Of all the inconvenient truths now confronting the world, perhaps the hardest to swallow is that the creators and sustainers of the acknowledged worst economic disaster in more than a hundred years are one and the same: our elected politicians—whether preening presidents and prime ministers of first-world nations or predatory wannabe dictators of failed states.
There is hardly a corner of the world not scorched by turmoil. It’s as if the inhabitants of this planet, regardless of color or beliefs, had collectively agreed that nothing could possibly be worse than their present circumstances. Nothing, including self-immolation or death by the fire of their governments’ weapons of mass destruction. And so we daily witness from our Lucelec-enriching air-conditioned bedrooms and living rooms the televised street eruptions in not only the more notoriously dissent-averse zones like the Middle East, China and Russia but also in the relatively irenic United States and Europe.
The cataclysmic upheaval threatens centuries-old belief systems, our moral and religious codes, our aspirations. And if no one seems to know for certain what must be the new order, still the consensus is that the present model had failed and therefore must be discarded. Which is not to say those at the top of the food chain are about to accept adjustments to the status quo that had made them monarchs of all they survey and beyond. Clearly they are determined to save themselves by any means necessary, as I say, whether with guns or with more unsustainable carrot-on-stick promises.
Hardly surprising, the Caribbean people characteristically carried on as if inoculated against what we saw on TV from the safety of own customized impenetrable bubble. Local references to the recession centered on other places not nearly as blessed as our own corner of paradise. Besides, our leaders knew precisely how to keep us safe from harm. If it came to the worst, they would “put something in place,” they would deliver their promises—somehow!
Alas the time of reckoning is at hand. Inevitably, the piper must be paid. It is finally dawning upon us that there really is no such thing as a free lunch—that the once ubiquitous carnival noises are quickly being replaced by the sound of gnashing teeth, even as the arrival of imagined better days appears more than ever impossible.
It matters not that we continue to deny the undeniable—that our current leaders are as ill-equipped as were their immediate predecessors to solve our nation’s more pressing problems. Our desperate faith in voodoo and miracles and days of wonder is doomed to be crushed by the Sisyphean stone of reality.
As if further to drive home the fact that our aspirations have largely been convenient and delusory, the latest word from the U.S.-based Moody’s Investment Services is that the Caribbean Development Bank, the region’s premier financial development institution, has had its credit rating downgraded from triple A to AA1.
CDB’s president Warren Smith is reported to have said last week that the downgrade was not unexpected and that it underscored the need to strengthen the bank’s risk management practices.
Additionally, that the CDB would be undertaking “an in-depth examination” of its risk management framework and would implement “appropriate recommendations as we build resilience to the more dangerous world we now occupy.” While not identifying the possible adjustments, Smith advised that Caribbean governments should “embark immediately on a raft of reform policies that would enhance the environment for the production of internationally competitive goods and services.”
For his part, Grenada’s prime minister told last week’s CDB the possibility of higher borrowing costs was “a major concern.”
Also commenting on the downgrade last week was Saint Lucia’s prime minister, who has taken over the chairmanship of the CDB Board of Governors—and whose most recent Budget relies heavily on more CDB loans. Said Dr Anthony: “The bank must move quickly to create a dedicated risk management function, adopt comprehensive asset-liability management policies and carry out other necessary reforms to ensure that all its fundamentals get back on track and are sustained.”
The prime minister observed that “underlying the downgrade are CDB’s weak capital adequacy ration despite the recent general capital increase, and the high degree of risk associated with its 55 percent loan concentration in its four top borrowers”—Jamaica, Barbados, St Vincent and the Grenadines and Saint Lucia. The CDB is an outlier in terms of the credit quality of its member countries.
What might Warren Smith have had in mind when he spoke of adjustments to the CDB’s risk management framework? Could he have been thinking about higher interest rates on loans? A more Merchant-of-Venice attitude? What might be the impact on its four top borrowers, in particular, Saint Lucia?
Last month Dr. Anthony officially confirmed Saint Lucia’s economy was “comatose.”
The reality we face is as follows, he said. “Tourism has held its own . . . but its recovery is at best tepid. It will take another one or two years before it returns to buoyancy of previous years. The agriculture sector has potential . . . but it has taken a battering in the past few years. The manufacturing sector has survived . . . but its share of GDP has suffered major reduction over the years. The fiscal situation has deteriorated in the recent past. Construction is a highly labor-absorptive sector and given our post-Tomas realities and the need to improve and expand our housing stock, it presents a very attractive option for improving quality of life and economic repositioning while creating jobs.”
Alas, it would appear the prime minister’s reality differs from that of other forecasters of economic weather. For one, there is the president of the St. Lucia Hotels and Tourism Association. This is what she said at her last AGM: “Many of the issues we faced in 2011 continue to plague us, both as a destination and as companies struggling to stay afloat amidst the dire economic and social uncertainties. We still have not found the firm footing that will enable us to boast of any significant recovery and renewal. Prognostications predicted on blind optimism, lack of understanding of the real impact of tourism on small island developing states and an unwillingness to truly collaborate in the implementation of solutions leave us ill prepared to deal with surmounting challenges.”
Mrs Troubetzkoy cited as deceptive signposts “the cosmetic growth in visitor arrivals and the seasonal buzz in business activity and general misconceptions of global recovery that are misleading many to think we are out of the woods. Nothing could be further from the
truth . . .”
Contrary to the prime minister’s perfect storm prognostications, the tourism front is far from “tepid.” It is a near dead zone! As indeed is bananas, officially referred to as “agriculture.” And as manufacturers know only too well, things in their sector were never worse.
As for the prime minister’s revelation that the “fiscal situation has deteriorated in the past,” what precisely to make of that? The fiscal situation is deteriorating even as I write—by the second, now, headed without brakes or barriers toward large-scale bankruptcy.
With such an obviously self-serving diagnosis, how then to trust the physician’s prognosis or his remedy? Dr Anthony offers a prescription based on debt-financed grass-cutting, and the hope that already debt-burdened citizens will take advantage of proffered concessions to build new homes in such numbers as to resemble a construction boom. Oh, and the introduction of “a set of fiscal measures to improve government’s revenue base, reduce the deficit and achieve fiscal strengthening.”
There you have it, the perfect storm: a predicted buoyant tourism industry in a year or two; the envisaged construction of hundreds of new homes, concomitant jobs, jobs, jobs and a miraculous panacea called VAT. Hey, stranger things have happened. But that does not mean people will rush to bet the farm on them.
In fairness to the prime minister, some of what he has offered as a cure for all our problems have been prescribed for ailing Britain and America, albeit with some differences: the British government is planning state-backed infrastructure investment, including house building, to boost growth in the economy.
Three guesses where the idea came from. Yes, the IMF—which “suggested the way forward, along with tax cuts, if the British economic situation worsens.” Alas, there’s a taste difference between the house-building IMF medicine for the UK and that for us. In the case of Saint Lucia the government is recommending that citizens go into greater debt while paying more taxes and higher prices at our stores. No sugar pill for the wicked.
I was taken aback this week by these random comments by the former Republican senator Allan Simpson: “This Congress and this President don’t seem to have any problem getting along when it comes to passing laws that attack constitutional liberties or funding stupid wars and the defense industry . . . They’re all incompetent and corrupt when it comes to defending the 1 percent. We’re in debt to our eyeballs but all the proposals they all put forth on a budget lower the tax rates for the rich while cutting the things people need just to survive the situation they put us in . . . Too many people love to play their games with them, pretending it’s some kind of team sport. Well, I ain’t supporting any more teams. I’d rather Occupy!”
As if he were addressing our perfect-storm sea captain, with reference to America’s fiscal problems Simpson said: “You can’t get out of this hole by spending cuts. You can’t grow your way out of this hole and you can’t tax your way out of it. So put that in your pipe and smoke it, we tell these people. This is madness.”
This was my favorite. Referring to a bipartisan budget he presented with the debt commission co-chairman Erskine Bowles, earlier this year rejected by the House, Simpson said: “I am what is known as a RHINO. A Republican In Name Only, because, I guess, of my social views or commonsense that seem to escape other members of our party.
“For heaven’s sake you have another senator wandering the earth in his white robes saying that if you raise taxes by one penny he will defeat you. He can’t murder you. He can’t burn your house. All he can do to you as an elected official is defeat you for reelection. And if that means more to you than your country when we need patriots to come out in a situation, when we’re in extremity, you shouldn’t even be a Congressman.”
Say that to our present crop of leaders!
Permit me to end on this what’s-good-for-the-goose note: With WASCO preparing, via strike action, to take things from the ridiculous to the sublime, Dr Jimmy Fletcher went on TV to offer his two cents’ worth. He said he was not part of the negotiating process but from his vantage he saw a mission impossible: WASCO had for years and years been insolvent. Right now it was in no position to seriously increase salaries. Not when its annual expenditure far exceeded its collections.
As Jimmy spoke my mind wandered to the prime minister’s most recent budget address. Didn’t he say, for various reasons, that the government was dead broke, deep in the red, unable to meet its payroll without borrowing and all that jazz? Did he not talk about a deficit amounting to multi-millions?
Did any of that prevent the prime minister from hiring all kinds of new personnel? Did that stop him, to quote his parliamentary colleagues, from “being generous” with his various allocations for government-held constituencies? What’s good for Senor Goose suddenly no longer good for his madam?
Never before has a nation been prouder in the red.
‘There’s a taste difference between the house-building
IMF medicine for the UK and that for us. In the case of
Saint Lucia the government is recommending that citizens go into greater debt while paying more taxes and higher prices at our stores. No sugar pill for the wicked.’