WE have this idea that “we are all in the same boat” and usually that boat is the Titanic.
The Titanic was designed and built badly. The watertight compartments did not reach high enough and were insufficient because higher compartments would have decreased first-class cabin space.
It was built with second-rate rivets used to hold the hull together that would eventually fracture from the collision. It was Captain E. J. Smith’s retirement trip and he ignored seven iceberg warnings from his crew and other ships. Finally, Bruce Ismay, White Star Line chairman, wanted to make the crossing in six days and said the ship could not afford to slow down.
But notice this. There is no single cause and therefore no one to blame. In fact, both US and UK inquiries eventually put the responsibility for the deaths on the captain of the nearby vessel Californian whose captain was told there were rockets coming from the Titanic and he assumed they were having a party.
Remarks By President Biden on the Economy—May 10, 2022: “There are two leading causes of inflation today. The first cause is a once-in-a-century pandemic that threw the supply chain completely out of whack. And this year we have a second cause: Mr. Putin’s war in Ukraine.” Damned icebergs!
In the Philippines—and normally to support a political agenda—we are told that our “boat” is a broken bangka without paddles and every other country is sailing a Russian oligarch-style mega yacht.
The countries that are actual “broken bangkas” like Pakistan, El Salvador, and Argentina are only mentioned like “The Philippine is going to be like Sri Lanka! Get life jackets!” The world is not all in one boat, Titanic or otherwise.
Lack of information is mis-information, and the amount going around could fill an ocean. Being ignorant in 2022 is the most dangerous thing you can be unless you want to be played for a fool.
There are 223 central banks in the world like a massive fishing fleet. The Philippines even calls it the “Bangko Sentral.” But ours is substantially different from the Federal Reserve, ECB, and the People’s Bank of China. The big three have the mandate of “price stability” (inflation control) and currency stability, as does the Bangko Sentral. But those three must also “promote effectively the goals of maximum employment and economic growth.”
And for the politicians that control the central banks, it is “maximum employment and economic growth” that wins elections. The un/mis-informed public has no understanding of “currency stability” and are told that historic high inflation is “Putin’s fault.”
Therefore, when an equally un/mis-informed member of the media challenges a genuine monetary expert, the media crashes and burns. “Diokno was recently named the best central banker in the world by The Banker, an international business, banking, and finance magazine owned by the Financial Times.”
In every country, inflation and the global crude oil price track each other, as there is both correlation and causation. So why is Philippine inflation at 4.9 percent year-on-year and not at 8.3 percent like the US? The annual inflation rate in Brazil jumped to 12 percent in April 2022.
Taking a typical barrel of crude oil, 90 percent is used as gasoline and diesel fuel. Since April 2020, transportation spending in the US is up 36 percent versus 16 percent in the Philippines. Brazilians are spending 33 percent of the monthly minimum wage to fill up a 50-liter fuel tank.
However, 80 percent of Brazilian households own a car, but about 10 percent of Philippine households own a car, jeep, or van. The majority of Filipinos commute to work and shopping on public transportation. That keeps transportation spending/inflation lower. The point is our national spending on transportation is lower compared to other places that some of the “experts” have relatives living.
We are not all in the same boat and all our boats are different. Thinking otherwise leads to wrong impressions and very bad decisions.
E-mail me at mangun@gmail.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.