America’s Cup Should Benefit All!

December 10th, 2014 by De Onion

As an international business worker I feel that I will be left out in the cold while the benefit of the Cup instead flow to:

– Tradesmen, the carpenters, masons, electricians who build the facilities for the Cup.

– Hospitality workers who will feel an influx of tourists both over the next two years thanks the frenzy of the Cup and over coming years and decades as Bermuda’s image is permanently enhanced by all the exposure.

– Taxi drivers who will be busy ferrying the visitors around the island and sharing our landscape and history.

– Musicians and entertainers who will find themselves playing for packed houses of visitors and thousands of YouTube viewers hungry for Bermudian culture.

– Gombay troupes who will undoubtedly find fame from their amazing displays.

– Dockyard (obviously)

– St. Georges which will see a flood of visiting yachts for the Cup and the great sailing.

– Landlords who will not only find benefits from renting to the high-end visitors coming for the Cup but also more modest accommodations for all of the teams and support staff.

– Landscapers, photographers, and videographers who will play their part to make the island look beautiful to the world.

– Minister Grand Gibbons who already has everything in the world but has now outdone even himself and been a true credit to Bermuda by bringing this event to our shores.

– Entrepreneurs who see the opportunities that will come to sell Bermuda’s art, culture, and lifestyle to the world. Here are 4 opportunities that anyone except a reinsurance accountant could do:

    – Bermudan books. With the rise of the Kindle and iPad it is easier than ever to self-publish a photo book, cookbook, anthology of Bermuda stories, etc.
    – Bermudian clothing. There’s no doubt that people will be looking for the complete Bermuda shorts and blazer and with modern contract manufacturing it is easier than ever.
    – Bermudian art. Millions will see the natural beauty and beauty of our people and many will fall in love and want Bermuda art in the form of photographs, painting, sculpture, and even custom Gombey masks.
    – Bermudian experiences. Each of us has unique knowledge of our island that we can share with guests from tours to home cooked meals.

Meanwhile I and other international business workers will be stuck picking up the crumbs from the Cup in the form of a half dozen Dark N’Stormies and some hors d’oeuvres at a corporate tent while the caterers, waiters, bartenders, liquor wholesalers, and taxpayers reap the bulk of the benefit.

Bean’s Law in action

September 25th, 2014 by De Onion

With the Opposition’s farcically absurd suggestions of online gambling and the mythical “blue economy” as the saviours of Bermuda’s financial services based economy Bob Richards steps up to plate with this perfect example what Vexed has coined “Bean’s Law”.

The amount of energy necessary to refute bullshit is an order of magnitude higher than that required to produce it.

The problem with this approach is that it leads to the kind of back and forth between politicians that people are sick of. If Bob wants to become a better communicator then he needs to focus on the basic truths that are incompatible with the PLP’s silly talking points.

The PLP bought every Bermudian a new car that they make payments on but never get to drive and it spent the pension of every government employee under 33 (and part of the pension of everyone under 65). That’s inexcusable.

South Basin Returns

September 10th, 2014 by De Onion

5 years after I wrote http://www.newonion.com/?p=289 against a backdrop of rampant graft it seems that the Dockyard South Basin development is back in the news. http://www.royalgazette.com/article/20140910/NEWS/140919977

Any word who the owners are or how the tendering process worked?

UBP vs. PLP

September 10th, 2014 by De Onion

It’s time to move past the pathetic UBP-PLP dynamic that has plagued Bermuda. Instead of tribalism can we actually talk about the policies that affect this country. Posing with the jersey colours of one’s political party is the height of that tribalism.

It’s not hard. We all want to live in a safe, prosperous island where each of us can live our our lives happily.

Tucker’s Point Bankruptcy

September 13th, 2013 by De Onion

It should come as no surprise that an 88 room hotel with $150m in debt is in receivership.

88 rooms, $150 million in debt = $1.7million per room. Debt service costs of roughly $300 per night per room.

Average room price of say $595 per night, 70% occupancy = revenue per available room of $416 per night on average.

So with the cost of financing eating up ~70% of hotel revenues you’re never going to be able to make a profit.

I know Tucker’s Point has the club and other revenue generators but even so the underlying numbers are so awful that we should never realistically expect new build hotels to make money in Bermuda unless there is some radical change in the economics. It is also a vindication of BEST’s economic argument against the SDO and another slap in the face of the PLP Ministers who seem to have fallen hook, line, and sinker for bad arguments for granting the 2011 SDO.

Bermuda’s bonds trading at ~3% yield

April 6th, 2013 by De Onion

That’s really impressive. They’re thinly traded so the pricing is probably not too meaningful of actual market value, but still…

“We need foreign capital.”

February 27th, 2013 by De Onion

Not all foreign capital is created equal. We need to be smart about how we get money into Bermuda. In order of the value of foreign capital:

1. Earned from global business and paid as salaries to Bermudians. The paycheques of Bermudian employees by definition come in from overseas and get put straight into Bermudian pockets – then those Bermudians go out and spend it, sending money zinging around Bermuda.

2. Earned from global business and paid as rent/expenses to Bermudians. All the service companies that do work for global business, all the rent payments to Bermudian landlords. Again, straight into the pockets of Bermudians and then around the economy – especially to the service companies.

3. Earned from global business and paid as salaries to non-Bermudians. A large fraction of these paycheques are immediately paid to Bermudians as rents, another fraction to Bermudian businesses in services, and purchases, and a smaller fraction goes with them when they leave.

The worst possible thing we could do is sell local land or companies to foreign businesses. For the most part these transactions tend to just put temporary money into the pockets of the Bermudian former owners at high valuations and then imply an endless stream of dividend payments out of Bermuda’s economy in perpetuity.

Popular vote for Premier

January 22nd, 2013 by De Onion

What’s interesting is that the next OBA vote for its leader will in effect be the popular vote for Premier (at least from that side of the House’s MPs). Pay your $5 to the OBA, show up at the election, and you too can have a vote.

Defaulting Cities

December 3rd, 2012 by De Onion

First, here’s a link about bankrupt municipalities in the USA. Link

Recently Bob Stewart has also started sounding the drum on the Bermuda government’s impending bankruptcy.

Link

People believe that governments cannot go bankrupt. Well just look at big countries like Argentina and Greece, or small municipalities like Pritchard.

The bond holders, owners of government debt, hate bankruptcy because it requires them to take a hit on what they thought were ultra-safe investments. After all, nothing is safer than lending to governments — or so they mistakenly thought.

What brought these financially underwater cities to their knees were crushing medical and retirement obligations to public workers and to seniors. This brings me to financial issues facing Bermuda.

Much has been said during election promises that seniors in Bermuda need not worry about such things. Indeed, the Minister of Health, Zane De Silva, stated that seniors have no need to be concerned about health costs because government will stand behind its many promises. Good luck — I feel reassured.

The real problem is — as The Royal Gazette pointed out in an editorial on November 21 headlined ‘Petrifying Pensioners’ — that such promises have not been costed, and medical costs are rising at an unsustainable level. But who needs to worry about costs when the full faith and credit of Bermuda stands behind such promises?

I think he is far too optimistic. Based on my models Bermuda is already beyond the point of being able to make its debt payments. If anything, this is the last year it has a hope of turning it around. The government’s numbers are wildly optimistic or outright stilly. The biggest howler is that the government estimates it will only spend half as much on debt this year as it did last year ($35 million vs. $70 million) despite having run up hundreds of millions more debt. My best guess model is that the Bermuda government will have a deficit on the order of $350-$400 million making a few assumptions.

– The government will under-collect revenue due to lower than expected payrolls and customs duties.
– The government won’t sell the buildings it had intended to sell to raise cash (they haven’t even started trying and if they do they won’t be able to sell).
– The government aimed for $130 million in spending cuts between last year’s record budget and this year’s. Those won’t materialise because they were dependent on false-savings by not paying pensions which does not appear to have been implemented.

It’s possible to turn it around and prevent a default – but it will take real spending cuts and a total reversal of Bermuda’s economic decline.

Rumours of voter fraud

November 14th, 2012 by De Onion

No idea how much of these are just election time nonsense, but nonetheless it’s a very serious concern.

I’m now hearing rumours that people are being registered to vote at friends’ houses in marginal constituencies and other instances of potential voter fraud. It’s almost certainly small-scale, but with some constituencies likely to be decided by a handful of votes every little bit counts.