Tony Abaya is a shrewd observer. Yesterday he looked at the positive economic news (the Philippine stock market is on its third day of record highs). He wrote, “Economic and business policies were not an issue in the midterm elections, as they seldom are in Philippine elections. The market was reacting positively to the fact that the elections took place at all and that the results seem to reflect the general sentiments of the public as reflected in pre-election public opinion surveys and the Pulse Asia exit poll. This means, the market sees the political situation to be stable and have voted with their investment dollars and pesos.”

What was an issue, he said, was the president, and she lost, and lost big. Not just in the Senate, where only two of her candidates, Joker Arroyo and Edgardo Angara established, early on, strong showings both in the exit poll and the unofficial (but more credible) counting, but also lost in the House of Representatives.

Abaya clarifies that while the president claims her people won most local races, and thus this served as a partial vindication of her leadership, many of these races were uncontested by the opposition. “Uncontested elections are not a referendum on anything or anyone,” Abaya says, while it “is in the contested elections that real choice is expressed, and by this standard, President Arroyo has lost that referendum.”

Abaya runs down the list of bellwether races: Manny Pacquiao loses in General Santos City; Lito Lapid loses in Makati City; GMA’s personal friend Lilia Pineda, wife of the alleged jueteng lord of Luzon, Bong Pineda, loses in Pampanga; Jojo Villafuerte loses in Naga City; Ali Atienza loses in Manila.

Meanwhile, administration efforts to squeeze in some of their own into the Senate keep hitting obstacles raised by Namfrel and other groups: Maguindanao’s election has basically been discredited (up to now, no one can say with certainty elections even took place); Lanao’s election is in doubt, too; in the first district of Davao City, Sen. Ralph Recto went from 14th place to No. 5 — after Koko Pimentel’s votes ended up in Recto’s tally, resulting in Recto going from 65,000 to 145,000 votes due to a “clerical error.”

Stories like these are deflating the administration balloon. From its initial claims entire regions would deliver 12-0 votes, the claim was reduced to provinces, then town, and now... individual barangays. The administration is running out of places to credit with overturning the results. The credit for this goes to the volunteers from Namfrel, the PPCRV, and lawyer’s group Lente, who’ve stubbornly insisted on not only a quick, but accurate, parallel count. And who have been steadfast in exposing election irregularities.

Where does this leave the president? Ms. Arroyo has until June 30, when new terms begin, to get at least two more seats for her senatorial slate: her winning candidates, Arroyo and Angara, are unreliable allies at best. But at this point in time, even if two more of her candidates make it, it will be difficult for the public to believe electoral manipulation didn’t take place. Not that public opinion will matter if two extra seats are gained. But then what?

Ms. Arroyo is the titular chief of two political parties, Kampi and Lakas, that cordially hate each other. They will cooperate on all the usual ventures such as passing laws and lining up for presidential patronage, but her two parties will increasingly work at cross-purposes. The reason is simple. Lakas existed before Arroyo, it intends to exist after Arroyo; Kampi is purely an Arroyo creature, has no other basis than loyalty to her, and lacks even a Jose de Venecia, whose ambitions aren’t limited by Arroyo’s political plans. He intends to remain relevant, whatever happens; President Arroyo has begun her slide into irrelevancy as the 2010 elections near.

Tony Abaya quoted Secretary of the Interior Ronaldo Puno, who enjoys a reputation as a formidable political operator. In 2005, he’d told a Kampi party congress that their objective should be to “make Kampi a truly dominant party after the 2007 elections: The objective should be the biggest political party in the political scenery.” This they’ve failed to do, not least because their efforts to pirate Lakas members had to be put on hold leading into the elections.

The president, of course, can quietly instruct her lieutenants to resume pirating politicians from Lakas’ ranks. But for what purpose? Kampi could grow, but it has no national figure capable of contesting the 2010 presidential elections. The vice president, Noli de Castro, who will be a reluctant candidate at best, is more inclined to support Lakas, if not the Nacionalista Party of his good friend Sen. Manuel Villar, another presidential contender.

The president has no champion other than herself; but to remain relevant, she would have to be in a position to remain leader of the country beyond 2010. Speaker de Venecia, for one, would be happy to abolish presidential elections in 2010 and substitute parliamentary elections in their place. This would require constitutional amendments, an effort that would be expensive, divisive, and unpopular and which could unite public sentiment against her and anyone else backing the effort. Not to mention the problem that the bungled 2007 election poses.

The Comelec has proven itself a discredited disaster; it would be hard put to be taken seriously by anyone when it comes to supervising the plebiscite required to approve any proposed constitutional amendments.

Last Monday, Ms. Arroyo called businessmen to the presidential palace and her Cabinet asked for help: convince the opposition, they told the businessmen, to forget things like impeachment. The businessmen dutifully complied, publishing advertisements asking people not to rock the boat. With the 2010 elections on the horizon, I don’t think many people are eager to rock the boat. But here’s the thing: if the president’s to avoid being a lame duck over the next three years, she has to do the rocking. And this is a temptation she just might find irresistible.