Friday, June 21, 2013

Philippine bubble economy continues to inflate. When will it pop?

All that goes up must come down at some point...
Our stocks have become one of the most expensive in Asia, trading at over 20 times their price-earnings ratio. One luxury condominium developer reportedly paid celebrities like Paris Hilton and Donald Trump $5 million each just for using their names in his projects. That developer’s 36-year old son is reported in a Vanity Fair article that he commissioned a renowned Dutch architect to build another residence for him that would cost $15 million (P645 million). The house is especially designed to also be his very own art museum in his honor, as it would be filled with two dozen portraits—of him—he has commissioned to be done by famous US and European artists costing $3 million.
Makati condominiums—even before the first brick is laid down—are selling at P150,000 per square meter, as expensive as a Manhattan flat. Stock market brokers have been the biggest buyers of Audis and BMWs, while their bosses not to be outdone, are now inquiring about the Manila elite’s latest toy, Rolls Royce cars. They just doesn’t sell at P26 million each; they require P120,000 monthly “maintenance” expenses, or the company will not repair it if by some chance, gets stuck in a Manila flood.
All these First World luxuries in a period of worsening unemployment (7.5 percent) and underemployment (19.2 percent) as well as declining foreign investments (by 8.5 percent) and exports (by 11.1). And the most miserable times for residents of Metro Manila suffering the floods after just a few hours of rain.
Read full article by Bobi Tiglao here!

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