Welcome

Dennis Jones is a Jamaican-born international economist, who has lived most of the time in the UK and USA, and latterly in Guinea, west Africa. He moved back to the Caribbean in 2007. This blog contains his observations on life on this small eastern Caribbean island, as well as views on life and issues on a broader landscape, especially the Caribbean and Africa.

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Tuesday, September 30, 2008

Micheal Palin was funny on "Monty Python", but what about Sarah Palin?

My female friend said "I hate it that people will cut Sarah Palin slack because she is a woman." So, I will not take off the gloves but I am going to try to say a few blunt things. What I have heard Ms. Palin say in public tells me that she has no idea what she is talking about. Her recent interview with CBS's Katie Couric is being dribbled out on TV, and as it is we hear a woman drivelling, if not dribbling. Asked about whether global warming had anything to do with human activities, Ms. Palin said something along the lines that we cannot blame all of man's activities on global warming.

The interview was already lampooned this weekend on Saturday Night Live, and is shocking people because it did not need to add humourous material, just use what was actually said.



In the actual interview, Ms. Palin sometimes just repeats certain phrases in a random, unconnected fashion. When asked for some specific examples of Senator McCain's push for more financial regulation, she replies to Ms. Couric, seemingly blinking in disbelief at what she had heard so far: "I'll try to find you some and I'll bring 'em to ya."



Her hands often do the talking, and they seem more coherent than she does more of the time. Wolf Blitzer was stunned on CNN's "The Late Edition" last night when he played the two clips side-by-side. Art imitating life or life imitating art? Judge for yourself if you think this reflects a disastrous choice.



The word going around (see Huffington Post) is that the McCain-Palin camp are happy with the prospects because expectations have been set so low that Ms. Palin's stock can only go up--but like the Dow, will it come crashing down again? But it's clear that Ms. Palin's remarks to Katie Couric "revealed her broad lack of knowledge on many of the issues that one needs to know when you're a heartbeat away from the presidency" to quote Huffington.

Key conservative supporters and commentators this past weekend stated clearly that Ms. Palin was a bad choice and should step down from the vice presidential candidacy: National Review columnist Kathleen Parker said Ms. Palin should step down since she's "out of her league."(see report).

While I am looking forward to the vice presidential debate due this Thursday between Senator Biden and Governor Palin, I fear that it could be a really embarrassing event. If I am not wrong it could even be really humiliating for Ms. Palin. It could turn out that a savaging by Senator Biden leads to many sympathy votes for a person downtrodden.

For a presidential candidate who is supposed to pride himself on his ability to make good judgements, Senator McCain's choice of a poorly vetted VP running mate shows little supporting evidence of good judgement. For a man who puts so much importance on the need for experience and understanding, especially as his age (72) suggests that he may not be around all the time to carry things with his own knowledge, Ms. Palin's choice is just gobsmackingly insane. She has no reverence for the age (66) and political longevity of her opponent, Senator Biden, and emphasised how long he had been a Washington insider, saying: “I’ve been hearing about his Senate speeches since I was in, like, second grade.” Hmm. That rings a bell. Dong!

Maybe while Ms. Palin is hunkering down with Republican aides at the Arizona "debate camp" she will see a light or realise that she has more important walruses to catch in Anchorage and just slink away claiming "personal reasons".

Monday, September 29, 2008

I don't like Mondays.

I had such a wonderful weekend.

Beginning on Friday night, I let my emotions sway with the US presidential debate, seeing a seasoned Senator smirk and condescend towards his younger, much newer, and more naturally warm opponent. I felt good at the end of Friday night, and the night ended very late after watching some of post-debate analyses. By the end of that I had not forgotten but put well aside another week of cataclysmic events in financial markets. Armageddon was still not here. US politicians indicated that with their willingness to work over the weekend do whatever it took to get a plan passed that, come Monday or soon into the coming week, a deal would be on the way.

Saturday began with difficulty, worn out from the week and the debates. My customary fish cutter and cappuccino breakfast was much later than usual, and I sat alone as my family snuggled under covers. Later in the day, my daughter had another birthday party to go to, this time at Drill Hall Beach, where she celebrated with her class mates in good Caribbean family picnic style. Everything was simple and nice. We had fried chicken, pizza, buljol, and golden apple juice. Children played on boogie-boards, and shared two boards between 20. Boys threw rocks and found brain coral. A heavy shower of rain came to drive everyone from the sea: Caribbean people are afraid of rain, even when they are already soaking wet. My wife taxed herself with some buff-up treatment for her feet.

My neighbour-landlord celebrated her birthday during the evening, kicking off at 9pm, and having a fete that was just really a great bash. She got a gift of party decorations for her house, that left her veranda festooned with balloons. She had food that was a feast of international dimensions: doubles, rotis, pork cutters, shark and bake, sushi, corn soup, and more.We love our drink but we don't go crazy with the liquor, and there was plenty of coconut water for those who did not want wine or rum. But the best of it all was that the birthday girl looked fabulous as she showed off her new trim figure. I would love to include her picture but you're not going to see my "Auntie" on this blog. You just have to imagine. In the wee hours of the morning, my wife and I took our weary danced out pre-baby boomer bodies home, with an armful of left over food.

On Sunday, no one could move very well. My daughter was pooped. Her papers had not been party poopers and were pooped too. God would have to excuse us all today. I had business to tend to as I got to put the last few weeks' financial turmoil into context for a wider audience, when I appeared on Voice of Barbados' "Brass Tacks" (see Nation report). I was surprised during the afternoon when I got some phone calls from people who had heard me live and then on the news, offering me congratulations. I guess I had not sent anyone into panic.

My working week started as usual on Sunday evening, when financial markets opened in Asia. I did not stay to look as I knew that some bad things were already in the works. Some of the issues I had flagged on the radio started to hit people between the eyes squarely as the British government announced an effective nationalisation of a bank, Bradford and Bingley (which is a major lender to landlords; see Times report). News was filtering out that Belgian-Dutch banking and insurance giant, Fortis, was partly nationalised by the Netherlands, Belgium and Luxembourg governments (see BBC report). Wall Street's problems are also evident world wide. So, no surprise that Asian and European stock markets took a pummelling.

But I did not care because I was having my own pummelling. My dear wife had sought to raise the romance quotient by arranging joint massages. No, not massages together, but having my joints massaged after she had hers twisted, folded, and slapped. My masseuse, whom I will call "Charming", seemed to attack me with a vengeance befitting someone who had seen her pension plan go up in smoke last week and thought that it was my fault. After whacking the daylights out of my back, arms and legs, to "warm me up", she told me to turn over. I give her a McCain-like smirk. But after a couple of hours of manipulation and kneading, I needed nothing more than water and my bed. The markets could handle themselves.

Then day broke in America and here. My easy weekend left me unconcerned about trading as I ate breakfast with my little daughter, and she told me how she had heard me on the radio. "Daddy. How did you get inside the radio?" She is my number one fan, and told me that she had also seen my picture in the Nation newspaper: "I know that's you, Daddy, because you are bald." (Actually, my head is shaven.) The warm feeling she gave me passed over me again during the day, as I got some back-slaps and outstretched hands from some parents I met in the school yard: "I heard your speech on the radio..." one said. Maybe they mistook me for Obama. I could get used to this "celebrity" status, though. But that's another great thing about living in a small island or community.

But what of America's problems? First up, Citigroup announced a buy out of Wachovia--once the fourth largest bank in the US (see Times report). Great start to the day. Then, all the focus was on Congress, as markets hoped that the US politicians--who were supposed to have gone on holiday and start campaigning--would give their support to a plan to deal with some of the problem assets on the books of financial institutions. All looked good at the start. Then tension rose as the noon time for the vote came and went, and then tension rose to ridiculous levels as the vote started around 1.30 in the afternoon. The bottom lime: the proposal was defeated. Market reactions? Run for the hills! Today was a tragically historic day in the US equity markets. The Dow Jones Industrial Average registered its largest single day point loss in history--down 778 points, over 7 percent (see Bloomberg report). The NASDAQ 100 index lost 10.5% of its value in today's session alone. The Volatility Index (VIX) registered the highest reading as far back as data have been recorded since 1990--reaching 48--that suggests the greatest ever level of fear for two decades. Gold prices soared above US$900/ounce again, but people fled from oil, which dropped by about $10 to $96/barrel, on fears that the world would really see much slower economic activity.

The numbers show that although more Republicans voted for (65) than seemed likely, their heavy vote against (133) is what killed the plan, which was not passed by 23 votes (by a vote of 228 to 205). Why did the legislators vote against? Ideology? I don't think so. My own suspicion at the time was that the fact that all face re-election in November meant that a vote against would better protect prospects with local voters. In fact, some analysis later showed that those Congress-persons who had or faced close contests in their districts voted against. Blame is flying around now like confetti. Presidential candidate Senator McCain piled on his blame on his opponent, telling the press: "Senator Obama and his allies in Congress infused unnecessary partisanship into the process.'' Democrats are ridiculing Republicans who appeared to get upset that House Speaker, Nancy Pelosi, criticised the Bush Administration's economic policies in a speech she gave in the afternoon. Oh, Diddums! Bottom line is that Republican in Congress rejected the solution put forward by their administration. Divided they stand. Divided they fall? President Bush was "very disappointed" and will work with members of his Republican Party: his appearances now like the dog on His Master's Voice Records tend to make markets plunge but this time the damage was already done.

Politics reared its head in a clear and ugly manner. Many US politicians had been stricken with the anger of their constituents over the past days as many people heard about a bailout of Wall Street financiers. The "fat cats" were going to get more fresh milk while ordinary citizens had to deal with Melamine-tainted Chinese powdered milk. What about bailing out home owners...or those with car loans...or student loans. No saving Wall Street; punish them. Main Street needed saving.

Well, tomorrow is the end of September and the end of the quarter and financial year for a lot of companies. The fall in the Dow wiped US$ 1.2 trillion from the value of shares. Congress declined to give its assent to a bill that may have a US$ 700 billion tag. When voters see their statements for money market funds, pension funds, share holdings, or almost every other asset, the large dip through to the end of September should be well understood by them. While I don't favour bailing out financial firms, and may see this as an awful outcome from too much loose monetary policy, the problem being faced is one that is frightening people and fear and logic don't mix. Credit has dried up and that means that the essence of the economy is missing. Wall Street allows Main Street to function--and taking that for all countries, we see that the current credit crisis is seizing up the world's economies. The 1987 stock market crash was a rapid plunge, while the current problem has been much slower in enfolding, but it's still seeing markets move to worryingly low level.

Today's fall out from Wall Street led to a pounding in Latin America, and Brazil's stock exchange had to close temporarily. Now the effects are just coming to Asia's new trading day. Australia's equity markets are already in turmoil and will see a delayed opening. The central banks in Japan and Australia have pumped large amounts of credit into their financial systems this evening, similar to the US$620 billion added by the US Federal Reserve. I don't know if any Republicans can see across to Asia from their west coast locations, but maybe they can tell us what they see as credit conditions are pailing into insignificance

We have a few days in which more attempts will be made to come to an agreement. The Jewish holiday, Rosh Hashanah, will be observed. When another vote can be taken, which should be Thursday, October 2, the temporary banning of short selling will be removed. OMG!

I really don't like Mondays.

Saturday, September 27, 2008

Yes, Mr. President.

We can observe the same events, and listen to the same dialogue, read the transcripts, and come away with very different views about what took place and what it all might mean.

I watched on television last night the first debate between the US presidential candidates and I had several immediate and continuing impressions (see transcript of debate). To me, Senator Obama (Democrat) looked and sounded very polished and tried from the start to make a connection with "ordinary" people--moving from his elitist image toward a constituency that he needs to capture: "... And you're wondering, how's it going to affect me? How's it going to affect my job? How's it going to affect my house? How's it going to affect my retirement savings or my ability to send my children to college?" He was a university professor and in keeping with that began and continued with a style that suggested clear and ordered assessment of issues, for instance with a list of four points that the proposed bailout plan for the financial sector should include: "No. 1, we've got to make sure that we've got oversight over this whole process...", etc. He tagged himself as a decider who was smart: "So we have to move swiftly, and we have to move wisely." He's a well educated man and he wanted to stand on those credentials, but he seemed to want to portray himself as less lofty than others would wish to suggest.

Senator McCain (Republican) began with an interesting tack, seeking to cement the idea that he is truly bipartisan: His first remarks were about the ailing Senator Kennedy (Democrat) and then he immediately went to current Congressional discussions of the bailout plan: "...we are seeing, for the first time in a long time, Republicans and Democrats together, sitting down, trying to work out a solution to this fiscal (sic) crisis that we're in." His further points then seemed to wander into an answer. He had no problem doing that wandering throughout the debate, thinking on his feet in a less structured way than Senator Obama, but with some clear messages nevertheless, whether it was a fixation with cutting government spending and scouring government institutions, or finishing the war with Iraq in a way that honoured the American soldiers.

During the exchanges, Senator Obama clearly tried to tag Senator McCain with a heavy taint of the current Bush administration: "Now, we also have to recognize that this is a final verdict on eight years of failed economic policies promoted by George Bush, supported by Senator McCain."; "...the policies of President Bush that John McCain wants to follow..."; "... under George Bush, with the support of Senator McCain, we've been giving them [Pakistan] $10 billion over the last seven years." In several different ways he posed the question: "how did we get into this situation in the first place?" We got there because of a series of policies implemented by President Bush, and "supported 90 percent" by Senator McCain. Whether it was the financial crisis, the spending that Senator McCain repeatedly said was out of control, the war in Iraq, the tarnished image of the United States abroad. Eight years of Republican rule had got the country to where it was now. A vote for Senator McCain would mean a vote for at least four more years of the same.

Senator McCain tried to distance himself from that, and set himself up as a maverick within his own party--including his choice of vice presidential candidate--and also someone who had a long political record that people could check to see what he really represented: "It's well-known that I have not been elected Miss Congeniality in the United States Senate nor with the administration. I have opposed the president on spending, on climate change, on torture of prisoner, on - on Guantanamo Bay. On the way that the Iraq War was conducted. I have a long record and the American people know me very well and that is independent and a maverick of the Senate and I'm happy to say that I've got a partner that's a good maverick along with me now."

Senator Obama repeatedly looked Senator McCain in the eye and referred to him as "John". Senator McCain rarely looked at his opponent and referred to him always as "Senator Obama".

Senator Obama tried to get his social agenda into play early and often: investment in education, technology, health care, alternative energy. Senator McCain's main platform was cutting government spending.

Once the debate moved away from economic and financial issues and into the realm of foreign political relations, Senator McCain played an interesting card. He was the man of knowledge, experience, and concern with the reality of war and what it might mean to lead a country that was coming from a defeat in war.

Senator McCain also tried a tactic that drew attention to his experience in a different way, by saying repeatedly that Senator Obama was inexperienced and lacked knowledge: "I'm afraid Senator Obama doesn't understand the difference between a tactic and a strategy."; "I don't think that Senator Obama understands that there was a failed state in Pakistan."; "Senator Obama doesn't seem to understand ..."; What Senator Obama doesn't seem to understand that if without precondition you sit down across the table from someone who has called Israel a "stinking corpse," and wants to destroy that country and wipe it off the map, you legitimize those comments."; He doesn't understand that Russia committed serious aggression against Georgia."; "We seem to come full circle again. Senator Obama still doesn't quite understand -- or doesn't get it -- that if we fail in Iraq, it encourages al Qaeda." That's a lot of ignorance to pile on someone, and in the mind of many a point repeated becomes an evident truth/ Add that to the use of the words "naive" and you get a clear picture.

A vote for Obama is a vote for a ignorant, greenhorn, and despite his great communication style, he really does not get it. You would think that warning people against voting for someone who is so ignorant would find a logical counterpart in the person picking a running mate that was full of knowledge like he is. I guess we will have to wait to hear Senator Biden attack Governor Palin in next week's vice presidential debate, for her lack of knowledge and limited time in office, and point out that Sarah just does not understand and suffers from naivete.

My wife is an unbridled fan of Obama's and found all of McCain's "antics" just worthy of "Cheesh!" or "How lame." I have a feeling that supporters of McCain and doubters about Obama may hold on to what they hear repeated.

What I saw of the initial discussion amongst the political pundits suggested that they thought the debate was a tie. The initial poll of viewers gave Senator Obama a 51/38 percent win (see report), including an interesting large lead amongst women voters; McCain apparently failed to get the "game changer" he needed out of the debate to reverse his deficit in the polls. Of course, polls and pundits can be wrong, and on election day, it is more important that people vote for Obama for him to win.

What I saw left me in no doubts in my mind that Obama would be an excellent president, and should be the clear choice of most voters. Those who think the same wonder what others see that leave doubts in their mind. I cannot think like a white man, who has a deep distrust if not hate of black people. I cannot think like a woman, who may feel embittered that her preferred Democrat candidate is not running for this office. I cannot think like someone who feels that a one term Senator with a Kenyan father and white American mother represents something too exotic for me to have as the leader of my country. I cannot think like others who do not support the person who seems to me to be the best candidate by far. But partisanship is not about logic, but about emotions. Politics is about how you relate to people who you want to exercise power. This coming election will be so interesting as a test of whether America can relate positively to the notion of a black man exercising power over the country.





Thursday, September 25, 2008

Are We There Yet?

What happened today? Depending on when you want to start, nothing or quite a lot. Take a look at the chart (and if it's not clear, click on the image).

At 3.30pm yesterday afternoon, while the financial markets were digesting the US Congressional testimony of Messrs. Bernanake and Paulson, and dealing with the questions and answers session,the exchange rate for the Euro against the US dollar was at 1.4640. The US dollar buyers in the markets liked what they were hearing in terms of possible better outlook for the economy and the US dollar, and the Euro rate fell towards 1.4600 as the afternoon moved to its close.

By 9pm, just before President Bush said that "our entire economy is in danger" unless Congress agreed swiftly to his US$700 billion rescue package for stricken financial institutions, the Euro had rebounded to around the same level as at around 3.30. The President wished us good night, and within minutes, the US dollar got crushed while traders in Asia and then in London decided to unload dollars sending the rate to 1.4760.There was a rumour going around that a deal would be in the bag soon, and that could mean a worse fiscal position for the US and worse outlook for the dollar. But hang on, some said. We still don't know if this bill is going to pass, so where are we rushing? Back came the herd and dollars were bought aplenty, so that by 7am this morning when New York traders were just getting their first coffee, the Euro was sitting at 1.4640.

And so it's been for the past few days--moving sideways. Forget the daily headlines about "Dow up!", Dow down!" No one's going anywhere because no one knows what will happen, and prices basically stand still over a day, though during the day we see a lot of volatility. If you make a deal and sit on your hands and hope to see a profit or loss at the end of the day, you've probably been disappointed as nothing has really moved over a 24 hour period. If you are prepared to take some risk and trade the rises and the falls then these could have been very good times, or very rough times.

Some words and phrases that have come out in financial markets very often in recent weeks are "fear", "panic", "confusion", "increased volatility", "total collapse", "lack of confidence", "flight to quality". You've seen all of those sentiments playing out in a huge way: gold prices move the most in one day than seen for decades; oil prices move so sharply that trading has to be suspended twice during a day; stock markets give up daily 5 percent losses, and make back 5 percent; the rates at which banks lend to each other double as those with cash hang onto it for dear life.

People who borrowed money to buy homes have had a lot of those feelings too, but with little opportunity to do more than lose money and more. They, unfortunately, have no where to run if the value of their house has dropped. What dribbles of confidence filter into financial markets I doubt if a drop of it is filtering into the minds of most American citizens.

If markets show so much confusion how can anyone believe that there is a clear solution lying ahead? Even if the financial market mess is solved in the near term, I don't hear much about solving the financial mess in which many homeowners have found themselves.

Wednesday, September 24, 2008

You Lost That Loving Feeling?

I'm probably not alone amongst those living in or from the Caribbean in knowing more about the political positions of those who fought for the candidature of the Democrats Party in the US, and the US presidential candidates than I do about the positions of the candidates who just duked it out for the presidency of Jamaica's People's National Party. World media coverage gives me a lot more information about the US and its activities than I can find about things going on in this region. Even if I cannot really figure out what the impact of US events will be on my life, I and others feel that they will have a bigger impact than many of the events going on in our tropical backyard. The package of cable channels that I am offered gives me a range of US TV channels with the click of several buttons but I cannot tune into Caribbean Broadcasting Corporation Barbados. Forget about trying to tune into a Jamaican TV station. The economist in me says that we are happy to pay for this skewed choice and have shown with our dollars that we are not so pressed for information from within the region. That said, I am now pondering in my ignorance whether I have missed a momentous event in my own country, Jamaica.

This past weekend, the opposition People's National Party (PNP) had a contest for its presidency. The holder, Portia Simpson-Miller beat out convincingly Peter Phillips, a former vice-president of the party. Mr. Phillips had held portfolios for security, health and construction and works ministries under the leadership then PM P. J. Patterson. He was retained as security minister when Mrs. Simpson-Miller took over the presidency of the party, and role of PM in 2006. Mr. Phillips remained as security spokesman when the PNP lost office last September after 18 years in power and was also leader of opposition business in parliament. As many will know, Mrs. Simpson-Miller created history in 2006 when she won the PNP presidency over Phillips; Omar Davies (then finance minister); and Karl Blythe (former water minister) in a divisive contest following the resignation of Patterson. She became Jamaica's first woman prime minister, but carried the blame for the PNP's loss in last September's general election.

From what I had been able to discern about the PNP presidency contest it was on the face of it more about leadership ability than about political philosphies. Mr. Phillips probably sensed that his time for leadership was best now given a series of world economic events that were making life hard for the new government (rising oil and food prices), and a low standing in polls for the new PM, Bruce Golding, coming from perceived difficulties in dealing with these and political embarrassments including disputes still running about the general election results.

Ian Boyne wrote a very thoughtful piece in July (see Gleaner report), which highlighted some important issues. Did Mrs. Simpson-Miller have the capacity to lead? This had been raised in the presidential run-off in 2006, and is still a major issue: people's doubts would have been reinforced with Mrs. Simpson-Miller's actual performance in office. Mr. Phillips is an intellectual [
Doctorate in International Political Economy and Development Studies; Fulbright Scholar] and "has the solid middle-class credentials, the Drumblair [Manley dynasty] connection, the right inflection, the right school tie, university network, acceptability by the upper classes and even - yes, it's politically incorrect - the right skin colour", according to Mr. Boyne. Mrs. Simpson-Miller has charisma and charm--still important and unspent factors. She is a.woman of the people and has formidable grass-roots power. The P.J. Patterson view that she was (is) the only hope for the PNP has already been exploded twice in 2007 when she led the party into two electoral defeats. Therefore, her supposed invincibility has been shattered. She therefore seemed vulnerable. A notion also exists that 'big money' will not be backing the PNP while Mrs. Simpson-Miller is leading it; the PNP would be starved of funding and you can't win any political election without money.

Well, despite all those factors that might have favoured Mr. Phillips, a susbstantial majority of the party's delegates have given him the boot.He and many of his supporters have quickly resigned their positions as oppostion spokespersons in parliament, hence that look of emptiness around Mrs. Simpson-Miller. Mr. Phillips challenge to the incumbent was itself tumultous and his failure could have enormous political fallout in coming months, and we should be watching, especially if another general election is called soon. Mr. Phillips will now wander for a while in the political wilderness.

The contest helps me realise that those factors that are fascinating me and many others about the current state of US politics--that the
overlapping values of candidates' religion, race, gender, class, colour, speech, perceived intelligence and such personal characteristics--may play out in our little garden of politics at least as much as we think they do in the US. So, I regret deeply that I was not able to follow this contest as easily and intensely as I could the political horses in the US.


Monday, September 22, 2008

Murphy's Law.

From whenever and whereever the notion "Whatever can go wrong, will go wrong" came, it's now known as Murphy' Law or Sod's Law. Anyone brought up in England will be on the blower already telling me that my family-oriented blog cannot have words like "sod" in it because that's an offensive word. Well, if you think that then, I so doff my hat to you.

It's been quite a weekend and there is enough of it to go around for quite a few blog posts. So, just a few of the unlucky to be Irish events from this weekend.

Lightning struck dead my Internet connection on Saturday afternoon, while my daughter and some of her class mates were being washed by nature at Ocean Park at a birthday party. Water was the theme and we had the theme everywhere.

Our friend, who decided to divert his trip to Guyana to spend the weekend with us, went with me to this same kids party. "Go and look at the sting rays being fed", I told him. My little daughter dropped a plastic cup in the ray pool and my friend trying to rescue the rays from environmental catastrophe, had to saved as he toppled head first towards the sting rays. We grabbed his legs and saved the story for another time.

Barbados is not like the US where there's a good chance of getting many things fixed during any day. Saturday afternoon through Sunday are quarantined from work. My business depends on having a constant, reliable Internet connection. My business needs to be up again by Sunday afternoon. Cripes! Cable and Wireless (C&W) please help me: "Sorry, mate. Bring in the modem on Monday morning." To get that was the result of several calls to friends at C&W, all of whom were sweet and helpful but could not move the immovable. Again C&W take the biscuit, as I went through another hour long wait for anyone to answer the call to the help line; I'm still on hold. I may search out that call centre and just launch myself on all the operators and give them a real working over.

My most helpful unhelp was in PriceSmart, on Sunday, when I tried to find a replacement adaptor and a Universal Power Supply (UPS)--nothing like letting the horse bolt and then close the stable door. First, the youth asked me how many UPS-es I needed. One, I said. He proudly pointed me to packs of four USB cables. Grief! He then added, "If the stores upstairs were open, you could get one there...But they're closed, till Monday." I can understand why people go on the rampage in stores and shopping malls.

Add to that, the pizza that had been ordered for my daughter's party was not ready. Trouble was they had the wrong toppings. The order says "Hawaiian" so why are you giving me pepperoni? "Would you mind waiting a bit?", I was asked. What can you do when 40 kids and maybe a similar number of adults are ready to be pizzed off because you come back with empty boxes without the thin crust muncheroo? I should have gone back to my house and taken a poll. Fortunately, we had other food preparing. I did not even bother to mention to my wife how on the drive back a big blue Transport Board bus overshot the entry to the roundabout and sent me and another driver scurrying our cars for safety on the central island. The pizza must get through!

This was all well and good but my business need was still unfixed. A neighbour offered to help me out by offering access to her computer and Internet connection. All I can say is that, though we had tested earlier in the day that everything was working as it should, when I came to need it, the computer froze, with that wonderful spinning hourglass taunting me saying "Nah, nah, nah!". I wanted to get my New York trash talk face on and say "No ya didn't?" Murphy, I give it to you, boy. I just said to myself, don't try to fight fate.

My poor friend visiting had to return so I arranged to drive him to the airport and that offered me the solution to my Internet problem. One of our friends at the party lives on the road we needed to take and offered that I just pass by their house. Great! They gave me the garage opener and the security code to enter. Voila! I did what I needed to do to get my business affairs straight for the new week, then left. But, wait. They gave me the garage opener because the front doors were bolted. How were they going to get into their house? I looked at my visitor and we hoped that my friends had known what they were doing.

So, off to deal again with the thrills of regional travel. Our drive to the airport was stalled as we met an horrific head on crash on the highway by the airport--on that piece of dead straight road. My friend had just asked me a question about traffic accidents in Barbados. I hoped he had no more questions. Ever aware of the perils of travel, I told him I would wait while he checked in. Lo! His flight was postponed, so back from the airport we came at 7pm so that we could cool out at my house and then go back for his rescheduled flight at 10.30pm.

But all of that late night nonsense solved my Internet problem. Barbados has no 24-hour Internet cafes that I know of, and on a Sunday, it seemed that they too had closed midafternoon. The airport's departure lounge has a free wireless network and my computer picked up a good signal, as I waited for my friend to complete his immigration and security checks, and I ensured that he was not going to be an overnight guest.

So, on the lazy drive home, I decided to just drive along the south coast road rather than deal with the Wildey mess. I had fears of meeting a hole in the highway. Then I had a crazy thought, and as I neared the hotels; I thought of a plan. Why I thought that the Savannah hotel would be better equipped than the Accra I can never really explain. But my hunch was right. The hotel has a business centre and sells unlimited/24 hours access for a small price. I was tired and needed to just cool out anyway, so took a relaxed hour and really took stock of stock market, financial meltdown and whatever catastrophe was facing the world this coming week. The people at the Savannah are gems.

In all of that, though, God had his plan, and the day was graced with brilliant sunshine and the storms and flooding of the day before were a distant memory. Murphy did not visit my daughter's birthday party and it was a super success.

Thursday, September 18, 2008

Run for cover?

Rudyard Kipling wrote a poem entitled "If", which is always worth recalling, though I usually only remember the opening and closing lines:
If you can keep your head when all about you 
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or, being lied about, don't deal in lies,
Or, being hated, don't give way to hating,
And yet don't look too good, nor talk too wise;

If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with triumph and disaster
And treat those two imposters just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to broken,
And stoop and build 'em up with wornout tools;

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on";

If you can talk with crowds and keep your virtue,
Or walk with kings - nor lose the common touch;
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run -
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man my son!
For many people, myself included, the week's events have been eclipsed by a sense of Armageddon facing financial markets in the US. It's been a week of extreme volatility, fear, despair, unprecedented events, and more.

I have read that we are safe in Barbados, meaning I think, that there is little direct impact that may come from all of this, and like with the hurricanes that bypass the island while devastating much of the rest of the Caribbean region, most people here will read, try to digest and probably feel that all is far from lost. We have enough problems here, thanks, and I know that public schools closed early yesterday because of a heavy downpour of rain.

Since last Friday we have heard of the bankruptcy of a Wall Street icon, Lehman Brothers. We heard within hours of that news that another icon, Merrill Lynch, had been bought out by the appropriately named Bank of America. We heard that a major insurer was within a day of failure, and the Governor of New York gave the institution freedom to borrow from its subsidiaries, hoping this would stave off that failure. Help. Fire!

But whatever was going on, the financial system was quickly siezing up. Those institutions who had cash did not want to let it go to others, so money borrowing rates skyrocketed. Central banks in the North America, UK, Europe and Japan agreed to pump unprecedented amounts of liquidity (US$180 billion) into global financial markets, an effort to ensure banks have access to enough cash and to jumpstart a system that had virtually ground to a halt.

This week we saw the largest intra-day move in the gold market in approximately 30 years; if in doubt grab some gold. We saw the US stock market drop 7.5% in 3 days. We saw 10 year US interest rates pushed to 5 years lows, we saw people ready to pay the US government more money for its debt than they could get back. Simply amazing.

Safe investments seemed suddenly unsafe as one money market fund reported that its value had fallen below a dollar. People looked to withdraw funds, and that put other money market funds at risk.

Public confidence is always important, especially in financial institutions, and panic reactions can often precipitate the crisis that everyone fears. Financial institutions should understand what they are doing, but often are found to be asleep at the wheel, or too reliant and trusting of certain opinions so follow like lemmings. They often jump in and then they jump out. Ordinary citizens rarely understand all that is going on but their concerns can be critical. The general fear of risky assets has meant that people and institutions pulled their money out of stock markets and sought safe havens like gold, government debt, and straight old cash. In the financial world there is an index of panic called the Volatility Index (VIX), and yesterday, when it seemed that the stock markets had plumbed into a deep hole, this index went over 40 (an indication of extreme panic), not seen since the stock market hit the bottom of the bear market in 2002. In a kind of cruel irony, you can actually trade the VIX.

The immediate call in many quarters of a country that prides itself on being the bastion of capitalism, ironically enough, was not to let the markets work it out but for government intervention. No one wants to lose their jobs, their money, their shirts, or their homes. A lot of people, directly or indirectly involved in the financial sector have lost one or more of these things in recent months.

People who watch financial markets have been waiting for shoes to drop in the sector and the sound of a whole wardrobe of shoes has been defeaning this week. I asked myself last week how the necessary shrinking of the sector would happen, and within days the answers came. Failure for some. Marriages of convenience for others--some with suitors of their own kind, from the private sector, some with cross-cultural relations as private sector became folded into the public sector. A lot of people will be having new looks to their lives in coming months.

Some will find it unbelievable that a US Republican administration could move in a way that looks like socialism by effectively nationalising or taking onto the public books a range of financial institutions in order to save them from going under--first Bear Stearns (investment bank), then Fannie Mae and Freddie Mac (mortgage institutions), then American International Group (insurance for all sectors, especially financial institutions). But, you have to be creative if you are entrusted with control. People ask what will be next. The latest news is that the government will take the problem debts off the books of the financial institutions--the toxic, illiquid items that no one really wants right now, thanks. A new Resolution Trust Corporation? Trust the government's resolve? New rules have been put in place to ban "short selling", taking bets on prices falling. Some will see that as the only way to deal with a normal market behaviour that, if stoked by unfounded rumours, can mean targeting downward the prices of otherwise healthy institutions. Others will say that this is the government trying to determine what prices should be.

The root of the current crisis is the bursting of a bubble related to the housing market--lots of lending to allow people to buy and own homes, based on a belief that house prices would continue their decades-long rise, and so anyone and everyone could buy a house whether or not they could really afford it. An important part of resolving the problem is to clean up the financial mess that comes from the bursting of that bubble, but there is a harder philosophical reckoning to come for Americans in terms of accepting that not everyone can and should own their homes.

It's always easy to see the bottom from above. Many indicators suggest that a recent bottom in financial markets was hit this week. Maybe. Markets have a way of correcting themselves, so it could be a true bottom or it could be a breather--relief rally--before another leg lower. Today is full of euphoria as the financial markets in the US and all the talk is of reversal, and it will need a huge rally today just to get the markets back to where they were last week. If you look day by day, which many do, then all may seem well today.

Is it safe to come out yet?

Tuesday, September 16, 2008

Playing with Reality.

During the year that has passed I have been trading increasingly in financial markets. What a crazy fool! You must have nerves of steel. Look at all those people on Wall Street, and London, and Tokyo getting kicked out of their jobs! Billions of dollars flying around as if they represent confetti. How do you make sense of it all? These are some of the reactions that I have heard.

A long time ago, one of my gurus told me only try to control the things over which you have control; the rest you have to leave to fate. Another guru told me to make sure that I must ask the right questions, not search always to have the right answer. So, in reaction to a lot of the turbulence in financial markets--and there is a lot going on all the time, it's just that people focus on the large negative or positive movements--there is little you can do but to control your own position, and asking questions is good. Another foreign trader, who is a regular strategic advisor, emphasizes the need for discipline over sentiment. When you put these notions together somethings become clearer. First, you cannot go chasing all the rainbows in the sky, and you do not need to fear that the world will end just because you see dark clouds in the distance. What that means for me is that I focus on a few things and know that the rest has some effect but probably not that much in the short term. Second, you can really only control your losses; and if you do that your gains will take care of themselves. Third, if you do not understand what is going on and have no reason to be involved, then stay out. But keep asking questions.

I don't believe that governments should bail out private sector institutions that are in the business of taking risks, when those risks turn out badly; that is not what tax money should be used for.

That said, I have listened to and read a lot of commentary over the past days about the new "Darwinism" that appears to be moving on Wall Street--only the strongest financial firms will survive.

I have heard in the same breath people plead to let markets work because they send the right signals, but as soon as trouble is on the horizon, then come calls for government help. Most people hear those seemingly opposed arguments as meaning leave the markets alone when things are going well and the operators are making bundles of money, but come to its aid when it looks like parts of it will fold. Often there is the warning that if the financial sector or parts of it are left to fail then the whole economic house of cards will come crashing down. That's a frightening possibility, but it's also not a given. The problem is that one never knows beforehand if failure of a certain large financial institution will be the element that breaks the whole system's back. Luckily, in the age of computers, it's possible to see quickly many of the interlinkages between financial firms and have a good idea of whether it really could be the key. In part, that was an important difference between Bear Stearns and Lehman Brothers; Bear was critically interlinked. That was also likely a risk facing Merrill Lynch, ahead of its "shotgun marriage" with Bank of America. There is also the sense that some institutions are too big to fail: you can understand that for Fannie Mae and Freddie Mac being bailed out, and that may be what determines the fate of AIG (American International Group Inc., the biggest U.S. insurer by assets), a firm that touches almost every part of American life and for whom the ramifications of a bankruptcy may not be calculated fast enough ahead of a collapse. As I write, I hear that the US Federal Reserve will offer AIG a US$85 billion bridging loan and take an 80 percent stake in the company, and there are the word "AIG failure would threaten the stability of world financial markets" (see Bloomberg report). True? False?

Never in my life have I had in my hands or in all of my financial assets at one time one million dollars, yet financial markets allow me to play with sums like that on a daily basis. My limited experience has taught me a few things. First, when it's your own money on the line what you are prepared to risk for an expected reward really changes. I have my own money at stake, even though it is leveraging larger sums; it's only my money that can be lost. By contrast, I cannot really believe that the disciplined approach of risk-to-reward ratios really matters when it's not your own dollar on the table.

But training the nervous system to accept losing money is hard, whether it's your own or others. Most trading platforms try to help in that training by letting you have a demo account. This is usually considerably larger than the real money that most individuals can trade--say US$50,000 compared to a mere US$1,000--and if they do well with the demo, they may build up a notion that big money can be made easily. But if you remember that you are playing with Monopoly money in the demo you can freely trade away and lose with abandon, as you try out strategies; you can even reset the balance if you lose it all. So, you see clearly, it's not like the real world.

I wonder how many of the financial experts who have been managing million and billion dollar asset portfolios gt suckered into making big money easily had no notion of whose money they were really playing with and what would happen if it were lost. However many of them did consider that issue, the number is now greatly outstripped by those who now know what it's like to lose it all. True, there are always packages that mean that amongst the newly unemployed will be those who will get a handsome compensation. Many will have to be creative very quickly to keep their own income streaming in, because their lifestyles were probably built on a belief that their jobs would still be around for a good few more years. So, hail to those from Lehman Brothers who have quickly turned to eBay to try to sell memorabilia etc. (see report); as my wife quipped learning how to make "Lehman-aid".

The last few days have marked a major shift in the financial sector landscape, and when people talk about needing to rewrite the text books it's not hyperbole, because things are happening that were not supposed to happen, and decisions are having to be made for which there are no precedents. That's one of the reasons why those banks and other institutions who have cash have been hanging onto it for dear life; but like with juggling, it you don't let go of the object that needs to move everything comes to a halt.

Finally, financial transformation aside, we have seen something else clearly. When it comes time to collapse there are hard nosed people at the bargaining table. Want a deal? At that price? Sorry, I'm going home. Tomorrow, if I come back I'm sure the price will be better. Also, financial marketeers make money by anticipating movements correctly. Recently, it has been very hard to anticipate things correctly.

Discipline says in that case stay away. I am getting better at Sudoku for the next few days and palying with my demo account.

In all this, I know that people in an island like Barbados are trying to figure out what this may mean for them, being physically and functionally very distant from the turmoil of the world's financial markets, and whose annual income is dwarfed by the figures being used to save one financial institution. That assessment involves a lot of speculation and many possible negatives could be overtaken by other positives. So far, we have seen very little regional or international contagion from the upheaval in financial markets; commodity price gyrations have a more direct and identifiable impact on such economies. We have limited access to foreign exchange, so crude oil prices rising rapidly to around US$145 several weeks ago was more damaging, and the move back to below US$95 this week will be more beneficial. Likewise, the fact that the world economy is likely to grow more slowly is probably going to be on more importance and probably result in lower tourist visits or tourist spending.

Thinking of financial sector aspects specifically, our relative lack of sophistication may be a saving grace: banks in the region have not been directly affected by the sub-prime crisis, because they have not held any of these assets and because their lending operations have been based on the growth of deposits rather than on borrowing from foreign banks. Also, since the 1990s and Jamaica's financial sector difficulties, the regional banking system has gone through a period of consolidation and strengthening, reflected in the increase in capital and a sharp reduction in non-performing loans (see an interesting address from the Governor of the Central Bank of Trinidad and Tobago, given in June this year). That does not mean that we should not care, but it's hard to care when you cannot see how you are affected. As the US budget deficit looks set to rise further from the various rescues, we may be heading for another range of problems, but that's not yet clear on the horizon.

It's rare for us to not see the sun shining. The winds really knock us over are the real ones that tear through the region at this time of hurricane season. The US financial system is sneezing, but we will not necessarily get a bad cold.

Monday, September 15, 2008

Remember September.

I've written before about coincidences, or that they are nothing of the sort, but something more significant. Something clicked in my head a couple of weeks ago, when I was in New York, at the US Open tennis tournament. The first night's games were due on and as part of the ceremonies, Earth, Wind and Fire were due to perform live--having forgotten about retirement, aching limbs, the need for Viagra, etc. By some quirk, my wife and I had to leave the Arthur Ashe Stadium to get to our dinner reservation elsewhere in the tennis complex. So, we missed the live EW&F performance, but saw them performing on TV in the restaurant, without sound. For a long time, one of my favourite songs has been "September", by EW&F, and now I got spooked. I remembered the opening lyrics:

Do you remember the 21st night of September?
Love was changing the minds of pretenders
While chasing the clouds away

Our hearts were ringing
In the key that our souls were singing.
As we danced in the night,
Remember how the stars stole the night away

Or, just boogie along to the video:



What is so weird about that? Well...

I left Jamaica as a six year old boy and went to England on the night of September 21.

My parents were married on September 22 (after the night of September 21)

My youngest daughter, a child no one planned for or expected after a second marriage, was born on September 21--after a night when Washington DC was hit by a hurricane and no power was available in our house for three days. Now, she is a near five year old in Barbados, as September 21 approaches.

While September has had its momentous moments in my personal life, it is also turning out to be momentous in many other ways. Our generation will remain fixated by the horrors of the planes crashing into the Twin Towers on September 11, 2001. Today, in another phase of life, I lived through perhaps the most bizarre day in modern financial history as two iconic pillars of New York's Wall Street came tumbling down. One independent investment bank (Lehman Brothers) declared itself bankrupt, a victim of a credit crisis it helped create, and after the US government and central bank refused to offer a bail out. Another independent investment bank (Merrill Lynch) sold itself to a commercial bank (appropriately named Bank of America) to avoid a financial calamity. All of that happening one week after the US's major mortgage finance institutions, Fannie Mae and Freddie Mac, the mortgage lenders that help people get lower housing costs and better access to home financing, had to be nationalised.

A year ago, in mid-September, I started to dabble in foreign exchange trading, and now a year on I call it my mainstay income earner. Would the trepidation that I felt personally over the weekend, last night, and early this morning as financial markets seemed to teeter on the verge of collapsing have been there if I had remembered some things about September?

I liked it when all that concerned me about September was going back to school, and getting back into the academic schedule. Putting on new shoes and sporting new uniform and hair cuts. Last week getting back to school was enough of a challenge when a four year old had to be convinced that she was old enough to go into her third year of school. But, after school started so smoothly, in just a few days look at the mess that has started to unfold in the rest of life. I think that for the rest of September I will be on holiday.

Sunday, September 14, 2008

Connecting the dots.

Few things in life move in straight lines, and it's often more than a passing interest to try to find how things are really connected.

An aquaintance, Kevin O'Brien Chang, wrote today in the Jamaica Gleaner that "A fundamental principle of democracy is that the people cannot make proper decisions if they are not properly informed" (see Gleaner article of PNP election race). That remark leads to many thoughts about this week's fiasco concerning the "do we, or don't we" about the signing of the EPA. But, my economics oriented mind makes me think also about how one shifts and shapes an economy. Margaret Thatcher famously dealt with the prospect of economic upheaval in the UK by suggesting that people "get on their bike" to go to where the new jobs were, once mines and shipbuilding were under threat of nationalization.

Today's Nation newspapers reports (see article) that Barbados' PM wants to "stop the rot" of Bajans not being able to find work in a country where employers are telling him that there are jobs to be filled, and the Immigration service is telling him there are openings to be filled, but Bajans are telling him they cannot find work. The newspaper reports that the PM said: "I am issuing a warning to employers in Barbados today that their attitude to the employment of Barbadians must change or they too will feel very shortly."

Unless, I am greatly mistaken there is still an economic logic known as supply and demand, and these are supposed to meet happily if the price is right. What is evident in Barbados can have a number of very simple reasons. Is it that the jobs that exist are not jobs for which Bajans have the skills or if they have the skills, their levels are not the best for the price they want to offer them? This mismatch, and many others that may be the roots of the problem, cannot be solved overnight, and Bajans at the very least will have to go through a process of retraining and re-education, including accepting that they are overpaid for what they do. No business person should be encouraged to take on people not well suited for tasks just because of some desire to see nationals in work, and few business people will stay in business long if they are paying too high a price for their inputs. The PM is reported to recognize certain aspects of that problem, in his remarks that "aspersions have been cast on the work ethic and productivity of Barbadians". And he argues that "if attitudes, aptitudes and productivity of Barbadians are not what they should be, then we shall invest time, energy, and resources in making them what they ought to be". But, I hope that he has a lot of time and energy, and is honest enough to know that this cannot be done overnight.

This is where the proper information starts to become important. Somewhere in the whole array of government, business and labour organizations should be a notion of what jobs the economy is producing and what kinds of skills exist to fill those jobs. In an ideal world, this would be forward-looking and would have schools, colleges and training institutions geared up to develop skills that can find a good match in jobs being created. At a cursory glance some of Barbados' problem is that jobs coming on stream are not those for which enough quality workers exist in the country, some of this was evident in the construction sector during the preparations of cricket World Cup. But the economy is also changing and is producing jobs that require particular skills for which a general education and training may not be enough, or do not rely of demand simply for unskilled manual labour. If you need doctors, engineers, computer technicians, linguists, financial experts, expertise in hospitality services, etc., then you had better be focusing on training enough people in those skills to a high level or accept that locals will be unemployed because internationally those skills may already be in abundance. You cannot get by hoping that people can learn on the job, or take what's available and know that it is inferior in quality.

People I know make very unfavourable comparisons in a key area saying that the average Bajan worker in the tourism sector is far inferior to the comparable worker in a hot tourist market like The Bahamas. We have heard many tales about the BPO--business prevention operative--who hinders the doing of things as if it's a national sport, whether this is in the public or private sector, big or small operation. We have read and heard stories of the non-service philosophy of people working in the service sector, the "You wan' it? It ova dere" syndrome.

How much of the high cost of living in Barbados is rooted in the relatively high cost of labour? How can I explain to myself that goods and services in Barbados are so expensive? It's not just import duties. So, a business person, trying to make a profit is going to be more attracted to a source of labour that is cheaper and/or more productive. If the Bajan worker is not high on either of these criteria then work is not going be easy to find.

There are debates raging about the quality of education in Barbados--not just about whether a child's trousers are baggy or a skirt is too long. The discussion about employment cannot really take place without knowing whether schools, while perhaps able to get children successfully through certain exams, are failing the economy in not focusing on developing other skills that it needs.

The PM mentioned seeking to employ Bajans who left and went to be economic successess abroad. Involving the Diaspora is never a simple process, and at an early stage people need to understand why some left their homelands and succeeded abroad. Those who departed voluntarily could have been amongst the best, and left behind others who could be called the rest. People who found that they had skills that the economy could not use well, or that the conditions for work were better than in Barbados, are not necessarily likely to uproot themselves and come back to work in their homeland just because of national ties.

Another reason that could be important is that there is a bias by employers against certain kinds of nationals. Barbados has an intriguing racial backdrop to many issues and it is interesting that the PM's plea and warning come in the same issue of the Nation as an article by Tony Best that discusses the "residue" of racism. It points to problems that come from the "allocation of economic resources in a nation that is 90 percent black", saying that Barbados' economy is still largely controlled by whites, though less so than it was 50-60 years. Could it be that those who have economic muscle are tending to look less favourably on the majority of those nationals who are available for work?

I do not have the answers to the questions that I have posed, and there are many more questions that could be asked. But if this is really a serious attempt to address a national problem then it needs to start with some attempts to provide proper information and identify the "why" in the problem. I feel that this is not a debate that will be comfortable, if it is conducted honestly, because it may require a dismantling of some myths about Barbados' economic success.

I have not even begun to tackle in my mind how this argument about jobs for Bajans sits with commitments to a Caribbean Single Market and Economy. I don't think that they are consistent, but that is another issue to be discussed.


Thursday, September 11, 2008

Balls of Confusion.

I have had a very sick feeling in my stomach for a very long time. I heard about something called the EPA when I came back to the region some 20 months ago, and tried to find out what it was. I have to admit that, even though I think that I am reasonably intelligent and can understand a lot of complex issues, I was at a loss to really understand the details of the EPA. But, I have had this experience before with so-called trade agreements, and their web of arcane language. What I could understand left me with a strong feeling that the region was going to see little that could be called unequivocally gains, and probably experience what most people would feel were losses, in terms of economic activities. The nature of the EPA as I read it accepts that the region will suffer as it provides for funding to help the region's countries "adjust" (see, for example, Gleaner article on banana trade).

I had to hold back a deep throated chuckle yesterday when one of the local papers heralded September 10, 2008 on its front page as "EPA Day", as if this was a time for celebration and party. CARICOM heads of government had been convened to a special meeting in Barbados in an effort to eliminate the "dissonance of viewpoints". Many sectors of the regional public had recently started to voice loudly their concerns about the EPA. Maybe that headline was merely to warn people that the reason for traffic problems was due to a constellation of regional head of government running around the yard.

Well, let's get past the acronym, and get to think about some of the acrimony. EPA stands for Economic Partnership Agreement; not Environmental Protection Agency as many of you might have thought. In broad terms, it sets out a new arrangement for the trade in goods and services between the Caribbean region and the European Union (EU) countries. Broadly, the region's goods and services will get duty-free and quota-free access to the EU market: that's good news for our principal crops, bananas and sugar, and another major manufactured export, rum. But, my understanding is that the door will be similarly open for EU goods and services to gain access to the region, which is not good news for our other economic activities, where we are not at all competitive. The Caribbean region is odd. We rarely engage in wars that involve weapons and the loss of life, but we are often engaged in struggles with other nations that amount to war because they often involve a loss of our livelihood.

I had the experience of reviewing a draft EPA while I worked in an African country and could not for the life of me see how the potential gains for the African country would ever be realised, given its starting point as a very underdeveloped agricultural economy, with few manufactured goods and virtually no services that could compete with any of the EU countries individually or the EU collectively. But other things could come from the EPA, in the form of access to funding, and maybe that would be what might attract bureaucrats and politicians to go ahead with negotiating the agreement.

In the Caribbean region, one thing is for sure. The bureaucrats and politicians have done little or nothing to really try to explain to the populations they serve the pros and cons of the EPA. Except that is towards the end of the process, when there have been flurries of panicky attempts to "bring people on board". Like when you try to haul someone back onto a ship after he/she has fallen into the water, the body is heavy and struggles and is often hard to manage, and frequently is let go to fall back into the water and be a gift to nature.

Given that the populations were not entrusted with any real information that might bolster a particular position, it's no wonder that most people are bewildered. What is more disturbing, though, is that it seems that many of the political leaders who are entrusted with signing the agreement, do not fully understand what the agreement means, or if they do cannot lucidly explain it, or have different understandings of what it means. No wonder then, that like a couple who find themselves at the altar and doubts are still unresolved, the marriage ceremony is an awkward affair. So, it was yesterday at Barbados' splendid Sherbourne Centre. Guyana's President had adamantly said for sometime that he would not sign the agreement as it stood, and he seems to be sticking to his word, adding that his country had much to gain from EPA but that it was a bad agreement. He is not convinced that the agreement makes much sense if it includes goods AND services, given that the region has few if any services apart from tourism that we could try to trade with the EU; in any event "trade" in tourism is free. I have met and worked with President Jagdeo several times and I know he is far from a fool, and can understand many very complex issues. Haiti, too, will not sign. My understanding is that African and Pacific countries have already made a precedent for the Caribbean by initialling "goods only" agreements.

Nothing I have heard is really reassuring about what the deal will mean, and remarks such as those attributed to Jamaica's PM, Bruce Golding, that it did not represent everything that the region wanted but was the "best possible arrangement" sounds like a curate's egg: at best, good in parts and bad in others, and is really meaningless to most people. If two sides are negotiating and one is much stronger than the other, when the latter says it got the best possible, what on earth is that?

Bureaucrats who were part of the original group of negotiators, such as Sir Shridath Ramphal, the first chief negotiator and director general of the Caribbean Regional Negotiating Machinery (CRNM) and former chairman of The West Indian Commission have muddied the waters by suggesting (logically) that the EPA spells the death knell of the CSME (Caribbean Single Market and Economy)--a baby that many believe is at best still-born--and also adding that the region should wait to see what position is taken by our African partners, when the ACP summit that has the EPA on its agenda is held on October 2-3 in Accra, Ghana.

There are many issues that are only surfacing in the public and political consciousness at this past-eleventh hour. One other revolves around in what state the region has come to agreement with the EU--as one or as several? My understanding, and the signing fiasco supports that, is that this is not a regional agreement on the Caribbean's part: individual countries have signed or not. We are only appearing to move under one flag when the West Indies play, and we know that is a lot of appearance and much less substance. So, who we trying to fool this time? Moving in lock step is not a natural dance for the region. If the EPA is signed, good and bad consequences will be set in train. If the EPA is not signed, from NOvember 1, different bad and good consequences will be set in train. Damned if you do; damned if you don't. Again, the knots stay tangled.

Sunday, September 07, 2008

Free at last!

It's rare that large corporations do anything for nothing. So, I was surprised to read today that a French construction company has offered to repair the damage to an important road passage in Jamaica for free (see report in The Observer). The company, Bouygues, developer of Highway 2000, has offered to repair the damage to the Bog Walk gorge caused by the passage of Tropical Storm Gustav just over a week ago, free of charge. Cynics may immediately jump to one of several conclusions or ask one of several questions. Is this because the company is making so much from the deal governing tolls for Highway 2000? Is it a way of keeping itself in the good eye of government for consideration for future construction deals? Louis Brais, branch and project director, said that it was simply that "Bouygues is in the unique position in Jamaica - having for six years the Highway 2000 project - to react quickly." Bouyges may want to keep itself in the unique position of being the highway constructor of choise, but perish such thoughts.

I'm not going to be immediately cynical and will hold to the belief that this munificent gesture is genuine. So, while we should not look this gift horse in the mouth, the onus remains, however, on government to convince and prove that this deal remains a gift, rather than a trojan horse. Bouyges may well negotiate a sweet deal when it comes to maintaining the repaired road, and woe betide them if the maintenance fees seem on the high side. I'm not sure how good the Jamaican public is at scritinizing its public affairs--from what one reads, the newspapers are usually not afraid to probe and often to find misdoings. Government ministers know that accountability means something and that jail is not out of the question.

Friday, September 05, 2008

My head hurts: Do we need American Airlines so badly?

I am always suspicious about figures to do with the "benefits" of tourism. One of my big beefs is that the accounting is a bit skewed; we hear about the money coming in but do not look at the tourism-related money that goes out in many forms.

When I read stories such at the recent ones covering the Jamaican government's guarantee to American Airlines to continue flying to the island (see Gleaner report), I scratch my head. I want to watch the pin-head dancing to explain why money cannot be given to Air Jamaica to support it--not that I am in favour of that, just that I want to hear the arguments--but money can be found (US$ 4.5 million), lickety spit, for a foreign airline. I know that a lot of the tourism industry is supported by various forms of subsidies from government to hotels and airlines to keep up visitor numbers, so am always intrigued at what is the true net gain from all those visitors, when one strips away the headlines of "visitor arrivals increase", "tourism major foreign exchange earner", etc., remembering that a lot of the foreign exchange then goes back abroad. So, I sympathize with Paul Pennicock's (Air Jamaica, vice president-marketing) finger pointing at the goverment: he should know what he's dealing with, given that he was formerly the government's director of tourism. So real carefully what the Tourism Minister, Edmund Bartlett, is ready to pay for:

Under the deal, AA will not fly its planes into Jamaica if less than 65 per cent of the seats are taken up. However, if the aircraft is more than 65 per cent full but less than 75 per cent, Jamaica will be required to pay the 10 per cent revenue that the airline would lose. [I presume that Jamaica pays whatever is the actual difference between 65 and 75 percent, which could be only 1 percent.]

Minister Bartlett said, "that was a small price to pay for a deal that will see American making 19 new flights to Jamaica each week with the possibility that approximately 156,000 more visitors could make their way to the island over the 12 months."

He added, "This will earn more than US$96 million for Jamaica with the Tourism Enhancement Fund, which is financing the deal, earning US$1.2 million over the period. Even if you were to pay the US$4.5 million, look at the value of the thing."

That sounds like good leverage of government money, but is it the whole story? From another stance, I know a lot of people, who if given a share of the nearly US$ 5 million in their own pockets, would be happy to find their own way to Jamaica, without American Airlines.

Anyway, a lot more explaining needs to be done. Jamaica has invested a lot into tourism, and with more rooms coming available when major American airlines are raising fares and passenger fees due to much higher fuel costs--though crude oil prices fallen fast in recent weeks from near US$150 to around US$110 a barrel--and threatening to cut schedule flights to the Caribbean, the government may feel the squeeze on its proverbial private parts.

Governments are elected and then decide priorities. Governments are also in place to make decisions for the benefit of the population. These decisions are made from a very difficult set of conflicting demands, and the demands are never ending.

I know a lot of people in Jamaica who don't want to see money bogged down in some bureaucratic process to stop the funding to rebuild Bog Walk Gorge--again (see some comments in The Observer)!Or, better still, find a way to make a route that is more suitable for the heavy traffic that this single available route offers. Do the people only have pipe dreams?

People are also wondering while they wander across the new Hope River Bridge--the old bridge was washed away this week by Tropical Storm Gustav, and its torrent of rain. Tropical storms and hurricanes are also annual visitors that need to be accommodated. Is there hope for those people? They will be very cross if they have to keep crossing by this new Bailey bridge (or is it barely a bridge?).

People in Jamaica are also experiencing a different kind of tube riding than is familiar to some of the visitors from London or those Americans accustomed to tubing down fast flowing rivers on vacation.

These are the crosses that we have to bear. But, don't cross the people too many times.

Wednesday, September 03, 2008

Fear of flying?

My daughter is studying in Canada, and just as I am thinking about heading there for a visit soon, I want to back away from that commitment. I just read that Air Canada's regional carrier, Jazz, has decided to save fuel and money by removing life vests and offering that passengers use the seat cushion as a flotation device (see report)! After American Airlines and other US carriers started to charge for checked bags, I thought the writing was on the wall. I know that soon I may find that there will be a request for passengers to volunteer to jump out with a parachute (one between all of them?) to save on landing fees.

The video is a spoof, but it rings true enough:



I fly a lot and increasingly see how people are stressed out from the moment they make a booking to the time that they get their bags at their destination--if they arrive the same day. Even the shortest of flights seem to mean a whole day of travel. Some regional carriers, such as Air Jamaica and LIAT, make great sport out of passenger inconvenience, delays, cancellations, losing baggage, etc--though Air Jamaica still offers champagne to ease the other pain. I wish I could do away with flying to do what I need to, but it seems impossible. But to what extent am I and others prepared to be pushed down for the dubious privilege of travelling by air? Answers can be sent on a postcard, and sent in a bottle, not by air mail.

Suffering fools gladly.

A Jamaican friend shared with me a story in the Gleaner of September 2 (see report), that points out how my peeps are dealing with the ravages of tropical storm Gustav. I'm sure that people will remember for a while the image alongside of the lady being carried over the river like she was on the back of St. Christopher. Cost? J$200 for the ride (US$2.75). But really a priceless experience. Better than a bobsled ride on Mystic Mountain, near Ocho Rios? I'm sure there was also someone nearby offering to clean the lady's clothes, and maybe redo her braids. Anyway, she had some stories to tell when she reached her job. Puts a new meaning to hill and gully riding.

A word to the International Olympic Committee. If the Games can have synchronized swimming why can't they have piggyback riding? Very simple event and it probably needs no instant review. We could include irritating judging based on opinions on artistic interpretation--imagine piggybacking and dancing "Nah linga". But, IOC, are you afraid that Jamaicans will bolt to the lead in this event too?

The image of another lady having her legs wiped off with disinfectant and then reportedly having lotion applied, after she had waded through muddy river water, will also be an image that should last for the ages. Cost of that "treatment"? J$20 (about US 30 cents). Another priceless experience? Better than an afternoon at the spa at Barbados' Sandy Lane or Kingston's Jencare? In the US, this would probably have led to a law suit for sexual assault. Someone in Jamrock may see the opportunity to offer this kind of service on a wider basis and have "bus stop spas" dotted around key points in the city, such as Half Way Tree. Why not offer a mani-pedi or facial freshen up after having to rub up against Marvin and Martha on a bus in the heat of the day? I give the ideas for free.

It is a well known fact that we in the Caribbean are creative people, and know how to deal with a range of adversities. Nothing against Americans and not belittling those in New Orleans at this time, but when they get hit by some natural disaster, it quickly takes on the proportion of international disaster and we all hear how "dem a suffa". When year after year we in the Caribbean live under the multiple beatings of tropical storms and hurricanes and volcano eruptions, we get barely a "Oh, look at those poor people where we took our beach holiday, John." Sure, we have fewer people at risk and ironically because we are poorer and less developed, the value of property damage is much less, but "we a suffa bad too".

We move on and try to make the most of life's daily challenges, and put a lot of trust in God. Meanwhile, we batten down hope that we have all of our loved ones safe during the oncoming onslaught of tropical storms and hurricanes: Ike is coming, and Josephine is forming (see names for 2008 and beyond).