Those who think that Barbados is better positioned than many to weather the global financial crisis, and that the impact will be limited and short-term should think again. Right now the industrial states are in deep recession with little but cautious optimism for short term recovery in a shrinking world economy where job loss is projected at around 50 million in 2009. The Third World which is responsible for about 70% of world trade is buckling at the knees. Royal Caribbean Cruise Line just reported a 98% decline in revenue, and airlines are in a passenger and freight free fall. So how can we, a virtually dependent country with nothing to trade be better positioned to hold our own or weather the storm? The fact that most sectors can hold their own with decline only tourism and construction argues against the need for stimulus.
It is hard to understand–or is it given certain ‘interlocking’ connections—why it is that Clico, who will or should be bailed out by the T&T government, is being handed $10 million in bail-out by our government when some pensioners haven’t got a check in three months.
It is highly unlikely that all of Clico’s subsidiaries on the island are facing potential bankruptcy. Clico is in many ways a miniscule version of the Wall Street meltdown. The implications for Barbados will likely be shocking. Among other things it means that the Trinidad government will end up owning much more of the island, which raises the question: can Bajans own property in Trinidad ? More about this as the air clears. In the meantime ponder this: will the government proposed housing project go to tender or will it be given to Clico?
Forget Rescues From Obama or CSME
Don’t bank on President Obama coming to the rescue. A front row seat in Denver failed to translate into a backdoor peep-in at the inauguration. The man has too much on his plate and little by way of scratch-grain to hand out. As a senator he co-signed a bill to kill off shore banking business (we are about fourth of 26 countries on the list). Should the bill be resurrected the off-shore component of our economy will dry up. But there may be a saving grace. There is a limit to which you can bite the hand that fed you.
Also forget CSME. The dictum “one from thirteen leaves nothing” (about the old Federation) still stands. The country in question, Trinidad , is now all powerful in the region (for the time being), owns much of the island (hear Plastic Bag), is setting up to take over tourism from us, and today imports labour from everywhere except Barbados .
Much more nationalization of banks and business recapitalization will be needed in order to avoid an outright world catastrophe. Inevitable restructuring of the financial and trade system will clip America ’s wings and shift the balance of power to the East and or Europe . Already we have lost much of what we owned or thought we owned. By the time normality returns to the global economy we could be reduced to structural servitude: a severely shrunken middle class and a massive underclass; tenants rather than owners. Promises and or innuendoes of prosperity buttressed by questionable propaganda are unlikely to save us.
The current global crisis is a reminder that our flawed economy with, to quote the IMF in 2006, its “macro-imbalances,” is a breeding ground for social unrest and disorder. Discontent is often a first necessity of progress. When critical mass is reached there will likely be an explosion that will rock the foundation. However, an article in the UK press gave assurance that the island will not be allowed to Go to Seed, which suggests that the Mother Country will take over. The time may not be far away.
Authored by Un-encumbered
February 11, 2009
Next in the series: The state of our economy and stimulus
BFP Editor’s Comment
Our apology to author Un-encumbered as your email was hiding unnoticed in the spam bucket for some reason. Thanks for alerting us.
This article was published with two changes. The title was changed from “Bajan Economy…” to “Barbados Economy…” and the first sentence was changed from “Those who think that we are better positioned…” to “Those who think that Barbados is better positioned…”