Simply put, the President is courting civil strife at the level of what Indonesia experienced. Yet, he denounced Steady Eddie for telling a lady friend in a bugged phone conversation that such an Indonesian type mess is a possible outcome of our present crisis. Emotional as he is, Erap apparently failed to think about the grave consequences of his words.
If things get worse and Erap’s class war strategy starts to get a life of its own, it would take very little for bands of unemployed with nothing to lose types to raid so called enclaves of the rich such as Forbes Park or North Greenhills where the President's Polk street residence is. Or Wack Wack where the President maintains houses for you know who.
And because a class war or one between the rich and the poor can easily have racial overtones given the amount of control the Filipino Chinese has over the economy, the President's incendiary language courts an Indonesian type carnage. Our local Chinese community who have relatives in Indonesia are well aware of the danger and this could spark an even more serious capital flight.
The problem of the President is he doesn’t think much before he speaks and no one in his staff is doing that for him. Or, they are too intimidated to tell him anything. The President must realize he cannot run a country the size and complexity of the Philippines like a bully of a small town mayor that he once was.
What will it profit Erap if he keeps the presidency but loses the nation in the process?
Most are complaining about the twin evils of high interest rates and peso depreciation. Those who are unfortunate enough to have both forex denominated loans and local loans are crying buckets. The depreciation of the peso has increased the peso equivalent of their forex obligations. Even the servicing of these loans to keep them current has become a problem. The high interest rates have made their local loans unbearable. They are squeezed both ways.
There are those who are saying that the banks will make a lot of money in this kind of a business regime. But then again, there is the reality that many of their clients, not just the borderline ones, will be defaulting. Even now, I imagine the banks are doing simulation studies of how much their non-performing loan levels will go up with the abrupt rise in interest rates.
That’s what’s dangerous. A sharp rise in the NPL rate for the system as a whole threatens the system’s stability. Banks should take an extra effort to help their clients through the hard times. True, the BSP actions on their reserves force banks to move their interest rates up. But if by doing so in an exaggerated manner will cause their clients to default, that’s like killing the goose that lays their golden eggs.
In any case, the BSP cannot impose monetary solutions to a largely political problem. I think I heard Paeng Buenaventura saying as much. I think Paeng should boldly brief his high school classmate on the gravity of the situation. From what he is saying, it is as if he has nothing to do with the problem. Pointing his finger on the world economic situation is only partly correct. He must realize he has aggravated a bad situation.
His problem is he has lost the confidence of local and foreign investors. And it will be difficult if not impossible to win it back again given what has happened. The reality is, without that confidence, we can only go from bad to worse.
A cabby picks up a nun. She gets into the cab, and the cab driver won’t stop staring at her. She asks him why is he staring and he replies, "I have a question to ask you but I don’t want to offend you."
She answers, "My dear son, you cannot offend me. When you’re as old as I, nothing surprises me anymore."
"Well, I’ve always had a fantasy to kiss a nun."
She responds, "Well, let’s see what we can do about that #1, you have to be single and #2 you must be Catholic."
The cab driver is very excited and says, "Yes, I am single and I’m Catholic too!"
The nun says "OK, pull into the next alley."
He does and the nun fulfills his fantasy. But when they get back on the road, the cab driver starts crying. "My dear child," said the nun, "why are you crying?"
"Sister, that was absolutely fabulous, but forgive me, I have sinned. I lied, I must confess, I’m married and I’m Jewish."
The nun says, "That’s OK. My name is Bruce and I’m on my way to a Halloween party."
( Boo Chanco’s e-mail address is bchanco@bayantel.com.ph )