Thursday, 5 May 2011

Passports to be extended for a year due to shortage

Manila Standard

THE Foreign Affairs Department says it will extend the old passports of applicants for one year free of charge because of the backlog resulting from an unprecedented increase in e-passport applications.

The department says it has been processing electronic passports from 8 am to 8 pm Monday to Friday and from 8 am to 5 pm Saturdays to keep up.

Filipinos under contract to work abroad and those with emergency cases may go to the Passport Director’s Office on the ground floor of the OCA-ASEANA Building on Macapagal Avenue for assistance, the department says.

People must apply for their passports at least 12 weeks before their intended date of travel to make sure they have their documents ready long before they need them.

The department says people may call the Office of Consular Affairs at telephone numbers 737-1000 or 556-0000, e-mail, or visit its Web site ( for assistance.

Do not count the Philippines out

Business Mirror

Ignored by the local media, the Philippines ranks No. 16 out of 47 countries in regard to its sovereign debt rating. While the emphasis in the last two weeks was the fact that Standard and Poor’s (S&P) lowered the outlook for the United States to negative, there is another story to be told.

Financial-ratings companies issue two kinds of ratings: the current grade of its ability to pay its debts and an outlook for the future. For example, according to the three major agencies, S&P, Moody’s and Fitch, the Philippine government debt is below investment grade but the outlook is reasonably positive.

The United States government debt carries the highest quality of current rating, but the outlook is negative.

However, these three rating agencies are not the only players in the game.

Weiss Ratings was founded in 1971, reviewing US banks for its consulting clients. In 1994 the US Government Accountability Office (GAO) concluded that, “Weiss far outperforms all of the nation’s major rating agencies, including Standard and Poor’s, Moody’s and AM Best, in warning of future life and health insurance company failures.”

Weiss has specialized in digging deep into specific business sectors to look for potentially bad companies. Recently, Weiss has ventured into rating the sovereign debt of countries for its clients. Their scale is simple: A, B, C, D and E. This scale shows the Weiss Ratings view of the financial and fiscal condition of each country and allows investors to consider the relative risk and rewards in country-denominated investments.

Its Sovereign Debt Rating consists of four indices—Debt Index, Stability Index, Macroeconomic Index and Market Acceptance Index—resulting in an overall rating for each of the 47 countries studied. The basis for the evaluations is very data-oriented with little regard to factors that cannot be quantified, such as political stability. Further, it is very investor-oriented in that one factor is a “Market Acceptance Index, measuring the current and historic capacity of each sovereign government or its agencies to borrow readily in the marketplace.” Is there liquidity for the debt if you need to sell? The three other indexes are the Debt Index, which measures the country’s overall reliance on deficit financing and debts in proportion to the size of its economy and population.

The Stability Index, which evaluates the country’s strength in terms of its currency, reserves, status as a world reserve currency, access to Special Drawing Rights (SDR) and long-term default history. The Macroeconomic Index, reflecting the long-term sustainability of the economy, considering gross domestic product (GDP) growth, unemployment, inflation and other economic variables.

Out of 47 countries, the Philippines ranked No. 16, with a rating of “C plus,” and that is good. Others in the “C plus” club included Germany, Australia, Kuwait, Indonesia and Mexico. Only two countries got a perfect grade—China and Thailand. Others on top of the Philippines included Malaysia, Switzerland and South Korea. But it is those nations below the rating of the Philippines that should be both a cause for concern and a reason for some elation, since we are not among them.

At “C,” among other countries, were France, New Zealand, Japan, Canada and the United States. The nations below “C” included the United Kingdom, Italy and South Africa. Bringing up the rear with a “D” or less were Portugal, Venezuela, Spain and, of course, Greece.

Here is what is important for the Philippines. The country’s rating from S&P is “BB.” The rating “BBB minus” is considered the lowest “investment-grade” rating. That means S&P is telling the financial world that it is OK to lend the Philippine government money, but watch your back carefully and charge the government more interest.

According to the Weiss ratings, the Philippines’ “C plus” rating is the equivalent of the S&P rating of somewhere between “A plus,” at the best, and, at the worst, “BBB minus.” In other words, the Philippines is investment-grade, according to Weiss. Weiss’s “C” grade is equivalent to the other raters’ single “A” and “BBB.”

What distinguishes Weiss from the other agencies is that the banks and financial institutions pay S&P and the others to make the ratings evaluations for the countries and companies that they are going to lend to. Weiss formulates the ratings, and then sells the information to whoever wants to buy it. I would think this would put Weiss in the position of being more objective.

The foreign press has particularly singled out and questioned how the Philippines could have a higher Weiss rating than the United States. There are several specific reasons why that is so. First, as I have mentioned before, the Philippine government, if it wanted to, could be almost entirely foreign debt-free. Foreign reserves virtually equal all the foreign debt. It would sort of be like clearing out your bank account to pay all your debts, but it could be done. The second reason is that the amount of total public and private debt of the Philippines as a percentage of the total economic output, GDP, is not only manageable but better than most of the other countries on the planet. Next, the Philippine government over the last years has been able to keep a better balance between revenue and spending, keeping the budget deficit in control. However, the most important reason for the improved financial outlook for not only the Philippine government but the economy as a whole is that we are moving in a better direction. While the Philippines is improving its debt situation and budget problems, more important, the financial situation and the economy are improving.

I mean, who would you rather bet on to win—the old champion who may still be great but who is obviously past his peak and does not train hard or the new up-and-comer who has his best days ahead and knows it?

You might want to look at all the ratings at There is no question in my mind that this list shows where the economic power and influence are shifting to, and it is good to see the Philippines moving up in rank.

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Tuesday, 3 May 2011

Ombudsman's Statement

Friday, 29 April 2011 00:00

Good Afternoon.

This morning at 10:30 a.m. I personally went to Malacanang to meet with our President, His Excellency Benigno Aquino, III, to tender my resignation. I thank the President for graciously accommodating me on very short notice, and for all the kind words he said to me.

In almost four decades of devoting my life to government service, I have always been guided by the precepts that the public and moral responsibilities of public officials transcend all other considerations. It is in accordance with these principles that I have strived and persevered to build and maintain an unblemished record in public service. For me, this is the greatest and lasting legacy that I can leave my family, my children and my children’s children.

Since September of last year, I have been subjected to impeachment proceedings which seek my removal as the Ombudsman, I have been charged with allegedly betraying the public trust which was vested in me when I assumed office in December of 2005 – this because I allegedly slept and failed to act promptly on cases of national concern.

Because of my strong belief in the falsity of the charges leveled against me, I was firm and resolute that I shall participate in the impeachment trial before the Senate and prove to the Filipino people that the allegations against me are untrue, as they are groundless. I felt that I owed it to the people and the Office of the Ombudsman to vindicate and protect the integrity and independence of the institution. I alsobelieved that in the Senate, I shall receive a verdict that would come only after the presentation of credible witnesses and evidence,unswayed by any kind of pressure, whether open or subtle, in proceedings that are devoid of histrionics that might detract from its basic aim to ferret out the truth and decreed by the cold neutrality of Senator-jurors.

In the past weeks, it has become evident to me that the vilification thrown at me by my detractors will go on as it has, since September of last year. I have withstood all these with the hope that I can assuage myself with the balm of a clear conscience and a verdict of not guilty by the Senate.

I wanted to face my accusers whatever the personal agony it would have involved. But the interests of my family, my Office, and more importantly the nation, must always come before any personal considerations.

I have not shirked in the face of pressure, have never been cowed into submission, have never been influenced other than by truth and justice. To leave before the end of my term in December 2012 is abhorrent to me. But as a government official, I must place first and foremost the interests of the Nation, the interest of my Office, and as a mother and wife, my family. The problems besetting our country demand a full-time Ombudsman and a full time Congress, both Senate and the House of Representatives. To fight through the months ahead for my personal vindication would, as it is, almost absorb my time and attention.

The impeachment proceedings have consumed not only the members of the House of Representatives and the Senate, but the Chief Executive of the land as well.

At a time when the present administration is in its infancy and beset with more urgent problems, the last thing that the nation needs is for the House and the Senate to be embroiled in a long drawn-out impeachment proceeding against a single public official. The President needs an Ombudsman in whom he has complete trust and confidence. To carry on my battle to cleanse my name before the Senate would detract from the time which could otherwise be devoted to legislative work which would address the needs of millions of Filipino people.

By tendering my resignation effective May 6, 2011, I hope we can now all focus on the impelling problems of our people rather than expending so much time, effort and resources to remove me from public office.

I will also be turning over immediately the day to day affairs to the Overall Deputy Ombudsman, and pray that we all give him our full support.

As I leave the Office of the Ombudsman, however, it is my fervent hope that the misconception bred that having been appointed to public office by former President Gloria Macapagal Arroyo, I owed my allegiance to her and am accountable only to her, and not to the Filipino people and the Constitution be discarded and laid to rest. While I acknowledge with deep gratitude the opportunity given me by former President Gloria Macapagal Arroyo, my undivided loyalty always was, is, and will forever remain, to the Constitution and the Filipino people. In the words of the late Chief Justice Earl Warren of the United States Supreme Court, judicial officers like me have no constituency, serve no majority or minority but serve only the public interest as they see it in accordance with their oath of office, guided only by the Constitution and their conscience and honor.

To those who have stood with during these difficult months, to my family, my friends, to many others who joined in supporting my cause because they believed I was innocent, I will be eternally grateful.

And to my detractors, I bear them no rancor because I have learned to make myself believe that we all love our country and our people no matter how our judgments might differ.

I shall leave this Office with regret at not completing my term, but with gratitude for the privilege of serving as Ombudsman for the past five years. I thank my colleagues at the Office of the Ombudsman whosecontinuous and selfless but unpublished efforts have made the Office of the Ombudsman what it is today. Not many know that for many years, the Office of the Ombudsman has consistently been voted the most trusted institution in the Philippines. That is all your stellar achievement. I stand proud of having worked with you through these years. And while our detractors will always find cause to criticize and charge delay in what we do, it is because we deem it better to accord due process to our own public officials whose lives we affect when we decide on their cases.

God bless the Philippines and our people.

Government spending, stimulus almost worthless

Business Mirror

This country is an absolute financial disaster, governed by completely incompetent and irrational leaders with no clue about how to help the nation’s economy.

How bad is it? Official unemployment is at 21.3 percent. The latest numbers show that retail sales dropped 8.6 percent in March following a 4.3-percent fall in February. Inflation is increasing every month, with April seeing consumer prices rise 3.6 percent over March’s number of 3.3-percent increase. Wholesale prices are even worse, up 7.7 percent year-on-year over 2010.

The gross domestic product (GDP) contracted by 3.7 percent in 2010 and for 2011, economic shrinkage expected to be minus 0.20 percent. The only bright spot is Industrial Production, which is growing at an annual rate of 3.6 percent.

No, I am not speaking of the Philippines. Our industrial production increase was 11.2 percent year-on-year for February 2011.

Those numbers above are from Spain.

Spain is a textbook example of government spending the people’s money without any rational thought or concern for the future. Spain was borrowing like crazy for “public-works projects.” Spain now has the largest high-speed rail system, eclipsing France with the recent opening of the Madrid-Valencia high-speed train service. The problem is that train will serve only 10,000 passengers a day. Spain does have 1.1 million daily train passengers, so $8.7 billion was spent to service less than 1 percent of Spain’s train-riding public.

From The Week magazine: “While the high-speed rail advocates claim that the trains are better for the environment, the cost of high-speed rail is so much that most people still use their cars for the Madrid/Valencia trip, since it is much less expensive, virtually nullifying the environmental argument.” Brilliant government planning.

Everyone is certainly aware now why the global financial system has fallen apart along with most of the Western countries’ government balance sheets: too much debt. And too much of the debt was used to buy useless and non- productive projects.

However, the core problem is that governments around the world believed in the economic theories as expounded by John Maynard Keynes, Keynesian economics.

Proponents of Keynes believe that government can spend money to stimulate economic growth. Although tried countless times, including during the Great Depression in the US, it has never worked successfully.

In theory, it looks wonderful. As normal businesses are subject to boom-and-bust cycles, the government can step in to spend, and thereby stimulate business activity until the private sector gets going again. Sort of like Dad paying the bills until the kid gets a better job.

In the last two years, the US government has spent nearly $2 trillion in “stimulus” and unemployment continues to be high and not coming down by any substantial amount, and economic activity is virtually at a standstill.

Government spending, particularly for “stimulus,” does not work. Government spending to help a nation’s economy is a failure in virtually every country.

The National Bureau of Economic Research (NBER) was founded in 1920 as a private, nonprofit, nonpartisan research organization. Using data as far back as 1960, a paper, “How Big (Small?) Are Fiscal Multipliers?” published by Ethan Ilzetzki, Enrique G. Mendoza, and Carlos A. Végh, provides the proof. It is available at While very technical and dry reading, this is the authors’ conclusion:

“In developing countries [like the Philippines], the response of output to increases in government consumption is negative on impact.” Are you hearing that? This study shows that in countries like the Philippines, government spending and “stimulus” have no economic impact.

What about the “First World?” “In developing countries, output increases in response to a shock in government consumption only with a lag [of two to four quarters] and the cumulative response of output is not statistically different from zero.”

In developed countries, the impact of government spending as economic stimulus can be one-to-one, that is for each dollar spent, you can get $1 of economic activity. Except, “During episodes where the outstanding debt of the central government was high [exceeding 60 percent of GDP] the fiscal multiplier was not statistically different from zero on impact and was negative in the long run.” The Western nations, all which are over that 60 percent of GDP threshold, have gone further into debt hell and all the money spent is for nothing.

Fed Reserve Chairman Bernanke could have taken economist Milton Friedman’s advice and dropped $2 trillion on the people from a helicopter and had the same results without the cost of government managing the stimulus program. Also giving the people the money directly would have done more for economic activity, since the people know how to invest and spend better than the government.

No business or company in its right mind using its own money would have built that train in Spain (or most of the government-funded projects), since that venture did not make any economic sense because it could not generate a profit.

The authors of the NBER study give many reasons, including exchange- rate flexibility, open trade and inflation-targeting regimes, as reasons why government spending is not successful in open economies. Their final understanding of the situation is, “We have found that the effect of government consumption is very small on impact, with estimates clustered close to zero.” Zero is the economic impact of government spending.

But they do say this, which can have a positive effect on countries like the Philippines. “While increases in government consumption decrease output on impact in developing countries, increases in government investment cause an increase in GDP.” Notice the key word: investment.

The leftists scream for more government handouts and control. If they cared about their own wealth and the plight of the poor, they would be screaming for less government. When Philippine Airlines was government-owned, I could not fly to Roxas City and have lunch at Baybay beach for P240 roundtrip on Cebu Pacific as I recently did. When PLDT was a government-sanctioned monopoly, you waited years for a telephone. When the government operated the toll roads, there was no Skyway.

Government spending cannot stimulate the economy. Only the people can do this.

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