The last two weeks has been a very interesting period in Philippine politics.
Noy Aquino is of course a so-called 'liberal progressive', who was elected to power on the basis of sentimentalism relating to his mother's recent death. His mother - Cory Aquino - was of course a lame-duck president who presided over a spate of failed military coups. She was supposed by the poor. She was eventually replaced by a former military leader Fidel Ramos, who orchestrated the BOT Law, and thus restored power to the Philippines. He was effective in timely implementation, though there is little wonder given the unfavourable terms he negotiated with foreign power companies. National Power Corp was left with onerous debts and electricity consumers were left paying expensive power...the most expensive in the world.
So there you have it, Philippine politics is divided between:
1. Liberal politicians supported by the media and the poor.
2. Conservatives, whether supported by landowners, military, who dominate power among corrupt officials.
The problem for both camps is that both sides are unthinking collectivists who are going to have little support for their policy initiatives. Noy Aquino is already off to a bad start. He is being condemned already for the following:
1. He was a lame duck senator - in 12 years he initiated 12 failed bills. He came to power on the basis that he would turn back corruption, and that he would free the poor from poverty.
2. He has struggled to establish his leadership credentials, as he has been dealing poorly with a series of 'brush fires' like the killing of 8 Chinese nationals in Manila. It was not the incident which resulted in his criticism, but the succession of follies after the incident.
The reality is that Noy Noy Aquino is not going to finish his 6-year presidential term. There are several reasons for believing this:
1. Who would want a lame duck president for 6 years - having just been elected
2. He is not popular among the military
3. He is not popular among the Conservatives, who will support the military because too many of them are corrupt to want Aquino investigating their misdeeds
4. The Thai military takeover highlights the 'practicality' of military takeovers. There was no foreign intervention. i.e. No sanctions, etc.
5. The top generals in the military are corrupt, and the same goes for the police. Expect them to be under scrutiny for the way they are appointed, i.e. Kickbacks for promotions, which was highlighted by the incompetency which resulted in this failed stand-off with the police in Manila recently.
The other alternative is of course an assasination of Noy Noy Aquino, but I think that is less likely. I would expect a takeover within a year. The implication is that we are going to see a collapse in the Philippines currency. For this reason I have some property advice - don't buy property there until the currency collapses. More details on our Property blog.
What will be the implication of a military takeover? Well the economy has been performing rather well of late for structural reasons, and increased tax receipts. I think poor 'military' administration will result in another Conservative Party supported leader, and I am guessing it will be Manny Villar. He is a very wealthy Filipino, with at least some 'roots' in poverty. I believe a good marketing campaign will see him depicted as the pin-up boy for the poor. A bit of promotion of his Eton City development might help as people drive along the Southern Tollway.
For those who want to support the resignation of Noy Noy Aquino - you will have to wish for a military takeover, his good judgement, or his assasination. Personally I prefer the military takeover because the country needs a shake-up, and as an investor, I appreciate the volatility. One day people will come to realise that democracy is nothing more than a system for legitimatising fascism. i.e. Tyranny of the minority or majority, its still tyranny. So good luck with that! Be sure to make lots of money, accumulate lots of guilt, then spend it on the poor to recoup your 'good grace'. :)
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