Wildfire

Meanwhile, the peso has dropped through the floor.

Normally, when the US Fed is poised to lower interest rates, the peso’s exchange value improves. Not this time. The growing corruption scandal is putting pressure on our currency, threatening to penalize Filipino consumers with higher costs for the staples of life.

Two things seem to be driving the peso’s decline: the withdrawal of institutional funds from our market and the increasing demand for dollars in the grey market.

The withdrawal of institutional funds is normal when investors feel uncertainty has risen in the host market. “Uncertainty” is a benign word to describe the political conflagration caused by the corruption scandals.

Grey market rates reflect movements in the informal (undocumented) economy. In the worst case, the decline in the peso’s exchange value signals escalation of money laundering activities. Dirty pesos are being laundered into dollars for more portability.

Some of the dollars in the grey market are physically brought in by returning migrant workers to avoid remittance charges. Given the steep peso decline, many repatriated migrant workers might be choosing to hold on to their hard currencies, anticipating better returns as the peso sours. This will magnify the peso’s erosion.

Of course, when the peso depreciates, the value of our foreign-denominated debt appreciates. Should the trend continue, we will be pushed closer to a debt crisis – or at least higher charges for financing our indebtedness.

It is too early to ring the alarm bells about an impending fiscal crisis. But the corruption scandal that is fueling all these is not about to dissipate. This scandal is beginning to resemble a wildfire.

Last Thursday’s Senate hearing on the extent of corruption marring the flood control infrastructure program turned out to be more explosive than expected. More political personalities were dragged into the mess. The executive secretary no less had to issue a denial it was involved in collecting commissions from the contractors.

A whistleblower claims luggages of cash were delivered to former speaker Martin Romualdez – at times, to his home in Aguado Street which is literally at the Palace doorsteps. This is symbolic. The scandal is closing in on the BBM presidency.

Already, fake news about BBM resigning spread through social media. This is not a healthy sign. It teases the wishful thinking of a growing section of citizens.

All the political personalities named in the Senate hearing issued their obligatory denials. None convinces the public. The denials appear to have been composed by lawyers skilled in injecting an element of reasonable doubt as a last-ditch defense tactic. Collectively, these denials fail to break the encompassing narrative driving this scandal: that politicians commandeered the national budget to widen opportunities for systematically looting taxpayer money.

While the Senate hearing was going on, Vince Dizon and Benjie Magalong were all over the place, uncovering more ghost infrastructure projects. The magnitude of this syndicated crime is beyond staggering.

There will be more revelations coming over the next few days. An increasing number will come from ordinary people with first-hand knowledge of the crime going on – such as the explosive testimony offered by a former Marine officer who used to work in the security detail of Zaldy Co.

Sgt. Orly Regala Guteza personifies the many ordinary citizens who were asked to do the dirty work and then expected to be blind and mute to the commission of high crimes. When they find to courage to blow the whistle, their testimonies will be many times more credible than the denials manufactured by lawyers.

Social media has become a rich source of detail quickly delivered into the main arenas of public conversation. We knew in real time, for instance, that a cargo truck was pulling out stuff from Zaldy Co’s Valle Verde mansion. We even knew, in real time, his flight details.

Citizen journalism will play a huge role in this crisis. It will keep the rage alive. It will prevent the corrupt from covering up their crimes.

BBM has been trying hard to keep a handle on this explosive scandal. At best his efforts look like an orderly retreat, abandoning beleaguered allies while repositioning as champion of reform. The ultimate goal of this orderly retreat is to conserve the presidency, prevent it from being blamed for the rampant corruption that has now been laid bare.

BBM has been fortunate to have gained tactical support from the groups behind the “Trillion Peso March.” These groups tried very hard to avoid demanding the President’s resignation. They reined in those who wanted to demand command responsibility for this corruption crisis.

Political groups that once presented themselves as reformists have been trying to spread the blame for corruption to include the previous administration. Avoiding taking the sharpest line of criticism – the complete failure of governance – is uncharacteristic for these groups.

But the specific characteristics of this scandal will soon reveal the hypocrisy and moral bankruptcy of the so-called reformist groups. This immense corruption scandal is the outcome of a quiet coup mounted by corrupt politicians against a passive presidency. The plotters of this coup wrested control over public spending from the executive branch to facilitate looting.

There was enough gravy to go around while the syndicates freely operated away from public scrutiny. The so-called reformist groups partook of the poisoned gravy. They will be made to account for their opportunism.