Puppets and Puppet Masters, IMF in Control

In January of 2010 the IMF announced that its was in agreement with the Government of Jamaica for a bailout loan of US$1.2 Billion under a 27-month Stand-By Arrangement. By 2011 Jamaica’s IMF agreement derailed as Jamaica did not sit the review test for quarters ending December, June and September and the IMF has said it would not go to its board until Jamaica is able to get the programme back on track, as such Jamaica was unable to drawn down any more money from the fund.

Under the 27-month agreement with the IMF, Jamaica had agreed to reduce the public-sector wage bill from 11.5 per cent of gross domestic product (GDP) to 9.5 per cent of GDP. Prime Minister Bruce Golding told Parliament that the requirement could lead to approximately 10,000 job cuts, which I think was a conservative estimate as some experts predicted close to 30,000. The IMF declared that Jamaica has not been moving fast enough to affect necessary reforms under the 27-month standby arrangement and so they will let off no more funds.

The big question then is, why did the Bruce Golding led Government stopped the IMF reforms dead in its tracks? What did the IMF want them to implement, was it so harsh, so terrible that they did not have the stomach or the backbone to continue with the IMF requirements? Whatever it was it was too much of a bitter medicine for them to deliver... so exit Bruce Golding and enter Andrew Holness.

In Oct 24, 2011 Andrew Holness was sworn in as the New Prime Minister, not long after he declared that the country will hold General elections on December 29th, just few months after taking office. Constitutionally the Hon. Holness did not have to call election and I thought it was a very bad idea at the time, Andrew needed time to make his mark but he was in a peculiar position with the IMF on one side and the Jamaican people on the other. Instead of taking the bull by the horn and do what had to be done he called an election thinking he would either first secure a mandate from the people or maybe he just did not want the job as head Bitter Medicine deliverer hoping that job would go to the PNP. Mr. Holness election campaign was based partly on the Bitter Medicine that was to come and the PNP campaign was based on the Good times that were to come.

Now the PNP have the job of delivering the toxic medicine even though they promised Good Times but only a fool would believe that good times was in our immediate future, knowing the state of our economy and society. Deep down in our hearts we knew for many decades we were heading in the wrong direction, spiraling out of control but throwing caution to the wind and living the high life felt way to good and addictive. However I do believe the Jamaican people have been crying out for structure and leadership for a long time, they wanted someone to stop their destructive behavior and lead the way, they wanted an intervention but our Political class is way too selfish for that, so they feed into the destructive behavior as a way to secure votes like a drug dealer to a crack addicted whore.

Honesty and Reliability are important factors in life, it is a requirement needed for the proper development of any society but members of our political class are neither Honest or reliable, they are just lying, blood sucking opportunist.

I agree with the Private Sector and the Opposition with regards to the Stealth Planned Tax Package. We understand that The IMF will have certain demands from Jamaica before any funds are released, they always do, so when the government announced a big broadcast, everyone tuned in to watched, waited to hear what was in store for us. Knowing the IMF and the state of the Jamaican economy "With a debt-to-GDP ratio of above 140 per cent, a persistent and perennial low-growth or no-growth economy, a crushing debt stock of J$1.7 trillion, and consistent under-performance on revenue collection" …we knew it would be both a Bitter and Toxic medicine and as such we braced ourselves, drink a beer and expected the absolute worst. One thing I know about Jamaican people, they do not do Austerity. They don’t mind getting a loan, always up for a big money let off but do not believe they should jump through hoops or swallow bitter medicine, ...it goes against the very principle of the Let off Culture.

So After the broadcast I said to myself, is that it? A friend of mine said when is the other shoe going to drop because that cannot be it? The Government introduced a new JDX (Jamaica Debt Exchange) programme requested by the IMF (called it: NDX (National Debt Exchange)). The Finance Minister touched on some potential projects to help boost growth and declared that they were hoping to have a public sector wage freeze agreement. After which the Private Sector declared that they were all on board willing and ready to do their part, shoulders to the grind stone. The opposition is never on board it is the very nature of a Jamaican Opposition regardless of which party is in opposition. Our opposition is only concern with opportunities to oppose and expose, stick it to the government… they live for the “Got You Moments”, so there will never be any holding of hands and tackling national issues out of patriotic and national pride. The Jamaican political class and diehard supporters practice the Scorched Earth Policy, if my party is not in power, tear down the country, mash it up, leave no stone unturned until I regain power.

It was a very Underwhelming speech by the PM and the Finance Minister which is why the Private Sector was chuffed, the private sector prefer their bad news light not heavy and disruptive, however the broadcast did not deliver much by way of substance. The TVJ Panel of experts was more informative, although I did not understand the need for them to call Jason Abrahams in Florida, sound like they woke him up, he had nothing to contribute but nothing Jamaicans love more than a person with an impressive last name and Job title working for a big company in North American to babble on and on about absolutely nothing …seconds into his chatter I was thinking… “Man come off a di phone and go back a yu bed”.

The next morning the Government went into Parliament and announced a $16.4-billion Tax Package, plus an additional $11.4 billion from the NHT (National Housing Trust) over the next 4 years.

The Government met with:

• The Opposition before the broadcast and no mention was made of the Planned Tax Package.
• The Private Sector before the broadcast and no mention was made of the Planned Tax Package.
• The Trade Unions and no mention was made of the Planned Tax Package.
• The Jamaican people on a nationwide broadcast and still no mention was made of the Planned Tax Package.

Clearly the time to announce/introduce this Planned Tax Package was during the nationwide broadcast after introducing it to the stake holders in the pre-meeting. Then go into Parliament and discuss the details with the Opposition and the country.

I am sorry but The Government was disingenuous and I cannot understand why, to what aim, what were they trying to achieve, what outcome did they expect from this deception? I don’t even know if we can call it deception because it looked like pure stupidity to me. What is the difference between being upset the night before or in the morning, plus the night before we were expecting to go to bed upset after hearing the bitter medicine details?

Those of us old enough understand that the IMF have us firmly by the short and curly because once you invite the IMF into to your house then they are now in charge of your house, so just be Honest and Open, let the chips fall where they may, we the Jamaican people caused this mess and we the Jamaican people must sacrifice to clean up our mess. Trying to Stealth in a Massive Planned Tax Package was the wrong thing to do and this Government looked foolish in my eyes. I am not even sure I can call it stealth anymore because it was announced in parliament and to the opposition, so I will just stick with Pure Stupidity.

The Real
World Boss

Having lived through IMF I told you youngsters not to go back to the Fund, I was told how cheap the loan was, but these youngsters are only looking for cheap, easy, let off money, they expected to get something for nothing which is what fishing is all about. This my dear friends is what the IMF does, its terms are Harsh, Hard and Fast, they can tell you to lay off 40,000 workers without batting an eye or implement massive Tax Packages at moments noticed, It is the IMF way or the highway and knowing the state of Jamaica it will only get worse, their terms are always Austerity and I have yet to hear or see any growth programme from this Government. The IMF is now in charge, they are the ones dictating our financial policies, the elected Government is just the conduit through which their power flows.

The Political Class

It amazes me also that this Government was anti-tax and anti-JDX when the previous Government was pro-tax and pro-JDX and it equally amazes me that the Opposition is anti-tax and anti-JDX when they were pro-tax and pro-JDX when they were in power. I never know if the opposition is making a statement base on Solid Economics Facts, with unselfish logics and commonsense or just opposing for opposing sake. I would like to think they are making a solid economic factual statement but knowing our political parties they say one thing in opposition and say something else when in Government. Audley Shaw on CVM sounded like he was campaigning. However I am happy to finally hear from the opposition, having heard way too much from those muppets in the G2K. The moral of the story is, be careful of Political Posturing while in opposition because you never know what will happen when you become the Government. Be mindful of what you say and do because it might come back to bite you in the butt.

I watched “Simon Says” on CVM the other night as he read statements from members of both political parties while they occupy different positions of our Government structure over time and it got me thinking... They can curse something one minute and defend the same thing the next. It just confirms to me what I knew all along but hoping that someday it would change, that politicians have no Principles, because principle is not wishy washy or opportunistic, it is a firm, stand your ground thing and the measure of a person. I think we are in bigger trouble than any of us care to think about, not because the economy is rubbish, not because the exchange rate is rubbish, not because of high crime rate but because those members of the political class are Spineless, Lying, deceitful, little invertebrates totally void of any principles and no good will come of it. For the first time in decades I genuinely fear for the future of my beloved country, each time I look and listen to members of the Government and Opposition.

Unless the Opposition can come up with something radically different, promoting personal responsibility and moving us in a different direction then I do not see any other option. It was the Opposition that brought the IMF back to our beds and then failed to implement their requirements. The IMF is not trying to create a growth program, it just knows how to chip away at what it sees as the problem, Public sector wage bill too high? Fire the lot!, Government need more Revenue? Increase taxes! Take the public sector for example, ever since I my eye deh a mi kneel, I have been hearing that we need to reduce the size of the public sector, every jack man knows it is bloated and costing us too much, people are just employed for employment sake and there is no efficiency in the sector. Back in the 90’s Douglas Orane was commissioned to investigate the sector and identify waste and mismanagement. The Government paid lip service to it and when the report was finally delivered the Government shelved it, none of the recommendation was ever implemented to my knowledge. We did not need the IMF to tell us to lay off 30,000 people, we could have laid off 1000 public sector workers , per year with an hire freeze for the past 30 years or 2000 over 15 years. A lot of our problems have been around for decades and we have done nothing to deal with it over time. The Political class does political tip toeing around the problems and the people.... well they just love and enjoy their merriment ...from Dancehall to Jazz and Reggae Concerts, to hot Observer Page 2 moments at various events. Jamaica is the Matrix, that movie must have been written with us in mind, reality means nothing, perception is everything, every body lives in their own creation of Lah, Lah Land where they bask in their own self-importance... look at me, look at me, I am big and large.

I have heard diehard supporters of the opposition declaring that it is now time for us to do one of our world renowned demonstration, that it is time to go on a slash and burn, looting and shooting rampage and I wonder to demand what, how will that fix anything, a rampage on that level will only make matters worst. It is about time we separate some of our problems from the political arena to the national arena and deal with the problems as one people, united before the world.

Meanwhile over the many years, No Mass Rally or Protest have ever been organized against:

• Government Corruption, Lies and Empty Promises
• Increasing Murder/Crime Rate
• Economic Mismanagement and Hardship
• Crumbling and/or missing infrastructure
• Child abuse/murder on rise in Jamaica

Which tells me mass riot and demonstration is only done when the opposition wants to become the Government not because they care about the lives of the people.

We have done nothing to address the problems in our society and as a matter of fact every Government have tried not to take any bold step fearing they may upset the electorate who provides them with power and glory but we cannot continue like this, we must change. The name Jamaica was meant for bigger and better things, a shining example to all but we have lost our way and derailed our journey to greatness. It is now time to correct the error of our ways.

The Austerity, Inflationary, No Growth, Bitter Medicine, Debt Reducing IMF Budget 

More about → Puppets and Puppet Masters, IMF in Control

Life, Debt and GDP

I am reading an interesting piece on the relationship between Debt and GDP, this continued from my reading last week on Debt and the Exchange Rate… I am trying to figure out at what point I should start to feel good about increasing GDP and lowering exchange rate. Since increase borrowing can increase GDP but only marginally so that the trade off is not worth the borrowed money and increase borrowing can lower our exchange rate since we artificially flood the market with currency we did not earn. Our Governments have trained us to react to certain stimuli without giving us the real story behind those stimuli.

Marginally increasing GDP and lowering exchange rate through excessive borrowing, doubling our debt is nothing but window dressing, eye candy and false positives as it is not sustainable or real, unless we earn way more than we borrow and debt repayment is a low percentage of every dollar earned, currently our debt is over 140% of GDP and 80 cents out of every dollar goes towards servicing the debt. Our Governments love to play with words, “we grow the economy” or “we lowered the exchange rate” even when the reasons for these claims are there for all to see… Yes because they doubled our debt or consumed the NIR.

Starter Fluid is rich mixture with low auto-ignition temperature sprayed into a spark plug hole of an engine to get added fuel to the combustion cylinder quickly. It is not used to continuously power the engine but as an added booster to kick start the process… Borrowing should be like starter fluid to the economy, borrowed money is injected into the economy to kick start the process, once kicked started the process is supposed to be self-sustaining, generating the energy/funds required to drive the economy, create new investments and pay back the loan. You cannot run a business on only borrowed money, you can however inject borrowed money from time to time in order to improve the process of auto-income generation by the business but if the only money coming out of the business is money borrowed then that business is not sustainable and will fail, it is only a matter of time, it is not if but when.

The Jamaicans economy is like a failed business borrowing large sums of money, most of which is not being used to kick start the process of income generation but is being used for day to day operation of the country, to finance the over the top lifestyle of the people. Most of the money coming out of our economy is borrowed money because we have failed to use this money to make the right investments and common sense decisions needed to put our economy in auto drive. Not only that our borrowed money through imports is used to drive other people’s economy, every time we buy imported items from overseas we are building overseas economy at the expense of our own and don't get me started on the interest and loan repayment which is like a chain wrapped around a swimmers leg.

It seems the in-thing in Jamaica these days is to talk about GDP as a measure of success or failure of any Government without understanding that GDP rate is just one of many Economic indicators use to determine the state of a country's economic and social health. GDP is the measure of goods and services produced within a country in a given period and not a measure of welfare, it tells us nothing about Income distribution and the lives of people. Along with Economic indicators we also have social indicators which show us the standard of living of all the people within the country. The whole purpose of Government is to service the needs of the population and the whole purpose of the economy is to also service the needs of the people, both Government and the Economy exist only to better the lives of all the people and if they fail to do that then, they are both completely useless as the only thing that matters is the standard of living of the people.

Examples of other important Economic indicators are unemployment rates, inflation rates, Consumer Price index, income distribution, Balance of Payment and Balance of Trade, etc. All these indicators and more must be considered favorable, all moving in the right direction for the majority of the people to sit back and declare that all is right in their world. Favorable indicator in one and bad indicators in the rest means nothing and could still represent hardship in the lives of the people.

Hypothetically let’s say a country had a GDP growth rate off 20% but 25% of the people are unemployed, 23% live below the poverty line and Inflation rate is in double digits… The rich get richer and the poor get poorer. The country suffers from income inequality and a quarter of its population cannot read or write, supermarket shelves is full of imports but only the rich can afford it…The majority of the population suffers from poor standard of living, kind of like colonial Jamaica.

Hypothetically again, Let’s say we have 6 companies and five of these companies are foreign owned, and they produce a lot of widgets, tons of the stuff and sell so much widgets that our GDP jumped 10%, lets also say these companies pay meagre wages and piss poor benefits but make super-duper profits which they export back to their mother country… Yes our GDP is up by 10% but we are no better off because that super profit did not contribute to the increased welfare of the people, income distribution was poor.

In the above examples it makes no sense boasting about GDP to the population as their lot in life have not changed and in fact got worst. GDP is selective indicator used when someone wants to prove a point. Highlighting GDP without highlighting any other economic and social indicators means nothing as It does not give us a full understanding of the true state of the country and the plight of its people.

Then we have the Social Indicators:

• Infant mortality rate:
• Life expectancy at birth:
• Availability of Healthcare
• Availability of affordable housing
• Literacy Rate
• Employment Rate
• Crime Rate
• Etc.

So the next person who tries to big-up GDP had better come with the state of the remaining economic and social indicators. Yes we want GDP and all the economic indicators to move in the right direction but going crazy about one indicator as if it is the beginning and end of it all is Crazy and a complete waste of time.

More about → Life, Debt and GDP

The Austerity, Inflationary, No Growth, Bitter Medicine, Debt Reducing IMF Budget

As far as I am concerned this “Austerity, Inflationary, No Growth, Bitter Medicine” Budget is a rubbish budget but whichever party was in power I feel would have to deliver this “Austerity, Inflationary, No Growth, Bitter Medicine” Budget which was written in Washington by the IMF and represents a clear sign of their frustration with our inability to live within our means, the world financial organizations are now doubtful that we will be able to repay our loans, plus interest. It is clear also that our political class lacks the ability, innovation and imagination to stimulate real economic and social development. They went to Washington thinking they were going to get a better deal from the IMF than the last set of equally clueless, political class members but came away with the same deal as our previous administration, I can just imagine them around the negotiation table thinking their smooth talk and good looks was enough to soothe the savage beast but instead realising that the world no longer finds us amusing or good looking for that matter, you owe me pay me, which reminds me of that scene from the movie Goodfellas:

Our current economic situation is not sustainable and I am afraid that we may have reached the end of our rope coupled with the fact that the rest of the world is dealing with their own financial turmoil and simply have no time, patience or the means to throw money at us.The UK economy is in a double dip recession and the US economy is going south as they say with anaemic job growth and a stalled economy recovery they are too busy trying to stay above water and really have no time for people who wants to live free at other people’s expense. Our National debt of J$1.7 trillion, is about "One Hundred and Thirty Percent" (130%) of GDP and our budget which is J$612.4 billion, as per Dr. Philips every new Jamaican born would owe J$600,000. Half the countries on the planet are lining up for financial bailouts and we do not have priority, we are at the back of the queue, there are countries that the world considers more important and they must be serviced first because if the Jamaican stock market crashes it would not cause so much as a ripple in the worlds financial market. Faced with this reality of our position on the totem pole it is then left up the Jamaican people to solve Jamaica’s problems by making the right common sense decisions, do what is best for our country and people but I doubt that will ever happen, we do not do right or common sense.

Go to the Back of the Line Jamaica!

The budget provides no incentives to private companies to grow much less survive through the hard times ahead, the government is literally saying, the loan sharks are not going to lend us any more money unless we pay some more on the over J$1.7 trillion we owe them. I agree that some level of increased taxation is required, we must pay the piper since our humongous debt needs servicing, the people carelessly ran up the debt and the people must shut the hell up and pay for it, I have no sympathy in that department, buying an imported luxury SUV that is bigger and value 4 times the house you live in with every expensive luxury electronic devices attached to your belt while kicking and screaming about the price of chicken back is laughable. I am only upset that a special entertainment tax, “The Merriment Tax” was not implemented because nothing will stand in the way of Jamaicans need for entertainment and merriment, cost is not a factor in this department and as a matter of fact the more expensive the event the more people will turn out to show that they belong in a certain “Big and Large” sector of society, not to mention the chance of being in one of the Observer’s Page 2 pictures.

However I would have liked to see more incentives given to various sectors including farming, manufacturing and export type companies from the budget. The resultant price increases on locally manufactured products and agricultural produces will cause companies in the retail and wholesale industry to seek cheaper alternatives from foreign sources, this budget could result in a massive increase in imports and further devaluation of the dollar. I agree with the tourism tax although they will belly ache and carry on because it affects their profit margin but they have been having it too easy for too long now, tourism is not an infant industry, it is a mature industry being treated like it was newborn.

We Jamaicans are a people who demand so much while contributing so little to our own development, everything must be given for free but accountability is a must, we must pay the piper sometime, it is not if but when the shit will hit the fan and the world will turn a blind eye, they are tired of throwing good money into our money sucking Black Hole. We the Jamaican people dig this grave, we cannot lay the blame on anybody else but ourselves, we cannot just a ga-long-so, living for the next merriment and imports on borrowed money, we must start making common sense decisions or else we will fail.

"Jamaica's trade deficit swelled to more than 3 Point 2 Billion U.S dollars (US$3.2 Billion) over the January to August of 2011 period while the import bill which reached over whopping US$4.3 billion dollars, exports earnings was only US$1.1 Billion dollars."

I see nothing proposed by this Government that will change our situation, a situation has have been getting progressively worst regardless of which party is in power. Our economic indicators have been marginal and mediocre in some areas and deteriorating in most others. Our social indicators have also deteriorated, we have become a selfish and greedy society and it shows, the level of violence within our society is as a result of this. Anything else other than the improvement of these indicators is idle chatter and a waste of time. Our national debt does not grow marginal and mediocre but by Quantum Leaps. Dr. Philips hinted that with these changes, there could be a balanced budget by 2016, when the Jamaican national debt could decline from the current 130 percent of GDP to 100 percent, but I say at what cost, then again I am not sure we have a choice, who in their right mind is going to lend knowing that we are skint, broke, penniless, sucking fumes. We are the Wimpys of the world, J. Wellington Wimpy, "I'll gladly pay you Tuesday for a hamburger today". This is the only positive thing about this budget, it was engineered to pay down our massive debt and because we ignored it for so long we are out of options, even if we changed government tomorrow the world position will be the same .... F*K you, pay me!!..

It seems the sole purpose and role of the Opposition is to become the Government:

"A scorched earth policy is a military strategy or operational method which involves destroying anything that might be useful to the enemy while advancing through or withdrawing from an area. It is a military strategy where all of the assets that are used or can be used by the enemy are targeted, such as food sources, transportation, communications, industrial resources, and even the people in the area"

The opposition is performing typical opposition duties, that of oppose and run interference, it is classic opposition, this is what every opposition party around the world and across time is doing and have done and ours is no exception. The life of an opposition is a life of luxury, you turn up in parliament and heckle the Government, you stand before the media and heckle the government, you make them rethink every strategy and second guess themselves every step of the way. It seems the main job of the opposition is to keep the people in a continuous state of discontent until they are able to regain power. The opposition does not have to make a decision base on policy or principle, they monitor public sentiments and feelings and what ever the public is against then they are also against, classic litmus test opposition, taking the popular position, as they say in America “armchair quarterbacks” and both the JLP and PNP are professionals at it.

The current Government rejected the Private Sector Working Group GCT proposal and as a result the opposition is for the proposal, if the government had accepted and implemented the proposal then the opposition would have been against it. The opposition ran an election pushing the deliverance of bitter medicines as the only way to forward, that and increase unemployment and when they lost the election they cursed poor people that they voted with their bellies not their heads. But now the opposition is totally against Bitter Medicine and cry for the poor people of Jamaica every chance they get. Now because Mr. Holness have never provided the details of the Bitter Medicine the JLP had promised when they were in Government and fighting an election battle, means he is now free to redefine it's meaning base on public sentiment, popular feelings and outrage. Just for the record I am for the Private Sector Working Group GCT proposal it makes sense to me and I hope it will be implemented one day soon, lower the rate to 12.5% and tax everything and everyone, no exception/exemptions.

“Daryl Vaz, who served as Minister of Public Sector Efficiency in Holness administration sounded off on a campaign platform that if the JLP was returned to office, it would "dig out" public sector workers who were blocking the work of the government. “ This is Classic Vaz who may have "single handedly" cost his party the election.

Even when our oppositions have done the same thing in the past, made the same decisions, carry out the same act while in Government they can turn around and criticise the government for doing the exact same thing and make it look like the worst thing in the world. This current opposition have delivered late budgets and have delivered several supplement budgets over the years but now use it as a dirty word against the current government, amazing!

Opposition also like to make promises while in opposition, they can pull them out of their hats on demand. The PNP like the JLP while in opposition made promises after promises and decades would go by and still they make the same promise and still nothing, they copy and paste these promises from one manifesto to the next, heck I think it’s the same manifesto with a date and title change…

While in opposition the PNP also played the same classical hypocritical opposition game, case in point: In 2009 the then JLP Government proposed a new IMF Tax package which was set to take effect on January 1, 2010. The PNP waited for public response and seeing that the public was against it also jumped on the band wagon. Portia Simpson Miller immediately became the defender of the poor and promised the JLP Government a wave of island wide protests if the tax was implemented and called on the Government to roll back the taxes which they did. So the PNP while in opposition forced the JLP Government to roll back taxes but then implemented those same taxes when they became the Government of Jamaica, you cannot make this stuff up!

Whenever a Government becomes the opposition they automatically become experts, magicians and healers. The PNP was in Power for donkey years and nothing but as soon as they became the opposition they can fix the world.

When the JLP was in opposition they had a gift from the Gods, they were experts, magicians and healers and as soon as they became the Government nothing but more debt and more imports. Now in opposition they are again Experts, Magicians and Healers sent by the Gods to fix the world, kinda like Thor.

More about → The Austerity, Inflationary, No Growth, Bitter Medicine, Debt Reducing IMF Budget