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PLP's mortgage relief plan changed? Did reality set in?

by Rick Lowe

Here's the new twist according to the Speech from The Throne:

"The plight of homeowners in financial distress must be addressed if a stronger economy is to be restored."

"My Government will therefore work with the clearing banks and other institutional lenders to develop a financially sustainable mortgage relief programme aimed at assisting distressed homeowners in saving their homes from foreclosure. Participation in such a programme would be voluntary."

Read the speech here…

Mr. Hubert Ingraham (FNM), former Prime Minister stated in an interview with The Nassau Guardian that; "it appeared as if the government had scaled back its mortgage relief proposal. He said the plan presented in the Speech from the Throne seemed more practical, unlike the version that was talked about before the PLP won the general election." Read the entire article here…

The "revised" mortgage relief programme seems less dictatorial than what they were suggesting on the campaign trail, but it remains unworkable without adding more to the national debt that the country cannot afford.

What intrigues me about this "Helping people at gunpoint" is that banks are being made the scapegoats.

First, a mortgage is a legitimate contract agreed by both the lender and the borrower, incorporating terms for non-payment that were all agreed to up front before funds were advanced.

Second, the banks are being demonised in this matter as "profiteers" that are cold hearted. The banks are not the only people to "profit" from mortgages now in distress. Why not ask property developers, real estate sales people, lawyers, accountants, the government et al to return the profit/money they made from each sale? And,

Third, if the programme will now be voluntary for banks, one assumes the derogatory noise in the market about banks by the political class will cease?

It merits repeating that it must be incredibly tough for people to lose their homes (and my sister might lose her property so I understand first hand) but to throw reason out of the window in these contractual matters, is whimsical at best.

To paraphrase Penn Jillette, voting for our government to use force to get banks to give money to people who happen to be in arrears with their mortgage is immoral, self-righteous, bullying, laziness.

We will know soon enough if rational thought has slipped in to change the original concept of the mortgage relief plan. But all the promises during the campaign make it very difficult to step away from providing "relief".

Details of the PLP's mortgage plan from their 2012 election "Charter follows:

Bahamas Customs & Immigration union need to see things as they are

by Edward Hutcheson

Listening to the demands of the Customs and Immigration Union members, makes you wonder if there is any reasonable dialogue happening in that organization. Two of their demands stick out like sore thumbs and you wonder if the term “economic fallacy” has application here. Before the last election we heard that members wanted their overtime pay to be listed as a part of their regular salary, this would look good on a mortgage application but who is to say that an employee will be receiving that level of overtime or pay during the life of his mortgage. It only qualifies you for entry into a higher market, since a specific salary figure is on a Government letterhead. But, what then? With the plans ahead for changing our tax regime, with the probable combination of VAT and Tariffs, it would be advisable that the leadership of the Union spend more time helping the government to work out the kinks that are bound to come. WTO membership demands that we make those changes, changes that will result in a downsizing of the Customs Department and the expansion of Immigration.

If that was all to it, we could look ahead. Yesterday there was a news clip, where Mr. Sloan Smith told us that 80% of the overtime revenue came from somewhere else. I am still trying to figure out what he means. Is he saying that this is not revenue that belongs to Government or that The Customs Department is no longer the direct employer in this regard? The officers in this particular union, must understand that they are not self-employed and that they are government employees. Mr.Smith comes across as a sensible, articulate individual, but he has to go back in his memory to see who came up with these two ideas that smack of entitlement.

Hopefully, none of his members have a mortgage problem, because these two issues may come up in the discussion and  even persons in the group they supported will ask for an explanation. They may have been quiet during the campaigning but now that the bills have come due, this is the time for the noise to cease, and even the utterances from the DPM and Chairman Roberts about “prosecution” are but smokescreens; none of them would like to meet the former Prime Minister in court, even on a rainy day. There is nothing wrong with making demands, but we create problems when we give the impression that those demands are exclusive to everything else that is going on in the country, those who take this line are heading for a myopic existence.

Labour unrest has a dark-side when used as a tool of political expediency. The outcry that came from union leadership about the amount of space they got in the Charter for Governance should have informed them of what was ahead. If Union leadership believes that Labour demands can only be fulfilled through political means in a nation that is almost 40 years old, they need to think again. But, when we fool ourselves that our needs are more pressing that other citizens in the nation who may not even have a job, we end up being deceived; regardless of how important we think our lifestyle is. Those who guard the nations resources have to see themselves at a level that is functional and proactive, and that “functionality” dictates that we (Bahamians) must see things as they are, before we make a move to where we think they should be.

May 25, 2012

V. Alfred Gray. Same promises, different day?

by Rick Lowe

Here we go again, a new minister of agriculture is going to save the day and make The Bahamas self sufficient in food. Food security will be his first concern... Will the results Mr. Alfred Gray (PLP), recently inducted minister, promises be any different than those before him. In fact he was one of those ministers in a  previous incarnation.

Several years back, Mr. Pierre Dupuch (FNM), as minister of agriculture, stopped food stores importing bananas to "help" Bahamian farmers. Well it inconvenienced food store shoppers as the farmers could not supply the product. But guess what? All one had to do was drive to Potter's Cay and the vendors continued importing foreign banana's for the convenience of their clients.

Of course the results were dismal and eventually the programme was abandoned.

In more recent years (2010), Mr. Larry Cartwright (FNM), as minister of Agriculture, devised a $42 million plan over five years to assist local farmers and stem the tide of food imports.

No results have been reported yet, and they may never be known, if history is a yard stick, but we can assume they've been no less dismal than banning banana imports.

In the seven years from 2005 through 2012, the Ministry of Agriculture and Marine Resources and the Department of Agriculture combined have spent some $81 million, and what do we have to show for it?

Now Mr. Gray, is going to save the world, but if he was to look around New Providence he might enjoy the farmers market at Doongalik Studios on Village Road or once a month at the Bahamas National Trust. Good things are happening without government spending a dime of taxpayer funds.

In other words, the ingenuity of modern Bahamians is helping them create a market for their goods.

Instead of grandiose plans of food security that government promotes at the expense of everyone, for the direct benefit of a few, the private sector is developing this on its own.

Sure, the food stores might be able to have a specialty area for locally grown produce, poultry or meat, but it's a pipe dream to think we can be self sufficient in food at competitive prices. We simply do not have the capacity.

If there are farmers producing quality products all we need is a middle man or two to get the product to market. This way, we do not have to use taxpayer money to pay for packing houses where product rots yet the farmers still get paid by the taxpayer.

It's so tiring listening to the same old rhetoric. To paraphrase Eamonn Butler from his recent publication for the Institute for Economic Affairs in London, England, Public Choice - A Primer, if you buy a cup of coffee in the free market, you know exactly what it will cost you. You pay the whole cost and you get the whole benefit. But if government implements a programme, say in agriculture, the costs and benefits are spread among many people, yet you don't know exactly what it will end up costing you, or if you will get any direct benefit.

I think it would be better to close the department of agriculture quite frankly. I've had enough of the same promises every five years.

What's that saying about doing the same thing over and over and expecting different results?

Back in September 2011 Mr. John Hedden released an overview of Bahamian agriculture, you can read his seven part series here.

I would think Mr. Hedden's experience would be of some use to our Ministers of Agriculture? But on second thought that's doubtful as they all come to table believing they have a magic wand. Problem is the wand is our tax dollars and every new generations debt burden to bear.

Lessons in Freedom: Seattle, America’s Europe?

by Tibor R. Machan

On a recent trip to Seattle, which I visit on and off quite a lot, I found the place to have just the kind of feel I have experienced in Stockholm and Oslo and in cities, big and small, throughout Austria and Switzerland.

The main places in the city are very clean, with a lot of public facilities spic-and-span that few in fact seem to use. It is the kind of place that appears to be ruled by people with taste and class, at the expense of everyone who lives there as well as outside the central regions. And of course green rules, except that the city seems to have a greater percentage of cigarette smokers than any other I have visited recently, including New York City, Chicago, Las Vegas and even New Orleans. (Maybe it has to do with how a good smoke goes hand and hand with a fine, dark cup of coffee, such as is sold in zillions of Seattle's coffee shops.)

It is not unlike Switzerland and many other places throughout Europe, where the trains run exactly on time but are not actually occupied very much now (since people seem to prefer using private cars on roadways they know they can leave when it suits them so as to take minor or major detours, do a bit of shopping, visit grandma, etc., that cannot be done while using public transportation).

It doesn’t appear that there is much fuss about being taxed to fund all the public facilities, apart from the broad concerns about governments going broke everywhere, borrowing billions from future generations the members of which aren’t casting votes about how the money they will be forced to give up is spent.

I was especially struck by how similar the towns look, on the way to or from the airport on the train route, to ones in such places as Hamburg and Amsterdam.  (I rode the train at about 7 AM on a weekday and there were no passengers to speak of along for the ride.) Of course, I was looking at the homes and commercial facilities from the outside and do not have detailed data on what the various places of residence and business look like inside.  (Often some areas that look run down to casual observers turn out to be extremely well kept on the inside, something I discovered on a visit to various Chicago suburbs a while ago.)

Anyone familiar with the phenomenon of the tragedy of the commons will very likely realize how it is evident throughout some of the most attractive places around the world--Santiago, Chile; Copenhagen, Denmark; Oslo, Norway and the rest. Because governments can always float bonds and finance the projects of their leaders with debt and money printed for them, there is rank and massive profligacy afoot in these places.  Another reason this can go on is that in certain parts of the country, indeed the world, citizens are quite happy to assume debts they are not ever likely to be called upon to pay back.  Shops, restaurants, hotels and such are nicely designed and built as a testimony to the good taste of the planners.  Never mind that in time there will have to be some kind of adjustment so that those who come up with the services that make all this feasible can be compensated (so they can feed and clothe themselves).  The resources for the time being come from tax revenues and borrowed funds, so few care much about the burdens created, the cost that must in the end be covered by the citizenry.  Sure, there are always a few who speak out and protest the profligacy but too often they are regarded as party poopers, spoilers of the fun so many are looking forward to.

The fact that most of the expenditures are carried out on the backs of millions who do not live in the places that are being spiffied up so nicely, people who work in rural areas--in plants and factories, on docks and farms and other areas where the hard work that earns some real funds is being done--doesn’t bother the ambitious planners in whose minds these beautiful downtowns around the world, including in Seattle and other parts the beautiful people like so very much live, are conceived.

The dreamers basically think, “These are such nice ideas that it would be a shame not to make a try at implementing them, never mind the ultimate cost to millions who have to give up their own plans in consequence.”  It is all in support of our communities, after all, right? And elites know best what is worth being built, right, never mind who must pay in the end, right?  (Kind of like in contemporary Red China where so much of what is being displayed is aimed for the foreign visitor, mostly at the expense of the millions living rather poorly in the hinterlands.)

May 23, 2012

We are delighted to present Lessons in Freedom, essays by Dr. Tibor Machan, for your pleasure.

Dr. Machan holds the R. C. Hoiles Chair in Business Ethics & Free Enterprise at Chapman University's Argyros School of B&E.

Visit his web site here...

Time for government to change to double entry bookkeeping...

...do the PLP have the firmness of purpose?

by Rick Lowe

After reading the comments of Mr. Michael Halkitis here… and Mr. Zhivago Laing here… I'm more convinced the public sector needs to move to Double Entry Bookkeeping from the Government Accounting or Fund Accounting method to ensure better accountability.

If they did so, they could tell at a glance what the true position of government financing is.

Of course the politicos of either party don't seem concerned. Maybe they know the truth, but it scares them so they punt the problem along to the next generation.

However, if the PLP are serious about bringing some sanity to spending, deficits and borrowing this would be a good opportunity to change the system over.

But I suspect their campaign was more symbolism about these subjects than substance, but we will see the evidence in short order.

I'm convinced reason dissipates when people are chauffeur driven and have a Police outrider.

Just kidding of course, but I'm not holding my breath while I await the PLP's move to cut spending, deficits and borrowing.

Future generations beware.

Reality cannot compete with dreams

"Reality cannot compete with dreams, at least not “fairly.” How easy to romanticize, perhaps about free enterprise, perhaps about possibilities of improving the world by some governmental policy which will restrict the freedom of others: Mr. Dooley made a good point when he said, “A man that’d expect to train lobsters to fly in a year is called a lunatic; but a man that thinks men can be turned into angels by an election is called a reformer and remains at large”. C. Lowell Harriss

John Stossel on Uncommon Knowledge

Enjoy a great 45 minute interview on Stossel's new book, No, They Can't: Why Government Fails-But Individuals Succeed.

Buy your copy of the book here…

Visit the Uncommon Knowledge web site here… and check out their You Tube Channel here…

Al Jarrett: Rest in Peace

by Rick Lowe

Al is reported to have died of a massive heart attack at 69 years of age.

I met Al when visiting the Rotary Club of West Nassau and always enjoyed chatting with him.

In fact we shared similar views on the debt and deficits being piled on by governments of The Bahamas.

He was a die hard PLP and did not let you forget it.

He will be missed.

Read more here…

A fitting tribute for Mr. Hubert Ingraham from Mrs. Anita Bernard

by Rick Lowe

Mrs. Bernard is another wonderful Bahamian and she offers her personal insights in the following letter to the editor entitled, Ingraham Was An Inspirational Leader.

I suspect both Mr. Ingraham and Mrs. Bernard will be missed.

Click here for the letter…

Promises to be kept

by Edward Hutcheson

It is possible to use the pain that people are going through to further a political objective, but  political victories have a double-sidedness to them that the winners fail to anticipate in terms of actual reckoning. Some run from it by remaining in “campaign mode”, reminding us, even from church podiums of what they were elected to do.

The Progressive Liberal Party has a particular problem. They have always been elected  times when the nation was on an even keel and all they have had to do was step in and keep the ball rolling, but this time is very different. Some perceptual arguments have been constructed to support why they have been elected, but none of those “perceptions” are holding any water, now that the results of May 7th are being scrutinized. There was no “landslide victory”, if the non-PLP votes are added together, and the number also indicates that it was more of a “one sided defeat”. Observers are finding out that disgruntled FNM’s and the Mortgage plan promises may have been the deciding factor. The Party was successful  in playing a game that saw a politicizing of the many problems, especially  crime, but now that “victory” has been secured that “politicization” has come back to haunt them. Politicization of any issue assumes that a political remedy is readily available, but the ranking leaders of the Party have always chosen constituencies where they were not intellectually challenged. All they have done over the years is show up at funerals. They have lived in one area and represented another, different constituencies that are separated by class and social distinctions. Former DPM Cynthia Pratt, tried to present a new paradigm for leadership, but I do not think it was embraced that the leaders in the “peoples party”.

This time the Party is plunged into a circumstance, where they will not be spending a lot of time in their suits and neckties, and though the intellectual component is present they will have to choose wisdom over being smart. The smart talk has to be thrown out of the window and the ground level exercise of reducing the space between words and deeds must be a constant. The country that they met on May 7th can run by itself, the real job of this government is the tackling of the issues that are endemic  to a mind set and expectation that they have coddled and promoted throughout their  different tenures. The chickens  have come home, the eagle has landed, whoop there it is, whatever you want to call it and it is on schedule if history is to be served. Next year will make 40 years of Independence and the performance of the Party that brought us into 1973, will impact how we celebrate that momentous occasion.  The Party will not accomplish all that was promised, but their commitment to the task at hand, must be seen by the voting population; especially that middle to upper-class, self-employed grouping who will bear the brunt of whatever “plan”, the government comes up with.

May 21, 2012