An Improved Philippine Peso

Mr. Rod Ceralvo in one of the Email lists that I belong to had this very precise and easy-to-understand dissertation on what and how the present improvement of the Philippine peso vis-à-vis the US dollar would affect the citizens of the Philippines in general, and in particular, the OFW family which gets its essential funding from abroad. OFW is acronym for the Overseas Filipino Workers, representing the millions of Filipinos who have gone abroad, either temporarily or permanently, to search out for employment opportunities that otherwise are not available in the home country.

-Immediate/Obvious/Short term: It means fewer pesos for every remittance sent by an OFW to his/her family. (Para na ring binawasan yung sweldo na iniuuwi ng isang breadwinner sa kanyang pamilya). This means a decrease in the purchasing power of the OFW family. Therefore the OFW family has to immediately cease and desist from their usual spending, may be, even downgrade their standard of living, but rest assured that this is only temporary.

-After the short-term: An improved exchange rate will gradually (and hopefully not very long) translate to lower prices of utilities, commodities and many other day-to-day needs that the OFW family regularly purchases and consumes.

-An improved exchange rate will lead to lower import prices (good news for local businesses because most of them still rely heavily on imported raw materials).

As such, it will enable the oil and other utility companies to buy/import more oil, gasoline and other fuel products with fewer pesos. This will translate to lower prices at gas pump/stations (so dapat bumaba rin yung presyo ng pamasahe sa jeep at bus), lower Meralco bills (pwede ng buksan ulit yung aircon), lower Shellane/gasul/kerosene bill, lower telephone & cable TV bills, etc.

-A lower exchange rate will also make the price of the latest Xbox cheaper. SM, Western Appliances, Abenson, etc. will also be able to cut the prices of their electronic and appliance items, specially computers, karaoke equipment, washing machines, DVD and LCD-TVs from Korea.

-A lower exchange rate, which at the onset translates to lower domestic purchasing power for OFW beneficiary families, will, in time, translate to a general increase in the real purchasing power, i.e. it will be cheaper to buy imported goods, cheaper to travel abroad, etc.

-The most significant effect of a lower exchange rate for the OFW family, as well as for the rest of the nation, is the resulting lower price of important imported medicines, especially those medicines required by the aging members of the OFW family.

So you see in the above example, the immediate effect of an improved exchange rate is the lowering of the purchasing power of an OFW family. But as pointed out, is only temporary. There are always time lags in the rise and fall of exchange rates and its effects on other economic variables like prices, import, export, GDP, BOP, and the standard of living. Even in the most sophisticated economies, an improved exchange rate doesn’t immediately translate to improvements in the living conditions of its people. The economy needs time to adjust. I was surprised to read that, as one of the country’s ex-economic managers, Mar Roxas hurled a cheap shot at this positive development. Wrong choice of a fight!

Now let’s go further, to the macro level. I happened to browse at the NEDA website (www.neda.gov.ph ) and examined the components of what our country sells and what our country buys. Do I need to mention that our country buys (import) more, a lot more, than what our country sells (produce, export)? I guess not – everybody knows that we are over-spenders, living beyond, way beyond our means, borrow here, there, and everywhere. Anyway, the NEDA statistics only confirmed what we all knew all along – that we import a lot more consumer electronic items and components, mineral fuels, oil and related materials, cars & other transport equipment, dairy products & even rice, medicine & medical items, etc. We export less and less of our products: semi-conductors & electronic items, apparel & clothing, handicrafts, etc, banana and coconut. And what effects will an improved exchange rate on these NEDA numbers, to our economy?

Let’s enumerate:
When the peso is strong, it is cheaper to import all the things that we are buying (remember, we are a buyer economy) , consumer goods and capital equipments like computers, electronics, machineries & equipment, raw materials, and other inputs to production. Indeed good news for businesses that rely on imported input or raw materials. This is also good for those who are investing on call centers, telecoms and BPOs who are buying and bringing in new technology from other countries.

Cheaper prices of imported foodstuff, i. e., apples, grapes, oranges, even rice, are also good news for consumers. Cheaper price of gasoline means cheaper price of kuryente(Meralco), pamasahe sa jeepney & bus, and operationally, for LRT & MRT, and even travel and shopping in Hongkong. These all translate to lower rate of consumer price inflation, which means improvement in the living standards index. Sory hindi applicable ang living standard index sa Payatas but good enough for the average OFW family.

Negative:
The sectors of our economy which will suffer more from a strong currency are our export industries, particularly the SMBs (not San Miguel beer, but the small-medium businesses). Right now our handicrafts, woodcrafts, toys, gifts & collectibles, home furnishings, Christmas décor, apparel and garments industries, etc. are gasping their last breath, trying to survive from stiff competition from China, Vietnam, Indonesia, new republics from eastern Europe and Africa.

A strong currency certainly is not good news for this sector. It will make our exports more expensive, and a fall in exports has negative effect on our economic growth. I don’t know if you are aware that the SMBs are the largest employers in the country. A shutdown of this sector will slow down considerably our economic growth and can have more grim consequences than we can imagine.

Of course these SMBs can choose to produce new product lines where both domestic and overseas demand is less sensitive to fluctuations in exchange rates, less price elastic, i.e. where non-price factors are more important for the buyers, and where there is higher income elasticity of demand.

For a fragile, strange economy like ours, there are certainly losers and winners in the fluctuation of the exchange rates, both short-term and long-term. The good news is, on the average the OFW family has more leverage and hedging abilities than the rest of the population, to offset the negative effects of a strong currency, and likewise, fully enjoy the positive effects of a deteriorating peso exchange rate. A great economic paradox indeed! Happy New Year!

No further comment.

In The Forefront: The US Illegal Alien Problem

2006 promises to be the year when the US illegal alien problem will be decided by the US Congress.

The House has already passed a version of it. But expect for more hotly contested deliberations in the Senate.

Where should one stand on this issue? And this question is rather uniquely important to the first generation immigrants, or the new immigrants already embraced by the country as among its legal and lawful residents and/or citizens.

The war of words continues to be waged outside the halls of Congress.

To be fair and balanced, some commentaries on the points raised are offered:

1. Very typical, especially in media, in the defense for the illegal alien problem is the use of the very emotional historical view that the nation was founded by and is composed of immigrants. As a historical account it is quite accurate, but to use as an argument in favor of the illegal alien problem is rather specious.

Modern nations now have set boundaries and exercise sovereignty within those borders. And each nation has promulgated laws not only defining their borders but also laws defining who may be allowed to enter and become its citizens.

These are all accepted and respected internationally.

For to disregard these would be to invite chaos and anarchy.

How far do we go down history, or prehistory, to determine property rights of people or their freedom to be anywhere they like to be? Whether present territories were acquired legally, justly, or fairly is not anymore the issue. These accepted realities will have to stand. If the opposite were true, then clearly this country should be in the thick of a heated shouting match, or even war, with its southern neighbor who clearly at some point in the past used to occupy good portions of several states.

2. And indeed, they should not be called "illegal immigrants" because they are not immigrants, but not for the reasons advanced. Here's a clarification below from a paper prepared by George Weissinger of New York Institute of Technology:

By way of introduction, immigration law violators are not immigrants. They are aliens who are in the United States in violation of law. There is a profound difference between individuals who legally apply for admission and fulfill all the requirements for admission, and those who decide to enter the United States, or intentionally overstay their visa in violation of law. Labeling such violators as intending immigrants only confuses the issue and juxtaposing these two categories is specious logic. A few of the important differences include criminal and health backgrounds of intending entrants. A lawfully admitted alien must undergo health screening and will not be admitted if found to have a communicable disease. Similarly, certain criminal convictions exclude some aliens from admission into the United States as well. Of course, the smuggled alien, or one who enters without inspection, bypasses such rules and regulations.

3. Those who entered legally but are now here illegally because of reasons such as an expired visitor's visa, students violating the terms of their stay, etc., are not called undocumented aliens.

The use of the term undocumented is not a trivial oversight. Being undocumented implies several things. On the one hand, it implies that the suspect merely failed to obtain documents in some attempt to enter the U. S., or that the alien would otherwise be admissible if documented. An important difference in perception occurs when the label is applied.

4. Here is how an immigrant is defined:

An immigrant is a permanent resident alien lawfully admitted into the United States and is allowed to work in the United States and remain in the United States indefinitely. A non-immigrant alien is one that is lawfully admitted into the United States for a temporary period of time. Except for some classifications of non-immigrants specifically entitled to work (such as intra-company transferees, or diplomats) non-immigrants are not permitted to work in the United States without permission from the INS.

5. And lastly, here are some very important facts about this problem:

The INS estimated that there were 7 million illegal aliens residing in the United States in January 2000. According to INS, 69% of this unauthorized immigrant population was from Mexico. (USINS, 2003) However, the top 15 sending countries accounted for 89% of the total illegal alien population and included Mexico, El Salvador, Guatemala, Colombia, Honduras, China, Ecuador, Dominican Republic, Philippines, Brazil, Haiti, India, Peru, Korea, and Canada. This means that a significant number of illegal aliens entered the United States through other than the Mexico-US border and that they fall under the jurisdiction of the investigations section (interior enforcement), not the Border Patrol.

Blog-Tapping

spidering through 20 million blogs in under a minute. Running linguistic algorithms takes another few minutes

The company's next frontier: algorithms that will classify bloggers by ethnicity, location, income, social class and level of education

What is this?

An extension of the NSA’s super-secret surveillance activities that stretch globally?

Big Brother’s footprints getting into bloggers’ thought processes and writings?

It is common knowledge that keeping private and personal information private is already a daunting task nowadays.

SS Numbers, credit card numbers, gender, educational attainment, viewing and spending habits, and other personal information. These are now easy ores to mine.

But this newest development takes all the spying efforts a step beyond.

But breathe easy, though. Because right now this new development is deployed primarily as a survey tool made available to business.

As this article painstakingly explains, this software called a spider is used to gather information on bloggers – essentially their age, gender, and of course, their educational attainment, for use of businesses in their marketing strategies.

Do you use sarcasm in your blog writings?

What about elongated spellings (such as soooo good)?

Do you use hip-hop terminologies?

What about multiple exclamation marks (such as !!!!)?

Do you use such adjectives as sordid and hilarious, or some elaborately emotive turns of phrase?

If you do, then know at least that you have been tagged.

This is abominable!

Oooops!

Greed: In A Different Light

The tired cliché that life is short so make the most of it is one among a few bromides that graying individuals are inadvertently assaulted with when pondering and planning for the ensuing years after employment. Family members, relatives, close friends, busybodies, or even casual acquaintances, in their mistaken eagerness to say the right things sometimes trip over themselves advising dear uncle, dear dad, dear grandpa or grandma, etc. to start living life more fully the minute retirement frenzy simmers down.

Once veteran parents pull back from outside employment, casual conversations around family gatherings typically revolve around endearingly-intentioned recommendations to the recently idled individuals to speed up life’s pace before Father Time catches up and physical activities could be greatly curbed due to the inevitable downward spiral of physical and mental health brought on by incalculable stress and time.

Travel around the world and visit exotic places typically seen only in glossy brochures, and colorful TV adventure programs. Gorge on all those exotic foods those places boast about in their travelogues. Soak the sunshine on those gorgeous beaches, idling away the days and afternoons sipping wine and fingering dainty hors d’oeuvres. Waste not a moment without indulging those tired bodies with hedonistic pleasures fit for the ancient demigods.

One is quite sure that one in the threshold between work life and own life has heard at one time or another statements like the above.

As one who is not really overly fond of exotic places, or long travels, and not really enticingly attracted to strange food, I always feel ill at ease being at the receiving end of such a barrage . At times making me feel downhearted and consumed by perceived naiveté on the question what life really is all about.

One can't help sense a deep feeling of unfulfilled longings, having been accused by inference of letting life pass one by, of laying waste nature’s bountiful offerings laced with alluring hedonistic attractions. A life quite unexamined and thus wasted and fruitless. Fit to be axed at the roots and to be burned to embers?

After a while one grows the compelling impulse to re-examine one’s priorities and purposes in life.

Am I really remiss in dismissively shunting aside all these well-intentioned recommendations as balderdash? Or are they simply snippets of taken-for-granted conventional wisdom, and thus easily rebuttable?

Lo and behold. After some gut-wrenching introspection, one inevitably is gifted by some unknown higher power with some bright discerning moments

What we have here may be a subtle but hidden strain of greed (and gluttony), cleverly disguised as to appear well within the bounds of living a good life. Greed taking on new dimension and meaning.

We normally associate greed with acute and over-indulging yearnings and inordinate accumulation of material goods (and gluttony as exorbitant attachment and proclivity to food, usually beyond normal satiation).

And digging some more, might not greed and gluttony apply also to other aspects of human life, like say the accumulation of human experiences? The inordinate and frenzied pursuits of life experiences?

As a species we do have an almost innate propensity to hurry and rush head-on through life. Adolescents cannot wait becoming older and be soaked with the more daring experiences of adult life. We are forever finding ourselves hurrying on everything we plan and do. And we rush so we could plan and do more. In the process, we constantly are finding ourselves behind schedules, which bring on more hurrying to be able to keep up.

Life is forever one big rush after another. Sometimes we wish we were Superman, or at least the Flash.

Thus, might not some form of insipient greed be involved in this very noticeable mad scramble to experience and accumulate all the possible activities that life could offer during our short sojourn here?

And for what lasting and worthwhile reasons?

For The Numismatist In Us - 4

Click Image To Enlarge
Originally uploaded by avnerijr.

As you may imagine, the lower denomination coins were the ones quite in use, rapidly changing hands. Thus, the country also made use of the five centavo coin made of an alloy of nickel, and a large one centavo coin made of copper. There was also a half-centavo coin also made of copper.