Recently in Economy Category

I spent 3 hours tonight at the term limits public forum and came away with the clear conclusion that the room (and presumably the island) are divided into two camps on this issue: Feelings vs Facts.

The OBA, via Michael Fahy, were presenting facts, an analytical fact based approach to public policy to an audience that was largely interested in their feelings. The majority of the questions/statements were feelings of being excluded in their own country but were reluctant to acknowledge that term limits has nothing to do with jobs but residency.

Both sides were talking at cross purposes.

Michael Fahy and the OBA took a lot of flak that was really the PLP's to own if we're honest. There was a lot of anger about Bermudians not getting jobs they were qualified for over non-Bermudians.

That's a work permit issue and an enforcement issues, and that is wholly owned by the PLP for the past 14 years. Michael really didn't do a good job of pointing out that he inherited these policies and 3,000 unemployed Bermudians. He said he was working to fix it, which he is, but he didn't seize the opportunity to put it squarely in the lap of the PLP which is where it belongs.

Easy to say sitting in the audience and not on the hot seat, but that was my biggest takeaway. Walter Roban was adept at presenting an impression that this mess was created by the OBA. The moderator - who did a pretty good job with a lively crowd - called him out on it directly, but generally he and his party got a free pass while stoking the fire they lit.

Interestingly, if you had judged by the questions, tone and audience reactions you'd have felt that the room was overwhelmingly pro-term limits. But at the end when a show of hands was asked for in favour of term limits it was at best 50-50, more like 40% in favor. Not the most scientific, but was perhaps the biggest surprise of the evening for me.

I do think that the OBA are going to have to figure out how to connect better at a personal level over work permits and immigration, because the PLP have done a great job at dumping their legacy of work permit granting and unemployment into the OBA's lap. The PLP are very good at this kind of thing, pushing buttons and tugging on heart strings, and the emotions are raw with so many unemployed.

But that is not an issue for term limiits.

And it's clear that if you look at the data that Bermudian employment has steadily declined during the term limit era. Chris Furbert presented employment data to refute the idea that term limits had cost jobs, but what he presented was total employment. Not Bermudian employment.

That tells a very different story, and one that makes it clear that term limits presided over an era of a massive reduction in Bermudian jobs. Total employment peaked right at the point that term limits kicked in (around 2007/08). Coincidence?

The truth is that Bermudian employment and non-Bermudian employment are much more mutually beneficial than they are mutually exclusive. Work permit abuses can be dealt with, but the problem today is not allocating out how much of an increasing pie, but dividing up a shrinking pie.

The former is a much better problem to be trying to solve.

That's the real story.

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It's always dangerous to wade into the PLP's Fox News like echo chamber, but their highly predictable Obama re-election bandwagon jumping is full of differences not similarities.

Firstly, unlike the PLP who inherited a thriving economy and budget surpluses, Obama inherited a massive financial crisis, huge budget deficits and two unfunded wars. How did he respond? Did he rack up huge increases in Government spending like the PLP did - in their case before an economic crisis?

Nope? Barack Obama has presided over the slowest increases in Government spending since Eisenhower:


Who were the big spenders? Well, like the PLP, Republican Presidents Reagan, Bush Senior and Bush Jr. outspent Democrats Clinton and Obama.

And let's remember that it was Cheney who said 'Reagan proved that deficits don't matter'.

Now, on to the PLP 'investing in our people and rejecting deep and radical austerity cuts'.

It is a documented fact that in March 2010 the PLP issued a memo announcing 'austere cost savings', not the OBA.

The only party in Bermuda who has actually put in place austerity measures is the PLP.

Of course, non of this will prevent them from continuing to claim that they are anti-austerity and that their overspending and borrowing pre-recession was recession driven investment.

Shameless can take you a long way.

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Larry Burchall has demonstrated, through indisputable math, that while the PLP are claiming to reject austerity, that they are in fact cutting back on government spending, ie. austerity measures.

However, where Larry is not quite correct, is that this is a secret, unannounced austerity plan.

That isn't true.

The PLP are on record as being pro-austerity, as far back as January 2010 when a Cabinet memo was circulated to the Civil Service ordering 'austere cost savings'.

Yet again, reality has an anti-PLP bias.

None of this will of course stop running ads that they are against austerity and that the other side want to cut back when the truth is very, very different.

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Here's a little something to chew on from the Bermuda Government's recent prospectus for the latest bond issuance:

Bermuda is currently in its election cycle, with elections expected to take place by February 2013, provided that the Governor, acting in accordance with the advice of the Premier, may call for earlier elections.

In general, the policies of the PLP, a pro-democracy, multiracial organization with predominantly black supporters, are relatively similar to those of the OBA. The PLP's mission consists of promoting equal opportunities for all citizens and improving the regulatory environment in the international business sector. The OBA, a pro business, moderate and multiracial organization, is founded on the principles of "opportunity, responsibility, integrity, transparency, fairness, inclusiveness and service."

I don't think this aligns with the PLP's spin on the OBA. I suspect you won't find anyone in the PLP saying their policies were 'relatively similar' to the OBA's, or that the OBA was a 'moderate, multiracial organization' either.

Unless I've been misinterpreting the message, the PLP says that the OBA's policies will send Bermudians back to the plantation (actually their 2012 message is that the OBA don't have any ideas, but that's a different talking point) and that they are an extreme white wing conservative party.

Anyway, just an interesting tidbit from an otherwise typically dull prospectus read.

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Only in the PLP's parallel universe does debt = investment and a credit ratings downgrade equal proof that the other side has it all wrong on the economy.

Message discipline is one thing, but this stuff lately is just plain bonkers.

Given today's news, it's now clear that the next election will be a choice between investment and austerity,

Given the OBA's attacks on the PLP's investment in the Bermudian people, it's clear that they will engage in rapid and radical cuts that will cripple our economy.

If you want to see deep job losses in the public sector, less money for education, fewer healthcare benefits and less investment in the construction sector, the OBA is the party for you.

Um, the job losses are being deferred until after the election by the PLP but the rest is already happening under the PLP. They're just pretending it isn't.

Racking up debt to pay for day to day bills isn't investment. Nor was overpaying for capital projects in the past, assets that the Auditor General has said she cannot match the values to the expenditures on in many cases.

Lenders aren't investors in you. Their shareholders are investors in them at your expense.

The key comments from Fitch wasn't so much the downgrade but these two statements:

"The downgrade of Bermuda's ratings reflects its weak macroeconomic performance relative to peers, deteriorating fiscal and government debt ratios and lack of a credible fiscal consolidation strategy."


"More importantly, Bermuda's debt/revenue ratio at 150 percent in 2011 is above the AA median, and is deteriorating faster than its peers. Moreover, recurrent changes to the debt ceiling, withdrawals from the sinking fund to meet interest payments and the inability to implement a multi-year budget programme have undermined the credibility of the fiscal policy anchor and the commitment to fiscal consolidation."

It's all a global recession right? But our position is deteriorating faster than our peers and the Government lacks a credible strategy.

Those aren't global issues. Those are local.

It's concerning that the response is so delusional from the PLP. It really is a deny reality approach to both the spin and public policy.

If you only got your news from their website and media outlets you'd be convinced that the economy is growing, tourism is up and crime is down.

It's that crazy.

If this were Paula Cox's personal finances the statement would have read something like this:

Paula Cox today thanked her credit card company for investing in her by raising her interest rate and credit limit on the card that she uses to buy groceries and pay electricity but can only pay the minimum monthly balances on.

The PLP have always put politics over policy and short term public relations over doing the right thing. But it's very worrying to say the least that as our problems worsen the PLP's response is to become even more un-serious about both addressing them, and acknowledging them. And escalating the prior level of delusional was not easy to do.

Instead they appear to prefer to believe their own hype.

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From today's Association of Bermuda Insurer and Reinsurers report:

The five ABIR members who historically have had the largest Bermuda-based workforces have cut staff numbers on the Island by almost a quarter over the past four years.

Over the same period the number of Bermudian citizens (including spouses of Bermudians and permanent residents) on their payrolls fell by one-fifth.


"Accelerated action by the Government to encourage ABIR members to locate senior executives here in Bermuda would be helpful.

"As the numbers from our survey demonstrate, there is a direct correlation between these senior executives being in Bermuda and employment opportunities for Bermudians."

From last week's Ascendant earning report:

Ascendant stated: "A significant decrease of 11.58 million kWh is directly related to the economic downturn, as the number of active, metered residential units has declined due to a weak economy and increased numbers of non-Bermudian work permit holders leaving the Island, as some businesses either moved operations out of Bermuda or reduced staffing levels."


Electricity sales in the commercial sector also fell 1.3 percent, compared to a decrease of 1.9 percent in 2010.

"Primary factors responsible for the reduction are business closures, reduced hours of operation, lower occupancy levels and concerted efforts by many businesses to reduce operating costs through energy conservation, due to the Island's economic downturn," Ascendant noted.

And from the PLP:

The truth is, international business has grown considerably under the PLP. Our balanced policies ensure that international business thrives while also ensuring that Bermudians benefit.


[The OBA] believe that the best way to create jobs for Bermudians is to bring guest workers into Bermuda to take the jobs Bermudians could be doing. These guest workers often send much of their income off our island, taking money out of our economy. This also drives down the value of labour and makes good paying jobs even harder to come by.

On message, but completely off the mark.

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It will be interesting to see whether the OBA's position on MP pay cuts is too complicated - although grounded in financial reality - to be fully understood by the public.

It's a bit nuanced and the PLP excel at demagoguing reality based positions such as this.

The PLP are obviously overjoyed that they think they can pin their own year long resistance on pay cuts on the Opposition who had no role whatsoever in wrecking the Government's financial stability.

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If the PLP's policies weren't responsible for deepening Bermuda's economic problems as they insist, why then are the solutions to our economic problems partial reversals of those very same policies?

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Methodology change or not, would Bermuda's credit rating have been downgraded if the PLP hadn't racked up $1B in new debt over the past 5 or 6 years?

Just asking.

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Kevin Comeau's OpEd in today's Gazette (unfortunately buried deep down on the opinion section of is a must read on the issue of smart immigration policy for job creators. The core problem with this new policy is that the offer is of no real value and the price tag is an insult not an invitation:

Government thought that by offering CEOs and other top job creators the opportunity to obtain Permanent Residency, these executives would be persuaded to remain in Bermuda. What Government failed to recognise was that effectively each of these top executives can already work and stay in Bermuda as long as they like we'd be crazy not to renew their work permits, and they know it. So in effect they are receiving very little when they obtain Permanent Residency.

More importantly, the offer of Permanent Residency at a price tag of $120,000 risks turning a gesture of inclusion into an insult. From the executive's point of view, the Government is saying that we want you to live in Bermuda and create lots of jobs for us, but we don't want you to be one of us. Instead, we will offer you and your family the right to become second class non-citizens for which we will charge you $120,000.

I've heard this sentiment directly from people who would be the targets of this new legislation.

The policy was created from a defensive stance, trying to give away as little as possible. The end result of long discussions between the private sector and government was a policy so narrowly targeted that it applies to almost no-one, and in reality offers nothing that they don't already have.

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Per my last post about the legislation for the airport duty increase not yet being passed, I received a quick response from the Collector of Customs.

The Provisional Collection of Customs Duties Act allows the Minister of Finance to apply duty rates before they are approved by the House of Assembly once a bill is read a first time.

In the event the legislation fails refunds are then issued.

I'll consider it a charitable donation to an organization in financial difficulty.

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So I arrived back from a trip on Friday night and was hit with 35% tax on the few items I'd purchased while overseas.

I politely advised the customs agent that this was not in effect until the legislation passes Parliament - which it has not yet.

I paid the duty at the 35% rate as it isn't the officer's fault and his hands are tied. But I will be writing to the Collector of Customs to receive my refund and would encourage others to do the same as well.

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Apologies for the lack of activity, I don't have a lot of time for posting so it will probably be light for the time being. In the interim, I recommend the following article entitled The Story of the Rise and Fall of the Cayman Islands.

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In case you're keeping track, the PLP's latest post on their site has flipped yet again back to saying that term limits was put in place to protect Bermudian jobs from evil, scheming bosses - at least for this week - not that it was to prevent long term residency claims which is what then Minister Burch definitively claimed it was designed for, categorically denying it as having anything to do with job creation or preservation for Bermudians.

One day it's about long term residency. The next about not letting expats steal jobs from Bermudians. Just pick one already will you.

Today's post:

These UBP/OBA economic policies would result in fewer jobs for Bermudians and put more of our land in the hands of foreigners.

Their commitment to end term limits for foreign workers would be nothing short of disastrous for the Bermudian worker. If implemented, employers at all skill levels would no longer be incentivized to hire Bermudians. So many of us have seen our resumes passed over not because of skill, but, because the bosses wanted their overseas man in the job. The OBA/UBP policy would mean more unemployed Bermudians and would cause many Bermudians to give up trying to even look for work.

The PLP act as if abolishing term limits would abolish the Department of Immigration. Removing term limits doesn't mean that jobs just get handed to non-Bermudians. They still would have to be advertised as normal and vetted by the Department of Immigration. That is unless the PLP don't believe that the Department of Immigration does its job properly.

And in case they haven't noticed, as our non-Bermudian workforce has declined, the Bermudian impact has been greater. Unemployment didn't exist in Bermuda before term limits, and right now there are few buyers for land in Bermuda - Bermudian or otherwise.

The PLP's reality bending alternative universe stuff continues to remind me of Stephen Colbert's concept of 'truthiness' and his comment that 'reality has a well-known liberal bias'.

In Bermuda's case it's that reality has a well-known anti-PLP bias.

It appears that as usual the PLP response to weakness is to go on the attack. In this case they are doubling down on term limits with an election coming. This is very dangerous for Bermuda. They appear willing to disparage the remaining job creators and investors who have stuck by Bermuda despite the PLP's hostilities. To escalate it further would be devastating.

Do they have no sense of responsibility, or would they rather sink the ship than make a change in course.

Saving face cannot be allowed to take precedence over saving Bermuda's economy.

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