Super-currency or Super-strategy?

So many questions, very few answers....
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by Philipina A. Marcelo

Just a few days ago, I was trying to make sense out of Mr. Zhou Xiaochuan’s call for the world to adopt a “super-currency” rather than continuing to use the US dollar as the reserve currency. My extremely limited grasp of Economics was failing me miserably, that I ended up asking more questions after trying to understand the issue. I was hoping to hear some enlightenment from Tim Geithner, but as usual, the Economics guru, Prof. Paul Krugman, who was probably feeling the pain of folks of my kind came to our rescue, breaking down the issue nicely in: http://www.nytimes.com/2009/04/03/opinion/03krugman.html?_r=1&em.

It seems that Prof. Krugman’s explanation exposes China’s efforts toward self protectionism, first and foremost, with little regard for the global economy’s desperate need to be rescued through a sustainable solution. Or, could it be that the solution that Beijing offers is the sustainable solution - as Tim Geithner seems inclined to acknowledge? But then again, as Prof. Krugman pointed out, we are currently in an economic situation that is completely new to all of us… there might not be an absolute solution to this crisis as of yet. As for the suggestion that China made investment mistake (which obviously it did), and is now trying to correct that by making someone rescue them, to me, it appears that they’re doing this under the guise of protecting the world economy through a “super-currency”. Didn’t I say enigma? But to be fair to Beijing, there was no way for them to know that they were making a mistake a decade ago... in fact, there was no way for them to know even when stock markets in all parts of the world were crashing left and right, right? And even if they realized that they made a mistake, the speed at which events unfolded was way too fast for the Beijing problem to be remedied fast enough. No one could’ve predicted the economic downturn that we are facing today, not even the Wall Street hotshots… well, especially not the Wall Street hotshots, actually, for they were just too busy amassing money for themselves! Thanks to "greed and stupidity" underneath those expensive suits and in those fancy offices, we’re in a financial quagmire right now! (http://www.nytimes.com/2009/04/03/opinion/03brooks.html?em)

OK, now, calm down... no point in getting an unremorseful lot to take resposibility for their horrible actions... They have already shown us how they're in it for the money - and that's it, so that even when the world economy is already down on its knees, their primary concern remains to be money, bonuses, and all other things synonymous to money! Take AIG for example.... (http://www.nytimes.com/2009/03/15/business/15AIG.html?scp=11&sq=AIG%20Bonuses&st=cse)

As Prof. Krugman and George Soros (via BBC) suggested, the financial world that we knew a few months ago no longer exists, and we’re faced with an entirely different world that, to me, may require a unique strategy for it to thrive. That “super-strategy”, to my mind, should result from a multi-lateral decision among the stalwarts of world financial architecture, which should be based on common interests. Therefore, shouldn’t China and its BRIC (Brazil, Russia and India) allies just cooperate with other world financial stalwarts for now rather than using devisive economic politics to push for drastic measures that may prove even more catastrophic – even to them - in the future? Although I sympathatize with Brazil because its economy grew to what it is today mostly through home-grown business ventures and local market-centered strategies, unlike China and India whose economic growth was based largely on international trade and political alliances, mostly with the US, and therefore, Brazil's irk is justified... still, is self -protectionism the way to go to respond to this crisis?

Yes, I’m still asking questions here! And, as George Soros pointed out, perhaps, the recently concluded G20 Summit in London is a good start to forge strong economic alliance among nations and design a "super-strategy" to "lay a new foundation" for a more sustainable global economic landscape. And, as we think about our "super-strategy", let me ask... how about values and ethics, accountability and responsibility? If at all, how would their inclusion into the "new foundation" bring about a robust and more sustainable world economy? If they're incorporated into the matrix of the "new foundation", would that drive the last nail to the coffin of the old Wall Street and the fundametals of Anglo-American capitalism as we knew it a few months back?

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Bubbly Reality

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by Philipina A. Marcelo

Now that an economic bubble burst in the West, it’s not hard to imagine how the vulnerable economies of the developing countries in the East can be blown away to pieces as a consequence.  Right now, we don’t see that happening as yet, following the violent burst of the housing bubble in the US that sent unprecedented volume of worms all over Wall Street crawling out to expose themselves in daylight, at the disgust of everyone except those greedy financial crooks with shredded moral fiber that coughed them out in the first place.  It seems that the reduced strength of their gut juices, fermented from excessive supply of greed-raked wealth, is no longer a viable environment for the worms to thrive.  But all these talks about what I consider as the US adopting a ‘self-preservation’ strategy to address the financial crisis that brought down the world financial fortress is scaring the hell out of me.  Take this article for example:

 

http://www.nytimes.com/2008/12/22/opinion/22krugman.html?em

 

I have always been an admirer of Prof. Krugman, and so, it becomes more distressful for me to read an article by the Nobel Laureate bearing a sunny prospective for the US, but of gloomy note for the developing countries, including mine.  Although I agree to most points made by Prof. Krugman, including that about the necessity of US closing the gap in their trade deficit by becoming more self-reliant, thereby, creating much needed job opportunities and stimulating local productivity, I fear about what that would do to countries of weaker economies that are, in one way or another, tied to the US through globalized economy.   Add to that the utter inability of allegedly corrupt governments, such as that of Gloria Macapagal-Arroyo’s in the Philippines, to respond to the pressing need of creating local jobs, and it becomes even gloomier.  

Right now, there are many Filipino college graduates who work in Call Centers, through services outsourced by American companies, whose college preparations are much advanced than what a Call Center usual job requires, but they take the job anyway out of necessity - to survive.  Still, a sizeable Filipino work force is employed in companies that export commodities to the US and to Europe.  When services outsourcing are stopped and importation lessened by the US, I wonder how the multitude of Call Centers and export company workers would take the blow.  In the case of the Philippines, I wonder how much effort is being exerted in cushioning the blow for the common Filipino, especially those living below poverty line.  I wonder if it is just wishful thinking to imagine Gloria Arroyo’s government working out a long-term and sustainable solution to the awful ripples of this category 5 financial crisis that is about to hit the Philippines, rather than figuring out how much more public fund is left for them to fish into their pockets and how are they going to do it with the remaining time they have in the government!

 

In the manufacturing front, I wonder what will become of the present manufacture output of China.  If the US cuts on its importation of Chinese goods, where would China peddle the low-cost commodities it produces in order to sustain its own economic growth?  I fear that Chinese goods find their way to China’s neighboring developing countries with weaker and less competitive manufacturing arm.  In fact, they are already starting to dominate the Philippine market these days!  The last time I shopped for a pair of flip-flops in the second biggest mall in the Philippines, it was impossible to find Philippine-made ones!  Instead, I saw more than a dozen variants of flip-flops, all bearing the "Made in China" tag.  The store manager advised me that if I really wanted a pair of Philippine-made flip-flops, I could probably find them in the sidewalks by the marketplace!  Now, that's not even ironic - that's outrageous!  He explained that it’s not a question of quality or lack of creativity in Filipino products that's making it doubly hard for them to find their way into these big malls, it's all about cheap.  It's cheaper for big stores to import in bulk from China than to buy in smaller volumes from Philippine manufacturers.  And if these stores are to keep their thousands of employees in the payroll, the choice is clear - cheap!  He summed the problem as the inability of Filipino manufacturers to respond to growing demands for manufactured goods.  And because the Chinese manufacturing arm is built to provide the then voluminous demands of the West, it would be hard for countries of weaker manufacturing arms, like the Philippines, to compete when China decides to 'invade' their local stores with its cheap produce.  Again, add to that the willingness of corrupt governments to sell their countries’ future to the highest bidder rather than improving the capabilities and competitiveness of local manufacturers, just to feed their maniacal need to feel the pleasure of excessive wealth in their pockets, and we have a potentially grim situation.

 

If only governments of developing countries, take the present global financial crisis as an opportunity to work out a long-term economic strategy that will build a more sustainable and resilient financial architecture, it would be a welcome ray of hope in the midst of this economic gloom that we are experiencing today.  About a couple of months ago, when all the stock markets  in the four corners of the planet were crashing left and right in an unprecedented speed and breadth, evoking panic everywhere, I remember seeing Prof. Jeffrey Sachs – another prominent and respected economist, graced an interview in a cable network news.  He advised that Asian developing economies should figure out a way to strengthen themselves where they will not be fully dependent on the more developed Western economies so they can effectively shield themselves from a financial crisis in the West.  After watching the Indonesian stock market freefalling all morning and closing on midday after a horrendous crash, I dismissed Prof. Sachs’ remarks that day as arrogant and insensitive, in spite of my admiration for him. But now that the dust has settled, and the world is looking at the financial catastrophe with shorter wave of panic, what he said made sense.  I guess, it’s a part of a corrupt government’s ploy and irresponsible acts to bring some sense of false security to its people by tying its economy to a robust Western economy albeit engulfed in a menacing bubble, bailing itself out from the responsibility of building a strong local financial architecture.  And when the bubble bursts and financial crisis errupts, it's very convenient to point to the West and just leave the citizens on their own to wallow in misery.  And then, when nobody is looking, feed itself to the people’s coffer.  The only difference with the Arroyo government is that it feeds its corrupt self with tax payers' money to gross obesity even when people are protesting, and dying of hunger and hard labor!  Talk about worm-infested all-bubbly fermented gut!  

 

Happy Christmas!

The One: BarackO

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by Philipina A. Marcelo

 

In four days, the lone Superpower on the planet will vote for its new leader… and the world watches eagerly, awaits results anxiously while it desperately tries to defend its financial fortress from the global economic meltdown that’s closing in around it.  I, myself, have been burning the worldwide web, looking for some comfort from news articles and political expert opinions on the 2008 US Election, keeping an eye for possible redemption from the financial crisis from heaps and heaps of reading materials about the two contenders, Senators Barack Obama and John McCain!  Without a doubt, the financial crisis had been making a hole at the bottom of everybody’s purse at the moment, and presumably throughout a considerable period in the near and distant grim future.  And so, the world holds its breath, as it once again, looks to the West and hopes for the best.

 

The considerable endorsement articles I’ve read rang some sort of bias on different levels, while some were coupled with indiscreet ideological partisanship; still others are peppered with insults emanating from frustration and dismay from the present economic state and international image of the United States of America.  From among a sea of candidate endorsements, I found one that’s refreshingly unbiased, or at least, the least biased among so many:

http://www.economist.com/printedition/displayStory.cfm?Story_ID=12511171

 

The article above is very well-thought of and very well-written.  It points out both the weaknesses and strengths of the two candidates, side by side.  It does not endorse Sen. Obama in a frenzied, politically charged fanatism nor does it lambast Sen. McCain unfairly and maliciously.  Instead, it points out how Sen. Obama rose from an unknown, inexperienced presidential hopeful into the very embodiment of hope and change that America needs amidst this tumultuous time - organized leadership that overcame huge challenges from the start of his campaign, rigorous and disciplined pursuit of his goals and that of his followers, willingness to listen and learn from the most brilliant minds to the smallest member of the society to come up with a political platform that could work for everyone, calm and cool confidence in the face of aggressive adversaries, and the willingness to extend a hand of reconciliation to turn foes into allies (It was joy to watch him embrace the Clintons during his many rallies, which undoubtedly added to the pride of reconciled Democrats, electrifying them to charge for victory come Election Day.) - all of which are necessary quality of a leader as America, and the world, faces a challenge that it has never faced before.  

Admittedly, I was an ardent supporter of Sen. Hillary Clinton during the Democratic primaries, and I proudly remain to be a Hillaryite, even after the Democrats decided that she was too consumed by her desire to be the next American President that she went on a spontaneous combustion towards the end of the primaries.  I maintain that she has what it takes to be a great leader, too, just like Bill Clinton... only maybe better.  But after the primaries, watching Sen. Obama's steady evolution into a leader that the world by and large can appreciate, I was won over.  This is not to say, however, that Sen. McCain is a totally worthless candidate, because he is worthy, too... or was, as shown by his sterling records as a soldier and a maverick senator, that is, until partisan politics sucked the better of him in the course of the presidential campaign.  The biggest and probably the worst self-destructing compromise he could ever do in his lifetime is choosing a nincompoop that is Sarah Palin for a running mate at a time when the American VP Office could mean flourish or perish for the global community!  Some of these issues were detailed in the Economist endorsement, which I believe, is a worthwhile read for those who haven’t made up their minds and for those who have but could do a bit of reassessment of their decision before finally casting their votes.  

Although, like the Economist, most of the global community, myself included, do not have a vote in the US Election, the far-reaching effects of the present global financial crisis that originated from Wall Street, and therefore, must be abated from Wall Street, show more than ever before that whether Americans like it or not, the rest of the global community has a stake in their Presidential Election!  And, their decision is a key as to how the free world will proceed forward after getting a good beating from the financial crisis.  It will be tough, but through wars and adversaries, America has shown its resilience many times before.  And through the help of its allies, it has risen to become the lone Superpower in the free world.  Unlike many, I do not have a big problem about that... because which developed country in this planet has as much tolerance and offers as vast an access to opportunities to as many peoples in the world as the United States does?  It is still one of the few developed nations where citizens from less fortunate nations can labor without being looked down to inhumanely, or spitted on like a piece of crap on a daily basis, or persecuted unjustly for their faith or sexual orientation, or even beaten to death like an unworthy animal.  There are subtle (and sometimes, not-so-subtle) shows of intolerance, that's for sure, especially during the Bush era, but foreigners may still take refuge from American policies of co-existence.  Sure, they usually put their own interests in the forefront, but who doesn't?  Indeed, America does have good things that could be worthwhile for the world to learn.  Therefore, Americans should be able to figure this one out, too.  There is only one difference between their past and their present circumstances – now, they stand as a part of a whole, which is the global community.  It is the inability to grasp this new reality for the United States of America that makes ultra-conservative, inward-looking, global know-how-deprived, and intellectually-challenged like Sarah Palin absolutely inadequate to become the nation's Number Two!  But, alas, Sarah Palin, thankfully, does not represent Americans of today, not even the majority of Republicans. (http://www.nytimes.com/2008/10/31/us/politics/31poll.html?_r=1&oref=slogin) 

The shocking occurrence of 9/11 and how the Americans of this generation came together to stand for their country against the barbaric act of terrorism, I believe, is a defining moment for the United States of America – as a Nation.  The 2008 Presidential Election is proving to be yet another defining moment for the United States of America – this time, not just as a nation, but also and more importantly, as a vital part (or leader, if the Americans still want it) of a free global community, whose very existence today is the result of democracy that the United States of America itself had ardently spoused for the last so many decades.  While it is true that the free market that it created proved to be an imperfect one, the repercussions of its excesses and unwarranted deregulation, everyone in the world is enduring today, it did introduce a new way by which members of the global community may interact and grow as one.  Leaders of nations that are key players in the global economic architecture of today coming together to confront the challenges of the present financial crisis is an indication that the world is ready to grow as one community.  Sadly, it takes a financial catastrophe to make this happen.  But, no matter, at least now, we see ourselves as one community.  And now, this community looks to America in this crucial moment, when its sustainable existence is in peril.

 

As an individual who looks up to America as a generous provider of a lasting gift that is an excellent Academic training, and as a frequent visitor who revere America for its embrace as it reveals eagerly how absolutely exciting it can be to be in that melting pot where everyone is accepted as an important ingredient of a blend, I am forever grateful.  I would like to believe that the Bush doctrine with all its short-sightedness and lack of intellectual ingredients in its policies, both local and foreign, is just a temporary glitch in the American psyche.  As I enjoy America's gift of topnotch education and spreading America's message of hope in my own country, I continue to pray that this tradition of hope remains alive in the American soil for others to enjoy in many generations to come.  And this, I reckon, depends on how America votes in four days’ time.  

Therefore, I say, “vote wisely, America!”