Bob Richards: “Mountain Of Debt”
[Written by Shadow Finance Minister Bob Richards]
There is a stark difference in approach and philosophy to national debt between the PLP government and the One Bermuda Alliance. The government wants Bermudians to think “We’re alright Jack.” We disagree.
In their so-called Pre-Budget Paper released in December, the government went to great lengths to justify ballooning Bermuda’s debt by focusing on debt/GDP ratios. But these ratios are nonsense when applied to Bermuda – serving only as a dodge for the government to rationalize its mishandling of the Island’s economy.
Here’s why:
A country’s national debt relative to its Gross Domestic Product (debt/GDP) is used by the government as a measure of Bermuda’s potential to borrow. But this is a misleading and unrealistic line of thinking. A person’s or a country’s potential to borrow is limited by their ability to repay. Any banker will tell you this.
So, who repays public debt? Is it GDP? No, it is taxpayers who repay public debt. GDP, in the debt/GDP ratio, is used as a proxy or shorthand for taxpayers, because GDP represents the whole economy. It is on this point that the government in its pre-budget paper is misleading people and, perhaps even, misleading itself.
Let’s look briefly and broadly at taxes. Taxes consist of five main types:
- taxes on labour
- taxes on corporate profits,
- taxes on investment/savings returns
- taxes on consumption and
- taxes on real estate holdings.
Taxpayers in all major countries are included in all five categories: labour-payroll taxes, corporate profits-corporate income tax, investment/savings taxes-taxes on dividends, interest and capital gains, consumption taxes-VAT, sales taxes, and customs duties, real estate taxes- land tax in its various forms.
In most major countries, these tax categories capture virtually all of the private sector. In other words, the tax base covers the entire economy, with the exception of government itself. GDP, in this context, can be said to represent taxpayers.
But in Bermuda, GDP does NOT represent taxpayers in any meaningful way. We don’t tax corporate/business profits or investment returns or interest on savings or dividends. These represent a large part of our economy. We tax labour (payroll taxes), consumption (duties) and real estate. Our tax base is much smaller than our private sector. Neither does our tax base necessarily move in sync with our GDP.
Because of this, Bermuda’s GDP in no way is representative of taxpayers. A huge part of the economy is, by design, tax free.
Debt/GDP is a debt indicator invented in major countries for major countries. To have the Bermuda Government use it to compare Bermuda to G7 countries, or any country with income tax, is to compare apples to oranges. It’s simply an invalid comparison, and it is being used to mislead people to think “We’re all right, Jack.”
There are two other factors to consider in this deception. As a country, the source of our revenues is so narrow and undiversified that the risk of disruption to that revenue stream is far greater than that of a major diversified economy. We borrow in foreign currency and cannot borrow money that we have printed, as is done in major countries. Moreover, we must earn that foreign exchange in order to repay foreign lenders. Therefore good sense would demand a very much more conservative approach than some other countries.
In their Pre-Budget Paper, the government went to great lengths to justify their record of skyrocketing debt. One paragraph was striking:
“According to the Maastricht convergence criteria relating to the soundness of budgetary positions… the public debt-to-GDP ratio should not exceed 60%. Judged by these standards, Bermuda is well positioned and maintains a much lower debt-to-GDP ratio than international debt standards require.”
Require?
Does the Bermuda government think the international financial community “requires” a certain level of public debt? I consider this to be a blatant abuse of language to lull Bermudians into false sense of security, particularly since the implication is that the Finance Minister thinks it would be OK to increase debt to 60% of GDP, which equates to about $3.3 billion, or triple what we already owe!
That would also equate to a debt of $50,769 per man, woman and child in Bermuda with an annual debt service of more than $300 million. And since the government likes to compare us with G7 countries, consider this: The debt per capita for the USA is just $35,239 even though they owe over $10.8 trillion, which is a debt/GDP of about 100%.
And what is the “Maastricht convergence criteria” anyhow?
Well, Maastricht is the city in Europe where the treaty forming the European Union was signed. The PLP government, in its wisdom, has chosen, as its standard, the debt criteria of the EU, the same EU that is today in danger of melting down because of TOO MUCH DEBT.
So let’s get real.
For a tiny country, with an even tinier tax base, this government has racked up a mountain of debt with little to show for it. In a stagnant economy with the government continuing to spend more than it earns, there is no way to pay it down much less pay it back. In their gut, all Bermudians know this government has put them and their children in a big hole.
Bermudians must ask themselves if they want a government that plays so fast and loose with their money.
We at the OBA know the facts about national debt. We know that this government has increased debt by about 700% since 2003, and still thinks it can triple the debt before it becomes too much. We know we are a fragile, undiversified economy that is thousands of times more vulnerable to the debt trap than other countries.
We would never allow Bermuda to slide into the debt trap that has engulfed other countries. We would control spending, grow the economy and put Bermuda’s fiscal house in proper order. That is our promise.
- Bob Richards
You can stop begging so hard, ET. You already have my vote.
So Bobby Brown please explain to the rest of Bermuda why the USA, Canada, UK, and the rest of the World are in the same predicament has Bermuda. I assume it’s because Mrs. Paula Cox’s and the rest of the PLP are Governments in those Countries also.
What ever happens in those countries will happened here it’s a spiral down effect. Then again you have all the answers!
Please tell the rest of Bermuda how you plan to fix it, and while your thinking about that BS replied added some more manure and tell the rest of we college students how your going to fix all the shootings before were next.
I mean has anyone been looking at that stock exchange besides we students. Oh and by the way my Finance professor thinks your not playing with a full deck.
Not all of the rest of the world is “in the same predicament”. That is false. Canada, for example, is doing fine, as are many economies in the world. Not all government debt is toxic. France, Germany and UK aren’t booming, but they are being asked to bail out others.
Bermuda has a very small, one-dimensional economy: it revolves around IB. We had the opportunity to save money during the good years, and even build up a surplus. There are countries that did that. But instead the PLP went on a spending spree, and at the same time did its best to alienate IB.
So here we are. IB has got the message: you don’t want them here. So they’re leaving, gradually.
Therefore the tax base is shrinking, and will continue to do so.
The debt went up to $1.2bn in a flurry of contracts for ‘consultants’ who did nothing for us , parties, luxury travel, overspends, and unaudited government expenditure. Hundreds of millions wasted.
Nothing about it was inevitable. It could have been managed so much differently. When, in 2007, the opposition said that there were red flags; that the economic outlook was uncertain, what did the PLP say? They said the opposition was “making mischief” and that “Bermuda is different” “You don’t understand” “we don’t want your opinions”. Sheer utter arrogance and incompetence.
This is ridiculous. the debt is not becuase of consultants and any comments supporting this fallacy are ridiculous. The debt has largely been an investment on the infrastructure of our country. The govt could have very easily sat around and invested nothing. Yes we would have no debt, but we would likely have nothing else to show for it, no affordable housing projects, no state of the art facilities for school, no social programs that have benefited many families in bermuda, no daycare assistance. So let’s not be disingenuous and act as though the debt has been all due to wreckless spending on consultants. That is a complete falsehood.
Partly, but mostly untrue and is the lie that is perpetruated by the PLP. What infrastructure has been built since 2007? Remember Berkley had been paid for by 2007. The Heritage Pier, costing around $70mn; TCD around $15mn; Dame Louis Brown Building say $80mn. That’s $165mn. What else is infrastructure, or investment? Free Day Care, free car license for Seniors, Financial Assistance? Day to day expenses, like paying electric bill or groceries. These are not investments that produce revenue but worse and need to be replaced and debt is used, the same as paying civil service salaries and servicing the debt. Sorry but you are misguided and need to wisen up, but you’re not alone.
The day all Bermudians feel that we are the same as “all the other countries” is the day Bermuda surrenders.
Just curious, but how is something “partly, but mostly untrue???” Gramatic nightmare perhaps?
Your comment is ridiculous as well as none of the housing projects so far completed by government have ballooned into fifty and one hundred percent over their original cost here is where the waste is along with a government infrastructure that seemingly continues to grow when in ’98 we were told by then premier Dame Jennifer that government would be downsizing.
As for social programs kindly name one where any sizeable financial investment was made? Most came under departments that have historically been white elephants operating in debt IE free bus service for seniors and school children. Free child care. And while some will feel that free licencing for seniors was a good thing in the long run it has cost the government millions of dollars as unscrupulous Bermuians decided to licence high end vehicles under grandparents who in most instances didn’t even own a drivers licence. More ill conceived legislation!!!
Your notion of building infrastructure is laughable given the cost to the country It can be likened to putting a million dollar roof on a pig trough sure they will enjoy the shade but the costs are overly excessive and un warranted.
Bermuda’s current debt is a direct result of poor fiscal management plain and simple the facts of the matter clearly show this.
“Back to the plantation”
Not a fallacy at all. Put a $ value on the “state of the art school facilities”. You can’t count Cedarbridge or Berkeley; they were both finished pre-2003, when the debt was still at historical levels.
Using schools as an example of the $1.2bn worth of ‘infrastructure’ is misleading and disingenuous.
What has been spent on “state of the art school facilities” during the period debt was run up? Not much. I know of a government school where the teachers were extremely excited about the fact it was painted last year. It was the first time in years.
So what ‘infrastructure’ was built within the past 6 years or so, during the debt run-up years? The court house, the dock. The dock is already falling to pieces. And TCD. Total them all up, and it’s maybe $150m – $160m. It doesn’t explain the $1.2bn.
We didn’t spend the other $1bn on daycare or social programs, just in case that’s what you’re trying to say.
The $1bn or so of extra debt was used to pay for lavish living by the political elite (cars, travel, parties, more travel), ridiculously expensive “consultants”, and (probably above all) expanding the civil service. Paid for by debt. The equivalent of using your credit card to pay for groceries.
And at the same time the PLP was making sure IB knew it was unwelcome. In the last couple of years IB finally took the hint, and is leaving. Hence the accelerated reduction of the tax base.
Don’t try and tell us they spent $1.2bn on daycare. We aren’t idiots.
Canada , nor all of the UK is in the same boat and even some of the US is doing okay. Those that saved…have “rainy day money” …those that wasted and spent and spent, or stole from the voters….are in the position they are in for a reason. PLP is to blame. Remember their slogan, VOTE PLP nad MAKE IT HAPPEN!…when we did vote PLP. I guess we should have asked what “IT” was that was going to happen!
No, “young mind” Ewart Brown and David Burch put us where we are today, and nothing else in this WORLD.
Yes, but our Government grossly overpaid on its projects costing us Millions more $$$ than they should have. It also siphoned off money to the likes of Andre Curtis for nothing.
The recession has affected us, Paula’s reaction to that is to raise taxes in the public sector to feed the Government’s over inflated civil service. The PLP did a very good job of giving people jobs and paying them well, over employing to keep votes.
Why should a young person try and do well at school when they can get a job earning 55k per year at Marine and Ports to tie a rope up on the Ferry. That includes health, pension and paid holiday. What does that cost the tax payer? This is just one example.
It is a spending hole that will continue to be dug as the costs far outweigh the revenue and we do not have much to borrow against accept political and social stability. Other counties have raw materials and exports. We do not.
I am sure your finance professor is great but does he understand the dynamics of an isolated rock with 60,000 people on it with no exports and a single pillar economy?
I doubt it!
No, dumbass! It is because you cannot spend more than you take in. In the U.S. Odumbass and the democRATS love to spend money to keep people dependent on government. Guaranteed votes for the promise of welfare checks. Bermuda is going down the wrong road also. The government has NO MONEY. The money government has belongs to the people and who does not like to spend OTHER people’s money? That is exactly what is going on. If you take in $1000 you don’t want to spend $5000 do you? Now, if government only had $1000 and spent $5000 and needs more money to make up the difference, is it ok to raise YOUR taxes because THEY spent more than they had?
Written in simple terms and describes Bermuda’s perilous situation very well. No doubt ther will be the usual detractors because it is Bob, but say why he is wrong, and what the PLP will do to control and reduce the debt, without incurring any more in this year’s budget.
PLP has never said that Debt will not continue to increase, and guess what neither has the OBA, as they know like everyone else, this period of deficit spending is necessary.
The only way that Bermuda can “increase” the money supply and stimulate demand in the economy is by borrowing.
Bob Richards not any other economist will disagree with that.
“The only way that Bermuda can “increase” the money supply and stimulate demand in the economy is by borrowing.”
That is an incorrect statement…
Then please correct it Mr. Paynter. How else can Bermuda increase the money supply and stimulate demand?
By encouraging new money (investment) in Bermuda… Not drive it away like the xenophobic PLP polices have done. Simple pasa
Encouraging does not neecssarily result in actual investments…
Sure beats the current PLP method – Discourage , Insult and Apologize
YGTSR
Curious, but isn’t that happening right now? At least that’s what is being reported.
It’s always easy when you’re the front seat passenger telling the driver how to drive. It irritates the heck outta the driver too by the way … But go on Bob… Mr Personality. You just fix everything why don’t you. And do it fast too!!
So you have a problem with the SHADOW FINANCE MINISTER doing his job?
No it wasnt easy when the UBPO was in the drivers seat and the PLP complained, Difference is Bermuda was far better off.
I would seriously like the see a debate between Paula Cox and Bob Richards in the pre-amble to the upcoming election.
ha! I would seriously like to see a debate between Paula Cox and Craig Cannonier in the upcoming election. I mean isn’t Cannonier the actual Leader?
Well I was specifically speaking to the ministry of finance, however in terms of leaders, game on…
I don’t recall individual Ministries ever debating, but I think Madame Premier would hold her own with either Richards or Cannonier.
Not if there were equal time for speaking. She makes one point every 45 minutes or so.
ha! but she still would make more points than your leader(s), any of the 3 Co-Leaders…
…only by confusing people with bit sentences that mean nothing..
“Bermudians must ask themselves if they want a government that plays so fast and loose with their money.”
TYPO, Lose or Loose?
Sorry just woke up :p
No typo, your on point
So, does this mean more cutbacks in Government Departments from your point of view? If so, will common sense prevail and have early retirement for persons reaching retirement age?
Will redundancy be allocated to new comers in the civil service, in particular the top heavy consultants whose jobs were created?
Will recommendations be used to keep individuals on board whom has their qualification, and in all honesty? Who will makes the decisions of who to keep or let go?
Mr Richards, you close with “We would control spending, grow the economy and put Bermuda’s fiscal house in proper order. That is our promise.”
In that regard, where would you cut spending, how would you grow the economy, and what does “put Bermuda’s fiscal house in proper order” mean?
Your column is very critical on the government but gives no methods to achieving your goals.
Not speaking for the OBA but:
Rule 1. When in a hole stop digging. The PLP has lost the trust of IB and continues to insult them. Yes there was an apology but that is like a drunk person saying they’re not racist after saying something racist.
Rule 2. Keep the revenue earners you have. See Rule 1.
Rule 3. Have a competent and trustworthy Government that encourages revenue earners to come and stay. See Rule 1 and 2.
Rule 4. When you have stabilised the situation you can then work on increasing the reveune stream. Same first 3 Rules apply.
Once the PLP have been defeated by the OBA in the next election, international business wll look at Bermuda in a much more favorable light. And I predict that at least two new hotels will break ground once the corruption has been curtailed here, and Derrick Burgess has gone back to his old job.
yuo sounds like the PLP are getting voted back in, l mean, with the OBA speaking out against them and all, with there “spin” on the cLOG’s spin.
Hey Bob – teach those PLP byes a lesson or two cuz they damm well don’t know what their doing. Paula can definitely learn from you! You keep tellin em bob and let the haters hate! You’ll see them all on here trying to chant you – the ones that can’t handle the truths – the loyalists with their blinders! OBA all the way!’! Next government OBA!!!!!
Bob your the financial genius of bermuda! Noneone can touch you! Esp not Paula. You will be finance minister by June 2012!
And if so, God Help Us All…
And if so, God Help Us All… if the PLP are re-elected
There, fixed it for you.
Voters of Bermuda…our Government has spent to the point of bankrupting our beautiful island home. Don’t believe the lies from them. Look at your friends, neighbours and family members who have lost their jobs in the last year and who have had their overtime cut back if they still have one. This island is hurting and the Government does not have a solution. Their MP’s are living off the fat of the land while you are struggling. Vote with your conscience in the next election if you truly care about your children and your grandchildren. That is all I have to say. God Bless!
I find it very intersting that Bob Richards continues to make things up to suit his arguements.
When S&P says Bermuda has “Exceptionally Low Debt” Bob Richards sounds the alarm.
When the Pre-Budget report talks about the need to bring the budget into balance and lays out a plan for reducing debt, Bob Richards says the Government wants to Borrow 2 Billion more dollars.
Bob, if you want to be credible, you should start by being factual!
What Bob Richards fails to do is answer 2 questions, and until he does, he cannot be taken seriously.
1)What spending would you cut, you have the budget, what departments/programs would you eliminate?
2)What taxes would you raise to balance the budget?
We can talk about debt till the cows come home, and i’m sure Bob Richards would say that if he was in govt since 2007, when the entire world went into deficit spending in the face of a Global Crisis, he would have not borrowed money. Its false and he knows it, therefore he would never say it.
Making up facts won’t earn to confidence of the people. When the external world looks at Bermuda, from the UK to Ratings agency they praise our strength. What does Bob Richards do, disagree with all as he’s the expert on all things.
Just like Larry Burchall who was exposed for vodoo economics in his last piece, Bob will forever be the critic, but refuses to spell out a solution.
“Larry Burchall who was exposed for voodoo economics”? You mean exposed by LaVerne Furbert, that world reneowmed expert on everything financial even though, like Paula Cox, she is neither an accountant nor economist?
The same holds true for Bob Richards and Larry Burchall – neither one of them are an accountant or an economist. Why don’t you ask to see Larry Burchall’s resume and compare it to mine. Compare Bob Richards’ resume to Paula Cox’s resume.
All of that doesn’t matter anyway, as Bob Richards will remain the Shadow Minister of Finance and I guess Larry Burchall will remain a columnist. He has his following and I have mine.
LaVerne, Larry has people, you have sheeple.
Rich LMAO
From the Ministerial Statement and the PreBudget Report, and from reviewing the April 2003 to December 2011 rapid buildup of Debt and consequent loss of monetary flexibility, it is absolutely clear and painfully obvious that Bermuda is now suffering the consequences of eight consecutive years of bad financial management. Larry Burchall
Who was and still is the Finance Minister during this time? Attack the messengers all you want but that doesn’t change the facts.
@ LaVerne. It’s a shame you need to bring up Paula Cox’s resume, but in her position one would look to the last 10 years at most. Let’s cut it down to 7.
Since 2004 Paula Cox has been Minister of Finance of Bermuda. During this time she has overseen an increase in the Civil Service/Government employees of approximately 50% or 2,000 people. As Minister of Finance she has increased the debt of Bermuda from $160mn to over $1.2bn, plus an unknown amount off balance sheet (but will need to be repaid) and the debts are still increasing. She has 3 qualified Governmental audits under her tenure, and recently announced a downgrade in Bermuda’s Sovereign rating.
If this was a private company, she would have been fired several years ago and the company gone bankrupt with the loss of over 6,000 jobs.
Some resume!
Thats the point – the country is NOT a private company. CEO’s exist to make money for a company. The country is not a profit-making business. The business of the country is to provide for it’s people. Sometimes that means making difficult decisions. Sometimes it means borrowing money to provide things to the people.
The comparison makes no sense.
Enjoy your point, but you may be one of the next to be out of a job. Good luck in your argument that the Government owes you a job and benefits.
You sound as if you are a Government employee/Civil Servant. If so, enjoy your point because you may be next in asking why you’ve lost your job. Maybe not this week, but shortly after the Election, whoever wins.
Maybe its not her, maybe we should ask Brown & Burch what they did.
“The country is not a profit-making business”. Interesting point. But it’s not a bottomless pit of money either. Someone, somewhere, eventually has to repay the debt. The government has not been “borrowing money to provide things to people”, unfortunately. That’s completely false.
It has been borrowing money to buy GP cars, indulge in luxury travel, throw parties, dole out tens of millions to overseas “consultants” who did nothing for us, and employ thousands of unnecessary civil servants. And at the same time it has reduced social programs.
The PLP mortgaged the house the buy crap, and now it doesn’t have enough left to buy shoes for the kids.
Paula would definitely have been canned in any private enterprise. No CFO lasts five minutes if she avoids and fails audits. In the real world CFO’s are expected to be competent.
In simple terms the job of the Government is to facilitate a stable environment so that private companies find it attractive to do business thereby employing the people etc. It is not Governments job to employ 10% of the population and be a leech on the private sector (taxes).
The business of a coumtry is to provide for its people, not “mislead”, lie, cheat and steal..or provide to a select few in exchange for votes.
“The same holds true for Bob Richards and Larry Burchall – neither one of them are an accountant or an economist.”
AND NEITHER DOES PAULA COX BUT YET SHE IS THE FINANCE MINISTER OF BERMUDA — HELLO!!!!!
And that is why we are in the mess we are in now….Paula please resign…you have no idea how to run this island ….and take your doctors advice…. you need to loose a lot of weight…..Paula what the hell are you eating ? to make you so fat ???
Um, I think Ms. Cox was a junior trust lawyer taking acre of some mutual fund client admin at Bk of Bda before she rose to political prominence and was then hired by ACE. No more a banker or an accountant than someone in IT or HR at a bank…
Laverne, you don’t have a following… Do we need to remind you that a UBP person, Wayne Furbert who you love to insult beat you BADLY in your own attempt at a district? Remind us of your followers there? Your own vote, your son’s vote and your aunties maybe?! LOL … You are a joke to think anybody follows you… Remind yourself of the PLP comment when you last attacked me…
“We consider you an embarassment”
Yep… You got followers for sure… They followed/led you right out the senate door. Need we rmind you of the difference between being laughed at and laughed with?!
LOL @ you… +1 ;0 I’m a keen follower too! LOL
Laven, the only one tht gives you the time of day is Larry Scott ..
So why the hell are you a P.LP. supporter ?and are you ok with the devaluation of the bermuda dollar ????????????????????????
Lavern, you have a following ? and you mention Bob Richards, and Larry Burchall’s resume compared to our premier’s resume…does our premier have any experience in accountancy ? or is she a economist ? NOOOOOOOO.
I read Larry’s column all the time…and you are no where as good as this columinist….at least he has voice in a newspaper that I can find .. where do I find your your followers ?
How many Degrees did Steve Jobs have or Bill Gates. NONE! Whats your point!!!
Yes but they CREATED and BUILT something…not destroyed something or ran their coountries to the ground. Oh…Im pretty sure they hired accountants that were certified.
I actually like Paula Cox and think she is doing a pretty good job with the mess she was left with. I just couldnt help but respond to your comment.
@ Bda Unicorn: “left with”?!? Ms. Cox was finance minister during the entire downward spiral and as such, was in the best position to rein the good doctor in…but no, she reneged on her responsibility … “cog” my foot
All 8 of’em..
LOL
Again, I read with great interest this article by Mr. Richards, in hopes to see some plan, some suggestions – but nothing, again.
I have spoken on this point before – if you want the swing PLP voters (whom you need to win the next election), you need to stop being the “UBP” and provide solutions to the issues at hand. WE DON’T WANT TO HER THAT THE PLP ARE THE CAUSE OF ALL OUR PROBLEMS – we know that they are a large part of them – WE GET IT!
Your constant whining is damaging your position as your integrity was called in question long ago – try to keep what little you may have left – for the sake of your party. It seems to me that this isn’t about the party or the people of Bermuda – this is about you. Own it – own your selfish pursuit – live up to your desire and I will gladly consider giving you my vote.
This goes for you, and all other politicians in is country – PLP, OBA, or otherwise.
Yng Black Mind
(those who know understand)
And the PLP’s plan 13 years ago was what exactly? I guess since you are a great believer in them and since you truly believe in them and their abilities…you are suggesting that “this” is all of their big plan?
Huge Debt, Failing Economy, Failed Education System, Soaring unemployment, unaccounted for monies, Labour Disputes (and they are a labour government), transportation system that is a mess, High Crime, Drug abuse is rampant….so this was all a part of the master plan! If not…. you MUST conceed that they have failed MYSERABLY!!! I actually have a lot of respect for Paula Cox and wish the OBA would court her. There are a few others that in my opinion are involved in PLP Politics for the right reasons. However, he rest, lost my trust and respect during the Brown reign.
Sorry yng Black Mind…I replied to the wrong post …didnt intend to reply to you post but an earlier one from another poster..
The only way to get our “national” debt and budget back under control is to reduce our bloated civil service, which is now largely unproductive hidden unemployment. The first steps should include hiring and pay freezes, early retirements, 4 day weeks, sale of GP xxx-hundreds of cars etc. to keep the hidden unemployed fed and clothed but not sitting quite so heavily on the shoulders of the actual workers. But with the civil service being so huge and powerfully unionized the OBA aren’t much more likely than the PLP to man up and administer the unpleasant medicine.
bob you have made some good observations but you have not come up with no solutions to the problem you are just like your leader who just likes to run his big mouth let it go the ubp is dead and the so called oba is only the same old plantatin owners ubp just wearing new suit and tie when the election comes around you wil see the real ubp jump out of the closet with their hoods on
“You will see the real UBP jump out of the closet with their hoods on”… Are you referring Kim and Charlie Swan seeing as they are the Real UBP now…
Sorry Jack the race card tricks were all used up in the last two elections the deck is empty. Nobody is falling for that anymore! We have seen the facts…we have seen the plp track record! Where is your great last Premeirpropbably in Vegas working as a magician. He disappeared, so did our economy, international business, jobs and the peoples money? Dont get me wrong, Im not complaining that he is gone. That goodness for Mrs. Cox.
“you wil see the real ubp jump out of the closet with their hoods on” are you referring to Kim and Charlie Swan? It seems they are the “Real UBP” in 2012…
I agree with a lot of the comments above, and it is time we heard from the OBA on how they would handle Bermda’s finances and what they would do. We are only hearing how bad the PLP are doing, we need to hear how you (the OBA) would change things.
Politics. If OBA tells um……..PLP will implement. Sh!t, they can do it, their the Government. Yah all just don’t get it.
You actually think OBA will wait until an election and then tell the people theres nothing we can do about it (the ecconomy et al) and further say…’we were just missin wanted a few bucks to suppliment’…………….
The wheel is not round. It is oval at this time. Go figure.
PLP people may understand when Paula increases across the board import duty to 35%. That will cost inflation to increase up almost double. Guess you guys would still say she’s the best premier/fin min since sliced bread. Don’t you people realize she don’t know whats she’s doing??? She’s raping the country… Idiots!!!!!!!!!!!!!
Funny thing is …I remember when Dr. Saul increased the luxury tax on cars over a certain dollar value, the PLP were out with their protest signs. Would be interesting to have the media dig up some of those old protest pictures.
Rightly or wrongly our National Debt and Bermuda’s economy is a MESS .
Even our best minds assume that a principled stand taken for the right reasons is a loser. Standing in the midst of what is already a catastrophe, even our best minds are content to pretend that the “disruption” is something from which we can be spared.
Ask any rational person: “When a government is so addicted to reckless spending that it has run up a crushing $1 Billion Dollar debt that it has no plan to pay back — when it needs to borrowing $33,000 per hour because it has taken on more obligations than it could ever hope to satisfy — would it be better to extend that government’s credit line another $600 million so it can continue heedlessly along, or to take every available opportunity to force it to alter course dramatically?”
There is only one right answer to that question.
The only sure thing here is that there will be consequences. With due respect to Paula Cox and the PLP establishment that breathlessly cites him, there is no chance of sparing the country. The major economic disruption is already happening, and it stands to get far worse. Thousands are unemployed, thousands more will need public assistance, at unsustainable levels.
The government may need to devalued the Bermuda dollar, and is gearing up a round of “quantitative easing” (more money created out of thin air).
I am a PLP Supporter BUT come on Paula ,
Good day to all the beautiful people of Bermuda..What really boggles me is that if someone that really cares about this country and has the answers to solving or improving our financial standings, one would think that person would be knocking on the Minister of Finances office door..instead of just saying what is wrong show what is the correct and best thing to do for all..why keep this to yourself..am sure if you do have the answer you will be welcomed with open arms as this is our country,,so if you ree allt care please dont bring someone else down, to yourself up…do the right thing and offer what you have with out ego,,thats if you really care about this country. am sure if what you have to offer is the right thing for this country it will be thankfully accepted and of course implemented…dont just sit back and with hold this info from those that could use it….work with each other not against..we are one people..Peace Good Health an Happiness tp All my People
lol sadly you really have no idea about party politics in bermuda. There is no bi-partisan ideas… If opposition told govt (whichever party is in power) that 2+2=4, they’d quickly be shot down as wrong.
Yes my friend you are absolutly right. and this is what is trully sad..health and happiness to you and those close to you
Not totally true recently Government and opposition came together to convene a joint select committee on Gun crime and youth violence^^ The report was tabled at the start of the new session of the House^^
You will not know about the OBA’s plans for recovery until an election is called. They arent that stupid. If they offered solutions right now the plp likely would steal them as they have no new ideas of their own.
You wanna know what the OBA is gonna do to get the Island rockin’ again, ask Paula to call the election.
This is so hard. Since we’re in the realm of the hypothetical it is reasonable to pose some questions and make some assumptions. Let’s get some things out of the way first and foremost. The PLP spent money. Lots of it. The things on which they spent it are well known and were criticized at the time and continue to be. Ferries, buses, revenue guarantees for new flights, pension increases for seniors, war veterans’ pensions, ferry docks, cruise docks, the NSC pool, free child care, duty relief for businesses, tourism concessions, Loughlands, Perimeter Lane, Butterfield Lane, Harbourside Village. new Police Station, new Magistrates Court,…..and the list goes on. They spent a lot and you can touch it, feel it and quantify it and most of us benefit from it. They spent it fast and furious after years of social neglect and infrastructure inaction by the UBP. Remember, the old police station was condemned in the 1970s. It is arguable that the PLP spent too much, too fast. Happy to concede that. The question then is which of the initiatives listed above would the UBP/OBA NOT have done. That’s what they need to tell the voters. The next hypothetical is, if they hadn’t done some or any of these and preserved their precious surplus, would they now heed the calls of the people for relief? Having a surplus is wonderful, but if you don’t use it to the benefit of the people then it is useless. This is an important point because saying “we would have a surplus in these times” is only half the argument. What would you do with it? Answering that will give us some insight as to whether or you have acquired a social conscience during your opposition years. I think the OBA won’t answer because they can’t. The elements of the BDA (the better way gang) and the UBP that have combined to take out the PLP are, on their public statements, divided on these issues. The BDA don’t know about the Bermuda Inc. philosophy of the UBP, compliments of Dr. Saul. A country is not a corporation. A country is not a household. A country cannot be run on those principles when the responsibilities are greater. To suggest that no debt is good and any debt is bad is too basic to be realistic when dealing with a sophisticated economy like Bermuda’s. The OBA need to be honest and say what they would’ve done differently, which constituency they’d disappoint and more importantly, what they would do to diversify this economy. This eternal “I told you so” from Bob the Snob is not only tiresome but only reinforces the “old UBP” credentials that will continue to hold back the OBA. As for a debate between he and Paula: please don’t let that happen. It’ll be the verbose princess vs indignant emperor. No thanks.
Lord man/women…you sound like J. Starling. Correct me if I am wrong.
And please use paragraphs.
What a pile of crap! Essentially what the PLP did best, courtesy of Dr Ewart Brown and his friends, is decrease the Bermuda treasury millions upon millions of dollars! And we the People want it all back!!!
Hmmmm, one thing I disagree with you is that “The BDA don’t know about the Bermuda Inc. philosophy of the UBP, compliments of Dr. Saul”. Of course the BDA know about that the BDA/OBA/UPB are one in the same Remember all of the BDA MPs were once UBP MPs.
On another note, I’m wondering if “the Shadow”, that is Bob Richards, would agree to taxing “corporate/business profits or investment returns or interest on savings or dividends”.
I’m also wondering why “the Shadow” is still in Bermuda, 13 years after he and his wife promised to flee this “Banana Republic” in 1998 after the PLP won a landslide victory.
Bob Richards is still here & we should be very thankfull that he is, however many have left. The brain drain is on. Those with connections in places like Canada, US, NZ, Australia & GB have been selling up & quietly leaving. The smart money has left or is leaving. Money does not like instability & controversy. University students don’t have plans of returning home to work. For those with an education the whole world is at their feet. They have no desire to return to Bermuda to a mess that did not have to be.
And remember there are many ex UBP elected members, including the ex Leader and now Minister of Tourism, in the PLP. Taxing business profits, and indeed rental income of Bermudians and Bermuda companies may the the next option by the PLP. You can’t tax IB as the PLP extended the tax free exception until the 2030′s. Enjoy tax that you’ve never seen before.
You talk nonsense… The EX-LEADER (!) of the UBP is now Tourism Minister for, guess who, the PLP. And the party lovin party has 5 more ex-UBP Member in their ranks.
Anyways it doesn’t matter what you call them, they are still gonna be the best option – BY FAR – at election time to get us out of the mess created by the PLP.
I have actually heard him say that he never said that he would leave if the PLP got in. Can you quote where you found him saying that?
All
The current solution for the financial analysis is to call the election. Once called, we can focus on Bermuda rather than the current ‘grab for power’ and ‘political one upmanship.’
The reality is that no one predicted the current world economic climate. If they were able to do so, they would not be in Bermuda because they would have been a millinaire many times over through personal financial planning or by advising the many corporations or governments from around the world!
I accept tha many will disagree but MP Richard’s claim to have predicted turmoil for Bermuda is not factual. His claims are similar to me telling someone to be careful how much they eat because they will gain too much weight. Whislt there is a general correlation between food consumption and weight, the other factors include metabolism, exercise, genetic make up and the type of food eaten, to name a few.
To be more credible MP Richards would have to specify which spending he would have avoided or curtailed if he had the privilege of serving as Minister of Finance. I am particulary interested in which social programs he would have cut since a ‘social conscience’ is a definite distinction between the PLP and OBA. Bda College tuition, daycare relief, reduced costs for seniors, the elimination of death taxes. )Hint – before you answer remember that the people you are affecting are the same ones you are trying to convince to vote for OBA – thus choices are difficult when you are in the drivers seat).
Let us now be practical. The PLP government spent substantial funds on investing in Bermuda’s infrastructure and some of its social programs. I will not bother to list them all but ask any policeman who worked in Hamilton over the past 40 years if the new police station was needed. You can also ask any cruise operator or Dockyard shopkeeper whether the new cruise terminal in Dockyard was necessary. You can also ask any western commuter whether there has been benefit from the fast ferries. How many Berkeley students would complain about the new Berkeley?
I could go on but I will not. My point?? The money has not been spent solely on operations. Thus there has been a genuine investment in Bermuda by the PLP. I accept that some may not agree with the pace of spending and I agree that there could have been some inevitable savings but we are simply not being honest if we claim that all of the funds have been wasted.
And now for a reality check. We are where we are and based on our current political framework, either the PLP or OBA (sorry MP Swan – there is little to no likelihood of the UBP playing a meaningful role) will be responsible for managing Bermuda’s finances over the next several years as we gradually reduce our debt.
The Premier and Minister of Finance has introduced a raft of measures in recent months that indicate how she and the PLP intend to address our economic climate. There have been intiatives on job creation, increased flexibility for IB senior personal, loosening of the rules for non Bermudian spuouses acquiring property, reductions in payroll taxes etc. To her credit, she has also introduced a new open budget format and asked for voters to comment on their preferences for increased taxes or reduced services.
From my perspective, we have to accept the reality that Bermuda has to be collectively prepared to make some very sobering decisions about the way forward. There are numerous empty residences and corporate offices, mortgage defaults are increasing, people are losing jobs at a rapid rate etc. Thus we will have to try to reduce the cost of living in Bermuda. 2 big choices are therefore looming – reduce the amount of money that government must raise (i.e cut services or salaries required for public servants – police, fire, prisons, teachers, pricipals, civil servants and blue collar workers are all included).
Following closely, we need to reduce our housing costs (the bank’s interest rates are key in this regard) and try to minimise the costs of basic food products (consumers need to be more savvy about this and compare when they shop for all goods, including food).
In summary, we are where we are and we need to stop looking in the rear view mirror lest we ‘drive ourselves to calamity.’ I note the analogy of the passenger getting on the driver’s nerves when they try to influence their driving. For Bermuda, the car driver is the PLP unless and until there is a change. In the meantime let us assist the driver to ensure ‘we all make it safely to our destination’.
VFM, you may be too young and inexperienced, or maybe you’re just forgetful. Either way, you need to get the facts straight if any of us are going to be interested enough to read what you write.
Bob Richards, specifically, DID predict problems in the economy prior to subprime imploding. He warned about an overheated economy; he warned that the government was overspending; he warned about debt.
By the way, I’m not an OBA person. I don’t think I’ve ever actually met an OBA member, as far as I know. I read this stuff in the paper as it happened. Maybe you missed it.
And what was the reaction? The usual sticking of heads in sand. “You’re making mischief”, “you don’t understand that Bermuda is different” “we have $3bn of investment in hotels waiting in the wings” “we don’t care what you think”. Utter madness. Incompetence. Arrogance.
And now, of course, you don’t want to “look in the rear view mirror”. Now that we’re in a complete mess you think we should all help the PLP get us out of it.
No. The PLP had their chance and they screwed it up. Royally. They screwed it completely up. The country is a financial and social mess. The tax base is shrinking. Debt is ballooning. Crime is rocketing. Businesses are leaving. Houses are empty. The economy is shrinking.
What an utter mess the PLP have created.
RR, you got much further into VFMs essay than I did. I got as far as the first sentence, second paragraph. No point in going any further.
It is amazing at the number of people who cannot see the ugly facts staring them right in the face.
The PLP are into their 14th year as Governing party. The Island is in a shambles. $200,000.00 in interest cost on a massive debt per day & growing. They don’t have a clue of what to do about it never mind runaway crime, failed tourism, IB leaving & the rest of the failures.
Still the apologists make excuses.
@ Triangle drifter
‘The reality is that no one predicted the current world economic climate’
Is this the first sentence second paragraph that you are referring to? If anyone predicted the current world economic climate they would be millionaires.
As a simple example, if you owned a home in Bermuda 5 years ago and accurately predicted teh decline, you would have sold the house. You would have made handsome profit at the time, invested the proceeds on a very short term, low risk basis and would now be in a position to buy back the same house or a house of similar value at a 30% to 40% discount!
A similar example is that you would have bought some relatively high yielding bonds at fixed rates because their value would have increased given the current low interest environment.
To be sure if I had any inclination about the pending economic decline from 5 years ago, I would have acted to provide substantial economic security for my family.
@ Rick Rock
You make my point. We can all make general claims and if they become true we can claim that we predicted them aka palm readers.
Given MP Richards’ accurate predictions (presumed) why does each of the banks have increased mortgage arrears? Why is so much of the unemployment ‘unexpected’? Why are landlords that just built new buildings complaining about empty buildings? Why did the bank’s fund several of the new commercial and reidential buildings? Are we all guilty of not heeding the ‘predictions’ of MP Richards? Did he offer any similar advice to BNTB, Argus or any of the numerous investors in real estate projects over the recent 5 to 10 year period?
To be candid, it is easy for all of us to say the economy is (was) overheating. Why did the commercial projects proceed rather than wait until government finished its building (if as alleged the government was not listening to Richards? Being more specific and offering alternative solutions is more difficult.
Most significantly, why hasn’t MP Richards stated which of the PLP expenditures he would have opposed?
By the way, youth and experience are relative terms. Let’s consider the bigger picture of what would have happened if government had not invested the $1b in the economy? Let’s assume at least $500m stayed in Bermuda? What would the impact have been on tourism and Bermuda in general if we did not have the Dockyard pier as an example? Is it possible that the expenditure has softened the impact of the global recession for Bermuda? Depspite the allegations to the contrary, many average Bermudians received a benefit from the government investments and have enjoyed spending the money as they see fit.
Let me briefly touch on a matter that I think is pertinent but has not been addressed thus far. How many of us consider that the biased hiring practices in IB has contributed to Bermuda’s social and economic decline? Statiscal evidence shows the disparity between Bermudians and non Bermudians and people of different ethnic backgrounds. The costs to IB would have been less and they could have enjoyed even higher profits.
As a final comment, I think MP Richards’ comments about effectively broadening the Bermuda tax base has merit. It will be interesting to see if he or the OBA have the oft referred to testicular fortitude to specify any changes to Bermuda’s current tax regime as part of their budget reply. Or perhaps as part of their election platform.
@ Rick Rock
I am realistic enough to recognize that a reduced debt of say $200m would have been beneficial for Bermuda. If we are objective, the total of the capital projects could have been completed for $50m to $100m less in a perfect world. My emphasis is therefore not to dismiss the debt conversation and the need to service it. Rather we have to accept that at least $1b to $1.1b of the current National debt is entirely reasonable if you eliminate the political rhetoric about the expenditures.
VFM,
- Bob Richards has given some detail on what he would do re the economy.
- It’s “maybe $100m” that was overspent, though even that would have been an astounding amount. It was well over $1bn over the past 6-7 years. Well over. The upshot is the extra $1bn or so in debt.
- Some people did forecast the problems in the economy, and got very rich. Read “The Big Short” by Michael Lewis.
- The PLP wasted money by the truckload. If you don’t know about the consultants that made tens of millions of our $ for doing nothing, that might be why you’re so naive. If you don’t have any concern about the politicians who got extremely rich while in office, that’s an interesting oversight. Same with the luxury travel (that STILL goes on), luxury cars, hundreds of GP cars. These things added up to hundreds of millions wasted.
It could all have been so different.
There’s a typo above. I meant to say It’s NOT “$100m overspent”. It was far more.
@ Rick Rock
What are you referring to? The overall spending on capital projects could nto have been ‘over $1bn’. The total spend was in that region.
@VFM, shopping is easy. There are about 100 major things that I need to do for my house, my car, my life. Some are urgent and some are not. In the real world people take care of things, plan and set aside money for maintenance and replacement. If I bought a new car, replaced my windows, put in a new kitchen and a/cs for my entire home my family would be happy for about two months and then we’d be broke. It’s the same for the government. Buying fleets of new buses and ferries and not taking care of them (they’re mostly wrecked), building “national” sports centers etc. – all in a few years – might be fun and provide a short-term feel-good factor. But it’s way too much way too quickly. And paying off the credit card bills can be a life-long hell.
PLP wated our money! Sure they built those things…LITERALLY ..their friends and supporters and at 2X – 3X projected costs and some projects without going to tender. Berkeley, Cruise Ship Docks, TCD, the new Court Building. How many were built on time, on budget and how many now built by a PLP supporter?
@ bda unicorn
We continue to hear about the so called enrichment of PLP friends and supporters. To date, i have not seen any evidence of your claims. And if you think every ‘friend or supporter’ of PLP or even most friends or supporters are financially well off then you are sadly mistaken.
I need not add to the debate,as I would have only repeated what you so clearly present. @ Vote FOR ME, you have put it brilliantly and addressed the issue so well. Excellent !!
So I hear that the government cannot afford to pay the civil servants this month and will be getting a loan from a certain local bank (prefered shares) to cover their expenses. Also sources say they will be asking for yet another extension to the debt ceiling as well as taking back the so called payroll tax relief shortly. Let’s re-set the dial again shall we hmmmm?
“In the meantime let us assist the driver to ‘ensure we all make it safely to our destination.’
And that destination, one can only surmise from the pLp’s record of governance is the NEW STONE
AGE.
All the way pLp. pLp all the way!
PLP: People Lying (to the) Public. All you need to know.
We were all excited about the new Bermuda promised in 1998. It is definately a new Bermuda, unfortunately we have changed for the worse. I will never vote again!!!!!
@ Observer
We all have serious feeings about Bermuda’s current status financially, politically, socially etc. The ultimate means of havnig an impact is to vote. If you consider the struggle that was endured by many to ensure the we each of ‘one man, one vote each vote of equal value’ i hope you will find the courage to vote.
I’m voting… Voting PLP out!!!
This is my prediction of what will likely take place in the event of the PLP being voted back into power. To cover expenditures and payments of just the interest on the debt the Government will need to borrow around $200 million + a year, as they have done this year. Because the Economy will not improve significantly they will need to keep borrowing every year over the course of the next term of Government. We could then see a debt level of over $2 Billion, 5 years from now. Interest alone on the debt will exceed $400,000 a day. The other problem that will likely make the interest payments even higher is that interest rates are going to skyrocket when the Global Economy finally does pick up, taking the interest payments up even higher. The PLP will be left with no other option. They can’t cut Government jobs and can only cut Services here and there. Raising taxes is on the cards but can’t be done until after an election. Even doing all of these things they will still be bringing in less than they are spending. They will have to borrow more, much more. Paula Cox is just letting us get used to the idea that we have significant debt. Over the next 5 years it will be time to take on more debt and get used to living with it as a permanent feature.