The proposed government mortgage relief program is now a very important national issue ...and it is imperative that we devise a national solution which is reasoned and considered... ...As corporate citizens, we at Circle Vision Financial Planning (CFAL) are simply interested in good economic policies ...which will further enhance the well-being of all citizens and permanent residents of The Bahamas

Economic View CFAL’s recommendations to the government on the mortgage relief program

CFAL Economic View

We have read with interest varying responses to leading international credit agency Moody’s warning to The Bahamas government on its proposed mortgage relief program.

Readers would recall in this column on April 3, 2012, we at CFAL expressed our concern with the then Progressive Liberal Party (PLP) proposal, as we had difficulty understanding the feasibility of the plan.  While we agreed with several of the recommendations, we also strongly disagreed with others.  This is what makes a market.  It is now the government’s program.

We wrote that “the center of the 2008 global crisis was the mortgage debacle, where the U.S. government through its government funded mortgage agencies provided funding for residential mortgages that in most cases the citizenry was not able to afford.  The end results, foreclosures and a depressed housing market, now headed into its fifth year.  As we all know, in the absence of a holistic economic plan, we continue to be dependent on the success or lack thereof of the U.S. economy.  The Bahamas is now experiencing what the U.S. experienced back in 2008 in the mortgage market as a result of lenient lending practices.  To fix the core of this problem, we need policies that are realistic, achievable, and measurable.”

We went on to say that: “While the idea of providing relief for persons having a difficult time in meeting their mortgage obligations is arguably a good one and one which we support, we have serious questions on some of the specifics outlined in the proposal as reported in The Guardian”.

We also noted that: “In a democracy it is not prudent for the government to mandate any financial institution to do anything; it is the shareholders, directors and management which decides on what course of action should be taken.  Governments and financial services regulators (Central Banks) sometimes resort to ‘moral suasion’ in a credit crisis in order to try and persuade financial institutions to provide relief to mortgage payers.  Alternatively, monetary policy initiatives by the Central Bank in the form of interest rate reductions are applied to solve the issue of mortgage delinquency.  That course of action, particularly with respect to our current predicament, is likely to be ineffective at best.  To date, we do not see the expected positive results.  We can point, however, to the long-term consequences.  It is our view that a holistic plan is needed.  A plan that examines the impact on all stakeholders to avoid unintended consequences.”

The burden

Since Moody’s comments, we read and heard on talk shows where many are recommending that the government simply cut interest rates.  They further state that all should bear the burden.  Well, why should all bear the cost?  “All” did not participate while many were not being prudent.

None of the economic and financial pundits speak to the cost and consequence of the reduction in interest rates.  Perhaps they do not know or choose to be intellectually dishonest in recognizing that it represents a transfer from savers to borrowers.

The recent cut in interest rates had serious consequences for many, including pensioners, National Insurance, insurance companies, the various government and private sector defined benefit pension plan schemes, savers and the Bahamian dollar.  In the United States and Europe, such a policy of artificially low interest rates is increasingly being referred to as “financial repression”.

These pundits continue to refer to the government savings on interest payments of about $25 million per year, but ignore the long-term increase to government debt and the cost associated with it.  We estimate a long-term increase in debt obligations of over $500 million.  The cost of government funding this deficit will outweigh the immediate savings.

As we have written numerous times in this column, “What the Bahamian people need are jobs”.  It’s the only way for us to manage the current and anticipated debt levels save for a significant increase in taxes which the government has indicated it does not intend to do in the short-term.

We believe the government will have to take a hard look at our taxation system as we have indicated on many occasions.  Merely dropping interest rates or guaranteeing interest payments will not cause lenders to extend credit especially since the creditworthiness of many borrowers was and still is slipping.  In the case of new or revised loans at the lower rate, the average monthly benefit will not make much of a difference to the borrower, particularly since it is the principal balance that is often too much for the borrower to bear.

In implementing a relief plan which we support, we urge our government to be mindful of the unintended consequences which can change mortgage funding in the future.  Will financial institutions continue to offer 30-year mortgages or refinancing programs if, for whatever reason, they cannot access collaterals after 15 or 20 years?  It’s not an easy decision.  We must tread carefully.

Solutions

We recommend the new government consider establishing a Long-Term Mortgage Relief Program (LTMRP), whereby a special purpose vehicle (SPV) is created for the expressed purpose of acquiring the distressed mortgages from financial institutions and issuing long-term bonds to fund the acquisition of the same.  A similar structure was used in the United States in the early 1990s to resolve the distressed mortgage and property assets of their Savings & Loan crisis.

We would recommend the government consider the following:

• Articulate clear guidelines on who would qualify for the mortgage relief program

• Relief on residential mortgages only up to a maximum of $500,000

• Purchase loans at a discount (i.e., 20-30 percent) from financial institutions with specific caveats

• Mortgage tenure up to 40 years

• Interest rates on restructured mortgages up to 5.50 percent (as indicated in plan)

• Cap interest spread on bonds issued to purchase the mortgages

• Annual audit by an independent accounting firm.

This would accomplish several things:

• Provide transparency to all

• The government doesn’t interfere in private contracts

• The government can restructure the loans with tenure up to 40-50 years with specific caveats.

The government should then issue fixed rate long-term bonds to fund the SPV.  This will lock in funding costs.  Natural buyers of these bonds will be pensioners, NIB, insurance companies and pension plans.

The government commitment will be defined with supporting assets (the mortgages) with monthly cash-flow which should be net positive for Moody’s and other rating agencies.  An example, if the government issued $75 million in bonds to purchase mortgages at a discount of 20 percent, the proposed interest of 5.50 percent would give the government some .50 basis points to service the mortgages, while having assets worth some $93.75 million.  The net cash cost to government would be a maximum of under $500,000 and the guarantee to support the loans.

Banks and other institutions would have stronger balance sheets, which would encourage them to increase lending to companies to create more jobs and opportunities.

This will reduce any semblance of moral hazard such as dictating the number of payments after which a lending institution will be unable to exercise its foreclosure provisions against a borrower.  What we don’t want is where financial institutions refrain from refinancing activities for fear of potential loss.

The program can be administered by the Bank of The Bahamas for a negotiated maximum cost, a 51 percent government entity to ensure its efficacy.

Reasoned response needed

We would strongly discourage the government from getting in the business of paying its citizens’ mortgage interest payments for any number of reasons, inclusive of moral hazard, perception of special favors to the disadvantage of others, increased debt and the potential to devalue our dollar, all of which can seriously cripple our economy.

We reiterate our comments that given the current economic climate as well as the projected growth trajectory, it is highly unlikely that The Bahamas could afford this expenditure except if we are able to grow the economy (provide more jobs) on the order of 10 percent per annum.

The proposed government mortgage relief program is now a very important national issue and it is imperative that we devise a national solution which is reasoned and considered.  As corporate citizens, we at CFAL are simply interested in good economic policies which will further enhance the well-being of all citizens and permanent residents of The Bahamas.

What we do not wish to see is capital being inadvertently driven away because of some ill-advised economic policy.  Whatever we think of the rating agencies, including Moody’s, their comments can cause our cost of capital to increase substantially in the future.

We should not dismiss their claims, but embrace them and articulate in a coherent manner the details of the proposed solution and chart a course in the best interest of The Bahamas, realizing that The Bahamas lives in a global environment.

• CFAL is a sister company of The Nassau Guardian under the AF Holdings Ltd. umbrella.  CFAL provides investment management, research, brokerage and pension services.  For comments, please contact CFAL at: column@cfal.com

May 23, 2012

thenassauguardian

Caribbean Blog International

The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) support permitting oil exploration in Bahamian waters ...once regulatory safeguards were in place... ...potential earnings could "eliminate The Bahamas' National Debt in five years"

Chamber Backs Oil Exploration

By NEIL HARTNELL

#Tribune Business Editor

THE Bahamas Chamber of Commerce and Employers Confederation (BCCEC) yesterday backed permitting oil exploration in this nation's waters once regulatory safeguards were in place, telling Tribune Business potential earnings could "eliminate the National Debt in five years".

I Chester Cooper, the BCCEC's chairman, effectively told this newspaper that the Bahamas - and its economy - could not afford the 'opportunity cost' of passing up the financial benefits if commercial quantities of oil were found within this country's territorial boundaries.

Projecting that revenues worth a conservative $1 billion per year could be generated if the Bahamas Petroleum Company (BPC) and its joint venture partners were to discover oil deposits that could be extracted, Mr Cooper said the sector had the potential to "transform the economy" - both directly and through spin-off commercial activities.

Calling for a "non-partisan" debate on oil exploration in the Bahamas, the BCCEC chairman acknowledged that a comprehensive environmental, health and safety regime was required to protect this nation's environment and tourism industry.

Urging the Government to "get on with it" when it came to developing such a regulatory regime, Mr Cooper pointed out that the energy and tourism industries already co-existed in the Caribbean, in the shape of Trinidad & Tobago and Barbados. Cuba, also a tourism-dependent destination, has begun to drill in waters near its territorial boundaries with the Bahamas.

Emphasising that the BCCEC's support depended on the necessary safeguards being in place, Mr Cooper suggested it was time to lift the debate on oil exploration, and BPC's activities, to a higher level and away from being a 'political football'.

"Now that the political season is over, it is a good time to have a comprehensive, non-partisan debate on the issue," he said.

"We support the continued exploration of oil and, if successful, the eventual development of a safe and well-regulated industry. We urge the Government to quickly put the proper regulations in place for the orderly development of this industry."

Oil exploration was first seized on by the Democratic National Alliance (DNA) as an issue that it could exploit for political mileage in the general election run-up. Then former Prime Minister Hubert Ingraham attempted to use it, and BPC, to portray the Progressive Liberal Party (PLP) as 'conflicted' and unlikely to act in the nation's best interest, given that Davis & Co (now Deputy Prime Minister Philip Davis's law firm) and former PLP attorney general, Sean McWeeney, were named as the company's legal advisers.

There were then suggestions that Prime Minister Perry Christie had acted as consultant to BPC while in Opposition. Eventually, the PLP pledged to hold a referendum on whether oil drilling and exploration should be permitted in Bahamian waters, while Mr Ingraham backtracked from an earlier position that the FNM would not permit the industry if re-elected.

Ultimately, the former Ingraham administration returned to its already-stated position that oil drilling would not be permitted, and no new licences issued, until an appropriate regulatory regime has been implemented. Government officials have already visited the likes of Norway and the UK to examine those countries' regimes, and what the Bahamas can learn from and bring here.

Nevertheless, just prior to the general election, the Government decided not to renew the five BPC licences that expired on April 26, 2012, and returned the company's $300,000 fee payments to it. This leaves the ball very much in the newly-elected Christie administration's court.

BCCEC chairman Mr Cooper, meanwhile, indicated that the tremendous economic benefits - if oil was discovered in sufficient quantities in Bahamian waters - meant this nation, with its limited natural resources, narrow economic base and troubled government finances, could not afford to spurn this opportunity.

"The likely revenues can eliminate the National Debt in five years and contribute significantly to education, healthcare and development of infrastructure across the country and, importantly, an expansion in GDP leading to more favourable economic metrics," Mr Cooper said.

He added that the revenue generated from oil exploration could be used to reduce import tariffs on oil imports, reducing energy and gasoline costs. This, in turn, would lower the cost of living and doing business in the Bahamas, and make this nation much more competitive in attracting foreign direct investment (FDI).

"We cannot afford to be dismissive of these realities," Mr Cooper said, acknowledging that a proper regulatory regime - and its enforcement - were "a must" to preserve the environment and tourism industry.

Noting the example set by other Caribbean nations, he added: "It doesn't have to be one or the other - both can co-exist. It is being done in the region, in Barbados and Trinidad & Tobago.

"Clearly, the risks can be managed. We further understand that the Cubans are drilling right across the Bahamas' border. So we need not re-invent the wheel with respect to the regulations. We can draw on our friends in the international community with tried and tested regulations, like the US, UK, Trinidad and the Clean Caribbean Initiative."

Calling on the Government to "get on with it" when it came to developing a regulatory regime, because the opportunity cost of not doing so was too great, Mr Cooper said the Bahamas had to ensure its people were either trained abroad - or qualified Bahamians enticed back home - to participate in the oil exploration sector.

The BCCEC's energy and environment committee, he added, felt there was too much misinformation circulating on oil exploration, and called on the Government and BPC to better educate the public. The BCCEC is also planning to start discussions by hosting a luncheon on the topic shortly.

May 18, 2012

tribune242

Caribbean Blog International

The children of Bahamian independence need to stand and prove that they too possess the skills to govern The Bahamas in the 21st century and beyond... ...We know that the prime ministers past and present can do it, but where is our future? ...It lies in the hands of those born during the autonomous era in the Islands

Democracy, independence and complacency

thenassauguardian editorial

The images and news stories of the Arab Spring that have dominated the international news media for more than a year are a telling story on the importance of the basic concept of democracy, a concept that is spoken about often, but a concept often not fully appreciated. The benefits that are gained from a properly functioning democracy are too often taken for granted.

The beauty of a democracy is that we, the people, get to elect the leaders of our own choosing through a formal process of narrowing down the candidates and casting a vote.

Another key aspect of that electoral process is that there is a time frame in which those elections must come around again.  If we the people are not happy with our leaders, we have the opportunity to elect a new leader, thus holding our leaders to a certain degree of accountability.

The equation is not complicated: Please the people or get voted out of office. The common demands from the people are basic: Provide security (from outside forces and crime at home), infrastructure, jobs and a growing economy.  In other words, provide results.

A true democracy also has a time frame in which there is change.  In The Bahamas, the government must have an election every five years.  In the United States, it is every two years (for House representatives and senators) and four years for the president.  The ability to call for change on a consistent basis allows for stability.

In Egypt, there was no democracy.  Former President Hosni Mubarak was in power for 29 years.  The people fought to depose him.

We must accept that rallies and protests are part of many democracies.  The rallies against the Vietnam War in the United States or those here in The Bahamas against the Bahamas Telecommunications Company (BTC) sale are examples.  But these generally don’t call for ousting a leader, just a change in the policy position currently held by the government in power.

But one aspect of a consistent election process that we do not follow is that of term limits.

Sir Lynden Pindling was in power from 1967 to 1992 (25 years).  Hubert Ingraham was in power from 1992 to 2002 and 2007 to 2012 (15 years).  The interim period was held by Prime Minister Perry Christie (five years), who is prime minister again.

Over 44 years we have had three leaders.  The United States over a similar period has had eight leaders, almost triple that of The Bahamas.  The United Kingdom has had 12 leaders, quadruple that of The Bahamas.

The Bahamas has benefited enormously from the perseverance of these leaders for equality, prosperity and peace.  The people of The Bahamas enjoy one of the highest per capita incomes in the region and access to clean water, power and communication.  We have so much to be thankful for.

But it is inevitable that change is upon us.  In the coming years it will be time for a new generation to take governing responsibility for The Bahamas.  We must take heed of the lessons provided by our leaders and understand that independence was won with heart and vigor, not to be forgotten.

We have become complacent in our positions and surroundings, a comfort that shields us from the change happening around us.  To be constantly challenged by our peers and countrymen sets forth a standard that cannot be undermined.

The children of independence need to stand and prove that they too possess the skills to govern a country in the 21st century.  We know that the prime ministers past and present can do it, but where is our future?  It lies in the hands of those born during the  independence era.

May 19, 2012

thenassauguardian editorial

Caribbean Blog International

...many individuals continue to weigh in on the possible causes of the Free National Movement’s (FNM) defeat... the victory of Perry G. Christie and the Progressive Liberal Party (PLP)... and the Democratic National Alliance’s (DNA) impact on the 2012 general election

Why the FNM lost and the PLP won

By Arinthia S. Komolafe

Although the general election is over, arguably the election season is yet to come to a close.  There is at least one imminent by-election in North Abaco following the announcement by former Prime Minister Hubert A. Ingraham that he will resign from this seat on July 19, 2012.  Meanwhile many individuals continue to weigh in on the possible causes of the Free National Movement’s (FNM) defeat, the victory of Perry G. Christie and the Progressive Liberal Party (PLP) and the Democratic National Alliance’s (DNA) impact.

It is apparent that a number of factors contributed to the FNM’s loss even though it is difficult to unequivocally state which particular issue impacted the voting population the most.  The most obvious contributors to the aforementioned defeat from a macro-economic perspective were the poor state of the economy, record unemployment levels, inflation, labor unrest, the perceived opaque immigration policy of the FNM government and rising crime levels.

It has been suggested that the FNM’s insistence on turning the entire election campaign into a leadership and/or personality contest between Ingraham and Christie played a significant role in the downfall of the FNM.  This coupled with what many deemed to be a growing tyrannical and dictatorial style of leadership by Ingraham is also being cited as part of the reasons for the FNM’s loss and the PLP’s landslide victory.  As can be expected, a rejection of Ingraham by the electorate would spell doom for the FNM.  The perceived incidents of fragmentation, scandals and corruption within the Ingraham administration that prompted voluntary or involuntary resignations of long-time politicians along with constituency reassignments also played a role in the outcome of the elections.

The Ingraham administration also had its fair share of controversy including the sale of the Bahamas Telecommunication Company (BTC) to a foreign-owned firm over and above Bahamians, significant cost overruns and delays in the New Providence Road Improvement Project that also contributed to the closure of several small to medium-sized businesses and the perpetuation of a monopoly of the nation’s most important gateway by way of a public-private partnership agreement to an elite group of families through the Arawak Port Development.

Notably, the FNM could also be accused of political tokenism – an exercise in which under-represented groups are placed in races that they have little or no chance of winning.  Arguably this occurred with some FNM newcomers and female candidates who were placed in historically PLP strongholds or incumbent constituencies.  The constituencies of Englerston, Bains Town and Grants Town, Centreville, Golden Gates, Tall Pines, Fox Hill and West Grand Bahama and Bimini readily come to mind.  These constituencies, for the most part, witnessed PLP candidates commanding the majority of the votes by a minimum margin of 645 to a maximum of approximately 1,390 votes.  As admitted by the FNM’s chairman, the party failed to attract the female vote – this in spite of the FNM’s impressive fielding of nine female candidates.  The PLP, however, fielded five female candidates, four of which were successful compared to one for the FNM.

Rejection

In the midst of it all, it appears that the electorate rejected the FNM’s approach to the myriad socio-economic issues that plagued the country during its term in office.  Further, on the campaign trail, the FNM’s message focused mainly on its delivery of infrastructure projects.  The FNM, however, failed to “touch the pulse” of the people who for the most part were suffering due to unemployment, the rising cost of energy, food prices, foreclosures and high taxes just to name a few.

Ingraham’s strategy of painting Christie as weak, indecisive, unable to control his ministers who were all eager to get their hands on the proverbial “cookie jar” was obviously ineffective and failed to resonate with an electorate that had become weary of that old form of “politicking”.

An analysis of the PLP’s modus operandi and efforts during the 2012 election campaign is imperative in order to complete this piece.  The former prime minister, the late Sir Lynden O. Pindling, in response to a question as to the reason for the PLP’s success at the polls was quoted in The National Observer’s January 14, 1967 edition as stating: “Organization, good candidates, red-hot issues, complete unity”.

The aforementioned quote can easily sum up the PLP’s 2012 election campaign.  It was clear from the beginning that the PLP led an organized campaign by campaigning on the issues that affected the Bahamian people the most – crime, economic recovery and job creation.  These were obvious issues in the wake of increased criminal activities, widespread economic hardship and joblessness.  Further, the PLP introduced what it coined as “a new generation of leaders” who in the run-up to the general election (when compared to their FNM counterparts) spent months to years on the ground in their respective constituencies, made many platform appearances at constituency office openings, rallies and the talk show circuit.  These provided them with opportunities for increased exposure and introduction to the electorate.

Finally, the success of any political party at the polls hinges on the ability of its members to be unified and stand together.  During the election campaign, the PLP spoke with one voice and had a common understanding which allowed for the resonance of its message.

As for the impact of the DNA, there are some 20 parliamentary seats that could have changed the results for the PLP or FNM but for the DNA’s presence.  However, the absence of the DNA may have also resulted in low voter turn-out in a general election that witnessed high voter registration with a record 172,000 voters.

The DNA’s showing was historic and impressive as it garnered approximately eight percent of the electoral vote, the highest by far for a third party.  The party’s presence deepened our democracy, provided voters with an alternative and forced the established parties to improve their political campaigns. Their future existence and relevance will depend on their commitment to “stay on the ground” and be a formidable opposition from the side-lines.

Considering the 14-year rise to power of the PLP and the 20-year journey of the FNM, it will benefit the DNA to study these parties’ voyages.  Invaluable lessons abound for the DNA in the successes and failures of the PLP and FNM in the past.  The DNA and its supporters should draw inspiration from the rise of the Liberal Democrats in the United Kingdom whose ascension in UK politics led to the Conservative/Liberal Democrats coalition in 2010, the first in Britain’s history since World War II.  The Liberal Democrats’ victory silenced naysayers that had asserted that third parties have no place in a Westminster system.  With a clear philosophy, purpose and perseverance, the DNA can hope for a similar testimony in future.

• Arinthia S. Komolafe is an attorney-at-law.  Comments can be directed at: commentary@komolafelaw.com

May 17, 2012

thenassauguardian

Caribbean Blog International

The Moody's credit rating agency warned that the Progressive Liberal Party’s election-promised mortgage plans created a “moral hazard” that “could increase Bahamian mortgage delinquencies ...and cost the Bahamas Government a sum equivalent to 3.1 per cent of GDP ...spread over five years,”...

A Reckless Promise That Might Founder

tribune242 editorial



TUESDAY’S first cabinet meeting of the newly-elected PLP government, marked Day One of its first 100 days of governing, Prime Minister Perry Christie announced.  Day One was also marked with a warning salvo from Moody’s Investment Services, one of three major credit rating agencies.

One could say that the new government entered its second term with a bang, but the bang did not bring good news.  The credit agency warned that the PLP’s election-promised mortgage plans created a “moral hazard” that “could increase Bahamian mortgage delinquencies and cost the Government a sum equivalent to 3.1 per cent of GDP spread over five years,” Tribune Business reported.  Moody’s saw the move as demonstrating a “lack of commitment” on the part of the new administration to tackle annual fiscal deficits running at over 4 per cent of gross domestic product.

Moody’s described the election-promised mortgage relief plan as “a credit negative,” implying that its implementation could lead to a further downgrade rating. Something, said Moody’s, that could scare away foreign investors and increase the Bahamas’ borrowing debt servicing costs in the international capital markets. It was pointed out that with economic growth and recovery a top priority, the last thing The Bahamas needed was to send the wrong message that would deter foreign direct investment, Tribune Business reported.

It was also the last thing the PLP government would want to deal with considering the hoop-la it raised last year when Moody’s downgraded the country from “stable” to “negative” due to the mounting debt accrued over the past decade. Earlier that year — in May — Standard & Poor affirmed its BBB+ rating for the Bahamas. Up to that time, the Bahamas maintained an A3 government bond rating.

The PLP were scathing in its remarks condemning the downgrade. It said the Moody downgrade “confirms government’s mismanagement”.

Of course, they were referring to the FNM government, which, in turn, explained that the recent global economic and financial crisis necessitated the “extraordinary levels of spending” despite a “precipitous” decline in revenue.

It explained that funds were needed to “safeguard the financial system, boost economic activity and provide assistance to Bahamians badly in need of help in these trying times”. The PLP would have none of it. Now faced with the same problem, its desperation appears to be tempting it to commit political suicide.

Despite being aware of the critical financial situation, on the campaign trail Mr Christie promised the impossible to voters. Now that the time has come to deliver, he is going to find it difficult to explain that he might not be able to keep his commitment.

In a 10-point plan of delivery, he promised Bahamians who had defaulted on their mortgages and had lost their homes to banks, that he would — among other things — get banks to agree to write off 100 per cent of unpaid interest and fees for all those facing foreclosure.

In Mr Christie’s opinion, “this should be acceptable to the banks as they would already have made provisions against these losses”.

“Therefore, writing off the unpaid interest and fees would have no immediate financial impact on the banks,” he said.

“As for the delinquent borrowers, they would benefit from the fact that their outstanding balances would fall substantially.”

Rather than the Christie plan being acceptable to bank managers, the very thought sent shivers down their spines. They knew that this would be a signal for Bahamians to stop their mortgage payments in the knowledge that not only would rates be lowered, but their debt would eventually be written off by government.

According to Moody’s, there is some $3.2 billion worth of outstanding mortgage loans in the Bahamas’ banking system, which is equivalent to 39.6 per cent of GDP.

The situation is so delicate that today bankers are unwilling to speak to the press about the problem.

However, one banker told Tribune Business that as a result of the new government’s promises, “banks are already seeing a deterioration in arrears for mortgages under 90 days past due”.

“Those under 90 days past due have increased since the PLP announced its scheme. We were alarmed at the trend,” said the banker.

We all feel sorry for any family who has lost their home, but in trying to rescue them, the PLP government cannot torpedo the whole Bahamas.

They have to stop and think again.

May 17, 2012


tribune242 editorial

And so the torch has been passed once again... and Perry Christie has been given a second chance to rectify some of the missteps of his last term... ...We are confident that he is aware that there is a very thin line between love and hate... that the electorate is impatient... and that there is a very high expectation that his new government will lead The Bahamas to greater heights in the days ahead...

The voice of the people

By Philip C. Galanis

“The voice of the people is the voice of God.” – Sir Lynden Pindling

What a difference a day makes.  Monday, May 7, 2012 will be recorded in Bahamian history as a day when the Bahamian people spoke loudly and unequivocally, although their behavior was anything but.  In fact, when Bahamians went to the polls, they quietly exercised their constitutionally guaranteed democratic right, emphatically asserting their displeasure with the Free National Movement (FNM) government.  The outcome of the election was a resounding rejection of the leadership of Hubert Ingraham and his government’s management of the country from 2007 to 2012.  This week, we would like to Consider This...what really happened on Election Day, 2012 and what lessons, if any, are to be learned about governance and the will of the people?

A macro-analysis

The results of the elections, as confirmed by the parliamentary registrar, indicate that the majority of the nearly 156,000 persons who cast their votes — a turnout of 91 percent of the registered voters — rejected Ingraham’s belligerent behavior that bordered on tyranny, representing a leadership style that was not to be tolerated and had to be terminated.

Nearly 76,000, or 49 percent, of the voters supported the Progressive Liberal Party (PLP) and another 13,422, or nine percent, supported the fledgling Democratic National Alliance (DNA), making a combined total of nearly 58 percent of the voters who rejected the Free National Movement (FNM).  Of the 38 seats that were contested, the PLP won 29 seats; the FNM won nine seats with 65,651 votes; and the DNA did not win any.

The professional pollsters predicted that the election results would be close and no one publically forecasted the resounding landslide.  There were two seats where the victor won with a razor-slim margin of less than 25 votes, six seats where the winner edged out by less than 100 votes, and 11 seats where the winner won by less than 200 votes.

The FNM won only three of the 23 seats in New Providence, both seats in Abaco, two of the five seats in Grand Bahama, and two of the eight seats in the other Family Islands.  Only four of Ingraham’s 17 Cabinet ministers survived the contest, with notable losses by veteran politicians Tommy Turnquest, Zhivargo Laing, Desmond Bannister, Charles Maynard and Carl Bethel.

The most difficult call in the election was the effect that the DNA would have on the outcome, but its presence was impactful.  In fact, there were several seats where, but for the presence of the DNA, the PLP would have likely taken the seats that the FNM wound up winning.  This was most evident in Montagu and Central Grand Bahama where the combined votes of the PLP and the DNA outnumbered those cast for the FNM.  This suggestion is supported by the hypothesis that the DNA votes were in fact anti-FNM votes.

Lessons learned

There are at least four lessons that can be learned from the election results.  First, we are a two-party system and, once again, these elections confirmed that the presence of a third party in the body politic is largely irrelevant and inconsequential as regards its ability to form a government, although its existence affected the election outcome.

The second lesson was that when Bahamians have lost faith in a political party, they will unceremoniously and decisively vote them out.  We saw this in 1992, 2002, 2007 and again in 2012.

The third lesson is that Bahamians fully comprehend the power of their votes and that the social contract between politicians and the people has a five-year life span, sometimes less as was the case in the Elizabeth by-election, but certainly not longer than five years.  Ingraham has now joined Perry Christie in being booted out of office after just one term.  Bahamians have proven that they will not tolerate arrogance, negligence, scandals, despotism or corruption.

The fourth lesson is that Grand Bahama is no longer FNM country, precipitated by the government’s gross neglect of the pain and suffering of the residents of that island over the last five years.  For the first time in decades, the PLP has won the majority of seats on Grand Bahama, proving once again that if the social contract is unfulfilled, there will be consequences.

Sore losers

It was amazing and disappointing to note the reaction of both the press and the vanquished.  In a Tribune editorial of Tuesday, May 8, the day after the general election, the editor of that tabloid noted: “Bahamians went to the polls yesterday and showed the depth of their ingratitude to a man who had dedicated 35 selfless years to their service.”

What drivel, what arrogance, what utter rubbish.  The editor, more than many, should appreciate that the mandate that is given to any politician and any government is for five years, and to reject them for whatever reason is the voters’ constitutional right.  We invite the editor to join us in the 21st century and recognize that that kind of patronizing plantation posturing offends the inalienable right and civic obligation to tell any leader — PLP, FNM, DNA or otherwise — that we have had enough of you, your policies and bullying tactics and that we invite you to leave and leave now.

We also observed Ingraham’s ungracious reaction to his thorough trouncing by the Bahamian people.  In an interview with the press days after being completely rejected, Ingraham “hinted” that bribery was involved in the PLP’s win on Monday.  How can he make such a claim with a straight face?  What did the former prime minister think he was doing when he embarked upon a massive contract signing marathon after calling the elections; or when he offered temporary jobs to voters in order to win their support at the polls; or when he approved last-minute citizenship for countless applicants who had been awaiting such approval for years; or when he increased public servants’ salaries on the eve of elections and extended other such political patronage that he doled out days before the elections?

Bribery comes in many forms, shapes and sizes and is fully recognizable even when incognito, camouflaged as a contract, a job, citizenship or otherwise.  If Ingraham would seriously reflect on this matter, perhaps he might appreciate that the Bahamian people told him and his ministers on May 7 that they were tired of him, and his bully tactics, his belligerent behavior, his one-man band approach to governance, his Pied Piper complex, his arrogance and that of some of his colleagues.  As loudly as Bahamians spoke on Monday, you would have expected him to get the message that just maybe, “he is simply not the best”.

Conclusion

And so the torch has been passed once again and Christie has been given a second chance to rectify some of the missteps of his last term.  We are confident that he is aware that there is a very thin line between love and hate, that the electorate is impatient, and that there is a very high expectation that his new government will lead the country to greater heights in the days ahead.  Christie has first-hand knowledge that hard earned political currency, which often takes many years to amass, will be quickly spent if those expectations are not satisfied within a reasonable period of time.  Most importantly, Christie, like the rest of the new government, has clearly heard the voice of the people; we can but hope they are acutely aware that it is also the voice of God.

 

• Philip C. Galanis is the managing partner of HLB Galanis & Co., Chartered Accountants, Forensic & Litigation Support Services. He served 15 years in Parliament. Please send your comments to: pgalanis@gmail.com

May 14, 2012

thenassauguardian

Caribbean Blog International

One thing that should be understood... is that the Free National Movement (FNM) is not a dead horse... ...After the 1997 general election – when Hubert Ingraham and the FNM won 57.6 per cent of the vote with a turnout of 92 per cent – commentators were convinced that the Progressive Liberal Party (PLP) was headed straight for "the boneyard." ...The victory was so great that concerns were raised about the future of our two-party democracy ... even The Tribune feared the FNM would be so powerful that it could “lose its balance”

Looking To A Future After Ingraham

TOUGH CALL

By Larry Smith

SO Hubert Alexander Ingraham has been forced to exit, stage left – and just as his personality cult was kicking in big time.

A few days ago, a documentary “chronicling the life, upbringing, and achievements of the prime minister” began airing on television. The film focuses on “Ingraham’s inspirational journey from humble beginnings to the highest public office in service of the people”.

We hear that the impetus for this project came from the FNM's campaign consultants, but in my view it was entirely inappropriate for a sitting prime minister. That’s the sort of propaganda thing Lynden Pindling did without batting an eye when I was a junior writer at the Bahamas News Bureau in the 1970s and 80s. It’s not the sort of thing I would have expected Hubert Ingraham to endorse in the 21st century.

Unfortunately, the film climaxed an out-of-control “Papa” campaign played out to the tune of “Simply the Best” that had to have turned off some voters. I can understand the FNM’s fixation on the papa theme. They tried to turn a derisive label into a term of support (as they had successfully done with Pindling’s earlier taunt about Ingraham being a “delivery boy”). But I think the current effort was way over the top and backfired badly when combined with “Ingraham fatigue”.

Of course, Ingraham has been down and out before – in 2002, when the entire FNM cabinet was wiped out. But this time there will be no return – age and circumstance will see to that. It will be up to the FNM rump in the House of Assembly to choose a new leader from the nine, mostly new, MPs left standing. Dr Hubert Minnis and Loretta Butler Turner stand out from this reduced line-up.

In addition to doing the right thing and resigning as party leader, Ingraham also said he would not take up his North Abaco seat, throwing the FNM into an immediate leadership quandary at a point when most of the party’s second tier leaders – like Tommy Turnquest, Carl Bethel, Dion Foulkes and Zhivago Laing – have been turfed out. Presumably, their political careers are now over.

Ironically (and sadly for some), Ingraham’s retirement from public life came only one day after he asked the Bahamian people to give him a final chance to complete “the work of my lifetime”, by re-electing the FNM to a fourth non-consecutive term.

The prime minister was known to be grooming Abaconians to eventually replace him in the constituency that has elected him seven times before, but a potential successor may not have much interest in contesting a bye-election under the current circumstances. And although Hubert Minnis will likely become leader of the opposition in parliament, it is still unclear who the FNM Council will settle on as party leader.

One thing that should be understood is that the FNM is not a dead horse. After the 1997 election – when Ingraham and the FNM won 57.6 per cent of the vote with a turnout of 92 per cent – commentators were convinced that the PLP was headed straight for "the boneyard." The victory was so great that concerns were raised about the future of our two-party democracy – even The Tribune feared the FNM would be so powerful that it could “lose its balance”.

And within days of the election, Sir Lynden added to the PLP’s despair by stepping down after 32 years as party leader. That was only five years after the party had suffered its first and only major defeat in a quarter century of absolute ascendancy under Pindling’s leadership. But it was only five years before it won a stunning landslide upset in 2002.

Back then, an electorate of 145,000 gave Christie’s PLP 51.7 per cent of the vote to the FNMs 40.8 per cent, with a turnout of 89 per cent.

Only seven FNM MPs retained their seats. And to make matters worse, three FNMs who had split with the party over the leadership struggle were returned as independents, an unprecedented turn of events.

Nevertheless, Ingraham was able to lead the party to a hard-fought victory in 2007 despite unprecedented prosperity.

The complete 2012 election results were not available when this was written. They will require careful parsing over the next several days, but one factor stands out sharply at this stage. The DNA, formed just a year ago after Bran McCartney’s rift with Ingraham, drew more than 10,000 votes and effectively threw several seats to the PLP, without itself coming close to winning a single constituency.

As one insider put it, “in the 2007 election, 10 seats were decided by less than 100 votes. When you add the DNA to that mix the 2012 result is what you get”.

That may be putting it too strongly. But FNM supporters could be forgiven for considering this election as eerily reminiscent of the party’s internecine wars of the 1970s and 80s, which kept them out of power until 1992.

So the DNA’s singular achievement may have been its role in driving Hubert Ingraham into retirement. At the same time, it has forced the FNM to deal head on with its leadership succession. And we should remember that the lop-sided seat spread (28 to 10) doesn't reflect the same degree of disparity in terms of actual votes. In other words, the FNM still commands huge support throughout the country, and only a few percentage points divide the two parties.

The other consequence is that Perry Christie (who refused to bow out gracefully after his 2007 defeat) has been given a new lease on his political life, and the PLP has managed to reschedule its inevitable leadership struggle into the vague medium-term future. Still, it is very likely that Christie will be in the same boat as Ingraham once was once his term draws to a close.

Ingraham’s swan song as prime minister was a time of immense progress and much-needed infrastructural investment. But the fall-out from the Great Recession also made it a time of economic stress for average Bahamians, who expressed their discomfort by voting in sufficient numbers against the party in power.

Christie’s response at the PLP’s Clifford Park victory rally on Monday night was to remark on the “wonderful journey we've been on”, to note that “the storm is now over”, and to promise that his government would actually “perform” this time.

This election could be considered “a choice between the devil you know, and the devil you know who don't do nothing,” as one wag put it. But Ingraham's hardline style trumped Christie's lackadaisical record in the minds of many voters this time around.

If there is one conclusion we can draw from this election, it is this: “Both political parties have their good times and bad times, only they have them at different times.”

That is a quote from the American writer Will Rogers, referring to American politics.

Now let’s see what happens with BTC and BPC.

May 09, 2012

tribune242

Caribbean Blog International