Existentialist nightmare in the Desert

In Franz Kafka's novel, The Trial, the main character is arrested and scheduled for an arraignment and an eventual trial. He sits inside a building that serves as the courthouse for a remote unnamed location. The authorities that are bringing the case against him are unknown. He has never seen them, nor talked to them. He doesn't know what the charges are against him. All he knows is that he is being arraigned and eventually tried for something.

The Trial is one of the best-known books written by Franz Kafka, acknowledged as one of the greatest existentialist writers of all time.

I thought of Kafka last Friday as I waited in line at the Department of Motor Vehicles office on Flamingo Road in Las Vegas. When you go to the DMV anywhere in Las Vegas, prepare to spend more than an hour in line just to talk to someone. After talking to one of the many DMV employees who sit in open windows, you are given a number and you're supposed to wait two to three hours so you can be helped by other employees with their own open windows.

Pray that the second employee you talk to will be able to help you. If that employee can't, or won't, you will be asked to come back and go through the process of falling in line and sitting for hours, awaiting your turn.

I thought of The Trial because of the absurdity of the Nevada system for the enforcement of its clean-air laws.

My daughter's car, a 2001 Ford Windstar, failed the smog test in Nevada a month ago because of an engine light on its dashboard and an indication that an oxygen sensor was not working. Since my daughter had to hastily go back to Los Angeles to attend her college classes, I instructed her to have the repair for the oxygen sensor done in LA.

On my trip to LA two weeks ago, I decided to drive the Windstar back to Nevada to have it smog-tested once more. It failed again, this time because another oxygen sensor was not working.

My mechanic in Vegas fixed the problem and reset the car's computer to remove the engine light on the dashboard. He told me to drive the car 50 to 80 miles before going for another smog test. I did, but this time, the car was rejected because the computer in the car had not re-set. I called my mechanic, who told me I had to drive the car another 100 miles and just keep driving it, waiting for the computer to re-set.

I took the car for a smog test a fourth time. It was rejected again.

Another mechanic suggested to me that I needed to drive the car at least 50 miles at speeds under 60 miles per hour and then bring it back to him. I did that yesterday. You ready for this? It was rejected a third time and with the two failed tests, that was the fifth time the car could not get past the smog-test station.

The car's computer had not yet re-set.

While I was in line at the DMV last Friday, waiting to talk to an "Information" clerk, I thought of Franz Kafka and the Trial. Why was the full weight of the Nevada bureaucracy on my shoulders? Was I being accused of fouling up the air? I know this was not the case because the test results never mentioned toxic substance levels beyond the level of tolerance coming out of my car's tailpipe.

The car's computer actually works, it just did not work properly in one area - the monitoring of oxygen levels.

The car's registration expires today, August 22, which was the reason for my visit to the DMV. I needed to get a time extension for registering the car. And that I accomplished, easing the burden on my shoulders.

I stood there in line thinking of The Trial. No one is accusing my car of fouling up the air. The whole point of smog testing is to make sure that the car does not spew toxic substances into the atmosphere at levels beyond what are permissible.

The car is not being accused of that. What it is accused of is that the computer is taking too long to function in one area, and one area only - the monitoring of impurities. Because of that, the car cannot be registered. Everybody knows that it sometimes takes a long time before a car's computer starts to function properly again, yet I'm supposed to make the computer work by driving it around and around in the streets of Las Vegas to force its computer to kick in. How far I have to drive - and for how long - nobody knows.

I've already put in close to 500 miles, driving around, nowhere in particular to go. Meanwhile, I cannot register the car because it continues to be rejected for the smog test.

I thought the smog test measures the quality of the air that comes out of the car's tailpipe. In New Jersey, contractors for the Department of Motor Vehicles stick a metal rod into the car's tailpipe to measure the amount of toxic substances that are coming out. If those substances are within tolerable limits, the car passes inspection.

Of course, in New Jersey, they also look at the engine light. If the engine light is not on, the car passes. My car's engine light has been off since my Las Vegas mechanic fixed the oxygen sensor problem.

In New Jersey the Motor Vehicles people test for toxic substance levels, the whole point of keeping the environment clean.

In Nevada, it's an existentialist nightmare. You know that your car is not polluting the atmosphere. Yet your car cannot be registered. The whole weight of Nevada bureaucracy is on your shoulders. Your friends, neighbors, everybody tells you that at some point in their lives they too have found themselves face-to-face with Nevada' existentialist bureaucracy.

I am channeling Franz Kafka. Hey Franz, want to write another novel?

I was to meet with a Filipino mechanic this morning (Sunday, August 22) who would finally put a fix on the problem.

But before I meet with him, he said, I had to drive my car on the highway at 45 mph for ten miles, then drive it at 65 for another ten miles, then 45 again followed by another ten miles at 65.

I hopped on my car at 8:30 a.m., drove north on Highway 215 for ten miles at 45 mph, got off the highway, turned around and started driving at 65. I noticed that the car started to make funny noises as a I struggled to keep it running at 65 mph. The car kept decelerating. Luckily for me it was Sunday morning and there weren't many cars on the highway.

I kept pressing on the gas pedal as the car slowed down to a crawl. When I reached the off-ramp to Sahara Avenue, I took it and forced the car to climb up the ramp until I had to step on the brakes in front of the traffic light, which was red.

When the light turned green, I stepped on the gas and the car did not move.

I knew right away that I had blown the transmission. Maybe it was from driving the car at a constant speed of 45 mph on the highway, maybe it was a problem that was already brewing. Who knows? All I know is that I don't want to spend another $2000 to repair the car's transmission. The car is worth - perhaps - $750, why should I spend another $2000 on it, especially since I've been spending $2000 a year - easy - on the car since 2007.

Now I've got another set of problems. Would a car dealership accept the car as trade-in even though it is not running and the transmission has to be fixed? Will the charity organizations accept it as a tax-deductible donation? Failing all that, will the auto wreckers accept the car?

The nightmare has not ended. It, like in the movie "Inception" is a nightmare within a nightmare.

Hope for under-water houses and millions of unemployed Americans

My classmate in my dance class, Laura Emerson, who is on the staff of the Las Vegas Review Journal, recently wrote a piece on the historically low mortgage rates. The low mortgage rates are out there, beckoning homeowners in Las Vegas and elsewhere, she wrote. Nearly everyone who owns a house probably would refinance these days because of the bargain-basement interest rates. Except that most cannot take advantage of the low mortgage refinance rates.

Most homeowners in Las Vegas are not qualified for refinancing. Many have homes that are under water, i.e., with market values lower than their mortgage balances. No mortgage banker or broker would refinance such properties. Homeowners whose houses are not under water are also shut out of the refinance market because their houses are barely above water and their home equities are much less than the 20% that banks require. Banks would refinance houses that have less than 20% equity provided that the homeowner purchases mortgage insurance. The cost of the mortgage insurance effectively shuts most people out of the refinance market.

I was reflecting on Laura's front-page business section article the other day and may have stumbled on a solution to this conundrum.

Assume that a house owned by a Las Vegas couple - let's call them James and Eleanor Alfonso - has a mortgage balance of $300,000. Their house now has a market value of $270,000. That house is clearly under water, with a negative value of minus $30,000. The bank that holds the mortgage on the house is probably watching this loan with eagle eyes for any sign that the Alfonsos may be thinking of defaulting and skipping town, or buying a second house - a very cheap foreclosure - prior to defaulting on their $270,000 house.

It is the way of a lot of houses in Las Vegas. People are just walking away from their houses. The "responsible" debtors are the ones who buy a second home - a cheap foreclosure - move into that second house and then default on their first house.

It's a sad, sad tale of mortgage waywardness in Las Vegas and elsewhere in America.

But what if there is a way to make both the bank and the homeowner whole?

Obviously, the biggest housing crisis since the Great Depression calls for the most creative solutions.

What if the bank that holds the $300,000 mortgage is willing to set aside the $30,000 negative equity on the Alfonso house and freeze it? The $30,000 will not be forgiven, just set aside and frozen. What that would do is that the mortgage will suddenly be equal to the market value of the house. The equity on the house will be zero, but at least it will no longer be under water.

Not long ago, people could buy houses with no money down. There were loans to first-time home buyers, to military people and others that the government was trying its best to put into houses. The mortgage industry can revive such programs, except that now the only people who would qualify for such programs are those who already are living in their own homes and have zero equity in them. The goal will not be to qualify as many Americans as possible for home ownership. Instead the goal will be to keep Americans in their current homes after years of proving that they can afford the mortgage payments.

The government will back the refinancing of mortgages that mortgage companies now hold on under-water houses. There could be a requirement that the homeowners who qualify for these zero-down, zero-equity mortgages have lived in their houses for two or more years. There could be an additional requirement that the homeowners have had a good payment record, that is, no more than one month in arrears in their mortgage payments.

With today's mortgage interest rates at about 4.5%, the Alfonsos' house, refinanced at a net loan amount of $270,000, will mean a monthly payment of $1368.05. Assume that the original mortgage amount on the Alfonso house was $350,000, with a mortgage interest rate of 7.5%. This means that the Alfonsos' monthly mortgage payment is currently $2497.25.

This means that the Alfonsos will see their mortgage payment (principal plus interest, not including real property tax and insurance) reduced by $1129.20. What this does for the Alfonsos is that they will do everything in their power to stay in their home and to continue making mortgage payments. Most Americans in a similar plight as the Alfonsos will welcome the decrease in their mortgage payments because a lot of them are hurting due to the Great Recession. A lot of them used to be double-income families but are now struggling with only one of the spouses working while the other spouse is receiving unemployment insurance compensation or not receiving anything at all.

The special refinancing arrangement, of course, would not be available to those who bought houses in 2006 and 2007 in Las Vegas. By 2006, home values had nearly tripled in the Las Vegas valley from a base year of 2002. Houses bought in early 2007, 2006 and some in 2005 had appreciated so much that when home values plummeted to 2002 levels those houses had lost up to 60% of their market values. At some point, the banks and the Obama administration will have to figure out what to do with those houses. The great majority of houses in Las Vegas and across the U.S., however, would qualify for the special refinancing arrangement.

Because of the help that can be provided to the Alfonsos in Las Vegas and millions of American families, the number of foreclosures and abandoned houses will slow to a trickle and the housing market will stabilize. At some point, the value of houses will start to climb and people who once owned homes that were under water, will see increases in their home equities. (In some parts of the country, the housing market has indeed stabilized and home values are starting to rise - even without much government intervention.)

This may even result in a mini-boom in the real estate market, as more people are encouraged to buy houses because of the expectation of increasing home values. The resultant mini-boom will encourage contractors to build again, causing a mini-boom in the construction industry.

Remember the $30,000 that the mortgage company set aside when the Alfonso house was under water by exactly that amount? Because the market value of the Alfonso house at some point will have increased to more than $300,000, the Alfonsos can refinance their house a second time, adding the $30,000 to their mortgage debt. This refinancing will divert $30,000 to the Alfonsos' original mortgage company, wiping out the amount that was set aside and frozen by that mortgage company.

It is important for mortgage rates to remain low, or even go lower, for this plan to work. The Alfonsos, after adding back the $30,000 to their mortgage balance, must not see a substantial increase in their monthly mortgage bill for this to work. If the government keeps mortgage interest rates low, or drives rates even lower, the Alfonsos and millions of refinancing homeowners will not be discouraged or inconvenienced.

If the $30,000 is added back to the Alfonsos' loan and the Alfonsos refinance a second time, assuming that the mortgage rate stays at 4.5%, their monthly mortgage payment will rise to $1520.06, still considerably less than what they are paying now.

The Obama administration is wracking its brains trying to figure out how to end the mortgage crisis in America. We may have stumbled on the way out of the conundrum.

If nothing is done, the economy will continue to be dragged down by a real estate market that is not just under water but is in the midst of a great flood. Banks will continue to suffer as more Americans walk away from their homes after defaulting on their loans. Banks and mortgage companies have every reason to embrace my plan, which will stop the bleeding from the foreclosures.

A second government initiative that must be pursued and announced in dramatic fashion immediately is the creation of millions of jobs. This is priority one for this administration.

This is my recommendation to the Obama administration:

1. We will offer every recipient of unemployment insurance payments, starting with the 99-ers, those who have been unemployed for 99 weeks or more, a chance to work and at the same time keep receiving unemployment insurance checks for another six months. The mechanism for doing this is the private sector, as explained in 2) below.

2. We will start with small businesses and gradually add larger businesses to the program. Small businesses with five or less employees typically are unwilling to hire additional employees even when work volumes increase because of possible harm to the bottom line. The government program will make it possible for a small business to add an employee it needs but cannot afford to hire. Assume that a small business needs an additional employee at a position that typically pays $15 an hour, $120 a day or $600 a week. An unemployed person who gets $450 a week from the government would probably want to take that job, which would pay her an extra $150 a week and put her in the ranks of the employed, rescuing her from her desperate straits.

What is the incentive for a small business owner to hire this additional person? The small business owner will only have to pay his additional employee $150 a week because his new employee will still get her $450 from the government.

This arrangement will put money in the pockets of unemployed Americans, resulting in increases in business activity. The resultant increases in business activity will mean more revenues for small businesses and eventually large companies, as small businesses start to increase orders of office supplies, equipment, plant, raw materials, machinery, etc. Restaurants will have a mini recovery as more people decide to eat out instead of eating at home. The increased business activity will ripple and echo into the larger economy.

With more people being employed again, tax collections will increase and local, state and - to a much more limited extent - federal government coffers will begin to fill up.

The federal government cannot afford to finance this program indefinitely for obvious reasons. The program may, however, over a six-month period be enough to jump-start the economy and get all its pistons humming again.

Many of the unemployed Americans who are hired by small businesses will probably stay on after the crash federal make-work program ends. An even larger number will find work in other companies, as the economy expands, causing the creation of millions of jobs in the private sector.

The third leg in this three-legged dance to the gods and goddesses of employment is the single-minded focus on the manufacturing sector. Small businesses in manufacturing industries would have the priority over other kinds of businesses in the creation of jobs that are partly paid for with unemployment insurance. The start-up businesses in the alternative energy sector would have high priority.

The contractors engaged in the erection of solar panels on rooftops. The sub-contractors engaged in the building of plants that will manufacture solar panels. The sub-contractors engaged in the erection of wind turbines. The manufacturers of futuristic cars - cars that can be driven in water and sprout wings, electric sports cars.

Small businesses that supply GM, Ford, Chrysler and the foreign manufacturers with plants in America will automatically qualify for this program that puts unemployed Americans in jobs while still receiving unemployment insurance.

Sub-contractors that install electric recharging stations all across America to power the electric cars that are now entering the American market.

Apparel manufacturers, electronics manufacturers who wish to add employees because Americans are becoming conscious again of the need for patronizing American-produced consumer items. The Made in America campaign of the Obama administration, if pursued with imagination and presidential resolve, will drive home the point that if Americans want jobs they must be willing to buy goods manufactured in America even if the goods cost more than the cheap imports.

In the past, our financial wizards and Federal Monetary Board poobahs fought inflation in a knee-jerk fashion. Recent experience tells us that some inflation is good because manufacturers are not afraid that they are producing goods at today's prices but may be selling these goods at tomorrow's lower, bargain-basement prices, killing their profits. Increasing prices mean that goods produced at today's low prices will be sold at tomorrow's higher prices, thereby assuring bonus profitability.

In other words, we want more inflation, not less. But not too much. Too much inflation will erode the value of our money too fast and the result will be an inflation spiral that could go out of control.

If I were Obama I would go before the American people and announce a plan that will dramatically reduce monthly mortgage payments for many Americans through a boom in refinancing. I would also announce a plan to put unemployed people back to work in small businesses, financed partly by a continuation of unemployment insurance payments to such people who find employment through such a program. Thirdly, I would announce that the first small businesses that will be helped by the make-work program are those engaged in manufacturing.

I would do it the day after Labor Day.

The Formative Years

I almost drowned when I was seven. My friends in that old neighborhood in Santa Ana, Manila all knew how to swim. Most swam doggie-style, but at least they stayed afloat. I didn't.

I remember diving into the pool after everyone else did and in an instant, all I could see were violent bubbles. I was gasping for air as I kept sinking on the steep incline of the pool's bottom surface. The more I tried to find air, the deeper I sank. I remember thinking that I would not get a chance to finally meet the child actress, Tessie Agana, who was my obsession in those days. I did not think of my parents, brothers and sisters. I thought of Tessie Agana and how I would not have a chance to ever meet her.

My life did not flash before my mind's eye, there was only surrender and a realization that my young life was about to be snuffed. Just then, there was a push against my back. Another push. Then another, and I could see the sky once more.

I had been saved by my friend Neto, who was probably two years older and very athletic even at that young age.

When I finally drown in the waters of my old age - which I am betting is still quite a ways from now - I don't expect to see my whole life unfolding before me either, contrary to what has been written about in books and movie scripts. I expect only an eerie silence, a cosmic resignation, a sublime acceptance.

Whatever parade and review of my life's icons, the nostalgic whispers of the real-life characters in my youth, the imagined giants who informed my moral and character building, those are happening now. Not at the point of death, but in moments such as now, when I wake up and spend a morning reflecting on my life.

My first class party (sophomore in high school) was an Elvis-filled night. One of my classmates, Jorge Bunag, shook his hips, stabbed his knees in a downward spiral, as his body gyrated to the tune of Blue Suede Shoes. It wasn't really my first party. That was a party at the home of my older brother's classmate, Gilbert Evaristo. I don't remember the music that was being played, though I'm willing to bet it was Frank Sinatra. Sinatra was all we listened and danced to in those days.

I remember dancing with a girl who may have been twelve - I was thirteen - and telling a joke which I considered particularly funny. I laughed so hard at my own joke that a bubble formed from my right nostril. I was so embarrassed I quickly turned around and left the girl in the middle of the dance floor. I glanced back at her to see that she was frozen in place, not knowing that she had just suffered the first trauma of her young life.

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I remember having a book of pictures of Brigitte Bardot. I don't know how I got to own that book. I might have gotten it from my father's collection of books and paperbacks. My dad was an avid reader of pulp fiction and an admirer of the female form.

Brigitte Bardot, or B.B., was to an average 14-year-old boy like me the ultimate pinup girl. She had a bronzed body, long legs, a bosom made for the gods, narrow hips, and full, sensual lips. The old woman who did our family's laundry often caught me glancing at B.B.'s pictures while doing what normal 14-year-olds normally do. I did not care that she saw me. I remember thinking she was old anyway, what did she know?

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The Beatles introduced me to the subtle intricacies of young adulthood. I was graduating from the unrequited love of Frank Sinatra ("If you are but a dream, I hope I'd never waken...") to the coy and complicated emotions of Beatle-land ("If I fell in love with you, would you promise to be true?" and "Something in the way she moves attracts me like no other lover").

I remember having a girl friend where I worked who spoke to me in Beatle-talk. Whenever she wanted to tell me anything, she quoted a line from one of the Beatles' songs.

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JFK was a huge influence on my political ideology. I am a Democrat now because Kennedy was a Democrat. I am a liberal-progressive despite the fact that where I grew up - La Salle - manufactured, and still does, religious conservatives. By the hundreds, by the thousands.

JFK also sent me subliminal signals that people who were borderline heroic were also sometimes immoral in their daily lives. I thought in those days that JFK was one of the exceptions, that he was one of the few heroic figures who were also immoral. Now I know that a person's personal morality has no connection with his heroism or lack thereof.

Marilyn's "Happy Birthday, Mr. President" before the world's TV cameras encapsulated the ill-fated romance between the world's greatest living man of the era and the world's most famous, most desirable woman.

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Marlon Brando was the first of the "method" actors who came out of a small acting school in New York. Founded and operated by the father of Geraldine Chaplin, Charlie Chaplin's wife and later widow - who appeared as the wife of Omar Shariff's Dr. Zhivago - the acting school produced James Dean, Paul Newman and many other actors and actresses who became giants on the movie screen.

Brando was only one of the many actors who graduated from the famous "method" acting school with a mission to transform acting into an art form. To be sure, there were great actors who had preceded Brando. Those actors, however, were not products of any school. They were great because they were great natural talents. Recall Lawrence Olivier, Orson Welles, Charlie Chaplin, Clark Gable, Henry Fonda.

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I'm willing to bet that the generations that came after my generation have their own set of memories that make them feel that theirs have been lives worth living. But I just don't see how their wonder years could have the same sense of discovery that people of my generation enjoyed in our formative years.

Society allowed us to grow and become our individual selves. We roamed the streets and came home in time for dinner, our parents all the while knowing that wherever we were, we were safely discovering our ever-expanding world. Today, kids are forbidden from venturing out into the streets because so many kids disappear only to be found later in ditches, lifeless and covered with mud.

There are so many crazies, perverts and all kinds and degrees of social deviants that kids are locked up in houses out of necessity. Thank God for video and computer games kids can stay home and not end up wrecking the furniture.

When they are in their sixties, seventies, eighties and beyond, are the kids going to have memories of their adventures and misadventures, or are they going to have memories of their degree of expertise in Warcraft III? Will they remember how good they had become in Halo 3?

The generations born since the turn of the 20th century probably worried about the generations coming after them. The world was shrinking and becoming more dangerous. I imagine, however, that the older generations living at the end of the 19th century envied the younger generations because the kids in those days were beginning to discover the wonders of indoor plumbing. The world was also starting to eschew war as their countries' primary foreign policy strategy.

The 20th century brought us sanity and sanitary living. The 20th century enshrined the value of human life, human rights and civil rights.

The 21st century is threatening to dismantle all that we accomplished in the past 100 years, as the world moves towards the clash of civilizations (Islam versus the rest of the world), the imprisonment of our young (fear of perverts, rapists, serial murderers and such who prey on children and women), the rise of the counter-culture (tattoos, body jewelry, drugs, four-letter words) and the institutionalization of long-term unemployment.

What will the memories of today's digital generation look like?

We need an all-out ideological civil war

We need an all-out ideological civil war. Without the blood-letting of course, but just short of it. We need to pit right wing versus left wing. Progressive ideas versus conservative ideas. Not in the realm of politics, but in our daily lives.

Americans have to be told that this is necessary. We face an uncertain future that is getting more and more uncertain every day. We can no longer pretend that the day of reckoning is not at hand, because it is staring us in our faces every morning, as we brush our teeth.

The Democrats are thinking of introducing next year legislation that will amend the recently enacted health care legislation to include a public option. Should they succeed in doing that, there will be an uproarious national debate on the role of government in this country that will make last year's dysfunctional town hall meetings seem like a picnic.

America needs this. If the left, progressives and students mobilize to support the public option and the right, the chambers of commerce, the old conservative folks mobilize in opposition, the resultant gut-wrenching shouting match will determine the country's permanent direction.

I believe in the public option. I believe in progressive ideas. I believe that most of the problems we are seeing today - economic, societal, lack of political will - are a result of years, even decades of conservative neglect. From Reagan, to Bush I to Bush II, the Republicans have neglected the erection of defenses against the Japanese, the Koreans, the Chinese, the Indians who have systematically dismantled American manufacturing and other business sectors.

They looked the other way as country after country took advantage of the U.S.'s commitment to laissez-faire economics. Reagan, after his second term ended, had no idea why the Japanese gave him a one million dollar gift during his visit to Japan in 1989. The Japanese loved Reagan. He never once entertained thoughts of protecting American manufacturers of television sets and other electronic products from the cheap Japanese products that were being dumped in the U.S. market. By the time Reagan's second term ended, the radio, television, non-high tech consumer electronic products industries had been buried in Arlington cemetery. All in the name of American military superiority.

Bush II - the younger Bush - looked the other way as China consolidated its position as chief night burglar of U.S. manufacturing jobs. He looked the other way, because China was financing Bush's ill-advised war in Iraq. He looked the other way, because China was financing the massive Bush tax cuts for wealthy Americans, many of whom were and still are Bush's friends. He looked the other way, because China financed the expensive flexing of world power muscles that Bush extolled when he proclaimed "Mission Accomplished" on the U.S.S. Lincoln.

We became like the Russians, as the Russians became like Americans. Recall that Russia was a third-world economic power even as it assumed the role of the second military superpower, a menacing knife at the throat of the world's number one superpower, the United States of America.

With China and India leading the way, other countries have taken over manufacturing and back office operations for American business. It started with Reagan during the Japanese miracle, continued under Bush I and to a certain extent under Clinton - though Clinton must be credited with the explosion of high-tech jobs in Silicon Valley and other technology centers all over the U.S. - and reached a crescendo during the Bush II years, when China and India systematically relocated a sizable chunk of American business into those two countries' cities.

The Russianization of America is nearly complete. Like most third-world countries, we struggle to find jobs for our people. We promise ourselves that we will develop alternative energy - solar, wind, thermal, nuclear, etc. - yet in the back of our heads we know that China and other countries are so far ahead of us in these fields that we may already be an also-ran in them.

We delight in being the sole military superpower in the world, an empty distinction since we know that a devastating terrorist attack on American soil is not a question of "If" but of "when."

In the end, we really have inherited nothing, just the wind. We are fast becoming third-world economically, even as we cling on to our military might. Just as the Soviet Union did during the Cold War.

The most important, most valuable resource owned by Americans - their houses - have lost so much value that now people can't wait to get rid of their houses instead of treasuring them. People are fleeing their upside-down houses (houses that owe more money than they are worth) as though those houses had the germs that cause the Black Plague.

Americans expect the worst of their Social Security system, their Medicare and Medicaid, which they consider already bankrupt as we speak. Americans are wrong on this, because the Social Security system is decades away from insolvency, even if the U.S. Congress does nothing. But the dim prospects are real. If America cannot find future public financing for the continuation of Social Security and Medicare, those two entitlement programs will eventually become insolvent.

For the first time perhaps in its history, the American nation fears its future. Are we equal to the challenges? Do we have the talent? Is it true Chinese and other Asians are born smarter than Americans? Why do Asians outperform most American kids academically?

Do we have enough money to support our military? Shouldn't we slash the Pentagon budget in half and bring our troops home where they can protect the country from Al Qaeda and other terrorists who are plotting to one day launch a terrorist attack that will rival 9/11?

American ingenuity, which used to be our source of pride and the promise of a prosperous future, is now being rivaled by other countries. While we still dominate new patents, our lead over the rest of the world is fast shrinking.

Our Ivy League universities are the greatest, but they have become so expensive that our own children are shunning them. Nowadays, our elite universities are educating Chinese, Indian, South Korean, Taiwanese, HongKong and other scholars so that those scholars can go back to their home countries and accelerate the pace of dismantling American-based businesses.

Besides that "minor" inconvenience, the current Great Recession has rendered diplomas earned in those great universities useless as more and more of their graduates find difficulty finding jobs upon graduation.

Americans do not dare to dream of the nice juicy jobs, they are fighting each other for jobs, any old jobs. And the prospects are more of the same over much of this decade. Will it ever improve? What happens to all these kids who are graduating from college and are spending the next chapter of their lives doing odd jobs because there are no permanent, career-making jobs that are available?

Is the solution another "Go west, young man" epochal episode, with west being China and points in Asia, where American jobs have immigrated to? Citizens of third-world countries have to expatriate themselves to find work. Are Americans destined to do the same in the not-too-distant future?

And what do we do about those who are in this country illegally? We can't deport them all, even if we could find them. What would King Solomon do? Is America sufficiently Solomonic to tackle the illegal immigration problem smartly and logically, not through their gut reactions?

America must go through a soul-wrenching national debate that explores a multitude of issues confronting American society. We can start with a debate on the public option. Such a debate will necessarily answer the question: Is America entering a welfare state phase, similar to the phase Europe had to live through as it struggled to take care of Europeans' needs after the Second World War, when Europeans were dependent on the good graces of Uncle Sam?

If America can no longer afford to solve most, let alone all of its problems, then the correct prescription would be a welfare state similar to the European welfare states.

That is what a national debate on the public option will accomplish. I believe - even as I favor the public option - that if the U.S. Congress successfully introduces the public option, it will be only a matter of time before the country adopts a health care system that mimics the Canadian, Australian, British and other European systems. I think those are great prospects. Health insurance for all, administered and financed by the U.S. government. With money collected from the people through higher tax rates.

America will look more like Canada. But is that such a bad thing? In the Time-Life documentary, "Auschwitz," reference is made to a section of the Auschwitz concentration camp as "Canada." That section was known as Canada because it was run like heaven. Corrupt - because German soldiers routinely pilfered Jewish prisoners' private belongings - but nonetheless run like heaven. The German soldiers in Auschwitz believed that Canada was the land of milk and honey, where all things good and beautiful awaited the people who were fortunate to have landed there as immigrants.

More and more Americans are turning their envious eyes to the north. Canadians have their future and their present mapped out for them. The government does all the planning, the people do all the enjoying. Canadians pay a whole lot for the privilege of living in that section of heaven they have carved for themselves, but they gladly pay. They look at their neighbors below them and tsk-tsk their way to the realization that the Americans expend a lot of energy rejecting the one lifesaver that can save them.

I'm all for a welfare state. Let us entrust the government with more of our money so that it can take care of our needs - basic and sophisticated needs. Most Americans live paycheck-to-paycheck. After they get done with the bills, all they have left is their paltry disposable income that they use to buy clothes, go to movies, party with their friends, etc. Then they work for another month so at the end of the month they have the money to pay their bills.

We Americans save very little of what we earn. Most of the citizens of countries that we dismiss as welfare states - or socialist states, if we believe the Republicans - save more money than we do. They take longer vacations, they enjoy life more, while we Americans work our fingers to the bone for the privilege of paying our creditors.

All the while, we are trusting in Uncle Sam. We think that Uncle Sam will protect us when we get old, or if we become disabled. But how can Uncle Sam do that if we are constantly questioning why we even pay taxes to the Federal government?

As a nation, we Americans must dialogue the question: if the government can promise us the security that Canadians, Australians and Europeans enjoy, are we willing to pay more in taxes? Are we willing to give up some of our freedoms for the greater good? Those are the questions confronting us today.

The sooner we answer that question, the sooner we can go on the road and meet our destiny as a nation.

A speech Obama must deliver

My fellow Americans,

A week ago, I told some of my most passionate supporters in Nevada that I found it hard to believe that the Republicans, who ditched the American economy not too long ago, now are demanding that you give them back the keys.

While I got a few laughs and some positive comments from that remark, I now realize that I may have erred in comparing the American economy to a ditched car. It was never my intention to make light of the earth-shaking events that clobbered the American economy the year I was running for the Presidency.

The American economy in 2008 in many respects looked like the economy did in the years leading up to the Great Depression. Banks, insurance companies, investment houses were all sinking. They had taken in water, the turbulent waters of the mortgage meltdown, the houses whose values were falling like rocks to the bottom of the sea. Americans had lost their jobs - 8 million of them. For the first time in a long time, American optimism had been replaced by a sense of impending doom. A foreboding sense that a huge comet from outer space was on a collision course with our planet earth.

Thus, to compare the American economy to a ditched car was wrong - utterly wrong.

What really happened in 2008 was that an earthquake - the mortgage meltdown - had so violently shaken the American economy that a side of a Rocky Mountain had broken away and had been sliding down a snow packed slope. It was a wayward mountain side the size of Rhode Island that was fast slipping down that slope. At the end of that slope was a drop no less than 100 miles deep. It was a straight drop.

I remember being in the heat of the campaign in 2008 and being briefed by my advisers about the meltdown in the financial markets that was threatening the whole American economy and eventually the world's economy.

I watched with horror as news filtered in that the American economy was headed for a steep fall. I, like millions of Americans, was relieved when I learned that Fed Chairman Ben Bernanke and Treasury Secretary Hank Paulson took the near-desperate step of sponsoring a bank bailout plan that promised to end the dangerous slide of the American economy.

It would cost close to a trillion dollars, but at least the economy could be saved. There were still danger signs everywhere, but the bailout of Wall Street would at least buy time for our economic planners to permanently halt that slide towards that ravine that was a straight drop 100 miles deep.

Mr. Bernanke and Mr. Paulson, aided by the U.S. Congress, was able to come up with a huge tree. Imagine a tree so huge it is almost as big as the state of Rhode Island. This was the $1 trillion tree that stopped the descent of the American economy into the ravine.

When I assumed the presidency in 2008, though the economy was no longer sliding, the weight of that rock the size of Rhode Island was proving to be too much for even that gargantuan tree. It appeared that the tree would eventually break and the rock would continue down that snow-packed slope and into that ravine.

Though the slide had been stopped, the lack of economic activity threatened to crush that huge tree. Nobody in America was buying. Nobody was buying cars, houses, durable goods, investments, shopping mall goods. Economic activity had come to a dead stop. If that condition went on too long, most people in America would lose their jobs, because if nobody was buying anything, there would be no need for American and foreign companies to produce anything.

It was clear that the solution lay in the government itself providing the spark that would create the energy that would make the American economy spring back to life. Every responsible person in America agreed that a stimulus bill costing at least a trillion dollars was needed. Some economists argued that the stimulus bill should be bigger than one trillion. We in America propose, but the U.S. Congress disposes. Congress would pass a stimulus bill that was a shade under a trillion dollars.

With our stimulus bill, the bailout of the American car industry, the cash-for-clunkers, the full-scale immersion into solar, wind and turbine energy industry, my administration, the Monetary Board, the U.S. Congress and the American business community all working together, we were able to jump-start the American economy so that now we are in the midst of an economic expansion that is on a trajectory to an eventual full economic recovery.

We are pulling that huge rock back up the slope, inch by precious inch. But, it is an activity that is historic and epochal in its challenges. Those old enough to remember the Great Depression perhaps can remember that the recovery from it took more than ten years. The final piece of the puzzle came when the U.S. entered the war in Europe and Asia and American industry went into full-employment.

While the American economy did not go into a Great Depression in 2008 and 2009, the enormous challenges before us were clear for everyone to see. We had lost 8 million jobs during the Bush years, we were still losing 750,000 jobs a month when I took over, and many of the jobs already lost and we were continuing to lose we knew would never come back - because they were manufacturing jobs in industries that had fled America for China, South Korea, Japan, Taiwan and other Asian countries.

My biggest challenge was how to put people back to work. That was the only way the country could slowly pull that rock back up that slope and reconnect it to that Rocky Mountain side from which it had broken off.

Thanks to American ingenuity and the heroes of Main Street - the small employers, the big multinationals that are now hiring again - we are gradually seeing the rebirth of American optimism. The economy has added jobs again, though the jobs that are being added have not been enough. We need to do much, much better in this area. We cannot let a whole generation of Americans - today's college graduates - spend the best years of their young lives unemployed and uncertain of their future.

We need to create jobs by the hundreds of thousands and eventually by the millions. We need to accelerate the pace that that big rock goes up that slope. We must push harder, and pull with more force. I believe that I have been leading in this effort. I've had my focus on the economy from Day One. People in America may not know this, because I did not constantly remind them of it, but since I got my initial briefings on the state of the American economy at the beginning of my term in 2009, I've had my eye on that rock. I knew it was going to be very difficult, one of the most difficult things that any American president would ever be challenged to accomplish.

I believe in my heart that we are on the right track, even though there are times when I am tempted to be discouraged. The pace of our recovery is so slow and I know there are millions of Americans who are having an incredibly tough time making ends meet. And the generation that just graduated from college must be wondering if they will ever find meaningful jobs in their lifetime.

But we must not allow the few among us who want a return to the policies that got us into this mess to prevail in the ongoing national debate. We are making progress, we are pushing that rock back up that slippery slope slowly but surely.

If we turn the U.S. Congress back to the Republicans, who along with the previous administration caused the earthquake that broke the side of that Rocky Mountain to split apart and go on that downhill slide, we are making a big, big mistake. The Republicans threaten to undo what we have already done. They want to return to the policies that caused the economic mess we're in.

They are not just saying NO to everything that my administration is proposing, they are also trying to convince us that their old policies of no regulation, of every man for himself, of low taxes for the rich, of hundreds of billions in tax breaks for the oil industry, of artificially generating economic activity by going to war in countries like Iraq will work. Even though we still have the memory of how the previous administration dragged our country to an economic collapse.

We Americans are a patient people, as long as we are given the facts. Just the facts.

I hope you, my fellow Americans, will not lose faith, that you will see that though the American recovery is probably the most difficult undertaking of our lives, we can get the job done. We are Americans. We never give up.

It will be tantamount to giving up if we give the reins of our economy back to the same people in Congress - the Republicans - who got us into our mess in the first place. If America must replace the Democrats in Congress, please do not replace them with the same people who ruined our economy through bad policy decisions. Can't think of any others who could do a better job than the Democratic legislators? That's because there are none. Despite the presence of Tea Party activists who at best have only muddied thoughts to offer about the American economy.

I appeal to the American people to stay the course. I need the help of a Democrat-controlled U.S. Congress to pull that huge rock back up that slope. We don't need a Congress that is pulling in the opposite direction - back towards the profligate policies of the past.

My fellow Americans, I appeal to your reason. I know it is difficult for you not to blame the party that is in power while you continue to suffer through the worst economic times since the Great Depression. I thoroughly understand your frustration. But it would be a much bigger mistake to hand Congress back to the same legislators who doubled the national debt in the 8 years of the Bush administration, who presided over the loss of 8 million jobs many of which will never come back, who refused to regulate the industries that sorely needed regulation.

It took us many years, nearly ten years to get us into this economic mess. Please do not give up on us after 18 months. We must redouble our efforts, but most of all, we must work together. The Democrats in Congress are wracking their brains, figuring out how best to generate more economic activity in this country. I need their help. Don't give me a Congress that will work against me in the coming years. You elected me to at least four years to get our country back on track. I need a Congress that will work with me and not against me.

A Republican Congress - which is saying NO to everything I propose - will surely say NO in the future.

If you will not do it for me, do it for yourselves. You need an administration and a Congress that are working together and not against each other.

Good night, and God bless America.

On being published

The greatest dividend that you as an author get from having been published is the probing and incisive questions that your readers ask about the ideas advanced by your book. The second greatest is the realization that the subject matter of your book is interesting enough to elicit further questions from people who have not yet read your book.

I delighted in both dividends over the past week as I kept opening my email and discovering questions on a few of the ideas in my book "Out of the Misty Sea We Must."

From my friend Tony Nievera:

Cesar,

1. What is the difference (between) a Commercial Base (and an) Export Processing Zone? and 2) What advantages/benefits will the Philippines offer?

Export processing zones, or Free trade zones, are operated by the host countries. Commercial bases in the Philippines shall be operated by the leasing foreign countries. Thus, if the United States leases a commercial base in the Philippines, U.S. laws will apply inside the commercial base. The multinationals that set up businesses in the commercial base shall be insulated from the stifling bureaucracy, the capricious judicial system, the corrupt culture, the crimes, the threat of kidnappings, etc. that may from time to time pop up in the Philippines.

Because commercial bases will be extensions of the foreign countries' territory, all manufacturing and other business activities conducted inside the commercial bases will be taxed by the foreign countries and considered as those countries' domestic production, reported as part of their GDPs. Such countries will be free to move their own citizens into the bases, providing them jobs that would otherwise go to China, India, Ireland and other countries that now benefit from the mass exodus of manufacturing and other jobs from the industrialized world, including the United States. The unemployed in the U.S. and other countries will find work in the commercial bases, thereby easing the pressure on the U.S. and local governments to provide unemployment insurance to the huge army of unemployed Americans.

For its part, the Philippines will benefit by providing jobs to its citizens. Multinationals in the commercial bases will need to employ Filipinos if they are to become competitive with manufacturers in China, India and other low-labor-cost countries. The areas around the commercial bases will see an accelerated real estate and infrastructure development. The first world business and government culture that sprouts inside the commercial bases will serve as the model for Philippine business and government, as more and more Filipinos are exposed to the efficient management and operations inside the commercial bases.

From Nelson Paguyo:

This I know. American business will set up business in any country where the business atmosphere is pro–investment and fair; and the government and people are welcoming. I am not sure the Philippines is at the present; and perhaps the reason why American businesses [and others] have avoided the Philippines.

My response to Nelson: The commercial bases, as explained earlier, will be slices of America. The bases will be run as though they were a slice of Washington, D.C., under the complete jurisdiction of the U.S. government. Philippine laws and governance will not apply inside the bases.

From my friend who signs his name "dmjj52":

it is not the people who (are) the problem, but it is the system of the government that drives away foreign investors. way back in 1994 i was sent to Keesler Air Force Base as an exchange officer. i was instructed to get my ID at the admin office. to my surprise, only ONE guy processed the form, signed it - and presto, i have my foreign military ID.

and this will NEVER happen in the Philippines. at the adjutant general, you will have to spend hours, if you are lucky! it will take a long list of personnel to have your ID issued.

and this is reality. foreign investors are not used to RED TAPES! sa atin kasi, lagayan dito at lagayan doon. try your luck at LTO, or even the Bureau of Customs!

not unless there will be a drastic change in the way our government works, then there will be a CHANGE.

My response to dmjj52: This is a perfect argument for the commercial bases. The red tape, the corruption, etc. that are found in the Philippines will not be found inside the commercial bases. The commercial bases will be operated by foreign countries under those foreign countries' laws, business climate and culture.

From my friend Jun Gomez (commenting on the obvious advantage of unemployed Americans being able to follow the jobs into the commercial bases in the Philippines):

I think that was the original idea in setting up manufacturing plants in China, unfortunately the very cheap labor abundant in China was just too tempting to pass so they hired locals instead!

My answer: The unemployed Americans who move to the commercial bases to work in American manufacturing plants there will be able to follow the jobs that would otherwise be lost forever to China, India and other countries. They will of course be paid well below what they would earn in the U.S., assuming that the jobs even exist in the U.S. Americans would be willing to take the jobs because the cost of living in the Philippines is way below that in the U.S.

It is estimated that a family of four could live on $1000 a month in the Philippines. A couple who both work in a commercial base and receiving $500 a month each would have a comfortable life there, sending their kids to American schools that would surely sprout inside the commercial bases.

From Kenn Stokes:

"Benefit" is certainly (subjective). I left the US to get away from the "Americanized" lifestyle of waste, stupid extravagance, self-centeredness, and outrageous taxes. So I have to wonder about this "benefit" thing. I know others that feel as I do so I'm not exactly the Lone Ranger in my thinking.

As for "benefits" to the economy I have to once again reflect on the lifestyle of credit that keeps the US so vulnerable and compare that to the resilience, even if defined as "impoverished" by the rest of the world, of the filipinos where the trade off is P5 in the hand or a few hundred thousand dollars in debt (you know, the mortgage on a house that manages to keep all members of the house separated, the 2 SUV's in the driveway, enough electrical appliances to choke a horse - but support the utilities contractors fantastically, the 500" television, two tons of toilet paper, kids with so many toys that they have no sense of reality, and monthly cell phone bills and daily latte budgets that would feed entire families in many parts of the world). I don't know, a few peso in the hand or debts with no light at the end of the tunnel.....hmmmmm, who's better off? Where is this "benefit"?

My answer to Kenn Stokes:

It makes sense to question the American values of excess and self-centered lifestyles. Americans have really re-defined the meaning of extravagance. But Filipinos are not at that stage where they are in a position to ask themselves: how much is enough?

Most Filipinos are dirt-poor. There are many slum dwellers in the Philippines who live on the edge of human existence. A new development in the slum areas is the "pag-pag" - dishes made from meats gathered up from rich people's and restaurants' garbage, boiled and served with spices and sold to slum dwellers for P10 (20 U.S. cents). People ransack piles of garbage, looking for items that may be salvageable and could fetch enough money for a family's next meal.

People are really living hand-to-mouth over there. They are far from the stage where most of them are asking, "what is enough?" Or "how many cars, how many houses does one really need?" Instead they are asking, where is my next meal going to come from?

From Eduardo (Danding) Gimenez:

Cesar,

It is a good idea. It’s not the best idea because once again it is about making goods for our masters while we continue to refrain to make things we need for ourselves. Let’s take just one field of endeavor. Transportation. Despite having a population almost 100 million, why is it that virtually every vehicle that plies Philippine roads is made outside the Philippines? Why is the Philippines the only in Asia that has not gone through the 2-wheeler stage?

Many of our neighbors make their own scooters, motorbikes cars, engines, trucks and buses. For decades, we’ve had a large enough population to sustain such manufacturing. In the 1980s, with a population of 17 million, Taiwan was manufacturing millions of 2-wheelers and cars. With a much smaller population Korea makes so many cars that they are completely self sufficient. Indonesia makes millions of 2-wheelers.

Our steel industry in the Philippines should have been much bigger had we gone that route. It would have forced us to create a machine tool industry, a plastic injection molding industry. Instead we are devoid of all necessary industry aimed at a better life for our people. Almost every call I see is a call to create industries and businesses to serve foreign investors. It is a continuation of the call to our best and brightest to serve everyone but the Filipino.

I hope you can see why I say it is not the best. It is a lazy idea. It is a weak idea. It says to ourselves “Let’s continue using our best and brightest to serve Americans”.

Love to all,

Danding

My response to Danding:

China's business model as a so-called awakening giant is making goods for the rest of the world, mainly the Chinese people's former "masters." If a country or a people must be criticized for being the manufacturing arm of the great industrialized countries, that criticism must be leveled at the Chinese.

The commercial bases idea does not expand the number of Philippine manufacturers whose sole function is to make products for their former "masters" - the Americans. It will be American companies, European companies, South Korean companies, Japanese companies and, yes, even Chinese companies manufacturing in Philippine commercial bases to fill orders from their home markets. They will merely do this in extensions of their territories that are situated in what is now the Philippines.

With regards to Philippine industry producing bikes and other motor vehicles for local consumption, that is an entirely separate issue. Over the decades since independence was granted the Philippines in 1946, Philippine manufacturers have had a difficult time competing with foreign manufacturers who ship their products to the Philippines. Foreign manufacturers, such as Suzuki, Toyota, Honda, Nissan, Hyundai, etc. have discouraged Filipinos from even thinking of venturing into such manufactures.

As a country we have been content with merely building the biggest and most modern malls and shopping centers where foreign-made goods are sold. That is how our economy has developed. I agree that we should do more manufacturing so that more of our locally-produced goods are sold in our mammoth shopping malls.

Maybe, if enough multinationals locate plants and factories in the commercial bases, there will be renewed interest among Filipino entrepreneurs to venture into the manufacture of bikes, cars and other durables, as more and more Filipinos become exposed to the multinationals' business culture and discover that they too are capable of engaging in the same activity at less cost.

Here's a query from a certain Michael:

Cesar:

Would Americans travel thousands of miles away from their families and friends to a hot and humid foreign country for a low paying job just to escape unemployment in the U.S.?

Why would companies import American workers to your "bases" in the Philippines? Companies are, to use your word in another posting, amoral. They are after profit, and not to solve their countries' unemployment problem.

Wouldn't it be more cost effective for them to hire local people?

And it would be good for the people in the Philippines They wouldn't have to leave their country to find work.

Go to Hong Kong and other Asian countries and you will see ten of thousands of Filipinos working as maids. Even the lower middle class families in Hong Kong have madis from the Philippines.

Wouldn't they be better workers in your "bases"?

Michael

My response to Michael: I think when Americans realize that their long-term unemployment is caused by the permanent disappearance of jobs that have gone to China, India and other low-wage countries, they will know that they have no choice on the matter. They must go where the jobs are. Ordinarily, Americans cannot go outside the U.S. to follow their lost jobs. The commercial bases will give a lie to that general rule, for they can indeed follow their jobs which may have relocated to commercial bases in the Philippines. But that's because American commercial bases in the Philippines shall in reality still be American territory.

American multinationals that establish manufacturing operations in the commercial bases shall be motivated by profit. They know that if nothing is done, the U.S. will be forced to raise tariffs against cheap imports from China, India and others and force these multinationals to manufacture again in the U.S. That would result in a global depression, as other countries raise their tariffs in response. Locating manufacturing operations in commercial bases will not require the U.S. to raise its tariff barriers and will in fact strengthen the multinationals as they navigate away from over-reliance on Chinese manufactures.

Finally, from Nel Reformina (an education specialist), commenting on my recommendation to convert most public elementary and high schools to math and science schools and to declare a moratorium on interest payments on sovereign debt:

Hi Cesar,

I have read with great interest your book.

I have always been an advocate for a drastic improvement in our public school system. In fact, I believe that the root cause of all of problems is the wide gap of education between the very small elite and the Filipino masses. Hence, I fully agree with your thoughts on education. A moratorium on the interest payments on the country’s debt is really worth pursuing as a means of financing the massive education improvement programs in the next 10 years. How do we convince our creditors that the interest savings shall be invested in education – and will not just go to the pockets of our corrupt government officials and employees?

For the moratorium to be acceptable it is important that the present administration should pursue a massive anti-corruption campaign, recover most stolen money and send to jail a number of corrupt officials to show case the sincerity of the campaign. Furthermore, in the next 10 years or so, if the pork barrel allocations of congressmen and senators cannot be removed (for political reasons), it should be mandated that at least 50% of the pork barrel be invested in the public schools of each congressman’s respective district.

If the corruption campaign succeeds and at least half of the pork barrel funds are diverted to education, I estimate that we would have enough money to double the present budget for education. We may not even need to ask for interest moratorium –even if our creditors by that time are willing to give in – and need not face the question of commercial bases which most likely will encounter a lot of resistance due to social, political and emotional issues.

By all means, we have to solve our education problem first. It is like a heavy anchor that prevents the ship from sailing to a new journey. All other issues – jury system,parliamentary system, confederation of independent states – are secondary to having a functionally literate nation.

Yes, out of the misty sea we must – sail to a new tomorrow!

Nel

My response to Nel:

We have been trying to reform our tax collection system and have been trying to rein in the abuses of our congressmen and senators for more than fifty years and have not succeeded. Our politicians merely laugh us off. But, we cannot wait any longer. If we do not put a complete halt to our slavish reliance on sovereign debts to solve our government's inadequate financing problems, we will wake up ten to fifteen years from now and discover that nearly all of our income tax collections will go to servicing our debts. At that point, we will all be working for our country's creditors.

As a country we will be forced to run our government with the remittances of our overseas workers and the VAT collections. The government will be so poor in relation to the massive need for financing social services (including and especially public health and education), infrastructure development, salaries of government workers, etc. The country will be either in an implosion or near-implosion stage by that time.

A moratorium on interest payments is essential to righting the ship of the Philippine state. Or at least the threat thereof, with the burden of finding creative alternatives on creditors' shoulders. My book, however, shows the way out of the interest moratorium nuclear option: Philippine sovereign debts can be converted to 99-year leases on Philippine territory for the purpose of setting up commercial bases. Philippine sovereign debts are wiped out, and the countries whose financial houses hold those debts will have an opportunity to stop the loss of manufacturing jobs to China, India and other low-wage countries.

Thank you for all your comments and questions, folks. I believe that we Filipinos are capable of solving our problems ourselves, freed finally from the suffocating head-lock that the IMF, the World Bank, the Paris Club and other organizations currently have on our psyche.

Of Blinders and the Blind Side

It's become hot and heavy these days on the Internet. The elections in the Philippines, the oil spill in the Gulf of Mexico, the Tea Party movement, the near-bankruptcy of Greece, the free-falling Euro, the very real prospects for a third Great Depression have hot-wired our emotions.

It's exciting times. I believe that unless we short-circuit our complacent brains and hot-wire our jagged edges, we cannot begin to transform our thought processes. And that we must do to be equal to the task. The world is falling apart before our very eyes. It's not just the Philippines and the other perennially perplexed and flummoxed societies that have seemingly insoluble problems. Countries as great as the United States, Germany, France and Britain are counting the days before that dreaded Day of Reckoning.

Some have noticed the upturned volume and the preponderance of negative thinking over the Internet. To this point, some have suggested that there be a moratorium on negativity. It was in response to this call for a moratorium that I drafted the letter below to some friends, only one of whom actually called for the moratorium.

In the letter, I focus on the problem of religiousness as a blinder. My thesis - which of course is not original - is that religion can be a blinder because it prevents government planners from seeing and considering the correct solutions which may in fact be right before their eyes, staring them in the face.

I had mentioned in my communication with my friends on the Internet that Filipinos have a blind side - whether it is the inability to see the corruption going on around them in their families, in their circle of friends. Or the inability to see that the Philippine population explosion is a major cause of the problems there. Or the inability to see the capriciousness in the judicial system. Or the inability to see the incentive-killing effects of nepotism and political dynasties.

My diatribe grew out of my concern that a misplaced trust in people such as economist Bernie Villegas - an Opus Dei founder in the Philippines - would assure that the country's economy will continue to circle the runway, unable to take off.

That is the effect of relying on people with a blind side, or who wear blinders. Most Filipinos, in my judgment, do have blind sides or permanent blinders.

July 4, 2010

Dear Carlos, Gene, Frank and others,

The historical argument is all there. Look at Europe. After the 2nd World War, the countries that completed their transition to secularism from Catholicism - France and Italy - and the countries that completed their transition to secularism from Protestantism - Germany, Great Britain, the Netherlands, the Scandinavian countries, the low countries, Austria, Switzerland, etc. - all made great economic strides. The countries that remained Catholic - Spain, Portugal, Ireland - and the countries that remained traditionally Orthodox - Greece and the near East countries - all lagged in economic development.

In the late 70s and 80s, as Spain, Portugal, Ireland, Greece and others became increasingly secular, those countries experienced an economic boom. While few French and Italians are practicing Catholics, the Spanish, Portuguese, Irish, Greeks, etc. have remained deeply religious. They however began to realize that their governments had to be secular and separate from the Church. In Spain, for example, divorce and abortion are legal and the Spaniards have learned to compartmentalize.

South America's history parallels that of Europe. As South American societies became secular - leftist in some cases - South America started to emerge from the huge shadow cast by the giant to the north until they experienced an economic miracle that rivaled the Asian miracle of the 70s and 80s.

One of the keys to economic success is secularism. I am not advocating that the Filipino people should discard their religion. What I do hope for is that the government - national, provincial and local - will someday become completely secular. There is hope in this area. President Noynoy Aquino has openly advocated family planning despite protestations from the CBCP (Catholic Bishops Conference of the Philippines).

We must tame that monster (population explosion) that we have lived with since the end of the 2nd World War, when Filipinos began to breed like rabbits. This, despite the invention of the Pill and the promotion of condom use as a defense against AIDS. Why have we not succeeded in taming that monster? Because it is protected and encouraged by the Catholic Church, which is the real and enduring power in Philippine governance.

Because of overpopulation, there is corruption in all stitches, nooks and crannies of the social fabric. People simply must be able to make ends meet, and corruption is the easiest way to a balanced budget. Because of overpopulation, there is widespread poverty, which leads to violent crimes, prostitution, jueteng, drug smuggling, murders-for-hire, etc.

Because of overpopulation, all the economic gains are eaten up literally by the ever-increasing number of mouths to feed.

Bernie Villegas, an Opus Dei founder in the Philippines, does not talk of overpopulation. He can't. He is far too invested in his extreme religiosity. He thinks that there should be more religiosity in government, not less.

Former President Arroyo, the late Cory Aquino and the de facto President Imelda Marcos either did not separate their faith from their governance or used the Catholic Church in a very cynical way, and the result was complete public subservience to the CBCP.

It was in fact during the administration of Fidel Ramos, a secular Protestant, that the country experienced real and sustained economic progress. So strong was the Philippines' growth spurt that it lasted well into the term of the plunderer Estrada - who just happened to be an irreligious jester.

I understand completely Carlos' impatience over the negativity that pervades Internet discussions about conditions in the Philippines. I think we should not criticize for the sake of criticizing. If I am coming across as that kind of a critic of the Philippines, it must be because I do not communicate my intentions as well as I should.

I must continue to emphasize that I am not an ordinary critic. I feel that I am entitled because I have devoted my retirement years to figuring out solutions to the country's myriad problems. I have even written a book (Out of the Misty Sea We Must...Blueprint for a New Philippines) that is chock-full of recommendations. I am most certainly not one who criticizes Filipinos and the Philippines for sheer enjoyment.

We cannot begin to improve our lot if we are allergic to self-examination and self-criticism. The first step on the road to improvement is a completely honest self-examination. Without that, we are just deceiving ourselves. Better to sit and wait for that miracle, or to pray until our prayers bring dividends.

I submit that people who wear blinders are incapable of honest self-examination. The Opus Dei is a blinder. That is why people like Bernie Villegas cannot be entrusted with the country's economic fate. That's just too bad, because I was once a huge fan of Bernie, who graduated summa from Harvard Business School. I was also offered a chance to win some kind of scholarship to further my studies in Economics either in the U.S. or in England and to explore that opportunity, I was scheduled to meet with Bernie, who at the time was the head of the Economics Department at La Salle. I was already in U.P. at the time, but my classmates and lifelong friends in La Salle threw my name into the mix of potential scholars.

I did not show up for the meeting with Bernie for reasons I can no longer remember. It was certainly not because of the Opus Dei thing because Bernie was not in that movement yet.

Oh, and the blinders. We all have blinders. There are very few who have absolutely no blinders. The few who wear no blinders are atheists and I often find them annoying.

Cesar L