An honest lifestyle check will clear the air - DEMAND AND SUPPLY by Boo Chanco

Last week, my pager beeped me a news headline that I found weird. The President, the news headline read, called on the people to prepare to tighten their belts. I didn't find the story in any of the papers the following morning or since. I guess the editors found it weird too.

’tang na naman, I thought. Siya nga dyan ang may mahabang belt. E, di siya muna. It is even good for his health. But, assuming the President had the gall to say what my pager reported, that can only mean he is preparing us for a long siege. That means he really intends to fight it out even if it means ravaging what is left of the economy and regardless of the sufferings people will face.

There is no doubt that our economy is quite resilient and it will take a while longer for it to reach the point of utter desperation. The small and middle enterprises, and specially the underground economy will sustain most of our people through the hard times. Crime in the streets will fill in the gaps. This had always been the case. Even in the stock exchange, the mom and pop brokerage firms with their smaller overhead expenses will likely survive.

But the total economy will not grow at levels that can sustain our two-percent population growth rate. The thin middle class will become thinner still as those in the middle and lower C move down to D. Because we are unable to generate enough savings to sustain a respectable capital formation rate, we are dependent on foreign investors. And they will not come at levels we need for so long as the confidence issue is not adequately addressed. You and I know what that entails.

We also have to work on domestic confidence. We have to convince our people that the events of the past few weeks have finally forced the national leadership to turn a new leaf. An honest-to- goodness lifestyle check that starts from the top is essential. Unless the national leadership passes such a test, no call for austerity or belt tightening will be credible.

The toothpaste is out of the tube so to speak, on the matter of such things as the mansions. No denial of ownership is credible unless it can be shown that truly and honestly, Erap, his family and his women had nothing to do with them. Just renting from Mr. Yulo? Okay, let Mr. Yulo show rental receipts and the wherewithal to afford that mansion as evidenced by his income tax return.

I was trying to defend our great leader one time over coffee by saying that at least, even if all these mansions are his, he didn't bring his unexplained wealth out of the country like Mr. Marcos. But the cynical folks I was having coffee with quickly retorted that probably we just don't know enough yet.

Trust is at an all-time low. And the President can't govern effectively without the trust and confidence of the business and thinking class. I don't think we are averse to some amount of suffering so long as we see a point to it all. That's why the credibility of our leader, supported by his lifestyle, is an essential ingredient in any effort to get this nation up and running again.

The other side

On the other hand, reader Dart Estrada (he says no relation to you-know-who) pointed out in an e-mail that business in the countryside isn't doing that badly. Here are portions of his e-mail.

What economy is doing badly? You know, I spent about a week in Cebu because of a speaking engagement. While there, I went around and saw a tremendous amount of business activity, especially among the small to medium scale industries.

I spoke to a few producers of costume jewelry and crafts and they claim that they are very busy with orders. A certain Mrs. Calma claims that she has become competitive, export-wise, when she started pricing her products at a rate of P42/$1! She claims she does not even need to use P45/$1. I saw perhaps hundreds of villagers busy producing crafts and consequently earning pesos. And what I saw, according to the local officials I was with, is just the tip of the iceberg.

I see the same business activity in various parts of Metro Manila. I visited some of the industrial sites in Pasig. Many warehouse blocs are NOW occupied by thriving businesses. A year or so ago, these same warehouses were vacant.

Yes, there is an economy that is hurting, sad to say, and that’s the Makati business district such as the stock market and realty companies. I must comment that the stock market is NOT, I repeat NOT, the yardstick of our economy. The past administration focused on the stock market, portfolio foreign investors, golf country clubs, realty projects and LOOK AT WHAT IT GOT US !!!

The state of the Philippine peso is not the doing of the President. Are you keeping watch over the European currencies? Did Erap also affect the value of the Deutsche mark? And the French franc? In fact all this brouhaha over Singson, jueteng etc. are causing panic in our banking industry — NOT ERAP ! Let’s be fair !

So what economy is hurting? I have a small business and I employ, directly and indirectly, about 75 people. It is not doing its best but, comparatively speaking to two years ago and last year, I cannot complain this year.

More Power Boo!

Spot peso-dollar rate

I was reading the Oct. 20 issue of a multinational bank's market review. The section on spot forex rate caught my attention. The forward rate for one month was quoted at a bid of P49.20 while the offer was P49.58. Those levels were breached the other day or less than a week later. Here's the rest of the forward rate quotes.

For two months, bid at P49.75, offer at P50.30. For three months, bid at P50.40 and offer at P51. For six months, bid at P52.10 and offer at P53; for 12 months, bid at P54.10 and offer at P56.40.

Seems those bankers are more conservative than the market. There is obviously something more than international market forces at work. Guess what?

Naughty naughty

Dr. Ernie E is back with this one.

A boy had reached four without giving up the habit of sucking his thumb, though his mother had tried everything from bribery to reasoning to painting it with lemon juice to discourage the habit. Finally she tried threats, warning her son that, "If you don’t stop sucking your thumb, your stomach is going to blow up like a balloon."

Later that day, walking in the park, mother and son saw a pregnant woman sitting on a bench. The four-year-old considered her gravely for a minute, then spoke to her saying, "Uh-oh .. I know what you’ve been doing."

(Boo Chanco's e-mail address is [email protected])