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Middle East braces for Beginnings of World War Four
GAZA CITY
THE Middle East was bracing for a new wave of violence last night after the Israeli assassination of Hamas founder Ahmed Yassin in the Gaza Strip.
Sheikh Yassin was killed instantly when an Israeli helicopter launched three missiles at him as he was leaving a mosque after morning prayers. All that remained at the scene was Sheikh Yassin's bloodied wheelchair.
http://thewest.com.au/20040323/news/general/tw-news-general-home-sto121943.html
"Intelligence officials are rushing around the planet trying to find limited nuclear weapons which are now aimed at Isreal in a preemptive effort to avoid the destruction of various cities in that embroiled nation", said one intelligence expert.
Not to defend slick willies immoral behaviour while in office, but at least that administration didn't accelerate global terrorism with the contrarian christian faith doublespeak. If we had turned the other cheek, would we now have this mounting global war embroiling every nation on earth? It will not end till the US gets out of Iraq, but even then, the seeds of global destruction have been sown. It's as if the Christians are praying for Armageddon and doing everything in their power to bring it about. I consider the Jews part of Christendom
A link to exchange rate news:
http://www.quickex.ca/Links.html
Unpleasant surprises waiting to happen
By ROMEO BERNARDO
There is, quite rightly, increasing concern over government's mounting debt. In all the talk about the risks, consequences and possible solutions to government's debt problem however, one critical dimension to the problem seems to have been overlooked--government's contingent liabilities.
This is surprising as past fiscal crises in the country were triggered by the realization of some of these extra-budgetary activities. Reported budget deficits have in fact been found to contribute much less to increases in the country's debt-to-output ratio than extra-budgetary items (the decomposition of the debt-to-output ratio by Homi Kharas and Deepak Mishra revealed that from 1980-97, reported deficits contributed only 34% while extra-budgetary items contributed 133% to the change in the debt-output ratio).
A study on government performance jointly published by the Philippine government, the World Bank, and the Asian Development Bank reports estimates of government's contingent liabilities running to about PhP3.1 trillion, which is nearly of the same magnitude as government's direct debt outstanding (PhP3.4 billion as of November 2003). What is worrisome about these contingent liabilities is that nobody knows when the additional fund demands will arise and how much government will need to put up at any point. Obviously, such unwelcome surprises can be very destabilizing.
Going through the list of government's contingent liabilities which includes the unfunded liabilities of pension institutions--Social Security System (SSS), Government Service Insurance System (GSIS), Retirement and Separation Benefits System (RSBS)--direct guarantees on obligations of state enterprises--e.g., National Power Corp. (NPC), National Food Authority (NFA)--guarantees on various types of risks (including market, currency, regulatory, political) under built-operate-transfer or BOT contracts, deposit insurance, implicit guarantee on the banking sector, umbrella guarantees for various types of loans in the agriculture, microenterprise and housing sectors, among others, government guarantees to NPC appear to require the most urgent attention.
The national government's exposure to NPC has become virtually real with government having had to incur debts directly to finance NPC's deficits, which have been rising at an alarming rate. From around PhP8 billion in 2000, NPC's losses, arising largely from inadequate power rate adjustments and the costs of take-or-pay contracts, rose steeply to an estimated PhP73 billion in 2003 and are reportedly, expected to reach PhP113 billion this year. Thus, unless rate increases are implemented and kinks in the privatization of the power sector are ironed out, the risk to government of absorbing an increasing portion of NPC's losses is very real.
Another threat to government's fiscal sustainability is the SSS' unfunded pension liabilities (estimated at around PhP1.3 trillion in 1999). Despite much ado over SSS' investment decisions, the accumulation of the pension fund's unfunded obligations is largely due to increases in pension benefits over the years (usually, as part of government's Labor Day concessions) without matching increases in contribution rates. Already, annual benefits being paid out exceed members' contributions and SSS' reserves are estimated to run out by 2011. Last year's 1% increase in the contribution rate is mere band-aid for a gaping wound. A larger adjustment is needed right away, without which the bleeding will increase by the day.
Then there is the banking sector, which because of public expectations, benefits from an implicit government guarantee. This implicit guarantee carries even more weight today as banks, lacking alternative investment outlets, have been parking a large share of investment funds in government securities. Any problem on the fiscal side will thus translate directly into banking sector stress. This underscores the need for government to come to grips with the sector's bad asset problem and recapitalization requirements to allow banks, in time, to carry out their intermediation function.
There are many, many other contingent obligations that government is potentially exposed to, some significantly smaller (e.g., directed credit programs), others with less likelihood of being triggered (e.g., force majeure events under build-operate-transfer contracts). In many cases, particularly with public enterprises, the need for government to take over the corporations' loan servicing results from operating inefficiencies and subsidized price structures due to the highly politicized environment for rate adjustment. Thus, in cases where the private sector is willing to take over, government should privatize and concentrate instead on strengthening its regulatory function.
As to the rest of government's contingent liabilities, the crucial first step is to set up a monitoring system to enable government to keep track of all the financial risks it is exposed to in any given period. In time, government needs to develop practical tools to better manage these off-budget risks.
http://www.bworld.com.ph/current/B&F/executive.html
PDIC to cover 95% of deposits
The Philippine Deposit Insurance Corp. (PDIC) would soon be able to cover at least 95% of the total deposit accounts in the banking system and almost fully cover small deposits generally placed in thrift and rural banks.
PDIC president Ricardo M. Tan said the proposed increase of the maximum deposit insurance coverage to PhP250,000 would make this possible as he stressed the importance of having the bill ratified as soon as Congress resumes session in June.
"With the proposed increase of the maximum insurance coverage to PhP250,000, around 26 million deposit accounts, representing 95% of total deposit accounts in the banking system will be protected," Mr. Tan said.
He added that this level of insurance limit would allow PDIC to almost fully cover deposits of small depositors generally placed in thrift and rural banks with 99% of deposit accounts in rural banks and 96% in thrift banks.
Mr. Tan underscored the passage of the bill, saying that it was important to protect small depositors.
"Small depositors generally have limited access to pertinent information involving their savings in banks. Coupled with this limited access is their inability to process available information," Mr. Tan said.
The bill seeking to increase the maximum insured deposit coverage to PhP250,000 from PhP100,000 remains pending at both Houses of Congress although both chambers already reconciled their differing versions after being stalled since the 12th Congress opened in 2001. The Lower House earlier wanted to hike the insurance coverage to PhP400,000, while the Senate wants to double the current limit to PhP200,000.
The approved bill, which seeks to amend Republic Act 3591, awaits ratification from both Houses before the President can sign it into law.
Aside from increasing the amount of the insured deposit coverage, the approved version of the bill also provides for a permanent and continuing insurance coverage on all insured deposits to protect depositors from sudden bank closures. The approved version of the bill also restores the power of the PDIC to examine banks and to extend financial assistance under certain conditions. -- I.C. Gonzales
Mindanao rural bank seeks merger perks
Newly consolidated One Network Rural Bank has asked a host of incentives from the Bangko Sentral ng Pilipinas in its bid to become one of the biggest rural banks in the country.
One Network Rural Bank is the result of the three-way consolidation of the Network Rural Bank (Davao del Sur Inc.), the Rural Bank of Panabo (Davao del Sur) and the Provident Rural Bank of Cotabato (North Cotabato).
The central bank is looking at the rural bank's proposed incentives which include ease in processing the setting up of 15 new Mindanao branches within two years, the grant of thrift bank powers, and authority to accept state deposits in areas without government banks.
Alex V. Buenaventura, One Network president and spokesperson, said 2004 is an important part of the consolidation period. The rural bank has 46 branches in the Mindanao and Visayas but wants to strengthen its presence with an additional 15 branches.
As such, the bank has asked Bangko Sentral that it be allowed to set up new branches anywhere in Mindanao over the next two years. It has also asked the central bank the same authority granted to thrift banks so that it can service foreign currency deposit units or FCDU accounts.
With a paid-up capital of PhP422 million, One Network is empowered to transact money changing activities, allowing it to buy and sell foreign currency.
When it reaches a paid-up capital of over PhP650 million, it could apply for an FCDU license.
One Network has also asked Bangko Sentral the authority to open domestic letters of credit to be able to service more clients in the provinces.
Mr. Buenaventura said the bank also wants a one-time authority to accept government deposits (including from barangays) in all areas where it has branches but without government banks.
It also wants the authority to be able to resurrect licenses of dead banks from the Philippine Deposit Insurance Corp. as an allowable form of expansion.
On top of all these requested incentives, One Network is asking the Bangko Sentral to allow it to keep only one-third of normally required legal reserve requirements for a period of five years.
Mr. Buenaventura believes these incentives will help boost the consolidated bank's efforts to succeed amid a difficult economic tide. -- Iris Cecilia C. Gonzales
New Islamic bank to be proposed
By ERIC S. BORAS, Reporter
A group of investors is planning to set up a medium-sized bank that would cater to the Muslim market in the country.
An industry source said the new Islamic bank, which would be put up through the rehabilitation of an existing thrift bank, would take advantage of the Muslim funds that were fleeing from the United States and Europe.
It also plans to become a major vehicle in channeling foreign aid from Middle East countries to the Philippines particularly to war-torn Mindanao where majority of Muslim Filipinos reside.
"Muslim businessmen were now looking for a place to put their money because the tightened financial examinations in Europe and America after all these bombings had made them uncomfortable with their investments," the source said.
The group of investors had already tapped the services of veteran muslim banker Ebrahim Mama-o, who is offering consultancy services for the Saudi Arabian Embassy in the country with specialization in the Filipino Financial Affairs program.
Mr. Mama-o, together with prospective owners of the new Islamic bank, will present its proposal to the Bangko Sentral ng Pilipinas next week, the source said.
"This new Islamic bank will hit the ground running and ably serve the needs of the country's muslim community as soon as the [central bank] approves its operation," said the source.
The idea for a new Islamic bank emerged after the country's existing muslim bank--Al-Amanah Islamic Bank of the Philippines--failed to reach out to the vast majority of Muslim Filipinos.
Burdened with high nonperforming assets, which limits income and curtails operation, Amanah Bank could not address many of the financial needs of Muslim businessmen, the industry source said.
Under the plan, the new Islamic bank would use muslim concepts such as "No Riba" and "Mudaraba" where the bank would not pay a fixed interest on deposits but rather give out a return based on profits, the source said.
The owners of a leading chain of fine-dining restaurants is said to be interested in investing in the proposed Islamic bank.
RP debt, banks' bad loans worry ADB
By IRIS CECILIA C. GONZALES, Reporter
The Asian Development Bank (ADB) has raised concerns on the country's swelling debt and the banking industry's growing bad loans, saying that this has been slowing down economic growth.
Richard Ondrik, ADB senior officer, said while the Manila-based bank was comfortable with monetary policies and the benign inflation environment, it still would like to see a more manageable debt level for the country.
ADB, a multilateral development finance institution, extends grants and loans to countries in Asia and the Pacific. Established in 1966, it is dedicated to reducing poverty in the region.
Mr. Ondrik said while country is not in a debt crisis like Argentina, the Philippines' situation is still alarming.
"What we are not comfortable is the size of debt. Prudential management of debt is one side of the coin. But how much it is, is scary. It is nothing like Argentina but there are concerns on the size of the debt," Mr. Ondrik said in an interview.
Data from the central bank showed that the country's external debt could hit $59.4 billion by yearend due to the government's external funding requirement.
TAXES
As such, Mr. Ondrik stressed the need to improve the revenue stream by implementing additional tax measures.
"It is good that government recognizes its debt level, but there are also tools to address this. And that means pushing for revenue growth," said Mr. Ondrik, who is also the bank's senior programs coordination specialist.
He cited, for instance, the need for Congress to push through with the indexation of sin taxes.
The measure pushed by the Department of Finance, and which remains pending at the legislative branch, seeks to realign the taxes on cigarettes and alcohol with the current inflation environment.
Mr. Ondrik said without additional tax measures, the government may miss its target to wipe out the budget deficit by 2009, a view shared by Bangko Sentral Governor Rafael B. Buenaventura.
"The government has a target of zero-deficit by 2009 but it really depends a lot on revenue growth," Mr. Ondrik said.
Similarly, Mr. Buenaventura has repeatedly stressed the need for additional revenue measures in the face of the heavy deficit burden weighing on the country's shoulders.
The Department of Budget and Management has pegged the end-2004 budget deficit at PhP197 billion.
The Department of Finance has recognized the need to raise taxes and has even reconsidered an earlier plan to impose tax on text messages.
Mr. Ondrik said now is a good time to implement additional tax measures because the present environment can tolerate it.
"If you look at it, when things are poorly performing, it is much easier to make major leaps," he said.
BAD LOANS
Another concern of the ADB is the growing amount of bad loans in the financial system.
Mr. Ondrik said that despite the passage of the Special Purpose Vehicle Act, or the SPV law, which grants incentives to buyers of bad loans, the banking system remains soured with bad loans.
The ADB official said banks seem to have unreasonable expectations from buyers.
"No bank has been able to take advantage of the SPV. It appears that deals are failing not because of the law but because of unreasonable expectations by the bank," Mr. Ondrik said. He urged banks not to expect too much from the sale of bad loans.
The SPV law stipulates that properties that banks want to include in the portfolio for sale to asset management firms must be submitted to the central bank which will certify if these are qualified to avail of incentives such as tax perks.
http://www.bworld.com.ph/current/B&F/b&fstory1.html
Phillipine Economy in a State of Collapse - Currency Dumped
Legislature: expensive and unaccountable
By YVONNE T. CHUA
Philippine Center for Investigative Journalism
'We don't want to tolerate corruption, but nothing happens to our reports. We just become subjects of harassment, and other people even make money out of our reports.' -- state auditor on congressmen's use of funds.
Second of three parts
In 2002, taxpayers spent PhP939,472.47 every month on each senator and PhP429,601.79 on each congressman, based on published reports.
Shocking as these amounts may sound, they reflect only part of what Filipinos pay for their legislators' upkeep.
Government auditors themselves say they are in the dark over how Congress spends most of its money, in part because there is hardly any paper trail to help them scrutinize how lawmakers use public funds.
What they do know is this: On the average, the upkeep of legislators has risen 10% every year since 1994. In 1999, this leaped to as high as a 60% increase in the House and a 72% increase in the Senate compared to the previous year's.
The hefty rise was due to the fact that lawmakers gave themselves a raise. Their basic salaries were upped that year. In addition, there were significant increases in the budget for foreign travel in both chambers as well as in local travel among congressmen.
Even as allocations for basic services such as education and public health have increased by only small increments in the last decade, Congress has used the power of the purse to put much more money into its own coffers.
Since the early 1990s, it has legislated generous increases for its own budget, which includes not only the basic pay of the lawmakers and their staff, but also their travel expenses, allowances, expenses of various congressional bodies, as well as the salaries of officers such as the Senate president and speaker of the House and the budgets of their respective offices.
From 1994 to 2003, the General Appropriations Act or GAA, which sets the national budget for a fiscal year, increased annually by an average of 7%. In comparison, the House budget had an 11% average yearly increase; that of the Senate posted an average 13% rise.
In 2002, when the total national budget shrank by 14%, Congress raised its own budget by 10% in the House and four percent in the Senate.
UNMERITED PAY
Yet, the increasing sums for the legislature have not been matched by a rise in the number of laws passed.
Since the 11th Congress, the legislative mill has churned slower and slower. Congress's efficiency hit an all-time low in the years 2001 to 2004, when the legislature approved a measly 76 bills, compared to an average of 400 to 500 laws enacted in previous three-year congressional terms.
The slide began in the 11th Congress, although it is the 12th Congress that deserves the slacker's prize. It boasts of a record low not only in the number of laws approved, but also in terms of the total number of bills filed. In addition, the percentage of bills filed to the number of bills passed is a mere one percent, compared to the three percent chalked up by earlier legislatures.
Before martial law, the Constitution fixed the annual compensation of senators and congressmen at PhP7,200 each, unless otherwise provided by law. The amount included per diems and other allowances, excluding only traveling expenses to and from their districts of congressmen, and to and from their places of residence of senators, when attending sessions of Congress.
There is no similar provision in the 1987 Constitution. Instead, the charter leaves it to the law (meaning the lawmakers themselves) to determine the salaries of members of Congress. It only prohibits any increase from taking effect until after the full term of all members of the Senate and the House approving such a raise has expired.
There is, however, a provision in the constitution that is supposed to guarantee the public access to information regarding the other sums legislators get from the government. That is why every last quarter of each year, the Commission on Audit (CoA) publishes an "itemized list of amounts paid to expenses incurred" for each senator and for each congressman in a leading daily.
IN THE DARK
But the published CoA lists apparently fall short of real Congress figures. The lists from 1994 to 2002, for example, represent only 47% of the total House budget published in the GAA and 26% of the Senate budget. Where the rest of the budgets went is unclear, because the CoA provides no such details.
Various reports and legislators themselves talk about amounts congressmen receive as officers or chairs of committees and "allowances" from the speaker, as well as cash advances and reimbursements for official activities. But these items are nowhere in the list of expenses of the House.
In the Senate, amounts received by senators for similar duties are indistinguishable from other expenses such as advertising. According to a state auditor assigned to that chamber, these are lumped under the heading "Other MOE (maintenance and operating expenses)."
The auditor says, though, that the expenses of senators in the performance of their duties as officers and committee chairs are incorporated into the CoA's published itemized list of amounts paid to and expenses incurred for each legislator.
But this does not seem to be the case. For instance, the amounts that appear in the Senate records for the senators' settled MOOE (maintenance, operating, and other expenses), including foreign travel in 2002 were, on the average, 112% more than the figures published by the CoA. In short, the CoA list reflected only about half the senators' MOOE that year, when the government paid a total of PhP77.5 million for the overseas travel of 173 congressmen and 11 senators.
The CoA's published list also showed that Senate President Franklin Drilon spent PhP6 million in MOOE that year. But the Senate's ledger showed he accounted for PhP21 million or 250% more than what CoA released to the public. The CoA list also did not state the Senate president's expenses for foreign travel in 2002, which added up to PhP1.3 million.
Moreover, Senate records pinpointed certain committees for which some senators drew additional MOOE. This means the discrepancy between the CoA list and the Senate accounts was even bigger for these lawmakers.
Outgoing senator Ramon Revilla, for example, was given PhP21 million in additional MOOE in connection with his functions as chairman of the committee on labor, employment and human resources development. The late senator Renato Cayetano drew an extra PhP19 million as the Senate's representative to the Joint Congressional Power Commission of the two chambers of Congress.
UNCHECKED
In 1997, the Presidential Commission Against Graft and Corruption (PCAGC) observed that many items in the Congress budget "are not liquidated and audited in the same manner as expenses of public funds by all other government officials where proofs, documents, receipts, contracts, vouchers, and other pertinent documents required by law, rules and regulation are submitted to justify these expense before CoA would pass them in audit."
"There is no mechanism," continued the PCAGC, "by which they (members of Congress) are made to account for funds they received in the same manner as all other government officials are periodically made to account for the funds entrusted to them, either through the regular or special audit of CoA or by Congress during budget hearings or in the committee investigations conducted 'in aid of legislation.'"
As a general rule, the law demands that public officials submit receipts, contracts, and other documentary proof when they liquidate cash advances or ask to be reimbursed for expenses. There are exceptions, of course, among them the representation and transportation (local) allowances or RATA given to certain public officials -- chief of division up -- for official functions.
Given as direct payment to the official concerned or as a cash advance drawn by the cashier and supported by an approved payroll listing the officials entitled to RATA, these are considered "commutable," therefore nontaxable and not subject to liquidation. All the CoA demands is a certification that the public official spent the money for the purpose.
LOOPHOLES
Another exception, although not as all-encompassing, are "extraordinary and miscellaneous expenses" authorized under the GAA for activities ranging from meetings, official entertainment, or public relations, to membership in government associations, contribution to charitable institutions, or office equipment and supplies. Unlike the RATA, these expenses are supposed to be paid on a reimbursement basis.
The CoA does allow public officials to submit either receipts and other documents as proof of disbursement or a certification by the public official before he or she is reimbursed. The rule, however, applies only to national government agencies. And extraordinary and miscellaneous expenses cannot be used for salaries, wages, allowances, and intelligence and confidential expenses.
Intelligence and confidential funds are paid through a cash advance to the agency head. To pass in audit, the project officer is simply required to submit a liquidation voucher directly to the CoA chairman. The rules allow the voucher to be supported only by a photocopy of the paid disbursement voucher of the cash advance, a certification of the agency head, and approval of the president (plus the Special Allotment Release Order and Allotment and Obligation Slip in the case of a national government agency). No receipts, contracts, or other proof are demanded.
Because the bulk of the published MOOE of representatives is consolidated with the basic pay in the payroll, they are no longer required to liquidate the lump sum of more than PhP200,000 released to each of them at the start of every month. They simply acknowledge receipt of the money. They do not even sign a certification the money was used for the purposes for which it was meant for, says a senior CoA auditor.
Apparently to go around the liquidation and taxation requirements, the House avoids classifying MOOE as "cash advances" or "allowances," even if this is the way members of the chamber commonly see them. Instead, the House classifies them as "monthly allocations" or "outright expenses." As a result, congressmen get away with not having to submit any document to account for these funds.
They are not expected to submit a payroll of their district staff or report their functions, salaries, and withholding taxes. No one starts asking if they do not produce a report on the research their offices should supposedly undertake. There is no demand for them to produce the list of consultants they have hired, as well as the contracts they draw up for those whose services they need. As far as the current rules go, how the legislators spend their public affairs fund is their business, and their business alone.
In the Senate, maintenance and operating expenses or MOOE are released through separate vouchers. But the only supporting document that is often demanded is a certification signed by the senator or his chief of staff that the amount was spent in the discharge of official function.
The sums are based on a voucher signed by the senator or his chief of staff, supported by an approved expenditure program for the month and a certification by the senator concerned that the budget for the previous month had been spent. "Extraordinary and miscellaneous expenses" are also lumped together in the MOOE and released as cash advances, not on a reimbursement basis.
CoA personnel acknowledge that the standard rule in all other government offices is to liquidate cash advances that are sourced from MOOE, including petty cash, as well as travel and field operating activity expenses. Except for salaries, they say, the rest of the money paid to a representative should fall under this rule.
But since these objects of expenditures are disbursed as "monthly allocations" or "outright expenses," and not as cash advances, to a congressman, the government auditors say this frees the lawmaker from the obligation to liquidate the expenses.
PRIVILEGED
An auditor who has been detailed at the House defends the setup: "The concept is, they (the congressmen) will spend the MOOE. How they operate their offices is up to them. They have the discretion because of the peculiar demands of their (district) office."
The CoA, says the auditor, presumes good faith on the part of the congressman and regularity in the use of his monthly allocations. He adds that state auditors can only assume congressmen will abide by government rules on hiring, procurement, travel, meetings, and activities or projects.
But a supervising auditor of the CoA insists that the arrangement at the House is not sanctioned at all by law. No law or CoA circular authorizes a representative's expenses for supplies and other items for the maintenance of his or her office as "outright expenses" to be paid through payroll, he says. Other CoA personnel, including auditors assigned to the House, admit as much. (The Senate, unlike the House, does not consider MOOE as "outright expenses.")
"The system is defective," laments the supervising auditor. "These are clear lapses in accounting and auditing procedures. How do we know if the congressman spent the money if he doesn't account for it? What if he pocketed it?"
"If you really want transparency, congressmen must liquidate all the money that is released to them," a veteran legislative officer remarks. "But they don't. Well, even if they did, we know a lot would be fabricated."
AVOIDING TROUBLE
One auditor, though, is more forthright regarding why the CoA essentially leaves the House of Representatives alone. "The House is a political body," he says. "We don't want to get into trouble."
Many of his colleagues agree. For instance, they point out, while the CoA is a constitutional body, the appointment of its chairman needs to be confirmed by the 25-member Commission on Appointments consisting of legislators from both the House and the Senate.
The CoA also finds itself at the mercy of Congress when budget time comes: The legislature wields the power of the purse. Horsetrading becomes inevitable, especially in the assignment of auditors.
One senior congressman, for example, threatened to bypass the CoA chairman's appointment unless an auditor, who turned out to be a personal friend, was reinstated in a Metro Manila town. The CoA caved in.
Another auditor is even more blunt, saying, "We're scared of congressmen, we're scared of the system. Babalikan kami (They'll seek revenge). We don't want to tolerate corruption, but nothing happens to our reports. We just become subjects of harassment, and other people even make money out of our reports."
Auditors who question irregular or corrupt practices in the agency -- which is part of their work -- are often quickly reassigned. -- with additional reports from Avigail Olarte and Booma Cruz
(to be continued)
Part 1: How representative is Congress?
The findings of the PCIJ's study of Congress are published in the book, "The Rulemakers: How the Wealthy and Well-Born Dominate Congress".
http://www.bworld.com.ph/current/TopStories/topstory6.html
Peso hits new lows on political, fiscal worries
Heavy dollar purchases by corporates and banks -- linked by some traders to election and fiscal concerns -- yesterday pushed the peso down to new lows versus the dollar.
All-time trading, closing and average lows were posted by the peso, which hit PhP56.45 to the dollar early in the day at the Philippine Dealing System, the country's electronic currencies exchange.
It closed at PhP56.42 following brisk trading, down four centavos from Friday's session. The peso averaged PhP56.429 to the dollar, weaker by 10.9 centavos from last week's PhP56.32.
Volume turnover at the spot market jumped to $160 million changing hands from the $117.50 million previously.
Currency traders said follow-through dollar buying was prompted by the peso's breaching the psychological resistance of PhP56.35 on Friday.
http://www.bworld.com.ph/current/TopStories/headline.html
I predicted six months ago that the Peso would collapse to the 100 Peso to the Dollar level, it is now beyond half way there and falling daily as the government cannot afford or find ways to get out of debt. Higher fuel import costs are burying the country and will cause it to collapse. Thus China is eyeing Taiwan as a launch pad to expand its influence in the Far East.
Isreal may be bombed by limited nuclear weapons controlled by Islamic Jihad terrorists.
We are already engaged in World War III. It is the war declared by Bush on Terrorism which involves over 80 different nations.
That is why China is already lining up behind Iran with $20 in funding. The stage is gradually being set up for World War IV.
If China invades Taiwan, American economy will collapse its imports from China...just a prediction of scenarios playing out on the international stage.
Looks like you found several links to back up the claims. Isreali Intelligence officials advised two other countries at least six months before 911 of the plans of Al Quida network to attack US. Some speculate that Mossad may have been involved as part of a counter terror and counter intelligence operation.
Palace, Benpres insist Maynilad deal not a bailout
Benpres Holdings Corporation yesterday described as "pathetic" allegations that a political deal had been struck for its divestment of Maynilad Water Services.
Benpres chairman Oscar M. Lopez, in a statement, denied that the government is bailing out the firm in exchange for the Lopezes' support of President Gloria Macapagal Arroyo's election bid.
The Malacañan presidential palace also denied the allegations and insisted the government takeover purely aims to ensure that water services remain uninterrupted.
In launching yet another Patubig project yesterday in Barangay Gulod in Novaliches, Quezon City (northeastern Metro Manila), Ms. Arroyo said "the continuous supply of clean water is the reason why Maynilad is being rehabilitated."
In the statement, Mr. Lopez said "How can it be a bailout when the Lopez Group is completely writing off its equity investment of US$80 million? If there was a political deal with the government, how come in addition to our loss in Maynilad, Meralco's (Manila Electric Co.) rates have remained unadjusted?"
He said the agreement released last week by the Department of Justice, which is still subject to approval by the Securities and Exchange Commission and the Quezon City Regional Trial Court, is between Maynilad, the Metropolitan Waterworks and Sewerage System (MWSS) and 20 creditor banks.
"It is pathetic that other vested interests have taken advantage of the election campaign season by injecting politics into purely business decisions, and in the process demonizing the Lopez family," Mr. Lopez said.
Nongovernment organization Bantay Tubig Network last week said Ms. Arroyo had agreed to save Maynilad and Benpres in exchange for Senator Noli L. de Castro's becoming her running mate. Mr. de Castro rose to prominence as a newscaster for the Lopezes' ABS-CBN broadcast network.
Political opponents of Ms. Arroyo have also linked the deal to the elections.
Mr. De Castro has also denied the allegation but the opposition says Mr. De Castro was enlisted to help Ms. Arroyo's presidential bid, which is facing a strong challenge from movie star Fernando Poe, Jr.
Presidential deputy spokesman Ricardo L. Saludo told reporters during a Palace press briefing "... we are always listening to comments, particularly those who accompany their comments with details and sound proposals..."
Earlier, Presidential Spokesman Ignacio R. Bunye called on the opposition "to spare this issue from politicking and, instead, support the government's move for the common good of water consumers..."
Mr. Lopez also said there was no mismanagement of Maynilad under the Lopezes, saying the family is "not leaving a desolate and financially unsound company as the misinformed wish to believe."
He said Maynilad opted to reorganize at the risk of shareholder interest instead of pursuing a rehabilitation case in court that would drag for years and would put to risk water services in the West Zone of Metro Manila.
Under the agreement with MWSS, Maynilad shareholders will write off PhP6 billion in equity and receivables to settle the dispute with the government. The write-off covers Maynilad's accumulated losses and will result in the Lopezes giving up its shares and right to be refunded for investments in the water utility firm.
Mr. Lopez said that in the last six and a half years of running Maynilad, the company paid more than $200 million out of $800 million in concession loans assumed from MWSS, implemented PhP4.3 billion in capital projects, improved coverage to 85% from 63% of the population, and connected 194,098 new customers.
The Quezon City judge handling the Maynilad rehabilitation case, however, was peeved by the absence of government lawyers yesterday in a hearing scheduled to clarify the deal.
Judge Reynaldo B. Daway suspended the proceeding to wait for Justice undersecretary Manuel A.J. Teehankee, acting Government Corporate Counsel Elpidio de Vega, Jr. or deputy Herman Cimafranca to appear. When they failed to appear or send representatives, the judge reset the hearing for tomorrow, strictly requiring the prompt attendance of the three government lawyers. Mr. Daway chided the government lawyers for failing to appear for the hearing that they themselves had requested.
With the postponement, all parties were given until tomorrow to file their comments on the deal and the "haircut" all the parties will suffer as a result of the Lopez exit.
Meanwhile, Senator Manuel B. Villar Jr. yesterday said the Maynilad deal is not expected to erode the country's chances of attracting foreign investments.
The Senate, however, will review the deal, Mr. Villar said.
For his part, Vice President Teofisto T. Guingona Jr. said the government could have helped Maynilad look for other investors before allowing the Lopezes to exit.
"The principle should be to support the private sector who (sic) is floundering ... The last resort should be the government take-over," Mr. Guingona, who is at odds with Malacañang, said in a press conference. -- reports from Anna Barbara L. Lorenzo, Karen L. Lema, Cecille S. Visto and Carina I. Roncesvalles
http://www.bworld.com.ph/current/TopStories/topstory3.html
Smart offers to buy PLDT stake in Piltel
Smart Communications, Inc. yesterday formally asked its creditors and guarantors to allow it to acquire the 45.3% interest of parent Philippine Long Distance Telephone Co. (PLDT) in debt-saddled affiliate Pilipino Telephone Corp (Piltel).
PLDT's stake in Piltel consists of 767 million common shares and 59 million Series K PLDT preferred shares convertible into Piltel common shares at a ratio of 170 to one.
In a statement, PLDT said it is not the intention of Smart, a profitable wholly-owned wireless unit, to merge with Piltel, nor does it intend to use Piltel as a backdoor-listing vehicle.
Smart was originally scheduled to hold its initial public offering draws in August last year, but PLDT chairman Manuel V. Pangilinan said this will likely be moved to 2006. Smart has yet to get regulators' approval.
The completion of Smart's acquisition of PLDT interests in Piltel will give Smart full access to Talk N'Text's expanding subscriber base and revenues.
Smart gave Piltel creditors a number of options:
First, creditors could sell their indebtedness in exchange for cash, either in US dollars or in pesos. Smart will allocate $20 million for the cash settlement option, with the maximum exchange price at 40 cents for each dollar equivalent of Piltel debt exchanged.
Second, debts can be sold in exchange for dollar-denominated notes fully guaranteed by Smart. The notes, which will mature in December 2007, will be equivalent to 52.5 cents for each dollar of Piltel debt exchanged. Interest rate is pegged at the London Interbank Offering Rate plus one percent per annum and payable quarterly.
In lieu of this, the notes' maturity could be extended by one year to December 2008 but the equivalent value will be a bit higher at 57.5 cents for every dollar of swapped Piltel debt. The same interest rate will be offered.
Third, if the maturity is extended to 10 years or until June 2014, the fixed interest rate will be at 2.25%, also payable every three months.
Yen-denominated debt could take this option but Smart has to be given at least a 15-month advance notice for early repayment. A 52.5% discount will be given if payout is made by December 2007 or a 57.5% discount it is made by December 2008.
Fourth, the debt is also convertible to dollar-denominated bonds guaranteed by the Republic of the Philippines (or RoP-guaranteed bonds) with a two percent coupon per year. This option, however, is not offered to Piltel bondholders.
Piltel creditors, mainly foreign banks such as Chase Manhattan Bank N.A., Bank of America NT & SA, Credit Agricole Indosuez and local banks such as Land Bank of the Philippines, Philippine Commercial International Bank, United Coconut Planters Bank and Bank of the Philippine Islands, were given until April 19 to submit offers to sell the debts to Smart.
Smart will proceed with the debt transaction only if at least 75% of Piltel's debt, is exchanged either for cash, Smart debt, or sovereign bonds.
Piltel has $403 million in foreign borrowings it intends to restructure. It has commissioned the services of JP Morgan Chase for the restructuring.
The company has been defaulting since 1999 on its debt payments totaling PhP41.1 billion. In 2001, 98% of its liabilities was restructured, leaving its total indebtedness at PhP22.5 billion.
"PLDT's wireless group is expected to realize benefits from the closer operational alignment of Smart and Piltel, an increase in the share in Piltel's revenue streams and certain other cash and tax savings," PLDT said.
Despite Smart's denial, analysts said the move could be a prelude to a merger, which would help PLDT consolidate its mobile phone business and give Smart access to Piltel's improving subscriber base and revenue.
"That's going to be beneficial for Piltel since it will allow them to restructure their debt. It also coincides with the improved outlook on Piltel. It's going to be a bonus if its merger with Smart pushes through," said Asiasec Equities' Oliver Plana.
Piltel, which posted net losses of PhP3.35-billion last year, has shown signs of recovery by attracting a record number of new subscribers last year. -- with a report from Reuters
http://www.bworld.com.ph/current/TopStories/topstory2.html
Gov't backs Delgados' purchase of Marianas telco
By CECILLE S. VISTO, Sub-Editor
The National Government wants the US Government to pressure one of its territories to allow a Filipino telecommunications firm to purchase a $60-million telephone company.
The Macapagal-Arroyo administration, wanting the Commonwealth of the Northern Mariana Islands (CNMI) "to honor the principle of reciprocity" and permit the entry of Philippine investments, sent a team to the US in September last year to meet with the US Trade department and the US Federal Communications Commission (FCC).
"Why they can't allow us in their market when we freely allow them to enter ours as long as they comply with all the requirements? There is no reciprocity," said a source, who was part of the RP delegation.
The Delgado family -- former owners of Isla Communications Co., Inc., (Islacom) who sold their controlling stakes to the Ayalas in 1999 -- have obtained FCC permission to purchase Micronesian Telecommunications Corporation (MTC) from GTE Pacifica, Inc. and Bell Atlantic New Zealand Holdings, Inc.
CNMI Governor Juan N. Babauta, who is opposing the deal, last week decided to closely scrutinize the proposal before approving the transfer of MTC to the Delgados' Pacific Telecom Inc. The deal, if it pushes through, it will be the first major Filipino telecom investment in the US.
Pacific Telecom is owned by Prospector Investment Holdings, Inc., a Cayman Islands corporation 100% owned by the Delgado family.
MTC is the Saipan service of Verizon Communications. Verizon is considered one of the world's leading provider of wireline and wireless communications.
Saipan is the administrative region of the territory.
MTC is licensed to operate cellular phone, satellite, submarine cable and various domestic and international services.
The source said Trade and Industry undersecretary Thomas Aquino led the team which pleaded the Delgados' cause. Former National Telecommunications Commission chairman Armi Jane Borje and Customs Commissioner Antonio Bernardo were also part of the delegation.
The Department of Trade and Industry, as part of the Trade and Investment Council, earlier endorsed the application of the Delgado family to operate MTC.
Asked what was the main cause of the disapproval of the CNMI governor, the source said Mr. Babauta is concerned over reports that the Delgado family's former partner, Willie Tan, is behind telephone-based gambling and online lottery in the islands.
"The Philippines took the position that the Delgados were not involved in such things and that this was a legitimate business transaction and that it was above board. The officials pointed out that when Americans invest in the Philippines, they are accommodated, thus, it is not fair for them to block our efforts," the source said.
The convincing apparently worked, since the US FCC gave its go signal to the project in November.
Mr. Babauta, however, is still unconvinced.
"It has become a private crusade of the Marianas Governor. That was their worry. Since it was taken directly to the US Government, the governor would be insulted," the source said.
"But the ball is really on their turf. The US Government must show to the whole world that it is not one-sided," he added.
FCC records showed the commission approved the sale four months ago. Under the rules, Pacific Telecom must still get the approval of the Commonwealth Telecommunications Commission (CTC) board before the sale becomes final.
The CTC is an autonomous agency whose three members are appointed by the governor and confirmed by the Senate.
In opposing the sale, Mr. Babauta also cited national security concerns. The commonwealth last year said the decision will not be appealed.
On Tuesday, CTC commissioners decided to subject the matter to a "settlement process" where all issues will be threshed out.
The CTC had underscored the critical nature of the telecommunications system to the islands' future. A number of issues that the Delgados supposedly failed to clarify included the so-called interisland toll rates and management of the telco system.
The sale, which has been under negotiations since April, will be sealed depending on the results of the deliberations.
Northern Marianas has a land area of barely 500 square kilometers with only a little over 80,000 in population. This island group, which has 14 islands including Saipan, Rota and Tinian, is located just off the Philippine Sea.
http://www.bworld.com.ph/current/TopStories/topstory1.html
Philippine Peso hits new lows on political, fiscal worries
Heavy dollar purchases by corporates and banks -- linked by some traders to election and fiscal concerns -- yesterday pushed the peso down to new lows versus the dollar.
All-time trading, closing and average lows were posted by the peso, which hit PhP56.45 to the dollar early in the day at the Philippine Dealing System, the country's electronic currencies exchange.
It closed at PhP56.42 following brisk trading, down four centavos from Friday's session. The peso averaged PhP56.429 to the dollar, weaker by 10.9 centavos from last week's PhP56.32.
Volume turnover at the spot market jumped to $160 million changing hands from the $117.50 million previously.
Currency traders said follow-through dollar buying was prompted by the peso's breaching the psychological resistance of PhP56.35 on Friday.
"Clients panicked when it hit beyond PhP56.35, although the market was calm that the central bank will provide dollar liquidity. These corporates are buying for their month-end requirements. The PhP56.35 was a very critical level," a market source said.
The peso-dollar rate had been hovering within a familiar range of PhP56.15 to PhP56.35 until it hit an intraday low of PhP56.38 last Friday, which traders also attributed to corporate demand.
"Banks were still covering their short dollar positions since Friday. They have to buy back the dollars they sold to the market. Last week, there was huge corporate order," a trader said.
Lack of substantial inflows exacerbated the peso's fall as inflows of dollar remittances coming from overseas Filipino workers (OFWs) continue to be sluggish.
"When the dollar is up, OFWs tend to anticipate further weakness for the peso. They will sell when the price is attractive to them. They only unload dollars which are enough for daily expenses," a trader from a foreign bank said.
FUTILE DEFENSE
Market players also said the Bangko Sentral ng Pilipinas (Central Bank of the Philippines, or BSP) was not in the market on Friday. "They may have thought it was futile to defend the peso at that time. They thought it would be more costly for them," a source said.
But in yesterday's trading, market players believed the central bank was in the spot market at PhP56.45 to the dollar, allowing the peso to trim its losses towards end trade to close at PhP56.42.
Currency traders said the peso will likely stay at current levels today.
Traders also attributed the peso fall to recent BSP pronouncements that the country's dollar reserves could hit the lower range of target by yearend. Bangko Sentral Governor Rafael B. Buenaventura had said gross international reserves (GIR) could hit $14 billion, the lower end of the target range of $14 billion to $15 billion, due to the government's borrowing mix and budgetary shortfalls.
"Worries on the country's dollar reserves weighed on sentiment," a trader said.
Other traders said political concerns ahead of the May 10 elections also contributed to the decline. Many companies, they said, continued to hedge on future dollar requirements.
Traders also said the BSP's hands-off stance in the market contributed to the decline. Mr. Buenaventura said it was partly due to "corporate demand" for dollars.
Others blamed uncertainties brought about by anticipation of today's scheduled announcement by the government of its budget deficit figures for February.
The Malacañan presidential palace, meanwhile, said it is optimistic that the peso will soon recover as soon as corporate demand for dollars eases and political concerns here and abroad ebb.
Presidential deputy spokesman Ricardo L. Saludo said the BSP will take prudent measures to protect the peso. "Monetary authorities are monitoring the currency market with ample instruments on hand to fight speculators and maintain orderly trading," Mr. Saludo told BusinessWorld. -- Ruby Anne M. Rubio, Iris Cecilia C. Gonzales and Karen L. Lema
http://www.bworld.com.ph/current/TopStories/headline.html
The President's Fiscal Year (FY) 2005 budget further accelerates the emphasis towards defense spending and hardware and away from homeland security, intelligence, law enforcement, health & education, and infrastructure.
Total discretionary spending on labor health and education across the federal government, for example, would increase less than 1% compared to the 7.1% increase in defense spending, to $401.7 billion, not counting the continuing cost of Iraq and Afghanistan.
http://www.sensiblepriorities.org/budget_analysis.htm
Business Leaders For Sensible Priorities
Business Leaders for Sensible Priorities was formed in 1996 because top American businesspeople believe that the federal government's spending priorities are undermining our national security. Advised by retired admirals and generals, the Business Leaders for Sensible Priorities 500 members include the present or former CEOs of Bell Industries, Black Entertainment Television, Eastman Kodak, Goldman Sachs, Men's Warehouse, and Phillips Van Heusen—as well as Ted Turner and Paul Newman. Our aim is to increase America's investment in programs that benefit our children (like schools, health care, Head Start) by cutting Cold War weapons systems and shifting the savings. That's just 15% of the Pentagon budget, but $60 to $70 billion available every year to meet children's basic needs.
“There is no way in which a country can satisfy the craving for absolute security, but it can bankrupt itself morally and economically in attempting to reach that illusory goal through arms alone.” — Dwight David Eisenhower
http://www.sensiblepriorities.org/budget_analysis.htm
"Every gun that is made, every warship launched, every rocket fired signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of it laborers, the genius of its scientists and the hopes of its children" — President Dwight D. Eisenhower, April 16, 1953
http://www.sensiblepriorities.org/
US business group slams Bush 'deception' over Iraq war
NEW YORK (AFP) - A US business group that monitors federal spending took out a full-page advert in The New York Times, likening President George W. Bush (news - web sites) to a corrupt chief executive officer who has forfeited public trust.
Timed to coincide with the weekend anniversary of the US-led war against Iraq (news - web sites), the advertisement -- paid for by Business Leaders for Sensible Priorities -- said Bush's case for invasion "was built entirely out of falsehoods."
Highlighting the cost of the war in terms of hundreds of US casualties and tens of billions of dollars, the ad said the "state-sponsored deception" underpinning the conflict dwarfed the damage caused by the series of corporate scandals that recently rocked Wall Street.
"It's past time for finger pointing," it said.
"It's time for someone in this government to step forward and take personal responsibility for the deadly deceptions used to mislead this great nation into war.
"And that someone must be George W. Bush."
Business Leaders for Sensible Priorities was formed in 1996 on concerns that federal government spending priorities were undermining national security.
The group's 500 members include the present or former CEOs of Bell Industries, Eastman Kodak and Goldman Sachs, as well as CNN founder Ted Turner.
http://story.news.yahoo.com/news?tmpl=story2&u=/afp/20040322/pl_afp/us_vote_iraq_bush_0403221721...
"Every gun that is made, every warship launched, every rocket fired signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of it laborers, the genius of its scientists and the hopes of its children" — President Dwight D. Eisenhower, April 16, 1953
http://www.sensiblepriorities.org/
Why Critics of Economics Can Ill-afford the “Postmodern Turn”
Yanis Varoufakis (University of Athens and University of Sydney)
The dissident’s nightmare
It is a sad irony when the activities of dissidents help shore up the establishment they set out to subvert. The point of this piece is to warn the ‘economic’ dissident: Beware the Postmodern Turn! The argument will turn on the thought that postmodern criticisms of economics serve the twin purpose of (a) releasing pent-up frustration with the profession while, at once, (b) reinforcing its ideological backbone.
Every era has a tendency surreptitiously to guide young dissidents toward a specific ‘umbrella movement’; one that ends up shaping their milieu. Existentialism, structuralism, neo-Marxism, etc. have given their place, in our era of devalued political goods, to Postmodernity and Deconstruction. Without wishing to discuss the ‘postmodern condition’ generally, I shall concentrate entirely on its likely effects on the struggle to ‘civilise’ economics. In this regard, the problem with postmodern thinking is that it stands no chance of success.
Postmodernity’s criticism of grandiose Theory may be terribly satisfying to those who adopt its grandiose pronouncements. However, the satisfaction at having lambasted all Theory is momentary and the ensuing subversion short-lived. To paraphrase Marx, the subverters will be, eventually, subverted and, tragically, the neoclassical establishment will come out stronger and better equipped to obfuscate social reality than ever before.2 If I am right, the task of the PAE movement must be to clear the way for radical criticism that avoids the postmodern trap as resolutely as it opposes economic autism.
Dissidents or the economists’ handmaidens?
Modernity marginalised Religion, but retained religious transcendence by worshipping Theory. Economics emerged as the highest form of this secular creed and enchanted all of its practitioners; free-marketeer and protectionist, liberal and Marxist, Keynesian and monetarist. It now seems that some economists are breaking ranks; joining the ‘other’, the postmodern, side which defines itself in anti-theoretical tones that exude an atheist’s anti-religious fervour. The danger is that the legitimate anger of students (which has given rise to the PAE movement) will draw them to an apostasy without a future. For despite its considerable oeuvre, postmodern criticisms of economics are doomed to shrivel and be absorbed by mainstream economics; the predator turning into unsuspecting prey. I risk this prediction for two reasons.
First, postmodernists allow economics to parade as equally scientific as the natural sciences (albeit on the grounds that no discipline is truly scientific). They are right of course to think that all theory resembles religion, since it also seeks to give meaning to the practices and expectations of whole communities. However some theories are capable of transcending religion and approaching objectivity better than others. Nature’s habit of working independently of our beliefs about it means that the natural scientist can devise experiments which have the power disinterestedly to discard falsity and thus forge knowledge and progress. Society, on the other hand, is corrupted to the very marrow of its bones by our collective beliefs about it, and can therefore provide no objective test of social theory (the latter being part of the very web of beliefs that society is made of). Thus social theory, unlike thermodynamics, is condemned to remain untestable, and stuck in the realm of opinion. Economics valiantly attempts to extricate itself from this fate with a touching commitment to mathematics but, sadly, it only ends up as a religion with equations.
Postmodernity errs in thinking of this as the inevitable failure of all Modernist enterprises. It lambastes economists’ churlish reliance on an Outer Wall of Algebra and an Inner Wall of Statistics but overlooks their success at never even coming close to the nature and the dynamics of contemporary capitalism, thus shielding the latter from rational criticism. But such is the fate of all idealisms which give language an existence independent of the material conditions of social life and reproduction. If only postmodernist critics understood theology and mathematics a little better! Perhaps they would have recognised in economics the greatest proof that Modernity is saturated with its negation.
Which brings me to the second part of the argument: Postmodernity not only lets neoclassical economics off the hook but, more worryingly, reinforces it copiously before dissolving into it. Consider what the postmodern rejection of metanarratives means at the individual level: It means the loss of any capacity to scrutinise one’s private urges rationally on the basis of some collectively constructed notion (or metanarrative) of the Good. Stripped of those capacities, the individual fragments into a community of selves, a bundle of ordinal preferences, and ends up with no one self whose preferences those are.
In this Empire of Ordinal Preference the only possible data that social theory can go to work with are the differences in individual whims and freely chosen identities. These data are then, courtesy of their ordinal properties, impossible to compare across persons (for this would require a metanarrative) or procure a view of capitalism as a system. Thus in a fully-fledged postmodern schema, social relations are confined to interplay, voluntarism, tolerance and exchange; society is the playground where the latter unfold; and discussions of the General Will, exploitation and developmental freedom make no sense. Does this all sound familiar?
If it does the reason is that neoclassical economics went down that alley decades ago. The asymptotic limit of postmodern fragmentation is the neoclassical general equilibrium economic model. Both Neoclassicism and Postmodernity espouse a radical egalitarianism which is founded on the rejection of any standard or value by which either individual action or the institutions of late capitalism (e.g. the labour and capital markets) can be subjected to rational criticism. In short, whereas the problem with modernist mechanism was that its view of our world excluded value from the outset, the problem with Postmodernity is that it ends up having no view of the world and becomes easy-pickings for a similarly viewless/valueless tradition, one which bears the additional weaponry of intricate mathematics and endless econometric ‘evidence’.
For Oscar Wilde the supreme vice was shallowness. For Postmodernity it is the New Jerusalem. Its playfulness allowed it to thrive in the friendlier waters of literary and cultural studies at a time when ‘margins’ were becoming central and classical stuffiness was going out of fashion. But now postmodernists have entered shark-infested territory. Neoclassical economics, another purveyor of shallowness, threatens to bend them to its will,3 gain strength from them and subsequently reinforce hierarchies more oppressive and totalising than those the postmodernists set out initially to dismantle.
When the IMF dictates its policies to some hapless Third World country, there is a strong whiff of the radical egalitarianism shared equally between general equilibrium and Postmodernity. The same whiff accompanies, and legitimises, the inexorable devaluation of political goods, the vulgar commodification of human bodies and values, the impossibility of conceptualising freedom-from-the-market, the depiction of Central Banks as ‘independent’ only when under the thumb of financial capital, the confusion of liberty with the freedom to exploit and to demean and, above all else, the portrayal of coercion as tâtonnement. Thus Postmodernity unwittingly blows fresh wind in the sails of neoclassicism, the undisputed champion of the deconstructed human agent. While warning us correctly that new authoritarianisms will be born when we get caught up in our own rhetoric, it offers no resistance to the current authoritarianism of neoclassical economics and, more so, the socio-economic system that it serves.
Conclusion: The dissidents’ dilemma
When a fresh wave of criticism is unleashed, it picks up along the way pre-existing discontents, hitherto bopping along hopelessly near the surface, and propels them toward the shores of exposure and respectability. Lonely dissidents suddenly find a new ‘movement’ that will have them. New hope of escaping obscurity is thus born.
In recent years many dissident voices had to adapt themselves to postmodern-speak in an attempt to be ‘included’ on the postmodern bandwagon. The PAE movement must release such voices from this obligation. Social criticism of economics must reclaim an awareness that to reject the scientific status of economics is not to reject science in general or to espouse postmodernism.
Indeed irony and ambiguity were utilised, long before Postmodernity, by thinkers eager to come to what a more confident past once knew as the truth. To re-establish irony, ambiguity and indeterminateness in the discourse of economists would be a triumph of the spirit. But it would not be a postmodern turn. For the latter has no monopoly on an appreciation of the radical indeterminacy of social processes (as Hegel would be all to eager to remind us) or the importance of not taking our selves, and our theories, too seriously. On the contrary, Postmodernity undermines itself by offering Modernity’s most awful purveyor another means of extending its dominance.
So, we have arrived at the dissident’s dilemma. The postmodern kernel within neoclassical economics forces a stark choice: Submit to homo economicus and model our messy world’s dynamic as if a series of suburban disputes between postmodern neighbours. Or, seek an historically grounded understanding of how systematic patterns of power and economics are the joint products of the continual feedback between technological developments and evolving social formations. The difference between the two options is not theoretical; it is ideological. The postmodern turn will be chosen by pseudo-dissidents whose prime interests lie in acquiring a chic image; one that the self-effacing postmodern criticism is good at imparting. The less fashionable option of working towards historically grounded knowledge will appeal to the truly ‘unreasonable’ dissidents; those driven by an unbending commitment to a rational transformation of society.
Notes
1. Department of Economics, University of Athens, 8 Pesmazoglou Street, Athens 10596 and Department of Economics, University of Sydney, Sydney, Australia. Email: yanisv@econ.uoa.gr
2. Recently, Routledge published a volume on the nexus of Postmodernity with economics edited by Jack Amariglio, Stephen Cullenberg, and David Ruccio (2001). The following thoughts have been extracted from my review of that book (forthcoming in the Journal of Economic Methodology)
3. Courtesy of a more sophisticated take on the same type of philosophical shallowness.
References
Cullenberg, S., J. Amariglio and D. Ruccio (2001). Postmodernity, Economics and Knoweldge, London and New York: Routledge
Varoufakis, Y. (2002). ‘Deconstructing Homo Economicus?’, Journal of Economic Methodology, forthcoming.
_______________________________________
Yanis Varoufakis’ most recent book is Foundations of Economics : A Beginner's Companion.
SUGGESTED CITATION:
Yanis Varoufakis, “Why Critics of Economics Can Ill-afford the ‘Postmodern Turn’””, post-autistic economics review,
issue no. 13, May 2, 2002, article 1. http://www.btinternet.com/~pae_news/review/issue13.htm
The Money Pill
So it's good to see that Gilles Raveaud, co-founder of the French Austisme-Économie, is pushing for a more basic approach to economics. He wrote in post-autistic economics review, May 2, 2002:
". . . it is a shame for all economics teachers that neoclassical economics is taught in the first year. . . this particular persuasion in economics developed after many others, and so ought to be taught after them (and surely not in first year, where one should present Smith, Ricardo and Marx)."
But Gilles has already strayed from the mark. Economics did not start with Smith, Ricardo and Marx. The origin of economics is the barter system, where commodities were used as money. Barter then led to money systems such as the IOU, and to token (fiat) systems such as rocks, beads and shells. Smith, Ricardo and Marx never examined the origin and nature of money. People like Ralph Borsodi, Silvo Gessell, E.C Harwood, Bernard Lietaer, Margrit Kennedy, and E.C. Riegel did. Why not start at the beginning?
The hierarchy of money is this:
I. BARTER (And Commodity Money Systems; i.e. tobacco, gold)
A. The IOU SYSTEM
1. COMMODITY BACKED MONEY
i.e. an IOU for gold (essentially a barter system)
2. CREDIT BACKED MONEY
i.e. an IOU against future production
B. SYMBOLIC or TOKEN MONEY (FIAT)
ie. sea shells, beads, rocks
We can eliminate B straight away because it only works in small communities where trust is paramount and self-interest in absent. All token money systems have been destroyed when self-interested outsiders entered the system.
So the IOU is our only reasonable choice.
Equally important is that, whatever the details, the money system should have as its primary goal, the attempt to remain faithful to the original, the barter system. Today's economists argue that barter is primative, archaic and imperfect and they refuse to talk about it. There is a definite problem here. I would argue that barter indeed has its limitations but to the extent that it works, it works perferctly. It is archaic only in the sense that food is archaic as regards the Food Pill.
Barter is uncomplicated, direct, immediate, whole, secure, egalitarian and flawless. There is no middleman, no need for bankers and less need for central bankers. No need for futures contracts, hedge funds or derivatives, and no worry about "Money Supply." No inflation, no bank mergers, no $45 million CEO bonuses, no overdrafts, no minimum balances, no robot phone machines that tell you, "if you would like to speak to a half-wit, please press..." And no currency casino/exchange rates. The closest Marx ever came to analyzing money was his observation that excess profits comes from either over-charging the customers or under-paying the labor force... or both. He saw the effects of money and totally ignored the fact that this does not happen with such ease in a barter system. Barter is the only Natural money system we have.
If there is a reason to substitute a money system for the barter system its primary focus should be an attempt to emulate the original. So, is our money today uncomplicated, direct, immediate, whole, secure, egalitarian and flawless? No, quite the contrary, it is none of these things. For an explanation of just one defect, see: Money divides Trade into Two Parts.
The best we can say is that our money is "easier" than barter. So we seem to have chucked out all the positive aspects of barter in exchange for one: ease. And regarding that one benefit, nobody has ever asked, "easier for whom?" After all, the Egyptians found an easy way to deal with labor problems, but it cannot be said that it was easier for everyone.
Like the Food Pill, today's money system is concentrated and unbalanced. It is based on the IOU but only the credit-backed side of the IOU without the recognition that there is also the commodity-backed side of the IOU, and that each has unique properties and uses. And limits.
For example, any study of the origin of the credit-backed IOU has to turn up the fact that the IOU, in its original form, was a personal contract between two parties (no banks, no government), and while it is true that this IOU could circulate as money, it is also true that the wider the circulation, the greater the risk, and thus the lower the value -- to the extent that an IOU from Boston might have little value in New York, and no value whatsoever in China. Yet today we base our entire money system -- local, national and international -- on a model that is risky over long distances. In a well regulated system such a limitation does not apply to the commodity-backed IOU. In a well regulated system the credit-backed IOU might be more equitable, but we do not have a well regulated system; we have a de-regulated system.
In the end I think what we are trying to do is spin straw into gold; create the perpetual motion machine; find a benevolent god that will make everything better; create a Food Pill.
Trying to emulate barter with paper notes is like trying to emulate real life with photographs. Barter is simple. The IOU is simple. But when one attempts to create national and international curencies, the problems and inequalities grow exponentially.
As mentioned above, there have been many people in the last 100 years who have plenty of good ideas about how a money system might work while still maintaining some of the positive attributes of barter. One thing is certain: the solution cannot be found by a collection of businessmen, bankers, and politicians -- or economists in their employ. The problem is technical and scientific and requires technicians and scientists to resolve it.
The thing is that since 1971, the whole world went to a money system based on debt (credit). In the Barter system money was based on wealth. And since 1971 huge changes have taken place around the world. The evidence is in; has been for quite some time. One need not be a great throbbing economic brain to see it. Examples are everywhere. Jeff Gates cites economist Robert Frank who reports that "the top one percent captured 70 percent of all earnings growth since the mid-1970's" When money is based on nothing more tangible than credit, that can hardly be surprising. Still, the 'economists' just dont get it. For more on the results of our new debt based system, see Jeff Gates'
Ownership Statistics - Shared Capitalism
and Everything Changed in1971
The cause of the problems is a perversely altered money system that bears no resemblance to the original natural model. Trading off a little of the general public's security for a little ease of use, bit by bit, results in a system that is more harmful to the public and more beneficial to the bankers and credit hawkers. Bit by bit the public has lost and the bankers have gained with trade-offs such as ...
Money creation at the stroke of a pen, resulting in un-democratic government spending, unpayable debt and elimination of social programs in favor of weapons programs and unwanted social programs like school vouchers
Money creation with interest payments attached which creates a snoballing of other problems
Failed banks and bailouts
Buy-outs of failed banks at ten cents on the dollar
Questionable policies: "Too Big To Fail" "Trickle-down" "Moral hazard" "Political" economy
"Loans" to tin-hat dictators
IMF and World Bank structural adjustments
Economic bubbles and crashes
$45 million bonuses for banking executives
Regulation by self-interested banking-industry insiders
Neo-liberalism
National currencies without intramural exchange rates
Foreign currency devaluations
Rejection of commodity backed currencies
Unredeemable currencies
Inflation
Central banks run by central bankers
Fractional reserve lending
"Nobel" prizes for economists
Massive libraries of arcane obfuscating jibberish written by overpaid, hyperactive, autistic neanderthals (terrible waste of trees, that)
Lenders of Last Resort
Speculative nonproductive currency manipulations; derivatives, hedge funds etc.
Undemocratically, inequitably issued money: scarce money for the poor
Predatory lending, foreign and domestic
Privatization of public resources and property
Preposterous exchange rate mechanisms
But, despite these deficiencies, we are told that our money system is easier than barter.
I hope you are satisfied with that explanation. Now go and eat your food pill.
© copyright 2002, J. Walter Plinge, France
b.ob@accesinternet.com
Distribute freely if it's kept intact, including credits,
and not for profit or print media.
http://ebean390.tripod.com/waltsub.html
The posts are informative, but yes, the market reflects the global bloodbath underway, and it looks like no end in sight, that doesn't bode well for too many. Its a crazy world.
Looks like you have been pretty busy here...
Like I said, get ready for World War IV...
Hamas immediately swore it would avenge Yassin saying Sharon had "opened the gates of hell and nothing will stop us from cutting off his head".
http://www.expatica.com/source/site_article.asp?subchannel_id=48&story_id=5866
What will your kids choose to be? A slave? Or a slave owner?
by J. Walter Plinge, July 2003
"He who will not reason is a bigot; he who cannot is a fool; and he who dares not, is a slave."
— William Drumond
"And he who has no time -- I'm busy, shaddup, I'm BUSY -- to reason, is a wage slave."
— J. Walter Plinge
It was the honorable James Madison, father of the US Constitution and author of the Bill of Rights, who bragged that he could make $257 a year on every slave he owned while the upkeep costs were only $12 - 13 a year. Pretty impressive numbers. Modern corporate cowboys have a target to aim at.
In 1994 Allied-Signal's CEO paid himself 50 percent more than he paid his entire workforce of 3,810 Mexican maquiladora workers. I'd say he's got Madison beat by a million miles: better than slavery.
In the 27 June 2003 issue of the International Herald Tribune, a front page story was about an IRS study regarding the top 400 incomes in the year 2000. They earned 1.1 percent of all the money earned in the United States that year. More than double their 1992 record. So each of these people earned the equivalent of 700,000 others ... and we are not talking about Mexican laborers here.
Worse still, in the nine years of the IRS study, "...the incomes of the top 400 taxpayers rose at 15 times the rate of the bottom 90 percent of Americans... [whose] average incomes rose 17 percent ...[or 1.88 percent per year]" and this is getting to the heart of matters because inflation averages 2 to 3 percent per year. So the vast majority of Americans' wages are not even keeping abreast of inflation. Every year means a Wage Decrease.
What this means in broad terms is that every year the price of a house ("The American Dream") zooms further and further out of reach because as housing prices grow faster than inflation (6-9%). The Reaganesque phrase “Pull yourself up by your own bootstraps” is apt here. It suggests that people resolve their problems by resorting to an utterly futile activity. But this money system is designed like a game of musical chairs - at every round we have another loser whom we then must treat as a contemtible bit of scum. Until we are the loser.
No surprise then that Ward Morehouse at the Program On Corporations Law And Democracy (http://www.poclad.org) wrote, "Home ownership rates in the US have not been rising for a quarter century [since 1976]. And in fact if you exclude mobile homes, home ownership rates have actually declined." (see the urls at the end for hundreds of such statistics)
You hear that? The American Dream has now become a mobile home. Every year: one step closer to homeless slavery. I have been telling my niece and nephew that they and their kids will have a choice: you can be a slave, or you can be a slave owner. There's not much in between. I don't think they heard a word I said ... or maybe they haven't had the time to think it through.
The thing is, on the face of it, there is some kind of error here. How is it possible that one guy can earn as much as 700,000 other guys and gals? That's like saying that one person grew more potatoes than the other 700,000. It's a mathematical impossibility. And what is this? “Bill Gates owns half the wealth in the US” ? What? Can Bill Gates take dictation? Can he type? I mean, we have people who can weld under water and people who can do magic tricks. What exactly can Bill do? Let's be serious, this is a guy that most of us wouldn't pay $3 an hour to wash our windows, and yet somebody is trying to create the mass illusion that he owns half the United States. Somebody has GOT to audit these books.
There are innumerable factors that got us to this point, but today I would like to focus on one of the least popular subjects....
MONEY
How does money get into circulation? There, you see? I've lost 98 percent of readers already. Hey folks, this isn't about economics. It's only about where money comes from. This is the easy part. Isn't it incredible that, in the world's most devoutly capitalist country, the USA, fewer than one in ... oohhhh ... say, 700,000, can tell you where money comes from?
One of the most unintentionally hilarious websites I have seen is titled “How Currency Gets Into Circulation” by the New York Federal Reserve Board (Fed). Their answer is, “We print it.” The website is about how the Bureau of Engraving and Printing prints money. There is not the slightest hint of how money actually gets into circulation. (http://www.ny.frb.org/pihome/fedpoint/fed01.html).
The answer to that connundrum is that money is lent into existence. There is simply no other way to create money in our system today. Through a system dubbed "fractional reserve lending" (a cool name suggests legitimacy, right?) when you take out a "loan" your banker creates the money he gives to you. The banker is only required to have 10% of the amount of the "loan" (thus the "fraction" - 10%, is held in "reserve"), and if you put 20% down on a house, well then you have just made a very nice gift to someone in need, and you are borrowing your own money at an exhorbitant interest rate. http://members.home.net/flaherty15/dep.pdf
The origin of money is the barter system: using products as money. In the barter system “money” equaled wealth. Today money is 180 degrees the reverse: money is debt (more on that later). With the barter system both sides of the exchange benefitted from the trade. If they did not, the deal was off. Today the beneficiaries of money are anyone BUT the producers of goods. Today's economists argue that barter is “primitive” “archaic” and “imperfect.” I would argue that, sure, barter has its limitations but to the extent that it works, it works perfectly. It is uncomplicated, direct, immediate, whole, secure, egalitarian and flawless. It's is also inflation-proof, non-profit, interest-free and should be tax-free.
There are no middlemen, no bankers and no central bankers. No futures contracts, no hedge funds nor derivatives, and no worry about “Money Supply.” No bank mergers, no $45 million CEO bonuses, no overdrafts, no minimum balances, no bank runs, no frozen assets, no currency crashes, no robot phone machines to tell you, “if you would like to speak to a half-wit, please press twelve, and wait.” And, most importantly, no currency casino/exchange rates. I will not advocate a return to barter, but we should recognize that it is the only natural money system we have and if we want another money system, then it ought to emulate at least a few of the above beneficial aspects of barter. Just a couple - is that too much to ask?
If you have ever accepted an IOU, or written one, then you already have a basic understanding of modern money. In the third grade at recess, we used to trade baseball cards and marbles and chew bubble gum. If you had two packs of bubble gum and I had forgotten and left mine at home, I might write out an IOU - “IOU a pack of Double Bubble - Walt” and I'd pay you back tomorrow. And if Billy had some baseball cards you really really had to have, you might see if he'd accept my IOU in trade. Then you'd have seen first hand, what money really is, how it is created, and how it can circulate. That's the model the Fed use today. Or, more accurately, that's the model they claim to use.
By looking closely at the schoolyard model, you can learn a lot about how money should work. I'll list five of the principles below. The Fed guys don't care much for these IOU principles. They make great hoopla noises about the IOU model, but when push comes to shove, they will push and shove rather than talk reasonably and sensibly. They ignore the all rules except for #5 which they use to their great advantage.
1) In our schoolyard, the money was not issued by a bank or government.
The Political/Corporate/Banking sector (PCB) (sort of like Polychlorinated Biphenyls) has privatized and monopolized the creation of money. The Fed stance is: “Outa my way buddy, we'll handle this. Our system will work better, we will make it work better.” And by that they mean they will make their system work regardless of its effect on people. Then, as a first line of defense, they pack the media with specialists trained in a speech called “Gibberish” that was designed to induce a Pavlovian sleep response in the general public. If that sounds glib, you might want to read the chapter on “socialization” (a nice word for “brainwashing”) in Arjo Klamer and David Colander's extensively researched book “The Making of an Economist.”
Has someone confiscated or monopolized the peoples' right to create money? What do the economists say? Here's what Geoffrey Gardiner says. (http://groups.yahoo.com/group/gang8/) “Did the public adopt state money, or did the state adopt public money?” There is no need to answer that question because the two are not separate. The members of the ruling elite were also members of the public. Their attitudes cannot be divorced from one another. The state and the public are two concentric circles. I see no need to try to make a serious distinction.”
One is not likely to find much profound thought in economists' circles.
2) Anyone who can pay off his/her IOU - redeem it - is a good candidate for money creation; people who cannot produce, are people you would not accept an IOU from.
On an average day you can find a statement somewhere in the media that will sound something like this, “In the little town of Quedge, South Africa, 10,000 workers can now find a job because their new factory is the only source of money.” Wow - talk about Slavery. Even most “primative” tribal societies knew that there can be no such thing as a lack of money. Did we lack money in the schoolyard, kids? Nooooo! But when money is confiscated by law and monopolized, this knowlege is lost in the name of “progress.” When you take money creation out of the public domain, this enormous power becomes concentrated in the hands of a few elite, who will eventually abuse that power.
One result is that the Fed uses interest rates in “the war against inflation.” High interest rates force wages of labor down and the lower the wages go the more profit there is for management and executives. The divide between the rich and poor is the direct result of Fed policy. This is not new, it began, curiously enough, just after the world went off the gold standard in 1971. Another result is that some areas, by design (like the South African town above), get no money and that's actually very profitable because it also forces wages down.
There have been throughout history, many varied money systems. Today there are local, or community currencies (CCs) based on the individual producer's ability to create money. They are being set up around the world to correct the present system, but they won't be much help if governments continue to stonewall with their manipulative currencies. see (http://www.strohalm.nl/)
http://www.frugalfun.com/slavery.shtml
William Greider, in an article titled “Who Governs Globalism” in The American Prospect, 1997, wrote, “Cumulatively, since 1980, Americans have bought $1.5 trillion more than they sold in their merchandise trade with foreign nations.” The debt is more like $3 trillion by now. Americans are writing checks but nobody's cashing them at the bank. Why? Because they think dollars are wealth. When the world cashes in their chips, the USS Dollar will sink like a rock. People will dream of the “good ole days” of true glorious southern slavery. (http://www.guardian.co.uk/comment/story/0,3604,940757,00.html)
There is no constitutional right to vote in presidential elections
At least according to this article:
http://us.cnn.com/2000/LAW/12/columns/fl.dorf.righttovote.12.13/
"Whatever the resolution of these delicate questions, the Supreme Court's Palm Beach County decision has spotlighted a substantial deficiency in our Constitution as currently understood: We have no constitutional right to vote for president -- or even for presidential electors. That should change.
Of course, in many parliamentary systems of government, the people do not directly vote for the head of government, and so there is nothing inherently undemocratic about an indirect choice (through elected legislatures, not direct vote). But there is a substantial difference in national self-understanding.
We do not live under a parliamentary system of government, and presidents often claim authority -- a "mandate" -- for their actions on the ground that they alone have been chosen by the whole body of the American people. It is time for a constitutional amendment that makes the truth of that claim more than a matter of state legislative whim."
Wouldn't you agree?
It would appear that the laws on rights to vote are scattered all over the states...
Restoring
Your Right to Vote
California
Issued December, 2000
The right to vote is an important civil right in a democracy as well as a civic responsibility, and yet many persons who have been convicted of a crime do not know whether they are eligible to vote. For both federal and state elections, the right to vote is controlled by the law of the state in which you live. Some states restrict the right to vote for persons who have been convicted of a crime. This pamphlet is intended to help you determine whether you are eligible to vote in the state in which you live, and if so, what steps you must take to be permitted to vote.
http://www.usdoj.gov/crt/restorevote/California2.htm
http://www.usdoj.gov/crt/restorevote/restorevote.htm
I doubt that they would, after all they don't vote.
"He who will not reason is a bigot; he who cannot is a fool; and he who dares not, is a slave."
— William Drumond
http://www.frugalfun.com/slavery.shtml
Stephen King and the Crash
As written in June 2000
On June 29, 1999 at about 3 am on BBC World Service Radio a reporter interviewed the chief economist at HFBC Bank in London, Stephen King (yes -- this is all true), who had an unpopular assessment of the present state of the US economy: some time around 2001 - 2002, the US economy would inevitably collapse. Daytime news broadcasts remain tranquil. The imminent collapse of the world economy, it seems, has not been a topic that an enterprising reporter might wish to persue. A cynic might say that BBC management requires a more up-beat feel, but we here at the Currency Center are not cynical.
What the world needs now is yet another prediction of calamity. Yet, a year on, King's prediction is right on the mark. He predicted a bubble "associated with strong growth and low inflation" combined with a dash of massive lack of investment in "products in savings" and interest rate hikes that are like a pea-shooter against the Godzilla of exponential growth. He even cited Greenspan's perceptive observation that "the party can't go on forever."
"I don't think there is any evidence," said Mr. King "to suggest that with one [interest] rate increase you have a problemÉ but after three or four rate increases, which is what we think will happen in the next 12 months, then you have a much bigger problem." For those of you who are living in mud huts, that's what has been going on lately -- and the same thing is happening in the UK.
I personally have not heard this prediction repeated, and King himself admitted that his viewpoint is not shared my many of his colleagues and he attributes this to their lax view of low inflation-- something that is seen as a good sign-- and their ignoring "asset price inflation" which he noted was present, in Cinemascope, in Japan just before their collapse. As it happens, Alastair Cooke, in an April 2000 broadcast of his "Letter From America," devoted considerable time to his friend's rent hike of 700% in New York City. How can we have low inflation if some prices are skyrocketing?, Cooke wondered and he talked to an economist who explained to him that certain things were out of the loop as regards inflation. . . like rent, and ahhh, real estate prices . . . which sheds some light on Kings' "asset price inflation." Real estate prices, it seems, do not figure in the calculations of inflation according to the Federal Reserve Board.
Add to this gonzo mix, a liberal dose of hucksters in the media selling "the largest uninterrupted ecconomic expansion in human history," while bearing in mind that Sinclair Lewis has already warned us that "Advertising is a valuable economic factor because it is the cheapest way of selling goods, particularly if the goods are worthless."
Today's question is: What will President (the media ALWAYS gets their way) George Dubya Bush's reaction be to this state of affairs as the rate increases continue and the inevitable becomes more obvious?
My guess is that he will do one of the following. . .
1) Declare war on some Non-WTO member nation
2) Start a school for ballroom dance and lasagna preparation in Aspen
3) Launch a national Pick Six Lottery backed by the FDIC
4) Push for a tax break for the over-the-$2mil/year crowd
5) Re-deregulate the Savings & Loan industry
If you forsee other possibilities, contact
World Center for Equivocal Currencies
Immediately
We Need To Know
Contact J. Walter Plinge at
b.ob@accesinternet.com
© copyright June 2000, J. Walter Plinge, France
Distribute freely if it's kept intact, including credits,
and not for profit or print media.
http://ebean390.tripod.com/waltking.html
Is "President" Bush Insane ?
Here's something on the bright side...
The Blueprint for U.S. World Domination
Like Hitler, "President" Bush would like to expand his empire. If he doesn't it will collapse, like Japan. There are a couple blueprints around that you can read. Neil Mackay wrote about one in The Sunday Herald (Scotland), September 15, 2002, in an article titled ''Bush Planned Iraq 'Regime Change' Before Becoming President." And there's more.
Citation from the Sunday Herald:
''This is a blueprint for US world domination -- a new world order of their making. These are the thought processes of fantasist Americans who want to control the world. I am appalled that a British Labour Prime Minister should have got into bed with a crew which has this moral standing."
''The blueprint, uncovered by the Sunday Herald, for the creation of a 'global Pax Americana' was drawn up for Dick Cheney (now vice- president), Donald Rumsfeld (defense secretary), Paul Wolfowitz (Rumsfeld's deputy), George W Bush's younger brother Jeb and Lewis Libby (Cheney's chief of staff). The document, entitled Rebuilding America's Defenses: Strategies, Forces And Resources For A New Century, was written in September 2000 by the neo-conservative think-tank Project for the New American Century (PNAC).
Wonderful . . . So, what is PNAC?
Project for the New American Century
What A Fun Name. Now, you see, it's time to expand the empire by usurping and colonizing, not just the earthly terrain, but time itself, in much the same way Hitler took the name "The 1000 Year Reich." The spin and manipulation is marvelous. Here is PANIC's... oops, make that PNAC's statement of purpose:
''The Project for the New American Century is a non-profit educational organization dedicated to a few fundamental propositions: that American leadership is good both for America and for the world; that such leadership requires military strength, diplomatic energy and commitment to moral principle; and that too few political leaders today are making the case for global leadership.
-- William Kristol, Chairman
You have got to admire the wordplay. We did this in gradeschool and it's lots of fun. The inference is that the US is dedicated to diplomacy and since diplomacy is so vulnerable there is a need for a military backup. (Question: How many diplomatic missions to Iraq has the US embarked upon in the past century? Answer: Zero.)
Here's an idea. Why not re-issue the F-16 under the name of F-16MP (for Moral Principle). This could be done by simply placing a bible on the dashboard of each plane. Or in the glove compartment, let's not quibble. Next, manufacture a line of neutron bombs and biologic weapons under the "Diplomacy" trademark. Wouldn't that give a whole lot more substance to PNAC's statement? I think so.
http://ebean390.tripod.com/waltinsane.html
Let's Play Hockey Like We Play Free Trade
Free Trade is, if we must go back to Econ 101, about mobility of three economic factors:
raw materials
labor
finished products
If one or more of these factors is not mobile then Free Trade cannot exist. It's just like hockey: if you take away the hockey sticks, you can still play something, but it sure won't be hockey.
But, virtually ALL economists say free trade is a cool idea. That's what we might have to call willfull ignorance because it's hard to accept the idea that none of these economists know about passport restrictions and, while northerners can easily move to the south, southerners cannot freely move to the north. An honest economist would have to say, "But we DON'T HAVE free trade. It's unatainable if labor movement is restricted." No northern economists have.
Chakravarthi Raghavan puts it this way: "[about the past damage to poor countries caused by free trade] . . . this important condition [mobility of labor] is normally brushed aside in economic literature by assuming either perfect competition in commodity markets or perfect mobility of labour and capital once administrative barriers to trade are removed."
http://www.twnside.org.sg/title/disinte-cn.htm
You see, economists simply assume that all labor is mobile because they have never heard of passports, since, you see, they just DON'T GET OUT that often. It's an honest mistake!
This freedom of workers to move around is fundamental to Interstate Commerce, so revered in the US; they should know about these things. To prohibit a Texan from going to California to seek his fortune in the music industry might seem like a merciful idea but it would be illegal; it's a "restraint of interstate commerce." Workers in the US and the European Union can go where the work is. That is fundamental to free trade. But in the Global "Free Trade" market they cannot.
Nonetheless, not a day goes by without someone in the British media raving on about "bogus asylum seekers" and "economic migrants." Same thing in the US.
Molly Ivins (Seattle Times, Jan 11, 1999, page B5) noticed that the Immigration an Naturalization Service (INS) got a revamping in 1996. More money; more power. Coincidentally this was the year after the WTO was formed in Uruguay. The INS budget was increased to nearly a billion dollars a year; more than the FBI, more than the Drug Enforcement Administration with their famous war on drugs, and more than Customs. Check bouncing in the US is now a deportable crime for LEGAL immigrants. The INS now sports 15,000 armed officers with arrest powers. Says Molly, who noticed the focus of arrests on Asians, Africans, Cubans, Latin Americans and Haitians, "... you notice that immigrants from Europe or Australia do not seem to end up languishing in the hoosegow for years while the INS looks over their paperwork." But minorities do. A Cuban who bounces a check can now get a "life sentence" because they are not deportable, since the US does not have diplomatic relations with Cuba because of ... aaahh... Cuba's human rights abuses.
When the labor force is locked in by passport and visa laws, we do not have free trade. When refugees are turned away because they are "economic migrants" it is sheer quackery to suggest that money and merchandise should move freely without borders in the name of free trade.
So let's make a change to our Hockey Rule Book. Since the restraints on labor movement penalizes poor countries, let's let that be reflected in the Rule Book.
New Rule #1
Peanalty: Poor Countries
Double the size of their goal to make it harder to protect
There, that's a lot better
"If Tony Blair genuinely believes in the boundless opportunities of globalization (Financial Times report August 2nd), he should concentrate his energies ... and begin to dismantle barriers to the cross-border flow of labour. 'Just Do It', Mr. Blair."
-- Martin Khor, Director, Third World Network
Letter to Financial Times, 11 August 2001
http://www.twnside.org.sg/title/ft.htm
"Open trade is not just an economic opportunity, it is a moral imperative. Trade creates jobs for the unemployed. When we negotiate for open markets, we're providing new hope for the world's poor. And when we promote open trade, we are promoting political freedom."
-- G. Dubya Bush
--------------------------------------------------------------------------------
Now, what about the free movement of money? That cause any problems anywhere? Well. actually, yes it does. It was the free movement of money that caused the Asian crisis. First of all, observe that while rich countries swamp the poorer countries with "inward investment" money, poor countries cannot reciprocate and buy into rich countries, because they are, well... poor. So this is a one-way street.
Second of all, the movement of money, 'capital,' is not a requirement of Free Trade. The IMF demands it. The World Bank demands it. But their darling of free trade, Adam Smith, never said it was necessary. As Noam Chomsky tells it, "go back to Adam Smith -- the basic principle of free trade is free movement of people. Adam Smith assumed there would not be movement of capital... Now we have exactly the opposite. We have to block movement of people by force, and free up movement of capital. And that's called free trade."
Paul Kingsnorth Interviews Noam Chomsky,
The Ecologist vol. 32 No. 4, May 2002, p.12
James Tobin:
"China doesn't have full convertibility, except of Chinese currency earned by foreigners in trade. You cannot convert Chinese currency into dollars or francs or yen just to move funds around. They have strict financial control very much like the controls that France had in 1945-46 right after the war. In fact, France had exchange controls of some kind until the middle of the 1980s. China receives a lot of direct investments from overseas without having convertibility of capital funds from one currency to another. It's not essential to have that."
You cannot get too much clearer than that. The truth is "it's not essential to have" currency markets "just to move funds around." Surely most Westerners will be mystified by that thought. They think their credit-backed money is a commodity.
UNESCO Courier,
Interview by Sophie Boukhari,
Ethirajan Anbarasan and John Kohut, Feb 1999 p46
"Full convertability [exchanging one money for another, ie. pesos for dollars], however, has proven to be incompatible with exchange rate stability. Once countries lift controls on short-term capial movements and allow full convertability of their currencies, the process of exchange rate determination is privatized as well."
http://www.foreignpolicy-infocus.org/briefs/vol14/v4n17cap.html
Ellen Frank, Emanuel College "Capital Flows and Exchange Rate Policy."
Next, we might note that it is the free movement of money itself that destabilizes poor countries. The problem is not so much that rich countries invest in poor countries, but that they get nervous and pull out at the slightest ripples in the economy, and boom: a crash. So it is the poor countries who take all the risks when it comes to free movement of money.
Let's go back to that Rule Book. Moving money fast helps rich countries . . .
New Rule #2
Advantage: Rich Countries
Reduce the size of their goal to make it easier to protect and, jeez, give that poor goalie a better stick.
Well, my goodness, that's a whole lot nicer.
--------------------------------------------------------------------------------
Any other changes today?
Sure, here's just a little one.
"Under current immigration policies as practised by developed countries in Europe and the new world, migrants are accepted from developing countries if they have money/assets, educational qualifications or work skills which will make them useful to the host country. Applicants who possess none of these attributes are rejected.
It is felt that the developed countries should either deny immigration to everyone or they should let anyone in who wants to come in. By skimming the cream off the top the developed countries ethically speaking are navigating very murky waters where there are serious racist and discriminatory undercurrents. [...]
How can the developing countries ever expect to advance with this constant leeching of all their privileged and talented people by the developed countries?"
Scientists For Population Reduction
http://www.scientists4pr.org/immigration.htmp
Ahem.
New Rule #3
Advantage: Rich Countries
Give that poor goalie some help!
--------------------------------------------------------------------------------
What else can we do for you today?
Well we could let the rich countries make promises they have no intention of keeping, just to sort of get the southern countries into the spirit of Free Trade. For instance in "The Ecologist Report" magazine, September 2000, page 36, Walden Bello, Director of Focus on the Global South, wrote "WTO: Serving the Wealthy, Not the Poor." Dr. Bello is executive Director of Focus on the Global South. http://www.focusweb.org
Bello noted that three GATT (pre-WTO days) agreements were approved in April 1994 at Marrakesh but are now being ignored.
There was a Special Ministerial Agreement that there would be compensatory measures taken to protect developing countires who were net food importers. It was acknowleged that developing countries had an inherent disadvantage caused by trade liberalization, and SDT (Special and Differential Treatment) could help in that respect.
The Agreement on Textiles and Clothing was to assure that northern quotas on southern textiles and garments would be dismantled.
The Agreement on Agriculture (AOA) was to bring down subsidies that resulted in the US and EU dumping massive quantities of grain on Third World markets, resulting in the bankruptcies of local farmers.
As of 2002, none of these agreements have been implemented.
Worse - the subsidies in the north have increased, says Bello, "through ingenious combinations of export subsidies, export credits, market support and various kinds of direct income payments."
"... overall subsidization of agriculture in the OECD countries rose from $182 billion in 1995 ... to $362 billion in 1998."
To make matters worse the World Bank and have their Structural Adjustment Policies. In this context, some are of particular interest. SAPs include, user fees for essential services like primary health and education or abrupt increases in the price of water in the name of market 'reforms,' more layoffs, less government spending on social programs, less credit for small farmers and small businesses, elimination of subsidies, removal of restrictions on foreign investment, raising of interest rates, devaluation of currencies, deregulation of labor markets, more privatization, pressure to export, slashing of workers' rights and environmental standards, liberalization of trade policies.
The north, you see, can increase its subsidies... but clearly the south should show some restraint here.
We need a new rule here.
New Rule #4
Penalty: Poor Countries
Reduce the size of his stick! It's waaaaaaay too big
Now . . .
PLAY BALL
--------------------------------------------------------------------------------
One question remains: if economists are willing to lie about free trade then where does the doctrine of deceit stop? For a bit more on that topic try:
How the Economists Got It Wrong
James K. Galbraith, Ph.D., at the LBJ School of Government at the University of Texas
http://www.prospect.org/print/V11/7/galbraith-j.html
The French Economics Students Revolt:
post-autistic economics newsletter (in English)
http://www.paecon.net
http://www.btinternet.com/~pae_news/GEN.htm
The American Economics Students Revolt:
346 people have now signed the Cambridge Proposal:
http://www.btinternet.com/~pae_news/Camproposal.htm
Signatories of the "Kansas City Proposal" will be posted at
http://www.btinternet.com/~pae_news/KC.htm
© copyright 2002 J. Walter Plinge, France
b.ob@accesinternet.com
Distribute freely if not for profit or print media, and it's kept intact, including credits
http://ebean390.tripod.com/waltfree.html
Oh that is very good...so how many people actually vote in America about 50%???
I don't know do they?
Money is Not a Commodity: The Proof
This is the proof that Money is not a commodity. If you can solve the riddle and disprove the proof, I’ll give you a prize, like say, maybe, Algeria.
It’s not too complex actually. It’s based on the proof of an already accepted law of mathmatics that you cannot divide by zero. That’s done by looking for the inconsistencies that dividing by zero creates elsewhere in the system.
Robert Kaplan, author of The Nothing That Is— A Natural History of Zero proves it this way:
Pick two numbers, like 13 and 25... ok...
we know: 13 X 0 = 0
and we know: 25 X 0 = 0
therefore: 13 X 0 = 25 X 0
now divide
both sides
by zero and... 13 = 25
The inconsistency is… well, obvious. The inconsistency is that by dividing by zero, you can arrange to prove just about anything.
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So, are there inconsistencies in foriegn commodity trade transactions? The assumption by the economic community is that money is a commodity and by allowing the free purchase and sale of one currency for another, currency values will be determined by the market forces the same as any other commodity. Here is what happens in real life when you buy and sell currencies.
“The power of these speculators was dramatically illustrated in 1992 when financier George Soros, following a bet with then UK prime Minister John Major, sold $10 billion worth of British pounds on international Money Markets for a $1 billion profit and in doing so, single-handedly managed to force a devaluation of the pound and scuttle a new proposal for an exchange rate system in the European Union at the same time.”
Tony Clarke of the Polaris Institute, Canada, cited in
The Ecologist, May/June 1999,
”Twilight of the Corporation,” page 161)
So . . .
Are there inconsistencies here? At first, it appears that the British currency acted like any other commodity. When supply increased, demand decreased and the value of the pound dropped. Pure supply & demand.
But there are inconsistencies in the Soros case (and many others):
Britain's economy was adversely affected by Soro's trade, even though Britain had actually gained financial power (Soros made a £.6 million profit and the same was added to the British economy) The other types of foriegn commodity transactions may cause small fluctuations, but they do not destabilize a country's entire economy. Other types of foriegn commodity trade, besideds buying and selling a currency with a currency, are:
· buying a commodity with a currency
· selling a commodity for a currency
· trading a commodity for a commodity (other than money)
The specific point here is that the values of all other foreign traded commodities whether imports or exports were altered by Soros. That is, a sale of a particularly large quantity of wheat, may alter the price of wheat and might possibly, in a wildly extreme situation, even affect related products like corn, but it will not alter the whole market uniformly. The value of all other commodities, imports and exports, was altered by the Soros deal. It did what no other commodity can do, so we can only conclude that there is something odd about exchanging currencies as though they were commodities. For this reason currencies cannot be considered true commodities.
To disprove this, one must show that other types of foreign commodity exchanges listed above can and do — to the same extent and with similar frequency — alter the whole market as currency trades do. Or maybe you can find another way.
Disprove the Proof and win yourself a prize.
Time Limit: 100 years
Good Luck
© copyright (c) 2000, J Walter Plinge, France
b.ob@accesinternet.com
Distribute freely if not for profit or print media, and it's kept intact, including credits
http://ebean390.tripod.com/waltproof.htm
People who don't have the right to vote can't complain or critique their government right?
Are you now saying that people who live as legal resident aliens have no right to criticise their governments policies?
Better not start pissing off all those Mexicans who import all those illegal drugs that support the national underground economy.
American Stock Exchange Reports Increase in Short Interest
NEW YORK, March 19 /PRNewswire/ -- The American Stock Exchange(R)
(Amex(R)) member and non-member organizations today reported short interest of
955,673,957 shares as of the March 15 settlement date, an increase of
72,223,184 from the 883,450,773 (adjusted) shares reported in mid-February.
The March figure represents trades through March 10, 2004.
In the year ago period, short interest totaled 495,054,867 (adjusted).
The March short interest position reflects short interest reported by all
broker-dealers (not only Amex member firms) in Amex-listed stocks. A short
position of 5,000 or more shares existed in 615 of the approximately 799
issues traded at the Exchange. Some short position was shown in 927 issues.
The attached short interest report was compiled by the Amex on the basis
of information obtained from its member and non-member organizations covering
all securities dealt in on the Exchange on both round and odd-lots.
Short interest for the preceding 12 months is shown below:
February 13,2004 883,450,773 (A) August 15, 2003 727,998,891 (A)
January 15, 2004 846,984,988 (A) July 15, 2003 661,282,482 (A)
December 15, 2003 833,014,348 (A) June 13, 2003 603,038,096 (A)
November 14, 2003 803,971,080 (A) May 15, 2003 543,255,369 (A)
October, 15, 2003 811,500,853 (A) April 15, 2003 467,101,875 (A)
September 15, 2003 742,116,249 (A) March 14, 2003 495,054,867 (A)
Changes in The Amex's Short Interest Reporting:
Please be advised that there is a new way of accessing short interest
information for the Amex through www.amextrader.com. Access to the site will
be in addition to the standard Amex press release on short interest.
Interested members of the media must contact Eleanor Henry at the Amex in
advance by phone at 212-306-1529 or email at ehenry@amex.com to obtain an ID
and password to access the site on www.amextrader.com. This page will be
available only to registered members of the media. The report will be
available by 2:00 p.m. on the publication date.
The American Stock Exchange(R) (Amex(R)) is the only primary exchange that
offers trading across a full range of equities, options and exchange traded
funds (ETFs), including structured products and HOLDRS(SM). In addition to
its role as a national equities market, the Amex is the pioneer of the ETF,
responsible for bringing the first domestic product to market in 1993.
Leading the industry in ETF listings, the Amex lists 138 ETFs. The Amex is
also one of the largest options exchanges in the U.S., trading options on
broad-based and sector indexes as well as domestic and foreign stocks. For
more information, please visit www.amex.com.
SOURCE The American Stock Exchange
/CONTACT: Media - Lynn Teresky of the American Stock Exchange,
+1-212-306-1654, lynn.teresky@amex.com/
/Web site: http://www.amex.com /
Re: Money Laundering
On Friday, 3 June 1994, I was walking with an AMEX member along West Broadway, when we met Ken Silverman. (The name of this member must be kept confidential.) Ken Silverman is a former AMEX member, whom I believe cleared through KOT (Spear Leeds and Kellogg). My friend knows Silverman through the AMEX.
Silverman informed me that two years ago, he was approached by an AMEX member (not Gottfried, Pierson, Miceli, VanCaneghan, or anyone publicly connected with PNF). Silverman stated to this AMEX member that he was looking for investments for some individuals. (Silverman knows nothing about finance, accounting, etc.) This member, whom Silverman refused to name, recommended PNF as an investment opportunity. Silverman went to the headquarters of PNF. There Silverman met Sam Gottfried, Al Avasso, and Otis Hastings. (Silverman informed me that Otis Hastings had a broken arm. Silverman intimated that Hastings' arm was broken by Avasso.) Silverman stated that he viewed the patents and was given a demonstration of PNF's magic fire retardant. Silverman also stated that he knew the history of Greyhound Electronics. Silverman stated that he knew that Miceli and VanCaneghan were involved in the stock scam. (I do not know when Silverman learned of the invovlement of Miceli and VanCaneghan.) Silverman stated that he declined to invest in PNF because Avasso appeared to be a member of the Mafia.
Silverman is moving "hot" money. Silverman had informed me in 1987 that he owned a small lot in Jamaica. This time Silverman stated that he was involved in the importation of motorcycles and motorcycle parts into Jamaica. Silverman also stated that he was renting motorcycles in Negril to tourists. This statement seems false. My companion asked Silverman for a business card. Silverman stated that he did not have one with him. My companion then requested the name of his business, so that when my friend visited Negril he could "look him up." Silverman declined to provide my friend with the name of his business. Silverman informed him to "just ask for the white guy with the motorcycles." Obviously, Silverman was dissembling. My friend believes that Silverman is acting to invest money with individuals who are smuggling marijuana and, perhaps, cocaine from Jamaica.
On Saturday, 4 June 1994, I met another friend in the city. This individual informed me that Silverman had told him that he (Silverman) was seekning investment opportunities for "hot" money. Silverman hinted that he was seeking to invest this money for individuals who were involved in the drug trade. This friend believes that the drug involved is marijuana-a drug of which Silverman partakes.
It appears that this money which Silverman seeks to invest was at one time transferred into Silverman's trading account. I remember that in 1989 Silverman had financial problems and was searching for some financial backers. I also remember that Silverman's financial prospects were not strong-he entered into some type of agreement with a real asshole, Richard Kaplan, and then this arrangement dissolved.
Ever since I have known Silverman, he has intimated that he knew Jamaicans in the marijuana trade. I always believed that Silverman is a despicable person.
I hope that I have been helpful.
http://www.wallstreetscandals.com/FBI/fbi.yastremski.html