Global View Today!

I never wished Happy New Year... 2012!

2012-01-11T08:40:00.003-05:00

Well, Happy New Year. And what better way to start the year than with a bit of fear in the air... Happy 2012, anyways! :-)

China and Russia may go to war if sanctions in Iran remain constant. Sad...
http://www.youtube.com/watch?v=Nbc9RLcecRk&feature=uploademail

New kids on the block- Greece and Italy!

2011-11-15T21:48:00.002-05:00

Well, in case you have not heard, Greece has a new prime minister and his name is Lucas Papademos who is an economist by training and former Governor of the Central Bank in Greece. He takes over from former prime minister George Papandreou, who decided to step down amidst pressure from Greece's- and now Europe's- well know debt crisis.

And in Italy, long time prime minister and Italian export, Silvio Burlesconi, has also decided to step down as prime minister of Europe's fourth largest economy amidst similar debt related issues. His successor is Mario Monti, who is also an economist by training as is his counterpart in Greece and was a former Goldman Sach's executive.

Very interesting things indeed...

Where is the people's money? American banks must find it!

2011-10-31T15:41:00.003-04:00

Article from Thomas Friedman: Here.

Well, in not so many words, this is why I for one was not too upset when they started to come after the "tax havens"... the money is there somewhere. In a vault, under some one's basement floor, or in a Swiss/Cayman/Bermudian/Jersey Shore bank account- the latter is more likely.

The quicker the powers that be find out where the people's money went, the better off the entire world will be. We can do nothing about it except for hope, and pray, that a solution is found to the mess. Sure, some of it is in China, but that was a legitimate issue- a major chunk of the ill gotten gains were stolen by some people we don't even know. Makes you spitting mad, doesn't it?

Can Europe get right?

2011-10-28T06:57:00.002-04:00

Odds are, no. They have- policy makers that is- have confused themselves on the matter. They don't know which way to go, who to turn to and what to do.

The European crisis is a fine mess, if I can say so. If you follow publications like the Financial Times and The Economist online, you would see that they have a series of articles that is continually compiling information on this crisis's origins, the issues that are happening currently as a result and also what policy makers and bankers are doing to stave off the worst!

I can list to you reams and reams of Internet files that document all of the problems and possible solutions. But it would be a waste of time.

Gaddafi is caught!

2011-10-20T07:54:00.002-04:00

Apparently Muammar Gaddafi has been caught at his home town in Sirte, Libya. Sources from Sky News and The Daily Mail report that he has been shot in both legs and has been transported by ambulance to a hospital.

Don't know where Libya goes with this. I hope he is kept aliveand given exile. We will have to see!

I'm not fully impressed with how easily some people forget that Gaddafi was accepted in certain circles as the man who tried to keep things together in Libya. But I am more than thankful that this bloody era is over for Libya and the Middle East.

Kweku Adoboli is a man after many hearts!

2011-10-01T10:46:00.002-04:00

Sort of an old story, but we know that every black man that don't have two cents to rub against the next cheered with glee when they found out this guy DID IT. LOL... but, he caused more problems than anyone could have ever imagined and thus it's a painful experience for persons in the UBS Group.

More importantly it shows you that we have not learned the painful lesson of the 2008 financial crisis at all. It's all happening all over again. These guys are just too greedy!

See story here:
BBC

It's going to come down to the actors!

2011-09-26T16:56:00.003-04:00

Paul Krugman of the NY Times writes that The European Policymakers are unlikely to make reforms necessary to save the European Union.

He cites that recent pronouncements- most likely made during the Sept.,2011 IMF/World Bank Annual Board of Governors meetings- are extremely bland and scary at the same time.

I am not sure how Krugam is thinking, but is obvious that two things are happening simultaneously: 1. Just like the set of bankers/actors that created the financial collapse of 2008, most of them hedged their bets and bet wide on other people's money and bet tight with their own money, often against what they bet on with other people's money; and 2., that there will be more action for political instability, more so from policy think tanks and multi-lateral agencies, companies and actors, even more than from political pressures from the ground in terms of labour unrest and social upheaval.

It's that time where I'm quite sure, certain gaggles of elites, not necessarily from the legislative branches of the leadership community in Europe, are actively considering if not planning the downfall of many of the current and aspiring politicians who have the mindset that keeps the current state of affairs constant.

Sounds like a war is going to break out. This time, cash will be their fuel, the casualties will be dispersed and seemingly inconsequential to the scheme of things, think tanks and social-meetings will be the battle room and the social media will be their primary weapon of choice!

The time to make these decisions whether folks like it or not is here. And, to be fair, it's not like Europe has not had political instability in it's history at all. This time it will be more sophisticated, and hopefully more humane than other shifts in politics in Europe.

Speeches from the World Bank/IMF Board of Governors Meetings, 2011

2011-09-25T21:17:00.005-04:00

Here are the speeches from the 2011 Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund.

See available links to Chairman of The WB/IMF Group, Prime Minister Hubert Ingraham's speech:
Here.

President of The World Bank's speech, Robert Zoellick:
Here.

Managing Director of The International Monetary Fund Christine Lagarde's speech:
Here.

Just for your information!

Cheers!

IMF posts its World Economic Outlook for Sept. 2011.

2011-09-22T08:56:00.003-04:00

Have not read it yet but the title isn't very encouraging.

See here: IMF World Economic Outlook Sept. 2011

Will read it sometime today or tomorrow!

Big Jobs Speech tonight from Pres. Obama!

2011-09-08T10:27:00.002-04:00

Well the big job's speech is going to be tonight and delivered by President Obama. Jobs, jobs, jobs! I wonder what he has to say about it? I think the US is about 10% unemployment and up to 15% real unemployment! Staggering figures. What's even more staggering is that it's been like this for well over two and a half years or thereabouts!

The US has tried stimulus. That fell short and many have said that it has failed. They have tried quantitative easing. That fell way short as well as banks hoarded money and buffered their balance sheets. They tried nationalisation. That didn't work out either as the government held on more debt from once private companies, car companies and banks, which raised the debt level and still created no new jobs or new innovation in the economy. The toolkit is just about empty at this stage.

Mitt Romney- current Republican candidate and former Governor of Massachusetts- said he has a job plan that has over 40 action steps. Rick Perry, Governor of Texas who is also a Republican candidate for President, said that he has created more jobs than Mitt Romney in Texas than Romney did in Mass.. Whatever!

We need jobs now in American. Small states like The Bahamas depend on that tourism investment. We also use jobs indicators to sense where the foreign direct investment money is flowing from in order to plan FDI projects.

If America can't do it, and apparently the EU is in another dream world, then we need some place else to deliver!

The Bahamian Economy: What, me worry?

2011-09-01T12:08:00.020-04:00

No one in The Bahamas is in the mood for more bad news, especially after Hurricane Irene swept through leaving significant damage that some estimate to be well in the millions. But bad news is what we had with the recent downgrade from the ratings agency Moody's on The Bahamas Sovereign Bonds to A3 status.

I remember back in mid-May, 2007 The Bahamas put up a Sovereign Bond package for investors and immediately gobbled up. I'm not sure if the same type of exuberance for Bahamian Bonds will hold true today.

For general information, issuing Sovereign Bonds is a way in which a country can raise money from investors to fund public operations. Aside from direct public borrowing- which can also be buttressed by the application of bonds into the loan structure- it is a very effective way in which a government can obtain money to do things it needs to do.

The main problem with Bahamian bonds being downgraded A3 status- which is the start of the second tier on the Moody's ratings chart- is that investors may see Bahamian Bonds as unstable, with the possibility of the government defaulting on paying back Bond Investors that have already invested.

In 2009 Standard & Poor's - the somewhat disgraced ratings agency that has recently downgraded The United States Sovereign Bonds as well in an act that many call political in nature- also downgraded The Bahamas Sovereign Bond ratings to BBB+, the equivalent to the recent Moody's rating.

The Moody's statement on why they downgraded The Bahamas was based on three factors: "1. The significant run up in government debt levels in recent years; 2. The country's limited growth prospects; 3. The challenges the government is likely to face in raising revenues."

The way Sovereign Bonds work is that investors purchase these bonds, just like a regular investment that’s expected to make a return. What's important with this is that the yield, or in other words the interest paid on these bonds, is how investors make money on the returns from that investment.

The dynamic is that as a country's credit worthiness is put into question in a negative way- as it has been with the recent ratings downgrades- investors will look for higher yields in shorter time frames. For example, they may seek bonds that carry 5 percent yield on a 5 year to maturity dated bond over a 5 percent yield on a 10 year maturity dated bond, and even better if they can get a 7 percent yield on a 5 year maturity date and so on and so forth. As reported by The Central Bank, The Bahamas Government has issued over 2.5 billion dollars worth of Government Bonds with 35 of those issues to reach maturity by 2016, nearly 50 to reach maturity by 2021 and over 80 to reach maturity from 2021 and beyond as far as the year 2037.

The concern over the risk of default in this case is well founded in terms of the ratings downgrade. It’s highly unlikely that an investor would want to be locked into a debt security with an entity that has decreasing means on which to pay that debt.

To some it means nothing. But to others it sends off signals that point to other issues surrounding the Bahamian economy in addition to it all factors highlighting our extensive debt accumulation over the course of the last several years. For example, considering that The Bahamas depends on foreign direct investment, what message do these downgrades send to investors if they want to invest in other portions of the Bahamian economy? How would their investor appetite be affected if there is considerable weakness in the economy?

Other things come to mind as well in terms of addressing this problem in the short and long term. One issue for the short term is confronting the issue of boosting consumer spending. This means not only tackling the astronomical unemployment rate- and the under-employed with the discouraged workers as well- but also boosting real wages in and for the long term.

Another issue is tackling and controlling headline and core inflation for the short and long term respectively. One economist pointed out in January of this year that inflation should not be a main concern, but it rather highlights the signs of recovery in the economy as prices were appreciating. I'm thinking that the exuberance of that statement should be tamped down just a bit.

As we see now- even with lowering oil prices- if boosting consumer spending is to be addressed as a first major step, reducing prices is critical to spurring an appreciation in real wages and increasing employment, most particularly when inflation in The Bahamas is imported and unemployment has little or no effect on inflation domestically. Concentrating on these things are vitally needed in order to generate government revenue in order for the government to have the fiscal headroom to stave off risk of default and meet its other social and regulatory obligations at the same time.

But if investors, both foreign and domestic, would be put off from pumping new money into the Bahamian economy because of these factors aforementioned, then how do we create meaningful jobs, boost consumer spending, while also taking into consideration a softening in the tourism sector? In addition to an increasing dislocation of that tourism product from the main economy (with an increasing bulk of our arrivals choosing the half-day cruise ship stop over, rather than taking that three day trip), how do we assure real investor confidence when tourism is our main industry and is not performing the way it should?

On the other hand the financial services sector has lost jobs and also lost out on business opportunities to other jurisdictions, even though it is virtually un-taxed in comparison.

Another concern is that at the same time with there being no new forms of economic production being presented other than the threat of oil exploration, agriculture is not being given a chance to have a fair start for production for domestic consumption or for export. With that, mostly all other forms of industrial activity and extraction of the natural resources in The Bahamas are being underutilized or under-explored.

Even more concerning- and we have seen this play out in The United States and the debt ceiling debate- is that as politics is becoming more competitive and everyone wants to be credited for the best ideas and the most successful administration, attaining bi-partisan decisions is becoming less and less attainable, which is something that is factored into the determinations on bond ratings most definitely.

Concerns on the long and short term prospects for The Bahamas, even as it is discussed by Moody’s and Standard & Poor’s, should be held by all Bahamians as we begin to see our economic outlook dwindle, and also especially concerning as we see the global economic recovery stall.

One thing is for certain, doing the same things we have been doing and not being more creative and flexible on what can be done in The Bahamas is probably going to create new problems.

The BCA's growth in a changing environment!

2011-08-02T22:14:00.023-04:00

The Bahamian Contractors Association (BCA) has come a long way in its development as an organization in The Bahamas. Within one short year, great work has been done with regard to growing the organization's revenue; winning a pioneering Grant Project aimed at strengthening The BCA's Training Programmes; developing its lobbying mechanisms to be more effective; and growing the BCA's revenue and membership all in one swoop. It is progress well noted and something that other non-profit organization's and for profit organizations can take sharp example from.

When I first met the then President of the BCA Stephen Wrinkle and his Executive Director, at the time during a stint I had as a Consultant with The Inter-American Development Bank for their Multi-lateral Investment Fund, both men were at their wits end with regard to the amount of opportunities for advancement for Bahamian Contractors. The BCA, having been an organization since 1952 and since Mr. Wrinkle's leadership within the past two and a half years since we had first met, not much had changed over those last 50 plus years with regard to the overall participation from Contractors; the level of administrative and economic impact the BCA had as an organization; the tools, systems and programmes that the BCA used as an organization; and the support from the broader public with addressing issues such as corrupt contractors; and assistance with regard to legislation and regulations that would work to boost the industry as a whole.

What’s even worse as an organization like the BCA, it was branded as being an elitist organization catering only to the big contractors, leaving the small and medium sized contractors out of the process. While sentiments to this effect may be little misplaced, much has been done to instil confidence in other quarters of the construction industry that felt that they have been left out.

When writing a project that would correct these deficiencies within the BCA and work with regard to making the necessary adjustments in the private sector, we focused on three key areas; the commercial relevance and viability of the BCA by increasing membership and participation, which meant that smaller contractors and medium sized contractors would have to be more involved in the process; creating a training programme for the trainer of trainer’s and Contractor’s alike so that smaller contractors did in fact have a chance to participate in large projects, once the proper training and skills assessment and market requirements were assessed; and increasing the lobbying power of the BCA by formalizing the international partnerships of the BCA and strengthening national partnerships in a concentrated manner.

After those first meetings with the BCA, the IADB and myself, and after having left a template for a project for strengthening the BCA on the table ready to be approved, I had disengaged from the IADB and then after such the BCA and I started a working partnership in a number of areas. The first of which was that one of the major stumbling blocks in the way of the BCA was the issue of developing a credible business-relay to the public and vested stakeholders that it was in fact ready to make the move into becoming a more effective association for all members.

The second major stumbling block was that the BCA’s revenue points were weak, and the prospects of raising revenue relative to what was doable on the ground was also weak as to what was envisioned by their governing board.

The third major issue was that the BCA had not the technical expertise on the ground to pave the way for them obtaining the Grant from the IADB, or for that matter obtaining and securing funding from the Baha Mar Development Team for more funding for training for contractors to be able to get better contracts from the works being done at Baha Mar and elsewhere.

What happened since mid-2010 to mid-2011 was nothing short of phenomenal. Not only did membership increase by over 450%, we also increased revenue by nearly 1200%, without taking into account the Grant Funding from the IADB, by applying basic marketing and follow through fundamentals, even in the face of a newly started, competing organization in the New Providence Contractors Association (NPCA) that has gained much traction within the industry and have also garnered public sympathy for their plight.

As simple as it sounds, contractors knew of the BCA, some even took part in BCA events in the past, but many of them were unaware that the BCA was an organization that they could have joined and let alone make more effective. Through my tracking, more than 3 of the 5 contractors contacted over the course of the 12 months I was surprised that none of them knew that they could become legitimate members of the BCA and 4 of the 5 contractors didn’t know exactly what the BCA did, even though they had heard of it or in fact participated in BCA events in the past. This indicated to me that even though they had heard about the BCA before in the past, they were unaware or have never been contacted fully on the benefits of joining the BCA.

What’s even more exciting about the recent developments with the BCA is that the IADB project will increase membership exponentially through one of its components, as well as put in place the framework for The BCA Institute- a full scaled, market sensitive training programme for anyone who is interested, not just contractors or persons in the construction industry.

Another critical achievement that has given value for members of the BCA is the creation of an interactive website, which allows BCA members to post their own work to their profile spaces, allow for consumers to rate the contractor of their choice and send reviews, as well as allows the regular news and updates on the construction industry in The Bahamas. Some contractors have already notified the BCA that they have been contacted for job offers through the website and have in fact won contracts.

Apart from the lobbying in the media, the BCA was able to capitalize on major developments in The Bahamas and it is part result to the credibility the office gave to support the lobbying efforts and being able to demonstrate that the BCA was not all about talk, but it was about doing.

While I personally had no hand in the training initiative or the planning of training initiatives with the Baha Mar Development Team as I moved on to other projects that required my direct attention and having completed 80% of my plan, the initiatives on the ground at the BCA, tripled by the inputs from the IADB Grant, are more than exportable and can be used as a template for partnering organizations to invest in.

The turn-around was a fantastic experience and one that should be an example for other organizations looking to grow, take advantage of their opportunities and develop as an entity that serves the public good!

Can the BP oil disaster prove fruitful for The Bahamas?

2011-08-02T12:54:00.006-04:00

The oil exploration debate in The Bahamas is starting to take shape in a very open way. The Minister for The Environment, who is responsible for the country's natural resources, has stated clearly that more analysis is needed before oil exploration is to be taken seriously in The Bahamas.

During the last administration of The Progressive Liberal Party, 2002 to 2007, the Natural Gas/LNG (not exactly crude oil, but a natural resource for energy) was an issue of great contention, the main point being protecting the environment. The second issue has been a national security concern, garnering cooperation from abroad and finding a way to secure the investments from natural or manmade occurrences, which could be disastrous to the environment in addition to it destabilizing a country.

The Bahamas Petroleum Company PLC's company profile page states that it has a license to explore for oil in The Bahamas and wishes to start as early as 2012. Their profile also states that the company has, between the years 1947 and 1986, drilled for oil in onshore and shallow water areas in The Bahamas and that their license has provided them the ability to do so, even though they have not drilled for oil in the last 20 years.

British Petroleum (BP) on the other hand has been in the business of oil exploration for a number of years. A good part of BP's business model has been oil exploration and refining with oil retail second. Comparing them with the other oil company, also known as the "Big 6", they have a smaller market share than all but four out of that group.

This makes the case for BP’s “Deepwater Oil Spill” in 2010 interesting, when looking into BP’s operations model and financial performance compared to that of other oil companies.

BP's average Return on Assets (ROA) when compared to Chevron and Exxon Mobil is nestled at the midpoint between the other companies during the years 2008 to 2010.

There's nothing startling about BP's Return on Equity (ROE) ratios for the same period either, as the numbers appear too vague if we wish to make a case that BP was paying out more money to equity than it was putting back into assets over the same period of time compared to the other companies on a pound for pound basis, with it being un-assessed by duration and intangible variables that can skew ratios through virtue of the net income and expenses payable at any point and time that may affect assets.

What's interesting with this however, is when we subtract ROA over ROE for the same period it tells a different story. BP's ROA over ROE gives us a better insight into how BP was spending its money on assets compared to equity.

While BP's ROA over ROE was less than Exxon and slightly more than Chevron, BP is larger than Chevron in market capitalization and global reach. In addition with Exxon having a negative ROA over ROE and was pumping more money into equity over assets between 2008 to 2010, both Exxon and BP had negative ROA over ROE figures.

All of this matters because ROA shows you how much money a company puts back into its company’s operations at the very first glance. When you subtract ROA from ROE, you have more of an idea of not how much a company puts back into assets, but more importantly how much money a company puts back into assets pound for pound compared to other companies in the same industry, as it eliminates the size and capitalization issue as we have with the oil behemoth Exxon. ROA also matters if a company’s business model is more capital intensive than other companies in the same industry per dollar value compared to other business operations, for example oil retail vs. oil exploration; oil transportation vs. oil refining, and so on and so forth.

It must be noted that while all oil companies mentioned had recent oil spills from mid 2010 up to 2011, BP’s oil spill was much larger by tonnage, which can be attributed to their business model as well as their size, scope and capitalization, relative to the spill’s geographical location- which may have been dictated by all of the factors of their industry and what they were allowed to endeavour in the oil market.

The numbers suggest, among other things, that the larger size tonnage spill is correlated to the company’s size and capitalization and then the ratio of ROA over ROE for each company respectively. While Exxon had more individual oil spills than all of the other companies mentioned, but because of their size, scope and extreme market capitalization, they were able to contain these spills in addition to having the capacity to minimize the fall out more so than BP.

Let’s take for another example the Talmadge Oil Spill that Enbridge Energy was responsible for in 2010, which produced a tonnage spill of nearly 3,500 tonnes, we have to not only look into company financials to see if a disaster could be averted by alerting the public to the company’s performance, but also to the issue of timely mandatory reporting of financials, to assist analysts and persons who have vested interest in these matters with regard to dealing with issues before they become disasters. In fact, aside from BP, the ratio of tonnage spill to revenue for Enbridge is significant and speaks to their business model, size scope and market capitalization in addition to their ROA and ROE performance indicators.

As with Enbridge, their reporting structure is not as strict as BP or the American-International oil companies. But from what we have examined, Enbridge has a negative ROA over ROE over the period of the last several years up until their last open financial report of record, produced in 2005 as reported by Hoovers. Digging a little deeper into the Enbridge financial information on their company website, they have up very basic reports for 2009 and 2010, which states that they have spent more money on company assets and operational equipment over those last two years, but when we calculate the ratios, they have the lowest ROA and also display negative ROA’s over ROE’s over the course of all the years recorded.

Enbridge, by far, is considerably smaller company by capitalization than any of the other Big 6 Oil companies mentioned. They are not intensively involved in the retail side of the oil and natural gas business- as is BP to some extent compared to Exxon and Chevron- with Enbridge being more focused on the exploration and wholesale distribution of crude oil, oil bi-products and natural gas.

This leads me to believe that as The Bahamas moves forward with oil and natural gas exploration, four key things must be essential to protecting the environment and preventing a major disaster:

1. The security of investments from man-made or natural disasters;

2. The business model, size, scope and market capitalization of any oil company in The Bahamas must be adequately categorized in relation to its financial performance and its projections on the possible returns on assets and equity;

3. Accurate and timely reporting of any oil company’s financial and investment information; and

4. Necessary legislation and regulations that curb the overcompensation of equity.

What happened to the Gulf Coast by virtue of this disaster and also what happened to BP's reputation by the Deepwater Oil Spill of 2010 is something that can be avoided in The Bahamas if we look carefully into the factors outlined in this article and then some.

Want that winning proposal? Let KEMP GLOBAL help!

2011-07-21T16:12:00.002-04:00

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DSK is now free to roam!

2011-07-03T19:35:00.002-04:00

If you have not heard, Dominique Strauss-Khan, the former head of the IMF has been released from his house arrest over the last week.

Funny thing is that while his release has been seen as an achievement for proponents of his innocence, the woman that has accused him of rape is now coming under much scrutiny.

Apparently the woman- who is still nameless to many- is a hotel maid with a very large bank account. Too large to go unnoticed. In addition to this hotel maid being a very wealthy woman, he boyfriend is also a convicted man currently serving time for drug charges.

The twists and turns are getting twistier and turnier. People have long claimed that it was a set up and the "powers that be" wanted DSK out of the IMF. For what reason is still unknown to many. Other conspiracy theorists state that the other reason why the powers that be wanted to smear DSK was because they wanted to stunt his chances for running for the French Presidency next year.

Whatever it may be, the turn of events with the hotel maid and her now known background, leaves questions to be answered.

Where will it turn from here on in, no one knows just yet.

Dare To Be Great taping with me!

2011-06-08T17:15:00.005-04:00

Hi all,

I was invited to be a guest on a Caribbean eRadio show on an eRadio stationed owned by Charles Lewis from Barbados on the show Dare To Be Great with the host Spence Finlayson. We had a great time. Also we had a co-guest Mr. Andrew Harris from Barbados who has a wealth of experience in the financial services sector.

I was a television guest on Dareto Be Great a few short months back with Spence. He is a fantastic host a master motivator.

Listen to internet radio with eRadio Broadcast Network on Blog Talk Radio

Is crime an economic concern in The Bahamas?

2011-06-06T18:15:00.010-04:00

The focus has been on crime in The Bahamas for the last few years. It's playing such an important part in the social dialogue that reports have it that it has become the number one concern in some quarters, with the economy being a very close second. With such a high premium placed on both the economy and on crime one has to ask the question; are these issues correlated to some extent?

I got an email over the past week stating that in Toronto, where they have five million people, that the murder count was 60 and people were furious over it. In 2010 Toronto had 60 murders in total. In The Bahamas the murder count for the year, 2011 is already 58 and will more than likely be higher by this submission is received by the media outlets that have so graciously shared my correspondence with the public.

With regard to analyzing crime statistics, persons sometimes tend to internalize and personalize crime and isolate the person that committed the crime. Partly because it affects us all in some way – my cousin was shot in back of the head, in broad daylight, with witnesses, but the chief witness was killed a year later before he had a chance to testify.

Without question the issue of crime is deep as it is wide. To that extent, you shouldn’t be blustered with the notion that any one person is able to solve crime with one stroke or within a calendar year. I certainly cannot share with you path breaking information on a one year 100% crime reduction strategy, and I can assure you that no one else can either. I will tell you however that reacting to the crime news and overstating crime statistics instead of analyzing the nature of the criminal behaviour and parameters of this behaviour are not fruitful endeavours.

Going back to the statistics to some extent and to add further value to the Bahamian murder rate statistic, UN reports indicate that the average murder rate for every 100,000 persons in The Bahamas stands at 22. This is the same rate as Brazil, Haiti and Guyana, but far less than Trinidad and Tobago and Jamaica with 43 and 60 per 100,000 respectively. St. Kitts and Nevis on the other hand has a murder rate of 35 persons for every 100,000 and their population is under 75,000.

Let's take a closer look at The Bahamas vs. St. Kitts and Nevis, with the latter suffering under the weight of a severe murder spree. Persons have indicated that the size of the population matters with regard to crime, but this matter can be a wash when we examine the population size of both countries as The Bahamas is four times the population size of St. Kitts and Nevis.

We may say with some degree of rationale however that population density instead of overall population size may be the cause of the differences in crime levels in each country, when we bring into the mix Trinidad with a population density of 254, Jamaica at 252 against that of St. Kitts and Nevis at 164 and The Bahamas at 23.27, all UN reported statistics. Population density as it relates to urbanization and how that relates to the crime phenomenon has been well documented. To date over 85% of the crime in The Bahamas happens in the inner cities of the capital city of New Providence.

Analysts typically link crime between economic performance and criminal activity. Speaking to an authority on the matter in The Bahamas, he assured me that crime is not a result of economic reasons. But the question to be asked is; what economic concerns are we evaluating with criminal statistics?

If we look at GDP per capita in all four of our countries, we see that Jamaica has a lower GDP per capita than all cases and a higher murder rate. But when we look at Trinidad and Tobago we see that they have the second highest murder rate but the second highest GDP per capita and the Bahamas ranked with the highest GDP per capita and the lowest crime rate, relatively speaking.

While analyzing the murder rate alone is not enough to base any determination on with regard to overall crime, so too, can we base any determinations on the crime by virtue of the murder rate as it relates to GDP per capita either, because there is more to economic performance, and the economy for that matter, than just the GDP per capita alone.

When we speak of the economy, we speak of things not only in the performance indicators, but we also speak to the level of un-employment; urbanization; the size of the informal sector; the size and scope of corruption; the illegal vices trade (gambling, narcotics, illegal immigration trade and the trade in sex workers); the level of economic openness and transparency; business ease; and the level of state and social protection in terms of property rights and transfers relative to population size and scope as well as a host of other issues and concerns.

I take the position, absolutely, that over 70% of the total crime in The Bahamas can be traced back to prevailing economic concerns and linked to wider structural deficits in the economic regulatory mechanisms in The Bahamas. Crimes against property in total, realty theft, house breaking and grand theft auto, are crimes that have economic implications, if only from a net positive benefit for the criminal.

To a broader extent when we speak of benefits transfers to underserved citizens- knowing full well that employees of the Department of Social Services were attacked by irate customers only a few short months back- we have to look at the amount of those transfer benefits relative to the economic situation we have today in The Bahamas.

We also must examine to the state’s capacity to provide proper services and deliver adequate benefits under prevailing financial constraints in addition to issue of social protection intervention before the turning point of human attitudinal change, particularly pre-school and secondary school assessments of persons that exhibit anti-social behavioural traits, with issues such as violence against women and overall attitudes against women to be taken into serious consideration as well as with the general lack of respect for authority and property.

While we must submit that crime is not a single entity with one single fix, we must begin to think about the links with crime to the wider economy and by virtue the society. Then, we must disaggregate certain crimes, under certain instances, with certain parameters and then determine if they all can be identifiable under those instances and parameters.

The Bahamas has the ability to build the capacity in its institutions and societies to deal with this matter decisively, and I believe that we can deal with this matter absolutely.

What to do about the IMF?

2011-05-19T20:23:00.005-04:00

In case you have not heard, the IMF (former) Dominique Strauss-Khan was arrested and charged with the sexual assault of a hotel maid. His second in command, John Lipsky, has assumed the role of Managing Director.

Apparently, Mr. Strauss Khan forced himself on a hotel maid in his New York Hotel- lady of African descent- and caused her great distress. Reports from the lady says that he chased her around the room after he appeared from his bathroom naked and ready for action. That's rather unfortunate.

This is not the first time that Strauss-Khan, who has been labeled "The Great Seducer" by his circle of people that know him well, has been in trouble because of his sexual practices. While nothing this severe has ever been reported, he was near expulsion from the IMF because of his relationship with a former employee at the bank. The Hungarian born woman has since left the fund for another international organization and the affair was squashed. Not so easily will this sexual assault charge be dropped however.

Currently Mr. Strauss-Khan was held on bail and now has been released on 1 million dollars bail with a 5 million dollar bond. He was on suicide watch over the past two days but has been released as of today.

This leaves the IMF in a very difficult position. European heads were in France- Strauss-Khan's home country- discussion what to do about the European Debt Crisis. The fund is supposed to be leading the charge on this debt restructuring effort for weaker countries and his presence was greatly expected to lead these discussion. But instead of him being present for the high-level meeting, he was locked away in Rikers Island and the meetings, in turn, discussed what to do about the scandal and how to replace Mr. Strauss-Khan, considering the severity of the situation on both sides.

To make matters even more interesting, Mr. Strauss Khan was a leading candidate for president running under the French Social Party and was set to challenge Nicholas Sarkozy in the upcoming French elections. That most obviously has been set aside as he has to answer charges in New York for sexual assault. But it does make the situation seem as if it is an all out collapse of the front runner for the French Socialist Party.

People wonder if he was set up? And if he was set up, then by whom and for what reason? No doubt conspiracy theories will swirl. I for one do not like the way he was treated, even if it was assault. He is a very important world figure and diplomat and such immunity against certain treatment was expected.

We will monitor this story as things progress. As it stands now, Strauss-Khan has been replaced by his second in command, he is released on bail, he will not be leaving the USA any time soon, and the fund is moving forward with the discussions in Europe about dealing with the Debt Crisis.

Obama got Osama!

2011-05-14T13:10:00.002-04:00

So Obama got Osama. This is a sure way to get re-elected. Do you think it was timed? Perhaps just a little timed. But, I really feel as if they could not find Osama Bin-Laden- the allied NATO forces- for about two to three years after September 11 and after the invasion of Afghanistan. After all, they still have not found Mullah Omar either and he was the cheif Taliban leader.

Reports have it that CIA had the house where Bin-Laden was killed under surveilance for over 6 months. They wanted to make sure that it was in fact Bin-Laden.

To me, I think they should have captured him. Why? So they can find out what in particular was in the mind of Bin-Laden, map his physiology and his brain patterns. There must have been something distinctive about Bin-Laden that made him the way he was.

But, in any case, it is over.... for now. Even as 80 Pakistani recruits and personell were killed two days ago in retaliatory fashion, the Bin-Laden issue is over.

Congrats to President Obama!

Happy Birthday to me!

2011-05-13T22:16:00.001-04:00

I turned 31 today. Some say it's the most unluckiest of days, but it doesn't matter-- the man makes the pay and God paves the way!

Happy Birthday to me!

Cheers!

Afghanistan gets messier!

2011-04-27T19:18:00.002-04:00

Afghan officer kills 9 US Soldiers.

This is where the danger of Afghanistan gets to a real point where the US should really get out of the arena. It's to a point where an officer of the law, who has no apparent ties to al-Queada or the Taliban, have apparently gone off of his rocker and hit out at Afghan and American soldiers.

The risk of retaliation is obvious. This is where American soldiers may get bogged down into a situation where they may feel as if they should retaliate, but if they do retaliate against the Afghan military they run the risk of jeopardizing their operation to a larger extent-- you would have the insurgents and the organised military that you (the US army) trained against you.

I hope the US military does not retaliate and they do in fact keep their cool. If they don't, it can get worse and it will spill over into the life of Afghanistan.

The Middle East war rages on...

2011-04-26T08:05:00.003-04:00

It just keeps spreading. Reports have it that hundreds of protesters have been killed in Syria. Syrian president Bashar al-Assad has put the hit out on anyone in the streets. The response by the allied powers- France, USA and Britain- has been luke warm.

This is a very nasty turn of events. As the premium has been placed on Libya, Syrian armed forces are getting away with genocide. There is no oil in Syria, you see? But, an unstable Syria is a threat to Israel. But, how much of a premium on Israeli security should the allies place?

In turn, speaking about Libya, the allies are not letting go of the thought that Gadaffi should, simply, just leave. Apparently, Gadaffi had a lengthy meeting with South African president, Jacob Zuma, where reports indicate that Gadaffi left the meeting with the intention of offering a peace treaty with rebels in the north in Ben-Gazi.

In the meantime, rebels in Ben Gazi have started to make strong preparations to export oil on a steady pace.

The mess in Syria compared to the mess in Libya seems unfair and uneven. But, such is the nature of geopolitics.

Transitory inflation concerns?

2011-04-26T08:01:00.002-04:00

Janet Yellen of the Fed says that inflation will remain transitory- meaning that inflation fears should be toned down because household wages are shrinking because of oil and food price inflation.

I don't know how to think about this. On the one hand, food and oil prices are on the rise. But, wages are shrinking. This means more to traders and investment bankers than it does for the average person on the street. To them, it's good news. For average folks like us, it is terrible news.

It shows that we don't control the oil and food prices and those prices are disaggregated from our wages.

See attached article: Bloomberg on Transitory inflation

Holy Week...

2011-04-18T07:21:00.002-04:00

Well, for my Christian friends out there, Sunday (me thinks) marked the start of the official Holy Week for Christians. This is the week we celebrate the life, death and ressurection of our Lord and Saviour Jesus Christ.

Good Friday is a national holiday in the Bahamas as well as Easter Monday. Good Friday being the day he was crucified and Easter Monday represents his rise and appearance to his followers.

Hope everyone has a safe, good holiday weekend, for those who are celebrating! In the Bahamas, people attend church- of course- but the meal is fried fish and "Hot-Cross" buns. This symbolizes the last supper Jesus had with his disciples on the night he was betrayed. (and some of us don't forget the wine, too...hehehehe)

In any event, God bless and let Jesus live!

Youri

Dani Rodrik on Development Econ

2011-04-14T21:58:00.001-04:00

... it's a little old, but I really love the commentary!!

Laughing all the way to the bank can be so sweet!

2011-04-03T08:44:00.010-04:00

Who would have thought that the richest man in Mainland China sells sodas? Not efficiently made consumer electronics and certainly not automobile parts or power tools. He sells sodas!

Billionaire Zong Qinghou of Hangzhou Wahaha Group Co., with "Wahaha" being a literal translation of Laughing Child in Chinese, has an estimated net worth of over 7.0 billion (USD) as stated by Forbes Magazine, 2010.

Mr. Zong, who started his company back in 1987 with a loan of just under $22,000 (USD), is now looking to invest in other industries as well, including high technology and now, as reported by Bloomberg, Department Store Retailing. If only I had listened to my grandfather (a man in his own right who made millions selling soft and hard drinks) before he passed away, he implored me to "...boy, go and get the sodas and the malt-tonics and start selling!!!" I might have been, at least, a millionaire by now.

However, it's more than just the money aspect of it and it is even more than just the weird fact that China's richest man sells mere sweetened, flavoured water. The fact is that in a market like China, some goods are simply universal. Also, it shows that with a little idea, as non-unique as it is, the right strategy, commitment and diversification with needs at the forefront, one can turn a non-unique idea into something spectacular.

Now, the Caribbean, if we take it island by island, does not and probably will never reach the population size of China. However, we do have a unique position as we are a tourist destination and our population can multiply every year due to tourist arrivals.

With that being said, the question has to be asked about the development of such an entrepreneur like Mr. Zong, relative to scale to the Caribbean, is how does the Caribbean- especially with the typically non-unique things that the Caribbean does as a collective- take inspiration from that and exploit our advantages.

Take for example the Tourism Industry. I can't think of one globally recognized Tour Company that is Caribbean based and solely owned by Caribbeans’. Considering that selling tours is something that happens in the Caribbean on a daily basis, there should be a company, or, group of companies, that do this for different markets at a mass scale. The markets for selling tours may be different and vary in size but, the fundamental to selling tours isn't. Also, the efficiencies in the business model within tour companies, is where Caribbean companies have perfected the art of the business, if only through the repetitive nature of our consistent business.

Can you imagine a Caribbean based Tour Company, receiving a loan or grant to venture into the Asian market? Can you imagine a Caribbean based Tour Company, actually breaking into the increasingly lucrative Asian market? With the list of millionaires and billionaires growing in countries such as India and China, the efficiency of the tour selling business compared to the growing market, would make endless profits for a successful firm, with or without full service tours to other jurisdictions outside of the Caribbean e.g., Chinese tourist going to Malaysia or Germany.

Let's go a little deeper into the Tourism market and take a look at Hotel Construction and Maintenance. In the Caribbean, we build hotels, we are a major tourist destination, and will always be in need of Hotels. However, I can think of very few cases in the Caribbean, where a major tourism related project was designed and erected by a solely owned Caribbean Contractor or Developer. More so, there are very few Caribbean construction magnates that specialise in Hotel construction, even though Hotel Construction and Maintenance is a key element of the tourism product.

Now, this is not to say that the construction industry doesn't have its own peculiarities, but, I contend that it's simply a part of doing business in a globalized world where expertise is top notch. For example, raw materials for construction are imported in many developed countries as it is the case for Caribbean countries. Manufacturing of machines and equipment for refining raw materials for construction is also an issue to consider in addition to the maintenance of such equipment. However, in a globalized world where labour and goods are to move freely, and with the open borders as we have in the Caribbean along with the very flexible regulatory regimes, these matters can be solved with a commitment to development and intentions to making progress, as doing nothing gets you nothing.

Can you imagine a government securing a bond for a construction company to build a world class hotel? And can you imagine a Caribbean where that firm not only receives the bond guarantee, but secures the right to import as much labour and materials to build world class Hotels?

Then there is the market for education in Tourism, in all facets of tourism related production and service. From construction development and manufacturing, to service oriented training in Hotel administration to housekeeping, Caribbean centres for tourism industry development would be world class and produce world class talent.

The millions of people that visit the Caribbean on a yearly basis can't be wrong. They come to our islands because we are doing something right as well as we have the right look about what we're doing. This is what makes the comparison to Mr. Zong in the Chinese domestic market for sodas such a sweet comparison, if we allow our minds to grasp the non-unique idea he had that turned his market inside- out.

However, Mr. Zong’s initial $22,000 dollar loan certainly did a great deal in kick starting his empire, especially due to his need, his market’s readiness for his effort and the trust from the regulatory regime in making his venture and subsequent expansion a success.

Libya has been under attack!

2011-03-24T20:12:00.003-04:00

I hate to be late with news. But, my job isn't about being on point with the time of the events, it's about the analysis of the issues! Therefore, I have a pass!

But, in case you have not heard, Libya has been under attack from UN sanctioned forces, including NATO. Leading the way are the French- where Libya was a former colony of sorts- and the USA, where there has been a huge political backlash (from the GOP of all places) about the authorisation of force on in Libya.

Whatever the case may be about the political gamesmanship, war is serious. The USA is still in the middle of the Middle East with Iraq and Afghanistan. The never ending wars. The main question is for the Libyan case: what exactly will be the end game for the USA? Will it be a continuation of the war in the Middle East- making the case even clearer on the perception that the USA is going for an all out colonisation of the Middle East- and how will the USA find themselves with less terrorists as a result: the "less terrorists" theory, being predicated on the idea that stuck in the minds of policy and security analysts, who were and still are critical of the war in Iraq, because they feel as if it breeds more terrorists as a result of invading Iraq, because it would have and is galvanizing anti-American Jihadists in the region.

The French case is a little different. France has a very vocal Islamic minority. They have taken to the streets in the past for equal rights and justice in the recent past (2005 to be exact), much like the African American civil rights struggle in America in the 60's and 70's.

France, seeing Libya as a country that it had under it's control gone awry, has taken the lead initiative in this UN sub NATO force. The politics in France is unclear on their direction and intent in Libya as well. However, reports have it that President Sarkozy is leaning towards ending the invasion and the aerial assault on Libya, short of actually ousting of Muammar Gaddafi. Which seems rather odd as it's the ousting of Gaddafi that the invasion and aerial assault on Libya was supposed to be all about?

No doubt, Libya has French and American companies in the thick of the oil and construction business. The destruction of Libya would mean the destruction of American and French interests. The war between Gaddafi and the rebels may last long than anticipated, especially if Gaddafi digs his heels in and goes in for the long fight-- which he appears to be wanting to do.

Gaddafi's son has said that he will die in Libya for the people of Libya, or something to that effect. This may drag on... a case scenario that no one wants, especially if time is money and money means oil and investment and the destabilization of Libya in the medium to long term!

8.9 Earthquake hits Japan

2011-03-16T08:01:00.002-04:00

I guess you all know that an 8.9 earthquake hit Japan last week. The amount of persons killed is over the 10 thousand mark. There are thousands more injured!

This is a pretty big disaster. Tsunami warnings have been posted all across the Japanese coast, going as far as for Hawaii.

I remember in 2006 when a Tsunami hit Indonesia, wiping out thousands. The Japanese government donated over $500 million dollars in US currency, immediately. They deserve the same type of assistance from Indonesia, China, the US and from Europe.

That's the truth!

Why the Middle Eastern Revolution matters to the Caribbean!

2011-02-27T18:01:00.006-05:00

Everyone in the world has probably been glued to their television sets, watching the revolution in the Middle East. I guess for some it's the late 1970's all over again. For others, memory takes them back even further. For people who review the politics of history- while adding its value to contemporary themes- it is quite breathtaking.

However, what's taking place in the Middle East also gives way to sentiments of angst. Especially when one turns around to look at their own country, in the attempt to make comparisons on the catalysts that took hold and prompted countries like Egypt, Tunisia and now, Libya, to the tipping point of revolution.

The Caribbean is far from being the Middle East. Although we have accepted persons of Middle Eastern heritage, for example the Bahamas with the deposed Shah of Iran and his family after the 1979 Iranian Revolution, and also a notable Lebanese population in Cuba, their style, culture and religious customs, however, have not taken root. While there is a strong representation of Islamic culture in Trinidad and Tobago as well, they are mostly African Muslims that emigrated under different circumstances and times.

Setting that backdrop, one has to ask the question posed earlier; how does the Middle Eastern Revolution relate to the Caribbean? The answer to that may be in the way the question came about in the first place and also in the way the answers relate to the underlying revolutionary catalysts that spurred protesters in the Middle East at its first instance.

The Economist magazine provided us with a lovely interactive chart of the socio-demographics of the leadership styles and profiles of the countries that were undergoing revolution. The results were far from conclusive, but it does give us a chance to ponder on some of the variables.

For example, and quite obviously, all regimes were dictatorships. But, there are also dictatorships in North Korea, Myanmar, Belarus and Cuba. They all were also, quite obviously, Islamic. But, there are Islamic majorities in Pakistan and in Indonesia, as well as a sizable majority in Nigeria.

Another variable was that their leaders were all over the age of 65 and their populations had a median age of 35. Manmohan Singh is closer to 80 than he is 60, and Alpha Conde, the current president of Guinea since December of 2010, is 73. Guinea’s median age is just under 37 and the median age in India is 25.

There were other variables, but these stick out the most. They stick out not because they are all alike, or that there is or isn't the paradoxical comparison of other countries, but because the variables still don't answer a fundamental question.

The fundamental question to be asked is; what, exactly, were people protesting in the Middle East? Numerous reports indicate a sentiment for economic liberation and the acknowledgement that the current guard was not equitable with spreading the wealth through their economic administration.

While the protesters felt that they were left out of the wealth loop, the numbers don't necessarily bear their claims. While Libya has seen a decline in GDP from 2008 and during the height of the crisis, Egypt has not seen the type of drop in GDP during the worst of the economic crisis. In fact, Egypt was set to grow at just over 6 percent of GDP for the year 2011, up from just over 5 percent GDP growth in 2010.

While it can be said that the Egyptian revolution was a little milder than that of Libya, but it also can speak to the leadership style of Libyan leader Muammar Gadafi, which some have likened to that of Saddam Hussein. Also, with Tunisia, they had feared well during the great global economic crisis, with GDP never falling below 2 percent of growth.

We have now two conflicting issues. The first being that the protesters in the Middle East were in arms over economic concerns, while the second issue is that the numbers don't bear the claims of the protesters for that being so.

Obviously one would suggest that; well, all countries weathered the storm and growth was seen, but growth for who, exactly?

This allows me to bring in another variable proposed by the Economist. That being that all of the regimes were in place for lengthy sessions.

Dictatorships, especially lengthy dictatorships, by nature, have strong holds on a country’s resources. While economic growth may be seen during their tenures- due to the fact that their tenures breed temporary, albeit, relatively, stable periods- this does not reflect, at all, the participation in the economic growth of the vast majority of the population. This of course excludes sub-sections of the population, by design, from the process of growth and hence the mis-interpreted and mis-understood depictions of economic vitality.

What does all of this have to do with the Caribbean? It has much to do with the Caribbean, because of the fact that these nuance variables are also at play within our local communities. While there are no dictatorships in the region (minus Cuba); while there are no Islamic majorities in the region; and while there are a few leaders that are over the age of 60, the issue of economic inclusion, no matter what other variable plays a part in either accelerating or retarding revolution, appears to be at play in the Middle East, whether or not the numbers speak directly to that assertion or not- which, in this instance, the numbers may not be telling the whole story.

The Caribbean, also, is at the mercy of global trends shocks. None starker than the price of oil and inflationary pressure. Oil is now comfortably above $100 dollars on the back of the Middle Eastern revolution, which many fear may fuel inflation and jeopardize recovery efforts.

While that economic reality does not speak to the contemporaneous political economy of the situation in the Middle East, its effects are real enough for us to mention as part and manner of the bi-product of what we have been witnessing in the Middle East.

Mubarak is gone... and now Bahrain tries to oust their leaders!

2011-02-19T10:27:00.003-05:00

It is a full fledged revolution in place in the Middle East. It is so astounding that some have even given it a moniker- The Jasmine Revolution! I guess it was time to change the old guard for another form of leadership. What will shake out of it is yet to be determined, but we hope it isn't Islamic Fundamentalists.

As you are quite aware, Hoseni Mubarak- after a 30 year rule over Egypt- has left the building. He left the very next day after his televised address to the Egyptian public on how he would not, in fact, leave. The move was one that took everyone by surprise. We thought he would have did what he said: that is, stay on until September and then have a transitional government. Well, the people were not having any of that!

Mubarak had failed to put in place his newly selected Vice President as a way to quell the angst of the Egyptian people. Now, the military has full control of the state. A position that they are not quite accustomed to, after the 30 year rule of Mubarak.

Now, as fate would have it, after the Egyptian and Yemeni Revolution, Bahrain is now having an uprising against the ruling class. Protesters have been met more harshly than what we have seen in Egypt. Sort of like what we saw in Iran last year after their presidential elections.

For the case of Bahrain, a country with a little over 800,000 people, the case may be more manageable than that of Iran. However, the difference between Iran and Bahrain is that Bahrain has a Monarchy, while Iran has a Theocracy. While one would think that a Theocracy would not have dared to squash protesters the way they did in Iran, protesters in Bahrain, are facing the same fate and may even be harsher.

I don't know how the Middle East can stomach turning their military against their people, ala Saddam Hussein. It doesn't look good, to say the very least. But, such is the neighbourhood.

What will happen is Bahrain is yet to be determined. Far from it. But, with only 800,000 people, there can't be much bloodshed for too long. Hopefully it will all end well!

Is the Middle East in the middle of a new Revolution?

2011-02-06T07:52:00.002-05:00

Some times, some people, just get fed up with the same ol'e same ol'e. This appears to be the case in Egypt after 30 odd years of Hoseni Mubarak at the helm.

If you have not heard, there are large protests in Egypt with protesters asking for President Mubarak to step down and for a peaceful, democratic, transition. The thing is with leaders like Mubarak- who can almost, if not certainly, be classified as a dictator- is that they do not go down easily. In fact, they try their hardest to secure power for the next generation after they have formally left the seat of authority. Sometimes they even stay around- like Vladimir Putin in Russia (even though he is not classified as a dictator)- to pull strings as if they had never left.

If you have not also heard, is that in Egypt, Mubarak appointed a Vice President in a Mr. Omar Suleiman, who was also the Egyptian head of intelligence. Whether or not he will be a crowd favourite in Egypt in the months to come is the issue. But, he has been used by the United States in the past as the chief head of operations for US military operations in the Middle East. Mr. Suleiman is also the chief architect of the Egyptian/Israeli peace accord-- by extension, holding extremist at bay from bringing holy hell and fire upon Israel.

However, Egypt is not the only case of revolution in the Middle East currently. Yemen has just ousted it's president, Ali Abdullah Saleh, and sent him packing to Saudi Arabia. No strong word yet on what would or should happen in Yemen after his departure, but one can imagine that everyone is very concerned about this power vac um.

Yemen is a hot spot for terrorism. In fact, Yemen is on the Al-Queda watch list for America. If you can remember, the Christmas day Nigerian bomber was trained in Yemen as well as a number of other "suspicious" activities surrounding money transfers and "chatter" coming from Yemen to the outside world, has prompted security analysts to look very closely at Yemen. See the Council on Foreign Relations website for more background notes.

The situation on Yemen has calmed down now. However, the power structure is still non-functioning. This can breed more terrorist cells and harbour more persons wishing to indulge in illicit acts- and not just terrorism alone- and remain a festering boil on the backs of the Yemeni people. We need to watch this closely.

Even before Yemen and Egypt, there was Tunisia. A somewhat mild revolution compared to that of Egypt at least, but now as we look back, a bellwether to the most recent demonstrations that we have seen in Egypt. President Ben Ali was ousted, the prime minister shuffled the Cabinet and we are now at a point where the new cabinet must deliver or face the consequences of Ben Ali.

Perhaps we were all fooling ourselves? Perhaps it is a course of nature, considering how the economy was so bad for so long and that people were bound to revolt. Perhaps this was the case? Perhaps what happened in Iran last year was a forewarning to us all. Perhaps all other regime collapses of this year can weather the storm as did the Iranian regime? We will have to wait and see.

We should all be watching. It's not as if the Middle East is like any other region. Terrorism is the main watchword and Al-Queda need only one or two more dysfunctional societies for them to take root and disrupt the rest of the world again. I remarked on my Facebooj page that this looks like the 1970's all over again for the Middle East... it appears to be so!!!

President Obama's State of the Union Address..

2011-01-26T06:26:00.002-05:00

Well, it was last night (Jan 25th, 2011 for historical record keeping purposes). I don't know why I tuned in, but it was typical Obama none the less. However, while the delivery was the same, the contents of the speech were different.

Why do I say it was different? Well, President Obama was talking about deficit reductions in a way that it he weaved into, or, out of, corporate concessions for business. It almost sounded as if George Bush could have given the speech. LOL...

He also praised the movements in Tunisia. If you have not heard, Tunisia just put out its president for almost life last week, and the people have also been rooting out his cabinet as well. No idea on when real elections will take place, but that is another story.

President Obama also talked about not repealing Health Care Reform. Apparently, some want to repeal it-- the numbers have been dwindling on that number for repeal, but it is still a stead group of congress persons who are in favour of repealing Health Care Reform.

Hopefully, President Obama spoke right to their hearts and they leave the repeal talk alone. Plus, it would set a bad precedent and it may also come across as racist. Don't want that, do we?

Anyways... the speech was typical in Obama's delivery, but a little different with regard to the content. See full speech here

The fall of the American Empire?

2011-01-22T10:29:00.015-05:00

A college buddy of mine responded to a Facebook message I placed on my wall. He was asking me why was I commenting on America all of a sudden? However, when the President of China, Hu Jintao, visited Washington DC in the month of January he and American counterpart, Barack Obama, commentators wondered what will America do about a seemingly, increasing, threat, China poses to US interests. I explained to my buddy that international news is what I comment on and not to take it too personal. But it did lead me to think: is the sun setting on the American Empire?

I must say that America has been our greatest ally- even taking into consideration the Chinese assistance with many projects in the Bahamas- and it's a relationship I truly treasure as a Caribbean individual.

The American media went into overdrive for President Hu's trip, from talking about a full scale attack on Chinese technology and military systems, to the milder, trade and commercial based sanctions and measures to curb Chinese exports and the undervalued Chinese currency. Whatever it is, it has to be said that China has the world's largest standing army and has the second largest economy in the world and growing at a rapid pace while the American economy is in a decline.

The first point that people notice is the huge military build up of arms that the US has not been able to persuade the Chinese not to build. Reports from the Pentagon estimate that the Chinese nuclear arsenal has increased some 25 percent since 2006. The People's Liberation Army of China has a standing army of over 2.5 million men and another 500,000 on reserve. The United States has just under a 1.5 million standing army with about the same amount of official reservists.

While that total seems startling, especially considering China's population, but the way warfare has changed and weaponry has developed since the Atomic Bomb dropped on Hiroshima, a country like the United States, doesn't have to engage in an "on the ground" invasion. With a military expenditure of over $680 billion dollars (with a Republican congress promising to increase this amount), with much of that spending going towards satellites, surveillance systems, long range missiles, anti-ballistic missiles (like the Patriot missile) and sea to air combat vehicles, the Unites States seems more fortified than China.

But, there is more to having military power than size or advanced technology alone. You need the universal, intellectual right, to use your moral authority to get the job done, as we have seen with the invasion of Iraq with America and the inability of China to persuade North Korea, or anyone else for that matter, to put their aggressions aside.

The second issue is that US economic power seems to have faded. The Free Market ideology has flaws and the salience of its subscriptions has been severely challenged in the international arena. The market system has been criticized by Chinese officials, of all things, as well by other emerging economies such as Brazil’s former President, Lula da Silva.

America has not kept captive the imagination of the rest of the world through the philosophical underpinnings of the capitalist free market ideology. One has only to look at the mess the global banking sector has gotten the rest of the world in and you can understand why there needs to be a better way of doing business. Massive worldwide unemployment and business closures, led to massive protests and instability.

While some proponents of the free market system feel that this is just a blip on the radar and that this system is the best way to transfer wealth to the economically under-served, they believe that by increasing the amount of wealth and money to be dispersed without government interference should increase income equality. Opponents on the other hand would argue that if this were the case, the American financial system and automobile sector would not need government bail-outs or government facilities for housing in the US (Fannie and Freddie Mac) nor other regulations that work to ensure that wealth is not concentrated into the hands of the few, would not be necessary now or ever.

Slate Magazine's Tim Noah estimates that income inequality is a major issue in America as the top fifth of Americans, who earn more than $100,000 a year, received nearly 50 percent of all income in the U.S., while the bottom 20 percent received just 3 percent. However, income inequality in China is a growing problem as well, with a Socialist system. A report from China's Ministry of Labour and Social Security estimate that 20 percent of China's population at the poverty level accounts for only 4.7 percent of the total income or consumption and 20 percent of China's population at the affluent level accounts for 50 percent of the total income or consumption and the gap is widening.

One can say that the demonstrations in China in 2008 and 2009 indicated that the Chinese people were clamouring for more reform to their system. Conversely, Tea Party protests in America, while a little milder and somewhat more civil, has brought about threats of political assassinations and actual attempted assassinations , with protestors brandishing semi-automatic weapons at the rallies doesn't quite bode well for America either. (I have to add that the French and Greeks take to the streets with more fervour and animosity than China and America combined)

China's export driven economic model, to China's credit, is changing towards an inward, domestic spending and consumption pattern of growth, isn't exactly socialist either. In fact, China is exactly where the Western world was back in the 1700's with a "beggar they neighbour" mindset and Mercantilist practices. China, now the largest exporter in the world, surpassing Germany in 2009 and now the second larger economy surpassing Japan in 2010- has the economic might to make demands on global interests worldwide, with or without fully subscribing to any ideology moving forward.

America has other internal challenges as well. Their media is on steroids with the 24 hour news cycle model that accelerates the velocity of political and negative social rhetoric at record speed while breeding social discontent. Their congress has bottlenecks as well, with it always in deadlock with threat of filibuster, made worse by a large gap with regard to the transformation of policy information to the masses about how the American economy and society works with a democratic system and congress.

China doesn't have those internal problems as they have a strong check on the information that flows through China, and as a one party democratic system, makes decisions more quickly than the American two or, multi-party, system.

Which country will self destruct, artificially inflate their economy and over extend their reach without the influence to back it up, first, or who has the resilience to overcome those obstacles to attaining ultimate global power over the next 100 years? America appears to have the lead!

January 14th, 2011!

2011-01-15T09:20:00.001-05:00

KEMP GLOBAL was born. Great day for the President and CEO, Youri Aramin Kemp, indeed!

Political Rhetoric to blame?

2011-01-10T17:59:00.003-05:00

Well, it's been all over the news- the shooting of several people in Tuscon Arizona, with one of the critically wounded being Congresswoman Gabrielle Gifford.

People are jumping to the idea that political rhetoric is to blame. But, there hasn't been any evidence to suggest that. It appears that the young man responsible for the shooting, was a nutter on his own run and not tied to anyone political action committee or side.

So, to me, rhetoric from the GOP or the Democrats aren't truly to blame. Now, the shooter may have gotten a few ideas from some sides of the divide, but it appears as if he had his mind made up on his issues from jump street.

It was so incredibly shocking that the cable news networks- CNN and MSNBC- were quick to jump to political rhetoric being to blame, before even having an idea on what was behind the shooting or who the shooter was themselves.

This is how media influences, or, at least, tries, to influence the debate and how it is structured. The irony of it all: is that the media is blaming the politicians for spewing rhetoric for insighting the shooter to violent action, but they are flaming the debate themselves by choosing sides and casting blame in a negative light. They didn't get away with it as some reporters with integrity, particularly Wolf Blitzer from CNN, caught it right away and asked them to change their tune-- much to the shock of the other talking heads who were trying to shade the debate.

It's not a good thing to hear these types of assassination attempts. It's also not goo to flame the debate and jump to conclusions. We will have to see how this develops over the next few weeks.

Oil is rising again...

2010-12-31T08:13:00.001-05:00

Same ol'e story... See Business Week article.

Well, it seems as if the battle we had for 2009 and 2010- the battle on derivatives trading and futures, especially in the commodities market- will be the battle again for 2011.

Don't look for the GOP to make any substantial headway in this issue. They are more in line with Wall St. than the Democrats. Even though a few key staff from the Obama administration have gone on to work for Wall St. and he also has plucked a few Wall St. folks to work for his administration.

Will we see $5.00 a gallon oil by 2012? Yes, if the trend continues and nothing is done about the futures market for oil. What does that mean for the rest of the world? Well, for China is means higher costs for production, which means higher cost for the inexpensively made goods many people import from China.

For the Caribbean, it means another year of skyrocketing prices in almost everything. Damaging the prospects of strong growth. The Bahamas has been well over $4.00 for a gallon of gasoline. Everywhere, except for Trinidad, has seen oil prices at ghastly levels. In fact, Trinidad produces oil and they have kept their oil per gallon price to under $1.00. Can you imagine that? Gas for a buck US?

It isn't fair... but, blame the US congress for not acting more strongly on separating the oil market from the dollar. And, now, also blame Ben Bernanke for mulling- in open forum- the possibility of a $600 billion dollar injection of cash into the American economy- which no one has made the attempt to ensure that the flow of this injection, goes only to Main St. and not at all Wall St.

This is the life.

Merry Christmas folks..

2010-12-25T07:11:00.001-05:00

From the staff- mainly me- from Global View Today, I wish to send out a very Merry Christmas and a Happy New Year!

Have a blast!

Blessings!

Youri

All hopeful for a better 2011!

2010-12-15T20:17:00.043-05:00

As it turned out, 2010 certainly is a year most people could afford to forget, if the traumatic effects of economic uncertainty weren't so fresh. I haven't given up on predictions, but just that predictions are predicated on what the nature of the policy prescriptions allow. As with the fluid nature of the tender times in economic history, projections, can be changed or affected within day's notice. With that, growth forecasts perhaps need to adjust to what are the drivers and causes for fear or misconception on the economy currently and about what could, should, is and has been allowed to happen on a month on month basis!

Regionally, there hasn't been any Caribbean country, aside from Trinidad and Tobago, that had anything to be gleeful about- T&T has natural resources, mainly oil, so, the cost of production of local goods as well as the export of oil and oil bi-products to supplement their economic model, served them well. For everyone else- political issues aside- it has been dismal.

Latin America, as with the African continent, began and is going through the structural adjustments that many have wanted for at least 50 plus years! Hence, their seeming stability, through the worst of it, should be of no surprise. They have embraced freer markets, began curbing the tendencies of an over saturating the public sector, as well as received Chinese investment, to the tune of billions. Also, moving forward in a most progressive manner, they have taken a diagnostic approach to their development and have, as policy, employed the techniques- while still under review- of diagnostic methodology like the Human Development Index and Human Opportunity Index, as a staple of economic adjustment and performance barometers.

Switching gears towards our neighbor to the North: America is still in the doldrums. It's so seriously difficult to address that commentators have stopped talking about the economic numbers and simply reverted to the old method of tax policy to affect some type of change in the circumstance. In addition to the fact that 2010 was an election year, the economy took a back seat to the Tea Party, posing as paragons of economic virtue. The "comprehensive" economic stimulus was ineffective as well as with the tax policy as a component of it, as employment still hovers around 10 percent. While much was done in the past two years president Obama was in office structurally, it appears as if not enough was done to stimulate American productivity and boost exports in addition to unlocking consumer loans from banks.

Additionally, the USA is now mulling over what analysts would coin "American Stimulus 2!" To be fair: it's American Stimulus 3! The Troubled Asset Relief Program (TARP) of 2008- while it was coined as a bailout for financial firms and the toxic assets they were exposed to- was a stimulus plan in itself, in that it attempted to stimulate banks to lend by removing the risk to exposure to the investment products that were creating higher risk portfolios, which in effect were preventing them from lending. The second plan was the American Reinvestment plan of 2009, which did more to add value to an uncertain American future on the global economy, rather than it providing short term strengthening domestically.

Europe isn't any better. The Euro-zone is in a particular and severe crisis. The problems with Portugal, Ireland, Greece and Spain (PIGS), has put the idea of the largest currency union at its harshest testing point. The risk of a disintegrating Euro-zone through the debt contagion of weak performing Euro-zone economies has everyone concerned. While inflation has been stable, the euro isn't- the Euro, being the glue that holds the zone not only together in strength, but together in anguish.

The European Central Bank (ECB) can do nothing about the risk of a devaluing euro as a result, if countries continue to fudge their financial statistics and report, falsely, on the dynamism of their economies, in addition to them having the lack of political fortitude to revalue their economies to what it should be- i.e., weak performing, Euro-zone economies, not on the scale of France and Germany, especially as it relates to agriculture, manufacturing and financial markets. Furthermore, the markets have dealt, severely, with the PIGS as sovereign bond yields have risen as well as the market for homes has collapsed with the financial sector, frozen in fear.

Additionally, the ECB has done very little about inflation, even though it has remained stable. The issue with inflation is that employment is still very soft. So, glittering reports on a stable inflation rate in the Euro-zone may be misdiagnosed, due to a lack of appreciation on the real reason behind inflation drivers in Europe.

Inflation in Europe is tied directly to production and production is tied directly to employment. Employment is tied to consumer demand and consumer demand, is soft because of uncertainty in the labor market as the labor market as with the United States is affected by higher productivity levels in Asia- China and South Korea, respectively. When understanding that the unemployment rate through Europe is over 10 percent, while bond yields have plummeted- which signifies a state financing issue that was caused by weakness in the general economy- the issue shouldn't be low inflation, but current deflation with the risk of hyper inflation when the economy picks up again, if the drivers for current inflation statistics remain misdiagnosed.

China looks stronger than normal over any other Asian countries. The Renminbi has been revalued, almost simultaneously as the Chinese stimulus package began to turn consumer spending inward, as opposed to their export focused economic model This not only giving the Chinese consumer more purchasing power, but makes investment into China more expensive at value. Additionally, the Chinese government has taken steps towards cooling their overheated real estate market, which was grossly inflated due to speculation- the revaluing of the Renminbi is a part measure as it would limit investments in all areas and not just real estate, in addition to an imposition of a real estate tax as well as imposing a higher down payment requirements for persons wishing to purchase a second home.

As for the Bahamas: we are in a cast to ourselves. The market for tourists in the US is still soft, while tourist arrivals are up in The Bahamas from last year this period, but not back to their previous levels.

Foreign Direct Investment related projects are getting a fresher look. Baha Mar, as well as with the fourth phase of the Atlantis/Kerzner development, should be enough to keep many Bahamians busy in 2011.

There should be greater assurances that these developments impact on a greater, more meaningful scale. One can only wait to see how the dynamics of the socio-economic agenda push matters moving forward. Certainly there should be a close eye on all and sundry, as money begins to be spent on these developments.

With all things of note, I wish for everyone, from family, to friends, to my loyal readers and the editors of the news outlets that keep my commentary in the public square for all to share, a very Merry Christmas and a Prosperous New Year!

Raising the price on the poor...

2010-12-12T12:36:00.002-05:00

Cool article from the McKinsey Quarterly about the success in Bangladesh with Grameenphone and their ability, through commercially driven methods, of delivering more socio-economic benefits to the poor rather than government sponsored programs for the telecommunications market.

See article.

The only issue is that this is only in terms of undeveloped markets in telecommunications. Also, undeveloped markets where services is not only sub-optimal, but also unavailable to many people, let's say, at least 1/4th of the population, enough for initial private investment to gain scale from new consumers.

Other than that, it was great insight into some of the complexities of private led vs. govt. sponsored programs.

Diagnosis before presumption!

2010-11-29T23:54:00.045-05:00

Development economics has evolved over the last 30 years. The "new school" has been shifting from the free market, or, market sensitive ideology of economic development and more towards the development of individuals from a structural standpoint. In this vein, the view is that markets don't make people- people make the markets and hence a focus on people, is vital.

The reason why economists are now taking the development agenda to another height, is because of the obvious fact that unfettered free markets, without social responsibility or human development components built in with them, leads to instability if safety measures aren't put in place to protect market participants from fraud, malfeasance, external shock to the system or the loss of confidence in the market and its actors, which will result in it inhibiting trade and commerce- just as we have seen the system collapse under the previous global crisis. All of which has cost taxpayers trillions of dollars world wide, reduced productivity and retarded civilization.

Under any circumstance, the market can and will be controlled, massaged or shocked by an actor or actors, which in a sense is the logical first effect out of any earthly circumstance. This, in the most direct sense, means that actors, from all sides, whether they are private developers, consumers, the government or welfare recipient, all play a part in the system and a system which is shaped by their attitude and behavior.

However, structural developmental approaches to the economy isn't without its critics. Some say that market forces rule and should not be ignored. Yet still, the argument that markets rule, emanates from proponents that, ironically, do more to make the market move- especially when money talks. Some also would argue that people are better off to themselves- if this would be the case, we would not need laws, rules, regulations in the market or in society. So, the arguments against incorporating a more people approach, are left wanting at their fundamental core- who else would make changes, keep order and ensure things go smoothly, if not people.

To be quite candid: there is not, never was and never will be a free market in the truest sense. Subsequently, there is not and never will be effects caused by trickle down in the truest sense, without intervention. The market is nothing without the actors. And, with regard to trickle down economic theory- which many authors have unconvincingly, to this author, argued their theoretical understandings on why they adhere to the trickle down effect- it never is trickle down. In fact, the trickle down, happens after an actor, or, actors, have loosened the pump to allow water to flow- to be as poetic as I can possibly be.

To go even further with regard to trickle down theory: actors not only have to first loosen the pump for trickle down to even begin to, in fact, "trickle down", but also, persons, to whom this trickle down is presumed to be trickling, must be in a position to catch the water that is supposed to be trickling. What use is it to give a man a hammer, if he knows not to use it? What good is it to give a woman an apron, if she knows not where the apron is to be used? What good is it to open a door, if the person knows only to enter in through the window? What good is it to assume or presume that the allocation of any benefit or entitlement, would go towards the best suited purpose? Under which theory, will there be a setting, or, set, of indicators and variables, where it is decided that this is and will be the best fit for one and all? There isn't any. Just ill fitting presumptions, assumptions, catch phrases, idioms and "well established facts" to bolster misplaced conventional wisdom in an evolving world.

This fundamental underpinning of market economics and as a result, development economics, is the challenge of the new century for developing nations and the under served in emerging markets and developed markets- i.e., the overall challenge of having all parties, from all sides of the spectrum, understand their role in the scheme of things from the position that they make the market and not the other way around.

To segue: Keynes and his work on demand side economics, after long hours of intensive analysis, made his position clear when his idea by blatantly speaking to, at least, government led intervention in the economy to spur growth.

The mixture of private sector innovation, government intervention, support, the level of market closure, investment incentives or socio-economic programming and policy making, is where the test of a market system and its resilience becomes a matter of ideological importance. In addition, what information and salient idea should take form, at what time, when, where and how it will be administered under it's best fitting relative purpose- after variables have been delineated for a particular outcome- should also be of critical importance. To this extent, diagnosing the nature of the problem as well as prescribing solutions that affect a desired, positive, outcome, in addition to it not doing damage to the existing structural successes, is also vitally important.

Being diagnostic rather than presumptive should be the first thought of approach when dealing with structural development matters. But, how do you ask a policy maker to diagnose a problem where he feels that it is not his position to be in the diagnostics business? How do you impress that the "well established facts" are irrelevant to what folks are dealing with today, during an economic downturn, or, worse, when things are "good"- especially under the pretense of market forces led laissez faire?

It comes down to the mode, thinking and ability of the actors in the system to always have in mind ways of removing binding constraints from the system, increasing the market share for a greater amount of persons entering the marketplace as active participants and taking all parties involved to make the right determinations on what fits best for persons to have an opportunity at a larger piece of the pie.

Technical expertise is valuable at all times. Knowing that you have to diagnose the problems, knowing what tools to use out of your diagnostic kit and then having the will and wherewithal to sustain continual diagnostics and act upon all first best information, is no easy task- probably why the presumptuous of us prefer to just assume things will happen as it "always" has. However, putting ourselves in the right frame of mind to have the confidence to attempt it, is critical even at this juncture where thought on what's right and presumptions on conventional wisdom seems to be popular again.

Ireland gets Financial Aid...

2010-11-28T21:21:00.003-05:00

Well, the stabilisation of the weaker EU countries has begun. See here an article from the Business Week online Magazine on how Ireland has just now won a financial aid package from the EU and IMF to the tune of 85 billion Euro's-- just over 113 billion USD. Business Week article

The fear is the contagion of the financial crisis. As you well know, contagion risk after the first financial crisis, brought on by the USA, was not seen as quickly and hence, the current global recession was deeper and more severe.

Ireland is no where near the level of the USA in terms of financial clout, or interconnectivity throughout the world, but it may seep slowly in through to other, relatively, smaller EU countries and emerging markets that dabbled in Irish markets- particularly with sovereign bonds.

Ireland was not on the same stabilisation package as Britain was during the onset of the US led financial crisis. So, help reaching Ireland was late and was not an option at the time- as the thought was that their impact and contagion would be minimal.

However, fears over spread of contagion is evident, by at least IMF and EU leaders.

Cholera epidemic in Haiti..

2010-11-16T15:20:00.002-05:00

Over 10,000 people are suspected to have Cholera in Haiti. This is a serious concern. The news broke a while ago, but it is worth repeating. As you know, the Bahamas has more than their fair share of Haitian immigrants that come to the Bahamas-- an epidemic in Haiti, may mean a spread of the disease in the Bahamas.

At the very least, we should all be concerned about Haiti, overall. As you would be well aware, the earthquake last year in Haiti, still has the country on it's knees. Development Aid is still hard to get to the areas that need it the most. And, with a major disease outbreak, things may get more difficult and hard to manage. See attached a video from the UN on the seriousness of the outbreak.

IMF/World Bank Group has a new Chairman!

2010-10-13T08:11:00.015-04:00

Prime Minister Hubert A. Ingraham of The Commonwealth of The Bahamas, was recently elected to the post of Chairman of the IMF/World Bank Board of Governors this October. Congratulations are in order! All Bahamians and Caribbean people should hail this achievement in our hemisphere's history. His supporters should be as pleased as punch-- as well they should be. His detractors are probably saying to themselves; "Dear God!". Then again, some people don't care either way, because they want to know: what does it have to do with me? They all have their reasons to feel what they feel.

However, stepping around all of that; I have to say that this appointment is an important step for the Caribbean, as it would put attention on small developing state matters, at a most critical time in global economic development.

The question must be asked; what authority will prime minister Ingraham have that would cause there to be a change in the focus of the group? Firstly, he will have the authority to set the agenda of the board of directors on what should be discussed at general meetings, as well as, secondly, liaising between leading finance officials as to what should be prioritized on the agenda.

It is not exactly a position of total authority. Neither is it a position of sinecure, either. But, it is a chance for small states to have a voice placed in a position that clearly state what the situation is.

As we know, current, larger country issues, are allot different than developing country issues, and totally different than micro-state issues. This is where affecting global economic change becomes important.

The G-8 and G-20 countries have worked out some of their issues through the IMF already during this crisis-- an important move back in 2008 was the enlargement the SDR fund to facilitate a large stabilization fund for the G-20. By doing this, the fund attempted to stabilize larger countries and as a result, smaller states would also benefit.

Some argue that this method is outdated, because of the increasing effects of globalization and the shift in capital to large developing countries from developed countries, in addition to the misdirected use of capital inflows, which has placed smaller states down the line in the economic production order. This issue is particularly magnified when capital inflows are not infused into the main economy of smaller states, but rather used through offshore transfer points or in specialized investment vehicles that are headed for larger consumer markets.

A second question to be asked is; does Mr. Ingraham have the tools to address these issues, as well as other plaguing financial issues that small developing states have? No doubt he has the experience, serving his third non consecutive term as prime minister of The Bahamas, in addition to having international respectability-- or else he wouldn't have been in the discussion, let alone be selected as the Chairman of such a prestigious grouping. However, no one person has all of the answers. This is where we, as people who have a vested interest in a brighter tomorrow, have a duty to give input into these issues in a critical, broad based and impartial manner.

For instance, there needs to be a stabilization fund for external supply shocks, particularly with regard to oil and circumstances that affect food prices. Small developing states are, primarily, price takers in the market for oil and processed food. This means that they are victims of imported inflation, as well as victims of external supply shock caused by foreign externalities. Imports affect the level of foreign reserves and foreign reserves, are needed in order to purchase goods on the international market because countries look for a stable, recognized currency in which smaller countries can purchase goods with.

There is also a need for a separate, foreign reserve stabilization fund in the Caribbean. The process we have now, is that countries access the IMF stabilization funds on request-- some of the time after a lengthy process. However, the administrative cost and timeliness of accessing the funds, could be much improved if a standard requirement for a grouping of Caribbean countries is set, with flexible parameters on when this fund can be accessed-- this would also eliminate the problems that arise as a result the emergency nature of accessing the funds, and allow countries to take pre-emptive strikes when forecasts indicate that their foreign reserves may be impacted negatively.

Another major concern is the lack of Central Bank supervision and coordination in the region. Not that there is proper Central Banking coordination in any other region, but there is an opportunity to find a shared commitment on a coordinated, Central Bank policy. For one reason, small developing states are not like large states, because small states are dependent on any and every means to maintain macro-economic stability, unlike large countries that have the ability and the capacity to monetize debt, or dynamic enough to provide goods and services for consumption in order to create independent wealth and make money multiply on a large scale.

Coordinated central bank policy for the region, from a regional body, autonomous enough to enforce its own rules, but sensitive enough to be intelligently responsive to individual country needs, would assist with working closely with failed institutions as what we have in Haiti, and also equipped enough to handle the run away freight train in that of the Jamaican Central Bank.

Thinew body does not have to compete with the IMF for business. In fact, the IMF can go a long way with providing technical assistance, and supervisory controls for this grouping, or, sub grouping, within the Caribbean.

There also needs to be a way for Caribbean states to develop a sovereign bond-swap facility. The reason why it would be beneficial between Caribbean states is that it would be useless to attempt a bond swap with larger developed or developing countries to small developing countries, because of the size compatibility. However, the theoretical aspect of sovereign bond swap facility between small, but dynamically different by comparative economic scale, countries, can prove meaningful.

It would allow Caribbean countries to swap debt on one end, and build up foreign reserves on the other end, while having an added weapon in fighting domestic inflation in addition to giving an autonomous Central Banking body, a purpose for existence.

I'm certain that there are allot of pressing issues on the agenda, but let's see what the new Chairman has to say on the matter when he meets with his colleagues throughout this course.

Chilean Miners days from escape...

2010-10-11T15:58:00.002-04:00

Sorry guys, been away for awhile. The only thing worth reporting-- other than the plugging of the BP Oil leak-- is that the Chilean Miners are days away from being free.

This underscores a major problem with deep coal and mineral mining-- the safety issue. I guess there is nothing you can do in Lat-Am Countries, but we should all be concerned about multi-lateral conventions on countries that do not mine with safety.

Perhaps larger countries can impose offshore mining restrictions on their own companies. But, that would hinder their competitiveness. Besides, with globalization so far advanced, large companies from developed countries would just move offshore for good.

But, in any event, glad to see that these miners will be going home.

What The Bahamas could have done!

2010-09-24T22:44:00.014-04:00

Everywhere I turn, persons are asking me: "what has The Bahamas done during this economic downturn?" People from all sides, all spectrum's and all colours feel as if more could have been done to assist people during this economic downturn. Some have said that we have done enough. Perhaps it both could be right. Then again, it could be wishful thinking on all sides.

There is no question that conventional wisdom on recessionary relief was used for Bahamian economic policy making during this downturn, that is; 1. Welfare support to the poor and new poor and, 2. Tariff/Tax cuts to the private sector- even if both had to be revoked, as if the government was the Indian giver of last resort.

For the first part, welfare spending in The Bahamas went in 2008 and promoted as a way to help people to sustain the damages of the worsening economy. Two problems I have with this. One is that the governmental systems, particularly within the Social Services Department, is a little frayed and to some extent, outdated to handle the influx of persons they had received. Not only that the numerous reports from the Social Services Department showed this, but also the means testing apparatus to assess persons who may need assistance, is also a considerable challenge and even more a challenge when bearing in mind the personality issues that come about as a result of a lack of policy coherence and standard means testing for assessment.

The idea that certain persons didn't truly need the support, or would rather have spent their discretionary income on other non-essential items and in turn sought social support to subsidize their income and lifestyle, was something that was noted by The Minister of State for Social Services. In addition, in the beginning of the increase of funds to the social services department and prior to the Minister's acknowledgement, the Director of the Department went on record in stating that Bahamians, generally, do not take advantage of the resources made available. So, along with a lack of policy coherence, we have a pitfall with regard to economic relevance.

The fact that we need public sector reform, could not have been underscored any better than it has been with what we have experienced with this admitted, in-efficiently ran program, which did more to subsidize supermarkets rather than stimulate growth with creating jobs and investment.

The second issue is that tax cuts and exemptions were given to businesses at large in 2008/09. It was something that would keep business open and able to import cheaply and make goods less expensive, helping families with keeping cash in their pocket.

The problem is that it widened the fiscal deficit and deepened the public debt. The same has happened in America pre-economic crisis and post financial crisis; in that tax and tariff cuts were used to spur economic activity through the free market to keep investors and consumers confident, but the consistent recessionary pressure did more damage to the government's fiscal credibility as economic activity did not rise as a result and employment conditions worsened, which lessened economic transaction in which to tax.

This in turn, particularly in the case for The Bahamas, led the government- as with other governments world wide but for differing, prioritized reasons- to sacrifice economic growth and relief to businesses and the consumers who was intended to benefit, for fiscal austerity and even more so, as an attempt to salvage it's macro-economic credibility to investors in The Bahamas and abroad by increasing and stabilizing government revenue.

This has put The Bahamas back at square one; the social support has been downscaled after the recent 2010-2011 budget and on a small scale the year before, or negated due to the higher taxes and also the higher taxes/tariffs within the same time frame. This, while the economy is still slightly depressed, would more than likely dampen investor appetite while not solving the macro-economic issues with regard to long term and short term growth- with the government's fiscal issues still not yet fully clarified, during this unconventional and extraordinary economic downturn.

One thing that can be used as an anodyne to this situation, is if construction related activity is spurred either through state action (with appropriate targets set and reappropriations of rents set at key cyclical drivers), or at the cost of large scale developments that can employ mass scales of persons, or with private home buildings, private infrastructural renovations tied to a program geared to stimulate activity first, rather than provide tax breaks in the hopes it spurs activity, first. Every Bahamian construction affiliate, whether they are prime contractor or apprentice with hammer in hand, need to have a chance to work at a decent price and The Bahamas as a collective needs to benefit from that incentive.

A second thing is that an import tariff reduction program to the private sector, should be considered and tied to private sector employment; i.e., a program designed to create private sector employment, with subsidized salaries- if need be- by the government, through the reduction of tariffs for companies that wish to participate on the basis that they will employ a certain amount of individuals.

A third place to look, and with a more controversial issue, is with the cutting of the prime Central Bank rate; and the cutting of that rate, to supplement supported, commercial bank lending programs to businesses and consumers. While it [cutting the prime rate] may be less effective than it would have been had it been done at the onset of the crisis, with liquidity levels in the country now more than adequate, the government should be in a position to micro-monitor and give strong support to this segment of the market system and say firmly that it is in a position to stand behind the financial system in case the situation worsens, or in the event that new loan repayments may be affected and at risk of non-performing in the short term.

Banks are in the best position to pick the winners in this instance more than the state. But the state must be in a position to back economic activity and its inherent risk, and to some extent short term failure, at any cost, as a way to assure the public and as a provision to wash away the negative effects of action as it tries to support a greater good.

Tune in to "Dare To Be Great"- Cable 12 Bahamas, 8:00pm on Monday 20th September, 2010.

2010-09-19T09:44:00.001-04:00

Dear Friends,

Please tune in to Cable 12 Bahamas on Monday the 20th of September, 8:00pm for "Dare To Be Great" with your host the Master Motivator, Spence Finlayson and guest Management Consultant, Youri Aramin Kemp.

It is a fantastic taping and please feel free to send this along or tell friends to tune in. The show has already aired in Trinidad, Barbados and a few other Caribbean countries already through Direct TV and CaribVision. We talked a little politics, a little of the economy and we also started and ended with a little of myself on each end... great night!

Mr. Finlayson will also be hosting another live taping on Tuesday 21st of September, 2010 at 6:30pm with Mr. Ortland H. Bodie Jr. / aka Baby Pindling, aka Prophet at The British Colonial Hilton.... I hope you make an effort to attend and if you do, I will see you there!

If you wish to be a sponsor of the show, please feel free to contact Mr. Finlayson at:

Email: info@daretobegreatshow.tv or spence@daretobegreatshow.tv or phoenixinstitute@gmail.com or by telephone: 242-364-4011...additionally by Facebook: http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.daretobegreatshow.tv%2F&h=14586

Much Love!

Trade Value up...

2010-09-07T12:47:00.002-04:00

WTO Press Release.

Well, Trade Value is up 25%. No report on the actual trade volume. I think if you were to examine trade volume up to the date the latest trade value report came out, you would see there are some particular things involved with regard to the puzzling, as it seems, numbers.

The latest WTO report on trade volume was dismal but expected to rebound in 2010.
WTO Report

The interesting thing is that trade value, began to rise after China revalued it's currency. No doubt China played a huge factor in the evaluation process of the value figures.

So, it is not "more" trade. Or, even more "valuable" trade as it relates to volume-- but, simply, more value added due to currency valuations-- even without any empirical studies.

I guess it pays to read the news, all the time.

Getting around in New Providence!

2010-08-27T22:06:00.020-04:00

The school year in The Bahamas starts off in full swing on August 30th. That means more road rage, late comers, accidents, short cutters through the petrol stations and all around Tom foolery. The road sight is not a pretty one, even during the off-peak season.

There has been varying reports on how much persons in The Bahamas spend on this stress called transportation. The number varies from anywhere between 20 to 30 percent of your salary on average on gasoline alone. Spending anywhere from up to $100 to $150 per week for a non delivery driver-- depending on your personal load (which can leave you quite broke) -- and with gas prices nestled at a comfortable average of $4.25 per gallon, that range estimate seems fair.

However, other reports have it that, roughly, only 20 percent of Bahamians use the public transportation system. Additionally, it is said that the average car per household is 3 for every 2 persons (I always wondered where some get these estimates?).

Why would one person need 1 and 1/2 of a car, is beyond me. But, that statistic becomes more severe in reality that when you travel the roads on a daily basis- with the ongoing road improvement project not making life any easier- you notice that the traffic on the island of New Providence is a miasmal mess.

Jitney (public transport buses) drivers are the worse. They would make Mother Theresa sin. They cut you off, block the road and stop anywhere to let on or off a passenger or just to count their change- I thought we had demarcated bus stops for all of this?

They, along with the idle day drivers- those people with absolutely nothing to do but drive around all day- need an intervention.

We need a better public transportation system on the island of New Providence, at least. We also need a comprehensive transportation system in Grand Bahama as well. But, Grand Bahama is for another article-- one word however, railway.

There was a position paper done by a few College of The Bahamas professors some months back. I have not had a chance to read the document, but some have been on the talk circuit, asking for change to the existing system. One change mentioned is that we should unify the bus system in The Bahamas, particularly for the system on the main island of New Providence, as a way to get more people out of their cars and on to te public buses. I have some thoughts on that.

During a discussion at a dinner with a few colleagues a while back, the issue about the public transportation system came up in that the individual bus owners, can't seem to come together on what the terms of an agreement on a unified bus system would entail. No party wants the other to be in total control, and no one wants to lose money if their routes were to change from one where it was profitable-- I wouldn't take that couchant, either.

A recognized bus union in The Bahamas, the Public Transportation Authority of the Bahamas (PTAB), has been working tirelessly, as it appears, in trying to create a unified bus system.

One of the things I think that they could look at, is that they should propose to the government or an investment bank, a plan for an intervention and attack the problem from a necessary, but yet expensive, standpoint. However, while it may be expensive in the short term, the long term benefit in that it would create a multi-shareholder monopoly union that is open to the market and would benefit us all.

What should happen is if that firstly the government should impose a moratorium on all new bus licenses. Secondly, government, with internal or external financing, should, by mandate, gather all license holders and make them one company.

Those who want out of the new company, their licenses should be forfeited and they should be given compensation in cash or with a minority share offering in the new company and paid out gradually.

The new multi-shareholder monopoly should finance a new and improved public transportation system, exclusive of taxi's and tour buses. This new system should be complete with new bus terminals, bus stops, a new route, new rate system and machines for fare top up's, modernized payment options, a new fleet of buses- eco friendly of course- and be open to the public via the national stock exchange, in order for investors to be able to participate as well enable the new entity to raise funds other than from private, angel investors or by random fare hikes.

The short term political pain would be with mandating bus owners into the new system. But, if compensation is financed via a pay out option for persons who don't want to be a part of the new company, as well as compensation for the loss of vehicle use during the transition period for persons who want in, these things should ease the burden of change. With that, a loan repayment that is sensitive to the issue of change, as well as creates a minimum bus fare floor in order to finance repayment in an orderly fashion, with sliding fares for peak and off peak times, this matter can be worked out-- before we get to performance bonds and the rest of the financial drolls.

Another pain would be during the transition period of the phase in of the new system. Sensitive execution is required, especially if licensees are to be compensated during the period of transition and also if the transition is gradual and phased in via the most used routes, as a way to minimize the effects of the temporary loss in service.

The long term benefits would be the upgrade of an essential public good, more persons using the public transportation system instead of their 1 and 1/2 cars daily, a new company to be listed on the national stock exchange, a cleaner environment, savings to the average consumer on fuel, an efficient and reliable bus service along with a new industry complete with everything from administrative staffing, to mechanics, to bus drivers along with the creation of a private sector entity, financed with government bonds or backing- an entity that can actually pay off its debt to the government or other parties or being co-owned by the government via shares, while providing a useful and essential public good in addition to it being sensitive to individual livelihood.

Whatever plans are worked out, government intervention is unavoidable if we are to break this stalemate- everyone knows, from the licensees to the average citizen, that we need a better public transportation system. One that is sensitive to the livelihood of the licensees as well as the public at large.

Notice how everyone stopped talking about the economy?

2010-08-23T21:22:00.002-04:00

It doesn't take a man with x-ray vision to see that most news stations have stopped talking about the economy. Some have even resorted to talking about foreign news- ala the miners trapped in Chile.

It's still a pretty bad state we are in. Things are getting a little better, but until you see investment pick up in the USA, there is nothing much anyone can do.

In the meantime, we have to keep focused on the signs for recovery other than investment flows.

I have to admit: I have not been watching as carefully as I used to, but I will do more.

No one want to win these days...

2010-08-22T14:43:00.002-04:00

Well, it appears as if no one wants to win an election out right these days. Just a few short months after Britain had its first coalition government, Australia is now going through a similar problem.

The current Australian Prime Minister, Julia Gillard, leader of the Australian Labor Party, has hurt herself.

She called a snap election in attempts to take the conservative party off guard, after beating former PM Kevin Rudd in the last election very handsomely, and is now unsure if whether or not she won outright.

Apparently, the independents are large in numbers and have no allegiance to any particular party. So, they are holding Mrs. Gillard at ransom, for her own hi-jacking!

Funny thing politics is...

Two scoops of recession and a pinch of budget cuts!

2010-08-08T17:45:00.008-04:00

The word on the streets is now there is a possible double dip recession in America. This is a considerable concern for not only large manufacturers in Asia and Europe, but also for smaller economies in the Western Hemisphere as we depend on American investment and tourism.

The American stimulus plans have run out of steam, with unemployment is still unacceptably high. President Obama, on the other hand, has said that there is no need for concern over a double dip recession in America- but, forewarned, is forearmed and the will of the possible, may not be the will of a natural course of events.

Simultaneously in and around Western European and American Consensus economic policy circles, is that budget cuts- and in some instances tax increases- is what should be done to stem the tide of fiscal deficits, even during this still yet sensitive time in the economy.

However, the ideas that: 1. Consideration’s over the option of more economic stimulus is out of the question and 2. Tax increases, in particular, is a desirable option, need more fleshing out in terms of their intended impact from a purely theoretical standpoint.

The first and obvious truth is that the American stimulus package did not go far enough. In fact, it has far less impacted America and the world, much more than it was billed to help.

For one reason, employment did not substantially grow over the course of the stimulus being rolled out. About 9.5 percent of Americans are unemployed, with business confidence still very low. In addition, the stimulus money way spent in areas that had little to do with the private sector, but rather with government sponsored programs that were and are short lived.

Service related jobs were not factored in to the American stimulus package, other than from “shovel ready” jobs- which were temporary- in addition to that creating more services related activity which didn't have a manufacturing base to support it.

For example, leading up to passages of both, The Economic Stimulus Act of 2008 and The American Recovery and Reinvestment Act of 2009, beginning from January 2007, business inventory rose by nearly 25% while service related work over manufacturing work increased considerably.

This displayed as well as created a major problem with the American stimulus plan; as the service related jobs were built around the government sponsored programs, they were not based on supply and demand for private investment along with an increase in manufacturing jobs outside of automobiles- which was also a government sponsored program for three of the top four automakers in the USA. And, as the money dried up, so too did the jobs and the economic multiplier effect that it temporarily displayed.

Even more so, a large amount of subsidies to private firms went towards technology, education and renewable energy. The first concern is that technology, need not be manufacturing based, especially with cheaper labor markets outside of the USA and global competition in the tech-sector being very stiff.

The second issue is that education does not stimulate the economy in the short term, especially when employment for trained professionals are even weaker than that of trained workers with years experience. And renewable energy is a new frontier and is a long way from being an economic staple for average consumers.

This added to the fundamental weakness in the structural economy of the USA- the main being that manufacturing has declined well below their peaks, even into the late 1980’s- , has led to current revenue shortfalls in addition to those forecasted.

The worst of it all is that countries in Western Europe, with Germany leading the way with respect to what they term “Ordnungspolitik”, are in the mood for not only budget cuts, but permanent budget cuts and tax increases as well as with Germany going through in the process of a wide sweeping deficit reduction program.

With the Euro-Zone and The USA representing over 40% of global GDP and, in turn, world production being affected by budget cuts and, in some instances, tax increases, the global economic outlook does not look so rosy, just yet.

Why are large European governments, with smaller countries following in lock step as much as they can, willing to sacrifice global economic recovery efforts rather than continuing to keep it afloat with additional credit?

The first issue is that it is seen that Keynesian spending, coupled with lower than normal interest rates, have not effectively dealt with the situation for the long term. In fact, I would be surprised if any economist, who is at the very least an observer of this crisis, would cant rip the public that government intervention is the measure that stops this recession.

With further respect to Keynesian spending, as a consequence, it, in effect, pulled private sector jobs into the government sector, with the government sector now being affected by budget cuts, which also signifies that if those government jobs were temporary- as in the case of the shovel ready projects- the private sector is back at square one and stuck with persons without the rigour of private sector competition, who would add dynamically less to the real economy.

A second issue is that sovereign bond yields affect public policy and economic policy making.

As government revenues decline, and if interest rates move lower, bond yields are adversely affected. For one, as the outlook for a country’s economic position worsens, governments find it harder to sell sovereign bonds at a higher rate. Secondly, as real “short term” interest rates move lower, in many instances, bond yields move higher as inflationary expectations are equated more so into financial risk matrices- which are also tied to the overall outlook of the economy.

Monetary policy is ever more important at times such as these. Interest rates have already been slashed, but this would be innefective if structural change and program design does not faccilitate the interest rate movements.

When the Central Bank is inactive with regard to market regulation, credit supervision and running the type of private sector related programs to assist banks with extending credit, while the economic landscape is still yet brown with deep-rooted buds are yet to take shape, using interest rates for private sector stimulation, is a zero option and an even more undesirable policy option to the extent it affects the bond market.

At the totally worse end, it is more damaging if monetary policy is not in sync with fiscal policy. It may lead to a loss to investors in the sovereign bond market as well as it may hurt Main Street in the short term if not negated by other economic policy measures.

From where I sit, it is a balancing act taking place in America and in Europe. They can afford to play the game with respect to large stimulus plans, budget cuts that affect economic recovery- while the smaller economies suffer as a result- and interest rate cuts- the latter probably causing what a liquidity trap.

Smaller countries are in a much different position and they need to monitor larger countries from a cautious perspective and continually seek to understand the causes of things.

The troops are coming home!

2010-08-08T01:19:00.002-04:00

Well, it seems as if the troops are coming home- well, most of them.

It was announced that the USA plans to drawn down troops in Iraq to 50 k by September 1st. Allot of families are glad to hear that.

Will this destabilise Iraq? Who knows? Reports from Iraq are mixed on the matter. Some want the USA to stay longer, others want them to get out- in both Iraq and American circles.

I think the worst of it is over. Saddam is gone. The real battle for terror and the middle east is in Afghanistan. While there are terrorist elements in Iraq, they have never taken hold as they have in the no-man's country as in Afghanistan.

President Obama's mission to end the engagement with Iraq is finally here.

A plug for my blog on American-Xpress...

2010-07-16T09:48:00.002-04:00

Dr. Jeff Cornwall, in his column space saw fit to plug my blog, as a way to give entrepreneurs who wish to go gloal, insight on the international economic trends.

9 Ways to Stay Worldly-Wise- American Express' "Open Forum".

"7. Track the trends. International economic trends can quickly turn a market opportunity into a financial disaster. If you’re engaging in business overseas, it’s important to keep a close eye on the world economy, from the budget deficit in Greece to the housing boom in China. The trends can change minute by minute, but you can stay current with blogs such as Mish’s Global Economic Trend Analysis, Global Economy Matters and Global View Today. "

I may not be everywhere, but I'm where the people who need to know serious and credible information, is.

The Chinese Connection!

2010-07-12T18:35:00.003-04:00

There was a study tour coordinated and sponsored by The Chinese government, for Junior Caribbean Officials, during the date of May 17th and May 27th, 2010- the second of its kind for the region.

The trip was attended by delegations from the Free National Movement, the governing party of the Bahamas and the loyal opposition, Progressive Liberal Party, in addition to the Bajan delegation, from the opposition Barbados Labor Party.

I went as a member of the delegation from the Progressive Liberal Party. Having done some policy work for the party on economic, international affairs and trade matters in the past, as well as my background on such issues, I was a suitable candidate to attend the study tour in order to gather the information for the benefit of us all.

The trip was more than a fantastic experience. One in which I am very thankful to have spent time with such wonderful people from China and Barbados and my colleagues from the Bahamas and to have been asked to attend, overall.

We had some time for leisure, but it was strictly business for the most part. Even the tour to the cultural sites, had a very structured, business feel to it. And when I did have time for leisure, it was done in a way for us to see the Chinese culture first hand, rather than it being about fun and frolic.

“Party to Party Relationship Building”, pretty much sums the main theme for the gathering, and I commend the Chinese government for using this format for discussions, as I see it as helpful for all sides.

Foremost, this format is an attempt by the Chinese government to "stabilize" the environment for their investments and strengthen their diplomatic relationships in a very healthy and open manner, for the long term.

For an aspiring leader, diplomat or someone with a foreign affairs interest, the mode, style and presentation, as well as the setting of the discussion environment, could not have been any better.

In all, we visited three cities: Beijing, Wuhan and Xiamen. They were three very distinctively different cities and all with different flavor and styles.

Beijing is the administrative centre of China and very much a concrete jungle to a large extent. No special frills and no special distinction, other than it being very much about business and administration.

There were some signs of social life in Beijing, especially from the point of the mega market- The Silk Factory- to which one of our colleagues had turned us on to. Almost everyone in the market that had a space, or booth, spoke English. To my surprise, they also spoke several other languages- from Arabic to German.

The city of Wuhan, on the other hand, is in a state of physical development. You can see it as soon as you hit the airport. Large cranes, buildings being erected, lots of road work and large equipment everywhere. It wasn’t until after my trip, when I conducted background research, I found out that French investment in Wuhan for industrial and international business was so heavy. Apparently, over one third of all French investment in mainland China is invested in Wuhan- more than any other province or city, along with the other foreign direct investment China receives from Western companies and countries.

The last city, Xiamen, is a tropical delight and very much a tourist destination. It reminded me of South Beach Miami, Florida, in so many ways. It has more restaurants than Beijing and Wuhan, as well as the people are more trendy as well as the shops very westernized and upscale.

Xiamen is also a strategic port city, directly opposite the island of Taiwan. Hence, they do allot business with Taiwanese companies, and the relationship is very lucrative.

Through all of the sightseeing, we had to attend seminars about a number of issues- most of which is the Taiwan/Straights issue and how important Taiwan is for the Chinese people and government, especially to the city of Xiamen.

Thus far, the import volume in China from Taiwan is $30 billion (USD) and the export volume from China to Taiwan is $9 billion (USD).

Industries most involved in the cross straights relationship are: chemicals, hospital services, low to high technological devices, technological information services, software, the construction of physical facilities and other construction related equipment as well as the cultivation and exportation of fruits, with Xiamen playing a very strategic role in the overall economic success, as well as an important role in the cultural and political changes in mainland China as a result.

The top Chinese officials we had dinner and meetings with, were all concerned with how The Bahamas was handling this economic recession. They also shared with us what tools and strategies they had employed and planned to employ during this downturn. For example, they have initiated a 4 trillion (YUAN) stimulus plan that they have directed towards capital related projects, or "shovel ready projects", and services related upgrades.

A chief Chinese economist made mention that more inward investment is what Chinese economic regulators are looking for and increasing wages and domestic investment, is critical to sustainability.

We saw evidence of this with the Dong-Feng car company. They operate solely in China and have had increases in profit, over the last 4 years, of an average of 12% per year, even during this economic crisis.

I was especially curious about the system the Chinese have in place to ensure continuity in the local market for SME’s, considering that China is a Socialist country. I was made aware by the same economist that Chinese SME's face no such problems; because Chinese culture dictates shared responsibility with their business practices and that practice is culturally understood as standard practice. So, if one person falls within any given company, the social collective comes together to fill the void, rather than having companies shut down unnecessarily- so, in a sense, SME’s are on their own in terms of the state assistance, but a built in social/community system kicks in automatically and provides support.

My mind thinks on so many SME's in The Bahamas that fell due to the owner having passed on and not having a sound succession plan, or due to a failure in other cooperative measures, to keep business open. SME’s in The Bahamas and the region could learn well from what we learned about China and its growing SME sector.

So many other things we could have noted, but too little space in my column. If anything, I can safely say that I now have "people" in China.

Nice article on Financial Reform....

2010-07-03T09:42:00.002-04:00

The Economist.

Sets out some key areas on reform. Not too analytical, but it sums up what reforms are already in the pipeline for the USA. The key of it all is the reform on derivatives- no more back room dealing, but now derivatives will be traded on the open market.

Sounds good. It will force firms to trade deviates and derivative packages they know, and now because also it will be attached to their overall firm's performance.

The other key things are mostly administrative- new general council to oversee things (big government) and special powers through the FED to use tax payers money to save failing banks and stop them from spreading their problems through the system.

The last is mostly cosmetic, as it only will serve as a warning shot in the early stages to other firms who may look like a firm in distress, so they can get out of the activity they are engaged. Will not stop a panic from starting, but it will stop a panic from being so severe over a long period of time.

Not been here in a while...

2010-06-21T17:01:00.002-04:00

Again. Been off. No real reason why...I guess I have "blog fatigue"...but, I'm still here.

I promised to chat about my China trip, aye? Well, China was excellent. Went to three cities- Beijing, Wuhan and Xiamen.

Was surprised that Xiamen was more like South Beach Miami, Fla. Very much a tropical place and tourist destination. Very trendy...lot's of bars and such. It is also a port city.

Beijing is stricly business. No frills and no fuzzy stuff. Straight up concrete for the most part. Yes, it has some sites to see- Tiananmen Square and Chairman Mao's body, etc...but, nothing really to report.

Wuhan is more like a rural linked city. Right in Central China. Went to a few housing bloc's and some agricultural farms...it was "ok".

All in all, a fantastic trip.

How the world turns...

2010-06-07T11:29:00.002-04:00

Dang. The oil spill in The Gulf of Mexico is more serious than I thought. Apparently, British Petroleum, BP, does not have the technology to fix the oil leak from it's pipeline.

How could that be? You mean to tell me, you have the technology to drill baby drill, but not the technology to stop the leak? Totally unacceptable.

What is even more ironic, is the issue that BP is supposedly one of the more "eco-friendly" oil companies and it prides itself on its performance as it relates to changing its production model to one of a more new energy model. I guess this is all out of the window.

In the meantime, BP is being hit in the stock market as stocks plunged more than 45 percent.

Tony Hayward, BP's CEO, has been wavering in the media as he is, apparently, caught out in mis-statement after mis-statement.

It is not good for BP. As for The Bahamas, we are preparing for the worst. We have already reached out to officials from BP and the U.S. government as it relates to disaster management of the oil spill- BP has committed to pick up the tab of the clean up and the U.S. government will offer assistance as necessary.

Apparently, the oil spill, once it gets into the Gulf "slip-stream", can reach The Northern border of The Bahamas within another 30 days or so. Floridians are already bracing for the worse and persons in Louisiana and Alabama, are already seeing oil clumps washing up on shore.

Additionally, the marsh lands in The Gulf off of the Coast of L.A. and Ala., are already taking the toll as animals and wildlife are being found oil slathered and the marsh lands are drenched in crude oil.

Without a doubt it is a national disaster and an international incident.

Through all of this the fishermen in The Gulf Coast have been more than hit hard. They have not been able to earn a livelihood as a result of the disaster as fishing spots are now disaster areas. In addition, shipping lanes are being affected as ships going through the Gulf, are having to 1. take extra precautions to avoid the deepest part of the slick, as well as 2. having to clean off their tankers and ships, after every trip as a result of the heavy crude that is sticking to them.

I pray for the best, but the disaster shocked everyone and no one expected it to last this long. To me, this should have been resolved in a matter of days- the capping of the oil pipe-line, that is. Instead, BP showed a nasty side of business practice by showing that drilling, was more important than disaster management and safety.

Help and hope for the coast!

Just got back from China..

2010-05-27T22:25:00.003-04:00

Had a trip top China for about 10 days, during the month of May. Sorry if you guys missed me...hehhe....will be posting something for the news organisations more substantially in the near future.

All in all, the trip was fantastic. We went to three cities- Beijing, Wuhan and Xiamen. We were treated like royalty by the Chinese government and I thank them from the bottom of my heart.

Why didn't anyone see this economic crisis coming?

2010-05-07T20:21:00.011-04:00

I had tuned in to one of the local talk shows in The Bahamas, and the host was on about the economic crisis and why hadn't anyone seen it coming- particularly the economists and business persons. It wasn't the main focus of the show that day- from what I heard- but it was a side remark, to the main point of why persons can still start up their businesses, even in these challenging times.

I would like to work with the first assertion and state that, yes; persons did see the crisis coming. The question to be asked rather than why didn't anyone see it coming; is why did folks not listen to the people who had something to say on the matter?

I can remember about four years back, sitting in a discussion seminar with my very distinguished professor at the time, Dr. Jonathan Hopkin. We were discussing the global economy and how he was in the process of selling his house, after we had reviewed literature two days in advance on economic and welfare regulation. During that same period, I was reviewing Central Bank policy in conjunction with financial deregulation- in particular regard to U.S. Federal Reserve rate policy and The Securities Exchange Commission's financial deregulation policies in the mid 1990's - for another distinguished professor of mine, Dr. David Woodruff- and then it all clicked!

The global economy was out of whack and in disarray. I knew then that the financial services sector was way more advanced an out of control than anyone without the training had anticipated. It was that awesome. While creating money out of thin air was bad enough- abusing the money multiplier theory, by loose lending policies with adjustable rates (e.g., housing market adjustable rates)- and the expansion of sophisticated financial products that weren't ever attached to the products of services that financial peddlers promoted them as. In addition to the loss of structural employment, due to advanced technologies making the worker obsolete and a shift in production to Asia and to some extent Latin America, all of this signified that North American and Western-European economies were on non-productive, welfare spend to consumption foundations that were bound to collapse.

My eyes were opened, so to speak. I never saw the economy or the world the same way I had before that epiphany, ever again. I went on every rooftop, to every kitten and Rastafarian and every website that dared to broach the topic about the state of the economy, proclaiming; "repent, for the end is near!"

So too were other, more notable and respected voices asking for structural economic reform in the domestic and global economy, for example, Nobel Laureates Paul Krugman and Joseph Stiglitz as well as Dr. Nouriel Roubini, a.k.a "Dr. Doom", for his incessant ranting on the collapse that nobody saw coming.

Nobody listened. Nobody wanted to listen. Persons were labelled as out of the loop, trouble makers and/or smart lipped, naysayers that always fussed allot about nothing. It was all bad news, you see?

In addition, the money created during the boom was lucrative- even after the crisis, to hear of Investment Bank CEO's spending 15K on a wall sconces and 10k on waste paper basket's, a piece, to adorn their multi-million dollar offices, is enough to make you think of the type of money that bought influence and the thinking behind the persons who were spending that money.

I admit one thing: I didn't see the crisis' contagion being so severe. The subsequent ripple effect around the globe in non-financial services sectors, yes. But, the ironic circumstance was having the leader of free-market capitalism, The United States of America, having their credit markets frozen due to the fear of risk of exposure to complex financial products, is something no one could have predicted- who would have thought it could happen?

Another thing was that not only were Investment Banks in North America and Europe using the same financial products, but they were also globalising them- e.g., the sale and re-sale of credit default swaps and derivatives from North America to Russia, from Russia to Spain, etc.

More importantly, as the crisis got bigger, credit dried up because no one- post Lehman Brother's collapse- was willing to risk exposure to persons and institutions that were involved in risky trading. Then market went into a panic- exacerbated by the U.S. political cycle- and wealthy consumers in North America and Western Europe, started spending less because they held back consumption and the home equity market began to collapse (good move Dr. Hopkin), coupled with larger losses in employment, which caused manufacturing in Asia and Latin America to decline, causing more job losses in the other respective regions.

In light of all of this, the good news is that this certainly is a time for planning and for innovative, strategic thinking for new and existing businesses as the rebound happens. The morning after, is always the best and brightest time for a fresh, new start. Busts are followed by booms spurred by innovation, imagination and creativity. While money is still hard to come by, thinking about what you can do when things get better, isn't.

However, while some would sell you a pipe dream on the idea that a recession does not have to mean a recession for you, reality states that the odds that the recession would not be for you is very slim.

Moving forward, after we have made note that some aren't prepared to listen to persons who have a penchant for being right too soon, I still would encourage persons to consider all factors on the table, because lives are depending on it. Lives have been lost already, and in my humble submission, lost unnecessarily and neglectfully so.

When we speak in terms of The Caribbean with lobbying for a risk sharing mechanism for foreign reserves in order to smooth government revenue in the event a crisis happens again, it's serious. When we speak of a plan to contain and fight inflation, based on U.S. dollar interest rate movements and the impact it has on oil and other minerals, it's serious. When we speak of flexible, coordinated and responsive Central Bank policy throughout the region, it's serious.

In terms of The Bahamas, when we speak of tax reform as a way to create sustainable, supplemental industries that would make The Bahamas less dependent on American consumers that are themselves dependent on a falsely inflated economy, in addition to tax and other reforms that fortifies the middle class, gives support to small and medium sized businesses while strengthening employment, it's serious.

So, here we have it again, people- of even a small voice like this humble author- are speaking for identifying reform and change. Will the people who have the power to do something act in a meaningful way?

I pray to God that they consider even the most marginal scenarios and set personalities aside, for the common good.

British elections are on...

2010-05-06T15:34:00.002-04:00

Almost all polls expect the Tories to win the current British general elections. They lead almost every poll by 7 to 10 percent. Most news outlets support them and only one, out of the 20 odd newspaper outlets, support Labour- with The Lib-Dems garnering support with at least three major newspapers.

Does not look good for Gordon Brown, British PM and leader of the Labour Party.

The Labour Party had a good run.... but, all things must come to an end.

The oncoming financial reform...

2010-04-27T09:43:00.003-04:00

It appears evident that the The United States will undergo some form of financial reform.

It's about time for reform, as well. However, some US congressmen, particularly Ben Nelson of Nebraska, don't want to broach the issue and have voted no for reform- ending the possibility of bringing the debate to the floor for a vote, by subsequently ending cloture.

It will happen. Forget about health care for just a second. The issue is financial reform...as you can see, even health care was impacted by the financial services sector vis a vis the insurance companies.

Until the insurance companies were bought out and they were assured to not lose market share, they went along with the deal and their lobbying subsided.

Without a doubt, the complex, exotic, derivatives and over the counter trades will have to come under more supervision. The murky asset pricing strategies must come under scrutiny as well.

What will not have a chance of being assessed, is the ratings agencies and how they assess the market and assets. This is too much of an art form- asset pricing- more than it is a cause from the basis of malfeasance.

Let the buyer be ware....

The countdown is on...

2010-04-27T09:35:00.002-04:00

...for the British elections. Nick Clegg has made some progress. Will Britain be ready for a third party winning the government? We will have to see.

If the Lib-Dems can, then it would be a great achievement for third party elections across the Commonwealth.

Cameron looks strong as well. It seems as if Brown's goose is cooked. But, I have learned, to never count out the electorate or a governing party.

Cameron and Clegg don't understand how the levers of the electoral process works, because they have been on the outside for so long.

The Bahamas needs tax and spending reform!

2010-04-14T01:07:00.016-04:00

I was listening to the news just recently, where Prime Minister Hubert Ingraham, who also is the Minister of Finance, said something to the effect that he would not lean against anyone broaching the issue of taxing the illegal numbers racket in The Bahamas, by virtue of taxing the Internet Cafe's that are reportedly "front's" for internet gambling businesses.

However, I'm not quite sure how easy it is to tax the numbers racket through Internet Cafe's in The Bahamas? For starters, you have to have them recognize that they are, in fact, running illegal gambling out of Internet Cafe's- considering that the authorities have not been able to produce solid evidence in order to prosecute anyone allegedly gambling in these establishments.

Secondly, what about the Internet Cafe's that are legitimate Internet Cafe's? Can't tax them...can you?!? Lastly, if I am running an illegal gambling racket through an Internet Cafe; then why would I want to pay taxes to the government for something I have been getting away with for so long?

Even if you put the work out for companies to bid on a national lottery, you still would be left at square one with the Internet Cafe's that run the numbers racket and their subsequent prosecution.

It is no easy task and good luck to the persons tasked with sorting it out.

More importantly, however, if we have come to a point where we are speaking in open forum about taxing the numbers racket, seriously, it signifies that the government feels that The Bahamas is at a juncture where it needs meaningful tax reform for government revenue; the government, clearly, is not generating enough internal revenue in order to meet its obligations now; and that the prospects of meeting the debt service, is very bleak with the current system of taxation.

To be very blunt: the government has to tax. However, the term "tax reform” isn't necessarily supposed to have a negative connotation or stand for a pejorative slight of hand.

The word "tax", does evoke personal sentiments for obvious reasons and the word "reform"- especially used by politicians- is a code word of sorts for the refocusing of entitlements and simultaneously as a buzz word for business persons, which signifies more and unnecessary regulation. Which to business persons, means more time away from their business and more time dealing with a governmental agency with mentally challenged employees.

To be fair, government employee's aren't mentally challenged- although some who look like they shouldn't be makes one wonder- and everyone doesn't understand what reform signifies- either which way- and no one wants to pay more taxes.

The truth is however, The Bahamas government is in debt to over 40 percent of GDP- with a widening deficit. Another clear fact is that the Bahamas doesn't have any streams of government revenue, other than from import taxes (where it gets over 50% of its revenue), National Insurance contributions, revenue from public corporations and government agencies and also through forms of public service charges and real estate; i.e., vehicle registration and real property tax.

Conversely, the Bahamas's tax to GDP ratio is about 18 percent. Which isn't that bad, considering Barbados, Jamaica and Trinidad is at 32, 27 and 38 percent respectively. But, The Bahamas isn't just like any other Caribbean country- we do things a little different.

Firstly, we don't produce many agricultural products for mass consumption in The Bahamas, neither do we have a large export sector in terms of persons involved in exportation, away from the concentrated profits some firms make.

Another concern that compounds the lack of efficient and beneficial dynamism in the market place as it relates to an optimal and targeted tax mix is the reliance of import tariffs for government revenue.

While The Bahamas does not produce over 80% of what it consumes, and with the tax system as basic as it is, it has to tax imports heavily. As a consequence, this puts consumers and more importantly, low income consumer, at a disadvantage as the tax burden is disproportionate to what they spend on taxes in relation to what larger corporations and high income earners pay. For example, a 50 percent flat tax on all consumer goods means more to someone who makes 20k per year than someone who makes 100k per year and a flat rate for business licenses, means more to the small business person than it does for a large corporation.

Moreover, large industries such as banking and shipping, are virtually untouched as it relates to taxation- no capital gains or corporate tax. Even the exportation of fisheries products is untouched as they relate to export taxes.

Some may argue that these low taxes are the reason why these industries are so dynamic and successful. However, there is more to a successful enterprise than just low taxation- location, barriers to entry and diversification, comparative and competitive advantages, come first and foremost for a successful enterprise.

More importantly, inequitable or no taxation, can be more destructive than high taxation. For political reasons, the need to keep such high-end entitlements incentivises corruption. Also, with regard to adequate funding for social programmes, persons wishing to engage in such specialised enterprises, face high entry costs that the consumer and subsequently the state ultimately must pay for.

Those additional barriers, decreases the tax base as persons begin to spend more of their disposable income in an effort to obtain the training and skills necessary to compete in and for what the marketplace offers, in addition to the high cost of private investment into such specialised enterprises.

What makes it worse is if the perception of risk through sacrifice made by individuals does not facilitate for the full cycle completion on endeavours. Or, the high cost for entry is private market based (cost for capital investment and cost for private education), where the government does not have a progressive, optimal tax mix and that tax mix model, is not synergised to assist with the equitable development of the industry at all levels.

When such market failures occur, the government must spend on socio-economic policies that develop infrastructure and human capital.

Through all of this, I must state that the issues are more complex than just taxation. We need more bang for the buck and a re-engineering of our socio-economic programmes, in addition to doing more with respect to meaningful tax and spend policies that encourages economic growth, as well as lowering the private and public entry barriers to enterprise and skills training.

Before we begin the discussions on what forms of taxation we should have- VAT, excise taxes, etc...- or what types of spending we must endeavour, we must begin to frame the mind of citizens and add to the conversation of what the economic importance of tax and spending reform is and what that means to us all, as I hoped this article addressed.

Ban Ki-moon on Haiti...

2010-03-29T10:34:00.002-04:00

Here is a good article in the Washington Post from Ban Ki-moon U.N. Secretary General about rebuilding Haiti.

This is just where every hope lies.

In partnership with the international community, Haiti's leaders are committing to a new social contract with their people. That means fully democratic government, grounded in sound economic and social policies that address extreme poverty and deep-rooted disparities of wealth. It also means fair and free elections, conducted with U.N. help, preferably by the end of this year.

This social contract must empower women -- as heads of households providing for their families, as entrepreneurs developing businesses, as advocates for the vulnerable, with full rights as decision makers in evolving democratic institutions and civic action organizations. It must offer new opportunities for economic advancement -- above all, jobs. The U.N. cash-for-work program should be a model. At the end of the day, only Haitians can build Haiti back better.

Two Cheers, One Jeer for ObamaCare!

2010-03-28T16:10:00.013-04:00

There was a single frame political cartoon I saw in one of the dailies, just after The United States Government passed The Patient Protection and Affordable Care Act, 2010. It showed a caricature of House Speaker Nancy Pelosi in a doctor's uniform holding a newborn baby in a towel, with the word "Health Care Bill" written on it, standing next to a donkey dressed in nurse's outfit, looking over at the patients waiting bench with a human skeleton adorned in a workman’s outfit, with the donkey saying; “next patient”.

The economic giant that is The United States of America, was put to a standstill due to the issue of Health Care reform. The cartoon displayed this most humorously. The economic growth persons in the economic forecasting and analysis field were expecting by the end of 2009 was less than modest. In fact, it was spotty- at best- with no clear sign of anything to be thankful for other than to be one of the few people still left alive, if only half dead.

Hopefully, the recent U.S. health care bill, at its fruitful best, can prove as a model for other countries wishing to introduce a form of universal health care, or be basis on what to reform or what not to reform with an existing universal health care package- it's best we can gain from this process, for having to wait for economic deliverance from The USA.

The only country in The Caribbean that has a universal health care system is Trinidad and Tobago. This is on the basis that every person is afforded health care within the public system, even though the system has a private option.

Trinidad’s universal health care system isn't an insurance centric model, but rather one on the provision and availability of care, along with a prescription drug plan for chronic illness.

The Health Care bill just passed in The United States, was, primarily, centred on providing insurance options and insurance regulations for the benefit and protection of consumers. The biggest achievement to date was the fact that the bill actually passed, with moderate taxes to be levied along with additional reforms- such as the elimination of insurance discrimination on persons with pre-existing conditions.

This aspect makes the bill a little odd on one end, due to the extent that it actually mandates persons to purchase health insurance by making it illegal to not have any insurance, pre-existing condition or not. This, in effect, increases the amount of payments to insurance companies. While on the other end, it sets caps on premiums for certain circumstances.

Whether or not these premium caps cancel out the increased payments through the increase of persons paying into the insurance system (creating losses at the firm level), is something the insurance agencies must track and assess for themselves based on their new competitive environment.

The bill also provides for the expansion in government subsidies to persons earning between 30K and 45K a year, of up to 75% of the premium. However, the cuts in Medicare -the government sponsored senior citizen health care option- via the elimination in the Medicare Improvement Fund, would, more than likely, go towards only half of the subsidy coverage I dare estimate- taking into consideration the expected amount of increased persons into the system (over 30 million), additionally coupled with the wide range of persons that are un-insured currently who fall under the 45K per year income bracket.

Through all of this, the second biggest achievement is that the bill synergises subsidy payments for persons, to then be paid into the private insurance market (no public option), along with excise taxes on the insurance companies with higher premiums, for that to be paid back to the government (no clear mandate on if these payments are earmarked to go back into the system). While this "evens out" the market providers, it also does not crowd out private insurers with a government option- while at the same time providing coverage to persons who may not have been able to afford the premium, along with not widening the deficit and increasing the public debt to fund universal coverage.

While acknowledging that prime synergy- which I felt quieted the private insurers- the bill defeats itself on the core matter of taxes to be levied on medical devices, which in effect makes new technology for medical practices more costly and effectively raises the price for medical services. This should raise concerns over the quality of care to individuals.

Additionally, the bill does not provide for a targeted expansion of the amount medical service providers, in a way that would ease the burden of the increased amount of persons that will be seeking medical aid under the scheme.

Facilitating an increase in quality services seems like a "no-brainer". The fact that the health care systems in Canada and The United Kingdom, are strained because their universal health care system is undermanned and facilities under invested- even when factoring in the huge tax burden in both countries, which sets aside funding for health care and to which the US is implementing excise taxes on items such as medical devices.

While it could have been equally as bad to have within the next 5 years an increase in service providers- as pointed out earlier that the bill does not provide for- coupled with the excise taxes on medical devices, causing an effect of cutting into the market share of the existing service providers and squeezing their margins and consequentially pushing their prices up, it is clear that this bill doesn't factor in provisions for adequate and timely ran facilities and services for the expected increase in patients.

While we have to praise the political and subsequent insurance achievements of ObamaCare, the possibilities of inadequacies in future health care quality needs certain attention.

Initiatives I would have ideally fought for are 1. Subsidizing and expanding “mandatory” employee insurance and full medical coverage, to and for all persons who worked over three years for the rest of their life along with their children, but only up to a certain age (with tax and subsidy mixes for special brackets); 2. Mandatory government provisions for persons with disabilities along with their children up to a certain age; 3. Zero tariffs on certain prescription drugs; 4. Increased scholarship and training within the health care field; and 5. Tax reform and increased income and excise taxes in certain sectors- but not on medical care providers or devices for the funding of this programme.

The start of KempCare...some shudder to think!

I guess some people still think its pretty bad...

2010-03-24T09:37:00.003-04:00

FT article from Robert Reich.

My guess is that now, America, can focus on its economy and not health care...its over, for now.

The debate has to shift to the economy now, after the Obama presidency and the congress, held America hostage with the health care debate.

What will be the way forward? As Reich suggests, it has to be with credit to small businesses.

Blaming banks for not lending, is not a good solution. We have to find a secure way. Government crowding out private banks, is not a good solution either- you risk diluting the private entrepreneurship spirit, as well as closing the market on smaller banks. Also, you run the risk of lowering services, especially to the small businesses you wish to help.

A simple idea is for government to simply keep on supporting private banks. And, to be honest, wait it out....sad, but true!

The changes and changes that remain constant!

2010-03-20T08:58:00.002-04:00

We are at a stalemate. Nothing is being done, faster than ever. Especially in the USA, President Obama is quickly getting much done about nothing.

I guess this is the black man's curse- trying to accomplish things that don't get done. Health Care, War in Iraq and Afghanistan and all and sundry- least of which is the economy.

Where will we go? Sadly, Europe is just as bad. In fact, they are at a stalemate with everything.

Financial regulation in Europe is a non-starter, regardless of Sarkozy's demand for swift reform. And, countries like Greece, Italy and Spain, become worse.

I guess this is the price you pay for democracy.

No new news, is bad news!

The Caribbean needs a strategy for fighting inflation!

2010-03-14T20:41:00.010-04:00

Trinidad and Jamaica have been plagued by the persistent scourge of high inflation and, subsequently, the high price of goods and sevices.

Less pronounced is the creeping inflation in The Bahamas- this is the steady and consistent rise in prices between 1 and 6 percent, to which there hasn’t been a deflationary session, to bring prices back under the point from where they began their incline.

Inflation matters, for all the right reasons. Governments through macroeconomic policy and central banks through prudentially active monetary policy should continually be cognizant of inflation. In fact, one should not just monitor inflation- you should fight it.

Inflation has two direct causes- demand pull and cost push. The former is caused as a result of increased demand, with shrinking, or, weak supply- law of supply and demand, lower supply raises the price and vice versa, in "most" cases. The latter, is as a result of the rise in cost of the factors that produce goods and services- for example, the rise in the price of crude oil, due to the machine parts that are used to drill crude, or, the rise in education costs, which affects the price of service related jobs.

Let's examine the price levels in the three countries mentioned- Jamaica, Trinidad and The Bahamas. Here is the IMF's statistics on average and average end of period consumer prices between 2003 and 2011- projected from 2009 and beyond:

Jamaica- the country with the highest inflation- has a considerable challenge with managing inflation and currency value, even before the inflationary spike between 2007 and 2008.

Throughout the 80's and 90's, the Jamaican Central Bank has been, unfairly, commented on as being a printing press, rather than a place were monetary policy complements economic growth through the stabilizing prices. But instead, the trade off has been towards creating employment and financing public sector projects.

Even more so, higher wage demands have been a consequence along with the need for higher salaried job creation in the public sector- which is part of the failing of macroeconomic policy on one side, coupled with a lack of assertiveness of monetary policy makers, on the other.

Trinidad has been on a high inflationary course, since their oil boom. Trinidad has also been reluctant in revaluing the Trinidadian dollar. This is as a result of the need for the Trinidadian government to assist with expanding their export potential in oil and other light manufacturing.

This causes higher than needed inflation in Trinidad, by having, on the one hand, a need for increasing money supply to fund employment and higher, nominal wage levels. On the other hand, Trinidad’s need to keep export industry prices low, in order to maintain production and keep relative prices for export competing goods, competitive, also influences policy decisions.

The Bahamas in slight contrast, as with the case for Jamaica, Trinidad and most other Caribbean countries, has an ongoing problem with positively sustaining the effects of external supply shocks.

Take for example the impact that oil has on the global market. The current price makers for crude oil are all denominated in US dollars- which can be described loosely as the “petrodollar”. The two major oil bourses are the New York Mercantile Exchange (NYMEX) in New York City and the IntercontinentalExchange (ICE) in London & Atlanta, which are housed between the USA and the U.K.

This means that as the US cuts interest rates, oil is affected in a substantial way: an increase in US dollars in the market to trade, will increase oil speculation. In addition, the TARP programme administered by the American government to support financial institutions, both commercial and investment, have sustained both short term lending and trading activity and added fuel to the fire- so to speak.

These financial firms ran away from mortgage related lending and trading, and instead found havens in the oil and metals markets and, that speculation, elevated price levels artificially as the activity, was as a response to investor/institution appetite to sustain returns, even during the current economic crisis.

In fact, the huge spike in crude oil prices at the end of 2007 through 2008 can be directly correlated to the lowering of the rates on the US dollar, coupled with the investment in large financials in the US through TARP.

When we examine both the fluctuations of interest rate reductions and crude oil price levels, we see a strong correlation and a co-movement of both variables and further relationships with three variables, when we factor in the weighted roll out of the TARP funding schema as an additional variable.

In light of this, I feel that it is clear that the region needs a committed and coordinated plan to contain and fight inflation. The cost to businesses and households, demands that a comprehensive strategy be put in place to mitigate some of the more harmful effects of external supply shocks on regional inflationary pressure.

One thing can be too simultaneously revalue currencies up by 10% of the band, especially in the case for Trinidad and The Bahamas, while, perhaps, cutting the rates by25 bps at the very least. This would strengthen purchasing power, while at the same time increasing the money supply in order for it to compete for goods, relatively, with other regions.

The only issues would be with regard to fixed exchange rate ineffectiveness, in addition to causing a run on foreign reserves. However, it would ease domestic inflation by creating money supply and spurring activity while strengthening purchasing power, during this still yet current crisis.

To go even further, tariffs on consumer goods should be relaxed in order to allow for businesses to take advantage of import competing goods at a relative cheaper rate. In addition, this will attract currency traders by creating speculation and spurring demand for the dollar as well as attract foreign direct investment, by increasing the capacity to develop without high inflationary costs -if conventional wisdom on currency revaluation dictates otherwise.

A longer term external supply shock plan must be put into the regional discussion as a way to combat inflation uncertainty in the long term. A plan that involves increasing capacity in food security, oil reserve maintenance and coordinated Central Bank policy that entails- where appropriate- a pegged exchange rate version of inflation targeting, foreign reserve and petrodollar risk sharing and management in addition to maintaining upward stability when US interest rates rise.

Did you set your clocks forward?

2010-03-14T16:36:00.000-04:00

Daylight savings time was today...set your clocks one hour forward. Forgot all about it. Does not make much sense to me, but I guess it serves a purpose.

Nice article..

2010-03-08T09:59:00.003-05:00

Robert J. Samuelson, posted a good article on the Washington Post's website....
Here.

Its about the Millennials and how the baby boomer generation, in particular, has up not only their opportunities, but the opportunities for Generation X and even for the baby boomer generation themselves.

There is no way, on holy ground, could they expect to get the type of social benefits throughout the rest of their twilight. If they secure it for themselves before the make a true exit, it would be probably worked out to less than what they put aside for themselves.

That's not being cruel, but it is, well, being economically efficient- you can't subsidize, or support something that is putting in no equal value in return.

These are rough times. And, baby boomers, caused it all....

Will Cameron be the next British PM?

2010-03-01T09:52:00.002-05:00

FT linky!

I like him (Cameron). But, I also appreciate Gordon Brown. Brown has showed tremendous leadership during this crisis and took over a Britain, behind a Tony Blair, who was one of the more stellar global statesmen that we had ever seen- more charismatic than Thatcher. To follow a path like that, like John Major tried, would have been foolhardy!

To be frank- Gordon Brown hasn't done me or any Brit, anything aside from preside over an economic crisis that no one knew would or could happen.

Also, Cameron, is a little weak on his platform- his attacks on Brown are spectacular, however. But, attacks, with a very intelligent British electorate, does not get you very far.

Cameron will be PM one day. Maybe in May- a refreshing change is needed in the British parliament. Hopefully, he will get in before Brown hands the reigns over to David Milliband- another well like, well spoken, attractive leader within the Labour ranks!

Time will tell.

Is anyone changing the paradigm on acceptable public debt?

2010-02-26T10:01:00.003-05:00

I wonder about public debt and debt to GDP. As we all know, public authorities have been either borrowing money- internally or externally- cutting taxes to spur the economy, spending money on public works in attempt to do the same or have been having decreasing revenues due to the fall off in public taxation- because folks, simply, do not have it to pay.

However, what debt ceiling is "really" acceptable? To me, from the works I have read from Desbonnete and Ayagari- the former from the Sorbonne in France and the other, is a former, deceased, Federal Reserve Executive and Professor at NYU, it is all a mixed bag.

Through their works they have tried to expound on public debt and debt to GDP, as a form of a standardization of the exact amount or debt as a function of the state as it relates to inflation and deficits- particularly with Ayagari. Desbonnet, particularly, focuses on aggregate risk as a function of increasing public debt- but examines it from a policy choice and preference standpoint, as it relates to how policy makers make decisions about increasing public debt as it relates to that risk.

However, while inflation is a concern, what about thinking about public debt in discretionary terms. Not merely as a function of welfare spending to stave off a recession or bring an economy out of a recession. But, public debt, as a form of social optimization as well as examining public debt, in the manner of social optimization and with the parameters of the related service expenditure to spend on public debt- i.e., the maintenance, monitoring and processing of public debt related agencies.

Maybe I'm just blowing smoke. But, I think it would be interesting to examine.

Better days ahead?

2010-02-18T09:18:00.001-05:00

Well, better news are abound about the American economy. A report from the Wall St. Journal states that manufacturing is up and inventories are moving.

I would bet 1 billion Zimbabwean dollars, that the Obama administration or the persons on his Economic Council, can account for the recent activity.

The worst of it all, the employment statistics are still soft. While over the last two months, un-employment has been receding. However, it still is a little to early to suggest that there will be permanent jobs for folks within the next six months.

While higher manufacturing and orders, should indicate that jobs are soon to follow- with a lag in profit margins and employment, we still would have to wait and see what follows next.

No doubt, US exports, should be higher considering the issue of the value of the American dollar, due to the low interest rates, which would have boosted production as well as made exports cheaper- relative to Chinese, European and Japanese goods.

The issue with the higher production, is certainly tied to that of the countries and firms competing with American goods.

Asia is becoming more insulated, as has been pointed out by Razeen Sally (LSE/ECIPE) in a recent paper- who also claims that it is fool hardy by Asian and South-East Asian economies, to further insulate themselves, because it would 1. damage the unilateral system and 2. (most importantly) the fact that the South-East Asian economies, in particular, have low value per currency coupled with producing similar goods- so, in a sense, negating any gains from trade, especially since a) import competing goods are too similar to export competing goods and, more importantly, for the way I see and expound on Sally's analysis b) GDP per capita per country, particularly in Indonesia, a large economy, is relatively small, making value per export not worth the effort of insulating it from the rest of the world via trade barriers and regional trade partnerships.

The beat goes on, as they say. We all will have to wait and see- particularly in the Caribbean, as we all wait for the USA and, to some extent, Western Europe to start spending money and making money, again.

Unintended consequences of a recession.

2010-02-14T17:12:00.007-05:00

Everyone by now, knows, that a recession can be a very painful thing to endure. It almost seems as if God has turned his back on the lot of the us, and focusing his energies on another planetl with hopes of cultivating it with a new form of biped and the beasts that it will master.

No one would blame him either, as we have done a fine job with this one over the course of the last 100 years.

In any case, snarky sarcasm and cynicism aside and while some may feel that way, God is still very much alive and in good spirits while his forces of a social nature, run its course.

While some may think of forces of nature in the real and natural terms; i.e., hurricanes and earthquakes, there are other forces of nature that are less seen, but, rather, felt and experienced through daily social life and within the economy.

They, like natural forces of nature, have their own direct impact and furthermore, unintended consequences that when you really sit and think about it, when the dust settles and when that times comes upon us, it is an obvious effect of what took place prior.

A recession, as with natural forces, is no different with regard to the notion of direct consequences, effects and impact.

I love it when my mind finds time to wander on issues that can either be quantified, or easily observed. It gives my readers a time to think on what may be in store or to what is actually brewing in the undercurrent. Also, it allows persons to see the social fabric and how it is changing, in real time, whether they agree whole hearted or not and identify that with what took place as a result of other social phenomena.

More importantly, it is a fresh look at the landscape through a social lens, in an attempt to see how the issues observed, will impact the economic landscape- the trends and tastes and how they shift due to factors and stimuli.

Take for example the Baby Boomer Generation. A generation, marked with excess and an understanding of the possibilities of the new frontiers of liberties.

Their generation, which spanned the years of 1943 to 1960, was seen to have been created as a direct result of the slowdown of the world economy, due to the Second World War- a painful recessionary period, which caused their pre-war parents, to be a little more cautious about their finances and held closer to their faith.

Boomers, in turn, rejected these ideas- as all next generations do when faced with the fascinations of modernity and constrictive social concepts- and sought about not only financial wealth and capitalism, but freedoms in sex, religion and personal development- the affects of which are felt all the way down through Generations X through Z.

No doubt, this current recessionary period has its own brand on the social fabric. In fact, it may define what it is to be a Generation X, Y or Z. It’s a force that has a mind of its own. A contagious state of being, which can be both positive and negative- depending on the moral compass of the people who have to live in this world, post crisis.

Take for example another phenomenon unfolding right before our eyes; the issue of education- not only the quality of education, but the current and contemporaneous socio-economic characteristics of education.

Education is not the only issue that is changing due to the state of the economy. For example, management practices, re-alignments in rights and priorities, most importantly health care and immigrant rights, sexual preferences and the changes in the domination of the gender roles in the society, are issues that are larger issues within themselves, but are too affecting mass social attitudes and preferences.

But, education is a little starker as the mutual concern for the access to education, and particularly education of strong cultural desire that is seen as valuable. is one in which we can examine by outputs- scholastic achievements and cultural behaviour within the school system.

We all know of the direct consequences of the economy on education- loss of jobs, will and do indicate that less people have a chance to go to private schools and are foregoing college.

However, what is less examined is the issue of how these persons, of perhaps different, previous social strata and cultural characteristics are performing and will perform in their new, involuntary environment.

Will the persons who are put into the public school system, be” dumbed down” due to inferior teaching? Will they, also, have a net positive effect on their peers by bringing a new level of competition? In the future, will they, in turn, rebel against the system because of a new and educated understanding of what circumstances caused their stunt in development?

How would all of this, affect the work force 10 years later? Will employers have a greater pool of under trained personnel to choose from? Will employers receive net benefits, especially in the lower skilled sectors due to the previous diffusion of knowledge diffusion, brought in by once private school students to the public sector who pushed their contemporaries to be a little better?

How will that shape the economy moving forward? How would these factors, impact the current state of technology and information access to the ordinary person? Would it even make a difference?

To begin to answer these questions, one must only look at and track the performance of the demographics of students outlined- former private school students and current and lifelong public students.

Are grades of former private school students suffering in the public school system? Are the grades of lifelong public school students improving? Is behaviour, generally, better or worse; i.e., are tamed social behaviour of private school students, having a net effect on their lifelong public school counterparts or vice versa?

With these parameters, we can begin to look at what needs changing and what doesn't. What also may be a good place to begin analysis, is in whether or not public school students are performing and behaving at a higher level on their part time jobs- if they have one- or are they, generally, less focused and more disruptive?

While there are litanies of issues to which leaders- management, political and civic- must focus in order to make the necessary interventions, trying to imagine ourselves as the Nostradamus of our times, won't hurt.

Especially if we use previous experiences, to gauge what would likely be scenarios from natural human tendencies and behaviour, in order to shape our intervention methods to impact a greater, positive, end result.

Bloggers and Journalists I read...

2010-02-09T15:27:00.002-05:00

Hi folks...I know most of you who pop in and read the blog, especially the friends on my friends list, want to know-- well, Youri, who do you read and why?

Its a good question. In fact, I read allot of random stuff. But, mostly, I read allot of economic, political and financial news. Stuff that really bores you. Stuff, so boring, that it would put folks to sleep on the first few paragraphs!

I'm not a novel kind of guy...you know!?!? The guy who likes Sidney Sheldon, or even a Steven King. I read allot of magazines and working papers, with a little bit of non-fiction.

Have not yet read Freakonomics, but am dying to. I should have jumped at the chance to read it when the book was offered to me by a friend of mine. Ah, well...hopefully, it won't go out of print.

But, back to the topic: Who do I read?

Well, I read, when he goes to print, Eugene Robinson from The Washington Post. I can see why he is the "award winning" Eugene Robinson from the Washington Post. He always gives you a great insight, plus a few new words. I have learned more about American news and politics from Robinson, than I have from anyone else in the print media.

Another person I read, almost all the time, is Clive Crook from The Financial Times. Simply a down the line, unbiased-- at least as far as I can see-- when he writes about American politics. Probably because he is a Brit, who observes American politics than someone who feels as if they have a vested stake in what goes on.

Willem Butier from The Financial Times as well. He had stellar, award winning style, work when the economic crisis of 08-09 was going down. He led the intellectual community and led the thought on what must be done. His stewardship of the thinking on how to handle the crisis- from government bail-outs to zombie banks- is priceless. Plus, he is an LSE Professor...my alma mater. If he has not won an award yet, he should!

Paul Krugman from The New York Times. Say what you want to say about his politics, his views are valuable and his work, stands for itself. Another great mind of our time that we must take into out daily living, if we say we are management and development personnel and, leaders of the free-world. Another professor from The LSE

Charles Krauthammer, who publishes in the Washington Times from time to time plus a Fox news contributor. The centre of the centre when it comes to common sense. When the left goes loony, he brings issues back into focus. Eye always on the ball. Concerted. Probably a little too much on the right, but certainly enough centre to make a good case against lefties like Krugman and the other folks who go way off the rails.

Dani Rodrik's weblog, is also a must follow. Probably more academic content than Krugman and Butier combined. Harvard Professor of Economics. His work on industrial activity and the need for government, gives the free market proponents more than a minute to rethink their strategy. When you read Rodrik, you get a sense that the unashamed free-marketeers "know" better!

Of course, staples like The Economist, Financial Times and the Wall Street Journal are in the mix. But, these few authors, stand out.

R.J.Samuelson- Obama's Fed budget lacks clarity!

2010-02-08T10:19:00.003-05:00

A clear and precise article from Robert J. Samuelson (no relation to the other famous Samuelson).

"In all the recent reports, speeches and news conferences concerning the federal budget outlook -- including the administration's proposed budget for 2011 -- hardly anyone has posed these crucial questions: What should the federal government do and why; and who should pay?"

Its about the candor gap and how the US budget, lacks clarity and clear purpose on initiatives and issues.

I think president Obama, spent a great deal to identify some of the initiatives in his state of the union address a few weeks back. He said that there would be definite changes in spending in education and, particularly, more pell grants will be dished out as well as an increased focus on early childhood development.

I don't think that we can talk about the returns to scale of such investments. But, education, is a clear best bet if we are taking into consideration the information age as well a the new, knowledge based global community.

Allot of other things were a little scant. He is pushing health care reform, but not so much the real or expected inflated price of health care. Definitely, there are going to be tax increases and budget cuts. Defense spending was slated to be cut, from what I remember.

While Samuelson makes a sound point, while most people missed it as it should be obvious, the lack of financial literacy and a lack of macro-economic principles, within the public main, especially when we take into consideration all of the other things going around- terrorism and the wave of employment news- especially the ad campaigns, meant more to confuse rather than illuminate the American people, we have to take what we can get unless we have a real grassroots movement, which seeks to educate the people on these matters, rather than hype them up for their attentional and voting block power.

"We can no longer just tinker. We need to ask whether government spending serves genuine public purposes or merely benefits favored constituencies."

Such idealism, while true, is a little cute-- sounds like the same old Federal Government, to me.

IMF augments existing Haiti loan....

2010-01-27T16:58:00.002-05:00

IMF Press Release.

Adding $104 USD to make the total loan amount, $114 USD. The loan will go to help Haiti bolster imports as well as pay for essential work, being done as a result of the earthquake.

Sounds like a mere pittance, if you ask me. This must be the start of a host of other loan programmes.

President Obama's state of the union speech tonight!

2010-01-27T11:45:00.003-05:00

Well, President of the United States of America, Barack Obama, is set to make his first state of the union speech tonight at prime time.

Of course, the media is making a big deal about it as they should. But, to me, it is a little anti-climatic. The main reason is that there has been to much ballyhoo about his first year during the course of the year, that it will and has overshadowed everything he is set to say.

From the inauguration, to the economy, to health care, to the underwear bomber and now the Haitian crisis, it seems as if he has been set to the background over fundamental issues that have been apart of the American, Hemispheric and Global agenda for quite some time.

While these are, by part, his problems for the most part. The gravity of the situations have been exacerbated by the hopes that president Obama will deliver results on all of these matters.

Perhaps President Obama is a victim of his own hype?

Worst of it all, is that he has been called a liar, among other things, as well as dragged in the mud because of his former political allies by his political enemies, not all of them on his right.

Maybe, some of the folks who were on the right may be more to his centre than he may want to admit. Perhaps some who parade around as allies still may be his allies...folks in Acorn and the Weather Underground. The only thing left is to align him with the Black Panther movement, and we would have public enemy #1.

In any case, Obama is set to deliver a message on cutting the federal budget- cutting back some of the programmes- as well as a message on specialised funding for education.

Not much is being mentioned about any notes on the economy. Liberal pundits are lauding, that while we are still not yet beyond the crisis, Obama has done well, considering the circumstances, and taken us beyond measure from what former President Bush had left it.

Notice I said that the liberal pundits are lauding it, not necessarily the folks from Obama's economic team.

We will have to see what he lays out tonight.

Views on Haiti's long term viability...

2010-01-25T09:39:00.002-05:00

Cool article in the FT about Haiti's re-development, by Paul Collier and Jean-Louis Warnholz.

They lay out three essentials for Haiti's recovery: Money, better governmental management and procurement systems and, first and foremost, an economic strategy that both of the former points and their agents can work with and have something that which it will be mandated to manage.

This is one of the best thoughts on Haiti for the long term I have read during the aftermath of the quake.

The article acknowledges the faults, the issues as it relates to the lack of vision and the series of corrupt regimes that have caused country systems to be in a state of disarray.

One the other hand, the article also quoted another article from the Wall St. Journal- a media outlet I highly respect- which was a little too dark for the moment.

The author, Brett Stephens, asks for the amount of foreign aid going into Haiti to be stopped.

He cites that, in a nutshell, it only goes to the corrupt people and politicians for their own selfish needs.

While that may be so, stopping the aid, will ensure that no assistance reaches the country at all.

Even if it goes out as political favours and engenders patronage- and as he even admits through other local economist's in Africa who say the same thing that he does- puts local farmers at jeopardy, when we talk about direct food assistance going on the black market, depressing national prices and putting pressure on local farmers, the "commerce" is something any country can ill afford to lose- especially a country as disrupted as Haiti or some of the other African countries.

What needs to happen, as the authors from the FT point out, is a better management strategy to go along with the aid that Haiti most desperately need.

Former President's Clinton and Bush should take a strong, commanding- even a domineering imperialist- role in Haiti to ensure that things are done right.

Clinton on the side of better governmental systems management and Bush, with regard to spurring the private sector and having them work in sync- as paradoxical as that sounds- with the government.

What would also work well with both of those efforts, would be a leader who is dedicated to overseeing the civil society and social sector development.

Perhaps we can bring back President Carter? Or, former Vice President Gore to lead that charge?

Perhaps that is too much wishful thinking on star power. But, the social sector and civil society needs leadership, as well.

Careful planning is needed for Haiti's re-development!

2010-01-20T15:03:00.005-05:00

The earthquake that hit Haiti earlier this year was a dreadful catastrophe that shook the conscience of every human being with a heart that beats in their body.

The comments made by certain quarters of the American political community and the religious community at large, are unwarranted. It is unwarranted because the facts, as seen in the eyes of the persons who made them, are largely irrelevant to the issues at hand. Gratuitously cruel to some extent.

The major, current issues are in finding ways for aid to reach Haitians in Haiti on the ground as well as what Haiti needs, in the form of development, to ensure that a catastrophe like this is not repeated.

We can surmise that no one can predict an earthquake with any certainty, even though scientists are becoming more accurate with their information. However, Haiti won't miraculously move off of the plateau of the tectonic plates that caused the earthquake. Also, Haiti still would need strong infrastructure and strong human services, to be able to better handle a catastrophe, like an earthquake, if a natural disaster happens again.

In a nutshell, considering the earthquake as well as for the fact that Haiti is prone to hurricanes as well, Haiti needs to not only rebuild, but rebuild stronger, considering the unnecessary loss of life that occurred.

Stronger building codes and a disaster management plan, is an obvious must.

Resetting the government agenda is also vitally important, but also an obvious must.

In addition, another issue that has arisen, more strongly post quake, is debt relief for Haiti. This, in conjunction with the almost bound to happen cry for reparations from France, are issues that have their merit grounded in historical and redistributive fact and need.

However, the question one must ask is; would spending money, via debt relief and reparations to and through the government of Haiti be worth its effort? A government, which had its parliament collapse along with other government agencies, on top of the other issues as they relate to its fragile state before the quake (2008 mini-coup/riot that was quashed)? Would this really work towards a better long term solution to the social, economic and political situation in Haiti?

I have my doubts on the viability of those options at this time. Perhaps it may be something to consider in the future of Haiti.

However, what about the underlying issues that has prevented Haiti to move, in the past, towards building a stronger, more progressive society? A stronger, more progressive society, which would help to strengthen the people and the institutions of Haiti, in order for Haiti to sustain such a disaster- God forbid, but more than likely, would to happen again in light of the obvious realities.

Without going into a historical diatribe about the merits of any particular organisation, whether it was political or religious, the fact of the matter is, is that the distractions as it relates to the disruptions which were caused by political instability- even if we speak to the heart and the socio-economic fibre of Haiti when we mention the name, Duvalier, and the Voodoo belief system, which was seen to have propped up the dictator- is something that needs to sorted out, if Haiti must become progressive.

Conventional wisdom, which in this case I will indulge because many indicators have shown that belief in this particular, even if one considers it axiomatic, position, is relevant; is the issue of the Haitian civil society and their private sector and the fact that they have been virtually non-existent in the past, if not, moribund, to say the most about it.

Civil society organisations have been proven to anchor communities and, by effect, stabilise communities through their organised nature and their ability to negotiate with business and political directorates and lobby for sensitive, effective and meaningful socio-economic solutions to critical issues.

Fostering a sense of common values, commitment and investment interests in the Haitian society, must never be repressed, ignored or uncultivated in the new Haitian society.

Where people have interests and investments’, coalescing around shared values on where the country is headed and what is needed to maintain sustained, positive development- issues as they relate to human and structural development, will be a synergistic, progressive positive.

The private sector must be engaged most vigorously. For the fact that the minimum wage in Haiti, is, roughly, $5 USD- and we can imagine that most employers don't adhere to it- is one that cannot be ignored and issues as they relate to 1. Curbing oligopolistic and monopolistic activity, 2. Providing for sustainable local markets, 3. Ensuring fair value in and access to external markets and 3. Trade and development assistance from all the relevant partners and stakeholders in the global community, is a large task but must be essential for a new Haitian, country wide progressive model.

Creating wealth in Haiti is an obvious task that must be addressed and attacked with full commitment from the Haitian government and their international partners.

The concerns as the relate to officials taking a mechanistic approach to the matter, is something that the Haitian government, non-governmental organisations and technical expertise from the development community- bearing in mind the daunting task of country wide buy in and creating economic synergies that are self sustaining- must take in hand from a prejudiced standpoint of the status quo and assist their weaker partners, in that the civil society organisations.

Certainly, there are enough 'what to do's' to go about. This author is not void of any. However, what Haiti and its partners in assistance needs now is to identify which 'what to do' to target and work at it. The second hardest part is 'how to do' as well as measuring the success of the 'what to do' as it would be and is impacted by the 'how did'? This is obviously after immediate reconstruction and investment for that reconstruction.

Partners from around the globe must converge on Haiti and assist the society at large with whatever decisions are made. This includes not just assistance with debt relief- if that be the case- or development through trade or just supporting NGO's stationed in Haiti.

But, assist Haiti with the technical expertise to build a better nation, from the inside out.

A profile in hypocrisy!!!

2010-01-19T09:24:00.002-05:00

Cute article from Richard Cohen at the Washington Post.

The thing is, assuming that Cohen is a liberal, why would he attack fellow democrats?

Apparently, the gist of his tongue in cheek article, is that democratic primary candidates, Harrold Ford and Kristen Gillibrand, are nothing more than flip-flopper's when it suits their purpose. Worst of it being, Ford is a carpet bagger and Gillibrand, is a closet conservative.

I know that is a big assumption-- assuming that the post is a leftist type of news rag. But, I have come to think of most of the media, as being left of centre...to say the very least.

New Chilean President...

2010-01-18T10:03:00.002-05:00

Amongst other news, Chile elected a new president over the weekend. Not much is know by him, other than his professional and academic qualifications.

FT article

I wish him all the best. He had beaten former Chilean president Eduardo Frei. Current president, Michelle Bachelet, also congratulated the new president.

What does this mean for bananas? Who knows....

Haiti still needs help...

2010-01-17T10:30:00.004-05:00

Well, the body count still is continuing to rise. As far as it stands now, over 50 thousand dead and another 100 thousand to be presumed dead by next week.

Aid agencies are trying to ramp up resources to help victims. One of the more sadder stories out of the mess, is about an 11 year old girl who was trapped for two days after the quake, with her leg trapped underneath the rubble. She was fed and given water for the initial two days until she was freed, but the day that she was freed, she died from her injuries.

You can still give aid. The people will need it.

Places of note where you can donate funds are:
The Red Cross
USAID
Yele
UNICEF
The Clinton/Bush Haiti Fund
The Salvation Army

While there may be others, these are the ones where folks should focus most of their attention, because they are legitimate agencies.

Yele is a group started by recording artist, Wycleff Jean, and focuses on goods and clothes, primarily. But, they do accept funds.

The Clinton/Bush fund was just recently started and they have a website up already, at the request of president Obama.

Please, send what you can and pray if you want.

They are trying....

2010-01-13T16:04:00.002-05:00

Well, the Biege book is out. See here.

The news is "trying" to sound better. But, you only need to get past the first two sentences in every paragraph, to get the sense that things are still not yet alright.

It's the old psyche trick? Huh? Say something good, and then hit them with the bad, in a soft tone...perhaps not even sugarcoat the bad news. Just say it plainly,!! The folks don't get upset as much and, even if they do read past the first few lines, they will normally remember the good that they saw, first!

NB: When the paragraph is longer, in this instance, the news is more dire. Just that the folks that typed it up, are taking longer to break the bad news to you!

7.0 Earthquake hits Haiti...

2010-01-13T10:39:00.002-05:00

My thoughts and prayers go out to the people of Haiti. Yesterday evening, a massive earthquake, 7.0 on the Richter scale, toppled Haiti and now thousands are reported to be dead.

The quake happened in the vicinity of the capitol, Port-Au Prince. Hospitals have collapsed as well as the Presidential Palace. Roads are un-passable and getting aid in may prove difficult.

A Tsunami watch was placed for the Southern and South-Eastern parts of The Bahamas. The folks in our Southern most islands, Inaqua in particular, have reported that they had experienced tremors with the massive quake.

As you all know, The Bahamas is comprised of a chain of islands, that are very low lying and a prone to tidal surges. Weather forecasters and scientists state that a tsunami is unlikely, due to the nature of the earthquake and the tectonic plates that caused it.

The plates are not aligned to create tsunami type waves, because, as they indicate, they are facing each other and are sliding past each other. A plate shift, where the plates are on top of one another-- let's say, plates that are V or "check mark" shaped, do have the capacity to cause tidal surges and, hence, tsunamis.

My prayers go out to all Haitian people in Haiti and the ones that are abroad, in need of contacting their family.

The Bahamas Telecommunications Company, BTC, needs to make all outgoing calls to Haiti, free of charge for the remainder of the week. The Red Cross from The Bahamas needs to be in Inagua by tonight and ready to go to Haiti, with Defence Force personnel, by tomorrow morning.

Prayers go out to all of my Haitian friends. We are truly blessed to be in The Bahamas, even if it takes a tragedy like this for us to appreciate this!

U.S. Trade grows....

2010-01-12T09:55:00.002-05:00

Washington Post.

I could not tell you, for sure, what exactly is driving the trade data.

Good news for president Obama, I guess.

Brown and Darling in disagreement over deficit!

2010-01-05T16:17:00.003-05:00

What a load of political posturing. Chancellor of the Ex-Chequer, Alistair Darling and British Prime Minister, Gordon Brown, are at odds about the amount of of the deficit and how to control it. As reported by the FT, today.

Aren't they on the same team? It seems as if Darling and Brown are gearing up for elections, next year, mandatory. Darling knows the public hates the deficit. Brown knows that he has to spend to stay in to win the next election, due to the horrible U.K. and global economy. Will the voters believe that is a plausible excuse, or use it to oust both Brown and Darling, is, yet again, another story.

More than likely, as it appears, Darling is going out on the limb by himself and leaving Brown to explain the borrowing and the deficit. Politically expedient, is not even the term to describe this.

I thought Brown would have called an election before the end of 2009. But, he didn't. Good thing he didn't, because his poll numbers were slipping and the general consensus is, that, when the economy is bad and jobs are being lost, the government of the day normally loses.

A former Guyanese President once said "I don't see how any sitting government 'can' lose an election?"....maybe we would have to ask Gordon Brown, by the middle of next year-- how could he?!?!

Of course the Conservatives are capitalizing. Opposition Tory leader, David Cameron, has his campaign posters all over the country, so reports have it; "Cut the deficit, not the NHS"....a sign of reassurance that "if" the Tories were to win, they would cut the amount of borrowing the British government has been undertaking to run the deficit to the way it is, and would not be cutting essential public services like; the National Health Services (NHS) education of the police force. All Labour party public institutions of record!

We will have to see...

Did I tell you guys about this? Give me your thoughts!

2010-01-01T16:17:00.002-05:00

Well, the New Year started off without a bang, even though the crotch bomber- Mutallab- nearly caused it to be a big bang on Christmas day. But, it was averted. That's fantastic.

Anywhoo...I forgot to mention that the National Law Centre for Inter-American Free Trade, AKA " NATLAW ", in Tucson Arizona, USA, had put up an article of mine to their website. This was ok. However, they wanted to charge onlookers a fee- $40.00 USD- to view it.

The article was about Bahamian Craw-fishermen and how they can, possibly, learn from OPEC. The article appeared here, first, on Thursday, August 6, 2009 and then on Caribbean Net News (my main publication outlet of choice) on Tuesday, August 11, 2009-- they lifted the article from the Caribbean Net News!

As you would normally be inclined to think, one should be elated. However, they were charging folks to view it, without asking me if whether or not they can or will be charging people to view it.

What a trip!?! How dare they?!?!?

Well, of course I contacted the powers that be at the centre and asked them to hand over all royalties made from the sale of my publication, as well as for any further reference, any additional publications they should contact me with any material or research that they may desire from my intellectual brain box (a bit much, I know!).

You would think that a supposed international law centre, would be more careful as to not charge people and, in a sense, pirate intellectual property from artisans. An international law centre, attached to the University of Arizona at that.

Anyways...they have since removed the price tag and the blockage link to the article, which would ask for persons to pay the fee. However, they have also "copyrighted" the material.

What type of organisation is this?

In any event, let it ride....my work, is my work. I should now check into if whether or not they are charging folks to view it on campus, or at their library.

Should I let it go, or take pride in my achievement and small victory?

Happy New Year!

New year.....2010, what are the resolutions!

2009-12-28T10:58:00.002-05:00

Hi all,

What are the new year's resolutions? I know I have a few of them, but tend to keep them close to the vest.

I hope we all have a safe and peaceful new year, all around the world. From Iran to Little Rock Arkansas!

Peace and Love!

Youri

Christmas is soon here...

2009-12-20T10:22:00.002-05:00

I am so glad that Christmas is finally upon us. Now we can all put differences aside, get together with family and enjoy the reason for the season.

I wish for everyone who reads this blog, to have a happy and safe Christmas season.

We can all use a break from the real world.

All the best and see you, well, you probably will see me for the new year... but, in the event that you don't....have a happy new year!

2010 looks fantastic already!

Will 2010 be a better economic year? PT2

2009-12-03T14:07:00.005-05:00

With Particular regard to the causes of this current crisis turned economic recession in 07-08, the issues of a) credit flows and b) deflation due to conditions that can be described as an aggressive bear market, for not only stocks, but also for companies in distress, is also of importance.

The IMF asserts in their WEO that credit has started to flow and spreads have come down. That is somewhat good news, but expectations on lending conditions, as of July this year, are still down considerably.

There has been some movement in the Asian markets with regard to stock activity, but to the level where they were in 2006-07 is still yet to materialize. In fact, it may never rebound.

Deflationary pressure is still a major concern, as it appears as if, while manufacturing has "stablized", purchases are down with output productivity increasing with minor layoffs.

To highlight for a moment of how we got here overall; the chain reaction of bad events started when credit stopped flowing through the banking sector, simultaneously with the decline in private equity activity, due mostly because major investors lost confidence in the system that was corrupted by risky assets- mortgage backed securities and collateralized debt obligations- where the risks were severely under appreciated.

Particularly, the market for housing backed securities, became detrimentally unstable due to the deteriorating economic conditions in America which, among other things, causing homes to be "turned upside down" (the collateral that secured the home loan is worth less than the money owed on it) and equally, adjustable rates for low cost homes that were extreemly very low in order to attract middle to low income families, being raised at a time of considerably high real inflation cost which caused massive defaults- the price of gasoline and processed food, saw record prices in the years between 2004 to 2008, that had risen from $27.00 to $91.00 (USD) for oil and with the weighted average export shares of total food for 2002 to 2009 from 90.2 to 146.9 with the peak in 2008 to 190.9, as reported by the FAO's in their global food price index.

Currently, The Case-Shiller housing price index (HPI) state that home prices are at -13% of what they were last year this time and -50% from their peak in 2006-2007 in the USA. The Financial Times (FT) HPI in the Eurozone is down for past 7 quarters leading up to Q1, 2009, with negative digit decreases steepening from Q1, 2008 to Q1, 2009 to -4.5%.

In another vein, while the Asian housing market was red hot throughout most of the 2000's leading into 2009, the reports for 2009 are allot less stated- which is quite concerning when leading institutions, are touting the Asian led recovery for the global economy. Examining national statistics on the residential market is still red hot in China, with a 17% year over increase in overall household investment and 13% year over increase in residential property and for commercial property there was a 73% rate of sales increase.

Figures throughout Asia are pretty modest compared with China, but one must take into consideration the issue with respect to sovereign national investment in housing in the socialist state, coupled with increased domestic savings and a balance of payment surplus, to asisst with funding the Chinese market during the downturn, in addition to the stimulus plan they introduced in 2008.

Let's all hope Asia does not follow the western model of economic management to a tee. Even though Asian officials have chastised western officials for their management, the fact of the matter is that they learned the tools and templates for economic management from western schools of thought.

The key issue with all said previously, is that the regulatory regime and the way investment banks are allowed to do business, coupled with the issues as they relate to trading and collaterlalized trading, still has not changed.

Not only does this indicate that disaster can strike again, but also if growth is to be led through the virtue of these windows, with lower employment and manufacturing prospects, in conjunction with the still uncertain nature of the very system that collapsed- let alone the uncertainty about impending regulations- there is nothing to suggest that robust growth is to be expected.

Nevertheless, when we factor in the savings rates before the crisis started for Asia, it is not difficult to believe that spending, at least, in the region, will be higher than other continental markets with regard to home prices.

Overall, the major issue with regard to economic growth, globally, is the issue of who, exactly, will there be growth for?

So, the recession is ending for some people. Asia seems to have never had a recession, let alone still in one. But, the recession is certainly not ending for many of us out there.

Emerging and developing markets must take advantage of the permanent jobs losses and continue to develop nationally the traditional way, until they have "caught up" to developed markets- where ever that may end up.

Will 2010 be a better economic year? PT1

2009-12-03T13:50:00.005-05:00

The IMF in a recent statement that the crisis is over, the worse is behind us, recovery is seen and the best is yet to come. Quoting the IMF in their World Economic Report in October, 2009 explicitly stated in the first chapter titled "The Global Recession is ending".

That may be true in some instances, but there is still very much to be done and perhaps, sadly, little than can be done to save much.

In light of this, can we expect a better 2010 in The Caribbean and larger developing world, in any event? It all depends on what other larger countries do and how much leeway we have with expanding interests past the traditional positions, if there is the notion of continued dependence on larger economies to lead the charge.

I remember one of my very first articles back at the end of 2008. It stated that the global economy would begin to rebound by Q3 this year. To some extent, I was correct, albeit that the rebound was not as upbeat as one would have read into my analysis and the growth is being led by Asia at large- China and South East Asia to be exact- as opposed to the traditional Triad (EU, USA and Japan).

Let's take a deeper look at some of the issues analysts have been looking at to gauge their outlook: manufacturing, retail sales and consumer confidence.

Led primarily by Asian markets, manufacturing has rebounded with little or no pick up in the USA or in Europe. The US Industrial Activity Report, or the "Biege Book" over the last year has stabilized towards accepting lower level of production and output expectations, to some 20% below that of 2006 and 2007. In Europe, the details are slightly more encouraging, due to the issue that emerging economies in the post soviet bloc's are still developing and commodities such as oil, coal and car manufacturing, are experiencing steady growth.

Coming into the end of the year, as it relates to consumer confidence indexes broadly, analysts are predicting that sales will experience an uptick due to the Christmas season. Retail sales have been coming along slowly, thanks’ to the cash for clunkers exercise in the USA and welfare programs in the USA and Europe; i.e., stimulus checks in the USA and added welfare spending in most of Europe as well as VAT relaxation.

However, are these issues primarily linked to the larger issues with the economy and recovery? Also, will this compendium of criterion, moving forward, be less or more affected by other conditions that impact them all? Should there be any real concern that after the Christmas season, consumer confidence will see comparable seasonal inclines?

To be fair, the USA and Europe are still not producing as much or as fast. Corporate defaults are at an all time high in Europe and are to be at a sustained default level, going into 2011 as well as into 2012 by some of the more dire predictions.

American production is up, but production volume is down. While also, job cuts, having worked to increase productivity levels by 10% to 15%.

For one, the issue of employment prospects and current employment rates is first and foremost.

The US just cut nearly 200 thousand private sector jobs in November, which was stated as the smallest job cut over a month period since 2008.

In Europe, The Employment in Europe report forms the analytical basis for the Joint Employment Report (JER) is slated to be out by December 9th, 2009. But, from the onset of the crisis, over 4 million.

Additionally, due to Europe's fervor for regulation, more private sector jobs are slated to be lost. Particularly with regulation in the financial services sector as well as regulation vis a vis carbon policy.

Reports up to April, 2009 from the International Labor Organization (ILO), also has global employment significantly down at -1.3%. This means that job growth has not only receded, but permanent jobs may have been lost across Europe and America, with modest gains in North Africa/Middle East and in East Asia.

In my estimation, the jobs lost over this recession, will never return to the traditional, real sectors of the developed markets the way it has been in the past in the USA and established Europe.

Higher technology, coupled with the uncertainty of the outlooks which are prompting managers to maintain labor costs, while reaping profits at the margins due to the higher productivity, will see to that.

It is up to, in turn, developing and emerging market countries to create traditional sector jobs to sustain growth into, what I would term, developed market economies “funking out".

The issue of increased investment, particularly led by private equity, is another issue to monitor for signs of progress.

The reason why private equity should be monitored, is because private equity is what drove the market, pre crisis. In 2008, private equity fell by 40% over the previous year, directly correlated with recessionary economic growth, with no signs of increased activity as it relates to mergers and acquisitions, or improved conditions in large firms outside of high technology.

The worst of it with private equity is that as long as asset pricing remains unstable and the issue of market/mark to market evaluation remains uncertain, private equity will remain silent, if all circumstances remain constant over the short to medium term.

Coming down the home stretch..

2009-12-01T09:36:00.003-05:00

When will the EU and the USA put something in for small and medium businesses?

I think the TARP, and the other stimulus plans for bank's across Europe, were a little flawed in the sense that they forgot that the same market mechanisms that the capital injections were passed through, is what messed the economy up in the first place. And, also, flawed because the same institutions, were still saddled with the same inept and in some cases corrupt individuals.

However, the idea that Central Bank's across the board were willing to support their banking systems, no matter what, staved off larger disaster.

The issue now must be with small businesses. I don't care if it's with green energy or dirty diesel mechanics, just get some relief to small businesses.

Direct par roll subsidies may be a start. Trade financing has to be another idea, especially throughout the USA...support courier and carrier services as well to reduce the cost of transportation- through fuel credits, tax cuts on packaging material and pay roll subsidies.

Are these ideas too far fetched, or are they just what the world needs right now?

UK keeps rate at .5%!!

2009-11-18T13:31:00.002-05:00

Well, if credit to households and consumers have not just yet gotten back to normal levels, and the rate is near zero, what is the BOE to do?

They can't be worried about internal inflation? Apparently, they report low inflation for September- CPI of 1.1% and low expectations.

The VAT reversal may have played a part in the inflation rate as it is, but certainly investor and consumer appetite has not been wet as yet. Maybe the X-mas may be better news for businesses!
BOE Report

The FT has a good Monday Ed...

2009-11-16T14:47:00.002-05:00

Could not have reported it any other way!

“When the recovery picks up, we will be back to square one,” Mr Diouf told the Financial Times in an interview.

He said the same structural problems behind last year’s spike in food prices were still affecting the market. These included lack of investment, surging demand in Asia and diversion of food commodities into biofuels.

“We have all the elements of the crisis,” he said, adding that a weakening US dollar could exacerbate the upward price pressure in food commodities.

Well, do something about it G-20/G-7/G-2 or what ever number you want to put to a G!

What he should have added is that the frayed financial market mechanisms on derivatives/futures, should be focused on as well....in addition to the Doha Round stalemate!

Japan's economy grew at 4.8% in 4th QT!

2009-11-16T13:50:00.002-05:00

They blame it all on the fiscal stimulus FT Report. They would blame everything on the fiscal stimulus. But, it is what they say they want it to be- I guess.

The issue that has me concerned is; how do they, or, "did they", create value out of nothing? For example, they [Japan] ran the same cash for clunkers programme as did the USA. But, it was just to stimulate transactions? Wasn't it?

The trick was to get persons to but new cars at an affordable rate. But, would allowing cars to sit in inventory, rather than being purchased at a low price or at a loss, be a good thing?

I don't think that it would be a good thing and they would [Japanese officials] have to give us another excuse. Because, I don't know of any business that can stay in operation, if it sells its products at a loss or below the market value or real value! That's just me!

The issue to me is with the value of the YEN. As it stands, now, the YEN hovers under 95 YEN per $1 USD. A stronger YEN, means more relative value for Japanese products. Also, it means that the YEN is worth more than the USD and that would have increased speculation over the last few quarters.

Not bad. But, a stronger YEN, with a weaker dollar, may not be a bad thing. The US economy is not as sound as it once was, so if the Japanese have not found other consumers for their exporters, or, show themselves to be less worried about the Euro and other Asian currencies, then they are probably going to under perform- all circumstances considered- in the early part of the next QT.

Especially they would underperform if they depend on fiscal stimulus and cash for clunkers....which may not sound like a bad idea after all, considering that the YEN is stronger and they can create value, relatively, within their own economy!

One of my favourite tunes...

2009-11-13T15:31:00.003-05:00

While this blog is about my work and my professional interests, I like to show another side.

We can't all be serious all of the time!! "Tiger Baby" from Militant out of Guyana!

Enjoy!

I posted this notification everywhere...

2009-11-13T08:41:00.002-05:00

...aside for on my blog. I had an interview yesterday on a local radio station, Star 106 fm with the host Jeff Lloyd.

It was a pre-recorded show. But, in any event, when I get a taping I would post it to the website.

I talked about allot of things...political economy, economics, the Bahamian economy, diversification of the Bahamian economy, the global economy and some issues as they relate to capital punishment and social justice.

Great interview. Jeff Lloyd over at Star 106 fm did a fantastic job with me.

http://star106fm.com/index.php

Just in case any of you like easy listening in the days...

What in the world?

2009-11-02T16:29:00.002-05:00

German businesses are asking for more taxes?

I knew the Germans were weird, but not this weird!

I guess its a socialist type mentality. Perhaps its German exceptionalism rather than US or French exceptionalism.

They tend to think about the macroeconomic picture, rather than for their individual firms. Good for them to be so caring about everyone else.

For me, tax cuts would be welcomed at any time. No idea as to the full reasoning with regard to the bottom line for businesses. But, the business community has said that it fears that the spending that occurred under this crisis, could leave it with a bad reputation for terrible fiscal mismanagement.

So what? Get your tax break and pay some back in if you wish to. Good grief!

Turn your clocks back!

2009-11-02T16:27:00.003-05:00

Hope you guys remembered to turn your clocks back one hour. Daylight savings time, in reverse. (I think!)

I always like this time of year. The weather is not so hot and not so cold. Just cool. Even though I normally have bad luck around this time, things always seem to feel great.

Better days ahead...