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.
Sunday, November 28, 2010
Tuesday, November 16, 2010
Cholera epidemic in Haiti..
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.
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.
Wednesday, October 13, 2010
IMF/World Bank Group has a new Chairman!
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.
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.
Monday, October 11, 2010
Chilean Miners days from escape...
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.
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.
Friday, September 24, 2010
What The Bahamas could have done!
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.
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.
Sunday, September 19, 2010
Tune in to "Dare To Be Great"- Cable 12 Bahamas, 8:00pm on Monday 20th September, 2010.
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!
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!
Tuesday, September 7, 2010
Trade Value up...
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.
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.
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