BYE-BYE MISS AMERICAN PIE (Part 1 of 3)

October 20 , 2008 by Teodorico T. Haresco, Jr.
Businessworld

How does the Philippines prepare its future, as it bids the American Dream farewell? What should Fil-Am owners of healthcare and retirement homes do, when suddenly no elderly are left in US streets? Why will America not recover before 2010? In the new global economy, why is Shoemart better positioned than Wal-Mart?

Why will Obama win the World…err…US presidency on November 4? With 100 million Generation Y’ers by 2010, will the US invent another war as in Keynesian paradigm, to reinflate consumer demand and housing starts?

On May 26 this columnist suggested putting his money where his tongue is: hemlines, currently above-knee, will drop to the ankles, reflecting the dour global mood going to 2010. On August 4 he reaffirmed that America needs to reinvent itself.

There’s no crystal ball: it’s all Demographics, analyzing a wave-crest cycle of 20 years per generation.

Drove My Chevy to the Levee

Throughout eons, Human capital has moved to fertile lands and centers of prosperity, and in recent history, America. For centuries, she has received huge migrations waves: the English Pilgrims and French Huguenots (1600s), followed by the Germans (1600s-1700s). The Irish, escaping the Great Potato Famine, arrived in droves – the first mass migration in US history (mid-1800s).

Others also heeded the call. Pursuing the promise of a better life – a slice of American Pie - my great grandmother, Nathalia went to America in the 1930s, with four sons, leaving behind a husband, and two daughters. Despite separation’s pain, they found success, opening the Manila Café in Jackson Street, San Francisco, probably the first of its kind.

We should not disparage the Filipino Emigre; certainly not a Marcosian 1960’s invention; as the Left, a few “K.S.P.” clergymen, Opposition and Intellectual Snobs negatively construe our economy to be. It is only right that this Administration calls them Filipino Expats. Our average migrant commands a premium yet may not be even as educated as the Indian, Chinese, or Bangladeshi. But he has Humor; Christ-ian, he considers life’s sufferings as transitory.

The Philippines has Labor; Gold, Nickel, Iron and Copper, and “Location, Location, Location” to the Asian Mainland. We have no lands made fertile by great rivers: the Nile, Yangtze, Euphrates, Rhine, Mekong, or Mississippi. Our substantial Minerals, Oil and Gas still unmined; require foreign partners and decisive governance.

The Statue of Liberty, calls “your tired…poor…huddled masses yearning to breathe free.” America has lured the world’s best minds and labor. But as much as liberty, people are drawn to opportunity – the world’s biggest economy, and her efficient, liquid financial markets.

But the American Pie is shrinking, and will continue to for the next four years. The subprime crisis is a primary cause, but also Social Security and Medicare, already faltering from less contributions from 11% fewer Gen X’ers than Baby Boomers. Finally, the world’s Global Currency Reserves are shifting from US dollars and Japanese Yen to other currencies, going from 71% (1999) to 63% (2008). (Chart 1)

The international labor market is consequently changing, and as wealth shifts from West to East, Filipino Expats are found from Angola to Vietnam, remitting a basket of currencies, making the Philippines the least volatile of economies.

But while America tries to reinvent itself into socialized capitalism (ala DeGaulle, higher

government intervention), overall consumer demand and spending will remain low, due to 9.6M fewer Gen X Americans. The storm will persist, and she cannot reinflate until Gen Y’s workforce arrives starting 2010.

Will the world become unruly, without the world’s Supercop, and her aging Carrier Battlegroups? What else can she offer to dissuade Mid-East petrodollars; Japanese and Chinese currency reserves from shifting to the Euro? During the Empire’s dark times, Lilliputs like us, with strong historical and market ties, must support, buying US private bank shares and triple-A municipal bonds.

Five US generations span 1905-2006 (Chart 2). By analyzing each one’s specific size and individual preference - results of their respective environments and experiences conclusions can be drawn – and exploited.

The GI Generation (1905-1925, 56.6M)

The Veteran Generation, they endured the Great Depression’s hardships and fought tyranny in WWII. Their zeitgeist was simple: frugality, patriotism, and self-pride, they embraced Texan Oil and blue-collar labor, whilst echoing chivalry: they stood by their word, and believed good would defeat evil.

They are classically Republican. Four of the era’s five Presidents were Republican.

Living within their US$3,000 annual average earnings, they bought US$7,000 houses. Their thrift left their offspring Baby Boomers a whopping US$7-US$10T.

They would have powered McCain to victory, like they did G.W. Bush. Their strong work ethic would have prevented a subprime crisis which, as implied in El Nuevo Herald, was in one way caused by lending to risky-credit demographics, like Latinos. However, under 5 million remain. The limited opportunities revolve around elderly care, which they probably already have. That’s why our Veteran’s Bill in US congress will never pass.

The next article will tackle the Silent, and the Baby Boomer Generation, and how our entrepreneurs can seize forthcoming great opportunities.

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BYE-BYE MISS AMERICAN PIE (Part 1 of 3)

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