The hysteria from China virus is getting worse. This afternoon, I went to this public market in Makati, convenient because there is no or little queuing, unlike in Shopwise, Landmark, SM Hypermart, etc. Close. And all sari sari stores, 7-11 near it are also close.
It will open tomorrow said some locals there, until 1pm only. Three days ago, March 23, first time the LGU barangay implemented social distancing and limited the number of buyers inside.
In nearby sari-sari stores, this notice was posted -- The store should not sell to people without quarantine pass.
Nopera virus, no work no income virus, the real killer by the thousands if this hysteria and lockdowns continue for weeks and months.
If the LGUs real purpose is to further observe social distance, then market hours should be longer, not shorter. Now more panicked people, vendors and buyers, will converge in the same area for few hours. More hysteria will produce unintented, opposite consequences.
Today, Calixto "Toti" Chikiamco of FEF posted this in the walls of his economist friends, me included. He wrote and asked for comments,
The Currency Competitiveness Forum has suggested devaluing the peso to PHP 55 to USD 1 as an economic relief and stimulus package: it will put money in the pockets of OFWs, boost exports and BPOs, and protect import-substituting local industries.With oil prices at historic lows and demand down, the inflationary aspect is muted. Furthermore, instead of outright devaluation because we have a market-oriented exchange rate, I guess CCF means that BSP will buy the dollars in the open market, flooding the domestic economy with much needed liquidity.
I commented: Remember Newton's 3rd law of motion, action and reaction? Applied in Econ: for every govt intervention, there is an equal opposite distortion.
This proposal that BSP will flood the market with pesos means BSP will print more money, on top of money printing P300 B to buy DOF treasury. Now we suffer deflation as many people have no work, no income. Next we suffer high inflation with all these money printing by BSP and new tax tax tax to be created to fund new overspending. In short, it's a lousy idea. They better not push that.
That P300B BSP loan to DOF/BTr Treasury note will require new money printing by the BSP and new taxes to pay back, assuming DOF can pay. Note that interest payment in 2020 alone, principal amortization not included yet, no virus scenario, is already P451B. This is still "small"? People want it P500B this yr or next year?
This "little risk of inflation these times" argument by the hawks of more government spending -- it is true these weeks and months, we actually have deflation as many people have no work, no income, no money, not spending beyond basic needs. When things normalize, that's where high inflation will kick in. DOF must pay back the BSP loan, tax tax tax is the most likely solution. And all taxes are passed on to customer prices.
Meanwhile, some relevant reports here:
NEDA and Sec Pernia think that Q1 2020 growth will be 5%, https://www.bworldonline.com/economy-may-contract-this-year-neda/
Me thinks this figure is from thin air, not from an Excel file.
LGU dictatorship, here's one example,https://www.philstar.com/nation/2020/03/21/2002637/barangay-captain-faces-raps-locking-curfew-violators-dog-cage?
Barangay captain faces raps for locking curfew violators in dog cage
MSMEs running out of working capital during lockdown | BusinessWorld
SMEs are a ticking time bomb
It is written by a friend and fellow BWorld columnist, Andrew Masigan. He also writes a weekly column in PhilStar.
Lock Downs And Shutdowns Will Lead To Meltdowns
A Virus Worse Than the One from Wuhan | Lawrence W. Reed
12 Experts Question The COVID-19 Panic