Bush chose domestic politics in trade issue

It is ironic that the Democratic administration of Bill Clinton managed to resist the demand of labor and regional politicians to protect the American steel industry with high tariff walls and the Republican George Bush gave in. The Democrats are supposed to be the pro-labor partisans while the Republicans are for free trade. Politics can induce politicians to do strange things.

Dubya is facing a mid-term election this year and it may not be possible to use the terrorism war issue to keep up his popularity that long. He must capture the Senate and keep control of the House and it is as simple as that. The steel lobby got the protection they wanted, albeit less than what they demanded. In the process, the Americans face the danger of a trade war against their allies in the war against terrorism. The American consumer will also have to pay more for cars, appliances and houses. The Yanks also lose the right to lecture the world on free trade.

The decision of Bush to protect the American steel industry is a classic example of what not to do in this globalized trading environment. Here is an industry that is unable to compete with the smaller domestic operators as well as international competitors. They should be allowed to fall by the wayside if they are unable to adjust to the new marketplace.

Sure there will be job losses in letting the steel companies fail. But by protecting them now, the impact on the larger economy may be more severe. Given the tenuous nature of the American economic recovery, the Bush decision may abort the uptrend and prolong the recession.

An economist at the Brookings Institution described the Bush plan as "a damaging economic blow that could delay the US economy’s recovery by increasing the cost of steel-made products like automobiles, cutting the demand for them and setting a dangerous precedent that could cause tens of thousands of layoffs in steel-using firms."

In other words, Americans may end up with more jobs lost than if the outdated steel industry was allowed to just fade away. This is what the Americans have been preaching to us when they lecture us on globalization. They are now hard put to practice what they preach.

Open markets, indeed! Hopefully, when the American trade officials come knocking on our doors, they won't be as cocky or preachy.

GMA needs help

That nationwide broadcast to the nation of President GMA Tuesday evening was long overdue. Finally, she has come down to earth with the realization that powerful as the Presidency may be, it is helpless in the face of our mountains of problems. Only a bayanihan effort that will involve everyone of us can give us a chance of victory.

The zarzuela of Erap is pushing us closer and closer to the precipice. In his attempt to force a political solution to a judicial concern, the former president appears ready to sacrifice the nation's equanimity. The scary part is, he just might be able to inspire sufficient mayhem to abort our economic recovery.

What President GMA said last Tuesday evening was incomplete. She said she needs us. The truth is, we all need one another. We need a repetition of last year's May 1 like a hole in all our heads.

CalPERS fund

We received a reaction on the CalPERS fund pull out from Southeast Asia from Patrick M. Ella, researcher/adjunct lecturer at the Institute for Economic Policy Research, School of Economics of the University of Asia and the Pacific.

There are other foreign investment funds, he points out, like TIAA-CREF which manages money of educators (teachers and professors and educational administrative staff) or the pension funds of huge private companies like GE, IBM, General Motors, Ford, etc. These funds devote a part of their pension money to follow global stock indices and we will always be part of a stock index.

Even CalPERS equity portfolio, he points out, has an indexed portion, meaning money devoted to tracking a regional stock index. CalPERS uses the Financial Times (FTSE) All World All Emerging Market index for investing in emerging markets and the Philippines will always be a part of that index (simply because we are still an emerging market).

Here are excerpts from his extensive e-mail.

We should not have any cause for worry that foreign money will start pulling out of the Philippines or our neighbors in the near future.

The Philippine and Southeast Asian stocks are very attractive at this time for three things: First, we have experienced two straight years (2000 and 2001) of negative returns. Historically, it is indicated that the third year (2002) usually will be a positive one.

Second the overall valuations of stocks at this period, in terms of price-to-earnings are very very low which makes them really attractive to value investors. Third, our markets have very little liquidity and so a trickle of foreign money can send stock markets in the ASEAN region surging through the roof.

You also mentioned the shrinking spreads of Philippine international government bonds, this is a good sign since the foreign investors have indicated that the political risk premiums are already gone which is, of course, what capitalists/investors are looking for.

Indecent proposal

Marilyn Mana-ay Robles sent in this one.

A young Filipino tourist on his first visit to Amsterdam locates the red light district and enters a large brothel. The madam asks him to be seated and sends over a young lady to entertain the client. They sit and talk, frolic a little, giggle a bit, drink a bit, and she sits on his lap. He whispers in her ear and she gasps and runs away!

Seeing this, the madam sends over a more experienced lady to entertain the Pinoy. They sit and talk, frolic a little, giggle a bit, drink a bit, and she sits on his lap. He whispers in her ear and she screams, "No!" and walks quickly away.

The madam is surprised that this ordinary-looking man has asked for something so outrageous that her two girls will have nothing to do with it. She decides that only her most experienced lady, Lola, will do.

Lola looks a bit tired, but she has never said no and it doesn’t seem likely that anything would surprise her. So the madam sends her over to the Pinoy. They sit and talk, frolic a little, giggle a bit, drink a bit, and she sits on his lap. He whispers in her ear and she screams, "NO WAY, BUDDY!", smacks him as hard as she can, and literally runs away!

Madam is by now absolutely intrigued, having seen nothing like this in all her years of operating a brothel. She hasn’t done the bedroom work herself for a long time, but she did it for many years before she got into management. She’s sure she has said yes at one time or another to everything a man could possibly ask for. The challenge is irresistible. She just has to find out what this man wanted that has made her girls so angry.

And she sees a chance she can’t pass up to show off to her employees how good she was at what they do. So she goes over to our Pinoy hero and says that she’s the best in the house and she, herself, is available. She sits and talks with him. They frolic a bit, giggle a bit, drink a little, and she sits in his lap. And our Pinoy Romeo leans forward and whispers in her ear, "Can I pay in Philippine Pesos?"

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