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Monday, 1 August 2005
My blog has moved!
Mood:  celebratory
I've moved to:


Looks better, reads better. See ya.

Posted by roehlanobriones at 10:18 PM JST
Friday, 15 July 2005
system chooses the people
In arguing against a parliamentary system, it is often claimed that the system doesn't matter - it's the people running it.

People versus systems. This is nothing but a false dichotomy. People will be people. But one may need a particular system to bring out the best in people.

Case in point: the market versus the centrally planned economy. The latter is actually more deeply driven by noble intentions. The genius of the former is in its economical reliance on that scarce resource, called charity or altruism - and capitalizing (pun intended) on that abundant phenomenon of selfishness. Noble intentions, as they typically remain only intentions, are doomed to failure.

So - let's not diss the parliamentary government just because what is need is good people. This is empty handwringing. We need a practical, workable system to encourage the good people to rise to the top. Not just the actors and infotainers.

Posted by roehlanobriones at 11:08 PM JST
Tuesday, 12 July 2005
Sometime ago a couple of senators were fulminating against rating agencies and asking the government to ignore them.

Well there's been another downgrade in rating (debt outlook, not bond rating per se), from Fitch and S & P. No, it's not for the political plight of the President, but the perceived wavering in revenue raising measures (namely the EVAT). These ratings are purely business. It assesses the risk investors take on when they invest dollars in government bond issues (denominated in USD). If the fiscal deficit spirals out of control, there is a good chance that the government may experience difficulties in repayment, with outright default being the worst scenario. Note that if the market agrees with the ratings and finds RP bonds too risky, the interest rate will have to go up for these bonds to find investors.

So - these agencies could be right, could be wrong. They carry a lot of credibility, so I don't think they should be ignored; however, they're good signals about what the world thinks about the credibility of our sovereign (public) bond issues.

Posted by roehlanobriones at 12:28 PM JST
Updated: Tuesday, 12 July 2005 12:52 PM JST
Saturday, 9 July 2005
Now is not the time to speak up
Mood:  irritated
Everybody's calling on the President to resign.

Not me.

Neither am I asking her to stay. Let her do what she wants. If she wants to stay, then so be it. She remains President to me, and properly to 85 million Filipinos.

To everyone - enough! Especially those who are asking GMA to quit, because she faces a country divided and that she is unable to govern. Precisely such a call for resignation makes the country less governable. It is called a "self-fulfilling prophecy." Self-fulfilling prophecies are a primary ingredient of instability, both in economics and politics. The only way to stop it is if enough people refuse to act upon the expectation.

Case in point: the 10 Cabinet members who quit. Solita Monsod pointed out the unsavory irony of their action, which was performed "in a way to encourage the very attempts "to exploit the situation and sow intrigue and destabilization" that they so piously "reject" in their statement"!

So I repeat - enough with calls of resignation, or talk of revolutionary governments, or juntas, or whatever. Take it to impeachment, if GMA refuses to quit. If she is removed by constitutional process, let the VP take over. In the meantime, support her as President and do not allow petty politics hold administration programs hostage.

The only constructive suggestion out of this impasse I've heard of comes from Fidel Ramos - maybe it's time we revive the move to shift to a parliamentary form of government. The timing of this suggestion is so bad - it's good. I kid you not.

Posted by roehlanobriones at 10:36 PM JST
Updated: Saturday, 9 July 2005 11:35 PM JST
Thursday, 7 July 2005
Escultura clarification
Seems Manila Times is not getting its facts straight.

Escultura's guest book

Escultura himself states that the Nobel Prize report was a hoax, and that he give his statement to Manila Times today.

To quote:

"Yes, it is a hoax and I have a statement about it in the Manila Times.


E. E. Escultura"

Posted by roehlanobriones at 8:24 AM JST
Wednesday, 6 July 2005
Is the peso still beautiful?
So markets didn't like what the Supreme Court is doing. Can you understand that? I can't.

Well the simple explanation is that the court ruling on suspending the EVAT introduced more uncertainty in public policymaking. Especially for this particular policy, said to be the leading effort at restoring fiscal balance. And without fiscal balance, government debt will avalanche. Either the government declares bankruptcy (nationally, internationally, both), or prints money to pay off debt, igniting hyperinflation.

Okay look at it again - EVAT suspension today, 1,000,000% price increase tomorrow. Or, EVAT suspension today, no imports tomorrow (because no dolars tomorrow). Conclusion: sell Philippine stocks now! Sell Philippine currency now!

Sounds farfetched, right? IT IS. That's why I said I don't understand it.

This is assuming though that demand and supply is purely driven by fundamentals - the underlying health of the economy, the actual magnitude of uncertainty introduced by real world events.

However there is a better assumption - include the uncertainty in predicting the behavior of others in the market. (The following analogy from Keynes). Suppose you have a beauty contest in which the judge who votes for the eventual winner gets a prize. If you are a judge you will be casting a vote not only for what you perceive to be the most beautiful contestant, but also thinking who would appeal to the other judges, who the other judges will vote for, what other judges are thinking about your choices...

In (what I think is an important) paper, Pierre Monnin shows evidence that such "higher order beliefs", i.e. beliefs about beliefs, are responsible for introducing volatility into the stock market.

So - is the peso still beautiful to you?

Monnin paper

Posted by roehlanobriones at 11:04 AM JST
Updated: Wednesday, 6 July 2005 11:07 AM JST
Saturday, 2 July 2005
oil prices
A couple of nights ago I saw a long queue at a gas station near my place. Just before a price increase, mostly people with big-tank SUVs were filling up.

Taxes are the reason - no longer are petroleum companies exempted from VAT. Countermeasures (elimination of other taxes and tariffs) kept the gas price from climbing the whole 10% (the standard VAT rate).

Looming in the horizon are further threats, such as international oil prices exceeding USD 60 a barrel (the current level is around that psychological benchmark).

Interestingly, observers agree the high oil prices are not supply-induced, but demand-driven - what with China growing at breakneck pace, and the US (by far the world's biggest gas guzzler) also jacking up its demand.

If we can get on the growth boat, we can certainly ride this tide. Far be it from me to proclaim some doomsday scenario due to higher oil prices - economic catastrophe isn't quite that easy to engineer. But if we don't we'll hit the double whammy - stagnant incomes, and resources essentially taken away from us by those whose growth enables them to pay for it. Ouch.

Posted by roehlanobriones at 8:37 PM JST
Tuesday, 28 June 2005
Toxic reaction
What can I say? She caved in.

So PGMA admits to being the one. Pragmatically, this is correct. The atmosphere had turned toxic. The immaturity of our democracy simply could not sustain the divisions rending it.

I only fear the repercussions for judicial processes and legal procedures. If you can do it to the President...

Anyway, as I suspected, the President had committed a gross blunder and a great impropriety. But it's going to take a lot more evidence than that illegal tape to prove illegality in her election victory.

For those crying out for PGMA's blood: get the evidence. Legally. Impeach her. And win the case. Then accept Noli as President. Simple. Rule of law. The law is hard, but...

That said, I am all for uniting behind PGMA's economic program. The lady is getting some good things going, and much as I disagree with many of her decisions, for the sake of the country we need to support this administration. By all means take it out by 2010, but give this government the support it needs for political stability. When animal spirits have been quenched and burned by past sheenanigans, it's time to remind the world that we are dead serious in this business of economic growth.

Posted by roehlanobriones at 3:37 AM JST
Just did an update on my site. Fixed my papers section. Some papers under revision will land there soon.

Still need to upload my other teaching stuff.

I was just in a productivity conference organized by the World Bank held at AIM. I co-authored a paper with Cielito Habito on Agricultural productivity, which he presented there.

I was glad to have attended the IT and electronics industry workshop session. The speakers there (don't have the details at hand right now) point out that the electronics industry in the country is weakly-linked, probably because it specializes in a very narrow range in the value chain (assembly, processing, and testing of semiconductors), which is highly depended on pre-fabricated parts, which can only be produced with considerable economies of scale (requires about a USD 2 billion fabrication plant!) But with a wider range of products - producing enclosures for cellphones, parts of the computer or gadget displays, etc. then the possibility of linkages, particularly with small and medium scale local entrepreneurs, increases.

If there is any dimension of poverty in this country that is most constraining, it is poverty of imagination. We need to imagine great things for our country, for example, having a vibrant electronics industry where spin-off industries abound, like what they have in Malaysia. It is possible, we don't have to lurch from "crisis" to "crisis". Sure we are corrupt, but to paraphrase Jesus, the corrupt ye shall always have with you - we can't twiddle our thumbs waiting for every last crook to land in jail. I tell you having stayed in Malaysia for a couple of years, they've done very impressively, but they are beatable in the growth race. China is beatable in the growth race. Thailand is beatable in the growth race. Vietnam is beatable in the growth race. Guess who is our country's worst enemy? You got it -

Posted by roehlanobriones at 12:10 AM JST
Tuesday, 21 June 2005
Filipino nominee of Nobel Prize?
I found the following reported in Manila Times:

Filipino nominee for Nobel Prize?

So I sent feedback to Manila times:
I find your report on Escultura's nomination for the Nobel Prize in Physics dubious.

I did a search for "Hieber" and "Jonhasen" in the Royal Swedish Academy website:

royal swedish academy members

I got no hits. Nor do I find the names by checking one-by-one.

Furthermore information from the Nobel Prize website on nominations is clear:
Information about nomination, etc. is kept secret for FIFTY YEARS. Only the winner is informed of the outcome.

Kindly double-check your facts and confirm whether this alleged nomination is correct.

Hey, we need to be careful about things like this. We don't to become an international laughingstock - again!

Posted by roehlanobriones at 9:38 PM JST

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