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Philippines Gets Investment Grade


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If you read S&P's evaluation of the Philippine economy and other statics they quoted in their article one has to really wonder why they up-graded their credit rating at all .... to me some of the stuff they are concerned about is ample reason to keep it the same or lower it ..... sighting the OFW's remittance fees as an asset is to me not a viable asset ..... but the present government's keeping the dollar exchange rate down has certainty helped the economy but at what cost ..... they show dollars in the bank but a much lower amount going to the people that really need it .... this can't and won't last forever ..... I believe you will see a change in the next administrations dealings with the OFW issue .... unless of course they see a way to take more from the cash cow ..... only time will tell ..... but I wouldn't bet my last dollar (or peso) on it being straightened out .... JMHO ...... :cheersty:

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The difficulty with the investment upgrade is most of the money remains at the top tier. Very little filters down to the broader population as a way to alleviate poverty. The rich get richer, while the poor get poorer. 

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The difficulty with the investment upgrade is most of the money remains at the top tier. Very little filters down to the broader population as a way to alleviate poverty. The rich get richer, while the poor get poorer. 

I believe they call it "GREED".

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This is where the Idea of socialism comes to bear fruit - the rich don't hold on to all the money.  Unfortunately this also results in nobody being rich after a while and then there is no money to do anything.  Kind of a catch-22, isn't it?  The best thing is to find a government to elect that will ensure the poor have a future and the rich can continue to make some good old fashioned coin and to do both without throwing the country into disarray or bankrupt.  And I think that the Philippines is seeing the start of this now.  Nothing can be changed 100% overnight but by going progressively (not that progressively, Bruce...  hehe) and continuing to build will see major changes in the Philippines.  

 

For those who don't believe me?  Go back and read the newspaper reports in the Philippines from even just 2 years ago.  5 years ago.  Big change is happening but we are too close to see the results yet far enough away to complain.  

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Soviet era socialism was the other extreme. It was distilled into a single phrase, "We pretend to work and they pretend to pay us."

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Soviet era socialism was the other extreme. It was distilled into a single phrase, "We pretend to work and they pretend to pay us."

 

 

True!  Unfortunately the quickest and probably the best way I can see the Philippines coming out and getting the poor working is to set up a couple tons of make-work projects - hopefully in partnership with big business - to get an income to the poor.  It doesn't have to be a big income but something conspicuously better than what they have now.  Educate them that the jobs in their areas are not going to last and that they need to use the experience they gain to build their own jobs from what they earn and what they learn...  Yes, a government bail-out but the people are still going to work for what they get!  For those who are too sick or physically work?  Get them the medical or physical care they so desperately need.  This is what rates a country moving from 3rd to 1st world status - just how well they can accomplish this.

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These ratings don't really have a lot to do with the amount of poverty in a country.  India has a higher credit rating (Baa3) that the Phils (BB+) but has hundreds of millions of destitute citizens.  China has a AA- rating but has 200 million people living on $2 a day.  Greece has a bad rating (Caa1) which is much lower that the Phils but has less poverty (as a per cent of it's total population) than China.  

 

The rating is an estimate of the country's ability to repay it's outstanding loans ... it also measures  the safety of it's government bonds.  This is important to the Phils.  It's 25 yr bond pays about 6%.  The higher the investment rating, the more likely foreign investors will buy the bonds.  This increases the pool of foreign currency  available to the government. 

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True - but it also is affected by the workforce.  India has sufficient people trained in higher trades to pass this.  China is a enigma of it's own...  And, Greece, while having a lower rating due to it's not meeting it's financial benchmarks, has a very highly educated population which is giving it a fighting chance to recover.

 

The Philppines has a lot of it's trained workforce working out of country as OFWs.  This does not bring about technical or economic growth on it's own within the country so they need to develop a workforce that is properly trained and given sufficient work nationally to enable the Philippines to grow.  All the loans and bonds are based on a growth projection so being stagnant won't help the country.

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I was originally against Agrarian Reform because the government won't be able to provide the promised seeds, equipment and financing need to make it a success. It was originally a vote getting gimmick. On second thought, survival and prosperity for those at the poverty level might be jump started through the development of small farms.

 

My wife and I have agreed to do a little philantrophic work in the Philippines as part of our retirement. The condition is our out-of-pocket expenses should not exceed $1,000 a year. We are looking at the distribution of GMO-Free, organic papaya seeds from Hawaii as one way to help small farmers. The participating group in Cagayan de Oro will be for potential future export to Japan and Korea where the Hawaiian solo papaya is known. I have a fruit exporting company who is interested. Samar will be a combination commercial sales and a feeding program for the urban poor. A cooperative located east of Metro Manila will grow and market the papayas. The retail price in Metro Manila is P40 to P45 per kilo.  

 

This is experimental. We will know in a few years if one of the three is successful and replicable.

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