However, as Avila points out several times, there are already clear signs that "first world" jobs have dried up in the current recession. This means that remittances, i.e. which subsidize the countries' development due to the failure of Philippines' structure of crony capitalism and politicians, are expected to be lower than anticipated for the rest of this year--and next one, too.
BANKING & INFLATION
http://www.philippinecorruption.net/
Due to widespread economic corruption and cronyism in the Philippines, foreign investment and lending in the country is consistently below what its many natural resources would lead one to expect. As noted above, this underdevelopment and corruption leads many Filipinos to try their luck abroad each year.
http://www.nytimes.com/2007/03/13/business/worldbusiness/13iht-peso.4891792.html
This widespread dissatisfaction with the Philippines political economy is also reflected by the fact that international investment exposure in the form of foreign banks is lower than in neighboring Southeast Asian countries, such as in Hong Kong, Taiwan, Thailand, Malaysia, and Singapore. However, this very lack of exposure to international banking standards has been a blessing for the Philippines in 2009 as the country has, in fact, been less affected by bank closures and financial stress than has been the case for other developing states in Asia.
The worldwide economic squeeze is also reducing inflation in the Philippines this year as a whole. However, since early summer, the US dollar has been rising against the Filipino peso. National interest rate cuts in the Philippines are continuing with the hope that such cuts will lead banks to lend more. NOTE: Whether this policy will function as desired is questionable based on USA and Japanese experiences over the last decade.
Meanwhile, the national debt burden has hampered the nation's credit ratings both nationally and internationally. This means that at a time when Philippine government spending is needed, fiscally and politically the time for developing and implementing is not quite right. On the other hand, 2010 is an election year, so pork barrel spending is likely to be deployed soon by the most powerful congressmen and kingmakers.
EXPORTS? and Production?
Like many Southeast Asian states, the Philippines is dependent on the exports of natural resources--e.g. from coco nut oil to fish to timber. The call for bigger spending projects this year have led to a greater national call for more mining, but horrible abuses by the mining industry in the past in the archipelago are likely to keep investment in large scale coal mining off the table for the next year. Meanwhile, lack of production of all types in "first world countries" today has significantly reduced the market for national resources.
Avila is interested in social welfare production and improvements for his homeland. So, he turns to the economist, Paul L. Quintos, to understand the global mess that the Philippine's economy is embedded in.
http://www.gmanews.tv/story/128533/Financial-crisis-to-hit-workers-most--study
Quintos, who is considered a radical but logical economist (quite like Nobel Prize winner Paul Krugman), "quite perceptively wrote last year that the current global financial crisis -- with the US economy at its epicenter -- is merely the latest and so far most severe in a series of financial crises that have erupted since the 1970s. At the most basic one finds the capitalist system itself to be in fundamental contradiction between social production which enables great strides in productivity on one hand, and the private ownership of the means of production which ensures that only a few profit from production by exploiting the many. The contradiction inevitably leads to crises of overproduction relative to the capacity of people to buy the productive system's commodities and products. Before long, real production that cannot realize enough profits gives rise to shadow financial products that enables some to make tons of moneys until reality catches up with the shadows, derivatives and other profitable mental figments and thereby manifest real crisis."
According to Quintos [here cited by Avila], "In 1980, the value of the world's financial stock was roughly equal to world GDP, itself bloated. By 1993, it was double the size, and by the end of 2005, it had risen to 316% -- more than three times world GDP. Government and private debt securities accounted for more than half of the overall growth in the global financial assets from 2000-2004 -- which indicated the role of leverage or debt in driving this process. In 2004, daily derivatives trading amounted to $5.7 trillion while the daily turnover in the foreign exchange market was $1.9 trillion. Together they added up to $7.6 trillion in daily turnover of just two types of portfolio capital flows, exceeding the annual value of global merchandise exports by $300 billion."
Early on in the 2008 financial crisis, Quintos had already asserted: "While the value of financial assets is ultimately grounded in the value created by the working class in the process of production in the real economy and cannot [should not] diverge too far from it, asset bubbles can form for a period of time driven by "irrational exuberance' (in the words of Alan Greenspan). The positive expectations of financial speculators feed on each other, bidding up asset prices in a seemingly endless virtuous cycle. But like all ponzi schemes, reality eventually takes over and all it takes is one negative development, e.g. rising home foreclosures, to reverse expectations and send the entire house of cards crashing down."
