Thursday, 22 April 2010

Election thoughts

John Mangun
Outside the Box
Business Mirror
http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=24402:election-thoughts&catid=28:opinion&Itemid=64

The one thing that I have noticed about the upcoming election is the lack of passion. Most of the people I talk with are only inclined toward a candidate but few are excited. I think most are excited to get the process over and done with and move on.

Perhaps people are suffering from “politics fatigue.” Or perhaps they have heard the same old campaign promises and speeches just too many times with few, if any, new ideas or wisdom from those who wish to lead this country.

I am little surprised that there is a lack of passion since the contrasts in the top contenders for the presidency are clear. What I mean is that the top candidates have gone to great lengths to brand themselves in a particular way, and it seems to have been successful. But I am not sure whether this candidate-branding is having the desired effect on the voters. We will know in a few weeks.

Again, the thing that disturbs me is that we still do not have a clear concept of what is going to happen on Day One, Week One, Month One, or even Year One of the new administration.

Again, the general statements are but campaign rhetoric. One adviser for a leading candidate says an administration under this person would spur and attract investment. Maybe so, but the question is, how and why? Foreign and domestic investors do not invest just because a particular person is nice. The missing sentence is, “More investments will come in because I will do this to make investing in the Philippines more profitable, convenient or whatever.” That is the line that is missing from the campaign speeches.

India and Indonesia are monumentally corrupt and both nations are greater foreign-investment magnets than the Philippines. Africa in general is corrupt, lacks infrastructure, and has other terrible social and political problems, and yet China cannot spend its money fast enough there. Thailand is a political nightmare and yet tourists are still flocking to the country.

But soon, general campaign promises and speeches are going to have to give way to real ideas, and those ideas are going to have to come quickly.

For example, peace and order is a major problem in Mindanao, but adequate electricity is much more critical right now. Sitting down with or shooting at the insurgents is not going to solve the economic problems. Even broad concepts like “economic prosperity will bring peace to Mindanao” are only noble but empty words unless there is an adequate power supply. And all the talk of attracting investments is hollow if there is no power to run those foreign-funded operations.

I researched statements of the candidates on the power situation, and what I read is not encouraging. Interconnection of the nation’s power grid and alternative energy generation is totally unrealistic for the longer term. Privatization of National Power Corp.’s power plants is a financial issue, not a power-supply issue. I fear that this problem of inadequate electricity supply will not be addressed, as happened in the past, until brownouts become common throughout the country. As I said before, the nation will cope with this, but you can put foreign investment on the back burner until there is a viable solution on the table for power. Right now the table is sitting empty.

When it comes to the global financial crisis and the potential for worse yet to come, I have a hard time even finding a candidate that speaks to the issue. I guarantee you that before 2010 is finished, we are going to see a currency and sovereign-debt failure unknown in our lifetimes.

I suggest the next President prepare right now for one of the following two things to happen. What is going to be the policy and action of the new administration if crude oil goes over $150 per barrel or the peso appreciates to 35 to $1? You think that I am dreaming and this is wild imagination?

Even if those might be worst-case scenarios, we had better be ready for worst-case situations as delicate as the financial world is right now.

The Bank for International Settlements released a study last month about the global debt problem that is so incredibly staggering for its implications, it should be required reading for every official in the next administration. From the abstract: “Our projections of public-debt ratios lead us to conclude that the path pursued by fiscal authorities in a number of industrial countries is unsustainable. Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability.” The bottom line: “This is a crisis with the potential for destruction at least as great as during the Great Depression.”

I question which candidate, if any, is qualified and prepared to lead this country successfully though a situation that could cause financial and economic chaos as severe or even worse than the Great Depression of the 1930s.

And note this: History has proven that great financial and economic turmoil does not have a happy ending. Wars are more easily entered into when domestic economies are under extreme stress from bad conditions. We have never seen a time in modern history when so many countries and so many people are under so much economic pressure on all sides.

We live in interesting times.


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