Monday, March 29, 2010

Villar is not poor

Yesterday, Villar tearfully shared how hurt he was by insinuations that he wasn’t really poor at or around the time of his brother Danny’s death in 1962. Numbers don’t lie, however, and he doesn’t dispute the fact that his father borrowed 16,000 pesos to buy that 560 square meter lot. Now how much do you think Villar Sr.’s monthly salary was in 1962 to have enabled him to borrow such an amount?

Assuming an interest rate of 8% and a payment period of 30 years, the elder Villar’s monthly amortization would have been 117 pesos (use the PMT function on Excel if you want to verify this). Usually, a lender would limit the monthly amortization to no more than 40% of a borrower’s take home pay (in most other times, this would have been even lower). So Villar Sr.’s take home pay would have been at least 292 pesos a month (P117/40%). The assumptions I’ve used are very liberal and Villar Sr.’s actual monthly income in 1962 was probably higher. Changing our assumptions to 9% interest rate, 25 years to pay, and 33% ratio of monthly amortization to take home pay, for example, would imply a monthly salary of 404 pesos.

Now guess how much the minimum wage was for non-agricultural workers in 1962. It was a whopping 4 pesos a day or around 88 pesos a month (see Republic Act 4180). If Villar Sr. was earning 3-4x the minimum wage, and if mommy Villar was able to provide supplemental income, I don’t see how, by any stretch of one’s imagination, Junior can claim he was dirt poor. Exaggeration is too mild a term. Bold-faced lie is more like it.

Fortunately, the illiterate masses (whom many people in this forum disdain) appear to be seeing through Junior’s charade. Unfortunately, though, they seem to be flocking to Erap.


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