The Dark Side Of That Unemployment Report: A Labor Shortage Leaving Many Businesses Adrift

Crabbers, e.g. crab processors, at a plant in Maryland. Most MD crab processing businesses are critically short of workers - thanks to Trump's draconian immigration controls, and his miserly "lotto" program for issuing H2B visas.

The glowing unemployment report released yesterday -  only 3.8 percent unemployment,  or the lowest seasonally adjusted rate in nearly 17 years  -  which naturally has Trump bragging and exaggerating.  The truth, however, is that his draconian immigration policies - especially to do with H2B visas and available foreign guest workers - have many businesses in near panic.  And we haven't even gotten to his 25 %  steel tariffs, enacted against allies like Canada, the EU and Mexico yet.

Let's get it out right now: This nation's economic growth - which Donnie J. Dotard so often brags about, especially the stock market  - is on the verge of circling he drain thanks to his tight- fisted, even cruel immigration -labor policies.  From home construction, to agricultural crops (harvesting) to landscaping, to wait staff and cooks, the nation is reeling from a lack of enough workers.

WSJ columnist Gerald Seib ('Immigration Debate Misses Economic Reality',  May 22, p. A4) summarizes the issues nicely:

"The American birthrate has slowed dramatically...hitting a thirty year low. At the same time, Alaska fisheries, New Hampshire restaurants, and Maryland crab processors all say they are critically short of workers. Farmers say they need thousands more workers and some production is moving overseas for lack of labor.   There are 6.6  million job openings in the U.S. which means for the first time in history there are enough openings to provide a job for every unemployed person in the country."

One of the largest, emerging unemployed contingents is the legion of new college grads. But ...will they take the jobs available? Say in construction, landscaping, agriculture, short order cooks at restaurants or even janitors there?  I doubt it, which perhaps others also know given the op-ed piece  by Tyler Bonin appearing on Tuesday (WSJ,  'My Advice To Grads: Start Mopping', A17) admonishing new grads:

 "There is a time to be bold but also a time for humility. A task once considered beneath you could be the key to your success.Do the job nobody wants, because believe it or not, somebody appreciates it. Volunteer to learn and to provide value to others."

Of course, the new grads' student loan schedule and amounts to be paid off may be a tad more than a $10 an hour job mopping floors at Safeway can provide.    But let's get real, the spectrum and number of jobs going begging is far in excess of what all this year's college grads could fill.

In Thursday's WSJ  ('Housing Shortage Shadows Rural Areas', p. A3) we read, for example,  how the labor shortage, especially in construction, is adversely affecting new home starts. Hence,  if the housing supply remains low it means the demand will continue to drive up prices. (Like here on the front range in Colorado, with the median home price in Denver now $529,000.)  We further learn, e.g. for a town in Ohio:

"The labor shortage is so bad  that the chamber of commerce goes from town to town to recruit workers."

With one member noting: :"The fear is that if we don't solve this in some way we're going to lose big employers."

Even the WSJ editorial writers entered the fray three days ago ('A Miserly 15,000 More Visas')   referencing how the  H2B visas "allows businesses to hire foreign guest workers for busy seasons" and congress had given the Trump  administration  authority to issue as many as 69,000 more visas to meet employer needs.

And yet the Department of Homeland Security has handed out "a mere 15,000 extra H2B visas this summer."

Adding:

"The 15,000 won't come close to meeting the demands across the country from resorts, fisheries, landscapers and restaurants among many other industries."

The most choice aspect was the editor's reference to the Trump "restrictionists" who claim "more foreign busboys or crab pickers will replace Americans when employers can't come close to finding enough Americans."

In other words, the dumb Trumpies are - as the Journal notes - seeking to protect mythical American jobs (i.e. that Americans won't take) at the expense of business viability and economic growth, e.g.

"Mr Trump says he wants the economy to grow by 4 percent or more but it won't happen if employers can't find enough workers."

This isn't just  aimless conjecture either. In the case of Maryland crabbers, we've learned for the first time the demand for crab processors in eastern Maryland was so high that the "U.S. had to award them by lottery". ('Crab Country Craves More Visas', WSJ,  May 12-13, p. A3).   The problem? Under this absurd system some companies - like G.W. Hall - got all the workers they requested, but other companies got zilch, zero, none.   In the words of Bryan Hall, quoted in the piece, referring to another owner:

"It's not right for me to have the girls and not him" referring to Russel Hall owner Harry Phillips.

The farm labor shortage is just as critical,  as reported in the WSJ editorial 'Exporting Jobs Instead of Food' (May 18, p. A14), e.g.

"The farm labor shortage is growing more serious as the overall U.S. jobless rate falls. The Labor Department says about half of the 1.2 million or so workers employed in agriculture are undocumented and if they were deported the shortage would become a crisis.."

The editorial concluded that the "U.S. farm labor shortage is driving production overseas,"

The labor dearth is equally parlous for construction. As per a Denver Post piece (May 13, 'Help Wanted As Applicants Are Scarce', p. 8B):. Quoting Michael Smith who runs the Colorado Homebuilding Academy:

"We've got a labor shortage. Labor is not keeping up with the change in the demand, unfortunately."

The need for more construction workers becomes self-evident when it is realized that by 2025 there will be approximately 100,000 open positions in construction and special trades but barely one fourth of the workers to fill them. Most of the projected open positions are driven by the population explosion along the front range with many would-be Denver residents  now looking to Colorado Springs for homes (and a long, e.g. 65 minute, commute).

What about getting native born Americans to get out there and get their hands dirty? (The Labor Dept. and DHS insist if employers in the short- staffed areas pay more, more Americans will take the jobs. Personally, I doubt it.)

One Maine employer - Bob Smith, owner of Sebasco Harbor Resort in Phillipsburg, quoted in the Denver Post 4 days ago, said:

"People say you should give these jobs to Americans. If you can find 'em then that's great. The only Americans we can find to do the work right now are in Puerto Rico."  (As U.S. citizens Puerto Ricans face no travel restrictions so can work wherever and as long as they want.)

On learning of all this, Janice fumed, asking why the hell enough Americans can't be found for the jobs going begging - from crabbers in Maryland to construction workers in Denver.. "You mean to tell me there are no able -bodied guys to do this work?"  Not really, hon!

Look, college grads are not  running up to Baltimore to process crabs nor are they going to go for construction jobs in Denver or Miami. And they certainly aren't going to California to help harvest oranges, prunes or whatever.  They believe, having shelled out tens of thousands for college, they are at least entitled to an indoor, office job complete with a/c even if it is done as a temp or volunteer. Especially if they had the likes of Sting (at Brown) or Hillary (at Yale College) delivering the commencement address.

Older workers are also out of the work game, like the two of us. As William Galston noted in his own WSJ piece three days ago ('Can America Grow Like It Used To?'):

"Two thousand was the last year in which the entire baby boom generation was of prime working age, and 2019 will be the first year in which none of it is. ...American men experienced the largest decline in labor participation rate of any OECD country."

Adding:

"There is no sign of a new baby boom on the horizon"

This despite Galston trying to make the case to "raise the aggregate level of work in our society."

Not even mentioned yet are the million or so (estimated) young folks who have joined the F.I.R.E. ('Financial independence, retire early') movement, aiming to cash out their chips, cubes and lockers by the age of 40 - to go globe trotting, or write blogs.  (I will have a special post next week on this movement, and how these ambitious young Turks plan to achieve that early retirement).

The point is, with all these labor participation subtractions, no economy can grow unless there are compensating additions. If it isn't coming via new births (irrelevant since these workers are needed now) then it must come via immigration. And yet the reactionary Trump bunch are cutting their noses to spite their faces. As Gerald Seib pointed out (ibid.) they are now cutting the LEGAL immigration numbers as well as the illegal, by as much as "260,000 slots per year or 25 percent".  Seib quotes the Cato Institute:

"This would be the largest policy driven reduction in legal, immigration since the racially motivated acts of the 1920s."

Galston, Seib and the WSJ editorial writers are in agreement that the fruit of this misplaced, ignorant policy position - based on bigotry - will only wreak economic havoc and dislocation as well as much lower growth,  possibly even recession. Trump should enjoy his high stock market for now, because it won't last much longer.  Especially, after he's now also declared a trade war with our allies including the EU, Canada, Mexico -  by slapping a 25 percent tariff on steels and 10 % on aluminum -  using a national security pretext.

Don't think this is any kind of biggie? Check out yesterday's WSJ 'Business and Investment' section (p. B9) on how these tariffs are roiling shares of manufacturing stocks. This is given that those companies will be most sensitive to the tariff retribution of the targeted nations- -when it comes. And it surely will: Canada is set to impose a $12.8b hit starting on July 1st.

Trump, aka Dotard, can boast all he wants of his "terrific" unemployment numbers, but as we see, he is still capable of self-destruction (including of his base) by shooting from the hip in reactive measures (via trade tariffs and immigration policies)  that are not conducive to this country's economic well being.

Bajan 'Wild Coot' Tees Off On U.S.Economic Hegemony in Caribbean

Columnist Harry Russell signs on in The Barbados NATION as 'Wild Coot' and the moniker is spot on, as he spares no one from his critiques in his Monday columns. In one, 'Whither the Caribbean',  that appeared soon after we arrived (April 11, p.8) he not only castigated the culture of corruption  exposed with the "Panama papers" - but also waylaid encroaching U.S.  financial hegemony and imperialism in the Caribbean.

Above all, he insisted the island state must show the world that its offshore banking and related businesses are totally above board and legitimate. This in the midst of North American media potshots about "tax havens" as well as financial alliances (e.g. OECD) spreading slander that the nation is merely a repository for offshore hidden assets.  Among the smearing culprits I myself have pointed to is former French PM  Nicholas Sarkozy who several years back (at an OECD confab) complained about "offshore banking outlaws" in the region. Most of the island nations with offshore banking went apoplectic at the scurrilous lies, given that this was one of the few financial pillars that remained, after the loss of tourist dollars and the downsizing of the sugar cane industry.

But Sarkozy is only one of the most vocal recent Neoliberals to inveigh against Barbados' interests and the Caribbean especially after most of its banana industry was torpedoed back in 1998 - thanks to Bill Clinton spurring a WTO verdict (forcing the EU to accept U.S. bananas,  as opposed to Caribbean) and the "rum wars" which erupted in 2012 (see my May 20, 2012 post). The banana decision was particularly galling as it demonstrated Clinton's obeisance to United Fruit, one of the biggest corporations on the planet.

Enter the Wild Coot and his own observations (ibid.):

"Now I am sure all those calling for the closure of tax havens know full well that the Caribbean has had to lean on tax havens for survival the last 30 or 40 years.

This is how it developed: first there was an attack in Europe and the United States, and the sugar industry that had been a captive market there was brought down to dwindling proportions.  Then there was the American destruction of the banana industry that humbled St. Lucia, St. Vincent, Grenada and Jamaica as the Americans funded entities (under United Fruit) in Bolivia and Ecuador.

The advice that countries got was to build seaports so that the tourist industry could fill the breach.  However, mega-ships offer everything that could be purchased in port at more attractive prices. People come ashore, but to look around and enjoy the beaches.

We had improved our offshore industry far and wide offering a low tax regime and trained labor force, good governance and low crime ...now this."

He didn't spare Obama either (ibid.):

"But the attack does not stop there. President Obama, as if he is king of the world, has proclaimed FATCA. This law requires banks in some countries (including Barbados) to declare to their tax authorities the tax liability of Americans doing business there. Failure to do so will incur heavy penalties for the Revenue authorities and the particular bank. On top of that, the corresponding bank in the U.S. incurs a heavy fine. The result of this is that banks in the Caribbean have to beef up with due diligence officers for fear of failing tests when correspondent banks visit."

Russell here is referring to Obama's proposal of FATCA (Foreign Account Tax Compliance Act) as part of the 2010 HIRE Act (P.L. 111- 147).

It was then passed by congress in March, 2010 and signed into law by Obama. It seems clear that Russell is unaware the law was advanced in order to get more revenue at a point in time Obama wasn't sure how to pay for the huge $897b  Stimulus to the economy (passed in 2009)  in the wake of the financial crisis. (Under the American Recovery and Reinvestment Act of 2009).

Russell did mention that "banks had to be rescued by the Obama administration" but then tied it to elements of Dodd-Frank (banks required to have more capital on their balance sheets) than to the 2010 HIRE  Act.  But this is an understandable oversight, even for a guy that worked 25 years in offshore banking in Bim.

What is most ironic is that the U.S. itself has since become one of the most significant tax havens in the world - especially South Dakota- as described in a recent piece in The Financial Times, e.g.


http://www.ft.com/intl/cms/s/0/cc46c644-12dd-11e6-839f-2922947098f0.html#axzz488HoZ3eB


Moreover, as the FT notes, SD has "guaranteed secrecy for family trusts".  In fact, Sioux Falls, SD has "become a magnet for the ultra wealthy who set up trusts to protect their fortunes from taxes and future ex-spouses". Further, assets held in SD trusts "have grown from $32.6 b in 2006 to $226 b in 2014."  As the FT put it, "after years of threatening Swiss and other foreign banks, the U.S stands accused of providing similar services for the rest of the world"

Maybe FATCA scrutiny needs to extend to these U.S. locations as well and with the same rigorous rules as Caribbean (and other)  nations must adopt.

Are the Neolibs Determined To Get Barbados - Or Is Barbados' Own Gov't To Blame?

Professor Eudine  Barriteau of the University of the West Indies, was blunt and to the point in her recent Coppin address, summarized in the Business Report of the Barbados Advocate (May 19, p. B3) Prof. Barriteau noted that despite efforts by Bim's present administration to correct the country's economic ills the global (Neoliberal) financial institutions "will stop at nothing until Barbados fixed rate of currency exchange is adjusted."  In other words, the vultures are circling and don't believe that even higher VAT (value added taxes) and terminating the economic lives of 3,000 citizens is enough.

Prof. Barriteau recalled that following the last Article IV Consultation on Barbados by the International Monetary Fund, the Government embarked on the retrenchment of public sector employees and the introduction of other measures to demonstrate its seriousness to the IMF regarding stabilizing key economic sectors. But after all the painful measures imposed, the Neoliberal Axis - including rating agencies - still remained unimpressed.

Perhaps a better analogy is to refer to the Neoliberal wolves at the door, ready to pounce on innocent Bajans and tear them to shreds like so many docile sheep. One must probe then what's at the bottom of the yen to devalue. And perhaps, just perhaps, there is more at work here than meets the eye.

The article 'Disappointing Performance' in an earlier Barbados Business Report Section of the Advocate News perhaps gave a few clues. Evidently the island nation has been hit from multiple angles at all its most vulnerable points.

Tourism, for example,  was expected to lead the way to pre-2014 optimism but it was hit in the cruise ship as well as air travel domain. We learned, for example,  that both long stay and cruise ship passenger arrivals fell by one percent. What was to blame? According to Central Bank Governor Dr. Delisle Worrell, a major contributor was the cancellation of direct flights out of New York by American Airlines and the reduction in seating capacity by Air Canada. In tandem the two moves caused arrivals from both markets to decline.  Neither of these has anything to do with Barbados itself, but shows the island at the mercy of the airlines.

What about the layoffs of thousands of public sector workers which was expected to free up money? Actually, according to Finance Minister Chris Sinckler, it was essentially a wash given "separation benefits",  He did say some savings would be seen in the "medium term". Well, one hopes some national benefit would accrue with so many sent packing- but not to the IMF, World Bank, and rating agency 'wolves'.


Then there is the sugar cane sector, which now is geared mainly to produce the molasses used to make Barbados rum. The problem? The cane crop was to have begun February 24 and surpassed last year's by 2,000 tons. The facts? The start of the crop was not only delayed until March but there was a crippling strike that resulted in several acres of canes being left in the fields and at transfer stations - contributing to financial losses the industry can ill afford - and a rebuke from a major Rum manufacturer for wasting time and resources for a critical industry.  This one was definitely in Barbados' court but ought not to have been any deciding factor on pushing for a devaluation.

Now add to that the ongoing recessionary trend which saw a 0.6 percent contraction in the island's economy between January and March this year - following on from a 0.6 percent contraction between January and September last year and a 0.2 contraction between October and December last year.

Despite all this the outlook is for a 0.5 percent growth this year - not too shabby if it comes to pass. Will the Neoliberal finance monster be kept at bay? I doubt it., According to Prof. Barriteau:

"It seems the international financial institutions and other financial structures such as the rating agencies will only be satisfied when they force Barbados to abandon a fixed rate of exchange rate - and after it has been forced to dismantle the key components of its economic model of development."

Let's note that this model of development has been the ideal for the rest of the Caribbean as it has promoted social justice as well as less inequality than manifested in any of the industrial (OECD) nations.  Prof. Barriteau's most stinging observation was that "none of the international policies that regulates financial and economic activities are designed to enable the private sector in the Caribbean to flourish."

She attributed this to aggressive trade protectionism and subsidies (such as in the U.S. for its own rum) that make it extremely difficult for Caribbean exports to compete. This means that NO amount of devaluation - even 50% or more - making Barbados' exports cheap (say its rum relative to U.S. rum) will incept more export sales.

Meanwhile the Barbadian people will suffer because a devaluation will reduce the value of their money but not the value of imported goods, including food, or the fuel that keeps vehicles running. Indeed, a 50 percent devaluation would likely be followed by a 100 percent increase in all food prices and likely more for fuel. People already struggling will be hurled into poverty and destitution because even the most draconian effort of gov't could not appease the vultures (or wolves) of the Neoliberal Reich.  Why not?

Prof. Barriteau believes it mainly is from a jaundiced view that presumes money laundering and tax evasion, though "the Caribbean people don't want the Caribbean to be the epicenter of either."

She emphatically stated (ibid.):

"We never have and we never will be because it existed in other places. The Caribbean is not the epicenter of money laundering or tax evasion."


Is There Another Side to the Story?


But what if the Neoliberal predators are merely lying in wait for an already savaged-ravaged nation?  This is the other side of the story, which is now making the rounds on the island and in its news media, especially the Barbados NATION. According to former Sen. Frances Chandler, writing in the Nation ('Sinckler's Leaking Glass') the current government - run by the DLP - and with Chris Sinckler at the helm, is raiding the National Insurance scheme (analogous to our Social Security) to the tune of $40m a month and replacing it with commercial paper (call it fiat money) at high interest. As she asks:

"What is the point, minister, when we sacrifice to help fill up the glass, but your administration seems bent on boring holes in bottom of said glass and emptying it?"

Sen. Chandler also referenced Central Bank governor De Lisle Worrell's comment that the recent Credit Suisse loan (at an exorbitant interest rate which saw B'dos bonds degraded) "wasn't needed and wasn't being used- it was only borrowed because people were panicking."

HUH?

Worrell himself has said the Central Bank will stop printing money (read: finance some of government's operations) once the deficit reduces to 6 percent of GDP from its current 11.3 percent. Meanwhile, another letter writer (John M. Robb, 'Destroying Barbados' Model', The Nation, 21 May, p. 10A) has basically accused the gov't of "destroying Barbados' economy" and putting it on a path to certain devaluation. In his words:

"Due to government's expenditure exceeding revenues there has been a sustained deficit the past six years - which some experts believe is too large and cannot be substantively reduced that easily.

In an effort to finance this deficit, which was the result of government's poor policies, government has encouraged the Central Bank of Barbados to print money to meet its obligations. This is a very treacherous practice which will put downward pressure on the Barbados dollar and if prolonged, could lead to a devaluation."

The sad fact is we may be even closer to seeing a devaluation than most believe. And if it occurs, the Barbados currency will never be revalued again higher. It will be forever in the maw of the Neoliberal jackals and vultures - picking over its bones endlessly.

That any government of the island nation could have been responsible for this sorry end is more than most of us can even contemplate. But we have to recall the same gov't was at the forefront when the last crisis hit - in 1991- in the wake of trying Reaganomics in 1986.

The U.S. A Banana Republic? Believe it!

A section of the Minneapolis Bridge which collapsed several years ago.

Author Barbara Ehrenreich in her must-read book, Bright-sided: How Positive Thinking is Undermining America  has warned of how a cult of positivity permeating the country has blinded citizens to its severe problems in the interest of cultivating delusions. She pulls no punches by also showing how what was once the province of two bit hucksters has now become an accomplice of the American Business model - found in every niche cubicle and team-building exercise. And by god, if you ain't a happy camper, the HR folks will help show you the door. No negative shit wanted here!

But unless the rose-colored glasses come off we can't see how the nation has degenerated to become basically a third world backwater in disguise. A banana republic. How or why, well it probably began from the time Kennedy was assassinated in November, 1963, and more and more resources got diverted to the military, national security state. Kennedy did his best to prevent this but the bastards couldn't tolerate it and offed him in an Executive action I exposed in multiple blog posts over October and November.

Mattea Kramer and Jo Comerford of the National Priorities Project write:

“Robust public investment had been a key to US prosperity in the previous century. It was then considered a basic part of the social contract as well as of Economics 101. As just about everyone knew in those days, citizens paid taxes to fund worthy initiatives that the private sector wouldn’t adequately or efficiently supply. Roadways and scientific research were examples. In the post–World War II years, the country invested great sums of money in its interstate highways and what were widely considered the best education systems in the world, while research in well-funded government labs led to inventions like the Internet. The resulting world-class infrastructure, educated workforce, and technological revolution fed a robust private sector.”

What would show we aren't a banana republic? Well, significant non-military investment across the board: from development of alternative energy sources - including solar, geothermal, wind, to massive infrastructure repair. The American Society of Civil Engineers estimates at least $2.2 trillion needs to be spent to even get most of our bridges, water mains, sewer systems to a passable grade C+ standard.  That requires a massive increase in TAXES.

The alternative is to be left further and further behind the rest of the world. China, already, is developing its alternative energy - especially solar- at a frenetic pace set to put the USA to shame. China has also just launched a Moon bound space craft in preparation for a manned landing. In the meantime, the U.S. has to rely on Russian craft to hitch rides to the International Space Station. We are now so officially poor we can't even afford a government supported manned space program. (And no, I do not believe pitiful little "private" efforts will amount to much more than near Earth commercial tourist ventures.)

How poor are we? Pretty damned poor for the so-called "richest nation on Earth". Richest nation, yeah, for the top one percent or the top 0.01 percent - who control as much wealth as the bottom 150 million.  You can thank over three decades of Neoliberal  trickledown economics and its attendant  monopolization, privatization and deregulation of industry. Add in also the destruction of labor protection that has resulted in 50 million Americans living in abject poverty, while 400 individuals own more than one-half of the nation’s wealth.

This sort of inequality, with faint hope of upward mobility, is the very definition of a banana republic. (Which is also distinguished by its characteristic out of proportion military spending.) Process this: the four Walmart heirs enjoy a higher net worth than the bottom 40 percent. The 0.01 percent, after all,  can afford jaunts to St. Kitts on weekends for  rose wine wraps for their wives, e.g.

While the men take in 18 holes at one of the well -tended golf courses.


 Meanwhile, our nation’s sense of food insecurity is more on par with developing countries like Indonesia and Tanzania than with OECD nations like Australia and Canada. In fact, the percentage of Americans who say they could not afford the food needed to feed their families at some point in the last year is three times that of Germany, more than twice than Italy and Canada.

If anyone believes we're on a par with Germany or Austria I invite them to travel to those nations and look around as we did 6 months ago. Homeless people, soup kitchens? Unheard of! Hungry kids starving for food at night, unable to sleep because a rich bastard ass party wants more and more for the rich and military - no fuckin' way! As our friend Reinhardt put it: "We would be ashamed to have such a situation here in Germany!"

Here's another wake up call for the drooling optimists in our midst and positivity cultists: The destruction of labor has become so comprehensive that first-world nations now offshore their jobs to the U.S. In other words, we’ve become the new India. Foreign companies, such as in Germany,  now see us as the world’s cheap labor force. 

Thank the inroads made by the Neoliberal labor destroyers. Of course, in the bidness-friendly, slavery l-oving, non-unionized South this degradation has reached its apotheosis.  Chuck Thompson, author of Better off Without Em, writes:

 “Like Mexico, the South has spent the past four decades systematically siphoning auto jobs from Michigan and the Midwest by keeping worker’s salaries low and inhibiting their right to organize by rendering their unions toothless.”

 Average wages for autoworkers in the South are up to 30 percent lower than in Michigan. People, alas, can't live on such low wages. Neither can the millions of fast food workers ensnared in a permanent underclass because - due to lack of investment in alternative energy or infrastructure- decent jobs aren't available and the Goops don't want to raise the minimum wage.  In the U.S. the minimum wage is just above $7 per hour and workers can expect no more than 12 days of annual vacation. Fast food workers earning that pittance get  little or no holidays, no sick days so even if they have the flu or a stomach virus they've no choice but to come in - getting the rest of us sick.

By contrast,  in Sweden, the minimum wage is $19 per hour and workers enjoy a minimum of five weeks paid vacation every year. They also are afforded sick days so if they do get a terrible rotavirus they can stay home and not spread it around in all the food they serve.

Poor? Yes we are, for the most part. Thanks to the military-national security state and Wall Street' denizens subverting the country.  Oh, and the bought and paid for political system - which thinks money is "speech" - that has enabled it!

U.S. Adults & Students Bomb Out In Math, Science ....Again!

Conducting a workshop in August, 1978 to help Caribbean teachers with the CXC Astronomy syllabus

One of the amusing comments of Caribbean teachers attending a CXC (Caribbean Examinations Council)  astronomy workshop in August, 1978 in Castries, St. Lucia was:

"Why is there so much physics and math in this syllabus content? Are we expected to be able to integrate both these subjects?"

Well, uh, yes .....that's why this subject is called Integrated Science and why astronomy is taught for one trimester as part of it. After doing some basic background review, however, most of the teachers grew a bit more comfortable.  Though astronomy ultimately became defunct after five years - because fewer and fewer teachers were prepared to handle it - the seeds sown in the inaugural year allowed a vast number of science teachers to enhance their physics and math skills.

Could a deficit in physics and math background, skill also explain why U.S. students continue to not do so well compared to other advanced nations? According to recent results of a world wide test - administered to over 156,000 people in 20 nations, between the ages of 16 and 65 - the conclusions are not sanguine, for the students or the adults. In the case of the high school students they placed 31st in math, and 24th in science, not having changed position in the last decade.

Meanwhile, the students of Shanghai, China (the nation that's just dispatched a space craft to the Moon) scored highest, with their results equivalent to at least one additional year of school - over U.S. competitors. Nor was this simply a matter of regurgitating material, but instead the students demonstrated they "were very good at higher order skills reflecting what you can do with what you already know."

One example of this type of problem would be:

"A group of 4 astronauts lands on Mars with solar radiation collection material of total area 2000 m^2. If the efficiency of the material is 30%, and the ambient night time temperature on Mars for their base location (Isidis Planitia) is -40 C (10 C day time high), will they have adequate collecting material if the solar constant on Mars is 620 W/m^2? (Assume insulating material with a thermal conductivity of 0.08 W/mC, and a need to keep the inside area of their domecile at least at 10 C, requiring solar radiant energy collected of at least 1,200 W per minute for an area of 10 m x 10 m.)

Estimate the thickness of insulating material they're likely to need in order to make it work. Comment on whether this expedition is even feasible given the limits of their materials, and that no more than 100 m^3 of insulating material can be taken."

That Chinese students are proficient at doing this type of critical thinking application problem and U.S. students mainly are not, ought to be severe cause for worry. In addition, this divergence can also explain why so many in the U.S. still fail to grasp the basics of climate change, including why spates of frigid weather and snow do not contradict it.  This take is also reinforced by the fact that American adults scored below the international average on a global test in math, reading and problem-solving using technology — all skills considered critical for global competitiveness and economic strength.

Meanwhile, adults in Japan, Canada, Australia, Finland and multiple other countries scored significantly higher than the United States in all three areas on the test, according to results released Tuesday by the Organization for Economic Cooperation and Development, which is made up of mostly industrialized member countries.  Are we a nation in profound decline? I submit to you that given the results on multiple levels, we are, and there's no gainsaying it.

How complex were the problems? Maybe you are thinking they were similar to the sample one shown above. Not so! Beyond basic reading and math, respondents were tested on activities such as calculating mileage reimbursement owed to a salesman, sorting email and comparing food expiration dates on grocery store tags.  None of which require profound insight or genius level skills, or shouldn't. But recall that a similar test given in the 1980s disclosed adults who: didn't know the Sun was a star, and believed the Sun moved round the Earth, not vice versa.

Not only did Americans score poorly compared to many international competitors, the findings highlighted the gap between American high- and low-skilled workers, and how hard it is to move ahead when your parents have not. To fix ideas,  in both reading and math, for example, those with college-educated parents did better than those whose parents did not complete high school.

Most worrisome, the U.S. tested below average on literacy. Coupled with the nation's "large social disparities, the test's findings reveal that for Americans, social background has a major impact on literary skills," the study said.

As we confront an era with ever more advanced technological issues, not only climate change but (very soon) the advent of quantum computing and bio-engineering, one wonders just how prepared Americans are. While too many still remain mesmerized by the bubbling DOW, they'd do much better to ensure they attain essential critical thinking skills - for themselves and progeny.

A set of sample math and science questions to see how you fare:

1)  In a given week a salesman travels 134 miles, during which he pays an average of $3.29 per gallon for gas. If his Buick Enclave gets 12 miles to the gallon, how much should he be reimbursed?

2) You're given a straight rule, a doughnut and a circular disc. Draw a sketch of each and mark the center of gravity in each sketch. What is meant by the center of gravity?

3) A girl is given 100 cubic centimeters of boiling water in a beaker, to which 50 grams of  ice is added. Using a thermometer, how will she know when the mixture has reached thermal equilibrium?

4) One Big Mac and Cheese with condiments has 3,800 calories. You want to burn them off with exercise, and choose jogging. This allows 150 calories to be burned off per half hour,. How long will you need to jog to burn off the Big Mac?

5) An air conditioner consists of a fan coil unit and a compressor unit.  When switched on, the fan coil unit rated at 250 watts, operates continuously. The compressor unit - rated at 1.6 kilowatt- operates only 40% of the time. If the air conditioner is switched on for 12 hours a day, find the total electrical energy in kwh (kilowatt-hours) consumed in a 30-day month.

6) Find the value of x, if:

6x - 24 =   12 - 3x


7) If seven  pencils and 5 erasers cost $11.60, but 5 pencils and 3 erasers cost $7.60. Find the cost of 8 erasers.

8) The floor of a room is in the shape of a rectangle. The floor is c meters long. The width of the floor is 2 meters less than its length. State, in terms of the unknown c:

i) the width of the floor

ii) the area of the floor

If the area of the floor turns out to be 15 m²    then find the width of the floor in meters.

Devaluation in Barbados Imminent? Looks That Way!

The news in this morning's online Barbados NATION is exactly what many of us who used to live there, and still hold assets there, didn't want to hear. That it isn't a question of whether or 'if' a devaluation will occur, but what manner it will take.

According to the brief article, THREE DEVALUATION OPTIONS have been presented to the Caribbean (specifically to Barbados) by the Inter-American Development Bank (IDB), which also "hailed Barbados as having successfully implemented one over two decades ago." That was the one I was there for, which entailed an eight percent cut across the board in civil servants' wages. That was also the one that drove wifey and myself back to the States, realizing that if we remained we'd be in endless penury and not even be able afford "poor man's" food of chicken and rice or macaroni pie or salt fish and cuccoo. (For reference, imagine having your wages cut 8% and paying up to $14 for a box of cereal, never mind bacon at $6 a lb. and eggs for $1.50 each- in the money you earn.)

As I pointed out in a letter published in The Financial Times, in 2008, the lead up to that "internal" devaluation - whereby the fiscal deficit was reduced from eight per cent of Gross Domestic Product (GDP) to two per cent by 1992, and capital expenditure diminished by 50 per cent- was a "tax cut" implemented in 1986. At that time the then newly elected DLP government decided to hand out generous tax cuts based on the Reagan "supply side" nonsense in the U.S. Like many others, I strongly argued in the Bajan press against this, given that: a) Barbados was not the U.S., and b) the loss in revenue would seriously compromise Bim's balance of payments issues, as well as banking liquidity.

This proved to be prophetic, as less and less revenue was collected leading up to 1991, and the conditions became so unstable that they drew the attention of the International Monetary Fund, or IMF. The IMF insisted on a full currency devaluation (fiscal) devaluaton, but the administration wisely begged off, seeing what such moves had already done to Trinidad, Guyana and Jamaica. The result was an across the board permanent wage cut for hospital radiotherapists like my wife, and for college physics teachers like yours truly. Within another year, we'd left for Columbia, MD given we couldn't break even or save a dime working our regular jobs plus two after-hours jobs (tutoring physics for me, repairing VCRs for wifey).

Anyway, in its latest policy brief the Washington-based IDB listed "external, internal and fiscal devaluation" as the main choices in the face of reduced competitiveness and a sustained current account deficit across the region, while noting that Barbados "had successfully implemented the internal option in the 1991 economic recession." Let's understand here that the reasons for the current morass are the under-utilization of the tourist industry, and the essential regression of the island's offshore banking business - no thanks to Neoliberal ideologues like France's (now deposed) Nicholas Sarkozy who several years back (at an OECD confab) complained about "offshore banking outlaws" in the region. Most of the island nations with offshore banking went apoplectic at the scurrilous lies, given that this was one of the few financial pillars that remained, after the loss of tourist dollars and the downscaling of the sugar cane industry.

The other problem is Barbadians are spending beyond their means, to be sure, as I pointed out in a blog back in May, 2010 ('Will Barbados Fall to the Sovereign Debt Crisis', Pts. 1 and 2). In terms of food, nearly all has to be imported and fuel costs add to the import costs. Bajans do grow a lot of their own, e.g. chickens for example, but it can't meet the island's demands. Another drag is the ever prominent "motor car" - which now clogs the island's narrow highways and biways. Each also must be imported, as does petrol, and the costs of both are eating up precious capital. Coupled with loss of income in an ongoing aggregate demand crisis (worse than in the U.S., obviously) the island has barely seen one percent growth in the past year - while it' s suffered credit downgrades.

So, the writing may now be well on the wall. In the brief entitled The Question Is Not Whether To Devalue Or Not To Devalue, But Rather What To Devalue, IDB senior economist Inder Jit Ruprah stated that “the typical example of success, given by proponents of internal devaluation, is Latvia. Rarely is Greece or Barbados mentioned”. True, but the fact he is mentioning it now again, indicates that Bajans - as well as other Caribbean island nations- may soon be expected to follow suit. Again, for Bim. But at least an internal devaluation would be a bit more tolerable than a fiscal (currency) devaluation. Ruprah added that before 1991 Barbados’ external position had begun to rapidly deteriorate but after the implementation "the current account improved."

Realistically, however, we can expect any current account enhancement will only be temporary - irrespective of devaluation (if at all forthcoming)- unless Bajans learn to somehow live within their means! One also hopes this can be achieved without acceding to the increasing demands from the local Neoliberal bastions (mainly former sugar plantation owners and long time, inherited business types) to "cut pensions" or "privatize" them.

Is Barbados Soon To Go the Way of Greece?

Tourists and Bajans flock to a vendor's stall to buy fresh grilled deep sea fish and "fixins" at the Oistins Fish Market. Will they still be able to enjoy this simple pleasure in the near future?


The recent news that Barbados bonds were downgraded to junk by Moody's - this six odd months after Standard and Poor's did the same -was disturbing in the extreme. It elicits the question of where the island nation is headed, and indeed if its future is one of profound austerity like that of Greece.

The downgrade lowered the country’s foreign and local currency bond ratings to Ba1 from Baa3. (note: a junk bond, is defined as one that is “below investment grade” due to a heightened risk of default, is any bond with a rating of Ba1/BB+ or lower, according to the system used by Moody’s.)

Standard and Poor’s lowered Barbados’ rating to junk in July. (The country’s S&P rating is BB+).

Moody’s  accompanying statement held that Barbados’ outlook remained negative, and cited two factors in the downgrade: Barbados’ “continuing lackluster economic performance,” and “ongoing deterioration in the government’s debt metrics.”

Barbados’ economy grew by 0.6 percent in 2011 and 0.2 percent through September of 2012, well below expectations, according to the New York-based ratings firm. (The United Nations Economic Commission for Latin America recently projected  the country’s GDP to improve in 2013 with a rate of 1 percent . Much of this obviously can be traced to the U.S. recession which hit the islands with the force of a hurricane). The Moody's statement went on:

“Moody’s believes that the country’s growth prospects remain very limited due to its deteriorating competitiveness and declining productivity coupled with heavy dependence on tourism, particularly from the United Kingdom and the United States. Given the prospects for continued low economic growth in those countries, discretionary spending on travel is likely to remain subdued.”

Over the last 10 years, according to Moody’s, Barbados has grown at a compound average annual rate of just 1.2 percent, among the slowest for countries rated by the firm.

The firm also said that Barbados’ offshore business sector, the country’s second-most important industry, “also faces greater competition and is coming under increasing pressure from changes in tax laws in the US, Canada and the UK.” Adding:  Barbados’ negative outlook considered that economic performance is likely to remain weak.".

This ought to be obvious to anyone who knows the island and its employment situation, lack of resources and depending largely on the one trick pony of tourism. Also that although offshore banking had helped with diversification, attacks by minions of the OECD nations (i.e. on any offshore banking as somehow disreputable and 'unlawful')  caused harm to Barbados' economic health.  Few of these attacking nitwits learned or knew that many of us had lived in Bim over decades, and hence had set up and kept banking accounts there- even after we departed. Not to get secretly rich, but to use the $$$ whenever we visited - for beach house or hotel accommodation, car rentals...and just to purchase freaking expensive groceries at the food marts! Anyway, Moody's goes on:

“While the worst appears to be behind Barbados both in terms of fiscal deficits and economic deterioration, Moody’s anticipates that the government’s deficits will remain large for the next few years and its debt levels will continue to rise, albeit at a slowing pace. Even if the country is able to consolidate its finances and stabilize its debt metrics, they are unlikely to improve meaningfully for the foreseeable future given its poor economic prospects.”

The credit rating agency said that Barbados’ government faces “difficult choices” in its stewardship of the economy. Well, uh yes! Choices much like Greece's: to make serious cuts on top of existing high VAT (value added taxes) and send the populace into a furore, or try to keep a slow steady but small growth pace and offend the high and mighty rating kings. (The same lot that awarded AAA ratings to bonds laden with credit default swaps back in 2007-08)

Anyway, we who once lived there and continue to visit also  hope that doesn't mean a currency devaluation or worse! We hope Bim doesn't go the way of Jamaica and Trinidad!(One TT$ is now worth 1/6 of a U.S. $)

Moody's statement ominously goes on:

“In the absence of significant corrective measures, debt metrics will continue to rise, and if the government does take such measures, it risks putting the economy back into recession, On the other hand, many of the proposals to boost economic growth carry the risk of continued deterioration of the government’s financial position, at least in the near term.”

More distressing, in terms of currency issues,  Moody’s announced that it had additionally revised Barbados’ local currency bond and deposit ceilings to Baa1, its long-term foreign currency bond and deposit ceilings to Baa2 and Ba2 respectively, and its short-term foreign currency deposit ceiling to NP.

A Moody's threat perhaps?

“The rating will face further downward pressure unless the government is able to successfully navigate the current situation such that a clearly visible and easily achievable path to stabilizing debt metrics is established within the next 12-18 months, in which case the outlook could be revised to stable. The rating could also be downgraded if pressures on the currency peg mount significantly.”


The Central Bank of Barbados itself added, however, that Barbados' economic strategy "remains unaffected by the downgrade," and continues to focus on conserving foreign-exchange reserves and growing the foreign exchange-earning sectors.

"Thanks to a sufficiently tight fiscal stance, foreign-exchange reserves of BDS$1.4 billion on December 19, 2012, have been maintained at about the same level as at end-December last year."

See e.g. http://www.youtube.com/watch?v=A9g1DOm6By8


Meanwhile the claim that Bajans are “heading back into poverty” (Barbados Sunday Advocate, p. 3, yesterday) , is disconcerting to say the least. This is especially pertaining to the statement (by one political rep, Trevor Prescod) that people are “begging in the street for bare necessities.” One hopes not!!

My personal barometer, meanwhile, remains the status of de-mutualized Barbados insurance shares. Their value has plummeted more than 50% in the past five years and this brings the whole “junk” meme into a whole new immediate realm! To clarify, de-mutualization of an insurance company, in this case the Barbados Mutual Life Assurance Association (after being taken over by Sagicor Financial Company), meant a component of life insurance policy value was transferred into stock shares (in this case of Sagicor). The process itself is termed “de-mutualization” and there is no choice by any insurance holder to accept them or not. (Though a 'policy holder's meeting' usually determines the decision.)

These aren’t like normal stocks because: 1) The total amount of shares distributed doesn’t vary. Thus, there is no ‘buying on the dips’ to increase the number of shares owned nor can one 'buy' more shares in any case. One is issued a fixed allotment based on the value of the original policy. All that happens is your total stock value on paper continually goes down if the share value goes down. 2) The losses are REAL, i.e. as per a (2008) federal claims court ruling, there does exist an original cost basis (not 'zero' as the IRS once claimed) , and if one sells at a value below that cost basis a real capital gains LOSS is realized.

Basically, in the past five years I have watched as the total value of those demutualized shares  has‘melted down’ to appallingly low levels, vaporizing - at least on paper - what might have helped for a rainy day. But perhaps I ought to have seen this coming. Back in 2010, I sounded an alarm on Barbados’ growing debt (see e.g. http://brane-space.blogspot.com/2010/05/will-barbados-fall-to-sovereign-debt.html

Noting that at the time that while Greece had a debt of roughly 10% of GDP, Barbados’ debt was 53% of its GDP. At such a significant debt ratio it has become obvious in hindsight that the country has had to borrow to sustain itself, eventually reaching the point that both S&P and Moody’s downgraded its bond status.

In a followup blog: http://brane-space.blogspot.com/2010/05/will-barbados-fall-to-sovereign-debt_27.html

I warned that Barbados had to strive to keep the quality of its tourism product high,  given the recession had caused potential tourists from the U.S. especially to be much more selective. Barbados wasn’t the only great beach destination in the Caribbean after all! In that blog I pointed out a number of customer ‘breakdowns’ that didn’t help advance Bim’s rep, or its tourist capital. For example, one service worker quarreling when I asked for an ice cold Diet Coke plus a cup of water with ice. Then at a TGIFridays, a waitress sending assorted platters spinning off her hand nearly toppling over the drinks of my guests, after having been asked why – after 35 minutes- our ice cream sundaes had not been delivered.

Beyond that, in the two plus years since, I’ve been distressed to read in online papers of Barbados continued noise problems, as voiced by numerous tourists. They complain of everything from loud music going way past midnight, to dogs endlessly barking. Make no mistake that NO tourist has to travel so far to tolerate such ‘botheration’ when they can find a relatively quiet beach hotel near St. Lucia’s Pitons and at lower rates.

Hence, in some ways it’s been no surprise that Barbados’ economy has grown so meagerly the past two years, given tourism remains the central foreign exchange earner. (Offshore banking also has been, but has suffered somewhat by being tarred by assorted Neoliberal Loons, like former French Premier Sarkozy, imputing nefarious “tax dodging”  at OECD conferences and Banking confabs.)

Will the outlook improve? One can only wait and hope! The island is holding its general elections this year and perhaps the outcome will spur change in the right direction. This although ominous warnings have circulated regarding impending privatization, including of the water authority, pensions etc. Let us hope that's not the case!

When I next visit the island I certainly don't want to behold a Caribbean version of Greece!