What Would Philippines President Rodrigo Duterte Do?

Shoot first, ask questions later.

It’s a time-tested method for solving problems of all kinds. In times of war, it becomes a necessity. In times of peace, it’s a heinous abuse of human rights. Yet, how effective would it be if we used this same mindset to fix the world’s economic ills?

More on that in a moment. But first to the Philippines, where this ‘policy’ has taken on an entirely new, and uncompromisingly brutal, meaning of late.

When President Rodrigo Duterte promised to halt the drugs trade within six months of his presidency, not many people would have predicted what would happen next.

In a response to the president’s urging, authorities have gunned down drug dealers at an alarming rate. Civilians have gotten in on the act too. Mr and Mrs Smith from next door have become vigilantes. But they’re not asking questions — no. They’re just shooting with an intent to kill. And anyway, what questions can you ask of the dead?

It’s extraordinary that this story isn’t bigger than it is. If it was happening in Australia, you’d probably assume we were living in Biblical end times. Yet, in the Philippines, a public figure, no less the president of the nation himself, orders authorities and civilians alike to execute drug dealers in cold blood.

Barbaric killings, whatever you may think of the nobility of the cause, are not the way to eradicate problems. Not least because they often result in significant collateral damage, particularly of the innocent.

Yet even more shocking is the lack of international outcry at what’s taking place on the island nation. Where is the international community to condemn these violent killing sprees? Nowhere. The response of Barack Obama, the leader of the supposed free world, was to call Duterte to affirm the longstanding ties between the two nations. He talked of ‘shared commitments to democracy, human rights and rule of law.’ All of which are noticeable by their absence in the Philippines.

On top of the 400 dead, police have arrested a further 4,500 drug dealers. Stunningly, another 500,000 people have turned themselves in to authorities. And for good reason.

Like any normal human beings, they fear being the victims of senseless killings by police. One suspects that among those 500,000 are people who probably don’t even deal drugs. Heck, when you can’t even defend yourself in a courtroom, who’s to say you aren’t a dealer?

Either way, when they have a president who says things like, ‘My order is shoot to kill you… I don’t care about human rights, you better believe me,’ who can blame them?

Of course, there will be some of you out there that find this barbarism refreshingly ‘progressive’.

But we’re not here to tell you what to think. As a financial publication, we’re more interested in viewing this ‘policy’ through an economic prism.

So one can’t help but wonder how Duterte’s senseless directives would apply in other areas of life — like, say, the financial system, for instance. After all, you could argue the financial system pours just as much untold misery on the lives of others as narcotics.

We need reforms to fix the financial system, not bullets

We’re all participants in the economy. You can think of the illegal drug trade as a microcosm of the broader economy.

This framework that governs our lives subjects us to its rules. Financial doping is forced upon us, whether we want it or not.

The difference with the regular economy is that, unlike a drug addict, we can’t say ‘no’. Yet, like drug addicts, we become hooked to financial doping, depending on ever more fixes. (Rather, the money masters that shape our lives become addicted to it; we’re merely the collateral damage from their bingeing.)

What if, say, we took this analogy one step further, to the same level as Duterte has taken his anti-narcotics agenda. What might that look like?

At the bottom of the ladder, you’d have the general population, eager as it has become to get its fix of financial doping. It laps up credit like there’s no tomorrow, and gets agitated when the tap runs dry. It invest in stocks, buys investment properties, and even uses credit to pay bills.

Above them sit the drug dealers. These are the middle men who dish out credit. In this analogy, you can think of them as banks and lenders. Some seem benevolent, like your next door neighbour who sells marijuana. Others, like payday lenders, are less so. Others still, create financial instruments which destroy entire economies.

At the top of ladder sit the central banks. They create the means through which banks can lend out credit. Think of them as the drug cartels who make, package, and ship illegal narcotics.

Like the drug dealers on the streets of Manilla, financial doping by commercial and central banks is no less harmful on the public in the effects it has on livelihoods. It not only lays the groundwork for the creation of dangerous financial instruments, as was the case in 2007/08. It also leads to high household debt. It leads to inflation, and loss of purchasing power. And it ruins lives every time it pops the asset bubbles it helps create.

And yet, this form of crime goes largely unpunished. Why?

We can’t answer that question. But we know for certain that those who commit financial terrorism against the people are rarely held accountable.

Yet you don’t need bullets to fix this. Legislation, and proper enforcement, would suffice.

That, at the very least, would be a start. Just don’t expect a Duterte-style clean-up of the financial system anytime soon.

Mat Spasic,

Contributor, Markets and Money

Financial doping is the single biggest reason that the world now faces its gravest crisis since 2008.

Markets and Money’s Vern Gowdie believes we’re already at the beginning of this next crisis.

Vern is the Founder of The Gowdie Letter and Gowdie Family Wealth advisory services. As one of Australia’s top financial planners, Vern says the coming crisis is already in motion.

He warns that stocks won’t be the only assets to implode when things turn for the worse. There’s another multibillion dollar market that’s poised to collapse when the credit bubble pops.

Australia has gone through two credit bubbles in its history. The third, and latest, has built up over the past 65 years. When it pops, the impact will leave a lasting mark. One that makes the 2008 financial crisis look like child’s play.

The fallout of this crash could damage your wealth. But you can safeguard your wealth from the worst effects of the coming crisis, provided you act now.

Vern will show you how to do this, and more, in his latest report, ‘Global Financial Crisis 2016: 3 Crisis Scenarios, and How They’ll Impact Australia’. To get your free copy today, click here.

Markets and Money offers an independent and critical perspective on the Australian and global investment markets. Slightly offbeat and far from institutional, Markets and Money delivers you straight-forward, humorous, and useful investment insights from a world wide network of analysts, contrarians, and successful investors.

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