Even on a Lazy Weekend

I guess it will be quite some time before finance people talk about something else.

The Wall Street mess has pretty much set off the alarm for markets to scramble for contingencies. This as the ordinary person is left to wait and see how its ripples will affect one who doesn’t bother with stocks and financial instruments more directly in danger of the scare from that part of North America.

That and more material on the topic coming in since the weekend has me dumping somewhat newer perspectives about it here.

  • Here’s a look at the credit culture and consumerism according to Ellen Tordesillas and Randy David. I’m not exactly clean credit-wise but I’m happy that I’m well in control. Consumerism has never been a problem with me though.
  • Here’s one of foreclosure’s many faces in the US. This one is set in Southern California. The inability of borrowers to pay off housing debt is one factor leading up to the downward spiral of the American economy.
  • Mortgage giant Fannie Mae is one of those big names in the queue of falling dominos this millenium has lined up so far. Here’s a Washingtonian Magazine article in 2002 pointing out the “potential risk to taxpayers” should it fall. The reference there was taken from this article which takes a look at the implications of the seemingly prescient read.
  • Finally here’s an interesting read which criticizes all the talks and write-ups on the current financial crisis in US paralleled with the Great Depression of 1929.

Yup. I still have a lot of time in my hands.

Impact on a Walled Street

One of the big things I never got to lay a finger on here during my long hiatus is the Wall Street crisis. By now, even those who aren’t into finance, economics or current events would’ve at least heard the ordeal over that side of North America. By now too, a lot of experts would’ve said their pieces on the unfurling of big names there.

So I guess what’s left for me to do is to leave some takes on the event much in the same vein as I used to back at highfiber.

For starters, here’s a rather simple explanation of the rudiments of what’s actually going on there. To those who got lost in the plethora of jargons spewed by analysts and experts on the matter, the article would be a good starting point. The author goes in depth and detail on the economic and financial fundamentals of the matter using as simple a language as is accomodating to the ordinary fellow. It traces key concepts stemming from the credit subprime of last year to that which rattled big names listed at Wall Street just recently.

For someone who digs the wider view, here’s Prof Bello’s take on the financial crisis. Aptly titled “A Primer on the Wall Street Meltdown,” he explains the latest unraveling of capitalism with the political and economic contexts placed in perspective. While some would directly limit the focus on the real estate woes the American economy experienced last year, he goes on to discuss the factors from last year leading to the most recent turmoil in Wall Street.

For the one sick of all the gravity mainstream media dons regarding the topic these days, here’s Craig Ferguson’s take for a good laugh. Thanks to leelock for the find btw.

Where We Are in the Downward Spiral

People would give a lot not to find out what’s in the news already. A break from the nitty gritty of citizenry in this country is the mode nowadays. It’s the only thing that a lot of people, at least those around me everyday as I walk streets, commute and go about as a bare iota in the urban landscape, dream of. Some of whom do so for good.

While the same collective won’t bother to do so, some actually do and in the case of a Foreign Policy report on the Failed States Index, have actually identified crucial issues that contribute to the deterioration of certain societies. Such issues are broadly classified among “12 social, economic, political and military indicators.” Further Information on the study can be found in the FAQ and Methodology page and Fund for Peace’s Failed States Index 2007 page.

This year the five most critical states are Somalia, Sudan, Zimbabwe, Chad and Iraq out of a total of 177 countries. As for the Philippines, it ranked 59th as 5 indicators which turned out to matter most were given as:

  1. Delegitimization of the State
  2. Factionalized Elites
  3. Uneven Development
  4. Security Apparatus
  5. Human Flight

There’s a slight improvement really as the Philippines ranked 56 among the failed states last year.

So while there are people busying themselves trying to get off the sinking ship to try to board elsewhere or fighting off domestic adversities along the social, cultural, economic and political spectrum, someone actually bothered to try and define the issues. For the cacophony associated with citizenry here, I find the ranking of the indicators worth another look, (though I’m undecided on the presence of the second one there.) I find the fact that all other 4 indicators there weighing that much over all other indicators in the model plausible though. The model’s relevance is another matter for me though as I’ve still got tons of to-do’s to strike out and a handful of other stuff to start on while the world goes on with its business.

Finally you gotta credit the work put into that Rankings page though especially the sortable columns. In the same vein as the most influential intellectual results were shown previously, the presentation of the portions of the report are again just as effective. Sorry had to let that one out as it’s really hard not to notice for an IT guy who’s had a decent share of web development.

Which Yardstick?

I first encountered the Asian Development Bank study entitled “Philippines: Critical Development Constraints” over the weekend at Ellen Tordesilla’s blog entry, (thanks to leelock.) Despite the much hyped 7.3% growth in terms of GDP by the Arroyo administration, (which the report acknowledged,) the study notes that “both public and private investment remain sluggish and their share in gross domestic product has continued to decline.”

An article at Inquirer.net yesterday on the same report summarized the “‘constraints to private investment and growth’ in the Philippines” which included:

  • Tight fiscal situation due largely to weak revenue generation.
  • Inadequate infrastructure, particularly in electricity and transport.
  • Weak investor confidence due to governance concerns, particularly, corruption and political instability.
  • Inability to address market failures leading to a small and narrow industrial base.

The article is actually the second on the same report released last week. The other one focused on the exodus of skilled workers looking for greener pasteurs. The phenomenon raises doubts on the sustainability of the economic growth last year harped on by the current administration as the country is losing “not only human capital but it is also losing a lot.”

Curiously the timing of the statement of the US State Department as quoted by Philippine ambassador to the United States Willy C. Gaa couldn’t have been more perfect. According to the article mentioning the post on the Philippine embassy’s website:

Gaa thanked the State Department for expressing its continued confidence on the Philippine economy and democracy in its recently released US State Department 2009 Congressional Budget Justification Report.

So which is it really? Sans the numbers and technocratic jargons, my guess is that it’s the one a lot of us knew all along. The presence of the former just stresses the latter, (just as it should.)

Food for Thought

A recent Time article takes a look at the effect of the rise of food prices worldwide especially among poor nations. Growing demand for food among fast growing economies such as India and China, rising oil prices affecting other agriculture commodities in turn, and global warming affecting harvests because of changes in climate, were among the main reasons raised in the material. That as images of riots related to basic commodities in poor nations in Asia and Africa are mentioned to depict a worsening global problem.

Now I wouldn’t have written about this were it not for a local problem related to the issue. Last week, leelock wrote about another Arroyo-China deal “allowing the lease of 1,000,000 hectares of our land to Jilin Fuhua Corporation.” Towards the end of the her entry, she posted a question of why we won’t grow food from our own land.

Given the global basic commodity problem international organizations express concern over and a largely unaddressed overpopulation problem, it all the more makes sense to support agriculture domestically. If the trend on global food and basic necessities Time reports and the growth of the Philippine population are indications, it would be worse to become more dependent on the global market for agriculture.

The Week’s Worth Elsewhere

Plowing Through Plowshares

This view reminds me of a fact my former professor told our class once: Land Reforms and other agricultural programs’ benefits often have the flaw of not actually being felt by the most destitute farmers for whom the endeavors are supposed to be for. That Pakistani viewpoint highlights just how much the centuries-old problem still remains. Talk about people remaining essentially the same.

Wanning Wages

An insight on Central Asians’ struggle to cope with minimal wages got featured in Eurasianet this week. Given that fact (minimal wages) it wasn’t pretty surprising to have snapshots of emmigration of profesionals and corruption among public officials included there. After all the same factors and scenarios have been playing out here in the Philippines ever since I can remember.

The Urban Rush

An IRIN News article this week focuses on something I’ve blogged about at least twice: Urbanization. Apart from the same points raised in the other reads I wrote about here before, (i.e. challenges and existing problems because of growing urban population globally, lack of urban planning, urban crime and violence, and poverty,) the read includes South Asia, sub-Saharan Africa and Latin American glimpses of the issue.

The Markets’ Value

Finally an Economist article places financial centers around the world at present in parallel with the Middle Ages’ powerful city-states. Apparently New York and London has managed to remain ahead of the pack despite the more global nature of the market and the challenges posed by today’s advances in technology in the world of business.

A Closer Look at Intellectual Property Rights

Intellectual Property Rights (IPR) can oftentimes be seen in discussions among several spheres of knowledge and domestic and international bodies. In the aftermath of the 1997 Asian Fiscal Crisis for instance, free trade agreements (FTAs) and economic partnership agreements (EPAs) have been characterized by the tight implementation of intellectual properties along with easier market access as alternatives to multilateral agreements with WTO according to Professor Walden Bello’s, “Globalization in Retreat,” which was posted at the Inquirer at the start of the year.

While it is understandable for research firms and large industries and corporations to safeguard intellectual assets because of the cost associated with the necessary research and development to cultivate such assets, a question is posed as to whether lesser developed countries (LDCs) can cope with their more developed counterparts.

In its report entitled, “Least Developed Countries Report 2007*,” which was released last month, the United Nations Press Conference on Trade and Development (UNCTAD) insists selective adaptation should be given in favor LDCs to help in their aim for economic development and poverty reduction.

*In PDF Format

The said report points several flaws of a pertinent imposed IPR agreement of the WTO. To quote UNCTAD’s official press release for the said report:

…it is unrealistic on current trends to expect that most such countries will achieve “a sound and viable technological base” by 2013, the deadline now set for their compliance with international standards as required by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO).

In principle, LDCs can benefit from extended grace periods before they must comply with all terms of TRIPS. They have until 2013 — and until 2016 for certain parts of the agreement applying to pharmaceuticals… But the report shows that in practice a growing number of free trade agreements, bilateral investment treaties, and other international trade pacts… override these special conditions. They restrict the use of flexibilities and exceptions and actually impose more stringent requirements on LDCs than those required of other developing countries or even of non-LDC WTO members. These so-called TRIPS-Plus requirements exceed standard WTO commitments on intellectual property. More stringent requirements also are imposed in the process of accession by LDCs to the WTO…

Obtaining technology is critical for LDCs… the report contends: A “one size fits all” model, such as the TRIPS Agreement, does not hold much promise of increased innovation, whether within LDCs or through the transfer of technology to such countries.

Because of the importance of technology in the development of LDCs, it is pointed out further that in the history of the development of industrialists in both North America, Europe and the emerging industrial powerhouses in Asia, “creative technological imitation was critical” and possible because of “weak or non-existent intellectual property protection.” At the core of the report’s recommendations is the proposal not to subject the transition period for LDC’s to a specific deadline but when the goal of having “a sound and viable technological base” as mentioned in the TRIPS Preamble.

Finally a case study on the manufacturing sector of Bangladesh is presented-that’s 155 firms in the agro-processing, textiles and garments, and pharmaceuticals to evaluate “the impact of intellectual property rights (IPRs) on innovation in an LDC.”

Speaking of pharmaceuticals, here is a Guardian Unlimited article placing attention on present-day pharmaceutical intellectual property issues and how it prevents developing countries from having access to cheap medicines according to Oxfam. It was written November last year when the world commemorated the fifth year of the Doha declaration. Among those mentioned to be involved in fight for patents involved Pfizer vs. the Philippines and Novartis vs. India-the latter surprisingly from the leading producer of inexpensive drugs.

Emerging Asia’s Innovation Edge

A business week article of the same title earlier this month focuses on the rapid rate of development of Asia powerhouses China and India. Important points from a report Gartner released days before include:

  • China is fast becoming the global leader in research. In 2005 as the report mentions, applications for patents in China outnumbered those in the United States. For instance, the names of Chinese conglomerates, Lenovo, Huawei and Haier are fast becoming significant in the market as low-cost names while investing much on research.
  • India’s mark in IT Services still leads the way as it serves as the source of half the country’s exports and is forecasted to grow at 30% every year in the market. Leading the Indian IT market are Wipro, Infosys and Tata Consulting Services.
  • The development of the two powerhouses also translates to more people who are gaining freedom from poverty. This in turn translates to more people who will become consumers in the emerging markets. This and the fact, (if the report is to be believed,) that 85% of the world’s population comes from developing countries should fuel the further development for the two.

A Mix on Structural Reform

An Oxford Analytica article came out last Tuesday on the progress on reform since the 1997-98 financial crisis. It contains an analysis of 4 southeast asian countries, (Indonesia, Malaysia, Philippines and Thailand,) on the progress of economic stability and remaining structural vulnerabilities after the debacle that gripped the region.

So goes the significance of the article:

Over the past decade, real incomes have recovered, while exposure to external debt pressures has been reduced through an accumulation of foreign reserves and the adoption of more flexible exchange regimes. However, several issues remain causes for concern, including poor governance and mixed progress on banking reform.

Read more of the article here.

A Look into the Asian Identity

Asia Times had an article last week about the re-emergence of the “‘Asian values’ debate” as “Asia regains its self-confidence and reasserts itself on the international stage.”

The article by Chietigj Bajpaee takes a comprehensive look at the Asian identity’s history taking into account ideological, religious and political perspectives which had the center stage for defining Asian values set for the current prominent players from Asia: China and India, (referred to as the Dragon and the Elephant respectively in the material.) That after the prominence of the former tiger economies of Southeast Asia before the Asian Fiscal crisis of the previous decade.