program once her 1.4 trillion peso budget is approved. And the Senate is seeing how that budget is full of lump sum appropriations, which means easier occasion for more graft. One is left wondering how much of the 100 billion will end up lining private pockets. Follow the leader.

And because business will have low liquidity positions and lower profit margins come 2010, who but the corrupt rich will have the oodles and oodles of money to buy their electoral "victory"?

Worse, who would have all the billions to throw as support to whoever is able to "guarantee" or assure that his or her benefactor/benefactress, will not have to face justice from the courts of law, once he/she is elected president in 2010?

And on the hopeful assumption that GMA and her minions should withdraw their attempts at prolonging their stay in power through charter change, would not she and she alone, with her money (along with her "esposo"), and her Comelec, not be the single substantial contributor to the campaign coffers of the next leadership after June 30,2010? Cha-cha or no cha-cha, elections or no elections, she and her ilk reign.

So gloom becomes doom.

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My friend Ver sent a very appropriate observation, painful though it may seem: "With the present situation and condition in our benighted land (borrowing your word) there are only two Filipino characters I can compare the Filipinos with. One is Juan Tanga where the Filipinos are nag tatanga-tangahan with the current situation and Juan Tamad where they are tamad kumilos to have a change for the good of the country."

***

As we write this piece, we are informed that the head of Julius Baer, a Swiss private bank quite popular with billionaire Filipinos, 52-year old Alex Widmer, committed suicide. After Lehman Brothers disappeared, and AIG fell into deep shit, and private banks all over the world, from Julius Baer to the Royal Bank of Scotland and its Coutts, how diminished are the portfolios of the Philippines’ filthy rich?

The tragedy of it all is "ninakaw sa Pilipinas, inilabas ng Pilipinas, at kawawang Pilipinas. Walang nakinabang."

Maybe that’s why we have to cha-cha-cha. The crooks need to replenish.