ELECTORAL VIOLENCE PERSISTS, URGENT REFORMS NEEDED

ELECTORAL VIOLENCE PERSISTS, URGENT REFORMS NEEDED
Erle Frayne D. Argonza

Clientelism—the politics of patronage and spoils—persists in many developing countries. My own region, the ASEAN, hasn’t clearly built stronger institutions and modern political culture that can undercut and eliminate clientelism once and for all.
With clientelism goes the nightmares of electoral violence. My country the Philippines is among those emerging markets where electoral violence persists, and post-electoral violence still significantly high. Building a modern political culture has been a truly daunting task for many stakeholders, and I could say this as I was active in civil society for the longest part of my life and electoral reforms were ceaseless interventions by us civil society advocates for decades now.
Incidentally, international organizations such as the United Nations attached agencies are very highly engaged in cross-country electoral reforms. Below is a report on the reform recommendations of the United Nations Development Program or UNDP.
[Philippines, 10 July 2011]
Source: http://www.beta.undp.org/undp/en/home/presscenter/pressreleases/2011/06/29/new-undp-study-recommends-electoral-reforms-to-prevent-asia-electoral-violence-.html
New UNDP study recommends reforms to prevent Asia electoral violence
29 June 2011
Bangkok — Countries in Asia are still at risk of electoral violence which can be driven by real and perceived fraud, corruption, or patronage, according to a new study by the United Nations Development Programme (UNDP).
“The mere suspicion or allegation of fraud is often enough, in democracies where there is a lack of confidence in authorities, for people to react violently,” says the study, a 20-page investigation of electoral processes in seven countries of South and South East Asia.
Understanding Electoral Violence in Asia studies electoral processes in Bangladesh, India, Indonesia, Nepal, Pakistan, Philippines and Thailand, drawing lessons and making policy-, legislative- and institutional-level recommendations to reduce the risk of electoral violence.
In a number of cases political parties and political party supporters were the main instigators of physical violence, says the report, citing several types of groups and organizations that play key roles in either preventing or perpetuating electoral violence.
The study points to the design of political systems, the mandate and powers of electoral laws and election monitoring as key preventive measures. The role of civic education, media and civil society in informing voters also helps to reduce the likelihood of election-related violence.
Another “contributing factor in election order or disorder is the state itself,” says the report. “In instances where security forces are seen to be partisan or corrupt there is a higher chance that they will be purveyors of violence rather than protectors of peace.”
In addition, when media is controlled by special interests it can have a “destructive role in promoting narrow interests, inflammatory political rhetoric and retarding democratic processes,” says the report.
Key to prevention of electoral violence is the strengthening of election credibility, the report concludes. “Political parties have a crucial role to play in countries where electoral fraud and violence have become institutionalized.”
Among the measures recommended to strengthen election credibility are strong oversight and enforcement powers for election commissions in, for example, Bangladesh, India, Nepal and Pakistan, and wide-reaching dispute resolution mechanisms in, for example, Indonesia and Thailand.
Systems to track party political spending, for example in Nepal, should also be put in place, as well as ensuring perpetrators of electoral violence in, for example, the Philippines, are brought to justice.
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BRAZIL’S ROUSSEFF IS NEW PREX, KUDOS!

Erle Frayne D. Argonza

Good day to you all! Solidarity greetings to all the Brazilians and South Americans!

Another leader of the Workers’ Party of Brazil just won the presidential polls. Lula da Silva’s former presidential aide, Lady Rousseff, is among the leaders of the socialist party in the rapidly surging emerging market, and will sit as the new chief exec soon after garnering the presidency in a closely fought presidential contest.

Already sick and tired of the globalization policies that only mired Brazil in poverty hovels, the voters decided to cast their vote for a second time around now. Not only that, Brazilians are also terribly sick of the militarism that encumbered the country closer to the ambit of the Anglo-American oligarchy and rendering it into a puppet of America amid unlimited tortures and deaths on anti-tyranny detractors.

As the latest electoral exercise had shown, an exercise that is buttressed by the economic surge of Brazil and its ballooning middle class, the route to sustained democracy and economic growth is the most longed for direction for the nation. Militarism is out and any return to worn out dictatorship is getting to be a remote possibility each day.

With the ascent to power of the socialists, the redistributive policies that ambitiously addressed poverty, hunger and unemployment were tried and tested in an erstwhile anti-populist country. A cash transfer program to the poorest of the poor achieved enormous mileage during Lula’s incumbency, a program that directly addressed the social equity problems that plagued Brazil since its independence from Portugal yet.

Globalization hit the underclasses so hard, with hyper-inflation in the 1990s driving prices up so madly that the poor laboring folks just can’t keep up with the spiraling cost of living. A similar incident also brewed so hot in neighboring Argentina, which saw the ascent of the Left there as a popular anti-globalization collective action.

Lula and the Workers’ Party rode abreast the rising tide of anti-globalization sentiments, with Lula ending up as the world’s most popular chief executive. Sweeping social policy reforms were instituted, supported by a dominant constituency. In almost no time at all, poverty and hunger were addressed and largely solved, and many Brazilian poor graduated to middle income status.

Lula thus left his office with a very memorable historic record of seeing Brazilians graduating to middle class due to his stewardship. Brazil has joined the select group of ‘emerging markets’, or those economies with large populations, a significant middle class, and growing at rapid rate.

Rousseff would most likely take Brazil to the next level, which is the institution of regulatory reforms that will bring Brazil closer to a ‘social market’ economy. A hybrid economy it will be, akin to China’s and Vietnam’s respective economies.

Whether Rousseff and aides will go for a full capital & monetary control policy regime remains to be seen though. What is clear, from a fiscal & monetary point of view, is that financial instruments will be further stretched to sustain the social equity efforts achieved by Rousseff’s predecessor.

On the political front, the new chief exec will be steward over a nation that will exert greater sovereignty and sustain the climb to regional power status. On the global political level, Brazil will be among those countries popularly called upon to constitute a new balance of power alongside the nascent Asian giants China and India.

Hopefully, through Rousseff’s auspices, a Brazil-Argentina binary power entity can stir Latin America away from flawed liberalization doctrines & policies towards stronger social policies, economy driven largely by domestic demand (strong middle class), and an independent and non-aligned Latin America that will stay closer with fellow developing countries.

Such a Latin America, to my mind, can move on to sustained high growth rates that will duplicate Asia’s growth patterns. Should Latin America join Asia in creating a broader zone of global growth drivers, the possible plunge of the global economy towards a ‘dark age’ due to the economic fiasco up North will be averted.

Let me extend my own kudos to Madame Rousseff and the voters who brought her to power. Congratulations and goodluck to your incumbency, Lady Rousseff!

[Philippines, 15 November 2010]

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VILLAR: EMBODIMENT OF ‘PHILIPPINE DREAM’

Prof. Erle Frayne D. Argonza

[08 January 2010]

The social forecaster J. Naisbitt, among the sharpest observers of cultural innovations worldwide, declared in his book Megatrends Asia that the ‘Asian dream’ is the global dream of the moment.
Realizing this gigantic power shift, Naisbitt challenged the youth of the West to “go East!”

If we were to localize the global trend of ‘Asian Dream’, we can find this in the capsule term ‘Philippine Dream’. This is the dream of any struggling child to live a future of abundance, a dream that was once championed in America (‘American dream’) but which has been lost along the way, a dream that has found root finally in our own motherland.

My contention is that, if the Philippine state would refurbish its nauseating image as a ‘weak state’, it would find a fresh start in electing a president who is an embodiment of the ‘Philippine dream’. Luck of all luck, the Nacionalista Party’s own top leader, Manny Villar, fits squarely into this ‘Philippine Dream’ mold.

The Manny Villar narrative is practically saying to our compatriots that nobody has to leave the country for overseas job in order to live abundance in everyday life. Stake it out in the country, live to learn well, be daring to be innovative and pioneering, and one will rise like a phoenix from the ashes of poverty.

Do not wait for opportunities to drop from the sky like ripe guavas descending on the mouth of a proverbial Juan Tamad. Build the opportunities, and be daring to re-engineer yourself in the process to keep on bringing you up to the next level of success.

Such is the sterling truth exemplified by the Villar narrative, which is indeed splendidly impressive and worth a plethora of accolades. Only Villar fits this mold among the couples of presidential candidates, most of whom are the typical coño kids who treat the poor folks as utilitarian objects for vote-gathering purposes. Not only did Villar soil his hands in creating opportunities for housing and urban development, he was also among those noblesse legislators who built enabling measures to widen the latitudes of social equity and economic prosperity. And yet no coño kid is he amid his abundant life!

I remember the coño kids on campus as highly scorned spoiled brats who are in the university largely to display wealth and who condescendingly regard their schoolmates as lizards and rats. A few of them did I make friends with, those who can be remolded to a life of social relevance, even as I was among those self-supporting students (I was a full scholar) and grew as a militant activist. Well immersed among fellow intellectuals, I only had but expletives reserved for the coños.

Today I am among those who ask: what right has a coño to be president of the republic? A person who grew up in a mansion and couldn’t soil his hands in work deserves to be a leader of colonial era government, and such an era is long gone!

I would ask the same for a vice-president: what right has a coño to be vice-president of the country? Isn’t Loren Legarda, who now teams up with Manny Villar, the most fit for the job since she embodies the ‘Philippine dream’ and all the sterling qualities of a talented and competent Pinoy who has risen from the hovels and lead a prosperous life?

An emerging market such as the Philippines has most to gain from electing highly competent top officials who embody the ‘Philippine dream’ and/or ‘Asian dream’. Conversely, it would be disastrous to elect Inquisitionist coño kids who in fact are mere smokescreens for crocodiles.

I am a firm believer in the ‘Philippine dream’ or ‘Asian dream’, and I go for a Villar-Legarda team for 2010.

VILLAR VICTORY: KEY FORECASTS

VILLAR VICTORY: KEY FORECASTS

By: Prof. Erle Frayne D. Argonza
Development Center for Asia Africa Pacific
[11 December 2009]

BACKGROUND

This political economist and social forecaster foresees an eventual presidential victory for Manny Villar in the 2010 national polls. The forecast is based on the observations concerning the weaknesses of the other candidates. Most observable weaknesses of the Noynoy Team, as per information from within, buttress this forecast most of all. The popularity of Noynoy Aquino is merely transitory, even as voters will eventually choose Villar whose strengths are his very cutting edge for victory.

SITUATION ANALYSIS

Prior to the filing of COCs by the presidential candidates, the four (4) strongest contenders to the presidency were (in alphabetical order): Aquino, Escudero, Estrada, and Villar. To be considered a strong contender, a candidate must first exceed the minimum statistic of 8.5% (level of significance). A double-digit means the candidate’s public standing is very significant (notably 20% and above).

Public perceptions do change, and change so rapidly depending on prevailing circumstances. Before the filing of COCs yet, Sen. Escudero already pronounced his retreat from the presidential contest, thus rendering his supporters at a lost as to whom they should cast their lot on. Meanwhile, one can also see the decline of Aquino’s rating from a top of 60% to a recent 47%, evidence of short-term perceptual change.

The current situation points to the high level of indecision on the part of voters. Based on impressionistic information from the ground, voters who previously went for Aquino have already shifted to Villar. It is most likely that those who chose Escudero will go for Villar, assuming that the proper social marketing strategies and public projection are in place and operational on sustained basis.

It will take till the end of April yet for 90% of voters to firm up their choices, and another month later for the rest of the 10% of undecided to firm up theirs. By projecting the weaknesses of the Noynoy Team onwards throughout the campaign, it is possible that the tide will turn back for Villar even before the end of April, thus ensuring Villar’s victory.

DEBACLE IN THE AQUINO TEAM

A fractious team comprising of fragments of hardly unconsolidated factions is what characterizes the 1st layer of persons and groups surrounding Noynoy. Practically caught flat-footed by the upsurge of popular clamor for his presidency, Noynoy was so unprepared for the challenge, and ditto was his party. As of late November, Noynoy’s platform couldn’t be ironed out yet, precisely because the factions of experts and partisans who were tasked to produce each aspect of the agenda couldn’t see each other eye to eye.

Fractious and fragmentary indeed are these groups, that Noynoy is hardly in a position to get them to act together. A man unprepared for the presidential mission is likewise bereft of that credibility to call the shots within his backyard during a presidential derby. Unable to call the shots well, Noynoy is likened to Erap Estrada who was also regarded as a mere pawn by entrenched interest groups.

Finally, Noynoy’s platform was released in early December. But so glaring is the hodge-podge nature of the platform. The statements are mere motherhood statements comprising of lines that were already said time and again, providing no innovative thought about the huge challenges of solving poverty, attaining full employment, achieving fiscal balance, and getting the country closer to a 1st world economy by mid-2016 (or attain ‘development maturity’).

Till these days, volunteers are having a tough time getting through the Noynoy campaign lines. To be able to get inside, a volunteer has to study first the diverse groups comprising the pro-Noynoy forces, identify which group could be most friendly to the volunteer, and then finally decide to join. This tedious and circuitous process will drag down the Noynoy campaign altogether, and will prove disastrous during the middle of the campaign period. Lacking a solid machinery, the campaign will flounder, causing much chagrin on insiders. A chaotic campaign it will be, which will prove catastrophic in terms of securing voters’ fidelity and finality of choice.

Furthermore, the platform of Noynoy is so focused on domestic policy, with nary a statement about foreign policy. This expert is of the opinion that the ASEAN integration, which will happen during the next presidency’s incumbency, is a gigantic event for the nation and its neighbors, so that we can ill afford to be lackadaisical about it as a central feature of our foreign policy. The ASEAN integration is one that should be led by the Philippines no less, being the most credible country member due to its esteem as the 1st independent nation-state in Asia, and should, to repeat, be the central feature of the next presidency’s foreign policy agenda.

Aside from the above, there is the lack of experience of Noynoy in diverse facets of governance and relatively weak leadership in the public policy field. His charisma is largely an attribution of transference of his deceased parents’ charisma, which could hardly suffice to rally constituencies and his own supporters to support radical measures in the future.

STREAMING VILLAR’S VICTORY

Noticing such weaknesses quickly, and projecting them in the sharpest possible manner, will enable the Villar Team to recoup the temporarily lost grounds in public perception. Villar is clearly on top of his machinery, is most prepared in terms of a coherent platform, is most experienced both governance and policy-wise, possesses a charisma that flows from within rather than ‘inherited’ from departed parents, is the greater visionary and patriot than any of the other candidates. These strengths of Villar should be projected in crescendo fashion across the campaign period, thus ensuring victory at the end.

The mix of tactics and methods must be configured soon enough, with Villar himself at the helm of all the planning, generation of cognitive maps, and determination of the compass of the campaigns. It should be stressed that the campaign lines and substance must be high-level at all times, and only minimally ‘below the belt’. Villar, Legarda and the senatorial candidates should focus on high-level, principled campaign, leaving the ‘below-the-belt punches’ to other supporting personalities and groups within the Villar machinery.

Across the campaign period, diligence must be done in sustaining the building of the machinery (both the party and the multisectoral coalition) and the propaganda efforts. The Team should veer away from the clash between the Erap Team and the Gilberto/Lakas Team, which should go ahead and be allowed to devastate each other till they self-destruct. Along the way, the endorsement by cultural-political blocs with large command votes should be sought, notably the mainstream Left and INK. The endorsement by Sen. Escudero will count a lot for sure, which will provide light to his supporters about whom they should vote for.

Lastly, it should also be noted that the old conflicts among the Cojuancos are re-surfacing, the new morph being the Noynoy-Gibo divide. Noynoy will most likely be slam-banged by the Teodoro camp relentless, even as it has to parry the hard blows from the Erap camp. The Villar Team should maneuver to stay clear of these hardball confrontations, and focus on projecting positive, principled campaign lines and substantive debate lines along the way.

To conclude, realistically the contenders for the presidency will tail behind in the exit polls as their machineries and campaigns efforts puff up, flounder and lose steam. This will pave the way for heightened trust and confidence of voters on the Villar leadership whose presidency they will galvanize in the poll precints later.

OBAMA IS AMERICA’S MAN OF THE HOUR

Erle Frayne Argonza

Good morning from Manila!

The candidacy of Barak Obama had generated a lot of surprises and raised hopes about reversing the trends of economic decay and neo-conservative (fascist) aggression by the USA, henceforth catapulting the USA back to its role as a world leader and friend of the world’s nations. Not only in the USA but also overseas, did Obama capture wide audiences and sympathies, and his image is still moving up the ladder of meteoric ascent as of the moment.

Indubitably, the standard banner candidate of the Democrat Party for the 2008 Presidential Election, Barak Obama, is the Man of the Hour. Intelligent, charismatic, competent, and young, he exudes the aura of a Man of Destiny, and is the man to watch across the globe this decade till next.

Already, a personality cult has been spontaneously rising and interwoven with his personal character, all over the world. Putting this cult aside, I am declaring my sympathy for this candidate, and honestly say that he is an ally to many causes that I advocate. To repeat: Obama is an ally, and a leading ally, not an object of my cult worship. Let those superstitious cult worshippers hold Obama in the highest esteem as their messiah, I have no qualms about their superstition provided that they do not hurt other people whose reverence for Obama isn’t identical to theirs’.

I shall no more dwell on the means for catapulting him to meteoric ascent, as this is better done in some mass communications and political science classes or opinion pages. I would prefer to dwell on Obama’s savvy for public policy, he being a legislator for some considerable numbers of terms now. This to me is the most important feature of his competencies, as public policy will be the cutting edge of his presidency if ever. That includes both domestic policies (economics, welfare & social sectors, growth for the states) and foreign policy.

To sum up my preliminary observations about the man, Obama has what it takes to re-chart the USA towards a new life, as far as public policy is concerned. He knows what policies destroyed America’s economic base, what policy architectures and politico-military actions destroyed America overseas, and he knows what policy options to install in order to reverse the trends. And he has the constituencies to embark on bold policy initiatives, rest assured, even if those policies are unpopular to the elites of his country.

Based on his grasp of public policy, Obama can in fact boldly undertake a revolution in America and across the globe. Obamanomics can be crafted to replace the Reaganomics of the last quarter of a century that resulted to catastrophes in both the USA and across the continents. The thematic directions could very well integrate the state interventionist frames crafted by George Washington, Alexander Hamilton, Abraham Lincoln, Friedrich von List, and Franklin Delano Roosevelt, all aimed at promoting the general welfare, effecting prosperity and equity, and galvanizing national unity under the aegis of the US Constitution.  

‘Obama Doctrine’ can be introduced in foreign policy, that can reverse the equally catastrophic neo-conservative (fascistic) unilateralism, global police aggressor deodorant, and anti-terror campaigns that destroyed nations and yet paradoxically led to the broadening and strengthening of terrorist forces worldwide. ‘Obama Doctrine’ may need to recast both the (a) Wilsonian civil rights advocacy and (b) Roosevelt’s New Deal advocacy of engaging America in the development of backward nations, (c) integrate both doctrines, and then use the new doctrine to foster lasting peace, international cooperation and prosperity in the entire planet.

The man has the sophistication to craft the core principles and concepts of his Revolution, I have no doubt about this. No matter how brilliant his core staff may be, he’s got the competence that enables him to exercise ‘relative autonomy’ from his technical team who can, in the end, add the flesh and tissues into the Obama core concepts. At the same time, Obama has the savvy to listen to his brilliant team people and the mass leaders that supported his candidacy, as listening is among his strengths that must have been tempered by his youth upbringing and grassroots work early in his life.

The last ingredient to his success, which should never be underestimated, is his coffers tactics. His candidacy having been funded largely by people’s donations rather than the elite’s purses, Obama is enabled to exercise a ‘relative autonomy’ from the patrimonial interests of America. This fact allows for a ‘14^th Brumaire’ of American leadership, a direly needed element to strengthen the institution of both the presidency and the US Constitution. The ‘relative autonomy’, reinforced by a massive constituency, enables the presidency to use sticks against erring elites and emancipate state institutions from the enslaving claws of the Military Industrial Elites.  

Obama brings hope not only to his fellow Americans but also to peoples across the globe who are so sick and tired of imperialistic wars, deaths, and the catastrophic effects of Reaganomics liberalization-privatization-deregulation oligarchic policies. Being an Asian observer, I’d urge my fellow Asians to give the trust to this great leader in the making, give him at least four (4) years to exhibit his performance level, and pray that peace and prosperity can be had globally under Obama’s reign over his federation.

Let’s give peace and prosperity a chance, and here is a man who can demonstrate that building our cherished dreams of peace and end to poverty are viable ones.

[Writ 22 October 2008, Quezon City, MetroManila]

US WATCH: AGRICULTURE DECAYS, BIOFUEL MATTERS MOST!

Erle Frayne  Argonza

Agriculture remains to be among the most protected sectors of the US economy. Enough to cause ceaseless chagrin on the members of the WTO, who have been demanding that the EU-USA-Japan trilateral belt better play by the rules and remove the trade barriers in agriculture.

But the overall alarming trend in America’s agriculture is the rapid shrinking of arable lands altogether. Lucky enough that America is blessed with millions of acres of arable land, but the liberalization of land use conversions affected this mighty economy strongly like in other countries. Prime agricultural lands are being transformed into commercial and residential lands, most specially those southern regions that practically fed the whole America for nigh centuries long.

Agriculture is following a general trend of economic decay. The historic practice of mono-cropping alone had already created havoc on the soil quality in many places across the US. Compounding the decay problem is the pressure by WTO members for the sector to bring down the trade barrier, thus possibly bringing in floods of cheap food imports from Europe and the south.

Just recently, the inflated marketability of biofuels led many a planter to shift to massive corn production, for the sole purpose of raking profits on alternative fuels. Of course, many hedge funds and enthused investors had cashed in on the biofuels craze, and news came out that even Bill Gates had invested in this ‘greenfield’ energy source.

Estimates put the amount of corn planted to biofuels as more than enough to feed over 110 million people. That’s a lot of mouths to feed for sure! But feeding mouths is hardly the priority in the US agriculture today, the core focus being the next round of looting on the consumers’ purse by driving food prices upwards both due to the biofuels craze and speculation on food stocks.

So, what say you, voters of America? Let’s just hope the political bigwigs contesting the presidency will indeed take the interest of ‘food security’ at its core. Failing to do so, America itself might end up with inflated food prices in the couples of years ahead, and believe it or not, the Depression era of seeing people without food on their plates may come back. The difference being that the Great Depression was only quite temporary, while this coming ‘food insecurity’ will be around for a very long time.

This brings to mind what the late John Meynard Keynes declared cryptically, “in the long run, we shall all be dead!”

[Writ 06 June 2008, Quezon City, MeroManila]

US WATCH: DE-INDUSTRIALIZATION

Erle Frayne  Argonza

The public (in America) is of the broad position that the NAFTA was responsible for the folding up of many factories and the transfer of jobs to Mexico/South. This NAFTA-bashing has some validity to it, but the semi-economic integration alone with Mexico and Canada isn’t a sufficient reason for the bigger problem of de-industrialization.

Once robust and colossal, the industrial sector of the USA contributed over 50% of the Gross Domestic Product or GDP, and employed half the labor as well. As early as the mid-50s, the futuristic sociologist Daniel Bell already warned that the trend wouldn’t hold long enough, as the ‘post-industrial society’ was already knocking its doors on the USA. Not only that, he also forecast that by the 21^st century, the center of global economic growth would be the Asia-Pacific, while labor would shift to the services sector.

Had the policy-makers heeded the warning of the likes of Bell then, and fine-tuned the ‘real economy’ principles of Franklin Roosevelt, the de-industrialization of America couldn’t have happened. By the early 1980s, Alvin Toffler added resounding echoes to the forecast of a post-industrial society, by adumbrating the  ‘3^rd wave technology’ thesis. Such a thesis expounded that knowledge-intensive technologies would dominate post-industrial society, and will destroy institutions founded on old economic-ideological precepts notably liberal capitalism and socialism.

However, the neo-liberals led by Friedman and Hayek became the dominant Pied Pipers in shaping the public policy of America. All sectors of the economy soon became dog-eat-dog arena for private sector hegemony, leading to the ascent of the ‘virtual economy’ founded on predatory finance. Gradually did the ‘virtual economy’ wreck the classic industries of America, the most exemplary being the steel industry.

The tragic closure of Bethlehem Steel tells it all: that the ‘virtual economy’ has no interest in sustaining strategic industries or to develop their technological edge further. One after the other, manufacturing concerns were closed shop, dis-assembled and re-assembled in emerging markets where labor and factor inputs were cheaper. The ‘industrial belt’ of America—stretching from up New England down to the automotive & machine tool shops of the south—is rapidly evaporating.

The clear message for this year’s presidential poll in America is: resuscitate the industrial sector. Re-tool both the hardware, institutions and human resources to make them competitive again. Revive all the strategic reproducible industries (steel, machine tools, railways, automotive, shipping, airlines, etc.), or else face the specter of ‘third worldization’ of America. A tall order, but what choice does the USA have?

[Writ 06 June 2008, Quezon City, MetroManila]

US WATCH: CAN THE USA PAY ITS DEBTS?

Erle Frayne  Argonza y Delago

Just exactly at what level had the totality of US debts had reached is practically anybody’s guess. So complex is America’s financial system and the mess created by the ‘bubble economy’ over the last three (3) decades, that it takes an enormous amount of research efforts led by top economists and financial consultants to undertake.

One thing is clear though: whoever will be the USA’s next execs must never fail to measure, comprehend, and reverse the debt trends. The estimates today, using combined data from the Fed, the Bank for International Settlements or BiS, and independent researches would put the figure at $50 Trillion.

Measured against the GDP, which stood at around $12.5 Trillion more or less last year, indicates that America doesn’t have the money to pay debts at all, assuming that the bubble bursts and the economy crashes to depression level. Well, the burst began last year yet, the recession is now on, and we need to observe events more closely to determine whether a depression will be at hand.

To say that US savings will salve America’s debt problems is baloney. The savings rate is barely 1%, which accounts for the need for large doses of foreign direct investments and portfolios to cover up for the lack of investible savings. Compare this to East Asia’s average of 30% savings rate, which makes this region’s economy verdantly robust for years to come amid US-EU economic collapse.

On the other hand, to bank on gross international reserves as the source of salvation would likewise bring guffaws. America’s reserves could never exceed $90 Billion at any given time (in real value), which couldn’t even suffice to buy for 1 month’s imports. Compare this to East Asia’s reserves, which range from 4 months imports in RP’s case to at least a year’s for China’s.

So, let us repeat the question, where and how will the US source its funds for salving the debt crisis? What concrete steps will be taken to reverse the debt trap? Who among the political bigwigs in America today possesses the soundest theory and practice for solving the gargantuan debt crisis?

Those questions remain to be answered. Let us hope that the two bigwigs McCain and Obama will do their homework well. The electorates’ expectations are enormously high, and meeting those expectations using traditional, flawed approaches and practices would only endanger both the economic and political stability of this once mighty giant.

[Writ 05 June 2008, Quezon City, MetroManila]