Bonding with Family (12-13 September)

Whenever I have the opportunity, I go back to my Antipolo residence again to visit my family and cherish my story session with my mother. We always make it a point to hold heart-to-heart sessions to re-affirm our love and concern for each other, most especially to assure her that I'm doing fine in the independent life I am enjoying right now.

This evening was not an exception. I am so glad when she told me that Daddy has brought a new car which he can now use in driving anywhere in Antipolo. Mama told me that since he brought the car, he has been very active physically. Japanese people have been compelled to live a fast-paced life and having a vehicle complements that.

Also, she asked me to enroll in a driving school so I could be their weekend driver.....a good suggestion isn't it?

She totally missed my twin brother, who haven't contacted us for weeks. Mama understands how busy we are but reminded us that a single text message or short communication means a lot to a parent. I promise to call every week even while I'm in the office.

I only stayed there shortly as I need to take an early morning ride back to Manila. But this visit has already made my week complete.

Mama, don't worry, I love you and hindi kita pababayaan!

Ate, I love you too! Thank you for letting me use your laptop. Alam mo na......

Ren, we haven't talked since the Miss Universe pageant last August. So I guess kelangan na nating mag-modelling bonding na naman uli. Love you kambal!

Daddy, I love you too! Thank you for taking care of my mama. Domo arigatoo gozaimasu!

Susie and Mikko, my beloved pets, I love you all and I terribly miss you!

Lovelots,

McRhon

12th Cine Europa at Shang Cineplex (10-22 September 2009)

Movie goers like me can enjoy critically-acclaimed European films for free. Just drop by Shang Cineplex at least 30 minutes before the film schedule to get your free tickets.

This year marks the 12th Cine Europa festival here in the Philippines. I hope you take time to watch some of the exhibited films....much to your delight!!!!

Miss Venezuela is Miss Universe.....again!

Hail to the new Miss Universe, Stefania Fernandez of Venezuela!

I really had this feeling that a back-to-back victory for this nation will happen this year. Not only did Venezuela send a very stunning candidate, she really worked her way during the swimsuit and the evening gown round. And she gained my respect and admiration with her wit and intelligence during the final question. Let me add the fact that she really sported a sophisticated 50-60s hair style which made her distinguishable from the other finalists: Dominican Republic, Kosovo (and a very striking name, Gona Dragusha), Australia and Puerto Rico.

However, I was a bit upset at the decision of the Miss Universe organization to exclude Asians in the semifinals. Given their direct prerogative to instantly pick their ladies come pageant night, I seriously thought that the Asian candidates were all worthy contenders. Personally, candidates from Indonesia, Vietnam, and the Philippines should have been included in the top 15.

Stefania's victory was really deserving but was not appropriate at a time when the Miss Universe is very vocal of it's almost "racist" policies.

I hope this won't cost Miss Universe pageant's downfall.....it really shouldn't be.

(Photo courtesy of Inquirer.net)

Sweet, salty, spicy

I felt a nostalgic feeling the moment I stepped inside Khao Pad restaurant in Ortigas. The place is unassuming, although I have to say that it marked a big improvement from her makeshift "carinderia-type" store in UP (where the store became a witness to my life's trembling moments) and this time, with a dose of many Thai artifacts.

I was referred to by Dang, one of my dearest colleagues here in ADB and a UP Political Science alumna, who kept on prodding me to look for Mommy Thai since March. She already had a clue then that Mommy Thai's new store can be found somewhere in Ortigas. Our hardwork and persistence really paid off mare!

Maybe I am already late to know this very good news. In fact, I even sent messages to my friends in Facebook just to share this culinary gospel. But the moment, the sweet, spicy and salty Tom yum soup drenched my mouth, I was again brought back to the good old days I have spent during college in my dear UP Diliman campus. I even remember inviting my friends from UP Baguio, Manila and Los Baños to taste their famous Mixed Toppings.

Though I must say that I have tasted some better Thai dishes in other restaurants, for me. The place is really sentimental for it has left an indelible mark to the many students who has been nurtured by her cooking passion.

Really, my sense of history is nothing but sweet, salty and at most spicy.....thank you for the exquisite culinary gift Mommy Thai!

On changing my blog title

Just this morning, I decided to change my blog title to "Bellissima!", to give way for an Italian expression that simply means "extremely beautiful."

Looking back, it has been months since I last contributed a blog article. Hopefully, I'll be adding more. This time, with more beautiful stories coming from my recent experiences.

I really miss writing and documenting my thoughts.

Invitation to the 2nd HR/IR Conference and the 3rd UP SOLAIR Job Fair

UP SCHOOL OF LABOR AND INDUSTRIAL RELATIONS
STUDENT COUNCIL
Bonifacio Hall, University of the Philippines
Diliman, Quezon City
Website: www.upsolairsc.wordpress.com


26 January 2009

______________________
______________________
______________________


Dear Sir/Madam,

Greetings!

The University of the Philippines School of Labor and Industrial Relations Student Council (UP SOLAIR SC) 2008-2009, the first officially-recognized Student Council of UP SOLAIR, will be hosting two (2) major events as we end the academic year. These are the 2nd HR/IR Conference entitled: "Global Recession and the Philippine Industrial Relations" and 3rd UP SOLAIR Job Fair 2009. These events will both be held on February 21, 2008 at the UP SOLAIR campus grounds. It aims to provide participants an understanding of the current employment situation in the country as well as providing a venue for employers to recruit qualified graduates and professionals, particularly in the field of Industrial Relations/Human Resources who will meet the human capital needs of their organization.

For the 2nd HR/IR Conference (9am – 12pm), we have already invited distinguished speakers from the Department of Labor and Employment (DOLE), Employers' Confederation of the Philippines (ECOP), UP School of Labor and Industrial Relations (SOLAIR) and International Labor Organization (ILO). Your organization will surely benefit from attending this conference which we intended to be free for everyone, especially HR/IR professionals and graduates.

For the 3rd UP SOLAIR Job Fair (8:30am – 5:00 pm), we will apply a different concept. This year, our primary objective is to invite companies who are looking for various HR/IR professionals. UP SOLAIR currently houses more than 300 graduate students and more than 1,000 alumni who are qualified to fill your organization's vacancies and with sufficient background in Human Resources, Industrial Relations, Training, Project Management, Change Management among others. We will also invite graduating students from the different colleges of the University of the Philippines and other universities who are also interested to jumpstart their careers in the field of HR/IR. Vacancies for other positions may likewise be posted.

In this light, we are inviting your company to participate as a sponsor for this event. These two events will be an excellent opportunity to promote your organization. Attached to this letter are the sponsorship opportunities you can avail.

Please feel free to contact Mischa Millar (Finance Committee Head – 09228830124) or McRhon Banderlipe (Chairperson – 09273454163). Please visit our website, www.upsolairsc.wordpress.com.

We look forward to your positive response to this invitation. Thank you very much.

Sincerely,

Mc Ronald S. Banderlipe I
Chairperson
UP SOLAIR Student Council 2008-2009

Office tel #: 6324444 loc. 70485
Mobile #: (0927) 3454163
Email: mcrosweet@yahoo.com

HAPPY NEW YEAR EVERYONE!!!!

Salamat sa isa na namang makabuluhang taon na ating pinagsamahan. Sa susunod na taon, nawa'y patuloy na paigtingin natin ang mga makabuluhang samahan at pagkakaibigan.

Maraming salamat 2008! Maraming salamat sa inyo!


McRhon Banderlipe I
31 December 2008

CONGRATULATIONS!!!!! THE PROPOSED UP SOLAIR SC CONSTITUTION HAS BEEN RATIFIED!!!

Another milestone in the history of the UP School of Labor and Industrial Relations (SOLAIR) was marked when the proposed Constitution of the UP SOLAIR Student Council has been ratified by a majority vote in a plebiscite conducted last November 15, 2008.

97.73% of the voters were amenable to the proposed constitution, making it an important document that highlights the ideals, rights and responsibilities of the students of the College, as well as streamline the duties and responsibilities of the present UP SOLAIR Student Council and the succeeding batches of officers.

The ratification was advocated by the current UP SOLAIR Student Council 2008-2009, thus, becoming the first Student Council to be recognized under this Constitution.

It must be remembered that the previous student officers for the UP SOLAIR were appointed under the UP Industrial Relations Society (UP IRS) mandate.

The UP SOLAIR SC 2008-2009 would like to sincerely thank the students who participated and most especially, to the UP SOLAIR Electoral Board 2008-2009 for successfully conducting the plebiscite.

"Dahil tayo ay isang konsehong nagbubuo, naglilingkod, nagtataguyod at tumutugon sa hamon ng ika-100 taon!"

A Primer on the Wall Street Meltdown (by Walden Bello)

A well-written article from Prof. Walden Bello. This made me ponder how US financial markets are challenged with the effects of societal menace they did in the past.

Can they recover? We'll soon find out.

___________________________

A Primer on the Wall Street Meltdown

Publish Post

By Walden Bello*


Many on Wall Street are still digesting the momentous events of the last ten days:

• 1-3 trillion dollars worth of financial assets wiped out.
• Wall Street effectively nationalized, with the Federal Reserve and the Treasury Department making all the major strategic decisions in the financial sector and, with the rescue of the American International Group (AIG), the US government now runs the world’s biggest insurance company.
• The biggest bailout since the Great Depression, with $700 billion, being desperately put together to save the global financial system.

The usual explanations no longer suffice. Extraordinary events demand extraordinary explanations. But first…


Is the worst over?

No, if anything is clear from the contradictory moves of the last week—allowing Lehman Brothers to collapse while taking over AIG, and engineering Bank of America’s takeover of Merrill Lynch--there is no strategy to deal with the crisis, just tactical responses, like the fire department’s response to a conflagration.

The $700 billion buyout of banks’ bad mortgaged-backed securities is not a strategy but mainly a desperate effort to shore up confidence in the system, to prevent the erosion of trust in the banks and other financial institutions and preventing a massive bank run such as the one that triggered the Great Depression of 1929.


What caused the collapse of global capitalism’s nerve center? Was it greed?

Good old fashioned greed played a part. This is what Klaus Schwab, the organizer of the World Economic Forum, the yearly global elite jamboree in the Swiss Alps, meant when he told his clientele in Davos earlier this year: “We have to pay for the sins of the past.”


Was this a case of Wall Street outsmarting itself?

Definitely. Financial speculators outsmarted themselves by creating more and more complex financial contracts like derivatives that would securitize and make money from all forms of risk—including exotic futures instruments as “credit default swaps” that enable investors to bet on the odds that the banks’ own corporate borrowers would not be able to pay their debts! This is the unregulated multitrillion dollar trade that brought down AIG.

On December 17, 2005, when International Financing Review (IFR) announced its 2005 Annual Awards — one of the securities industry's most prestigious awards programs—it had this to say: "[Lehman Brothers] not only maintained its overall market presence, but also led the charge into the preferred space by ... developing new products and tailoring transactions to fit borrowers' needs…Lehman Brothers is the most innovative in the preferred space, just doing things you won't see elsewhere."

No comment.


Was it lack of regulation?

Yes—everyone acknowledges by now that Wall Street’s capacity to innovate and turn out more and more sophisticated financial instruments had run far ahead of government’s regulatory capability, not because government was not capable of regulating but because the dominant neoliberal, laissez-faire attitude prevented government from devising effective mechanisms with which to regulate.


But isn’t there something more that is happening? Something systemic?

Well, George Soros, who saw this coming, says what we are going through is the crisis of the financial system is the crisis of the “gigantic circulatory system” of a “global capitalist system that is…coming apart at the seams.”

To elaborate on the arch-speculator’ s insight, what we are seeing is the intensification of one of the central crises or contradictions of global capitalism which is the crisis of overproduction, also known as overaccumulation or overcapacity.

This is the tendency for capitalism to build up tremendous productive capacity that outruns the population’s capacity to consume owing to social inequalities that limit popular purchasing power, thus eroding profitability.


But what does the crisis of overproduction have to do with recent events?

Plenty. But to understand the connections, we must go back in time to the so-called Golden Age of Contemporary Capitalism, the period from 1945 to 1975.

This was a period of rapid growth both in the center economies and in the underdeveloped economies—one that was partly triggered by the massive reconstruction of Europe and East Asia after the devastation of the Second World War, and partly by the new socio-economic arrangements that were institutionalized under the new Keynesian state. Key among the latter were strong state controls over market activity, aggressive use of fiscal and monetary policy to minimize inflation and recession, and a regime of relatively high wages to stimulate and maintain demand.


So what went wrong?

Well, this period of high growth came to an end in the mid-seventies, when the center economies were seized by stagflation, meaning the coexistence of low growth with high inflation, which was not supposed to happen under neoclassical economics.

Stagflation, however, was but a symptom of a deeper cause: the reconstruction of
Germany and Japan and the rapid growth of industrializing economies like Brazil, Taiwan, and South Korea added tremendous new productive capacity and increased
global competition, while social within countries and between countries globally limited the growth of purchasing power and demand, thus eroding profitability. This was aggravated by the massive oil price rises of the seventies.


How did capitalism try to solve the crisis of overproduction?

Capital tried three escape routes from the conundrum of overproduction: neoliberal restructuring, globalization, and financialization.


What was neoliberal restructuring all about?

Neoliberal restructuring took the form of Reaganism and Thatcherism in the North and Structural Adjustment in the South. The aim was to invigorate capital accumulation, and this was to be done by 1) removing state constraints on the growth, use, and flow of capital and wealth; and 2) redistribute income from the poor and middle classes to the rich on the theory that the rich would then be motivated to invest and reignite economic growth.

The problem with this formula was that in redistributing income to the rich, you were gutting the incomes of the poor and middle classes, thus restricting demand, while not necessarily inducing the rich to invest more in production.

In fact, neoliberal restructuring, which was generalized in the North and south during the eighties and nineties, had a poor record in terms of growth: global growth averaged 1.1 per cent in the nineties and 1.4 in the eighties, whereas it averaged 3.5 per cent in the 1960’s and 2.4 per cent in the seventies, when state interventionist policies were dominant. Neoliberal restructuring could not shake off stagnation.


How was globalization a response to the crisis?

The second escape route global capital took to counter stagnation was “extensive accumulation” or globalization, or the rapid integration of semi-capitalist, non-capitalist, or precapitalist areas into the global market economy. Rosa Luxemburg, the famous German revolutionary economist, saw this long ago as necessary to shore up the rate of profit in the metropolitan economies. How? By gaining access to cheap labor, by gaining new, albeit limited, markets, by gaining new sources of cheap agricultural and raw material products, and by bringing into being new areas for investment in infrastructure. Integration is accomplished via trade liberalization, removing barriers to the mobility of global capital, and abolishing barriers to foreign investment.

China is, of course, the most prominent case ofa non-capitalist area to be integrated into the global capitalist economy over the last 25 years.

To counter their declining profits, a sizable number of the Fortune 500 corporations have moved a significant part of their operations to China to take advantage of the so-called “China Price”—the cost advantage deriving from China’s seemingly inexhaustible cheap labor. By the middle of the first decade of the 21st century, roughly 40 t0 50 per cent of the profits of US corporations were derived from their operations and sales abroad, especially China.


Why didn’t globalization surmount the crisis?

The problem with this escape route from stagnation is that it exacerbates the problem of overproduction because it adds to productive capacity. A tremendous amount of manufacturing capacity has been added in China over the last 25 years, and this has had a depressing effect on prices and profits. Not surprisingly, by around 1997, the profits of US corporations stopped growing. According to one index, the profit rate of the Fortune 500 went from 7.15 in 1960-69 to 5.30 in 1980-90 to 2.29 in 1990-99 to 1.32 in 2000-2002.


What about financialization?

Given the limited gains in countering the depressive impact of overproduction via neoliberal restructuring and globalization, the third escape route became very critical for maintaining and raising profitability: financialization.

In the ideal world of neoclassical economics, the financial system is the mechanism by which the savers or those with surplus funds are joined with the entrepreneurs who have need of their funds to invest in production. In the real world of late capitalism, with investment in industry and agriculture yielding low profits owing to overcapacity, large amounts of surplus funds are circulating and being invested and reinvested in the financial sector—that is the financial sector is turning in on itself.

The result is an increased bifurcation between a hyperactive financial economy and a stagnant real economy. As one financial executive notes, “there has been an increasing disconnect between the real and financial economies in the last few years. The real economy has grown…but nothing like that of the financial economy—until it imploded.”

What this observer does not tell us is that the disconnect between the real and the financial economy is not accidental—that the financial economy exploded precisely to make up for the stagnation owing to overproduction of the real economy.


What were the problems with financialization as an escape route?

The problem with investing in financial sector operations is that it is tantamount to squeezing value out of already created value. It may create profit, yes, but it does not create new value—only industry, agricultural, trade, and services create new value. Because profit is not based on value that is created, investment operations become very volatile and prices of stocks, bonds, and other forms of investment can depart very radically from their real value—for instance, the stock of Internet startups that keep on rising, driven mainly by upwardly spiraling financial valuations, that then crash. Profits then depend on taking advantage of upward price departures from the value of commodities, then selling before reality enforces a “correction,” that is a crash back to real values. The radical rise of prices of an asset far beyond real values is what is called the formation of a bubble.


Why is financialization so volatile?

Profitability being dependent on speculative coups, it is not surprising that the finance sector lurches from one bubble to another, or from one speculative mania to another.

Because it is driven by speculative mania, finance driven capitalism has experienced about scores of financial crises since capital markets were deregulated and liberalized in the 1980’s.

Prior to the current Wall Street meltdown, the most explosive of these were the Mexican Financial Crisis of 1994-95, the Asian Financial Crisis of 1997-1998, the Russian Financial Crisis of 1996, the Wall Street Stock Market Collapse of 2001, and the Argentine Financial Collapse of 2002.

Bill Clinton’s Treasury Secretary, Wall Streeter Robert Rubin, predicted five years ago that “future financial crises are almost surely inevitable and could be even more severe.”


How do bubbles form, grow, and burst?

Let’s first use the Asian Financial Crisis of 1997-98, as an example.

• First, capital account and financial liberalization at the urging of the IMF and the US Treasury Dept.;
• Then, entry of foreign funds seeking quick and high returns, meaning they went to real estate and the stock market;
• Overinvestment, leading to fall in stock and real estate prices, leading to panicky withdrawal of funds—in 1997, $100 billion left the East Asian economies in a few weeks;
• Bailout of foreign speculators by the IMF;
• Collapse of the real economy—recession throughout East Asia in 1998;
• Despite massive destabilization, efforts to impose both national and global regulation of financial system were opposed on ideological grounds.

Let’s go to the current bubble. How did it form?

The current Wall Street collapse has its roots in the Technology Bubble of the late 1990’s, when the price of the stocks of Internet startups skyrocketed, then collapsed, resulting in the loss of $7 trillion worth of assets and the recession of 2001-2002.

The loose money policies of the Fed under Alan Greenspan had encouraged the Technology Bubble, and when it collapsed into a recession, Greenspan, to try to counter a long recession, cut the prime rate to a 45-year-low of 1 per cent in June 2003 and kept it there for over a year. This had the effect of encouraging another bubble—the real estate bubble.

As early as 2002, progressive economists such as Dean Baker of the Center for Economic Policy Research were warning about the real estate bubble. However, as late as 2005, then Council of Economic Adviser Chairman and now Federal Reserve Board Chairman Ben Bernanke attributed the rise in US housing prices to “strong economic fundamentals” instead of speculative activity. Is it any wonder that he was caught completely off guard when the Subprime Crisis broke in the summer of 2007?


And how did it grow?

Let’s hear it from one key market player himself, George Soros: “Mortgage institutions encouraged mortgage holders to refinance their mortgages and withdraw their excess equity. They lowered their lending standards and introduced new products, such as adjustable mortgages (ARMs), “interest only” mortgages, and promotional teaser rates.” All this encouraged speculation in residential housing units. House prices started to rise in double digit rates. This served to reinforce speculation, and the rise in house prices made the owners feel rich; the result was a consumption boom that has sustained the economy in recent years.”

Looking at the process more closely, the subprime mortgage crisis was not a case of supply outrunning real demand. The “demand” was largely fabricated by speculative mania on the part of developers and financiers that wanted to make great profits from their access to foreign money that flooded the US in the last decade. Big ticket mortgages were aggressively sold to millions who could not normally afford them by offering low “teaser” interest rates that would later be readjusted to jack up payments from the new homeowners.


But how could subprime mortgages going sour turn into such a big problem?

Because these assets were then “securitized” with other assets into complex derivative products called “collateralized debt obligations” (CDO’s) by the mortgage originators working with different layers of middlemen who understated risk so as to offload them as quickly as possible to other banks and institutional investors. These institutions in turn offloaded these securities onto other banks and foreign financial institutions.

When the interest rates were raised on the subprime loans, adjustable mortgage and other housing loans, the game was up. There are about six million subprime mortgages outstanding, 40 percent of which will likely go into default in the next two years, Soros estimates.

And five million more defaults from adjustable rate mortgages and other “flexible loans” will occur over the next several years. But securities the value of which run into trillions of dollars have already been injected, like virus, into the global financial system. Global capitalism’s gigantic circulatory system was fatally infected.


But how could Wall Street titans collapse like a house of cards?

For Lehman Brothers, Merrill Lynch, Fannie Mae, Freddie Mac, and Bear Stearns, the losses represented by these toxic securities simply overwhelmed their reserves and brought them down. And more are likely to fall once their books—since lots of these holdings are recorded “off the balance sheet”-- are corrected to reflect their actual holdings of these assets.

And many others will join them as other speculative operations such as credit cards and different varieties of risk insurance seize up. The American International Group (AIG) was felled by its massive exposure in the unregulated area of credit default swaps, derivatives that make it possible for investors to bet on the possibility that companies will default on repaying loans. Such bets on credit defaults now make up a $45 trillion market that is entirely unregulated. It amounts to more than five times the total of the US government bond market. The mega-size of the assets that could go bad should AIG collapse was what made Washington change its mind and salvage it after it let Lehman Brothers collapse.


What’s going to happen now?

We can safely say then that there will be more bankruptcies and government takeovers, with foreign banks and institutions joining theie US counterparts, that Wall Street’s collapse will deepen and prolong the US recession, and that in Asia and elsewhere, a US recession will translate into a recession, if not worse. The reason for the last point is that China’s main foreign market is the US and China in turn imports raw materials and intermediate goods that it uses for its exports to the US from Japan, Korea, and Southeast Asia. Globalization has made “decoupling” impossible. The US, China, and East Asia are like three prisoners bound together in a chain-gang.


In a nutshell…?

The Wall Street meltdown is not only due to greed and to the lack of government regulation of a hyperactive sector. The Wall Street collapse stems ultimately from the crisis of overproduction that has plagued global capitalism since the mid-seventies.

Financialization of investment activity has been one of the escape routes from stagnation, the other two being neoliberal restructuring and globalization. With neoliberal restructuring and globalization providing limited relief, financialization became attractive as a mechanism to shore up profitability. But financialization has proven to be a dangerous road, leading to speculative bubbles that lead to the temporary prosperity of a few but which ultimately end up in corporate collapse and in recession in the real economy.

The key questions now are: How deep and long will this recession be? Does the US economy need another speculative bubble to drag itself out of this recession. And if it does, where will the next bubble form? Some people say the military-industrial complex or the “disaster capitalism complex” that Naomi Klein writes about is the next one, but that’s another story?



*President of Freedom from Debt Coalition and Professor of Sociology at the University of the Philippines.

Some LMR Symposium Materials Available for Download

You may now download the materials used by the guest speakers on the symposium last September 20, 2008 - Current Trends and Developments in Dispute Prevention, Settlement and Resolution in the Philippines

• Hon. Romeo Lagman – State Intervention in Labor Relations and Labor Standards focus on National Interest Cases and Enforcement

• Hon. Perlita Velasco – Labor Arbitration and the Current Constraints, Issues and Opportunities

• Hon. Reynaldo Ubaldo – Voluntary Modes of Dispute Settlement: Negotiation, Grievance, Conciliation, Mediation and Voluntary Arbitration
  

Please visit our website: www.upsolairsc.wordpress.com

Thank you.