Thursday, 1 October 2009

Bright sunshine after the storm

John Mangun
Outside the Box
Business Mirror

There is no question that it is different this time.

There have been greater disasters in the Philippines. Even greater floods.

Remember the 6,000 people killed and missing in the 1991 flood in Ormoc? It is not just that Ormoc was a million miles away from the consciousness of most people in Metro Manila. In 1990, we all felt the earthquake that hit Baguio City and killed 1,700. We were supremely aware of the terror that the people felt nearest to the epicenter.

Mount Pinatubo’s ash cloud forced all of us living here in the National Capital Region to shovel out after the 1991 eruption that killed 700.

I can remember experiencing a much worse storm than Ondoy: Typhoon Ruby or Unsang in 1988. Seventy-five percent of the Philippines’ rice and sugar crops were destroyed and more than 750,000 Filipinos were left without homes, with more than 500 killed. Less than two weeks later, while we were still cleaning up from Unsang, Typhoon Skip, Yoning, hit with more than 200 dead.

Obviously, that was before there was any really bad weather due to “climate change/global warming” and the Earth was a paradise. Back then we just called it a really bad typhoon season. And that was just a few years after the “experts” in the late ’70s were telling us that the earth was headed for “global cooling” and a new ice age.

I seem to remember that about the same time, the local tabloids were talking about a woman in Bulacan that had given birth to a mudfish, too.

But it is different this time.

Last weekend’s flood affected the high and mighty and the lowly and “insignificant.” All in Metro Manila were helpless. The pictures of expensive SUVs and Mercedes being tossed around like beach balls in the floodwaters were no less dramatic than shanties being ripped away by the same raging waters. And in the aftermath, the bayanihan (volunteerism) spirit rose and is growing stronger with each passing day.

Individuals who thought their obligations to society ended with a few peso coins or a piece of pan de sal for a street child are now picking up relief goods, packing boxes and distributing those supplies in areas they have only seen in television news stories. I find it wonderful and amazing to see the unselfishness that so many thousands are displaying in the wake of this calamity. It is refreshing and uplifting.

But the world is still spinning and there are other topics to discuss.

Thoughts are turning to the effects of Ondoy on the economy. The first analysis out of the box is that economic growth is going to be hampered by the loss of productivity due to the storm and flooding.

I am not so sure about that. Yes, it is certainly true that the government budget situation is going to be messy, as public funds are being spent to clean up and provide assistance to those most severely affected. Yet among the more affluent that can afford it, there is going to be a lot of buying and rebuilding that will have something of a positive effect on middle-class consumer spending.

The question is if funds will be diverted from normal holiday spending to replace that television or computer or furniture damaged by the flooding.

I am thinking that perhaps this disaster may have a positive effect on the economy.

It is probably because I am a “Tiger” and 2010 is the Year of the Tiger; natural optimism and all that. But Ondoy might just mark the dramatic end to 18 months of economic turmoil and confusion for the Philippines.

I know that nobody believed me last year when I said oil prices were going to plummet. And again this year, in April, when I said that the stock market was going up and the index was at 2,000, that prediction seemed improbable.

There is one kind of “climate change” that I do believe in: economic climate change. And the Philippines is heading for a much brighter economic climate.

Events are moving very rapidly to a major collapse in the value of the dollar. China is unloading its dollar holdings at breakneck speed. Just in the last few days, the Chinese have invested $2.5 billion in an energy project, invested $4 billion in high-speed railroad equipment, and invested $2 billion in US high-risk funds. They are dumping dollars just as fast as they can.

Dollars are now less than 50 percent of the foreign-currency reserves. Before the middle of November, we are going to see a very substantial, perhaps as much as a worst-case scenario drop of 10 percent in the value of the greenback.

The reduction in the purchasing power of remitted funds is going to be more than offset by a decrease in the price of all imported goods as the peso goes up. The value of our mineral resources is going to increase by 10 percent to 15 percent over the next year. We are going see a major change in commodity prices, which will be beneficial to the country.

I was very wrong in my early-2009 prediction on sugar prices due to a supply problem, and higher sugar prices are good for the agricultural sector. Oil is ready to fall again as a dropping dollar will dampen speculation of a US economic rebound. Prices of building materials will fall also as speculation of a US recovery disappears.

The sun always seems to shine brightest after a big storm. It will not be an exception this time.

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