July 2010 Archives
Terry Lister today seized the initiative by declaring his candidacy for PLP leader (and Premier), with a statement that is so sensible I can't possibly imagine it being successful with the PLP delegates. By declaring early and clearly he has surely not unintentionally highlighted front-runner Paula Cox's continued lack of decisiveness.
Much like Dale Butler's early indications, his message appears tailored more for a national audience than the narrow PLP delegates who tend to occupy the extremes of Bermuda politics and political thought. We'll see how that works out but this does signal perhaps a moderating of PLP thought and a more reality based, pragmatic approach not driven by dogma.
I wish him luck. We haven't always agreed, but if he does what he says then Bermuda will be well served.
May I propose that he recruit a large group of white Bermudians to rally against his candidacy and declare their support of Paula Cox. No doubt he'd be a shoe in with the delegates at that point.
PS Mr. Lister declared on Twitter, in what must be a first for Bermuda.
Well the protest achieved exactly what it was always most likely to achieve: the complete opposite outcome the organisers and protesters hoped for. The downside risk to these is always greater than the upside potential.
May I suggest a moratorium on Parliamentary marches against the PLP; they are counter-productive.
If the intent is to publicly vent or feel like you're doing something, then keep marching. If you actually want to be strategic and increase the likelihood of a positive outcome, then accept that the PLP thrive on rancor and extreme partisanship and don't help them out.
The ill-advised antics of one or perhaps two protesters was as predictable as the PLP's disingenuous exaggeration and misrepresentation of what occurred - identical to the Uighur protest.
Zane DeSilva's claim of racism after he was jeered is amusingly bizarre - a smallish group of predominantly elderly white demonstrators demonstrating against a white MP is a new brand of white on white racism one can only conclude. (The PLP's race strategists may want to look up Jump the Shark - or in this case the Jumping the Great White Shark).
Apart from that, the moment the Corporation scheduled a protest is the moment they lost control of the message. All it takes is one person to act stupidly, as the guy who blocked Zane DeSilva's car did (although no-one surrounded it and 'banged on it' - check the video, there was a light tap as one does to signal a driver to pull away - ask garbage collectors), all it takes is one dumb placard and the PLP spin-doctors will get to work mis-characterising things as widespread uncontrolled "anger, rage and racism".
People do dumb things when in crowds. It's a widely researched phenomenon known as collective effervescence.
This stuff is so predictable you can script it. In fact, I pretty much did script it:
...successfully able to pivot and portray the protest as some angry white mob (which it was not). He even dragged his wife out as a prop in front of the crowd, hoping to create a scene.
Note that Zane DeSilva also dragged his wife and son out and immediately condemned the protest as racist. The goal is to create a self-perpetuating theme that all anti-PLP protests are racist.
Marches like this are a key component that the PLP need to get their backbenchers etc. back in line. People should stop helping them.
There is no greater sin for the PLP than one of their MPs publicly siding with a group of predominantly white Bermudians. As soon as they can boil an issue down to "privilege", or today's catchphrase of "unearned privilege", then the PLP MPs fall back in line.
One MP describes this dynamic, particularly during elections, as the 'racial afterburners' - the last two weeks of an election campaign where buttons are pushed, tensions are raised, loyalties are tested and undecideds break disproportionately against the UBP.
Yes, a double standard exists when it comes to protesting in Bermuda. Yes, the PLP can march, rally and attack their opponents with racially loaded offensive language ("House Negroes", "Confused Negroes", "Uncle Toms", intimidate employees and employers etc.) without much condemnation. A different set of rules apply to others, and I for one would rather conduct myself by those rules.
People need to just accept it. For now. This dynamic is an outcome of history. I understand it. I don't see it as a problem. It's just the way it is. So, no more marches and Cabinet lawn protests please.
The irony of course is that the PLP continue to describe Bermuda's social, economic and political environment as one where whites continue to hold the power.
If that were the case these protests wouldn't be happening. These protests only occur because the only power these same - mostly elderly and mostly white - Bermudians hold is that of speaking out. And it has the completely opposite effect than intended, so it isn't even powerful.
The thought process seems to be that we have to do something, so let's protest. Because that's just what you do (and what the PLP did so well historically).
But it's not transferable. This has to be a battle of ideas, not emotions and not partisan loyalties. The path to a more issue driven, rational political environment is to lower the volume, lower the rancor, eliminate the environment where all sides get taken over by their reptilian brains and fall back into historical tribal camps.
People can complain that this is unjust (race - or more accurately history - has a factor in how your protest is perceived or portrayed), or you can accept the reality and take a different approach.
As I wrote prior to the protest, groups of mostly white protesters will box in fence-sitting PLP MPs, however right they are or think they are on the point.
Black Bermudians are still not comfortable coming out in large numbers to march against the PLP, however much they may agree with an issue, and certainly not when led by organisations historically linked/identified as white (Corp. of Ham, UBP). The same dynamic can be seen with black Bermudian driven protests and light white turnout. This cuts both ways. Much of it is about history, and class defining different priorities, but it's there for us all to see.
We've seen a few examples with the Bermuda Union of Teachers, and Friday with the BPSU who notably came out publicly for more dialogue - I suspect because they've had first hand experience with the PLP Government's sincerity around issues such as this.
The Corporation touts the 80% disapproval of the takeover in their poll. However getting a racial cross section of 80% of the population in a poll to agree with you in relative anonymity, and who comes out to visibly demonstrate are not at all connected.
White Bermudians don't lose anything by protesting against the PLP because they are continually vilified and demagogued. The PLP reminds white Bermudians regularly that they don't need their support, although they keep trying to guilt trip people into offering it rather than genuinely asking for it.
What the PLP fail to acknowledge in their complaints about their lack of white support is that by demonizing whites continually they are pushing away white voters.
You can't ask for someone's vote by saying in effect 'You white devils owe us your vote'.
It's insincere. And offensive. The ensuing complaints about lack of white support ring hollow. The tactic is designed to drive whites and blacks into separate camps, not broaden the PLP's white support. Courting demographics in politics are a long established fact of life. Race, age, gender, class, income. I doubt they'll go away.
So please, no more protests. Lower the emotion. Be strategic. Be tactical. Stay focused on the ideas. Debate the merits. Don't take the bait. Play the long game.
Change takes time. Today's status quo is as entrenched now as it was in the 70s and 80s.
I remain convinced that Bermuda's future is worth fighting for. The right way.
In the case of the Corporation of Hamilton I believe the outgoing Premier has lost the argument and has simply retrenched, making this a bogus fight against a non-existent foe. The tried and true PLP rally cry.
Kathy Gibbons' op-ed struck the right tone; the Corporations are a de facto separation of powers, a check and balance on the potential dangers of bad or malicious national/local blended government.
Bermuda is small yes, but the difference in fiscal management between the debt ridden national government and debt free municipalities is stark. Yes, reform is needed, that much is agreed by all sides - although the PLP refuse to acknowledge it because it doesn't fit the narrative.
The PLP's aggressive stance now on the issue is amplified because they have been out PR'd by the Corporation. It's become personal. This is the outgoing Premier's final high-profile item, his last attempt to manufacture a legacy beyond scandals and controversies after seeing his own personal liabilities doom the gaming bill and has his backbench in a muted, but very, real revolt.
The question over this bill is just how public of a middle finger do his MPs want to show him as he leaves office? Generally the PLP have been loathe to criticise in public, although it's clear they're counting down the days to his departure as much if not more than everyone else.
The Corporation of Hamilton has played their cards very well so far, but I'm not so sure the rally/march tomorrow was one they should have played. The key is turnout - size and who.
During the Uighur debacle, Dr. Brown was clearly on the ropes - until the protest, when he was successfully able to pivot and portray the protest as some angry white mob (which it was not). He even dragged his wife out as a prop in front of the crowd, hoping to create a scene. Nice stage management indeed, all subtleties cast aside with the mic set up in front of the Sally Basset statue.
At that point the pressure quickly shifted onto the PLP MPs to not publicly side with this faux 'angry white mob', and they all capitulated although they fundamentally agreed with the protester sentiment as evidenced by the speeches condemning the outgoing Premier in Parliament.
The question tomorrow with the march/rally is does this box in the PLP backbench, with the party discipline and intimidation clearly being amped up in a big way and I understand all kinds of backroom deals being cut.
If this bill is voted down tomorrow, the outgoing Premier will have been dealt a very public humiliation on his last day in Parliament. He will do everything and anything to prevent that. Hence the racial refrain that this has now taken because he knows he can't win it on the argument.
There's few things less interesting than discussion on interest rates, but the Finance Minister let fly a shockingly disingenuous howler in defence of her $500M bond placement:
If we look the Opposition's record of long term borrowing when the United Bermuda Party was in government, we find that the coupon or interest rate was higher than what Government achieved on the recent bond. For example, in 1994, the United Bermuda Party Government attracted a rate of 7.59% on a senior debt issue. A Progressive Labour Party government refinanced that facility at a lower rate of 5.39% in 2004.
Another example, in 1997, the United Bermuda Party government attracted a rate of 6.72% on an issue with a ten year maturity. You will note that both issues were single bullet maturities and not staggered as the Opposition said should have been done with the recent issue. In any event, that ten year facility was refinanced at 5.73% in 2007.
The simple truth is that no administration in Bermuda has been able to obtain a long term interest rate on debt instruments below 5%.
The Finance Minister is smarter than this, so we can only chalk this up to desperation.
The claim is that the PLP achieved better deals than the UBP's (much smaller) long term debt by refinancing in 2004 and 2007 and the bond placement in 2010. It's slightly material to the discussion that this claim is made in a complete vacuum, with no mention whatsoever of the interest rate environment at the time.
A quick search would show that the 90s were a high interest rate period, about double that of 2004 and much, much higher than today. Citing 2007, where the Finance Minister professes some skill in refinancing at 1% lower than in 1997, simply reflects nothing more than the difference in the prime rate. No skill there. If that's all it takes to be Finance Minister then sign me up.
Hopefully Ms. Cox is aware that the comparison metric between interest rates is not the absolute number but the spread over treasuries. The UBP's debt, which the PLP refinanced, are both in line with the prime rate.
The rate the Finance Minister achieved in the just placed bond however was about 2.25% over prime (3.25%). That is what was achieved in an environment where the fed is lending at as low as they can go, pretty much zero.
So a high school level analysis reveals that the examples the Finance Minister cites in isolation as examples of her outperforming the UBP were nothing of the sort, and the placement just completed is paying a higher premium over prime. The exact opposite conclusion she wants us to draw.
Reading the article from HSBC Bermuda CEO Phil Butterfield you can just picture him rubbing his hands together at all the long term debt placements he sees on the horizon that will generate some chunky fees for his firm (which is who his responsibility is to):
Mr. Butterfield said the success of the sale was significant for Bermuda, which would now be known among major investors on the capital markets. "This positions us well, as a jurisdiction, to potentially go back to this same group of investors in the future," Mr. Butterfield said.
"That is significant, when you think about the infrastructure challenges we face, like the Causeway, the Airport and possibly the relocation of the docks, for example."
This is a bankers dream.
The suggestion that over-subscription is a vote of confidence in the island is absurd. This isn't a popularity contest, it's business. Investors saw a high interest rate and leaped at it.
Why the decision to up-size from $400M to $500M was made at the same offered rate is beyond me.
If you generated over $2B of interest at 5.6% for $400M, surely when it came to an additional $100M the prudent course would have been to make this smaller offering at a lower rate. Why go out at the same level?
It would appear, that with all the back and forth about how well the placement was managed, that at the end of the day we were looked at as just another Caribbean bond. In fact the placement is pretty much identical to the terms of the Cayman Island's recent offering.
Bear in mind though that Caymans were unable to make payroll a few months ago. We were seen as the same risk as that.
As a finance type friend told me yesterday:
If she is even thinking of comparing today's bond rate to 1994 she is seriously on crack as rates in 2010 are even lower still.
No getting away from the fact that our recent bond was issued at a spread to
Treasuries attributed to crap sovereign credits and NOT AA.
And finally, I couldn't help but chuckle at the idea that going to the debt markets was somehow a prestige event for the island. I'm thinking it's more prestigious to not have to borrow in order to meet your obligations.
But what's done is done.
The conversation going forward now has to be about a) living within our means and prioritising what we can and cannot afford, and b) setting about saving $500M over the next ten years and $28M per year in interest to service the facility. It would be nice to pay that down early and save all that interest.
Shame the Government blew almost a $100M on Berkeley and the cruise ship terminal isn't it?
I'm a little surprised that the PLP, in defending the hostile takeover attempt of the Corporations, want to open this argument:
The truth is, Bermuda is the size of a small town in the United States or United Kingdom.
The implications of conceding this point are potentially far-reaching for our highly paid, internationally jet setting small town Government.
If you could indulge me a moment of pedantry, for one of my language pet peeves, this one courtesy of the B.D.A.:
"Our information is that the payroll tax increase has seen a number of well known high profile international companies seriously consider looking elsewhere to relocate their operations," he said. "We are literally on a knife edge in terms of flight.
We're not literally on a knife edge, we're figuratively on a knife edge. If we were literally on a knife edge, well, the island would be sitting on top of a knife.
My pedantic quirks aside, I agree with the assessment that the economy is in a bad way with no real impetus on the horizon to start growing again. The only people still blissfully unaware of this is the Government.
There is simply no way around the fact that government revenues are shrinking, the economy is losing jobs (and the PLP is further force-ably contracting the economy by chasing out non-Bermudian workers after 6 years), and government spending is increasing at a rapid rate.
This is a recipe for disaster.
A few days ago the BDA's Michael Fahy had an op-ed entitled 'How the BDA would save the economy'.
There's some interesting ideas in there, including privatisation of some government services and the proposed Ministry of Commerce (Tourism and Finance), but a fundamental problem exists in the piece.
The BDA proposes 4 'obvious examples of expenditures' they would cut:
1.Reducing the purchase and use of GP cars and restricting the number per Department and making more use of car pooling.
2. Ensuring strict adherence to the limits of spending and use of Government Credit Cards especially overseas. Set limits on hotel and travel costs regardless of who is incurring them.
3. Cease sending teams of senior Government officials on overseas trips unless there is a predefined cost/benefit.
4. Cutting costs by demanding discounts and promotional events from outside parties such as advertising agents.
All worthy of cutting I concur. But this is going to have an immaterial impact on the total Government budget. There's plenty of waste in there, but those savings would be in the hundreds of thousands or one or two million range.
The cuts that are needed in order to match revenues with expenditures over the foreseeable future need to be in the tens of millions of dollars, not hundreds of thousands of dollars.
I suspect the BDA knows it, but don't want to stick their necks out and admit that the public need to scale back their expectations of what Government should provide. Government has made promises they can't keep. The BDA should have called them on that but chose the path of least resistance. A mistake in my view.
Further complicating the issue is that the bulk of Government expenditure is on salaries, so departmental budget cuts that get tossed around (but rarely followed) are usually on a small share of the overall Government budget which excludes the people part. It ain't easy to lay off civil servants, and it brings with it all sorts of knock on effects of unemployment.
The spending versus revenue gap is that extreme; hence the $500M bond sale.
I'm thinking that if a sovereign bond issue was six times oversubscribed that you're paying too much interest on it.
I'm advised that a 5.6% coupon is high for an AA rated 10 year bond, and that the market is pricing Japan 10 year yields for dollar based sovereign risk at 3.6%.
Apparently these terms put us in the company of Mexico and Turkey.
However my main concern, over the seemingly high interest rate in this low interest rate environment, is that Government debt never gets paid back. Ever. It just gets rolled over. Politicians are short term incented creatures and that means that they rarely think long term.
Ask yourself this? Do you really see the PLP saving $500M over the next ten years to pay this back when it matures in 2020? That's after the $28M a year in interest they - or we - have to pay just to service this debt. And let's not get into the fact that they took out debt to pay down other debt.
While the rest of the world is talking about de-leveraging and living within their means after years of government deficits, Bermuda is leveraging up and increasing our deficits. What are they thinking?
Say what you want about the UBP, but they knew that you had to live within your means and that there's no such thing as a free lunch - or free healthcare.
If I were a Bermudian married to a not yet Bermudian - which I'm not - and government was jerking me around with a license costing over $1,000 to own property, while allowing corporations to buy hotel residential units - with tax breaks, I'd be incorporating myself a little company, taking the savings from my tax concession and calling room service from my hotel residence.
Bermudian families get penalised while big business gets special treatment.
Yet another crazy example of compartmentalisation and cognitive dissonance from the party that demonises anyone who dare add branches to the Bermuda family tree and own property in Bermuda. Remember that? The whole we're protecting land from nasty foreign spouses shtick.
In one of those rare moments that is insanely funny because it wasn't intended to be, Senator David Burch today said the following in respects of his tearing up and returning to sender a letter from the Mayor of Hamilton:
It was a speech he gave on March 21, 2010 when he talked a whole bunch of crap and I was offended ... I sent it back because I want that man to know and the rest of them to know that if you disrespect people, that is what you will get back in return."
I can't imagine what he expected in return from the caller to his radio show whom Senator Burch called a House Ni**er over the public airwaves?
Come to think of it, perhaps Mel Gibson has been taking debating tips from Senator Burch.
What? You didn't expect the outgoing Premier to hold his own celebration of himself? A 5 day farewell party.
I suspect this won't be the only 'farewell' Ewart Brown party in Bermuda over the next several months.
The PLP should really (and probably are already intending to) capitalise on some sponsorship opportunities here. The most obvious of course is securing a title sponsor.
How's about the "Ewart Brown Farewell Gala brought to you by The Good Riddance Girl"?
PS It's not every day that there's a pronouncement that we're in the "Platinum Period" but also the early stages of turning around tourism in the same sentence, and without a hint of irony.
He ushered in a Platinum Period for Tourism, and, after the global economic crisis ravaged our tourism sector, he was the primary architect of a tourism turnaround that is just beginning.
Of course the Platinum Period was so successful that Government just waved the white flag and has resorted to selling tourism units to corporations as housing for their employees and is funding a 3 star hotel with sales of low cost housing in the same piece of land.
Roll on October. Bermuda needs to emerge from this lost 4 years sooner rather than later.
Sorry. The statement today from the Finance Ministry on the two week inability of the Auditor General to access the Financial Information Management System defies belief.
Mark me down as not buying it.
If it was simply a simple systems permissions problem why did it take the extreme measure of a press release from the Auditor to shame the Ministry into quickly giving her access again?
This doesn't pass the smell test.
Today's article where the PLP is called out for not making progress on racial inequities and holding it back through their regressive political tactics is a great example of the following quote which someone sent me a week ago:
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
Whatever remaining credibility and integrity Paula Cox is hoping to bring to Office of Premier, which appears to be hers to lose, must surely have just gone up in smoke with the appalling news today that the Finance Ministry has been blocking the Auditor General's constitutional access to the Financial Information Management System for two weeks - and quickly rectified once the Auditor General went public.
This is intolerable. Not to mention unconstitutional.
What doesn't she want the Auditor - and the public - to know?
Why is it that whenever we're treated to another of the outgoing Premier's grip n grins with some foreign politician, celebrity or athlete - which inevitably become a Facebook profile picture and press release - I think of the White House State Dinner crashers?
Remember them - the Salahis - whose full time job seems to be trolling around Washington for photos to post on their Facebook page and hosting questionable charity events.
I guess the idea is that if you lack your own power and fame you have to settle for trying to impress others with proximity to it.
A few quick thoughts on the predictable racial redirect after the first ever open Public Accounts Committee meeting last week - which focused on the Auditor Generals' (that's plural - two Auditor Generals) concerns about Global Hue's handling of Bermuda's Tourism account:
- It's pretty cynical to turn a forward step like opening up secret committee meetings into a backwards argument about race.
I loved this quote from the outgoing Premier: "One of the reasons I supported the public meeting of this committee was to allow the Bermudian public to see what happens when a black-owned company secures a coveted contract from the Bermuda Government."
It goes without saying that if the outgoing Premier saw opening up the Public Accounts Committee meetings as an opportunity to expose racism, he'd have done it the second he could. Immediately. Stat. Instead it took years of cries for transparency from the Opposition UBP, commentators and the public.
- The PLP say that "Bermuda is lucky to have an advertising firm of the caliber of GlobalHue working for us." Really? Lucky? I thought we hired them.
Regardless of what you think of Global Hue, this kind of statement suggests that the power dynamic is screwed up here.
Who's calling the shots? It would appear to be Global Hue judging by their assault on Glenn Bean and his subsequent firing with massive redundancy package. Surely Bermuda should be hiring people who feel like they're lucky to be working for us? Who's working for whom here?
- It isn't automatically racism to question why a contract wasn't put out to competitive bid if the owner of the 'lucky' sole-bidding firm is black.
It would however be racism to award a contract to a firm solely because it is black owned.
Not to mention the fact that this black owned firm is a non-Bermudian one. This raises the question of whether the outgoing Premier is using taxpayer funds for an affirmative action program for non-Bermudians?
Now you can argue about righting historical inequities through affirmative action, or economic empowerment, or whatever term you prefer. But it would be a novel argument that Bermudian taxpayer dollars should be deployed to empower groups historically disadvantaged by non-Bermudian governments. That's a discussion the Bermudian public perhaps should be invited to have first.
- If it's racist to criticize non-tendered contracts for foreign black owned firms, and racist to criticize non-tendered contracts to white owned firms of friends and members of the PLP, then competitively bid contracts are pretty much automatically racist by the PLP's thinking. The rest of the world might be interested in this.
- Surely the PLP are aware that this line of criticism that they're so outraged about - specifically crony capitalism, racially driven contract awarding and whites joining the party out of economic interest - is precisely, precisely, the criticism that they lodged, and continue to lodge at the UBP.
There's no two ways about this. The PLP are on the receiving end of their own tactics, and they don't like it one bit. Howling with derision in response is very unbecoming.
The PLP proved the concept here. The protests at these kinds of accusations rings hollow. This has been their bread and butter argument since time immemorial. They should be very familiar and I would have thought that the pioneers of these tactics would be better at responding to them.
- Surely Zane DeSilva could have done better than this:
"If the Opposition is going to pick on the Government over contracts not put to tender, let me name a few others. The Rugby Classic. The Philadelphia Triathlon. The Royal Bermuda Yacht Club. All of these were sole sourced by this Government. Why aren't they objecting that these haven't gone to tender? "
Um? Huh? The World Rugby Classic? The Philadelphia Triathalon and the Yacht Club (Gold Cup?)? Let me get this right? 3 events which the Department of Tourism decided to sponsor (not source) are examples of non-bid contracts?
What the hell. Let's do this.
As usual he's got it backwards. These 3 examples are events created by private entities and Tourism was offered the chance to support them as they benefit Bermuda.
If the Department of Tourism created these events and asked The Rugby Classic, or Philadelphia Companies (subsidiary of Tokio Marine) or The Gold Cup sailing to sponsor, then he could make this claim. But of course they didn't. These were brought to Tourism. Those three entities are event organisers, not service providers.
Which of course means that Zane Desilva couldn't come up with one example of a legitimate 'sole-sourced' (ie. non tendered) contract, he had to fabricate them.
All that can be said about a Cabinet Member shredding up a letter from the Mayor of the capital and returning it to sender is that it is deeply, deeply embarrassing for Bermuda - a supposedly sophisticated financial centre governed by reasonable people in a democratic manner.
How much more of this can Bermuda take?
I can only presume that with the outgoing Premier on his international farewell tour - completing his taxpayer funded bucket list - that there is a leadership vacuum, and adult supervision is desperately needed.
Anywhere else, anywhere else that had a Cabinet Minister behave in such way, would see that Minister gone by noon.
But no. Not here. The classy, stable Bermuda that we knew is becoming a distant memory.
Autocrats are incompatible with democracies.
The self-inflicted social and economic decline continues at an accelerated pace. Bermuda needs new, responsible political leadership that is capable of dialogue.
Fareed Zakaria provides his typical sober and thoughtful commentary, this time on the topic of the US economy:
[T]he real fear that markets have is that the United States and every Western country have made promises that they simply cannot keep with regard to health care and pensions. We have to get honest about that, and we have to explain how we're going to pay for those things and how frankly we're going to have to scale some of that back. ...
The third part, the heart of it, is that you have to create an environment in which businesses are willing to invest money in the United States. This in some ways is the absolute key. At the end of the day, government spending can only be a temporary measure. It is a bridge to the private sector investing in America and creating jobs.
The Bermuda Government would do well to heed his advice and be honest about the promises that they are not going to be able to keep (and in fact couldn't even in the boom years - FutureCare anyone).