So now much of Europe and (maybe soon) the United States are now in the bizarre position of being potential candidates for intervention by the International Monetary Fund (IMF). The IMF for its part is ready to do just that and marshall its stash of (or, perhaps more appropriately, ready access to) dollar reserves to which the Philippines had recently “contributed” USD1 billion.
Various “cause-oriented” groups are up in arms huffing and puffing about how a billion clams could’ve been used to fund sacks of morsels to be tossed into the gaping mouths of the Filipino poor.
The thing with populist rhetoric is that their propagators are very adept at reducing long complicated stories into two- to three-word slogans.
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Trust the Germans to come to Europe’s rescue too!
Then again, just a generation or two ago, things actually were a lot simpler. Back then, countries produced the stuff that its population consumed and exported the surplus. When the price of a product or commodity rises, people paid more to buy said product or commodity. Now, however, prices are by sleight of hand kept low so that ordinary schmoes can buy things they don’t need and consume more than what their backyards can produce and feel like a million dollars in the process. Those low prices are made possible by “globalisation” — the idea that (1) funds from countries with vastly different financial circumstances can be made available in a perversely advantageous way in another; and/or (2) people from countries with vastly different labour situations can be employed in a perversely advantageous way in another.
So we all created a world held together by dubious “value” chains. The First World dependent on cheap Third World labour to keep their valued consumers fat, happy, and trendy and the Third World dependent on cheap foreign capital and exchange rate disparities to keep their workers employed and their retailers fat and happy.
What is wrong with that picture? Quite simply, a big chunk of the value of capital in the First World is now propped up by profitability made possible by labour employed from Third World countries whose ability to consume is made possible by that very same employment. All the while the substance that once underlay First World capital — production capacity — vanished from under their feet even as they came to be dependent on the Third World for markets for their manufactured products. Meanwhile, in the Third World, an addiction to the easy money made possible by wages owing to the capital-intensiveness (an irony lost in the term) of the First World atrophied domestic capability to build capital indigenously — which means that deflation of the value of capital in the First World will likely leave more and more Third World people unable to find employment.
The world economic order has become a Gordian Knot of mutual dependence in which one country fuels another’s illusion of prosperity within a closed system that produces no real aggregate net added value overall. No real aggregate net added value being created sounds ominous when one considers the continued growth of the planet’s human population.
In short, it seems global wealth may be a zero-sum game. The wealth and economic vigor of a set of nations is made possible only by the poverty of all the rest, just like a closed system is made dynamic only by movement driven by inequities in energy levels at different locations within it.
So will USD1 billion “lent” or not “lent” to the IMF really make a difference to the average Filipino schmoe as some politicians and “activists” claim it would? Probably not. Ultimately, in an OFW nation like the Philippines, the health of a bunch of “distressed” European nations will most likely have a bigger effect on ordinary families than $1bn that would have been all but spread thin across a nation saddled by an enormous population of 100 million. Even if that money were simply disposed of as cash dole outs (as is the Filipino’s preferred mode of wealth distribution), each Filipino will have received only $10 — enough for a week or two worth of pagpag* meals perhaps.
As such — for argument’s sake, using the underlying premise of the flawed thinking of those who huff and puff about this issue — perhaps Europe deserves that $1bn more than Filipinos do. At least in Europe, there is some semblance of a track record of results given opportunities and second chances.
[*NB: Pagpag is the colloquial term for a popular Filipino dish.]
benign0 is the Webmaster of GetRealPhilippines.com.
The average Flip still thinks all Europeans are rich fat cats, like Americans which prompts them to pull out the victim card yet again. It doesn’t matter if the guy is on the brink of losing his job from the economy, as long as he’s white he’s a walking Euro/dollar sign. Hence the flips say they don’t deserve it.
Sid, if folks think all Americans are fat cats they are delusional! My military retirement has been cut to the bone! My social Security was cut 13% before I got my first check! In America we steal from those who work and give it to the ones that don’t or won’t work! Welcome to the New World Order folks!!! The UN and the IMF are both a scam !!!!
hey i thought these european countries are supposed to be superior societies than us. isnt this a frequent theme in grp? bashing filipinos and praising euros is practically a pastime here in grp. now, all these countries are needing bailouts and ultimately, it has come to the good ol philippines to help save their hides hehe how ironic. now that euros have turned to begging, expect the new grp mantra to be “mendicancy is a virtue”
Emo-driven post. Mendicancy is much worse here if you ask me. And the Euros are not begging; it was PNoy’s decision to give 1 billion and that’s it.
Only EMO people would treat every GRP article as ‘bashing’. Close-mindedness at its worst.
spain, italy, greece, ireland, cyprus, portugal, all these “sophisticated societies” (ilda’s term) are in fact begging because they cannot solve their sovereign debts without outside help. but of course you consider it worse here because you are preconditioned to be anti-philippines. get off the tabloids and read the economist sometimes. search for scanned pdfs on sharing sites if you cant afford. thats what i do para makatipid hehehehehe
Not anti-Philippines but anti-Pinoy. At least those countries never play the victim card and they care much for their people, unlike most Filipinos.
Set your priorities straight for once.
@jaks: Depends on how you interpreted the term “sophisticated”. Please elaborate on the nature of said interpretation.
For now, tell us: What is exactly have you learned from those PDFs you ripped off from those sharing sites?
See the proper thing to do when expressing disgreement about something is to state your disagreement in precise terms and clearly articulate your reasoning behind said disagreement.
No amount of reading ripped-off PDF documents will make you any more insightful. More knowledgeable and conversant perhaps. But not necessarily more insightful.
Help me help you. 😀
well, market economies, derivatives, subprime mortgage, property bubble its all a haze to me. im still learning 🙂 i understand that there are nuances and complexities but for now i will stick with the basic spending more than you earn is bad for you.
Wow, you’re just plain trolling now.
@jaks Your comment highlights the very point I make in my article with regard to the way Pinoys think about issues like this. 😀
its just as simple as these idol countries of yours spend more than they earn. now they need some assistance and our country is chipping in. thats it.
but you had to go “world economic order” on us to make the simple complicated and insert a little pinoy condescension for good measure.
@jaks: So what is it exactly about my “world economic order” treatise that you are in particular disagreement with?
Cite specific examples, plez.
Never come up with a good argument so making an assumption is the best option.
Hey, my model countries is Singapore and Malaysia. And like I said, those European countries spent so much for the welfare of their own people and that’s it.
i frankly did not understand because you made the simple complicated hehe 🙂 but i will read again
for once daido you are correct, european societies are welfare states. this has resulted into sclerotic and lethargic people. this is why all the innovations are coming from silicon valley, while the euros just sit around sipping wine and get left behind and drown in debts and order cheap ukrainian mail order brides.
@jaks: And the Philippines is a welfare state, much worse compared to those countries. The 60/40 provision of the 1987 constitution is a proof of it.
@jaks: Well there you go. So perhaps understand and do your homework first before you comment. Slogans make things seem simple. But what sets apart the men from the boys is a willingness to face the complexity behind the packaging. Whilst most people simply take brand slogans at face value, the truly cluey ones read the small print in the packaging.
The issues involved might be alien to non-OFW Filipinos that are used to a cash-driven society and where only 30% of the people have a bank account. Money is not a zero-sum game in a bank-driven system. It is /created/ (“printed”) by the banks that can lend out 6x more than they have deposits (fractional banking).
You might think that’s reckless but where else would the money come from in a rapidly expanding economy? The fact that the Philippines is cash-driven protected it from the credit crunch but also clips off economic growth drastically.
This economic fundamental is obfuscated by the bleeding in of OFW money, charity, soft loans and some (little) investments. You must have heard of what we foreigners think of the Philippines : you can make a small fortune there on condition you arrive with a big one.
The moment the EU (and Western) financial system collapses though, the Philippines will bleed too and more since its export markets will shrink, OFW’s will be laid off, and countries will cut in their development aid.
Indeed, the money (and money is fiat-money and debt) that was magically created (“printed”) by fractional banking will as magically vanish into nothing. Ashes to ashes, dust to dust. That’s why the bank-warranties are necessary to sustain the money flow, the trust, since all money is fiat (trust) money. If all goes well, those warranties will never have to be used and money lost by bad loans will be eaten by the economic growth.
If not, that’s Armageddon and the whole world will fall back on mere subsistence production. The consequence is no gifts, no OFW remittances, no foreign investments any more.
heres my try benigno, you are saying that the current state of worldwide economics/capitalism is fundamentally flawed because wealth and purchasing power is artificially produced? and so it results into a condition where prosperity/wealth in one area necessarily results into suffering/depravity in another. and so this passing between countries of bailouts (investments as well?) is ultimately meaningless and superfluous and will not have meaningful impact? is that it? thanks
Pwede na rin. Just one minor detail: I didn’t say wealth in one area necessarily “results” in the impoverishment of the other. I said it is made possible by the poverty of other areas.
You know what all this bailout non-sense is?It is passing the debt that the banks are making,by putting all of the money in the fat pockets,along to the citizens in the bailed out countries.Thus creating more debt,a vicious cycle and not likely to end until someone bails out the citizens,as should have been done at the beginning of this mess.
“Poverty” defined as wage difference will only be temporary. China started out after WW-II with very low wages but currently wages in Shanghai after taxes are near or over European wages. That’s why production factories in China are moving over slowly to the vast low-wage hinterland (in-sourcing).
Define “poverty” as a result of lacking natural resources, then the Philippines is darn rich – with 4 harvest possible per year, no heating bills, vast mineral stocks in the underground, plenty of sustainable enery (sun, geothermic, hydropower).
Then why it is so “poor”?
Well, $1Billion worth of goodwill money to the IMF is $1Billion less pork. Rather let the IMF have it than any Flip politician.
Do you really think the E.U. and the USA need the Philippines measly USD1billion? R u kidding? It is a political gift to someone and that is all,a kickback for all the call center jobs or some sort of Thank You to someone. If the USA needs money,they will print it,not ask the Philippines for it.This one Cracks me up!LMAO!
Actually, you can’t just indiscriminately print money, or you’ll have an inflation problem. Increase in quantity of money, like all commodities, results in devaluation. The purchasing power of money will be reduced, and prices will rise.
As to the intention, I don’t think it matters that much, since the loan was taken from bank reserves. Also, the loan gives us an asset in the form of interest income.
$1B as an small attempt to save the jobs of OFWs. Sounds like a good attempt and a great gesture to me.
However, I don’t think it will make much of a difference
The main issue of course is that this is not a gift but a warranty, and normally a loan that will be paid back with interest, unless the IMF goes bankrupt.
Second thing is that the warrants are for the Spanish banks and the Greek obligations, not for the EU as a whole. My country (only 10 million people) next to Germany warrants its own banks by over 100 billion Euro (5 trillion php) and now we have to warrant the Spanish banks too. So this is not a EU problem but a PIGS problem.
Finally, as a 8 months per year resident in the Philippines, this xenophobic popularism strikes me as as very ungrateful since the EU puts in much more money in the Philippines /yearly/ as gifts and soft loans without any hope on return.
The Americans might want to support a semi-ally in the area, but the EU has no interests whatsoever in the Philippines. Its interests are in China.
Within the next year, or two at the most the EU is going to implode! Germany and Finland are tired of paying other countries bills. When the Germans and the Finns pullout the EU is dead! Everyone in the world will now pay the price of Europe’s failed experiment of challenging the US Dollar! Europe is gonna be a 3rd world Country and they did it to themselves! The sooner the EU goes away the sooner the rest of the world will recover. The latest French elections is the tipping point for Europe! Bye Bye Euro.
We all know the EU is a goner BUT it is not the failed socialism that killed it.It is the exportation of all the production jobs to China and the rest of the third world that is the biggest culprit,then the banksters.Same thing goes for the states,and it is next!