Jamaica and the IMF.

So Jamaica has decided to resume borrowing relations with the IMF and of course many Jamaicans are very concerned about what that means for them considering what has happened in the previous borrowing arrangements.

The opposition PNP has asked for a full disclosure as to the terms and pre-conditions associated with this new arrangement.

Whether we agree with this new borrowing relationship or not the fact that the government has decided that this is the path we will have to go down, means we have to deal with the issue.

What is missing from all the discussion, is how did we get here and secondly where do we go from here.

Jamaicans as usual get caught up in the unimportant issues and very rarely focus on the bigger issues, in this case what is the future for Jamaica.

Jamaica has lagged the rest of the Caribbean due in part to lack of vision on the path of our nation leaders, and will continue to do so as there is absolutely zero vision.

There is no common thread that holds Jamaicans together and while sports has assisted in some way, however we need a lot more than that.

The fact that we have returned to the IMF has shown the abject failure of our leaders which have collectively taken us down a part of destruction year after year.

When a government is elected to power, they ensure by their policies that we never move forward.

This is how I see each government operate when they get into office.

Year 1.

  • Dismantle the policies put in place by the previous administration.
  • Get rid of the management staff of the previous administration.
  • Put in place their own people, who take over a year or more to understand the job.

Year 2 & 3

  • Begin to put in place plans from their “manifesto” and start working on their own plans for the country.

Year 4&5

In the last two years the plan being put in place are done in a manner to assure a win in the next general election. These policies are usually not very lasting and are only done to create popularity for the incumbent as they seek to win the next election.

So in reality within a five year term, the government really only spend 40% of their time in office doing anything to move the country forward.

Jamaica, I believe has found itself in this position due to the bankrupt minds of our politicians who aims are really to win election vs putting plans and systems in place to move the country forward. In so doing they would have not only enrich the country but it would also assure themselves of an election win at the polls.

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Jamaica’s Quest for Oil

(First written Feb 14, 2007)

Jamaica has embarked on a serious quest for “the black gold “(oil) for sometime now, and seems now more than ever to be on track in finding good oil deposit. This is based on the recent comments coming from the Group Managing Director of Petrojam at a recent function in the Twin Island Republic of Trinidad and Tobago.

While the Ministry of Commerce and Petrojam are all excited about the possibility of finding the black gold, I am far from being excited.

I am, like most Jamaicans, are very concerned about our voracious appetite for oil. This is based on our current consumption and our ever increasing oil bill, coupled with the fact that we will spend close to US$1B this year to satisfy our craving.

My reason for lack of excitement stems from the fact that, rather than trying to reduce our energy consumption we are trying desperately to find the easy way out. We are one of the few countries in the world where our
peak energy demand is greater after 6pm, (when most persons are at home) rather than during the days when we are supposed to be the most productive.
This is a clear indication that we use a lot more energy for domestic purpose rather than industrial and commercial activities, a sign that we are not a productive nation.

My other reason which, I consider to be the most far reaching,  stem from the fact that I strongly believe that the country will not reap the rewards if we ever find oil. Those which have been given the opportunity to explore for oil and manage to find it, will be richly rewarded as our technocrats never seems able to sign agreements which ensure that Jamaicans are the main beneficiaries. Instead we seem eager to ensure that our foreign investors exploit the resources of this country much to the detriment of the populace.

My final comment is that our country is so steeped in corruption, that money that actually makes it way into the country coffers will somehow slip through much like the slippery black gold itself.
Nigeria is today the eleventh largest producer of oil in the world, but look at the economic situation in that Country, in addition to the fact that the
populace has not participated in the process, Nigeria is today ranked as one of the most corrupt country in the world. The day Jamaica strikes oil, will be the beginning of the path to knock Nigeria from the top.

Jamaica Tourism Industry

(First written Feb 2, 2007)

I have noted within the last few weeks, growing concerns being voiced by those in the tourism industry about the amount of money that will be lost as a result of cancellations over the new caricom visa regime. It has been reported that the losses may be in the order of billions of Jamaican dollars until the visa regime end sometime in April.

I tend to be very skeptical these days about the figures being reported by those in the tourism sector every time that there is a change which is said to
impact visitor arrivals. Last year, the decision by the United States of
American to make it mandatory for its citizens who visit the region to have a passport, was described as having the same effect as a major  category 6
Hurricane
. It now turns out the estimated loses reported were greatly exaggerated and that the impact after all was very minimal as over 80% of our visitors already had a passport.

I am however very concerned about our government decision to continue to project the tourism sector as the engine of growth and the main foreign exchange earner for the country. My concern lies in the fact that any major event be it a hurricane, a travel advisory or even the requirement to have a visa to deter terrorism could have a disastrous impact on the revenue inflow to this country.

We need to have alternative income streams for our country. China is today a growing world power, is that due to increased tourist arrival? The fact is China has seen a significant increase in visitor arrivals over the last few years and is projected to be even higher making their tourism sector the second biggest, over turning Spain by the year 2010.

However it’s the manufacturing sector in China which is making the greatest impact on its earnings and hence the economic powerhouse that it is fast
becoming.

Tourism is indeed good for the country, but I think we
have concentrated “too many eggs” in one basket.

Devaluation and the Jamaican economy.

(Reprinted from my report done in  September 1, 2006)

I hear it being said on a consistent basis by many a writers, public speakers and people of influence, that the Jamaica dollars is overvalued.What does this really mean for the average person, and who decides ultimately what the “price” of the Jamaican dollars is, in comparison the benchmark currency which is the US$.

Firstly, what is value and how is value arrived at. As some would say , value, like beauty is in the eyes of the beholder. My favorite definition is however taken from the compact oxford dictionary, which defines value as follows: “the regard that something is held to deserve; importance or worth”.

So, is it that those who stand to benefit most from the “devaluation” of the local currency are the ones consistently calling for its devaluation? The argument is, as the holder of the foreign in question,” I think it is valued more that the current quoted market price”.

From a historical perspective the local currency has been battered and bruised over the years, as those with influence, as well as market forces has driven the dollar from its highly “valued” position of US$ 1.00 – J$0.77 in 1972, to the present “overvalued” rate of US$1.00 – J$88.9. This means the US dollar has appreciated over 11445 % in just over 37 yrs. ( If I said devaluation the figure would not look so grave)

This is an astounding arithmetic average appreciate of the gren back against the Jamaican dollar of 309% per annum. Note I said arithmetic average, as it does not look at periods of relatively stable exchange rates or mild devaluation.

Now how is value really arrived at, and what conditions define whether the local currency is indeed overvalued.The mere annunciation by a few without definitive quantitative and qualitative analysis of the economic conditions in Jamaica cannot be therefore taken very seriously. The proponents of the devaluation of the local currency have consistently failed, in my opinion to provide any evidence to the effect that the local currency is indeed overvalued.

The supportive argument being put forward has been, the Government via the Bank of Jamaica has consistently sought to “defend” the local currency. The Government in my opinion has tried to prevent the manipulation of the local currency for the benefits of the few in this country who stands to gain more from currency devaluation.

Let us follow for a minute, the argument, which supports the devaluation of the local currency, and what that policy over the years has had on the local economy.

        In each of the last 37 years, it has taken on an average, 309% more of local currency to purchase items manufactured outside of this country, and in particular items manufactured in the states. (This of course does not take price reduction due to technological advanced etc. into account).

        It has cost the country the similar percentage amount in increase local currency to repay loans acquired in US$ from overseas lending agencies.

        During the last 20 years (1985 – 2005), the arithmetic average inflation rate has been in the region of 19% per annum, peaking to an astounding 80% 1991.

        In the one-year period Jan 1, 1991 through Dec 31, 1991, the local currency moved from $8.17 to $21.57 or 164% devaluation. Ironically at the close of the calendar year (1991) the inflation rate had moved to an all time high of 80% as stated above.

        During the period Dec 1988 to Dec 1991, the inflation rate in Jamaica moved from 8.8 % culminating in the one of the largest if not the largest inflation rate ever recorded in modern Jamaica of 80%.

        The local currency during the same period had moved from US$1.00 – J$6.50 to US$1.00 – J$23.57. This correspondence to a % devaluation of just under 232% during that three year period.

From the above few points, it is clear to me that the Jamaican economy has nothing to boast about in terms of gains from the devaluation of the local currency. In fact, from all that I have seen, the country’s economy has been dealt some of its most severe blows during the periods of high devaluation of the local currency.

The people of this country have suffered tremendously from policies of those, who are of the opinion that the local currency is overvalued when compared to its trading partners.

Jamaicans do not stand to gain any significant benefits from currency devaluation in the near future as the policy direction take by the Government in the last fourteen years have virtually assured this.

The largest businesses now in Jamaica are foreign owned, which means there is greater movement of dollars being repatriated as dividend etc. to the parent companies overseas. Therefore the more profits earned locally, the more $US which will be leaving the shores of this country.

There are few investments taking place in Jamaica today which is bring in foreign exchange, another point which points to the fallacy of this “devaluation” cry.

Jamaica is a “net importer” as seen by our trade data and hence, is using more foreign dollars than it can and will ever generate and therefore will never really benefit from continuous declines in the exchange rates.

Threats

        Bauxite, which is one of our key earners of foreign exchange, will not last forever, and will probably run out in the next 20yrs.

        The new immigration bill being put forward in the United States could also deal a devastating blow to the Jamaican economy.  We all know that remittances from the United States has been for the last few years been the main stay of many local families and is a huge contributor to the country’s’ foreign currency coffers in terms of NIR increases..

There is no doubt that quite of bit of Jamaicans who have called the USA home have been there illegally and could be asked to leave the Country with the passage of this new immigration law.

So once again, I see us losing a lot more from currency devaluation that we stand to gain.

Now for the greatest irony of all.

The Islands of Bermuda with a population of just 65,773 people enjoy an average per capita income of

$ 69,900. This from an April 20, 2006 report from the CIA, is the highest in the world. So what is the exchange rate of the Bermuda dollar to the US, well BMD$1.00 = US$1.00.

The British Virgin Island comes in at number 8, with an average per capita income of US$38,500 per annum.

Just for the records, Jamaica comes in at position 144, out of 232 Countries with a per capita income of just US$4,200 per annum. This is the worst in the English speaking Caribbean with the exception of Guyana which hold position 148, with a per capita income of US$3,800 per annum. If Cuba with a per capita income of $3,300 (position 156) and Haiti with per Capita income of US$1,600 (position 194) are included then we are the forth from the bottom.

I guess if we continue on this path as being suggested by other, we will take the place of Guyana shortly and will have the dubious position of the worst per capita income in the English speaking Caribbean with an exchange rate of close to 200:1.

Now of course this is just my humble opinion, as I am sure  many would disagree with my position.

Public Officials and good governance

First Reported  September 27, 2006

Having read two articles regarding the Contractor General’s office and Air Jamaica as well as the National Solid Waste Management Authority, I am now more convinced that this administration has absolutely no intention of following the rules of good governance.

We create monitoring agencies to ensure that the very rules set by the legislature are not broken, however when the persons running the agencies request information, they are told to either keep quiet or given the run around.
Leadership continues to flout the law and nothing seems to be able to stop them as they move ahead doing whatever the please, without regard for the public in this country.

No one accepts responsibility when things go wrong and neither is anyone held accountable for their actions or lack thereof. This in my mind has shown that the entire country is out of control and is being very poorly managed. It is my opinion that people are more concerned about covering up and making excuses, rather than focusing on what are the fundamental and systemic issues facing these agencies and move correct the
deficiencies found.

The situation regarding the doctor at the Victoria Jubilee hospital at the actions likely to be taken against him over the release of a story regarding a
malfunctioning autoclave has really left me wondering what has become of Jamaica.

Again we seem to be preoccupied about the messenger rather than focusing on the message and hence we continue to miss the real problems.
The migration of educated Jamaicans has less to do with crime and ever so more to do with an unwillingness to be part of a Country were corruption,
lack of ethics, crass behaviour by public and elected officials are excused and promoted, rather than being punished.

Bill Clarke and Scotia, a case of greed gone too far?

The current battle between former CEO of BNS and BNS Canada is really getting ugly and will turn out to be a very costly process. Is Bill Clarke justified in putting up such a fight to retain his “dignity” or should he just have taken the offer from Scotia and ride off into the sunset.

Is this of “craven choke puppy dog” (Translated to me is the just plain greedy) Bill Clarke for the most part has being an aggressive and sometime very crude and abrasive character who at times did not seem to care about the people he came in contact with while he was at the pinnacle of his career.

Bill Clarke however from what I have been told was a fearless person who worked tirelessly to ensure that BNS raked in significant profits year after year and was very loyal to his company. The one thing I found very odd however was he held little or no shares in the company that he had worked 40 yrs at and 10 being as CEO.

There may have been a good reason for this I have no idea and only Bill himself can answer that question. What is happening now is that Bill’s dirty laundry is being completely exposed and I have the feeling that he is fighting a battle that he does not have a ghost of a chance in winning.

The situation will not doubt only get worse, when he loses all his appeals and will be asked to pay full legal cost to Scotia and possible rental cost for the period that he has lived in the company house after being told to leave.

Its really unfortunate so sees what is happening, but as my mom always tell me and I am constantly reminded by that fact. ” When you work for a company no matter how high up the food chain you are, you are just still an employee, nothing more than that.” She went on further to say,“it does not matter what your contributions have been in the past or even very current, when your handlers think its time for you to go, you will have to go. You can either go quietly with the package being offered or publicly with a reduced package, it’s your choice.

Very sound advice from a lady who is my mentor with a high school education who is currently studying for a college degree.

Global Warming is it real?

There has been a lot a talk in recent times about global warming and the effect of green house on these changes. In addition to higher surface temperature, they have been talk of rising sea levels and the melting ice caps.

Is this another attempt by scientist to postulate a theorem and then build a case around it and then get the world to buy into this?

You see if you believe that there is in fact “global warming” , the next thing is to develop models to prove that your belief is real.

This is the danger that we run into from scientist, they push their beliefs forward and they go on to “prove” that they are correct thus allowing people to buy into this belief.

I am  willing to say that there is in fact  global warming, but this has absolutely nothing to do with green house gases or anything to do with what has happened in the industrial world.

I believe that rising surface temperature and rising sea levels is a perfectly natural phenomenon which has existed for many thousands of years and has nothing to do with this so called “green house” gas.

Lets take a look at a couple of things and how scientist have lead us to believe we are about to have a global catastrophe.

Fallacy # 1

Storms/Hurricanes are getting stronger due to higher surface temperature as a result of green house gases.

Why should I believe this to be true? The fact is the world population has increased and more persons today are being exposed to these naturally occurring phenomena thus giving the impression that we are having more and that they are stronger.

Where is the records for example of 500 hundreds years ago, which would indicate the strength of these hurricanes and the damaged they caused back then.

The fact is we have are trying to make a decision as it relates to earth in the very short time span that we have lived here, when the fact is we live here for an average of 70yrs which is like a fraction of  second in the earths life cycle.

The ice age for example would have existed for an entire life time, a time more than many of us would have lived from birth to death. If that was to happen today, our scientist would sure find a way to suggest that it’s something that we are doing which caused this problem.

The earth goes through cycles which last for thousands of years, from the global freeze to warmth then to global freeze again.

I can bet my last dollar that we will have an ice age again and  though none of us will of course be around to see it, but I can assure you of this, those living at that time, will be lead to believe its as a result of what they did  or are doing which caused the problem.

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