08 March 2009

Development or Dementia


John Maxwell

Mr Warren Buffett may still be the world's richest person and is worth more than the combined GDPs of Jamaica, Zambia, Gabon, Uganda, Paraguay, and Brunei. although he lost the equivalent of Jamaica, last year. As you may imagine, lots of very rich and influential people listen carefully to Mr Buffett as to a modern day prophet. Last year he admitted to losing nearly 11 billion dollars in misplaced investments; He prophesies or forecasts that the world economy will be in a shambles throughout this year and "for that matter, well beyond."

In another development this week, the Spectrem (sic) Group's Millionaire Investor Index hit its lowest level since the company unveiled it in February 2004. The index fell 15 points in November to a level of negative 39, deep into bearish territory. The index is based on a survey of the economic confidence of American households with more than $1 million in investable assets.

Wealthy investors have a huge effect on investment markets because of the disproportionate amount of money they control. The wealthiest 20% of Americans account for more than half of U.S. household income.

Judging from a wide reading of investment advice, financial papers and news stories about the current financial disaster, it would seem fairly clear to me that it is not the time for speculative bets involving large amounts of money.

On Thursday the Jamaican Ministry of Finance said: "The Government of Jamaica remains committed to fiscal prudence and policy initiatives geared towards the preservation of sound macroeconomic fundamentals." This was in response to the news that the deepening global financial crisis has caused one of the world's leading rating agencies, Moody's Investors Service, taking the decision to downgrade Jamaica's government bonds.

This downgrade of course, makes it harder to borrow money and more expensive to borrow if you are able to find a lender.

Late last year the Port Authority had not apparently found any answer to its huge unfunded debt burden which the PAJ itself suggested was overpowering its balance sheet The PAJ sought advice from Merrill Lynch but eventually apparently, decided not to take it

Merrill itself has been one of the most spectacular casualties of the global financial disaster so it may not be politic to mention them in this connection.

Nevertheless, the PAJ seems to be pressing ahead with its plan to destroy the town of Falmouth and to replace it with the world's largest sewage disposal plant for ships. For this coprophagic extravaganza, the PAJ is all on its own, undertaking to borrow somewhere in the region of 200 million US dollars

This facility is to attract the word's most environmentally hostile enterprise, a floating property development called the Oasis of the Seas. It will be five times the size of the Titanic and is meant to house 10,000 people at a time, divided between paying guests and employees.

This monstrosity will be a self contained floating theme park and condo/resort, designed to make is unnecessary for the paying guests to set foot on land, except when the property requires to be cleaned and sanitised.

The Oasis of the Seas is being built in Finland for Royal Caribbean Cruise Line on an 80% bridging loan from the government of Finland. But RCCL says it cannot guarantee that the company will be able to finance the project.

The company has told the US Securities and Exchange Commission, the SEC, "Although we believe that we will be able to (finance the ship), there can be no assurance that we will be able to do so or that we will be able to do so on acceptable terms."

"The disruption in the credit markets has resulted in a lack of liquidity worldwide (that) may affect our ability to successfully raise capital or to do so on acceptable terms," RCCL warned.

Royal Caribbean noted that credit rating agencies Standard & Poors and Moody's have both lowered its credit rating over the past year, and cash flow at the company is under pressure due to the decrease in consumer cruise spending as a result of the current economic climate. In fact RCCCL bonds are currently rated as 'junk'.

Worse, the company announced net income of US$8.8 million for the first quarter of 2007, down from US$119.5 million a year earlier, a drop of 98%.

In all of this confusion, one or two things appear to be clear:

1.    RCCL is as the Americans say, in deep doo doo.

2.     Jamaica's PAJ is in effect backing RCCL's speculative enterprise, but does not stand to gain any profit in the unlikely event that the ship is built and operated successfully on schedule.. If we are to invest one fifth of the cost of the ship, there should be corresponding equity in it for us.

If the project collapses as seems likely in the present crisis, we will be left holding the bag, forced to pay for a benefit we have not had while hundreds of thousands of poor and starving Jamaicans demand a piece of the action.

There seems to be no parliamentary approval for this assault on the Consolidated Fund. Is someone personally guaranteeing our $200 million adventure into deep-sea property development?


I do not understand the logic or the law behind the recent electoral petition decisions.

AS I understand it, under the Representation of the People Act, if only one qualified candidate presents himself on Nomination Day, that candidate is judged to have been elected, unopposed.

That means that Abe Dabdoub is the rightful Member of Parliament for Western Portland and there is no vacancy for which any by-election may be called. The same principle holds in all the other constituencies.

What riles me is that much of this confusion was due to the direct intervention of a man who must have been well aware that he was himself unqualified to make any determination on the legitimacy or otherwise, of any candidate in the election. Should the DPP not have taken notice.

Masters of Hypocrisy

One of the most instructive morality plays has recently been presented by the British press. The villain is Britain's Prime Minister, Gordon Brown and the cartoonists and columnists have clearly declared open season on him. Recently Mr Brown has been attacked from all sides including his own party, for failing to apologise for not preventing the recent worldwide depression and the criminal activity that led to it.

The SUN may have given the game away with its warning that no matter how successful he was abroad, Brown could not escape from the criticism at home that he was partly to blame for the economic crisis in Britain.

His every action has been damned with faint praise, culminating in the reviews of Mr Brown's official visit to the US. Before he got there the British press was reporting thst he had been snubbed by President Obama, because the customary Rose Garden press conference had not been scheduled. It was only later that the British figured out that a Rose Garden press conference in sub-zero weather was unlikely to be either popular or healthy.

The behaviour of the British press was so peculiar that some of the US coverage has been concerned more with how the British media reported the story, than the significance of Mr Brown's trip

The reviews of Mr Brown's appearance before the joint session of congress were even more bizarre; it did not occur to most of the British press authorities that an invitation to address a joint session of `congress was a very rare honour indeed.

The Brits tried to play down Brown's 35 minute speech, despite the fact that US news agencies said it had been interrupted by applause almost once per minute.

If you want to understand how the British can turn triumph into disaster, read on:

KEVIN CONNOLLY, BBC 'We were discussing whether or not Mr Brown had been "snubbed" by the White House before he had reached the sanctuary of the British Embassy on the night he arrived - and that debate probably helped to shape British perceptions of the trip before it was properly under way.'

GUARDIAN 'It went down pretty well - although the repeated standing ovations have to be seen in context. The joint houses are almost as well-drilled as the National Assembly of North Korea in recognising the key moments in a speech which call for you to leap to your feet applauding.'

But what he said was so full of echoes from other writers that he never found his own voice and was able to inspire a not much more than respectful ovation when he finished.

TIMES: 'While both prime ministers [Blair 2003 and Brown 2009] received 19 standing ovations, it was notable yesterday that many Republicans could be seen sitting on their hands while Democrats were repeatedly rising to their feet.'

'They rewarded him with 19 standing ovations while he was speaking but as they filed from the chamber of the House of Representatives after Gordon Brown's 36-minute address, US legislators offered somewhat less effusive praise.'

JULIAN GLOVER, GUARDIAN: 'The response differed too. Blair received 19 standing ovations in his speech, which was ecstatically received. … Brown got 19 too, but some - especially in response to passages on the sacrifices of the American military - appeared somewhat routine.'

ANDREW GIMSON, Daily Telegraph, reporting from London was able to say:

'Somehow the speech was sagging. Mr Brown spoke over and over again about optimism, but was not making his listeners feel any more optimistic.… was able to inspire a not much more than respectful ovation when he finished.'

The American view was different:

BOSTON GLOBE : 'Neal joined several other Irish-American lawmakers in escorting Brown down the aisle of the House floor, a courtesy that would have been unthinkable during the darkest days of the conflict.'

Ben Pershing , Washington Post : 'Brown's 35-minute address to the dignitaries and lawmakers assembled in the House chamber was interrupted nearly 30 times by applause …'

... 'Brown's reception on the Hill yesterday was warm, as many lawmakers jockeyed for seats along the aisle of the House chamber so they could shake the prime minister's hand and get his autograph.'

The New York Times's Brian Knowlton also noted the 'warm welcome' that Mr Brown received. And he added that attendance had been good: 'The Capitol interns who are sometimes summoned to fill empty seats on such occasions were relatively few in number.'

TIME magazine's Michael Scherer perhaps best summed up the whole sorry business when he described as 'kind of pathetic' the British media's 'obsession' with how the UK is viewed by America, and how Mr Brown is viewed by Mr Obama.

A final note on British spinmania: The severely handicapped toddler son of the leader of the British opposition has just died. He had never been expected to survive long and Gordon Brown, who has also lost a child in infancy, cancelled Prime Minister's question time to deliver an emotional message of sympathy to David Cameron and his wife.. What the British press did with the story afterwards was unbelievable. The front pages were filled with pictures of the child and his father, never his mother, in what seemed a transparent attempt at political PR. This went on for days for no discernible good reason. David Cameron, having lost a child, seemed well on the way to canonisation.

The Tories may well need the PR; despite being well ahead in the polls, unanticipated swings to Labour lost the Tories a couple of very recent bye elections.

Copyright© 2009 John Maxwell


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