Tango or Sarswela?

The political world was abuzz with the recent outburst of Sara Duterte. Her statement read: 

“I apologize to my mother (Elizabeth Zimmerman) for this statement. (The public should) read my message from the point of view of a politician and nothing else. 

The President personally confirmed to me he will run for VP and Bong Go as President. It was not a pleasant affair. I was left with two letters for consideration, one, why I should endorse the Go/Duterte tandem and, two, I take in Bong Go as my VP.” 

Sara proceeded to say, roughly, that the crazies in PDP-Laban, the President’s party, should leave her alone and take their circus elsewhere. It was unclear whether the crazies included Sen. Go, Manny Pacquiao and/or her Dad.

Many believe Sara’s statement is simply a sarswela, another political head fake to portray her as her own person rather than the daughter of her father. Years of “jet skiing to the Spratleys”, “running amok at the whiff of corruption”, and “no sacred cows in the Administration” have taken their toll on Malacanang pronouncements. This skepticism has now moved to Sara, rightfully or not.

I feel Sara deserves a little more credence than that. Here is my take:

  1. Politically not all is touchy feely in the Duterte extended family. 
  2. The tension is not so much between Elizabeth and Honeylet Avancena as the media is portraying, as between Sara and the President’s men.
  3. Elizabeth wanted Sara not to wash their dirty linen in public but Sara has just had enough of it. Hence her apology to her Mom.
  4. Sara does not appreciate being muscled by anybody, not even her father. She does not want to be told to endorse Bong Go for President if she does not run nor accept him as her VP if she does. That conversation was not ”a pleasant affair” which in the Duterte family temper scale was probably a shouting match. She is not believed to have punched anybody.
  5. Malacanang is too small for Sara and Bong Go.
  6. It is not personal to Sara, it is simply business. (“Read my message from the point of view of a politician and nothing else”.) Sara may have something to say about how her Dad left her Mom but she is not dragging it into the political arena.

The President has a slight problem. He needs legal and political cover after May 2022 not only for  himself but for his people; either through a Sara or a Bong Go presidency or a Sara/Go or Sara/Digong ticket. The President knows Sara will shelter him but maybe not his brothers-in-arms Go, Duque, Cusi & Co. who have many secrets. In 2016 when she returned as Davao Mayor, Sara replaced her father’s staff wholesale with her own. Her message: There is a new sheriff in town. Go to Manila if you want to be with your boss.

The President is seemingly annoyed Sara is not buying his problem. She is no idiot. She sees what the President’s men have been upto in the last six years. The last thing she wants is to have them shadow her Administration if it comes to that. The President’s only choice may be to run for VP to ensure his and his team’s security which says goodbye to BongBong Marcos’, Tito Sotto’s and other vice-presidentiables’ hopes. Buwisit.

The PDP-Laban is in a frenzy. This erstwhile two headed juggernaut with Digong and Manny Pacquiao as titular heads has now become a headless chicken. In the latest move, the Pacquiao faction just fired the President as its Chair. This is after the Duterte faction fired Manny as its President. The cabal is now heading for the exits or to Sara’s HNP party (Hugpong Ng Pagbabago) if she will accept them, which she likely will not.

In the meantime the presidential race is now distilling to 2-3 electables (Sara, Isko and Manny) and one outlier (Lacson). Bong Bong Marcos will not run as President but will happily settle for VP with Sara which could potentially put him up against D30, Isko or Pacquiao. BBM will struggle against all of them. He may prefer to literally hang out as Senator.

Leni is said to be announcing her candidacy on Sept. 5 but now is re-considering if Sara runs. With little money, no organization and modest poll numbers, she probably knows she will not win. A Liberal Party bloc has reportedly moved to the Isko camp which has further under mined her footing. She has a clearer path to the Senate or, my recommendation, as Camarines Sur Governor where she could make a difference. We need to rebuild our politics from the bottom up.

Isko, a data nerd, is looking at the polls. He believes he has a chance with the Central, Southern Luzon and NCR votes- his so called Leyte to Lingayen corridor – and the Visayas  with the help of the LP breakaway faction. If he could add a VP to carry Mindanao (Manny?) that tandem could be competitive against a Sara ticket. Isko will be pummeled by the Administration who already has a file on him. His dilemma is does he give up the certainty of a Manila mayor re-election for the uncertainty of a presidential run? He could also be a presidential king maker which will stand him in good stead in 2028.

Manny Pacquiao is a presidential contender despite his pugilistic loss. Contrary to common wisdom, I believe the loss actually boosted his popularity. The story of a man who at 42 years did his best to make his country proud is a compelling narrative. Manny still suffers from the image of not having the intellect nor policy chops to be a good President. He needs to translate his popularity with the ‘masa’ into a viable campaign by surrounding himself with a credible economic team and on-boarding a VP who could deliver Luzon (Isko, Grace or Vilma?). Ronald Reagan was not the brightest bulb but proved to be one of the most effective and popular U.S. presidents because he acknowledged his deficiencies. Manny’s other option is to accept, against the calling of the Almighty, the Vice Presidential ticket where he stands arguably the best chance of all the candidates. As VP he could learn the job and run in 2028.

GMA is not a player, more of a coach. She is trying to merge the solid south of Sara with the so-called solid north of the Marcoses and her own Luzon bailiwick but things are getting complicated. She brings to a Sara presidency her economic disciples of Reps. Salceda and possibly Stella Quimbo and Garin.

Money is going to be a problem for anti-Administratio candidates. It is estimated a presidential campaign will require some P40-50 billion to seal the deal. This may sound like an awful lot of money except it is not. The return on investment could be less than a year. Let me explain.

The addressable market for corruption in the Philippines is (A) the National Budget (P5 trillion) and (B) the sweetheart deals- the franchises and permits granted or denied, the favored business transactions, the tax leakages, the regulatory reach; which are correlated to our GDP (P19 trillion). Assuming the leakage in (A) is 10% of the Budget or P500 billion (which is small compared to the overpricing we see in the PPEs) and the corruption in (B) is 2.5% of GDP (the allowable pilferage rate in supermarkets) or some P500 billion; the annual take from corruption is close to P1 trillion and even this could be a low ball estimate. The loot must be shared with “the boys” in the Executive branch, Congress, the Judiciary and private business partners; but even a 20% carried interest (the performance fee charged by hedge funds) would amount to P200 billion a year and 1.2 trillion over 6 years.

A take of P200 billion a year is 4 times the P50 billion one would spend in an election i.e. the latter would be recovered in 3 months.

Considering the P50 billion election kitty was itself sourced from corruption, the return  on investment is actually infinite. It is what investment bankers call a leveraged buy out where you purchase a company by raiding to death the funds of the company itself. If that sounds like the plunder of our country, it is.

But to the original question, Sara, tango or sarswela? My modest opinion is the Duterte Thanksgiving family dinner may this year be a little more tense than usual.

Rinse, repeat. Rinse, repeat.

When it rains, it pours.

This is what embattled teacher’s pet DOH Sec. Duque must be feeling these days. First there was/is the mismanagement of COVID, then the  overpriced PPEs, then the P30 billion Philhealth scam last year, then the “dropping of the ball” on vaccine procurement, then the unaccounted P167 billion in DOH funds, then the P67 billion in unused equipment, then the P12 billion in underspent relief to frontliners and others, and now Philhealth’s unpaid P87 billion bill to private hospitals. Did I forget anything?

DOH has a record unblemished by success.

Pressed by Senators to explain, Duque said he was so confused he was losing his mind. Well, Sir, imagine what the nation feels.

Philhealth recently announced it was “temporarily” suspending refund claims from private hospitals “in the spirit of proper fund management and fraud control”. In the spirit of pushing back, the Phiippine Hospitals Association, the Philippine Medical Association and the Private Hospitals Association countered by saying they would no longer honor Philhealth members by Dec. 31 of this year unless Philhealth pays the unsettled claims.

Let us understand what Philhealth really meant.

One, in bureaucratic terminology, “temporarily” means “indefinitely”. Already Philhealth argues the supposed P87 billion in unsettled payables is only P13 billion. 

Two, Philhealth is accusing the private hospitals of filing fraudulent claims and will therefore stop paying ALL claims. Mouthpiece Shirley Domingo emphasized its circular just reaffirms a 2016 policy to control hospitals’ criminal activity. The pot is calling the kettle black. This is the same Philhealth that over the years advanced P30 billion to a select group of hospitals ahead of their claims. Re-circularizing the Circular signals Philhealth is running out of money and looking every which way to not having to cough up. Nice try, bad idea.

This is what I wrote about Philhealth last year:

“The Senate hearings on Philhealth confirm what we already suspected: The agency is a criminal enterprise posing as universal health care. It is organized crime. It is a protection racket. It is a Ponzi scheme built on the monthly sweat of hard working Filipinos.

Interestingly, the Senate investigation was called by Senators Sotto and Lacson and not by Sen. Bong Go even if the latter is the Chair of the Senate Health Committee. Delicadeza perhaps since Sen. Bong and DOH Sec. Duque are seat mates at the IATF presidential table. Anecdotally, Sen. Bong requested for the Chairmanship of Health, even arguably it is the most obscure of Senate committees.

 Philhealth was a conman’s dream until COVID came along. The virus resulted in a surge of medical claims which exposed the carcass left over by the plunderers. Philhealth is expected to lose P90 billion this year which should pretty much wipe out the agency’s equity of P97 billion in 2018. At the current hemorrhage Philhealth is projected to go bankrupt by 2022. 

The Philhealth scam is the mother of all scams. It involves reimbursements for unnecessary and unprofessional procedures – many of which have scarred patients for life – padded claims, overpriced procurement, bribes, ghost members, and, if you listen to Sen. Zubiri,  “discounts” for early collection of claims due. As if these were not enough, somebody decided the goose had to be fattened further and faster. So Philhealth advanced monies to favored  hospitals under an Interim Reimbursement Mechanism (IRM) where up to P30 billion would be deposited against future claims. This grew the kitty for ‘the boys” but also further depleted the cash of Philhealth. So chosen hospitals get advance payments for still to be determined procedures while others are delayed millions of pesos for completed procedures. A major hospital is currently owed half a billion pesos by Philhealth, another some P250 million.

The Inquirer reported of the hospitals with the three largest IRMs, two are in Davao: Southern Philippines Medical Center (P326 MM) and Davao Regional Medical Center (P209 million). Dr. Leopoldo Jumalon Vega, former chief of Southern Medical, was recently appointed DOH Undersecretary. It appears the wagons are circling. Southern Medical has defended itself saying it has some 1,200 beds making it one of the largest facilities in the country. The Medical City group in Manila has 1,300 beds but did not make it anywhere near the top IRM list. Does one have  to pay to play?

Philhealth President Morales recently rescinded IRMs which speaks for itself.

The plunder is not rocket science but otherwise works really well.”

Duque announced he will resign if asked by the President. The President said he will not do that but will accept his resignation if offered. Soooo what is it? I suggest they split the difference.

There we are. The only two questions are, one, whatever happened to the Philhealth officials accused of crimes; and, two, the elephant in the room, why does the President continue to stand by his man, even go down with him? There are many theories, here are some ranked not necessarily by merit:

  1. The President does not like to be told what to do.
  2. There is no “probable cause” to fire Duque.
  3. Duque is a trusted guy and trusted guys are hard to come by.
  4. They are soul mates.
  5. Duque is a convenient foil.
  6. Duque does not need more money than he already has, especially not another P67 billion.
  7. Duque is the brother of a good friend of the President.
  8. Duque is close to GMA and GMA is close to the first family. Duque was her Health Secretary. His dad was the Health Secretary of GMA’s father, Diosdado Macapagal. 
  9. After 20 continuous years in the DOH and Philhealth, Duque is still learning the job.
  10. Duque secretly supplies the President with the blue pill.

Sec. Duque has asked for a “dialogue” with the private hospitals preferably, I imagine, until May 2022. He understands the fall out if there is a run on Philhealth. If hospitals stop honoring Philhealth patients, its members will stop paying their monthly dues and self-insure instead. This will be the end of universal health care. In a political season with COVID on a rampage that could be the kiss of death. The Opposition is praying Duque stays on.

Presidential spokesperson and Senatoriable Harry Roque said: “Philhealth should pay faster. Lack of funds is not an excuse. Philhealth funds will never run out”. A weird statement but anyway.

 Roque obviously did not get the presidential memo.

Once More, This Time With Feeling

Here we go again.

After a return to ECQ early this month the IATF is considering extending our misery for another fortnight if we continue to misbehave. Do not say I did not warn you. Our economic managers are being sedated as we speak.

The economic Q2 numbers were just announced. As we expected GDP grew dramatically (11.8%) versus the same period last year which looks amazing until you realize it was against a horrific performance in 2020. The bad news was the economy actually contracted by another 1.3% compared to Q1 this year. I know, I know, all these numbers are confusing but just accept that things are getting worse although at a slower clip. The latest ECQ has now compounded matters. Buckle up for the ride.

My cook tells me – and she is where I get the truth, not Government statistics – food prices are significantly up whether from the lockdowns, the rains, the supply chains and/or the failure in our agriculture. The latter contracted again even as NEDA affirms it is a priority sector.

Meanwhile back in the ranch the Commission on Audit reported the DOH led by Presidential favorite Sec. Francisco Duque – yes, him again – has failed to account for some P67 billion in COVID funds. A separate audit uncovered P95 million of expired and nearly expired medicines. The good news, in the scheme of things, was that P12 billion of the  pandemic budget is still unspent which, before we get overexcited, does not mean it will not be although not always where we hope. Duque says it is all good yet all he has to offer is another lockdown.

If one is to believe Palace Spokesperson Harry Roque, the President is “keen” to find out the DOH’s response to the allegations. He added those involved in malfeasance will be punished: “There are no sacred cows in this Administration” was how he put it.

Actually what the President reportedly said when Roque was not looking was that P67 billion was too big to steal and that the COA should mind its own business.

You know the political season has begun when the President starts referring to Manila’s Mayor and potential Presidential aspirant Isko Moreno as the “bikini boy”. This was the same “call boy” whom the President so heavily praised not so long ago. This political tack is, with all due respect, a terrible idea. One, it is a cheap shot and voters get this. It speaks of the accuser more than it does of the accused. It smears Moreno’s family and families are traditionally off-limits even in the blood sports of politics. Two, it is a judgement on the many Filipinos who to put food on the table have had to do things they are not proud of like begging, stealing, or selling oneself or their loved ones. The attack is likely to blow back, to elicit sympathy for a man who went from an uneducated “basurero” to mayor of Manila even if it meant degrading himself along the way. Three, the attacks simply enhance Isko’s name recall and gravitas as a presidential contender. It is a badge of honor to be singled out in such unflattering terms. It shows Isko is starting to gnaw at somebody’s skin. The Presidential dark horse just became less dark.

This is not an endorsement of Isko who can speak for himself and his record which I am certain is not unblemished and the Administration will make sure you know that. The irony is the attacks are unnecessary since the first family is so far ahead in the polls. I also believe Isko will not run, he will not risk the certainty of a mayoral re-election for the uncertainty of a Presidential adventure unless his polls start to rise from the President’s tirades.

Isko was just diagnosed for COVID and our prayers go to him and his family. The Palace might want to send him a card but not flowers since that may be misconstrued.

Speaking of political machinations there is a conspiracy theory, possibly fake, that vaccines are being allocated to cities depending on their political color. Mandaluyong led by its Mayor and MMDA Chair Abalos is currently the NCR municipality most vaccinated (by my estimate 41% of its 400,000 residents) while Manila ( 24%) and Q.C. lag (20%).

Meanwhile the Opposition is falling into the classic quandary of how to unite in the face of differing egos, ideologies and constituencies. So far only Ping Lacson and Senate President Sotto have officially announced their candidacies for the two highest offices so it is interesting the Palace has been mum against them while attacking Isko who officially has still to declare. This is either because they are not considered a threat, they will push back or the Palace welcomes (supports?) their entry to spread the vote. Note that Sotto, an erstwhile Duterte supporter, could be going up against Digong for the VPship.

Right now the Duterte family succession plan is looking good. Its biggest potential obstacles are an act of nature, an overreach by the Palace or an economic and health condition so severe as to create a backlash; all of which are not beyond the pale.

The political theatre has still a long ways to go with many head fakes, meanderings and deep plays. We the people are simply pawns in the unfolding of the narrative. It does not have to be so, we have it in us to take charge of our destiny in May 2022.but we won’t; but that is another conversation. I just hope Filipinos do not become the victims in this race to the bottom.

Killing Me Softly

“You only know the noose is too tight when you run out of air.”

There, I guess, goes the economic projections.

After several false starts, our economic team was confident this time we would have lift off, Q3 will be the start of our 6-7% recovery. GCQ with heightened restrictions and now ECQ for the next two weeks just threw those forecasts out the window.

Our Q2 numbers should be relatively good, the operative word being relatively because they mask the so-called “base effect”. The Q2 numbers last year were so dismal anything mildly modest this year will look stellar even if in fact they will be just that, mildly modest. Again, Q2 will impress compared to Q1 this year when GDP dropped yet another 4.2%.

One barometer of where the economy is headed is the USD/Peso rate. Although somewhat counter intuitive, the peso is strong when the economy is weak and weak when the economy is strong. In the former, businesses stop importing for inventory, supplies and capital investment so there is less demand for dollars. From March 17 2020, two days after the first lockdown, the peso went from P52.23/USD to P47.50/USD in June this year, an appreciation of some 10%; as the economy shrank cumulatively by some double digits. The trend reversed last month with the peso weakening to P50.50/USD as the economy started to pick up with health protocols easing and vaccinations starting to take hold. Higher crude oil prices also accounted for some of the peso weakness. 

The return to ECQ for NCR Plus accounts for some 70% of GDP, the heart of our economy. Our economic managers, I imagine, were pulled kicking and screaming from the room when the announcement was made. An estimated 167,000 jobs will be lost swelling the official 3.8 million already unemployed and the millions more actually under employed. The peso dramatically strengthened reflecting the diminished prospects for the economy.

It was a hard call to make for the IATF: The variant was spreading with most of the country still not vaccinated. The idea behind the ECQ – and I am guessing there actually is an idea – is two fold: One, to mandate a stand-still over the two weeks it takes for the variant to transmit and, two, to buy us time until we can get more people vaccinated. This “circuit breaker” should certainly help. The only questions are, first, whether it will stall the spread post August 20 and, second, what is the cost to lives and jobs of the freeze? The answer to the first must be yes for a while but no after that; and for the second, plenty. Surveys show Filipinos prefer to live with the uncertainty of contagion then to die from the certainty of starvation.

“Circuit breakers” have been tried in other countries like the UK and the results are unclear. The plan works only if we can get the majority of Filipinos vaccinated quickly which will not happen. Otherwise we are simply kicking the can down the road. We have insufficient vaccines, our roll out is sub optimal and many people still refuse to be vaccinated. Vaccine czar Gen. Carlito Valdez admitted there is a “hesitancy” among Filipino elders to be inoculated. The World Health Organization reported the level of vaccination among our elderly is “unacceptable”. Spokesperson Harry Roque urged seniors to be jabbed if they wish to see their grandchildren. This seems academic if they cannot make it past tomorrow’s meal.

The reluctance to be inoculated is due to misinformation but also to a mistrust in the DOH leadership’s integrity, truthfulness, accountability and competence. Then there is the confusion: For example why are the vaccines we are begging 75 million Filipinos to take still classified by the FDA as for “Emergency Use” only? It implies the cure is still experimental. The Government might enlist some credible influencers to endorse the vaccination program. Government officials, perhaps, need not apply.

Part of the issue is how the DOH has framed the problem and the solution. Essentially the DOH model is to lock down the community until the vaccines are available. Once there was a prospect of the vaccines however far into the future, the DOH abandoned the hard work of testing, contact tracing and other protocols necessary to minimize the transmission of the virus. The DOH never had a holistic solution to the problem, it simply defaulted to the path of least resistance which was to quarantine the country. As a result this is neither the first nor probably the last time ECQ, GCQ or whatever the applicable alphabet; will be imposed and therein lies the problem. As a side note it is interesting the DOH prioritized the NCR for national vaccinations yet it is the one now being shut down.

The DOH treats the health protocols like a switch it can turn on and off at a moments notice. The fact is a “stop-go” policy is in many ways more disruptive than a straight-up solution. It often takes more time and money to stop and re-start an operation than simply shut down. Businesses depend on certainty for planning, hiring, investing, arranging supplies, building inventory (some perishable), and meeting contractual obligations like utilities and rent. Workers have to know they can get a ride to work. The IATF pays lip service to protecting the economy but seemingly has little idea what is involved.

So where does that leave us? In a pickle, I am afraid.

Our economic managers have said the coffers are depleted. The House has passed a Bayanihan 3 bill that will allocate P1,000 per resident which over 14 days translates to P71/day for three meals and everything else; with no assurance it actually will end up up with the intended recipients. For the record we reportedly still have not spent the funds under Bayanihan 2. There is no more money because the stimulus, it is said, was already included in the 2021 Budget passed last October. This was increased by P500 billion or 11% more than the previous year’s Budget. After adjusting for inflation of some 5% this leaves only 6% for additional spending in what is the worst crisis in our history. So, nothing there.

The BSP reported bank lending dropped for the 7th consecutive month and we are only in July. Again, nothing there.

How will the growing tension and suffering in our community play out? Where is the release valve? The street demonstrations and uprisings in Brazil, Colombia,Tunisia, Cuba, S. Africa and India might provide some clues. We hope we will not get to that but, again, one can only push people so far.