Deluged

Thursday the 13th was a particularly bad day for us. A slight thunderstorm flooded many parts of the city and left thousands of students stranded into the night. Meanwhile, the stock market dropped drastically by the most number of points ever in a single day.

There was untold misery in the streets and unfamiliar panic in the markets. Public confidence in things getting done is visibly shaken. There is growing suspicion that, despite all the self-congratulatory speeches our leaders deliver to entertain us, there is something broken in the domestic economy.

True, the dramatic fall of the Phisix was, to a major extent, driven by global factors. Anticipation over the US Fed easing its quantitative expansion program drove the dollar up against almost all other currencies. That, in turn, encouraged global investment funds to sell down non-dollar denominated equities and seek safe harbor in dollar denominated investments.

Financial speculation is almost always self-fulfilling.

When global funds withdrew from the Philippine market, the peso fell and the dollar appreciated. The falling peso encouraged more withdrawals. Suddenly, the Philippine stock exchange, only recently celebrated as among the world’s best performing, was vulnerable. Our domestic capital market is small, driven by rumor instead of fundamentals and dependent on hot money to expand.

There is more than just the global convergences driving our market down. Thursday’s dramatic drop was preceded by a string of really bad domestic economic news.

Both our exports and our imports were seen declining. If only our imports showed decline (as far as official records are concerned), then that can be simply dismissed as being due to the epidemic of smuggling whose magnitude appalls all the foreign chambers of commerce. The decline in our exports, however, has to be real. It indicates a worsening structural inability to compete brought on by many factors, from the unaddressed infra gap to energy inefficiency to the deteriorating skills base of our labor force.

Freshly released employment figures confirmed the discouraging trade data. For the first time in many years, domestic unemployment rose. No wonder our poverty and hunger pictures worsened: there are no jobs created. This notwithstanding the fact that tens of thousands of our able-bodied men are employed as security guards to compensate for government’s chronic inability to ensure public order.

The Palace, as usual, tries to pass on the blame to some force majeure. They say rising unemployment is due to declines in our agricultural sector brought about by global warming. This, of course, does not explain why the rest of the economy could not make up for agricultural decline or why it seems only our agriculture alone seems to be suffering so much from global warming.

Now comes the most devastating item: our economy is suffering from a net investment outflow.

A net outflow of direct investments is a rare malaise. One business analyst says net investment outflow is usually associated with severe events such as the outbreak of civil war. There is something in our economy that is flushing out investments. Whatever that is, we must address it with urgency — or else disinvestment will push up unemployment even more dramatically.

Each time the President leaves for some meeting abroad, the cost of doing so is routinely justified by the claim that he will scrounge for investments. Each time he returns, he claims new investments found. Yet the record shows net investment outflow.

Perhaps investments are driven out by the sheer deterioration of our infrastructure. Last Thursday’s floods certainly suggests less has actually been done than what we were told.

A couple of weeks ago, the MMDA proudly announced it deployed teams to clear the city’s waterways. A few days after that announcement, I did notice an MMDA crew poking about the drainage pipes in my neighborhood. The day after, a brief downpour submerged several cars.

Thursday night, while floods choked traffic flow, the MMDA chairman was all over media theorizing about “back flows” from clogged esteros. As he entertained us with his hydraulic theories, tens of thousands of soaked students were trudging flooded streets without a ride home.

Whatever happened to the MMDA’s proud announcement about measures undertaken to avoid flooding? We have not had a real storm yet, and the metropolitan area ground to a halt because of flooding. This did not happen before. We shudder at the thought of what might happen when the first, full-sized tropical depression visits.

True to this administration’s predisposition to blame others for one’s own omissions, Francis Tolentino suggests the floods happened because the local governments did not do their part to relocate squatters living along the waterways. What then did the MMDA do to goad the local governments to do what needs to be done?

It could be, of course, that goading local governments is not Tolentino’s job, but local government secretary Mar Roxas’. I recall Roxas announcing last week that informal settlers will be promptly removed from the waterways.

Since making that announcement, it seems Roxas has been preoccupied obsessing about gas leaks in the Fort Bonifacio area. He has, since the Serendra blast, emerged to become the administration’s chief gas leak expert.

Roxas might serve the public better if he used his time and the powers of his office to pound on local governments, getting them to clear the waterways. Leave the puzzle about explosive gas leaks to the real experts.

The decline in our capital markets and the rising floodwaters suggest much more is being said than being done to protect our people from avoidable misery.