The Philippine government appears to be been digging itself into a deeper hole with her persistent recalcitrant foreign policy anchored on profane laced ad hominem and blackmail politics
It’s not just the US government now. The other day, EU was shown the “middle finger” (Washington Post September 21) and accused of being “hypocritical” (BBC September 21)!
Perhaps, the EU may be reacting to the summary execution of the daughter of a British baron, who was accused of “drug pushing” to celebrities (The Guardian September 19)
Ironically, even after radiating signs of backpedaling on the demand for US troops to withdraw where the leadership “acknowledged that his country needed American troops in the South China Sea”, the Philippine president “assailed the US over criticism on the war on drugs”. (Bloomberg September 21, 2016)
War on drugs has turned into a vicious war of words with foreign political peers.
Now I’d like to remind you of the potential ramifications of the swiftly unfolding saga of foreign policy gaffes by the administration. (September 13)
If the Philippine government makes real of the threat to undermine the interests of the shadow but powerful and highly influential political forces behind Washington—the neo-conservative and military industrial complex—then potential responses or repercussions may have already been set in motion. To repeat:
-This would eventually prompt US rating agencies credit downgrades—especially if US military interests are compromised.
-This would reduce investment and portfolio flows from the US and allied nations.
-Credit flows will likely ebb too, thereby putting pressure on access to international credit markets and thereby tightening financing conditions. This will be baneful to a leftist government with a penchant for political spending profligacy: social spending (welfare state), bureaucracy, infrastructure, and most importantly, the military institution.
The reduced access to credit and fund flows will likely accelerate on the unraveling of the mounting economic and financial imbalances inherited by this government from the previous two regimes.
-The Philippine government will be alone to deal with territorial disputes. (This should be a good thing if only the Philippines government’s response would be to increase trade rather than through brinkmanship politics)
-Finally, it would be a lot cheaper or cost effective for the US government to engage in covert operations to influence the domestic political environment than to pullout from the country. The US government may surreptitiously work to offset whatever leverage the administration has been building to countermand the US government’s influences in the country. The US government has been no stranger to the financing, influencing and orchestrating destabilization to regimes it perceives as hostile to its interests. Operation Gladio should be a stark reminder.
As for credit downgrades, the latest from the Nikkei Asian Review (September 22) [bold mine]
President Rodrigo Duterte blasted credit-rating agencies and international organizations on Thursdayafter Standard & Poor's warned of a downgrade if the Philippines' recent economic gains are reversed.
In an invective-laden speech, Duterte lashed out at his critics, including a Philippine senator, the U.S., the European Union and the United Nations for criticizing his war against drugs which has killed more than 3,000 suspected drug users and peddlers since Duterte took office on June 30.
"Do not keep on complaining about my mouth, because my mouth is not the problem. It cannot bring down a country, but it can erase a generation of right-thinking Filipinos," Duterte said.
Duterte's tongue-lashing expanded to credit-ratings agencies a day after S&P said the rise in extrajudicial killings could undermine the country's credit scores, due to "rising uncertainties surrounding the stability, predictability, and accountability of its new government."
The Philippines earned its first investment-grade credit score in 2013 as a result of governance and fiscal reforms.
First of all, credit downgrades are coming.
Second, the US government has now used the S&P to wag the proverbial geopolitical “stick” to contain the Philippines government. As such, current events bolsters or reinforces my case that the past Philippine credit upgrades had hardly been about “governance and fiscal reforms”, but about the prominence of US military interests here (Phisix: BSP’s Tetangco Catches Taper Talk Fever July 29, 2013)
Third, Philippine government’s balance sheet should be expected to massively deteriorate given the intensified demands of an expansionary government due to the war on drugs. The war on drugs, of course, represents nothing more than camouflage for an “Ochlocratic dictatorship” or a populist Police State (Welcome to the Police State August 18)
Fourth, “unpredictable” eh, according to the mainstream? Heck, leftist governments operate like clockwork!
International access to credit will narrow as the budget deficits are destined to bulge! This leaves higher taxes, ballooning local debt and the BSP (monetization of government spending or helicopters) as the key sources of financing!
What happens to the race to build supply, once interest rates start moving higher?! What happens to the US dollar short exposures by the listed and non-listed firms and by the government?
Oh, by the way, the USD peso closed the week at 47.99 to match the 47.995 January 26 2016 high!
C-H-A-N-G-E is indeed coming!
USD Php 50 here we come! (That's just the first target)
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