It’s only just begun!

Bad as the situation might be these days, it's only just begun. The best thing that the so-called economic summit could do is enable various sectors of society to come to their senses. There has to be a realization that we are all in this together and we could either help each other weather the storm or be individually victimized by it.

Sen. Manny Villar feels that while it is nice to achieve consensus in this summit, what is lacking now is political will to do what we have to do. We have enough laws on almost every matter under the sun, Manny observed, but no political will to implement them. He is particularly interested in seeing laws that deal with improving agricultural productivity implemented vigorously. If we are to turn inward, that means we are going to depend on agriculture to carry our economy through this world crisis.

It bothers me that there are those who say we will see a recovery next year. They fail to realize that because of globalization, it is no longer possible to contain the damage. The Europeans thought that they would be spared the impact of the American recession because a smaller percentage of trade with the US relative to the rest of the world. But the rest of the world is dependent on the US and the inability of the US to buy their exports limits their ability to buy from Europe.

Nowhere can the amount of interdependence be illustrated as well as in, for lack of a better term, the globalization of supply chains. Take car manufacturing – parts are produced in one place for assembly somewhere else. Our Calabarzon industrial parks are part of the Silicon Valley economies. If they can't sell computers in America, the disk drives produced in Laguna have no market.

The NYT quoted the assessment of a director of Brazil’s largest industrial association: "We see the global recession turning into a mighty snowball that just seems to be growing and growing." And the chief financial officer of Sony Corp. says it’s tough to see where the bottom is in the current environment.

Here is how an article in The New York Times summarized the world situation:

Taken as a group, the major industrialized economies of the world – the United States, Canada, Japan and Europe – are growing weakly or shrinking, while the once red-hot economies of Asia and Latin America have fizzled. Even worse off are many Caribbean and African nations, where the tourist drought and the collapse of commodity prices have hammered already fragile economies.

The only nations that appear to be weathering the global downturn – India, China, Russia and some in Eastern Europe – are those that have resisted full integration into the world economy, retaining vestiges of socialism and protected markets.

But almost everywhere else, industrial production is falling, unemployment is rising, profits and stock prices are depressed. The volume of cross-border trade is shrinking while cross-border investment has dropped by half. Governments, facing declining tax revenues, are adding to their debts, cutting payrolls and social benefits, or both. Consumers everywhere are hunkering down.

Back here, that low inflation figure is not exactly good news. Most likely, that's because people no longer have the means to buy anything thereby depressing demand. This means, many of our people are not even eating properly anymore. If I were President, I wouldn't be able to sleep nights worrying about this. But that's only because I have the impression that there seems to be no real strategy that is working to navigate us out of this mess.

The absence of activities on the part of the private sector means government must be more active in stimulating demand. They won't be crowding out the private sector if they borrowed a little more since no one's borrowing anyway. The only problem is, when government spends for anything, a large part lost in corruption must be paid for by future generations.

Hopefully, any stimulus program will be geared to generate activity in the countryside. If we are going to depend on our internal economy during this world crisis, making our agricultural sector efficient is only one big hope for survival.

Year-end holiday

The Employers Confederation is supporting the proposal for a long year-end holiday ostensibly to help the country's tourism sector. In reality, it is because there is little work to be done anyway. Employers will save by letting workers go on what amounts to a forced vacation leave chargeable to their leave credits.

That might be a good idea but it betrays the difficult economic situation. But if we are going to do it, government should announce it early so people can plan their vacation and as they put it, "help our tourism sector." At the very least, people can go to their provinces and spend money there. That's good too. But pity those who work for and get paid by the day.

Blackout

Given that it was the last day of a long holiday period, it was an unlikely moment for a power blackout. Demand was low and all those overpriced power plants contracted by the Ramos administration from some independent power producers add up to an over capacity in the system.

A day after it all happened, the energy and Napocor officials couldn't tell the reporters covering their press conference what caused the blackout beyond the unhelpful statement that some power plants tripped. But of course, we know that. The question is, why did they trip?

Two of the power plants that tripped belong to Mirant Philippines. They bought the coal fired Sual plant in Pangasinan and the Pagbilao plant in Quezon from the original IPP, Hopewell. Sual is the same power plant that was attacked by jellyfish some years ago, causing grid-wide blackouts.

Coincidentally, I heard from the grapevine that Mirant officials are very busy trying to sign up bulk power consumers from among Napocor's directly connected customers. That they are doing this ahead of the formal promulgation of the implementing rules and regulations of the Power Reform Law should have caught the attention of DOE officials.

Aggressive marketing may have distracted them from the boring day-to-day task of assuring the reliability of their power plants. Oh well, the guys who agreed to sign up with Mirant should probably provide for back-up given the record of Mirant's power plants, specially Sual.

Pinoy joke

Here's a timely Pinoy joke from reader Marilyn Manaay Robles.

PERFECT HEAVEN: Having American salary, British home, German car, Chinese food, and Pinoy wife!

PERFECT HELL: Having Korean car, British wife, German food, Chinese home and Pinoy salary!

(Boo Chanco's e-mail address is [email protected])