With apologies to the film with the same title. The movie was about the events in Europe leading to World War II and how Winston Churchill was the lone voice speaking out about what was about to happen but only a few listened to the washed out English politician.
The Great War had taken its toll on the economy’s of Europe and the United States was the savior but it’s own economy would run out of steam by 1929 when the Wall Street crash happened. That was caused by a combination of excessive spending and greed on the part of the rich, composed mostly of the robber barons of the Gilded Age. The US emerged as the new world power even if England still had her empire.
The British economy was in shambles despite the largesse coming in from the colonies. The cost of keeping the empire intact was more than the benefits and the war had taken its toll on the finances of Britain, to the point that it wasn’t as great as the British wanted it to be.
This time around, it is not Great Britain that is in the hot seat but the world power that is the United States, which has been lording it over the world since the 19th century. America didn’t learn from the mistakes of history and has been overcome by hubris. It has repeated the same mistakes by virtue of its hegemony, on several levels and has to contend with worsening social discord between liberals and conservatives.
Yesterday, the Peso sunk to P56.00 against the Dollar on the back of recession concerns and the higher inflation rate recorded for June, which was at 6.1%. True inflation is probably higher based on the actual experience of consumers. Your P1,000 at the grocery doesn’t buy as much as it used to before.
On top of this, there is the food supply crisis. Pork production is down due to ASF. Rice production is still not up despite the mechanization drive of the DA and our fish catch is short on account of our antiquated fishing fleet and the lack of large-scale aquaculture investments. Higher food prices results in cost-push inflation.
The BSP will be instituting another rate hike next month. The US Federal Reserve Bank will do the same. Another 50 basis points and we will see the Peso depreciate further. This translates to higher cost of imports.
Oil prices have gone below the $100 benchmark but this is not expected to last long as the forecast is tight supply volumes on account of Russia and Iran’s production not being in the mix on account of US sanctions.
Europe is facing the specter of lower economic output due to the impending shutdown of the Nord 1 gas pipeline for “maintenance.” NATO countries have made a committment to gradually stop buying Russian oil and gas despite there being no alternative supply sources which can fill in the gap to be created by the decision quickly.
What’s worse is Russia has been gaining ground in Ukraine, particularly in the region where breakaway republics have been declared. There is still no end in sight as both sides are playing a game of chicken. What is clear is Ukraine, despte massive US and NATO backing in terms of military hardware and cash, is finding it difficult to sustain the fight against the combined Russian forces, both regulars, paramilitary militias and the Wagner mercenaries.
It doesn’t help that Biden faces a challenge at home in the November midterms. Boris Johnson resigned as Prime Minister yesterday and Emmanuel Macron lost his parliamentary majority after winning reelection. There is creeping social unrest in the US, UK and France.
It remains to be seen how China’s economy fares with continuing lockdowns in light of Covid spikes. But at this point, it is awash with cash because of the US trade deficit and would be the only country which is capable of extending development loans to the Philippines.
China’s State Councilor and Foreign Minister, Wang Yi, met the other day with BBM to discuss PH-China relations. The US and China are in a tug-of-war with Marcos it is in both their interests to maintain good relations with the Philippines as the two duke it now for superiority in the region. Both sent high-level delegations to the Marcos inaugural.
It doesn’t help that the positivity rate is up again in the NCR+. This is likely due to the arrival of the highly contagious BA.5 variant, which is now the dominant strain in the US and Europe. We can’t afford any more lockdowns. While BA.5 is not as fatal as the original variant, there is still the problem of hospital capacity to contend with and its impact on the labor force which affects manufacturing capacity and local supply chains.
It remains to be seen how Marcos’ Cabinet will implement his marching orders in their respective department’s. Those who are entering government services for the first time will go through a learning curve which we can’t really afford. This is true with the Department of Transportation and the Department of Information and Communications and Technology. The actions of these Cabinet Secretary’s have a direct impact on economic performance.
Bills have been filed in the House of Representatives but the Senators are still busy dividing the spoils in terms of committee chairmanships. It would be a good time to revisit constitutional amendments but incoming Senate President Miguel Zubiri has shut the door on this. Bottmoline, the Senators aren’t enthusiastic about abolishing their power base.
About the only thing us ordinary Filipinos can do is hope for the best. We can only do something with that which is in our control. We have voted for our leaders and what’s for sure is we will get what we deserve with our choices.
Comments