WE all want to hear ideas and opinions that we like. If you are a coffee drinker you want to hear that “Drinking More Coffee Could Mitigate the Liver Damage from Last Night’s Martinis”. You prefer not to read “Ten Reasons to Quit Your Coffee!”
However, a sensible person does want to be exposed to both sides of the issue to make an informed decision about any given topic. Part of the problem in this age of instant communication is that it seems that almost everything is agenda-driven. Data is distorted. Pertinent facts are left out. Is the positive analysis about coffee funded by the “International Coffee Producers Council”? Should you “quit coffee” because the “Global Green Tea Association” says so?
How do we know what to believe?
Over the years I have advised my sons that they do not need to know everything about everything because you can always hire an accountant, attorney or other professional. However, I also tell them that they need to know enough to be able to ask sensible questions and enough to make sure that the “professional” is not able to take advantage of your ignorance.
For example, when a doctor prescribes a particular antibiotic, I become their worst nightmare with all my questions. Of course I have little knowledge about what the best medicine might be, but I want to be told why he or she is recommending “cephalexin” for example. A simple “Why are you giving me this particular drug?” deserves a sensible answer.
Instant communication has created too many “instant experts” whom we are expected to believe, and that is dangerous.
Not even a week can pass without some foreign economic group making pronouncements about the Philippine economy as if their pronouncements came directly from Divine Inspiration. I have never been impressed with education or experience. Impress me with your results.
A man goes to a shoemaker to have a pair of boots made. He is unhappy with his new shoes and complains about the poor workmanship. The shoemaker says that he has been making shoes for 25 years. The customer replies, “You have been making the same pair of shoes for 25 years and you have never improved your ability.”
In a recent report, Deutsche Bank said that the Philippine economy is overheating. By definition, “Overheating of an economy occurs when its productive capacity is unable to keep pace with growing aggregate demand. An economy is said to be overheated when inflation increases due to prolonged good growth rate.”
In other words, the economy is so strong and people have become so rich that they are willing to pay more for goods when the supply has not been able to keep up with the demand. Does that really describe the Philippine economy in 2018?
Deutsche Bank: “The current account deficit has soared to a 19-year high of 3.3 percent of gross domestic product.” That is correct but does not have anything to do with the economy “overheating.” In fact Deutsche Bank says it is a result of the “sustained rise in imports to feed the Duterte government’s ambitious infrastructure program” not because of an overwhelming trend of consumer demand for Chinese rubber shoes.
There is a critical concern about inflation. But absolutely no mention is made by Deutsche Bank of the increase in taxes that pushed my sachet of “Tang Four Seasons Flavor powder drink juice” from P8.75 last year to P16.50 in 2018. I am not impressed with the Deutsche Bank analysis.
****
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.