mercury retrograde

if you’re into astrology, take note.

three times a year the planet mercury, viewed from planet earth, seems to stop moving forward, instead seems to move backward, as in paatras, along its orbit. the first of these retrograde motions 2008 begins on january 29 and ends on february 19 (effects might be felt from a whole week before until a whole week after).

the co-incidence is, tipong paatras din – “as above, so below” – ang takbo ng buhay-buhay dito sa lupa, particularly in matters that have to do with communications and transportation (both ruled by mercury). a time when any astrologer will tell you, whatever your sunsign, not to be surprised or angry with yourself or with others when things move slowly, or contrarily; to expect all kinds of delays and hassles no matter how well-laid your plans are; not a good time to start anything new, sign new contracts, or buy new stuff, specially electronics and vehicles (anything to do with transport and communications) because you could end up getting a lemon; but if you really have to, then take extra precautions, read the fine print, be clear about your options in case something goes wrong.

in my experience, it’s also a time na yung akala mong tapos na e hindi pa pala. loose ends call for attention, for closure. a good time to deal with recurring problems and issues, or to resolve them finally, or pag-usapan man lang, para hindi paulit-ulit, or kung maulit man, medyo ibang level na… as in a spiral instead of closed cycles.

with mercury paatras it’s wise to reschedule, repair, return, redecorate, restore, replace, reconsider, review, rethink, rewrite…

a global recession?

clearly the world is trying to remain optimistic (don’t panic!) about the state of the u.s. (global) economy, but that’s only because the federal reserve jumped in with that hefty interest rate cut just when it did, in the nick of time sort of, or (i suspect) stock markets everywhere would have crashed. and with another considerable rate cut expected next week, and bush’s promised stimulus package of tax rebates, the consensus seems to be that the optimism will continue for some time, even if markets and the dollar remain volatile.

interesting, what’s going on in the world’s financial capital, the giant economy to which all other economies are hinged – the federal reserve cutting interest rates so people can go on borrowing and buying houses, and bush saying the fundamentals are sound (sounds familiar) sabay give back cash to taxpayers so that they can go on spending, consuming, investing, and of course giving banks and speculators, i.e. the finance industry, time and money to get their act together.

it’s all artificial, of course, quick fixes that don’t address the root of the problem, which is that it’s a faulty economic system, this globalized free market no-regulation kind of capitalism. not sustainable.

writes geoff colvin of fortune magazine:

I remain a huge fan of globalization. It will help more people than it hurts, in America and worldwide. But it will certainly produce new challenges, and today’s economic situation looks like one of them.

The reasons we’re in a major slowdown center on U.S. consumers, who drive the economy. Through the past six years they’ve been the most maniacal spending machines the world has ever seen. Stock market wobbles, rising interest rates, staggering personal debt, war, floods, hurricanes – nothing could slow them down. That was mainly because the value of their largest asset, housing, kept going up, and because they were confident about their jobs. As long as their home equity looked like a piggy bank and their paychecks looked solid, they just kept buying, and America’s economic engine just kept turning.

Of course, home values have been declining for quite a while, and more recently the jobs picture has deteriorated markedly. What really slammed the door for many economists was the December employment report, which showed the unemployment rate jumping to 5% and a tiny number of jobs (18,000) created. With the home-equity ATM closed and paychecks looking iffy, it seems consumers have finally been forced to put the credit cards back in their wallets. Sure enough, after the holiday season a wave of retailers reported year-over-year sales drops for December. Department-store giant Macy’s (M, Fortune 500), for instance, saw a 7.9% drop in same-store sales and noted an overall decline in consumer spending as a contributing factor.

Now what does any of that have to do with globalization? Quite a bit. Consider first the housing bubble. It was fueled by extraordinarily cheap money that lenders were virtually throwing at borrowers. As a result, the prices paid broke free of any connection to plausible values in relation to rents or total housing supply.

That superabundance of cheap money didn’t come from Americans, since we haven’t been saving for years. It came from the rest of the world, from what Fed chairman Ben Bernanke calls the “global saving glut.” While we were spending, nearly everyone else on earth was saving at unprecedented rates, and those hundreds of billions of dollars made their way here. Not that anyone beat us with a stick and made us borrow the money or use it to pay ridiculous prices for homes; we can’t blame anyone but ourselves for that. But the fact remains that without the global saving glut, we couldn’t have had a housing bubble or the resulting housing collapse.

The jobs picture also has an important global dimension. For a majority of Americans, the most significant fact of globalization is the advent of a large-scale global labor market. Millions of people around the world can now compete for millions of U.S. jobs. Never mind that the number of jobs that actually get outsourced is relatively small. What matters is the mere presence of those lower-priced workers. They hold down the pay of high-priced Americans and constantly entice employers everywhere to create new jobs over there rather than here. Thus, the problem isn’t so much jobs being sent abroad but jobs that never show up here at all.

To repeat, globalization remains a net plus for America and the world. But it means that we Americans must rethink our role in the world economy. We used to be the locomotive that pulls the train, and to a large extent we still are; Chinese factory owners will not be happy about a U.S. slowdown. But while we still influence the world economy, the new reality is that the world economy increasingly influences us.”

doomed dollar exchange

i had been trying to get a grip on the problem of the rising peso, trying to understand why it is said to be good for the economy when it’s clear na mas maraming pilipinong nagigipit kaysa naliligayahan. googling didn’t bring up more than the usual reports about negatively affected sectors, such as telecommunications, manufacturing, garments, real estate, and of course about ofws and their nixed appeal for a fixed exchange rate and lower remittance fees.

but now that the exchange is up (down) to 40-something pesos to a dollar from 49-something in january 2007, hindi ba tayo dapat mabahala? so i emailed two economists, cielito habito of inquirer whom i know personally (a sister of his married a brother of mine) and filomeno sta. ana iii of business world whom i “met” through the plaridel e-group, and asked them what the government could do to stop the peso from appreciating so much.

i thank them both for their quick replies via their monday columns. habito’s Dealing with the rising peso (which has a part 2 that he emailed me a capsule of) and sta. ana’s Temper the appreciation, says GMA. Is that enough?

as it turns out habito and sta. ana are on different wavelengths, representing two different schools of thought.

habito, neda director-general in fvr’s time, agrees that there are things government can do but fixing the exchange rate is not one of them.

“Defending a fixed exchange rate (that is, making it stick) under current circumstances requires measures that would raise demand for or reduce supply of foreign exchange. The Bangko Sentral (BSP, the Philippine central bank) itself would inevitably have to provide most of the needed extra demand, by buying up increasingly large amounts of dollars. While this may look good because it wouldbuild up the country’s foreign reserves, it can have at least two harmful effects. One, it pours pesos into the system, thereby stimulating inflation (i.e., accelerating price increases). Wonder why inflation has ticked up lately? Well, oil prices are not the only reason, that’s for sure. Two, it would lead to large financial losses on the part of the BSP, losses that must ultimately be shouldered by someone (there’s no free lunch!).

“The latter has in fact already been happening, even without fixing the exchange rate. In the course of trying to arrest a too-rapid peso appreciation, the BSP has quietly built up foreign reserves over the past year from about $23 billion in January to more than $33 billion by year’s end. This means that it has been accumulating massive amounts of an asset that is rapidly losing value, leading to losses estimated at over P40 billion so far. Remember the old Central Bank and how it ran up massive losses in the late ’80s and early ’90s from exchange rate operations (of the reverse kind)? After it was reorganized by law into the present BSP, we taxpayers ended up quietly paying for all that, in case you didn’t know.”

instead, habito would recommend taxing “hot money” and encouraging capital flight.

“I’ve written before that Thailand and Taiwan, among other countries, have … eased up dramatically on the rules on foreign investments by their citizens, practically abetting it. At the same time, they are restricting entry of portfolio investments (“hot money”) to curb supplies. Some people in our government still think it’s a good thing that we are able to attract a lot of hot money, unfortunately. Not because they are benefiting, but because they don’t know any better, and argue (for pogi points) that it’s a sign of (misplaced) confidence in our economy, etc. Actually it’s not a “pull” factor at play here but a “push” one, as I’ve been pointing out. There’s simply so much dollars out there — nobody wants them — looking for a place to go.

“I personally see very limited leeway for our government to influence the exchange rate in the face of global market forces (i.e. the weak dollar, which will soon be further weakened by the anticipated lowering of US interest rates by the Fed), plus the surging
remittances of OFWs, which is a natural response to the declining peso value of their remittances (i.e. in an effort to maintain the peso incomes of their families at home).

“… In a sense, we are helpless on this, and can only do palliative measures for those affected at best. I think our economy should learn to adjust to a lower peso-dollar exchange rate in the long run. The trend will continue until the US economy turns around, and I don’t see it happening under Bush because of his expensive Iraq adventure.”

sta. ana, who belongs to a reform-oriented activist policy group (Action for Economic Reforms), believes that more can be done.

“Time and again, we, together with many economists like Raul Fabella, have advocated a competitive exchange rate. Even the World Bank and the International Monetary Fund favor a more competitive exchange rate.

“What a competitive exchange rate is is debatable. At the very least, the Philippine peso should not be overvalued. We estimate that the overvaluation of the Philippine peso is about to reach 15 percent. Recall that a factor behind the 1997 financial crisis was an overvalued peso. We have not yet reached that degree of overvaluation in 1997, but the current trend is already a cause for alarm. The Bank of the Philippine Islands (BPI) forecasts that the exchange rate may even settle at PhP37 per US dollar.

“But like Fabella, we are not content with simply avoiding overvaluation. More importantly, we prefer an undervalued currency. For this is the lesson of the successful developing countries; an undervalued currency is a necessary condition to achieve sustained high-growth rates over a long period. Empirical studies have confirmed this. Dani Rodrik, for example, estimates that an undervaluation of 50 percent (which is roughly the undervaluation of the Chinese renminbi) translates into a contemporaneous growth boost of 1.35 percentage points.

“In the past, an advocacy for an undervalued currency was a lonely battle. Devaluation has been associated with economic crises. Thus, those who prescribe depreciation face what Fabella calls a ‘credibility wall.’

“But precisely, devaluation was a corrective measure in light of the significant overvaluation of the peso. We would not have been struck hard by the 1997 financial crisis, if the peso was not overvalued in the first place.

“But this time, the public is learning that an appreciating, overvalued currency hurts the whole economy and many sectors. Now, the media reports attribute the closure of 75 firms in the first half of 1997 and the displacement of 100,000 workers in the seaweed industry, to the appreciating peso.

“There is now an expanding constituency, organized and articulate, for a competitive exchange rate, which is our euphemism for undervaluation. It is composed of the organizations of manufacturing exporters, food processors, business process outsourcing, workers, overseas Filipinos, together with public interest groups and academics. Even the protectionists favor a devalued currency as a substitute for trade protection.”

of course, undervaluing the peso, maybe back to 50? 55? would require a change of policy, which seems unlikely, given GMA’s mindset that an appreciating peso is good because it takes fewer pesos now to pay off our dollar debts, which she has been gleefully doing just so she can borrow some more. masaya siya.

glorietta, media, and blogs

it was not unexpected that the philippine national police would find for a gas explosion, not for an explosive device. matagal na nilang sinasabi that evidence was pointing to a critical build-up of gases that could have been prevented if the guys in charge were doing their job.

but it was unexpected that the police would recommend charges only against the engineers, operators, and fire prevention officers who were immediately responsible for safety measures, and not against the mall owner nor city hall. unexpected because matagal na silang naghi-hint that the the pnp was not beyond charging even ayala land and mayor binay for command responsibility if warranted. kaya na nga panay ang press release ng ayala land before this, contesting findings of a gas explosion and negligence.

puno‘s excuse:

“. .. it was just that repairing the malfunctioning sewage system was not the job of the owners while those who had been charged had immediate responsibility for the repairs of the sewage system.”

pero kaya nga tinawag na “command” responsibility, di ba. kahit hindi ka directly responsible for repairs, pero kung mga tao mo ang pumalpak – june july august pa lang daw me problema na ang sewage system – ibig sabihin may pagkukulang ka rin. kasi kung on-top-of-the-situation ka, kung maayos ang palakad mo, wala sanang pumalpak, wala sanang namatay at nasugatan.

i smell a rat. maybe a backroom ex-deal (puno style) between ayala and malacanang. hmm. maybe re charter change? or maybe that is still to come, and nagpapapogi lang ang palasyo sa mga ayala.

not that i’m completely sold on the negligence charge.

i was expecting that anc, as is usual with important developments, would have some resource persons, maybe an engineer or two, to share their expert opinions, but no, not this time. later in the evening ricky carandang devoted the whole hour of the big picture to the same story, but again we had to listen to the same pnp guys rehashing what we had already heard, with ricky just clarifying the double blast, the ayala investigations, and the rdx angle.

the biggest let-down of all, not just from anc but from all media is that no one has yet asked the BIG question posed by some bloggers and, i hear, science e-groups, soon after the blast: conceding, for the sake of argument, that it was indeed not a bomb but a gas explosion. WHAT IF it was not a matter of criminal negligence but, rather, a matter of creative criminal engineering? surely it is humanly possible to orchestrate such a blast? what would it take? why is it not being considered by the police as a distinct possibility?

nakakadismaya our media. no time to read, no time to research, no time for critical thinking. paano kasi, ang he-hectic ng buhay. bread trip. one show after another, one deadline after another, no time to read read read and google and surf the internet, much less to turn on to pinoy blogs, where some of the discourse is remarkably (happily) higher than in broadsheet and broadcast media.