Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

Archive for May, 2011

on Objections to RH Bill

Posted by butalidnl on 26 May 2011

The RH Bill debate is going strong. Anti-RH bill advocates are raising a lot of questions about the RH bill; some of which are valid questions (and some quite invalid).  I have listed down some of these questions, with some kind of response to them.

The RH Bill is against the will of God.
This is one of the more popular lines of attack of the CBCP. It is also the most flimsy. Because, if the RH bill is against the will of God, then why is it that it is supported by the Iglesia Ni Kristo and various Protestant churches? These groups even cite scripture as the basis for their position.  From this, we can say that the RH Bill is merely against the will of the CBCP, or at most the Vatican. This is much less than the will of God.

“Go forth and multiply…” This is supposed to be the basis for the Catholic position, if Manny Pacquiao and some others are to be believed. But if we look at the Bible, God only used such a formulation twice, both in Genesis. This was addressed first to Adam and Eve, and then to Noah’s family after the flood. In both occasions, the earth was empty, and needed to be filled in by humans. God did not repeat this statement at more recent occasions, particularly not during the New Testament.

RH Bill Won’t End Poverty.
Of course it won’t, it wasn’t meant to. The RH Bill addresses the problem of poor people getting even poorer because they bear too many children; or of families who become poor because they have too many children. The RH Bill is aimed at providing a basic service to society. It is similar to vaccination campaigns, or a firefighting service.

Too Expensive, No Money in Budget
The RH Bill is estimated to cost about P3 billion/year. This is not much, if compared to things like Congress’ pork barrel allocations, or GOCC bonuses. The RH Bill is only “too expensive” if your starting point is that it is not important. However, since reproductive health is a basic government service, money must be provided for it. In addition to RH being a basic service, it also protects basic women’s rights. It is essential.

It is actually cheaper, from the perspective of the national budget, to fund contraceptives and sex education, than to spend for having too many children. Children of the poor go to public schools (and some even go on to state universities); they would need health services, and some poor families get subsidies on rice and other things. These cost much more than the RH bill will.

Sex Education will Encourage Promiscuity
The experience in other countries show that sex education actually delays the age when a teenager has his/her first sexual act. Perhaps this is because if they have had sex education, they know the consequences of sex, and are less curious about it.  “Sex Ed” from porn is not sex ed; porn doesn’t explain sexuality at all. If we deprive teenagers of sex ed, they will resort to porn for whatever information on sex they can get from it.

Some parents are afraid that teachers would explain “too much” or be “to eager” when they give sex ed. I disagree.  In 1972, when I was at my 2nd year in high school in Cebu, we had lessons on the human reproductive system. I remember that our teacher taught it as if it was just another topic. For teachers, sex ed is just another topic – they will teach it in a matter-of-fact or even boring way. Parents have nothing to worry about.

RH Bill Promotes Abortion
This is easy to answer: it does not. In fact, the RH bill categorically states that it is against abortion.  Any abortifacient contraceptives (e.g. “morning after” pill) can be designated as such in the Implementing Rules and Regulations of the RH Bill and prohibited. And if needed, the CBCP could sue in court to remove a contraceptive from the list of approved contraceptives if they are proved to be abortifacient.

In a way, those who oppose the RH Bill are the ones promoting abortion. Because many women don’t know how to avoid pregnancy, about 100,000 a year abort their pregnancies. And 1000 Filipinas a year die of abortion-related complications. If  these women had sex education, they wouldn’t have gotten pregnant in the first place, and thus they wouldn’t have been forced to resort to abortion. Sex Education reduces the number of unwanted pregnancies, and thus of abortion.

Why not include a list of Contraceptives which are not Abortifacient?
Contraceptives in general do not cause abortion. Almost by definition, since they prevent pregnancies, they have nothing to do with abortion. If there are contraceptives that do cause abortion, these should be specified and prohibited, but in the law’s Implementing Rules and Regulations (IRR). Including them in the IRR would make it more flexible – so that the list could be expanded (or shortened) based on further developments and research, without having to amend the whole law.

Sex Education Should Teach Values

I agree. But the question is: which values would that be? In some places in the US, they experimented with teaching sex ed using the “abstain from sex” approach. In other words, they taught teenagers merely not to have sex. And since they shouldn’t have sex, they didn’t teach birth control. Well, the result was that these teenagers ended up having as much sex as those without sex education, and they didn’t know how to avoid pregnancy. This shows that a “no sex” approach to sex education doesn’t work.

On the other hand, the approach could be what is called the “ABC” approach. A, for abstinence. B, for “be faithful” (hopefully, referring to married couples). And C, “use contraceptives”, for those who can’t abstain nor be faithful. There are still values taught here: children are taught to abstain or be faithful as earlier options to having sex.

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Is US Dollar About to Fall?

Posted by butalidnl on 19 May 2011

The US Congress will have to raise the Debt Ceiling from the present $14.3 trillion by August 2, or else the country would face technical default. But the Republicans are demanding budget cuts be done first; and Democrats are demanding that measures should include increased taxes for corporations and the rich. Both sides are standing their ground, and there is a real danger that the country will indeed default by August 2.

Most probably, a deal will be made at the last minute, and the US can go on merrily increasing its national debt for a few more years. But the question remains: can the US dollar’s credibility withstand such a strain? Will the US dollar fall while Congress debates over raising the Debt Ceiling?

I think that sooner or later, within the next 5 years or so, the US dollar is going to “fall”.  The national debt limit is only part of the problem; the main problem is that the US has a triple deficit – of the budget, trade balance, and payments. And that it has accumulated a huge amount of “unbacked liabilities” in the world – to the staggering amount of $75 trillion.

All proposals on the table will help to reduce the budget deficit, but it will even not be enough to get a balanced budget.  Since there will continue to be a deficit in the coming years, the national debt will continue to grow. And then, there is the trade deficit which also grows from year to year. Thus, all plans now being considered will not improve the US’ capacity to repay its debt.

The world is getting impatient with the dollar, and it seems that US politicians are taking their time at solving it, not realizing that the problem is really urgent.

Signs of Trouble
The problems in the Middle East are all in the news. But the biggest problem with it lies not in Libya or even Yemen – but in the fact that the US dollar has not strengthened in the face of all these problems. Almost always before, when there is political turmoil somewhere, the US dollar gains in value, as money exits that country and goes to the safety of the US dollar. Now, the whole Middle East is ablaze, and the dollar, instead of strengthening, has weakened considerably.

Another sign of impending trouble is that the US, even with “QE2” (the program of the Fed for creating $ 600 B by buying government treasuries) and the extremely low Fed interest rate, faces rising commercial interest rates. QE2 was instituted in the first place to REDUCE interest rates. What will happen after June, when the QE2 program is over? Will interest rates rise substantially, resulting in a rise in unemployment? Will there be a double dip recession? If the Fed makes a “QE3” program instead, will this be enough to hold interest rates down? or will foreign fund managers dump US treasuries instead?

A third sign of trouble is the news that PIMCO, the world’s biggest holder of bonds, has entirely stepped out of US Treasuries. Even worse, PIMCO has resorted to selling US Treasuries short – which means that it even has negative ownership of Treasuries. This shows that US Treasuries are no longer attractive to the wiser international investors. I doubt that many hedge funds keep Treasuries in their portfolios either.

A fourth sign is that when Osama bin Laden was killed, he had with him 500 Euros. He had Euros, not US Dollars, which means that he considered Euros more useful in case he had to escape capture in Pakistan – Euros seem to be more useful in bribes etc. in Pakistan. This shows that even in the underworld, the US dollar is not considered a good currency anymore.

Roots of Crisis
The present crisis has its roots way back in the Bretton Woods agreement, made after the Second World War, to have the US dollar as the world’s reserve currency. Until 1971 the dollar’s value was pegged to the US supply of gold, keeping the US currency in “control”. In 1971 President Nixon let loose the gold peg, making the dollar itself as the only thing in reserve.

The US dollar as reserve currency meant that countries were willing to run a trade and exchange imbalance with the US, since this would mean that they would accumulate US dollars in their reserves. This meant that the US tended to have a structural trade and payments deficit with the rest of the world. This  effectively overvalued the dollar, making its imports cheaper than they otherwise should be. And this contributed to the very high standard of living in the US.

Over the decades, the US steadily accumulated a big debt burden. It is now at $14 trillion, or more than 90% of the US’ annual GDP. Among developed countries, it is only Greece and Japan which have higher debt/GDP ratios. Greece has had its debt crisis, and is now forced to undergo a strict program to get rid of its deficit. As for Japan, most of its debt is to Japanese citizens – and thus the impact of the debt is less than if it was held by foreigners.

The US debt is only part of the “US dollar overhang” in the world economic system; because the bigger part (approximately $60 trillion)  is simply the dollar reserves that countries have accumulated, due to the US trade deficit.  The national debt, in the form of US Treasury Bills, is the smaller part of the problem; but it is the more worrisome part of it, since the US has to pay interest on this.

Stumbling into Dollar Fall
The danger is always present that a country would decide to dump their US treasuries, leading to a chain reaction that sees other countries dumping treasuries, a spectacular rise in interest rates, and the dumping of US dollars from national reserves, and the fall of the dollar. This has not happened so far, since no country will do that consciously and devalue their own reserves. But we cannot depend on this not happening in the future. In fact, I think that the chance of this happening is getting bigger with time.

As more and more dollars are sent abroad, in the form of  US Treasury bills or simply “cash”, the danger that they will no longer be accepted by other countries increases. Already, many countries are calling for an overhaul of the international currency system. Countries have to continuously weigh the advantages of holding dollars against the cost due to the continued watering down of the dollar’s value.

Even if no country would willingly cause the dollar to fall by dumping it, a series of smaller events could push things so that even  minor players could accidentally cause such a fall.  The recent intervention against the Japanese Yen had the inadvertent effect of increasing Central Banks’ reserves of dollars. Central Banks all over the world had to subsequently find ways of restoring their dollar reserves to normal levels. The BRICS agreement to use their own currencies when trading with each other means that less dollars need to be kept as reserves. Eurozone countries intervention to support weaker Euro countries’ finances is another measure that strengthens the euro against a potential fall of the dollar. All these make the dollar weaker. A disruption of the scale of the 2007 sub-prime crisis happening now would surely topple the dollar.

Perhaps it won’t even be a single country or investor which would precipitate the dollar’s fall. It could be simply an accumulation of small steps that would push it over the edge. The US high unemployment rate has “forced” the Fed to keep the Fed Funds rate low, but this at the same time increases consumption and imports, and to further trade deficits.

The US dollar is undergoing something like a game of international “musical chairs”. US-based investors buy securities in other countries, effectively moving dollars abroad; Central Banks sell dollars to prevent their currencies from appreciating; the continuing US budget deficit means that the government has to issue more Treasuries;  foreigners buying US equities or Treasuries effectively returns dollars to the US;  too much incoming dollars could cause inflation, and increase unemployment. The cycle continues, and dollars are passed back and forth from the US and abroad.  A growing number of Central Banks are wary of keeping too much dollars, and this cycle would eventually break down at some point.

Tipping Points
There are a number of occasions or events which could push the dollar over the edge. The Debt Ceiling of the US has been reached, and by August 2 the US Congress has to agree to raise the limit. Not to do so will surely bring about a loss of trust in the dollar, and its subsequent fall.

And then will come the budget discussions later in the year. This is another occasion when confidence in the dollar may be critically damaged.  This will be followed by the Presidential election campaign and possibly a new administration.

At any time, Congress may pass a law imposing a tax on Chinese imports. This will cause Chinese countermeasures, including a stop to buying US Treasuries. And this will be enough to precipitate a chain reaction that will cause the fall of the US dollar.

The US dollar will fall within the next 5 years. While it will cause a deep crisis, it won’t be that bad, in the long run. I wrote a blog post about how it will be Two Years After the Dollar Fall

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