I read Sir John Swan’s opinion with interest, and let me first say I don’t disagree with his take on the state of Bermuda’s economy because it has become a manifest reality.
When the Premier himself concludes the same, it means it is not a conversation in the dark. No fault of Sir John’s, but the topic of the economy becomes weaponised by the naïve for political gain.
We witnessed the same phenomenon in 2011 when the economy was in tethers. Was it in tethers? Yes, assuredly it was. Was the issue weaponised? Hell yea; it was all the Government’s fault. I’m sure we can all remember those words. I won’t be the fool to say that government policy did not contribute, but a good dose of reality would show the Government was not alone and private sector was as much to blame.
They say when America coughs, Bermuda catches a cold; and, typically, any economic slowdown in the United States really hits Bermuda a few years later.
Trimingham’s closed its doors in 2005, one year after the Bank of Bermuda was sold to HSBC. We never linked the two happenings, but take a little closer look and you will see there was a paternalistic relationship between the old Bank of Bermuda and Trimingham’s, without which the 163-year-old store could not survive. They lost their piggy bank.
It did not stop there with Trimingham Bros; many persons who got their money out of the BoB sale to HSBC purchased Butterfield Bank shares.
Smart move, right? But what happened there?
The Wall Street crash of 2008 put many banks at risk of total insolvency, including Bermuda’s banks. So all that investment money got diluted in the crash. You cannot reinvest money you don’t have. In short, a lot of private-sector capital just vanished. People who had investment portfolios starting at $60 million were now looking at $10 million, etc.
The slowdown was inevitable, deposits went up, investments went down, while hundreds of millions of dollars representing decades of earnings vanished through downgrades. No one wants to talk publicly about that.
The One Bermuda Alliance caused a little surge in confidence, which prevented Bermuda from falling off the cliff entirely, but with no significant inbound investment, debt was doubled in the process. Confidence does help, but let’s note that confidence is largely psychological; it is driven by perception, not necessarily fact or reality.
Confidence creates at times its own reality, but it alone cannot solve Bermuda’s economy — we need ingenuity to do that.
It is like the other misconception that immigration alone can solve the problem — “open up the doors, let them all in” without saying, “to do what?”
Create industry, then industry will demand jobs and put pressure on the need for immigration to open the doors. Ingenuity and enterprise should be our focus and the main driver to fix the economy.
It is too easy to weaponise the economy and point to politics as the solution. and. yes. the Government is party to the solution. The truth is we need the private sector to think, be creative, and add industry and vitality to the economy before there can be any sustainable recovery.