Things you need to know before idolizing marcos

[jhnkvn]

"value of management is good"

hmm let's see, from less than 1b debt to a whopping 28b. Good management? If the country was a public company would you bet on it? No dividends, massive debts, personal gain of the ceo is massive. Value of assets going down the drain. Your treasury has no money to pay debts,

Remember that we're dealing with a country. It's actually impossible for the treasury not to have money to pay debts as the central bank can proceed with an expansionary policy and begin printing out money to service debt at the expense of inflation.

I keep on telling people that borrowings at that time were inevitable. Irregardless of who was in power uutang ka. The early 1980s was characterized by a second oil price shock that sent energy costs through the roof, a fall in commodity prices, and the rise of the real interest rates worldwide. The central bank adopted an expansionary monetary policy much like what China did in 2008 to mitigate the US' financial and subprime mortgage crisis by increasing public investment to maintain growth. Mind you, I am not discounting the failure of crony capitalism.

Let's tackle the rise of real interest rates worldwide. First is that half of the Philippine's short-term debt was not fixed and in fact pegged to the floating market. Thus as global interest rates risen, the cost of servicing them also increased. From 5.7% in 1979 to 9.5% by 1982. Look at it this way, our "economic" recovery is also fueled by our real estate sector which is flushed with cash and highly leveraged. This is good in our current economic situation where interest rates are nearly 1%.. but what if that shot up to 4.8% (+3.8%) over time? Don't tell me you do not expect a lot of real estate developers to fold up.

Second factor was the reduction in export. Remember, currency devaluation is a double-edged sword -- it benefits exporters because it discounts Philippine products and make them more attractive but is a major boo for imports. However, take note that our balance of payments then were closely equal with exports and imports trading blows. A stark contrast to today's importation bias.

I believe the third factor is what really got us and this was capital flight. As pesos are turned into dollars, your current deficit will really balloon up. This is mostly the effect of political instability. Now you know why Marcos just had to institute martial law..

Fourth... was inevitable. The second oil crisis was accompanied by international oil companies (think: Saudi Arabia, OPEC, etc.) to accelerate their balance of payments. The Philippines already in an expansionary policy had to use high-interest short-term borrowings to finance their oil credit. You can say we're forced to borrow at high interest rates. What do you expect? Pay in cash? Nobody does that. All governments use credit lines. Here they dangle: You don't pay? You don't get oil. You don't get oil.. uh oh..

So kahit ano gawin mo, no matter which President sits down at the Malacanang during that time, talagang hihiram ka.

Let's say hindi humiram si Marcos.. what will you get due to a deepening world economic crisis? Negative GDP. Nobody wants that.. trust me. Take a leaf out of what countries did in 2007-2008's crisis -- the US, China, and EU all entered an era of quantitative easing to prop up their economy. Why? Because it's better to borrow and prop up the economy. Problem is Marcos was not only forced to borrow.. but he borrowed at a wrong time when real interest rates were high.

Now what matters is what happened afterwards. I still believe Cory's decision to honor the payments were incorrect. Our interest payment terms were obviously unsustainable given its long-term nature. Given that, it would have had been easier to undergo hardships now.. but Cory didn't like that option. In fact, no President wanted to take the hard route and all of them simply wanted to please the people. Hell.. you can always honor your IMF obligations but default on the bank party obligation naman. Worried about investor confidence? Ha. I'd say the worry is more of personal losses as much of the elite's cash was still in dollars.

[glenn_duke]

Eto ang out of touch from reality.

Edi swerte kayo at nagkawork kagad. No so lucky for others.

Not born in the 70s, no right to judge? I pity this remark.

Ipapatay ka for small reasons like that tapos you like that? Yeah glorious years indeed.

Hindi nakasuhan tapos greed in malacanang? Opposing theory yet in the same post.

Kahit ano gawin ni Marcos, basta may infrastructure. Happy na.

No amount of economic evidences will stir you away.

First hand experience is much nearer to reality than learning history from adulterated information.

Kung hindi ka tamad at may abilidad you can find work, tamad lang ang ginagawang excuse ang martial law sa hindi nila pag-unlad angkan.

You shouldn't, you didn't live through it, so ano basis mo to talk about it, nothing. Just like in car reviews, you don't give first hand advise on a car you have not owned or ridden.

Killed for small reasons, woww, ilan ba ang pinapatay ngayon for no reasons at all, yup glorious days indeed, days where it is still safe to walk in the streets of Metro Manila. Now even a 14 year old would not hesitate to kill just to get what they fancy, gangs in every street of metro manila, yan ba ang mas magandang buhay.

Just as I said, if the marcoses are any worst than Erap and Gloria, then why are they not in jail or jailed.

You interchange enrile from Marcos, only enrile is happy if you are happy.

What economic evidences? Mas maraming nagugutom ngayon at walang trabaho. Kahit UP student nagpapakamatay dahil sa kahirapan, dati namumundok pa sila ngayon, hopeless talaga. Ang daming squatter ngayon, sign that life in the provinces have gone from bad to worst.

[[archie]]

You hide behind the crisis? Ayaw ko na magtype, basahin mo na lang. Get your facts right...

The Philippines found itself in an economic crisis in early 1970, in large part the consequence of the profligate spending of government funds by President Marcos in his reelection bid. The government, unable to meet payments on its US$2.3 billion international debt, worked out a US$27.5 million standby credit arrangement with the International Monetary Fund (IMF) that involved renegotiating the country's external debt and devaluing the Philippine currency to P6.40 to the United States dollar. The government, unwilling and unable to take the necessary steps to deal with economic difficulties on its own, submitted to the external dictates of the IMF. It was a pattern that would be repeated with increasing frequency in the next twenty years.

[jhnkvn]

Like I said, economy (ex. labor employment) and infrastructure goes hand in hand.

Let's say electricity, power every home without interruption... That's good. But remember our economy was in the toilet, minimal jobs, a few can afford it. What good does that do?

If there is excellent infrastructure in place and a sound fiscal policy, the economy will always follow. Why? Because you're more competitive globally, firms will still seek you even if you have ridiculous policies. Look at China think local politicians can't simply grab your land and factory? They can. But that didn't deter the likes of garment companies in moving there to take advantage of lower wages to make their products more competitive.

Let's say producing a microprocessor in the country costs at Php10 due to low overhead costs versus Php20 (with high power costs). Kahit ano gawin mo.. somebody will take advantage of the market to seek a profit. Humans aren't idiots.. whether that be a Filipino entrepreneur, a Chinese investor, or a crony of Marcos one way or the other.. they will need to employ a sizable workforce to churn out the products.

Let's say you have a good economy but minimal infrastructure. First thing is that.. your economy will immediately go down. If transporting good X from point A to point B is not cost-efficient, companies obviously won't be spending. if you don't have good infrastructure, your products are automatically less competitive in the market. Let's say you have two chocolates of similar quality. Why would anybody buy a chocolate from the Philippines at Php100 versus chocolate from Brazil at Php60?

Worldwide, it has always been infrastructure first before economy. Economic prosperity is the one that follows.. not infrastructure. Look at Japan post-WWII.. what they did was heavily borrow and restate their infrastructure to prop up the economy. What if they demanded "oh, we'll wait until we have a good economic environment before we build infrastructure."? Do you think that good economic environment will come? Probably.. but at what time? what opportunity cost?

Let's say Marcos was in power. Tingin mo ba hindi niya ipapagana yun Bataan Power Plant? Of course he will. He'll probably parade it to the media that the Philippines is now tapping nuclear energy as a power source. That it's cheaper in generating those watts than comparable coal, geothermal, and hydro-electric sources. But no, the succeeding administration not only mothballed it but is paying an annual maintenance charge for it at the expense of taxpayer pesos.

What is its opportunity cost? The power crisis that followed hindered business progress. Tingin mo how much damage was done to computers? What about energy intensive businesses? Paper, coal, steel, mining, textile, etc, to name a few. How much was the lost economic output if business weren't actually hindered? Remember, our country is blessed with natural resources. What if businesses were supported due to good infrastructure, lower overhead costs, and they began expanding -- employing more people, lowering unemployment, and contributing to the GDP?

[[archie]]

First hand experience is much nearer to reality than learning history from adulterated information.

Kung hindi ka tamad at may abilidad you can find work, tamad lang ang ginagawang excuse ang martial law sa hindi nila pag-unlad angkan.

You shouldn't, you didn't live through it, so ano basis mo to talk about it, nothing. Just like in car reviews, you don't give first hand advise on a car you have not owned or ridden.

Killed for small reasons, woww, ilan ba ang pinapatay ngayon for no reasons at all, yup glorious days indeed, days where it is still safe to walk in the streets of Metro Manila. Now even a 14 year old would not hesitate to kill just to get what they fancy, gangs in every street of metro manila, yan ba ang mas magandang buhay.

Just as I said, if the marcoses are any worst than Erap and Gloria, then why are they not in jail or jailed.

You interchange enrile from Marcos, only enrile is happy if you are happy.

What economic evidences? Mas maraming nagugutom ngayon at walang trabaho. Kahit UP student nagpapakamatay dahil sa kahirapan, dati namumundok pa sila ngayon, hopeless talaga. Ang daming squatter ngayon, sign that life in the provinces have gone from bad to worst.

Economic numbers lang tapos na eh. Napakasubjective ng marami nagugutom, much worse, hopeless.

Mind you those killings were initiated by the government. Yung killings ngayon, mahuli ka kulong ka.

Tamad lang Pala si yebo kaya siya natulog sa kalye para magapply.

Yeah sure first hand and ano lang nakikita ng Mata yun na. Never mind debt, never mind closure of central bank, never mind everything else.

[glenn_duke]

Tamad lang Pala si yebo kaya siya natulog sa kalye para magapply.

.

I bet that experience made him a better person now. The same experience that he shares with his children on the value of perseverance. Hindi tamad ang nag aapply na natutulog sa kalye, matyaga ang tawag dun. Saan ba nagsimula si Lucio Tan at yung ibang multi-billionaire na Taipan?

[[archie]]

From now on, I would not respond to "let's say" or "what if".

Those don't make sense. Kung nag "what if" din ako, walang pupuntahan.

[[archie]]

I bet that experience made him a better person now. The same experience that he shares with his children on the value of perseverance. Hindi tamad ang nag aapply na natutulog sa kalye, matyaga ang tawag dun. Saan ba nagsimula si Lucio Tan at yung ibang multi-billionaire na Taipan?

Nahirapan nga maghanap ng work kaya natulog sa kalye para mauna sa PILA. gets? Marami naghahanap ng trabaho.

You say tamad lang hindi makahanap ng work during the Marcos era. Now matyaga na.

[jhnkvn]

You hide behind the crisis? Ayaw ko na magtype, basahin mo na lang. Get your facts right...

The Philippines found itself in an economic crisis in early 1970, in large part the consequence of the profligate spending of government funds by President Marcos in his reelection bid. The government, unable to meet payments on its US$2.3 billion international debt, worked out a US$27.5 million standby credit arrangement with the International Monetary Fund (IMF) that involved renegotiating the country's external debt and devaluing the Philippine currency to P6.40 to the United States dollar. The government, unwilling and unable to take the necessary steps to deal with economic difficulties on its own, submitted to the external dictates of the IMF. It was a pattern that would be repeated with increasing frequency in the next twenty years.

Do you think I'm not getting my facts straight? In fact, I'm drawing stats from the Central Bank's then external debt arm -- the MEDIAD or Management of External Debts and Investment Accounts Department and Financial Plan Data Centers, the World Bank, the IMF, ADB, and the CIA World Book, etc. to name the most drawn sources. I am an investor by profession. Drawing data is like.. my forte in arguing and validating a hypothesis.

The Philippines was not in an economic crisis yet in the 1970s. It started in the 1980 when short-term high interest borrowings dwindled our current account to service debts. Want a more detailed timeline?

Early 1970s were exceptionally great. We had a current account surplus of 5% GNP in 1973 as an example.

In 1974 to 1978, borrowings began escalating. Propelling this was the first oil shock to the country and then the government capital spending to spurn development.

By the end of 1970s, the Philippine debt/GNP ratio was high. But was not of alarming levels. It was comparable to that of Korea, of Indonesia, and below Latin America average. You can argue that commercial bank liabilities grew from $1b (1975) to $3.7b in 1980 but the fact remained that the central bank maintained foreign currency assets that are still large enough to maintain 4 months worth of imports.

It was on October 1983 when the central bank announced difficulty to meet debt obligations of $24.4b. A decade is certainly a far cry to the "early" economic crisis in the 1970s.

True, we did turn to the IMF in 1962 and 1970 to meet a balance of payments but really now.. it was Macapagal who was sitting in office on the first tranche. Marcos didn't assume his first term until 1965 and many historians deem his first term to be truly positive (1965 to 1969). Second, governments turn to the IMF for so many reasons and not just to meet debt obligations. When the IMF is offering lower-than-market loans, of course it's better to secure a credit rather than issue out government treasury bills. Again.. we'll go back to the infrastructure and development issue.

[glenn_duke]

Nahirapan nga maghanap ng work kaya natulog sa kalye para mauna sa PILA. gets? Marami naghahanap ng trabaho.

You say tamad lang hindi makahanap ng work during the Marcos era. Now matyaga na.

I know you will say that kaya binitin ko yung unang response ko, ito sana ang kadugtong nun.

"Ang tamad ay yung umuwi sa bahay ng makita na mahaba ang pila."

Kailan ba kumonti ang naghahanap ng trabaho.