The Folly of Tourism Numbers

February 14th, 2012 by De Onion

So today we learn that tourism arrivals were up 12% – a jump in the number of cruise ship visitors alone. The thing is that we should feel this in the economy, and yet the continued implosion of Bermuda’s economy and suffering of the working class only shows to illustrate what folly it was to invest heavily in boosting the headline numbers through cruise ship visitors. At least new tourism minister Wayne Furbert isn’t following in his predecessors’ footsteps and loudly proclaiming this to be a huge victory, especially since next year will undoubtedly show a large drop thanks to cruise lines cancelling cruises.

I’ve updated the air arrivals graph with this new data.

5 Years of newonion.com

February 14th, 2012 by De Onion

Amazing that it has been almost 5 years of blogging.

Air Arrivals 1970-2011

February 2nd, 2012 by De Onion

Been playing with some data. Special thanks to Denis @21 Square.com

Banking Stress

February 1st, 2012 by De Onion

In 2004 HSBC Bermuda CEO Phil Butterfield stood in front of a group of employees and proudly and sweepingly announced “we have never lost money on mortgages in Bermuda” as he justified the reduction of mortgage lending standards.

One of the huge highlights of the financial crisis is the current inevitable insolvency of European banks. To put it simply, the banks were allowed to pretend that debt issued by countries (Greece, Portugal, Italy, Spain, etc.) was risk-free and had no chance of loss. So the banks bought that debt and financed government deficits – we now know that debt was not riskless and if European banks lose value in their loans to national governments then they will fail. Normally governments step in to backstop failing banks, but of course governments are the ones with the original problem… etc. Large scale bank failures are fatal to an economy. Utterly fatal.

Hidden away in the BMA’s January banking report is this scary little chart. The numbers themselves are not especially scary given Bermuda’s banks relatively low leverage, but the trend certainly is worrying.

What will it take to induce bank failures in Bermuda? We know that our government debt is very risky and with continued PLP management a default appears to be almost inevitable and with that default any ability for the government to act as the lender of last resort will be gone, the economic equivalent of operating without a net in an increasingly risky economic performance.

Union Showdown

February 1st, 2012 by De Onion

One thing is for sure – with the budget deficit becoming critical and the PLP still showing no managerial competence to lower expenses the only place they have to cut is going to be Civil Servant’s salaries. The unions are going to have to be innovative indeed.