column-John Mangun-OUTSIDE THE BOXTHE focus of attention has been on the global financial and asset markets for the last two weeks, as chaos seems to reign supreme. But it is much more than that, as we enter this next phase of the economic model where government began to lose the people’s confidence.
If you have not noticed lately, it is not business as usual in just about all aspects of what we consider normal life. The markets, as well as politics, are only a reflection of what is going on deep inside the social structure.
Here is the key to the deal once again.
We are witnessing a type of global phase transition and that is also true in the Philippines. The scientific definition of a phase transition is The transformation of a thermodynamic system from one phase or state of matter to another one by heat transfer. The term is most commonly used to describe transitions between solid, liquid and gaseous. Water is liquid within a certain range of temperature. Reduce that temperate by removing the heat from the water and it becomes solid or ice. Increase the temperature and it becomes gas or steam.
Each move from one state to another comes from a violent change in the environment that requires the release of a tremendous amount of energy. Think of all the heat it takes to boil water or, conversely, think of all the energy necessary to transform water into ice. The same thing happens in the social-economic world and it does not come quietly or calmly.
The United States is witnessing an unprecedented political shift. Republican Party front-runner businessman Donald Trump does not stand for any ideology, yet he is being criticized at the same time for being too conservative and too liberal. In second place is Ben Carson, a black, world-famous neurosurgeon, and neither of these men have ever held elective office and are now gunning for the top government spot in the world.
Challenging the queen of trapo politicians in America-Hillary Clinton-is Bernie Sanders, a political party independent who is a staunch socialist with the credentials to prove it.
Trump, Carson and Sanders are unbelievably far outside the political elite mainstream. Jeb Bush of the political dynasty that gave the US two presidents is being crushed in the polls. In a recently released mainstream political survey, the most often used word to describe Jeb Bush was Bush. To describe Mrs. Clinton, the one word used most often was liar.
We are seeing the same sort of thing here in the Philippines with political neophytes Grace Poe and Leni Robredo being seriously suggested to occupy MalacaAang.
There are now daily protests in Malaysia for the removal of Prime Minister Najib Razak on charges of corruption. Malaysians are not prone to going into the streets except to support issues along political party or ethnic lines. Now those lines are blurred.
In just two years Left-wing and populist Brazilian President Dilma Rousseff has seen her approval rating go from 79 percent to the current 8 percent, amid calls for her resignation or impeachment. Germany’s Angela Merkel is tied for Germany’s longest-serving head of government and is under intense pressure for supporting more immigration of Muslim refugees. Greece will hold elections for the second time in 2015. Only 40 percent of Japanese approve of their prime minister’s performance. Chinese investors kidnapped the head of the Fanya Metals Exchange, a government-regulated market that was basically a legal Ponzi scheme.
This list could go on and on.
The annual US Federal Reserve (the Fed) meeting takes place this week with plans and general outlook for the year being defined. Fed Chairman Janet Yellen will not be attending. But what will be attending is a petition signed by 100,000 people telling the Fed not to raise interest rates until real wages go up. As SovereignMan.com’s Simon Black said, All these people have their hopes and dreams tied on a quarter of a percent. That’s how ridiculous things have become.
The last time there was a major downturn phase transition was at the middle of February 2007. We all know how that turned out. As a run-up to that transition, the Thai military staged a coup in Bangkok, declaring martial law, and the Shanghai Stock Exchange dropped 9 percent in one day, the largest drop in 10 years.
There are always going to be incidents of chaos and confusion. That is part of life. Of course, some people can tie all these events together into some sort of master conspiracy with politics and the global financial markets. However, maybe these are just the cycles and trends naturally moving the world.