Jesse E.L. Bacon II

Weakening of the peso

“Painting a grim picture about our prospects is not our intention in detailing the impact of the peso’s weakening” Almost always, contradicting reactions are expressed every time the peso weakens against the mighty US dollar with overseas Filipino workers (OFW) who earn in dollars welcoming it to the hilt, while those working in the country, thus earning in pesos, are dreading it to high heavens. Monetary officials announced Tuesday that the peso hit rock bottom, the weakest, they say, in 12 years at P53.23:$1. For sure, the OFW and their families in the country welcome this development. A stronger US dollar translates to more pesos they can use in purchasing goods they want. Local earners, on the other hand, dread the dawning of this kind of development. They now would need more pesos to buy the goods they need. But objectively looking at the weakening of the peso, both are actually losers. A weak peso triggers inflation, an economic condition where a purchaser at present would need more money to buy the goods he had previously bought at a lower price. The layman’s question in such a situation is whether this unwanted condition can be prevented? Theoretically, even the government cannot totally prevent this from happening. What monetary managers can do is simply mitigate its impact on the economy and the consumers. This is what the country’s monetary managers are out to do when they meet next week. However, mitigating its impact is the biggest challenge because the Philippine economy is so tied up, to the local economy’s comfort, to the US economy. That the local economy is so dependent on the US economy is proved by the adage that when the US economy coughs, the Philippine economy gets afflicted with tuberculosis. Tuesday’s weakening of the peso is triggered by the US Treasury’s move to increase its interest rates. This development was enough to cause fund managers to shift their attention from the local currency to the US currency. In other words, overnight the US dollar became the darling with the peso the spurned currency. This development may not sound interesting much more alarming especially to the uninitiated about the nitty gritty of currency movements. In reality, however, today’s life is very much glued to the currency’s ups and downs. The story of modern day life revolves around it. With the weakening of the peso we should now prepare ourselves for the worsening of the current economic condition. Procurement of raw materials, to cite an example, that are being churned out into goods by local factories sourced from abroad will now be costlier than it used to be before the peso’s plunge. This will have bearing on the local industry’s production capacity. Will a costly foreign-sourced raw material slow down local production? Surely it will. A lower production capacity translates to lower productivity that’ll either push local manufacturing to the sidelines or force them to close shop. Painting a grim picture about our prospects is not our intention in detailing the impact of the peso’s weakening but rather narrate it in a way easily understood by the layman. The intention is to open the eyes of as many economically uninitiated Filipinos to prepare them for this looming scenario. Since the implementation of the TRAIN law last January, morning and evening news on television and radio including the daily newspapers are flooded with reports depicting a grim situation not understood by many. This is not good because it’ll just leave the uninitiated to speculate. A country can’t survive with mere speculations. In this regard, media and the academe can be of great help. Understandably, the government will do its best to deflect the true impact of any development such as this fearing it’ll be accused of failing the populace. Until now the people are waiting for an honest to goodness assessment by the government of the true impact of the TRAIN law on their life. Sadly, government is not communicating an enlightening message that is assuring to the restless populace. Will mainstream media pick it up from where the government failed? As mentioned, we can’t afford to allow the people to just speculate what is happening and what the government is doing to alleviate them from the economic burden they have been thrust into. (jelbacon@yahoo.com; jelbaconii@gmail.com)

Edifying summit

Who brought home the choicest part or parts of the denuclearization accord entered into by US President Donald Trump and North Korea’s Kim Jong-un Tuesday in Singapore is very edifying to the former who has prided himself in being a negotiator par excellence. The crafted accord expectedly was in broad strokes. It did not contain details yet on what denuclearizing North Korea meant. Scientifically, however, stripping that country of its nuclear capability takes time, 10 to 15 years. That long. That is the part of the accord that Trump proudly brought home. The assurance by Kim that from then on his country will never use its nuclear armaments is the other part of the deal that Trump describes as beneficial not only to the US but also to the entire Korean peninsula and the rest of the world. Those are the parts of the accord that Trump trumpeted as his victory in Tuesday’s unprecedented summit hosted by tiny island-State Singapore between the two leaders, the first since the birth of North Korea in 1948. North Korea, on the other hand, got the commitment that from then on the US and South Korea will no longer conduct joint military exercises. This regular joint military exercises between the US and South Korea had been regarded by North Korea as a thorn in its relationship with the South and the US. That thorn is now taken off. Trump likewise vowed to never use force against North Korea and once the process of verification as to that country’s nuclear capabilities starts sanctions will likewise be eased. Kim’s country will thus have access to the global market either as exporter or importer, as trader or buyer. When both leaders parted ways in Singapore they were swayed into believing that each had sealed the choicest part of the deal they had entered into. This was very clear, especially to Trump who proved during that rare one and a half hours press conference he had before leaving that tiny island country. Trump as usual projected an image of being in total control of the situation from the very first time he met and shook hands with Kim. Good for him. Kim gave him all the opportunity to shine so he will entertain the notion he has the upper hand. But in the negotiating table, Kim proved more effective and wily in squeezing from Trump the best that he could get from him at that very moment. Trump, with his imagined greatness in the area of negotiation, ended up baited by the 33-year old chairman of North Korea’s communist politburo hence the better concessions he sealed from the US president. Kim had truly studied Trump’s idiosyncrasies. He let Trump enjoy them to the hilt all throughout. He just gave him his boyish smile and allowed him to do the talking. I honestly don’t believe Kim does not understand the English language, he being Swiss-educated. But Trump should not be belittled for not getting the choicest part of the deal. His minimum expected victory is score points with his political base back in America. In this regard, he was a champion. His summit with Kim is already a victory for him. The world can just watch with awe how will Trump, admittedly a master showman even if his depth is doubtful, turn to his favor the unfavorable concessions he won from Kim in Tuesday’s summit. (jelbacon@yahoo.com; jebaconii@gmail.com)

Crazy as can be

When God made crazy technocrats, something impossible such as a P10,000 monthly income for a family of five to classify them as not poor becomes possible. This may sound funny or may even be considered as a joke by technocrats from the National Economic and Development Authority (NEDA) but reading between the lines, it is not. In reality this is a cover-up. Why would NEDA, peopled with economic experts, come up with a preposterous findings such as this? NEDA knows this is not factual or can be supported by facts. The primary agency tasked with putting the country always on the right economic path in doing this is simply looking for an excuse to justify its failure. There is no debate a large chunk of the nation’s population live below the poverty line. They are those whose monthly income NEDA could hardly track because literally they don’t even know where to earn their keeps on a day-to-day basis. These are our countrymen who live in densely populated areas where one can walk on esteros, these waterways being covered with tons and tons of trash. These are our countrymen who are in the countryside existing on subsistence farming, where ironically can’t even be assured of three square meals a day. If NEDA will categorize those whose income it is able to track to be at least in the vicinity of P10,000 monthly to be poor, where will they put those who are earning less, and to think they are a very large chunk of the population? Here the fine lines should be read. NEDA’s primary responsibility is to craft plans, programs and policies aimed at alleviating the miserable economic condition of many Filipinos. The question is, has NEDA made a headway in this regard? With due respect, it has not and this is not debatable for it is an indisputable fact. Reading between the lines in regard NEDA’s preposterous claim, it can be said then that it is doing so to cover-up for its own failure. Figures and statistics staring at us show that alleviation from the economic miseries are far way off from target. And who is responsible for this? NEDA, of course. But the economic agency is not about to accept this. What better way to absolve itself from the current economic mess? Concoct the tall tale that with P10,000 monthly income a family of five can already provide for their daily needs thus not poor anymore. The country can never extricate itself from the abyss of poverty unless the government through NEDA where the President sits as chairman rethinks current economic plans, programs and policies. We take as gospel truth the idea that modern day development is anchored on manufacturing. What is inexplicably forgotten, however, is the truth that manufacturing’s success is always premised on raw materials produced by engaging in large-scale agriculture or the extraction of minerals produced in the bosom of the earth. In both, the country has remained irrational. We engage in subsistence farming to the detriment of even food security for the Filipinos. Sadly, the exploitation of the nation’s natural resources, surface and underneath, are undertaken with the bulk of these benefiting not Filipinos but foreigners. Here lies where the eschewing of our economy happens. (jelbacon@yahoo.com; jelbaconii@gmail.com)

Meaningful shifts

Wanting to cash in on the raging issue that is China’s incursion into a territory awarded to the country by the arbitral court in The Hague, the political opposition is moving heaven and earth to hold the sitting administration accountable for what it perceives as its inaction on the matter. Taking exception to detractors’ peroration for the people to rally behind them in their effort at forcing the Duterte administration to take harder and stronger stance against China, the president himself clarified we can’t go to war with our giant neighbor thus his approach of not forcing the issue, at least at the moment. Foreign Affairs Secretary Alan Peter Cayetano then issued a follow-up statement to the effect that the Duterte administration is prepared for the worst but prudent enough not to be hasty in its decisions. Perhaps it’s good for the political opposition to realize that their desired goal of achieving meaningful shift in political fortunes out of the China issue is possible only if a critical mass among the silent majority is reached, a seemingly farfetched proposition at this point. Going to war with China over its incursion at the West Philippine Sea is an issue not so critical to the silent majority. It is not critical because we can’t be foolhardy in going to war where we have no chance whatsoever of winning. Battles are better won by not firing a shot. This is not debatable. The country’s victory in the arbitral court in The Hague is classic example to this. But it is equally true that enforcing the arbitral court’s ruling is a Yeoman’s job. It is in this regard that I don’t envy the President. This issue puts him in a damn if you do and damn if you don’t situation. However, as president he is still sworn to protect the interest of the country no matter how daunting the task may be. To be criticized for founded or unfounded perceptions is part of the territory. President Duterte knows this being a veteran in politics. The political opposition, however, should present their case more convincingly if they want to rally the people behind them. What course of action will they take if they were in Duterte’s shoes? It is not enough to just accuse him if they can’t present their own blueprint of what they’ll do if they were in Malacanang. Yes, it’s true the case brought before the arbitral court was initiated during the previous administration. That is to their credit, no doubt. But how to have that favorable ruling accepted and respected by China is the issue at hand. I also have no doubt Duterte is out to enforce it but in his own pragmatic way. There is no room here for foolish aggression because the welfare of the entire country is paramount than the enforcement of the arbitral court’s ruling if it will only bring us to harm’s way. Truly we are in a very pitiable situation. We have won the battle in the arbitral court without firing a shot but despite that victory, we are shackled by the reality we can’t fire any shot to have it enforced. Whether we like it or not the pragmatic approach is the only option we have. Pragmatism however should not be taken to mean cowardice or even surrender by us of what is rightly ours. (jelbacon@yahoo.com; jelbaconii@gmail.com)
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