Random commentary

(Ford Expedition 2008, gorgeous but a gas guzzler)

THE Big Three automakers in the United States are asking for their own bailout package. Why? What good will that do for the U.S. economy? These automakers — Ford, General Motors, and Chrysler — have long been inefficient. They make huge expensive SUVs that guzzle up a lot of gas! It's no wonder most Americans buy Japanese-made sedans. Compact, fuel-efficient, and reasonably-priced. Why should American taxpayers for the Big 3's incompetence?

At the U.S. House of Representatives' recent hearing, the chief executives of the Big 3 said they cut their expenses every which way. But guess what? They flew their company jets to get to Washington. This is a repeat of AIG whose executives were found to have gone on a chi-chi Caribbean vacation even as the company was going under, and just as Treasury Chief Hank Paulson announced a credit line for it. The gall of these CEOs. Such excesses!

* * * *
I had lunch recently w/ a friend whom I call "El Presidente", a former banker and one-time head of a large private entity conducting vital business in the local market, and he was mightily incensed at the bailouts in the U.S. What gets his goat are what he feels are unnecessary and violative business practices by those companies to be bailed out, such as hedging.

Hedging is basically described as taking a position on a commodity today, and betting on its price in the future. Like some airlines hedge on oil prices, betting that the commodity will be priced higher in say 3-6 months against its current price. So if the current market price of oil is $56/barrel, and an airline feels oil prices will again shoot up to $100/barrel in say a year, it can lock in its oil purchases at the current price. Companies hedge on raw materials or vital products they need for their operations to minimize the risks of working in a highly volatile environment when even a small event somewhere in the world can send price shockwaves in the global market.

But El Presidente thinks hedging distorts the markets and really doesn't resort to anything beneficial for the one who practices it bec. you don't always win. Meaning, in the case of the airline which hedges on its oil needs, if it bets that the commodity will go to $100/barrel a year, but in actuality, it falls to even lower than $56, then it loses out and it ends up w/ very expensive oil. Basically it is gambling, he says.

But then I think going into business is a gamble in itself. Your business can either prosper or fail. All you can do is minimize the risks in your business, and one of those tools available is hedging. So no, I didn't agree w/ El Presidente.

Arbitrage? Derivatives? Well now that's another story. I'll save that discussion for another day.

* * * *

So someone must be doing cartwheels in Malacañang because she made a new "friend."

Not since that illicit phone call made by the presidentita to former Comelec Commissioner Virgilio Garcillano ("Hello Garci") at the height of the 2004 elections has a phone call been much talked about, blogged, derided and a constant source of news bits in the tri-media.

It's really so sad to realize the depths our country, Philippines my Philippines, has sunk that the President-elect of the United States, didn't return the congratulatory phone call of our illegally-elected presidentita until two days ago. She made two phone calls earlier which were just noted down by White House operator and Barack Obama's staff but the presidentita was not among the first heads of state that he had called back.

Undeterred, the presidentita flew out to Chicago, purportedly to meet w/ the local Fil-Am community (and probably trying to find a direct connect among them to Obama), but still, she didn't get a meeting w/ Obama even if he was also in the same state. Grabeh naman the lengths to which this woman would go to just so the new U.S. President will notice her. Gumastos pa ng malaki, our taxpayers' money 'yan ha! all for nothing.

Finally, Obama calls her on Tuesday, at the ungodly hour of 3:17 a.m.! Obama's staff isn't stupid. They knew very well what time it was in Manila before placing that call. They were probably hoping the presidentita was asleep already. But noooo! Sympre excited, the presidentita answered the VIP call. Nanginig-nginig pa siguro sa kilig!

But then there were no details about the phone call. Did it actually take place? It doesn't matter really because all signs point to the fact that in the eyes of the newly-elected U.S. President, the Philippines means nothing. It is not a military power like the UK and Australia; it is not a huge trading partner; it is a country w/c the U.S. taxpayers still support through grants, out of delicadeza for some shared WWII history, and w/c are only inefficiently used by our corrupt gov't agencies; it is only a country to sell excess harvests by American farmers; it poses no strategic importance to the U.S. militarily bec. we kicked out its bases; and what's more, we have an illegally-sitting president.

If you were Obama, papansinin mo ba si GMA?