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Caribbean less competitive due to increasing aviation taxes

Posted on December 6, 2014 in Government, Industries

Go Lean Commentary

The book Go Lean … Caribbean relates the significance of supporting the airline industry so as to facilitate the region’s primary economic driver: Tourism.

Tourism is a leisure activity; many times participants in leisure are in no hurry to get to their destinations, they often drive. This relates to countries on a continental mainland; but for islands, not so much. For 27 of the 30 Caribbean member-states, island life is the reality. (Belize is in Central America; Guyana and Suriname are in South America).

If speed is not the requirement then boating should be an option. But the only boating/transport options for Caribbean tourists are cruise lines.

This following article relates the biggest threat to Caribbean tourism is Caribbean governments. These ones are authorized to assess taxes, but for far too often they have targeted airline tickets to generate needed revenues. This is such a flawed strategy, a betrayal of the public trust. They “cut off their nose to spite their face”, as the article here relates:

By: Ernie Seon, Caribbean-360 Contributor

ST. THOMAS, US Virgin Islands – The International Air Transportation Association (IATA) Tuesday urged regional aviation authorities to adhere to the key principles set out by International Civil Aviation Organization.

IATA’s regional vice president for the Americas, Peter Cerda said it is unfortunate that many governments had chosen to ignore the principles, a global issue that was particularly acute in the Caribbean.

Addressing tourism and industry officials gathered here on the occasion of World Aviation Day, Cerda noted that aviation taxes continue to increase the cost of travelling to the Caribbean. He said this made the region less competitive to other destinations.

“Taking the islands as a whole, each dollar of ticket tax could lead to over 40,000 fewer foreign passengers,” he said, adding that US$20 million of reduced tourist expenditure meant 1,200 fewer jobs across the region.

“Caribbean countries must therefore consider the aviation industry as a key element for tourism development,” he advised.

The IATA official noted that in terms of charges, two airports in the region, Montego Bay and Kingston, both in Jamaica, recently proposed airport tariff increases of over 100 per cent so as to attain a return of capital of around 20 per cent a year in US dollars.

He said that measures such as these do not encourage or support the development of the industry in the region.

“The regulators must act strongly and swiftly against such big increases. Governments have to foster positive business environments through consultation with the industry and transparency in order to ensure win-win situations for all,” he warned.

Cerda said the issue of taxes and charges in the region transcends the formal breaches of global standards and recommended practices and that the simple truth is that this region is a very expensive place for airlines to do business.

In the Caribbean, tourism and the aviation sector facilitate and support some 140,000 jobs and contribute US$3.12 billion, roughly 7.2 per cent of the Caribbean’s gross domestic product (GDP).

The airline industry is celebrating its 100th anniversary year in the black, according to industry figures released here. Globally, airlines are expected to earn a net profit of US$18 billion in 2014.

Cerda noted that while that might sound impressive, on revenues of US$746 billion, this is equivalent to a net profit margin of 2.4 per cent or US$5.42 per passenger carried.

“Looking only at Latin America and the Caribbean, the airlines in this region are expected to earn $1.1 billion.”This is a profit of US$4.21 per passenger and a net margin of three per cent. We are in a tough and very competitive business,” he added.

The aviation official said fuel expense across the Caribbean is estimated at 14 per cent higher than the world average, adding that this represents about a third of an airline’s operating costs.

He noted that in the case of the Dominican Republic, although fuel charges were recently reduced, tax on international jet fuel still remains high at 6.5 per cent.

“Another example is the Bahamas applying a seven per cent import duty on Jet fuel. Jet fuel supply is an issue in the region, the complexity of the fuel supply and the seasonal demand is costly and difficult, making fuel costs in the region a challenge for airlines.”

In addition, Cerda noted that airports are using the fuel concession fees as a source of revenue and they are still waiting to see any of these monies re-invested in improving fuel facilities.

On the issue of safety, he said that this has been in the spotlight in recent months, with July being an especially sad month for all involved with aviation.

However, Cerda said despite the recent tragedies, flying remains by far the safest mode of transportation.

“Every day, approximately 100,000 flights take to the sky and land without incident. Nonetheless, accidents do happen. Every life lost recommits us to improve on our safety performance.

“It is no secret that safety has been an issue in this region. Even though it is still under performing the global average, performance is improving,” he said.

The IATA official said that the aviation industry has come a long way since the very first flight from St. Petersburg to Tampa 100 years ago, turning this large planet into one small world.

He said through it all, one thing has remained constant: when governments support the conditions for a thriving industry the economic benefits are felt by all.

However Cerda cautioned that for the industry to deliver the most benefits to the citizens in the Caribbean and spur additional tourism and trade, “we need to be able to compete on a level playing field and have the infrastructure capacity needed to grow.”

He said he remains confident that if the Caribbean governments continue to strengthen their partnership with the aviation industry, “we will deliver the unique transformative economic growth only our industry can deliver, making the second century of aviation in this region even more beneficial than the first”.
Caribbean-360 Online News (Posted 09/17/2014; retrieved 12/06/2014) –
http://www.caribbean360.com/news/caribbean-less-competitive-due-to-increasing-aviation-taxes-iata-warns

This foregoing article highlights a defective premise, predatory taxing, and so thusly depicts the need for improved regional oversight of economic and governing engines.

See this photo of a recent airline ticket (price breakdown), for one of the stakeholders in the Go Lean movement, who was travelling from a Caribbean island. The reality of these aviation taxes defies logic!

Yes, the governments need their revenues, but this should not be pursued at the expense of undermining viable economic engines; this is self-defeating. Likewise there was a recent conflict with British Aviation Authorities and their unilateral tax on Caribbean air transport. The solution there/then is the same as now: regional coordination and a heightened advocacy; see Appendix–VIDEO.

Change has now come to the Caribbean. The book Go Lean … Caribbean serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU), an alliance of the 30 Caribbean member-states. This Go Lean roadmap has 3 prime directives:

Optimization of the economic engines in order to grow the regional economy to $800 Billion and create 2.2 million new jobs..
Establishment of a security apparatus to protect the resultant economic engines.
Improve Caribbean governance to support these engines.

The roadmap calls for the CU to navigate the changed landscape of the globalized air transport industry. There is the need for regional integration, administration, and promotion for Caribbean air travel among local and foreign carriers. The book posits that transportation and logistics empower the economic engines of a community. There must be air carrier solutions to service the transportation and tourism needs of the Caribbean islands. This point is fully appreciated by Caribbean tourism stakeholders; the book relates that the region’s Hotel and Tourism Association channel the vision of Robert Crandall, former Chairman of American Airlines, who remarked at a Caribbean Hotel and Tourism Investment Conference in May 2010 that the region is uniquely dependent on tourism:

“Everyone involved in travel and tourism knows that our [airline] industry is immensely important to the world economy, generating and supporting – either directly or indirectly – about one in eleven jobs worldwide. Here in the Caribbean, it is even more important. On a number of islands, travel and tourism accounts for more than 50% of all employment, and on some islands for more than 75%. Overall, about 20% of Caribbean employment is travel and tourism dependent – something on the order of 2.5 million jobs.” – Go Lean … Caribbean Page 60.

Go Lean asserts that air travel options must be optimized to impact Caribbean society – thus the need for more regional coordination, regulation and promotion of the Caribbean’s aviation industry. New models are detailed in the book in which tourism can be enhanced with “air lifts” to facilitate Caribbean events, and “Air Bridges” to allow for targeting High Net Worth markets. This roadmap also introduces the Union Atlantic Turnpike to offer more transportation solutions (ferries, toll roads, railways, and pipelines) to better facilitate the efficient movement of people and cargo.

This is one way the CU will empower the region’s economic engines. This is an example of the change that the CU technocracy will bring!

The Go Lean book presents a series of community ethos that must be adapted to forge this change. In addition, there are these specific strategies, tactics, implementation and advocacies to apply:

Community Ethos – Job Multiplier	Page 22
Community Ethos – Lean Operations	Page 24
Community Ethos – Cooperatives	Page 25
Community Ethos – Ways to Improve Sharing	Page 35
Community Ethos – Impacting the Greater Good	Page 37
Strategy – Customers – Visitors	Page 47
Strategy – Competitive Analysis – Event Patrons	Page 55
Strategy – Core Competence – Tourism	Page 58
Anecdote – Caribbean Hotel & Tourism Assoc. focus on Air Transport	Page 60
Tactical – Fostering a Technocracy	Page 64
Tactical – Commerce – Tourism Promotion	Page 78
Tactical – Aviation Administration & Promotion	Page 84
Implementation – Ways to Deliver	Page 109
Implementation – Trade Mission Objectives	Page 116
Planning – 10 Big Ideas for the Caribbean Region – #7: Virtual Turnpike	Page 127
Planning – Ways to Improve Trade	Page 128
Advocacy – Ways to Improve Governance	Page 168
Advocacy – Ways to Optimize Government Revenue Sources	Page 172
Advocacy – Ways to Enhance Tourism	Page 190
Advocacy – Ways to Impact Events	Page 191
Advocacy – Ways to Market Southern California – Air Bridge	Page 194
Advocacy – Ways to Improve Transportation – Aviation Promotion	Page 205
Appendix – Airport Cities – New Approach for Optimizing Business Model	Page 287

This commentary posits that the status quo of Caribbean aviation taxes reflect a flawed economic policy, reflective of the dysfunction in the region. This commentary also relates to other lessons of economic optimizations and dysfunctions previously detailed in Go Lean blogs, as sampled here:

Caribbean must work together to address regional industry threats – Example of Rum Subsidies

A Lesson in Aviation History: Concorde SST and the Caribbean

New York-New Jersey Port Authority – Lessons from an Airport Landlord

Bahamas Re-organizing Government Revenues in 2015 with VAT Implementation

Lessons Learned from the American Airlines Merger

Book Review: ‘Wrong – Nine Economic Policy Disasters and What We Can Learn…’

Caribbean Changes – Air Antilles Launches St. Maarten Service

Tourism’s changing profile – Need for Competition and Comparative Analysis

The world loves the Caribbean; people want to come visit and enjoy our hospitality. It is better for them, and for us in the region that they come by air transport. But cruises are viable options, though the Caribbean communities get less benefits from cruise lines (Pages 61 & 193). We simply “fatten our frogs for snake”. The more dysfunction we create with air transport – like these excessive aviation taxes – the more we push visitors to the cruise option; meaning less direct-indirect spending: hotels, taxis, restaurants, casinos, etc.

Now is the time to lean-in to this roadmap for Caribbean change, as depicted in the book Go Lean…Caribbean. We cannot afford to undermine our economic strengths with disabling tax policies. This is a public trust, betrayed. The Caribbean can – and must – do better. 🙂

Download the free e-Book of Go Lean … Caribbean – now!

APPENDIX Video: A Tax Too Far…? – http://youtu.be/Jbh8DJxUNC8

Uploaded on Oct 30, 2011 – A documentary on how the Air Passenger Duty instituted by the UK is affecting Caribbean Tourism, and the lobbying efforts of the Caribbean Tourism Organization to have it reduced, removed, or the Caribbean re-banded. Get more information about the APD on the CTO website: http://www.onecaribbean.org/our-work/advocacy/

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2008, Aviation, Sales, Tourism, Transform

Michigan Unemployment – Then and Now

Posted on December 2, 2014 in Economics, Planning

Go Lean Commentary

The tagline “a better place to live, work and play” is the focus for empowering the Caribbean, placing equal emphasis on all 3 spheres of activity. But the focus of work is easier said than done. Without work, the Caribbean will continue to suffer societal abandonment – our good people would simply leave to go elsewhere to find the missing work element. They will do this despite how pleasant the “live” and “play” elements may be in our society.

This is a lesson learned from Detroit, Michigan USA.

The book Go Lean…Caribbean serves as a roadmap to elevate the Caribbean “work” environment. It analyses the regional disposition and then seeks solutions by studying the performances of other global cities, especially in the US.

The following chart highlights 50 cities, 2 of which were studied for the Go Lean book, a good example, Number 1 on the chart: Omaha, Nebraska and Number 50 on the chart: Detroit, Michigan, the once great industrial city.

The lessons from Omaha have already been a subject of this commentary. Now we focus on the other end of the chart, Detroit; this city specifically and the overall State of Michigan in general.

The entire eco-system of jobs was crippled in Michigan during the recent Great Recession (2007 – 2009). In response to the crisis throughout the country, the US federal government began extending unemployment benefits as a safety-net. There was a federal program to provide additional weeks of unemployment benefits to people starting in 2008.^[2] The program was then extended again and again; the most recent extension was provided by the American Taxpayer Relief Act of 2012, which continued the supplemental unemployment benefits until the end of 2013.^[2] Only then was the comfort level established that the “recession was over”, and the recovery was well enough in hand.

The United States Department of Labor’s Bureau of Labor Statistics reports that in November 2013 the average (mean) duration of unemployment was 37.2 weeks.^[3] The median duration was 17.0 weeks. 22.6% of people who were unemployed found a new job in less than 5 weeks, while 37.3% had been unemployed for 27 weeks or more.^[3]

These numbers were very bad during the throes of the Great Recession. In line with the following article, which quotes statistics, the impact on the streets of Michigan were 1 million unemployed. See article here:

Michigan unemployment tops 15% – July 2009
Sub-title: Government says jobless rate is the highest for a state since 1984. Rate tops 10% in 15 states and District of Columbia.
By: Ben Rooney, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) — Michigan became the first state in 25 years to suffer an unemployment rate exceeding 15%, according to a report released Friday by the Labor Department.

The state’s unemployment rate rose to 15.2% in June (2009). It was the highest of any state since March 1984, when West Virginia’s unemployment rate exceeded 15%.

Michigan, which has been battered by the collapse of the auto industry and the housing crisis, has had the highest unemployment rate in the nation for 12 months in a row.

Rhode Island had the second highest unemployment rate at 12.4%, followed by Oregon at 12.2%.

A total of 15 states and the District of Columbia had unemployment rates of at least 10%.

Friday’s report from the U.S. Labor Department also showed that six states recorded record-high unemployment rates in June.

Over the month, jobless rates increased in 38 states and the District of Columbia. Michigan’s 1.1 percentage point increase from May to June was the highest in the nation, followed by Wyoming’s 0.9 point increase.

On an annual basis, jobless rates where higher in all 50 states and the District of Columbia. Michigan also recorded the highest yearly increase at 7.1 percentage points. Oregon came in second with a year-over-year increase of 6.3 percentage points in its unemployment rate.

The national unemployment rate rose for the ninth straight month in June, climbing to 9.5% from 9.4%, and hitting another 26-year high. Nearly 3.4 million jobs have been lost during the first half of 2009, more than the 3.1 million lost in all of 2008.

Unemployment rates decreased in five states, and seven states had no rate change.

North Dakota’s 4.2% jobless rate was the lowest in the nation, followed by Nebraska at 5%.

The Midwest and West both had jobless rates of 10.2%. The jobless rate in the Northeast rose to 8.6% from 8.3% but was the lowest of any U.S. region. In the South, unemployment rose to 9.2%.

Non-farm payroll employment fell in 39 states and the District of Columbia in June. California had the largest month-over-month decrease in jobs.

Payrolls increased in 10 states and were unchanged in one state. The largest over-the-month increase occurred in North Carolina.

Source: CNN Money Online Financial News Site (Posted July 17, 2009; retrieved 12-02-2014)http://money.cnn.com/2009/07/17/news/economy/state_unemployment_report/

The Great Recession was truly a crisis. That was then; this is now.

Detroit still has the highest unemployment rate of the 50 largest cities in the U.S., at more than three times the national average for May, which was 6.3%. The unemployment rate for Detroit hovered at 23%, six percentage points ahead of the nearest on the list — Oakland City, Calif., at 16.9%, according to the Bureau of Labor Statistics in June 24, 2014.^[4]

Once the metrics fall so low, there is no place to go but up.

In the past year Michigan is starting to finally feel the beneficial effects of the recovery. From those ghastly numbers of 1 million in 2009, the numbers petitioning for the Extended Unemployment Compensation (EUC) at December 19, 2013 were slightly “over 43,000 people in Michigan”. (The extension measure failed in the US Congress – the economy was a victim of its own success).

The Go Lean publishers are here to observe and report. Detroit in specific and Michigan is general is starting now to experience a turn-around. While there may be an ongoing hardship for those 43,000 people, the overall economy of Michigan has greatly improved since 2009, as the foregoing article relates, when the state “recorded the highest yearly unemployment increase of 7.1 percentage points”.

Michigan unemployment rate edges toward pre-recession numbers
Sub-title: …but employment hasn’t recovered
By: Emily Lawler – elawler@mlive.com MLive.com

LANSING, MI – Michigan’s seasonally unadjusted unemployment rate dropped to 7.1 percent in October, according to data released by the state Department of Technology, Management and Budget.

October’s 7.1 number is a .1 percent decline from September and the third monthly decline in a row. A year ago, in October 2013, unemployment was more than a point higher at 8.6 percent.

That’s the lowest rate this year and in fact the lowest since January through March of 2008.

“October’s 7.1 percent jobless rate was the lowest in Michigan since the January thorugh March 2008 period, and close matched pre-recession rates from 2003 to 2007. However, Michigan employment remains far below pre-recession levels,” noted the Department in a press release.

In October 2007, total employment in the state was 4.6 million. In October 2014, total employment in the state was 4.4 million.

Gov. Rick Snyder issued a statement on the unemployment:

“There is optimism and opportunity in Michigan as our state’s economy continues to move forward. More people are working and our labor force is growing as companies create more and better jobs. Our reinvention is helping working families and we are seeing results.

“But while we can recognize this accomplishment, there is more to do to fulfill our goal of the brightest possible future. We need to continue creating an environment for success, and that includes building a workforce with in-demand skills – and making sure a pathway to those skills is available for Michigan students and adults.”

Emily Lawler is a Capitol/Lansing business reporter for MLive Media Group.
Source: http://www.mlive.com/lansing-news/index.ssf/2014/11/michigan_unemployment_rate_edg.html

The book Go Lean…Caribbean serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). The CU is set to optimize Caribbean society, not Detroit, starting with economic empowerment. In fact, the Go Lean roadmap has 3 prime directives:

Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
Establishment of a security apparatus to protect the resultant economic engines.
Improve Caribbean governance to support these engines.

The CU will foster the right climate for Direct Foreign Investments, entrepreneurial initiatives, industrial development, and preparation for a ready, willing and able work force.

These points are pronounced early in the Go Lean book with the Declaration of Interdependence (Pages 12 – 14) with many statements that demonstrate the need to empower the Caribbean labor force:

xx. Whereas the preparation of our labor force can foster opportunities and dictate economic progress for current and future generations, the Federation must ensure that educational and job training opportunities are fully optimized for all residents of all member-states, with no partiality towards any gender or ethnic group. The Federation must recognize and facilitate excellence in many different fields of endeavor, including sciences, languages, arts, music and sports. This responsibility should be executed without incurring the risks of further human flight, as has been the past history.

xxiv. Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles. Thereby attracting direct foreign investment because of the stability and vibrancy of our economy.

xxv. Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the Federation and of the member-states.

xxvi. Whereas the Caribbean region must have new jobs to empower the engines of the economy and create the income sources for prosperity, and encourage the next generation to forge their dreams right at home, the Federation must therefore foster the development of new industries, like that of ship-building, automobile manufacturing, pre-fabricated housing, frozen foods, pipelines, call centers, and the prison industrial complex. In addition, the Federation must invigorate the enterprises related to existing industries like tourism, fisheries and lotteries – impacting the region with more jobs.

Despite the weaknesses of its current dilemma, Detroit does have strengths. The city is working hard to turn-around. See VIDEO here of a Job Fair for STEM (Science, Technology, Engineering, Math) jobs peculiar to the Motor City:

Engineering Society of Detroit job fair on Monday – Posted November 9, 2014

Video – http://www.wxyz.com/money/job-finder/engineering-society-of-detroit-job-fair-on-monday#Job%20fair%20today:

We must learn from Detroit. The Go Lean book details a series of community ethos, strategies, tactics, implementations and advocacies to impact jobs in the Caribbean region, member-states, cities and communities. Below is a sample:

Assessment – Anecdote – Caribbean Single Market & Economy	Page 15
Assessment – Anecdote – Dutch Caribbean – Integration & Secessions	Page 16
Assessment – Anecdote – French Caribbean – Organization & Discord	Page 17
Assessment – Anecdote – Puerto Rico – The Greece of the Caribbean	Page 18
Community Ethos – Economic Systems Influence Individual Choices & Incentives	Page 21
Community Ethos – Voluntary Trade Creates Wealth	Page 21
Community Ethos – Consequences of Choices Lie in the Future	Page 21
Community Ethos – Minority Equalization	Page 24
Community Ethos – Lean Operations	Page 24
Community Ethos – Return on Investments	Page 24
Community Ethos – Ways to Foster Genius	Page 27
Community Ethos – Ways to Help Entrepreneurship	Page 28
Community Ethos – Ways to Impact Turn-Around	Page 33
Community Ethos – Ways to Manage Reconciliations	Page 34
Community Ethos – Ways to Impact the Greater Good	Page 37
Strategic – Vision – Integrating Region in to a Single Market	Page 45
Strategy – Mission – Facilitate Job-Creating Industries	Page 46
Strategic – Agents of Change – Globalization	Page 57
Tactical – $800 Billion Economy – How and When – High Multiplier Industries	Page 70
Tactical – Separation of Powers – State Department – Self-Governing Entities	Page 80
Implementation – Ways to Pay for Change	Page 101
Implementation – Foreign Policy Initiatives at Start-up	Page 102
Implementation – Ways to Deliver	Page 109
Implementation – Ways to Benefit from Globalization	Page 119
Planning – 10 Big Ideas – Cuba/Haiti	Page 127
Planning – Ways to Make the Caribbean Better	Page 131
Planning – Lessons Learned from 2008	Page 136
Planning – Lessons from Omaha	Page 138
Planning – Lessons from Detroit	Page 140
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Create Jobs	Page 152
Advocacy – Battles in the War Against Poverty	Page 222
Advocacy – Ways to Impact the Middle Class	Page 223
Advocacy – Ways to Impact Urban Living	Page 234

Other subjects related to the pros-and-cons of job empowerments for the region have been blogged in other Go Lean…Caribbean commentaries, as sampled here::

Making a Great Place to Work® – Detroit Employer Example

Where the Jobs Are – Entrepreneurism in Junk

The Geography of Joblessness

Continued Discriminationor Latins/Caribbeans in Job Markets

Where the Jobs Are – Computers Reshaping Global Job Market

Where the Jobs Are – One Scenario: Shipbreaking

Casino Jobs – Changing/Failing Business Model

The Future of Golf; Vital for Tourism Jobs

STEM Jobs Are Filling Slowly – High Demand, Low Supply

Where the Jobs Were – British public sector now strike over ‘poverty pay’

Where the Jobs Are – Fairgrounds as SGE & Landlords for Sports Leagues

Self-employment jobs on the rise in the Caribbean – World Bank

The purpose of this roadmap is to elevate Caribbean society. To succeed we must apply lessons from advanced economy countries like the US, and the cities there in; lessons from their good, bad and ugly experiences of the past.

The Go Lean movement (book and blog commentaries) posits that there is less effort to remediate the Caribbean homeland, than to flee to a city like Detroit and try to thrive as an alien in that land. So the book thusly advocates to “prosper where planted”. With the appropriate effort, as defined in the Go Lean book, the Caribbean can truly become a better place to live, work and play.

Download the book Go Lean…Caribbean now!

—————–

Source References:

http://www.michigan.gov/uia/0,4680,7-118–318402–s,00.html
Ayres, Sarah (20 November 2013). “Why Congress Must Extend Emergency Unemployment Benefits”. Center for American Progress. Retrieved 9 January 2014.
“Economic News Release: Table A-12 Unemployed person by duration of unemployment”. Bureau of Labor Statistics. 6 December 2013. Retrieved 9 January 2014.
http://www.marketwatch.com/story/should-you-move-to-detroit-2014-06-24. Retrieved December 2, 2014.

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‘Too Big To Fail’ – Caribbean Version

Posted on November 14, 2014 in Economics, Government

Go Lean Commentary

The book Go Lean…Caribbean serves as a roadmap to implement the technocratic Caribbean Union Trade Federation (CU) and Caribbean Central Bank (CCB) to provide better stewardship, to ensure that the economic failures of the past do not re-occur.

What economic failures?

There were crises on 2 levels: the Global Financial Crisis of 2007 – 2009 and regional financial banking dysfunctions.

Global – The banks labeled “Too Big To Fail” impacted the world’s economy during the Global Financial Crisis. (See the VIDEO below on the anatomy and consequence of the Credit Crisis). Though the epi-center was on Wall Street, the Caribbean was not spared; it was deeply impacted with onslaughts to every aspect of Caribbean life (think: Tourism decline). In many ways, the crisis has still not passed.

Regional – The Caribbean region has not been front-and-center to many financial crises in the past, compared to the 465 US bank failures between 2008 and 2012.^[a]But over the past few decades, there have been some failures among local commercial banks and affiliated insurance companies where the institutions could not meet demands from depositors for withdrawal. Consider these examples from Jamaica and Trinidad:

There was a banking crisis in Jamaica in the 1990s. In January 1997, the decision was made to establish the Financial Sector Adjustment Company (FINSAC) with a mandate to take control and restructure the financial sector. FINSAC took control of 5 of the 9 commercial banks, 10 merchant banks, 21 insurance companies, 34 securities firms and 15 hotels. It was also involved in the re-capitalization and restructuring of 2 life insurance companies, with the requirement that they relinquish their shares in 2 commercial banks.^[b]
For Trinidad, the notable failure was the holding company CL Financial, with subsidiaries Colonial Life Insurance Company and the CLICO Investment Bank (CIB). In mid-January 2009, this group approached the Central Bank of Trinidad and Tobago requesting financial assistance due to persistent liquidity problems. The global financial events of 2008 combined with other factors placed tremendous strain on the group’s Balance Sheet. The CL Financial lines of business ranged from the areas of finance and energy to manufacturing and real estate services. The group’s assets were estimated at US$16 billion at year-end 2007, and it had a presence in at least thirty countries worldwide, including Barbados. Most significantly, the company held investments in real estate in Trinidad and the United States of America, and in the world’s largest methanol plant prior to its difficulties.

Welcome to the new Caribbean economy.

With the advent of the CARICOM Single Market & Economy (CSME), a more integrated region is expected to lead to greater linkages among the member-states of this existing economic union. The Go Lean roadmap calls for the deployment of the Caribbean Central Bank. So the issue of financial contagions will now have to be a constant concern for this regional sentinel.

The biggest threat of global financial contagions for this region has been dilution of net worth for the citizens of the US, Canada and Western Europe, the primary source of Caribbean tourists.

The prime directive of the CU is to optimize economic, security and governing engines to impact the Caribbean’s Greater Good, for all stakeholders: residents, visitors, bank depositors and mortgage-holders. This need was pronounced early in the Go Lean book, in the Declaration of Interdependence – (Page 13):

xxv. Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the CU and of the member-states.

The foregoing news articles shows the type of functions executed by technocracies: monitoring risks, assessing risk factors, managing leverage and regulating industry performances. This first article considers and welcomes new stewardship for the global “too big to fail” banks:

Title #1: New bank rules proposed to end ‘too big to fail’
By: Joshua Franklin and Huw Jones

BASEL, Switzerland/LONDON (Reuters) – Banks may have to scrap dividends and rein in bonuses if they breach new rules designed to ensure that creditors rather than taxpayers pick up the bill when big lenders collapse.

Mark Carney, chairman of the Financial Stability Board and Bank of England governor, said the rules, proposed on Monday, marked a watershed in putting an end to taxpayer bailouts of banks considered too big to fail.

“Once implemented, these agreements will play important roles in enabling globally systemic banks to be resolved (wound down) without recourse to public subsidy and without disruption to the wider financial system,” Carney said in a statement.

After the financial crisis in 2007-2009, governments had to spend billions of dollars of taxpayer money to rescue banks that ran into trouble and could have threatened the global financial system if allowed to go under.

Since then, regulators from the Group of 20 economies have been trying to find ways to prevent this happening again.

The plans envisage that global banks like Goldman Sachs and HSBC should have a buffer of bonds or equity equivalent to at least 16 to 20 percent of their risk-weighted assets, such as loans, from January 2019.

These bonds would be converted to equity to help shore up a stricken bank. The banks’ total buffer would include the minimum mandatory core capital requirements banks must already hold to bolster their defences against future crises.

The new rule will apply to 30 banks the regulators have deemed to be globally “systemically important,” though initially three from China on that list of 30 would be exempt.

G2O leaders are expected to back the proposal later this week in Australia. It is being put out to public consultation until Feb. 2, 2015.

David Ereira, a partner at law firm Linklaters, said that on its own the new rule as proposed would not end “too big to fail” banks and that politically tricky details still had to be settled.

BASELTOWER

Carney was confident the new rule would be applied as central banks and governments had a hand in drafting them.

“This isn’t something that we cooked up in Basel tower and are just presenting to everybody,” he told a news conference, referring to the FSB’s headquarters in Switzerland.

Most of the banks would need to sell more bonds to comply with the new rules, the FSB said. Some bonds, known as “senior debt” that banks have already sold to investors, would need restructuring.

Senior debt was largely protected during the financial crisis, which meant investors did not lose their money. But Carney said it in future these bonds might have to bear losses if allowed under national rules and if investors were warned in advance.

The new buffer, formally known as total loss absorbing capacity or TLAC, must be at least twice a bank’s leverage ratio, a separate measure of capital to total assets regardless of the level of risk.

Globally, the leverage ratio has been set provisionally at 3 percent but it could be higher when finalised in 2015.

Some of the buffer must be held at major overseas subsidiaries to reassure regulators outside a bank’s home country. Banks may have to hold more than the minimum because of “add-ons” due to specific business models, Carney said.

Elke Koenig, president of German regulator Bafin, said supervisors should orient themselves more toward the upper end of the 16-20 percent range, though banks may be given more time to comply.

Fitch ratings agency said banks might end up with a buffer equivalent to as much as a quarter of their risk-weighted assets once other capital requirements were included. Analysts have estimated this could run to billions of dollars.

Analysts at Citi estimated the new rule could cost European banks up to 3 percent of profits in 2016.

Citi said European banks would be required to issue the biggest chunk of new bonds, including BNP Paribas , Deutsche Bank , BBVA and UniCredit , with Swiss and British banks the least affected in Europe.

(Additional reporting by Alexander Huebner in Bonn, Editing by Keiron Henderson and Jane Merriman)
Reuters Newswire Service – Online Site (Posted 11/10/2014; retrieved 11/13/2014) –
http://news.yahoo.com/g20-proposes-buffer-end-too-big-fail-banks-061252790–sector.html

Within the region, this second article considers the stewardship of one Caribbean financial institution in Jamaica and their lending practices:

Title #2: VMBS sees dramatic fall in foreclosures

VICTORIA Mutual Building Society (VMBS) recorded a three-quarters drop in property foreclosures last year.

It signals greater resilience by homeowners during an austere economy affected by heavy currency depreciation.

“The building society also enabled more members who were facing financial difficulties to retain ownership of their homes,” said VMBS in a statement about its year ended December 31, 2013. “Foreclosures on properties totalled 10 last year, compared to 37 the year before.”

Its non-performing loans, or loans unserviced for over 90 days, moved from 6.9 per cent at the beginning of the year to 5.6 per cent at the end.

“This improvement was the result of the continued drive to engage members who were having difficulty meeting their monthly mortgage payments, and working with them collaboratively, with the aim of helping them to bring their accounts current and retain ownership of their homes,” said Michael McMorris, chairman of Victoria Mutual, in his report for the group’s 135th annual general meeting held last month.

Greater focus was also placed on sales and services with mortgage disbursements up 133 per cent to $3.3 billion last year, the company indicated.

The Victoria Mutual Group, an amalgam of various financial, mortgage and insurance entities, made less after-tax surplus at $965.8 million for 2013 compared with $1 billion a year earlier.

The group’s pre-tax surplus actually increased year on year but its after-tax surplus dipped 4.2 per cent to $965.8 million as it was “adversely affected by the imposition of an asset tax on regulated financial institutions, which applied to both VMBS and VM Wealth Management,” stated the company.

The VM Group said that it aims to keep mortgage rates low by reducing administration costs, which augurs well for prospective homeowners.

Stated McMorris: “Internally, the year 2014 will see a continuation of a number of projects and initiatives geared towards improving efficiency and service delivery throughout the group.”

VM Group will seek to improve its financial advisory and brokerage services by growing the assets it manages on behalf of clients.

“To do this, Victoria Mutual Wealth Management Limited (VMWM) is working on new products to allow clients to customise their investment portfolios,” stated McMorris.

VMBS Money Transfer Services Limited (VMTS) plans to expand its services, both locally and overseas. The remittance company became profitable two years ago, and saw earnings grow by 61 per cent last year, due largely to an increase in fees, the company stated. VMTS also benefited from a 28 per cent increase in foreign exchange trading gains.

“Better gains on foreign exchange in part reflected a more challenging business environment last year, when depreciation of the Jamaican dollar was higher than 12 per cent,” stated the company.

VMBS allows its debit card holders free withdrawals at any of its teller machine or point-of-sale terminals.
Jamaica Observer Daily Newspaper – Online Site (Posted 08/20/2014; retrieved 11/13/2014) – http://www.jamaicaobserver.com/business/VMBS-sees-dramatic-fall-in-foreclosures_17381839

The related subjects of banking oversight and optimizing financial governance have been a frequent topic for blogging by the Go Lean promoters, as sampled here:

5 Steps of a Bubble – Learning to make a resilient economy

Canadian Imperial Bank of Commerce failing investment in FirstCaribbean Bank

Bitcoin needs regulatory framework to change ‘risky’ image

Open the Time Capsule: The Great Recession of 2008

What Usain Bolt can teach banks about financial risk

Barbados Central Bank records $3.7m loss in 2013

US Federal Reserve Releases Transcripts from 2008 Meetings

Dominica raises EC$20 million on regional securities market

Fractional Banking System – How to Create Money from Thin Air

Book Review: ‘Wrong – Nine Economic Policy Disasters and What We Can Learn…’

10 Things We Want from the US – # 2: American Capital

The Erosion of the Middle Class

All Caribbean countries have experienced economic dysfunction: English, Dutch, French and Spanish territories. In line with the foregoing articles, the Go Lean book details many infrastructural enhancements/advocacies to the region’s financial eco-system; to facilitate efficient management of the economy … going forward:

Ethos-Strategy-Tactics-Implementation-Advocacy	Page
Anecdote – Caribbean Single Market & Economy	15
Anecdote – Puerto Rico – The Caribbean’s Greece	18
Economic Systems Influence Individual Choices	21
Improve Sharing	35
Confederating Non-Sovereignty	45
Facilitate Currency Union/Co-op of Caribbean Dollar	45
Fostering a Technocracy	64
Caribbean Central Bank	73
Deposit Insurance Regulations	73
Securities Regulatory Authority	74
Modeling the European Union / Central Bank	130
Lessons from 2008	136
Anecdote – Caribbean Currencies	149
Growing the Economy	151
Creating Jobs	152
Better Manage Foreign Exchange	154
Improve Credit Ratings	155
Foster Cooperatives	176
Banking Reforms	199
Wall Street – Capital/Securities Market	200
Impact the Diaspora	219
Impact Retirement – Need for Savings	221
Help the Middle Class	223
Re-boot Jamaica	239
Appendix – Alternative Remittance Modes	270

There is no doubt that there has been mis-management of the Caribbean economy in the past. Consider the example of Jamaica; their currency has suffered from many de-valuations and depreciations; an average amount of $2.50 a year since the 1970’s; trading at 87-to-1 US Dollar; (at the time that Go Lean was composed – November 2013). Social Anthropologist posit that when societies come under duress, the communities have 2 choices: ‘Fight” or “Flight”. How have the countries responded that are cited in this commentary? They have chosen “flight”. A previous blog reported an average of 70 percent brain-drain rate across the region; with Jamaica at 85% and Trinidad at 79%.

Now is the time for change; time for new stewards of the Caribbean economy, security and governing engines. It’s time for the CU/CCB. We must prove that we have learned from the past. See the VIDEO below on the anatomy and consequence of the Credit Crisis.

The purpose of this roadmap is to provide that new stewardship. A lot is at stake: the destination for the hopes and dreams of the Caribbean youth. No more flight! We must act now and make the Caribbean, a better place to live, work and play. 🙂

———-

Appendix Video: – The Short and Simple Story of the Credit Crisis – http://youtu.be/bx_LWm6_6tA

Source References:

[a]. https://news.yahoo.com/facts-numbers-us-bank-failures-183852568.html

[b]. http://www.centralbank.org.bb/WEBCBB.nsf/WorkingPapers/DB0CF759B9E97FB9042579D70047F645/$FILE/Exploring%20Liquidity%20Linkages%20among%20CARICOM%20Banking%20Systems.pdf

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2008, Banks, Crony-Capitalism, Jamaica, Security, Trinidad

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‘Consumer Reports’ Survey Finds the American Consumer is Back

Posted on September 28, 2014 in Economics, Ethos

Go Lean Commentary

There are more lessons to learn from the Great Recession of 2007-2008. The lingering effects continue, right up to this day. According to the foregoing news article, only now, 7 years later, are Americans willing to start spending again… on big purchases. Too bad! Many aspects of the US economy depend on regular spending*.

According to the foregoing article, there is value to processing, defining and analyzing economic data associated with the Great Recession; this is the merit of Big Data Analysis. This point aligns with the book Go Lean… Caribbean in that a plan is envisioned to capture raw data, measuring many aspects of Caribbean society, including economic, trade, consumption, macro performance, and societal values. Much can be gleaned from this art and science, mastery of which allows for better stewardship of the Caribbean elevation effort. The news story follows:

SOURCE: Consumer Reports
Seven years after the Great Recession, consumers are finally opening their wallets, making long-delayed purchases and undertaking postponed life decisions

YONKERS, N.Y., Sept. 25, 2014 /PRNewswire-USNewswire/ — The Great Recession of 2007[/2008] caused the once-prolific American shopper to go into a prolonged scrimp mode. Now, some seven years later – and more than 5 years after the recession officially ended — the tide has turned, according to a groundbreaking Consumer Reports study. A nationally representative survey of 1,006 adult Americans conducted by the ConsumerReportsNationalResearchCenter revealed that people are now in the market for major purchases like homes, cars, and appliances – and that they plan to spend even more money in the coming year.

The full report, “How America Shops Now,” is the cover story for the November 2014 issue of Consumer Reports magazine and is available on newsstands now and at ConsumerReports.org.

So traumatizing was the Great Recession that many Americans put off purchases and personal decisions such as marriage and divorce. Seven out of 10 people told Consumer Reports that they finally feel fiscally stable enough to make up for lost time. Other findings from the survey that point to shoppers’ improved outlook:

64 percent said that they’d dropped big bucks on a major purchase in the past year

46 percent said they bought a new or used vehicle in the past year or intend to buy one in the coming year

12 percent said they’d bought a residence in the past year or intend to do so in the coming year

34 percent said they recently completed or are ready to do a major home-remodeling project

31 percent are holding fewer garage sales

30 percent are taking fewer odd jobs

26 percent of young Americans (aged 18-34) said they were ready to buy a new home; 32 percent believe they can buy a car

“Shoppers may be back, but they’re far from the profligate spenders they used to be. The harsh lessons of the prolonged downturn have had a major impact, perhaps a permanent one,” said Tod Marks, Senior Projects Editor for Consumer Reports. “Our survey shows that Americans are spending their money very pragmatically, and even though the employment picture has improved, many are working scared – scared about their future job stability and earnings outlook.”

The report also features testimonials from real consumers about their new spending habits. Additional data from CR’s nationally representative survey includes what Americans are most reluctant to cut back on – regardless of the economy, and the pricier items many people feel are still out of reach. The full report is available in the November issue of Consumer Reports magazine, and online at ConsumerReports.org.

Consumer Reports is the world’s largest independent product-testing organization. Using its more than 50 labs, auto test center, and survey research center, the nonprofit rates thousands of products and services annually. Founded in 1936, Consumer Reports has over 8 million subscribers to its magazine, website and other publications. Its advocacy division, Consumers Union, works for health reform, food and product safety, financial reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.

September 2014
The material above is intended for legitimate news entities only; it may not be used for advertising or promotional purposes. Consumer Reports^® is an expert, independent nonprofit organization whose mission is to work for a fair, just, and safe marketplace for all consumers and to empower consumers to protect themselves. We accept no advertising and pay for all the products we test. We are not beholden to any commercial interest. Our income is derived from the sale of Consumer Reports^®, ConsumerReports.org^®and our other publications and information products, services, fees, and noncommercial contributions and grants. Our Ratings and reports are intended solely for the use of our readers. Neither the Ratings nor the reports may be used in advertising or for any other commercial purpose without our permission.
CBS News Reporting on Consumer Reports – Thursday, September 25, 2014 – http://www.cbs19.tv/story/26623848/consumer-reports-survey-finds-the-american-consumer-is-back-and-ready-to-spend

VIDEO – CBS This Morning: Back to buying: Americans’ spending habits change after recession

(VIDEO plays best in Internet Explorer).

This book Go Lean… Caribbean serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU), the regime to empower Caribbean society. The CU/Go Lean roadmap has 3 prime directives:

Optimization of the economic engines in order to grow the regional economy to $800 Billion GDP and create 2.2 million jobs.
Establishment of a security apparatus to protect the resultant economic engines against “bad actors”.
Improve Caribbean governance to support these engines.

These prime directives recognize that the changes the region needs, new economic engines, will start first with the adoption of new community ethos and controls. Early in the book, the need for this shift is pronounced, (Declaration of Interdependence – Page 13) with these statements:

xxiv. Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles. Thereby attracting direct foreign investment because of the stability and vibrancy of our economy.

xxv. Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the Federation and of the member-states.

The Go Lean book, and previous blog/commentaries stress that Big Data Analysis will be key, among the societal controls, in the roadmap for Caribbean elevation. The book references to this analysis are as follows:

Community Ethos – Impact Research and Development	Page 30
Community Ethos – Ways to Improve Negotiations	Page 32
Strategy – CU Stakeholders – NGO’s need for Big Data	Page 56
Implementation – Security Initiatives at Start-up	Page 103
Implementation – Ways to Deliver	Page 109
Implementation – Ways to Impact Social Media	Page 111
Implementation – Ways to Foster International Aid	Page 115
Implementation – Ways to Impact Elections	Page 116
Planning – Ways to Improve Failed-State Indices	Page 134
Planning – Lessons Learned from 2008	Page 136
Planning – Ways to Measure Progress	Page 147
Advocacy – Ways to Mitigate Black Markets	Page 165
Advocacy – Ways to Improve Leadership	Page 171
Advocacy – Ways to Improve Gun Control	Page 179
Advocacy – Ways to Promote Contact Centers	Page 212
Advocacy – Ways to Impact Foundations	Page 219
Appendix – Application of a Chapter, the Book Art of War	Page 325
Appendix – Electronic Benefits Transfer / e-Payments	Page 353

The points of Big Data Analysis for Command-and-Control were further elaborated upon in these previous blog/commentaries:

https://goleancaribbean.com/blog/?p=2105	Recessions and Public Health – Lessons from the 2008 Crisis
https://goleancaribbean.com/blog/?p=2126	Analyzing the Data – Where Are the Jobs Now: Computers Reshaping Global Job Market
https://goleancaribbean.com/blog/?p=2003	Analyzing the Data – Where Are the Jobs Now – One Scenario: Ship-breaking
https://goleancaribbean.com/blog/?p=1763	Analyzing the Data – The World as 100 People – Showing the Gaps
https://goleancaribbean.com/blog/?p=1715	Analyzing the Data – Lebronomy: Economic Impact of the Return of the NBA Great to his Home City
https://goleancaribbean.com/blog/?p=1433	Analyzing the Data – Caribbean loses more than 70 percent of tertiary educated to brain drain
https://goleancaribbean.com/blog/?p=1296	Analyzing the Data – Remittances to Caribbean Increased By 3 Percent in 2013
https://goleancaribbean.com/blog/?p=841	Analyzing the Data – Having Less Babies is Bad for the Economy?
https://goleancaribbean.com/blog/?p=782	Open/Review the Time Capsule: The Great Recession of 2008
https://goleancaribbean.com/blog/?p=709	Analyzing the Data – Student debt holds back home buyers
https://goleancaribbean.com/blog/?p=518	Analyzing the Data – What Banks learn about financial risks
https://goleancaribbean.com/blog/?p=493	Analyzing the Data – Nigeria’s economy grew by 89% overnight
https://goleancaribbean.com/blog/?p=356	Book Review: ‘How Numbers Rule the World: The Use & Abuse of Statistics in Politics’
https://goleancaribbean.com/blog/?p=242	Analyzing the Data – The Erosion of the Middle Class
https://goleancaribbean.com/blog/?p=235	Analyzing the Data – Tourism’s changing profile

The 2007/2008 Great Recession brought major upheaval to American society. Unfortunately, due to economic inter-connections, this upheaval extended to the Caribbean as well, our economy is structured as individual parasites on the US economy. According to the foregoing news article, the US is now finally returning to their spending habits of old, and yet the Caribbean continues to linger in economic upheaval. There is a need for a change in the Caribbean, from these individual parasite economies to a regional-unified interdependent protégé economy.

The CU/Go Lean roadmap is designed to drive change among the economic, security and governing engines of the region. The change requires new community ethos, strategies, tactics, implementations and advocates; this effort requires Command-and-Control because despite the best efforts and best-practices, success will not come on the first attempt, or second, or third. In fact it will take a continuous effort, again and again, combined with the measurement of the progress, course adjustment and more continuous effort to finally bring the desired result: a better homeland to live, work and play. This result is worth all this effort, all this heavy-lifting.

The foregoing article which discusses the role of of the Consumers Report organizational structure, depicts how technocratic stewardship can greatly impact a community. This is a fitting role model for the CU/Go Lean roadmap in a new Caribbean.

Big Data Analysis is not just for academic consumption, rather it must be for the stewardship, Command-and-Control, of regional economic, security and governing engines. The people and institutions of the region are hereby urged to lean-in to this Go Lean roadmap, to fulfill the vision of making the Caribbean a better place to live, work and play. 🙂

Download the book Go Lean … Caribbean – now!

———

* The Go Lean book details the economic impact of the housing (Pages 161, 207) and automotive (Page 206) industries; these are traditionally “big purchase” items.

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2008, Jobs, Sales, Transform

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Blog # 150 – Why So Long? Can’t We Just…

Posted on August 26, 2014 in Ethos, Implementation

Go Lean Commentary

We have now reached a milestone in the publishing of the (sometimes) daily blogs from the publishers of Go Lean…Caribbean, 150 submissions. This is a good time to address a consistent question we’ve gotten from some readers:

Why are the blog commentaries so long?
Can’t you accomplish the same objective with shorter blogs?

This submission here is meant to be a practice in active listening: We hear you! Consider this attribute of one blog published on August 20, 2014:

3742 words: NYC’s MetroCard – A Model for the Caribbean Dollar – https://goleancaribbean.com/blog/?p=2074

So can we accomplish the same objectives with shorter commentaries? The answer: No!

The question is interpreted by us as “Can’t we just…?”

There is a serious reason why this is the answer: These are serious issues. We cannot, must not skim on the consideration of the solutions.

Our experience has taught us that serious problems require thorough and thoughtful consideration. There is no place for abbreviation in this exercise.

Our experience?

Consider these events from 2008, (a frequent topic of discussion in Go Lean…Caribbean blogs):

Video: Too Big To Fail – 2011 Movie (Pardon the adult language):
YouTube Video Sharing Site (Retrieved 08/20/2014) –
https://www.youtube.com/watch?v=Aqf97p1Rdm0

As the events of September 2008 unfolded where the financial system (Wall Street) was on the brink of collapse, stakeholders from the US Treasury Department assembled a representative body to conceive a remedy.

The resultant plan/proposal was introduced on September 20, by Treasury Secretary Henry Paulson and was later named the Troubled Asset Relief Program (TARP)^[a].

The plan/proposal was only three pages long, intentionally short on details to facilitate quick passage by Congress.^[b]

The plan called for the U.S. Treasury to acquire up to $700 billion worth of mortgage-backed securities…

… in the end, in an analysis by Bloomberg Business News Source, it was disclosed that the Federal Reserve had, by March 2009, committed $7.77 trillion to rescuing the financial system. This amount is more than half the value of everything produced in the U.S. that year.^[c]Wikipedia Online Encyclopedia Source (Retrieved 08/20/2014) –
http://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008

So can’t we just…?

The book Go Lean…Caribbean serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU) and the Caribbean Central Bank (CCB). This Caribbean empowerment roadmap has 3 prime directives:

Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
Establishment of a security apparatus to protect the resultant economic engines.
Improve Caribbean governance to support these engines.

The book described both the CU and CCB as hallmarks of technocracy, a commitment to efficiency and effectiveness. The book itself is 370 pages and covers 144 different missions.

As alluded above, principals in the Go Lean…Caribbean movement were front-and-center in the events that unfurled in 2008.

The roadmap was constructed with the ethos to be thorough in the assessment, strategies, tactics, implementation and advocacies to understand the complexities of our time and forge permanent change in the Caribbean region. The following is a sample of these specific details from the book:

Community Ethos – Deferred Gratification	Page 21
Community Ethos – Consequences of Choices Lie in the Future	Page 21
Community Ethos – Intelligence Gathering	Page 23
Community Ethos – “Crap” Happens	Page 23
Community Ethos – Lean Operations	Page 24
Community Ethos – Ways to Impact the Future	Page 26
Strategy – Vision – Confederate 30 Member-States	Page 45
Strategy – Missions – 144 Advocacies	Page 457
Tactical – Confederating a Permanent Union	Page 63
Tactical – Fostering a Technocracy	Page 64
Implementation – Ways to Pay for Change	Page 101
Implementation – Ways to Deliver	Page 109
Planning – 10 Big Ideas for the Caribbean Region	Page 127
Planning – Lessons Learned from 2008	Page 136
Planning – Lessons Learned from New York City	Page 137
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Create Jobs	Page 152
Advocacy – Reforms for Banking Regulations	Page 199
Advocacy – Ways to Impact Wall Street	Page 200
Advocacy – Ways to Impact Main Street	Page 201
Advocacy – Ways to Impact Hollywood	Page 202
Appendix – Credit Ratings Agencies in 2008	Page 276

Imagine following a long complex and detailed recipe for baking a cake. To get the best results, it is important to include all the ingredients and follow the exacting instructions, the more detailed the better.

The quest for Go Lean…Caribbean is not as simple as baking a cake, rather a goal that is so much more important, to make the Caribbean region a better place to live, work and play.

We cannot skim on this effort – too much is at stake!

Download the free e-Book of Go Lean … Caribbean – now!

———————

Appendices:
a. http://www.nytimes.com/2008/09/21/business/21draftcnd.html?_r=0; retrieved August 20, 2014.
b. http://content.time.com/time/politics/article/0,8599,1843642,00.html; retrieved August 20, 2014.
c. Ivry, Bob; Keoun, Bradley; Kuntz, Phil (November 28, 2011). “Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress”. Bloomberg Markets Magazine. Bloomberg L.P. Retrieved May 14, 2012 from: http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html.

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2008, Milestone

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Recessions and Public Health

Posted on August 21, 2014 in Economics, Planning

Go Lean Commentary

A man needs three things to be happy: something to do, someone to love and something to hope for – declares the book Go Lean… Caribbean (Page 36).

In this vein, there is a whole field of study referred to as Public Health Economics, a subset of Econometrics. One champion of this field is the European Public Health Association or EUPHA; this is an international, multidisciplinary, scientific organization, bringing together around 14,000 public health experts for professional exchange and collaboration throughout Europe. They encourage a multidisciplinary approach to public health. Imagine a group studying the link between a failing economy and increased medical ailments.

While the logical connection of economy-stress-illness may be common sense, the quantification of actual ailments is a science… and art.

The book Go Lean … Caribbean is not a book of science, but gleans from scientific concepts in communicating the plan to elevate Caribbean society. The book focus on economics, and relates that the resultant societal engines can be seriously impacted by public safety/health threats. The book thusly serves as a roadmap for the introduction and implementation of a regional sentinel for public health, the technocratic Caribbean Union Trade Federation (CU). The complete prime directives are described as:

Optimize the economic engines of the Caribbean to elevate the regional economy.
Establish a security apparatus to protect the resultant economic engines.
Improve Caribbean governance to support these engines.

The Go Lean roadmap immediately calls for the establishment of a federal Health Department, with a charter to manage the health care and medical dimensions of the Caribbean, in conjunction with, and on behalf of the member-states. This charter will include mental health in its focus, just as serious as any other areas (cancer, trauma, virus, immunizations). This direct correlation of physical and mental health issues with the economy, in this foregoing article, thusly depicts the need for this charter:

Subtitle: The impact of downturns on physical and mental health

Exam results capture pupils’ achievements but not their enjoyment of learning. Life expectancy does not say anything about quality of life. Similarly, statistics on unemployment rates and wage levels do not tell the full story of recessions. Social scientists are increasingly interested in the effects of downturns on public health.

These effects are unclear. There is some evidence that physical health may actually improve in downturns. One paper by Christopher Ruhm^[a], now of the University of Virginia, looking at American data from 1972 to 1991, suggests that a one-percentage-point increase in unemployment reduced mortality by 4.6 deaths per 100,000 people. “With shorter working hours, people spend more time at home with their families and may be less stressed from overwork,” suggests Stephen Bezruchka of the University of Washington.

But there is also evidence that big economic crises are correlated with a deterioration in health. The Depression of the 1930s was associated with increases in malnutrition because people had less money to spend on food. In 1928, 14% of adults over 20 in Philadelphia were deemed to be suffering from malnutrition. By 1932 the figure had risen to 26%.

Social scientists are now scouring public-health data for clues about the impact of the recent crisis. A National Bureau of Economic Research paper ^[b] found that in America there has been a 4.8% increase in the likelihood of self-reported poor health for every one-percentage-point drop in state employment rates.

Some diseases have become more prevalent. In Greece incidence of HIV has risen, with a 50% increase in new infections in 2011 compared with 2010. The jump has been concentrated among injecting drug-users, and has been linked to large cuts to health services. Needle-exchange projects have been pared back, making transmission more likely.

Mental health does appear to suffer during downturns. Mr Ruhm’s work found that suicide rates rose with unemployment. The East Asian crisis of the late 1990s was marked by a spate of suicides: in Hong Kong, Japan and South Korea the crisis was responsible for 10,400 more suicides in 1998 than might normally have been expected. Research on Spain indicates that in the current crisis the suicide rate has increased by 8%. The rise is concentrated among people who are most likely to have lost their job.

Working out how health is affected by recessions is made harder by time lags. Job insecurity may lead people to the bottle, which will have repercussions later. A recent paper co-authored by Paul Frijters at the University of Queensland^[c] found that the latest recessionary period was associated with an almost 20% increase in alcoholism-related Google searches in America. Higher alcohol abuse today will worsen health outcomes over time.

Obesity is another slow-burning health problem. Higher unemployment leads to lower incomes, which can make it more difficult for people to eat well. Research from the University of Nebraska finds that “financial stress”—not being able to pay for essentials such as food or rent—is a strong predictor of obesity. In Australia the risk of being obese in 2010 was 20% higher among individuals who experienced financial stress in 2008 and 2009 than among those who did not experience it in either year. Policymakers should keep an eye on this growing body of research for guidance on how to marshal health-care resources when economies fall ill.

Sources

“The effect of the late 2000s financial crisis on suicides in Spain: an interrupted time-series analysis“, by J. A. L. Bernal, A. Gasparrini, C.M. Artundo and M. McKee, The European Journal of Public Health, 2013

“More Than 10,000 Suicides Tied To Economic Crisis, Study Says“, by Melanie Haiken, Forbes Magazine, quoting study published in June (2014) in the British Journal of Psychiatry.

“Was the economic crisis 1997–1998 responsible for rising suicide rates in East/Southeast Asia? A time–trend analysis for Japan, Hong Kong, South Korea, Taiwan, Singapore and Thailand“, by S.S. Chang, D. Gunnell, J.A. Sterne, T.H. Lu and A.T. Cheng, Social science & medicine, 2009

“Decomposing the Relationship between Macroeconomic Conditions and Fatal Car Crashes during the Great Recession: Alcohol-and Non-Alcohol-Related Accidents“, by C. Cotti and N. Tefft, The BE Journal of Economic Analysis & Policy, 2011

“Exploring the relationship between macroeconomic conditions and problem drinking as captured by Google searches in the US“, by P. Frijters, D.W. Johnston, G. Lordan and M.A. Shields, Social science & medicine, 2013

“Financial crisis and austerity measures in Greece: Their impact on health promotion policies and public health care“, by A.A. Ifanti, A.A. Argyriou, F.H. Kalofonou and H.P. Kalofonos, Health Policy, 2013

“Is Malnutrition Increasing?“, by E. Jacobs, American Journal of Public Health and the Nation’s Health, 1933

“HIV-1 outbreak among injecting drug users in Greece, 2011: a preliminary report“, by D. Paraskevis, G. Nikolopoulos, C. Tsiara, D. Paraskeva, A. Antoniadou, M. Lazanas, P. Gargalianos, M Psychogiou, M. Malliori, J. Kremastinou and A Hatzakis, Euro Surveill, 2011

“Are recessions good for your health?“, by C.J. Ruhm, The Quarterly Journal of Economics, 2000

“Prolonged financial stress predicts subsequent obesity: Results from a prospective study of an Australian national sample“, by M. Siahpush, T.T.K. Huang, A. Sikora, M. Tibbits, R.A. Shaikh, G.K. Singh, Obesity, 2013

“Health and Health Behaviors during the Worst of Times: Evidence from the Great Recession“, by E. Tekin, C. McClellan and K.J. Minyard, National Bureau of Economic Research, 2013

Appendix – Cited References:
a. Retrieved August 21, 2014 from: http://libres.uncg.edu/ir/uncg/f/C_Ruhm_Are_2000.pdf
b. Retrieved August 21, 2014 from: http://www.nber.org/papers/w19234
c. Retrieved August 21, 2014 from: http://www.york.ac.uk/media/economics/13_02.pdf

The Economist Magazine (Posted 08-24-2013; retrieved 08-21-2014) –
http://www.economist.com/news/finance-and-economics/21584020-impact-downturns-physical-and-mental-health-body-research

Consider these crises:

Suicides
Alcoholism
Drug Abuse (Prescription & Illegal Street Varieties)
Rage

No one wants to live in a society where these mental health crises remain unmitigated. But the foregoing article relates that increases in many physical ailments (HIV, malnutrition, obesity, etc) also constitute a crisis. The book declares that “a crisis is a terrible thing to waste”, so the required mitigations start with this Go Lean roadmap.

A lot is at stake – from a declining quality of life all the way to early death.

The Go Lean roadmap immediately calls for the coordination of the region’s healthcare needs. This point is declared early in the Go Lean book, commencing with this opening pronouncement in the Declaration of Interdependence (Page 12), as follows:

ix. Whereas the realities of healthcare … cannot be ignored and cannot be afforded without some advanced mitigation, the Federation must arrange for health plans to consolidate premiums of both healthy and sickly people across the wider base of the entire Caribbean population. The mitigation should extend further to disease management, wellness, obesity and smoking cessation programs.

There is no doubt that the Great Recession devastated Caribbean economies, but what were the affects on the region’s physical and mental health? If we want to minimize the “push-and-pull” factors that lead people to emigrate, we must answer this question very thoughtfully, then be prepared for the next crisis. This point was also anticipated in a further pronouncement in the Declaration of Interdependence (Page 13), as follows:

xxv. Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the Federation and of the member-states.

Go Lean … Caribbean therefore constitutes a change for the Caribbean. This is a roadmap to consolidate 30 member-states of 4 different languages and 5 colonial legacies (American, British, Dutch, French, Spanish) into a Trade Federation with the tools/techniques to bring immediate change to the region to benefit one and all member-states. This includes the monitoring/tracking/studying the physical and mental health trends. This empowered CU agency will liaison with non-governmental organizations (NGOs) and agencies like EUPHA, plus other foreign entities with the similar scope, like the US’s Center for Disease Control (CDC) and the World Health Organization (WHO).

The book details that there must first be adoption of such a community ethos, the appropriate attitude/spirit to forge change in the region. Go Lean details this and other ethos; plus the executions of the following strategies, tactics, implementations and advocacies to impact the region’s public health:

Community Ethos – Deferred Gratification	Page 21
Community Ethos – Economics Influence Choices	Page 21
Community Ethos – Privacy versus Public Protection	Page 23
Community Ethos – “Crap” Happens	Page 23
Community Ethos – Lean Operations	Page 24
Community Ethos – Cooperatives	Page 24
Community Ethos – Non-Government Organizations	Page 25
Community Ethos – Ways to Improve Sharing	Page 35
Community Ethos – Ways to Promote Happiness	Page 36
Community Ethos – Impact the Greater Good	Page 37
Strategy – Vision – Confederate 30 Member-States	Page 45
Strategy – Mission – Reform our Health Care Response	Page 47
Strategy – Agents of Change – Aging Diaspora	Page 57
Tactical – Fostering a Technocracy	Page 64
Separation of Powers – Department of Health	Page 86
Implementation – Ways to Deliver	Page 109
Planning – Ways to Model the EU	Page 130
Planning – Ways to Make the Caribbean Better	Page 131
Planning – Ways to Measure Progress	Page 148
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Improve Healthcare	Page 156
Advocacy – Ways to Impact Cancer	Page 157
Advocacy – Ways to Better Manage the Social Contract	Page 170
Advocacy – Ways to Foster Cooperatives	Page 176
Advocacy – Ways to Improve Emergency Management	Page 196
Appendix – Disease Management – Healthways Model	Page 300
Appendix – Trauma Center Definitions	Page 336

The foregoing news article links economic downturns to physical and mental health ailments – there is no denying. There is need for a permanent union to provide efficient stewardship for the Caribbean economy, security and governing engines – plus serve as a Health and Medical Sentinel.

Who will be that Sentinel? The Caribbean Union Trade Federation hereby submits for this job. The region’s stakeholders (people and institutions) are hereby urged to lean-in to this Go Lean roadmap, to make the Caribbean a better place to live, work, heal and play.

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2008, Health, Jobs, Security

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The Crisis in Black Homeownership

Posted on August 5, 2014 in Economics, Social

Go Lean Commentary:

The United States of America has been the best economic manifestation in the history of mankind, (as declared in the book Go Lean…Caribbean Page 67), yet the experience has not been the same for all of its citizens. This definitely applies to the “black and brown” populations. The Caribbean Diaspora fits this classification and their experience fits 100% to the events related in the below news article.

The US is the “land of the free and the home of the brave”, but some restrictions apply. This reality is not new, as racial disparities have long existed in the history of America. But after a major social revolution in the 1960’s, positive change came to American minorities, following by decades of progress.

Then 2008 happened …

That year saw the crisis of the Great Recession where American society lost $11 Trillion in net worth; then later regained $13.5 Trillion; (Go Lean book Page 69). According to the foregoing article, the Great Recession losses were not evenly distributed; nor was the subsequent recovery – those who lost the net worth (Middle Class) were not the ones who recovered (One Percent).

How the recession turned owners into renters and obliterated Black American wealth.

By: Jamelle Bouie

In 2005, three years before the Great Recession, the median black household had a net worth of $12,124. Yes, this was far behind the median white household—which had a net worth of $134,992—but it was a huge improvement from previous decades, in which housing discrimination made wealth accumulation difficult (if not impossible) for the large majority of African-American families.

By the official end of the recession in 2009, median household net worth for blacks had fallen to $5,677—a generation’s worth of hard work and progress wiped out. (The number for whites, by comparison, was $113,149.) Overall, from 2007 to 2010, wealth for blacks declined by an average of 31 percent, home equity by an average of 28 percent, and retirement savings by an average of 35 percent. By contrast, whites lost 11 percent in wealth, lost 24 percent in home equity, and gained 9 percent in retirement savings. According to a 2013 report^[a] by researchers at BrandeisUniversity, “half the collective wealth of African-American families was stripped away during the Great Recession.”

It was a startling retrenchment, creating the largest wealth, income, and employment gaps since the 1990s. And, if a new study^[b] from researchers at CornellUniversity and RiceUniversity is any indication, these gaps are deep, persistent, and difficult to eradicate.

In the study, called “Emerging Forms of Racial Inequality in Homeownership Exit, 1968–2009,” sociologist Gregory Sharp and demographer Matthew Hall examine the relationship between race and risk in homeownership. Simply put, African-Americans are much more likely than whites to switch from owning homes to renting them.

“The 1968 passage of the Fair Housing Act outlawed housing market discrimination based on race,” explained Sharp in a press release. “African-American homeowners who purchased their homes in the late 1960s or 1970s were no more or less likely to become renters than were white owners. However, emerging racial disparities over the next three decades resulted in black owners who bought their homes in the 2000s being 50 percent more likely to lose their homeowner status than similar white owners.”

This wasn’t a matter of personal irresponsibility. Even after adjusting for socio-economic characteristics, debt loads, education, and life-cycle traits like divorce or job loss, blacks were more likely to lose their homes than whites.

If you’re familiar with American history and housing policy, this shouldn’t come as a surprise. The explicit housing discrimination of the mid-20^th century has left a mark—arguably a scar—on the landscape of American homeownership. The combination of red-lining, block-busting, racial covenants, and other discriminatory measures means that, even now, a majority of blacks live in neighborhoods with relatively poor access to capital and mortgage loans. What’s more, this systematic discrimination has left many black households unable to afford down payments or other housing costs, even if loans are available.

And in the event that black households are able to save and afford a home, they aren’t as financially secure as their white counterparts. To wit, middle-class African-Americans are more likely to belong to the lower middle class of civil servants and government workers—professions that, in the last five years, have been slashed as a consequence of mass public-sector downsizing^[c]. All else being equal, a black schoolteacher who loses her job to budget cuts is less likely to have savings—and thus a safety net—than her white counterpart.

But this isn’t just a story of legacies and effects. In addition to showing the consequences of past discrimination, Sharp and Hall argue that African-Americans have been victimized by a new system of market exploitation. Banks like Wells Fargo steered^[d] blacks and other minorities into the worst subprime loans, giving them less favorable terms than whites and foreclosing on countless homes. In a 2012 lawsuit^[e], the ACLU and National Consumer Law Center alleged that the now-defunct New Century Financial, working with Morgan Stanley, pushed thousands of black borrowers into the riskiest loans, leaving many in financial ruin. As early as 2005, the Wall Street Journal reported^[f] that blacks were twice as likely to receive subprime loans. And in a New York University study published last year^[g], researchers found that black and Hispanic families making more than $200,000 a year were more likely to receive subprime loans than white families making less than $30,000.

Together, all of this means that—according to Sharp and Hall—African-Americans are 45 percent more likely than whites to lose their homes. That means they’re more likely to lose their accumulated wealth and to slide down the income ladder, and less likely to pass the advantages of status and mobility to their children.

Apropos of that observation, recent data from the Bureau of Labor Statistics^[h] shows an incredible level of youth unemployment for blacks and Latinos. More than 21 percent of African-Americans aged 16 to 24 are out of work, compared with a national average of 14.2 percent. For black teenagers in particular, joblessness soars to nearly 40 percent. It’s a catastrophe with serious economic consequences. The Center for American Progress estimates^[i] that the young adults who experienced long-term unemployment during the worst of the recession will lose more than $20 billion in earnings over the next 10 years. And given the slow recovery, odds are good they’ll never recover those lost earnings.

It’s tempting to treat these as subsets of broader problems: poor assistance to homeowners and too much austerity. But they’re not. Even during the boom economy of the 1990s, black employment lagged behind the national average. And the racial wealth gap is a persistent fact of American life.

Likewise, the challenges of black homeownership are a function of discriminatory housing policy^[j], as are a whole host of other problems, from mass incarceration and overly punitive policing to poor air quality^[k] and food access. These challenges are heavily location-dependent, which is another way to say they are heavily racialized and most prevalent in the segregated, working-class or low-income communities that characterize life for most African-Americans^[l], even those with middle-class incomes.

For reasons both political and ideological, it’s nearly verboten in mainstream conversation to argue that racialized problems require race-conscious solutions. Knowing what we know about the demographics of foreclosures, for example, we should ensure any program to help underwater homeowners includes a specific measure to assist black victims of predatory lending, who may need additional help to get on sure footing.

For more than anyone else, this is a message for liberals and progressives, who—for all of their racial sensitivity—are still reluctant to tackle the economic dimensions of racism, even as they represent the vast majority of nonwhite voters and draw critical support from African-American constituencies. It’s how Elizabeth Warren could give “11 Commandments for Progressives” ^[m] —and receive huge applause—without mentioning the deep problems of racial inequality. One of her commandments is “that no one should work full-time and still live in poverty, and that means raising the minimum wage.” But solving this problem for African-Americans and Latinos—who tend to live in areas that are segregated from job opportunities—is very different than solving it for whites.

While conservatives and Republicans can play a role here, it’s Democrats who are committed to reducing income inequality and bringing balance to our lopsided economic system. Success on those fronts requires a return to race-conscious policymaking, from programs to increase the geographic mobility of low-income workers—relocation grants for individuals or transportation grants for communities with a spatial mismatch between jobs and housing—to public works programs aimed at low-income minority communities, to race-based affirmative action as a way to boost a flagging black middle class.

There’s little in American life that escapes the still-powerful pull of past and present racism, and effective policymaking—to say nothing of effective problem-solving—requires a response to that racism. Otherwise, we entrench the same disparities for a new generation.

——–

Jamelle Bouie is a Slate staff writer covering politics, policy, and race.
The Slate – Daily Magazine for the Web – Posted 07-24-2014; retrieved 08-04-2014
http://www.slate.com/articles/news_and_politics/politics/2014/07/black_homeownership_how_the_recession_turned_owners_into_renters_and_obliterated.html

The points of this foregoing article aligns with the Go Lean book and the collection of blogs/commentaries. The book posits that the crisis persists for the Caribbean and their Diaspora in North America and Europe. What’s more, this movement asserts that this crisis, any crisis, is a terrible thing to waste.

The Caribbean Diaspora have fled their Caribbean homelands over past decades in search of better economic opportunities. It is now the conclusion that many of these “lands of refuge” are rigged in favor of certain ethnic groups; those groups do not include the “black and brown” of the Caribbean. This commentary has relayed, repeatedly, that this Caribbean-bred demographic can do better at home … in the Caribbean. The following are related previous posts:

Unfortunately for the Caribbean, this societal abandonment has continued. Analysis by the Inter-American Development Bank asserts that the Caribbean continues to endure a brain drain of 70% among the college educated population; (https://goleancaribbean.com/blog/?p=1433).

This blog entry depicted how the Caribbean Diaspora that fled to Great Britain has not fared well; (https://goleancaribbean.com/blog/?p=1683)

In addition to economics, there is the concern for security and justice. This blog entry (https://goleancaribbean.com/blog/?p=546) related the dual standards of justice in the US, where all men are treated as equals (wink-wink), just some are more equal than others.

Yes, as the old adage relates: “the grass is not greener on the other side”. See this VIDEO here (Part 1 of 2):

(Click on first continuation video for Part 2 of 2 or click here: https://www.youtube.com/watch?v=gOS3BBmUxvs)

The assertion of the book Go Lean…Caribbean is that once the proposed empowerments are put in place, the Caribbean Diaspora should consider repatriating to their ancestral homelands.

Social Scientists maintain that when animals/mammals are confronted with threats, they have to choose between (stand and) fight or flight. For 50 years, the Caribbean citizens have defaulted to flight. Change has now come to the Caribbean. The book Go Lean…Caribbean serving as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU), hereby presents “stand and fight” options. This roadmap will spearhead the elevation of Caribbean society. The prime directives of the CU are presented as the following 3 statements:

Optimization of the economic engines in order to grow the regional economy & create 2.2 million new jobs at home.
Establishment of a security apparatus to protect the resultant economic engines.
Improve Caribbean governance to support these engines.

The book posits that the improved conditions projected over the 5 years of the roadmap will neutralize the impetus for Caribbean citizens to flee, identified as “push and pull” factors. This point is stressed early in the book (Page 13) in the following pronouncements in the Declaration of Interdependence:

xix. Whereas our legacy in recent times is one of societal abandonment, it is imperative that incentives and encouragement be put in place to first dissuade the human flight, and then entice and welcome the return of our Diaspora back to our shores. This repatriation should be effected with the appropriate guards so as not to imperil the lives and securities of the repatriated citizens or the communities they inhabit. The right of repatriation is to be extended to any natural born citizens despite any previous naturalization to foreign sovereignties.

xx. Whereas the results of our decades of migration created a vibrant Diaspora in foreign lands, the Federation must organize interactions with this population into structured markets. Thus allowing foreign consumption of domestic products, services and media, which is a positive trade impact. These economic activities must not be exploited by others’ profiteering but rather harnessed by Federation resources for efficient repatriations.

This foregoing article highlights the new realities ushered into the world as a result of the events of the Year 2008. The Go Lean book focuses heavy on this subject, even identifying this as a motivation in the same Declaration of Interdependence early in the book (Page 13):

xxv. Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the Federation and of the member-states.

The Go Lean roadmap proposes a community ethos in which economic principles are recognized as playing a crucial role in the chain-of-events that led to fight-or-flight decisions for Caribbean Diaspora. (These principles were always the reality, just not professionally managed as such). These principles are identified and qualified (Page 21) as follows:

1. People Choose
2. All Choices Involve Costs
3. People Respond to Incentives in Predictable Ways
4. Economic Systems Influence Individual Choices and Incentives
5. Voluntary Trade Creates Wealth
6. The Consequences of Choices Lie in the Future

These principles cannot be glossed over or handled lightly; this is why the Go Lean book contains 370 pages of finite details for managing economic change in the region. In addition to the assessments of the region’s standings, the book contains the following sample of community ethos, strategies, tactics, implementations and advocacies to impact the Caribbean homeland:

Community Ethos – Job Multiplier	Page 22
Community Ethos – Lean Operations	Page 24
Community Ethos – Return on Investments	Page 24
Community Ethos – Ways to Impact the Future	Page 26
Strategy – Competition – Remain Home –vs- Emigrate	Page 49
Strategy – Agents of Change – Aging Diaspora	Page 57
Tactical – Growing the Caribbean Economy to $800 Billion	Page 67
Tactical – Separation of Powers – Versus Member-States Governments	Page 71
Implementation – Year 1 / Assemble Phase	Page 96
Implementation – Ways to Deliver	Page 109
Implementation – Ways to Better Manage Debt	Page 114
Implementation – Trade Mission Objectives	Page 116
Implementation – Reasons to Repatriate	Page 118
Anecdote – Experiences of a Repatriated Resident	Page 126
Planning – 10 Big Ideas for the Caribbean Region	Page 127
Planning – Lessons Learned from 2008	Page 136
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Create Jobs	Page 152
Advocacy – Ways to Improve Credit Ratings	Page 155
Advocacy – Ways to Improve Housing	Page 161
Advocacy – Ways to Impact Wall Street	Page 200
Anecdote – Experiences of Diaspora Member Living Abroad	Page 216
Advocacy – Ways to Impact the Diaspora	Page 217
Advocacy – Ways to Help the Middle Class	Page 223
Appendix – Caribbean Emigration Statistics	Page 269
Appendix – Credit Ratings Agencies Role in 2008	Page 276

The Go Lean roadmap has simple motives: fix the problems in the homeland to make the Caribbean a better place to live, work and play. We want to keep Caribbean citizens in the Caribbean. There should be no need to go abroad and try to foster an existence in a foreign land. There is heavy-lifting wherever a person resides. Let’s do the “lifting” here, where at least we are at home and we are treated equitably.

Too many people left, yet have too little to show for it. Now is the time for all of the Diaspora (those in the US, and other countries) to lean-in for the empowerments described in the book Go Lean … Caribbean. We understand your pain, we have been impacted too. (The publishers of the book were entrenched in the Wall Street culture in 2008). This Big Idea now is to use the same energy and innovation to create solutions for Main Street – but not Main Street USA, rather Main Street Caribbean.

This is a dramatic change for the Caribbean, one that is overdue, an invitation to build an elevated society in the Caribbean that many had fled to find elsewhere, yet failed. We can make the Caribbean a better place to live, work and play. We can succeed here.

Download the book Go Lean … Caribbean – now!

———————————————————————————————–

Appendices:

a. Retrieved from https://www.evernote.com/shard/s4/sh/2f378f98-d21b-4f5b-89d4-c3a47419b0ad/479f14e61917697b135246e01d20f85f

b. Retrieved from http://news.rice.edu/2014/07/22/african-american-homeownership-increasingly-less-stable-and-more-risky-2/

c. Retrieved from http://www.epi.org/publication/public-sector-job-losses-unprecedented-drag/

d. Retrieved from http://articles.baltimoresun.com/2012-07-12/news/bs-md-ci-wells-fargo-20120712_1_mike-heid-wells-fargo-home-mortgage-subprime-mortgages

e. Retrieved from http://www.citylab.com/housing/2012/10/did-big-banks-subprime-mortgage-crisis-violate-civil-rights-law/3598/

f. Retrieved from http://online.wsj.com/news/articles/SB111318092881303093

g. Retrieved from http://www.citylab.com/housing/2013/08/blacks-really-were-targeted-bogus-loans-during-housing-boom/6559/

h. Retrieved from http://www.npr.org/blogs/codeswitch/2014/07/21/329864863/the-youth-unemployment-crisis-hits-african-americans-hardest

i. Retrieved from http://www.americanprogress.org/issues/labor/report/2013/04/05/59428/the-high-cost-of-youth-unemployment/

j. Retrieved from http://www.thedailybeast.com/articles/2014/03/13/how-we-built-the-ghettos.html

k. Retrieved from http://grist.org/climate-energy/before-repairing-the-climate-well-have-to-repair-the-impacts-of-racism/

l. Retrieved from http://www.slate.com/articles/news_and_politics/politics/2014/04/desean_jackson_richard_sherman_and_ black_american_economic_mobility_why.html

m. Retrieved from http://www.vox.com/2014/7/21/5918063/elizabeth-warrens-11-commandments-for-progressives-show-democrats

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2008, Banks, Civil Rights, Crony-Capitalism, History, Housing, Power

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Role Model Warren Buffet – An Ode to Omaha

Posted on July 16, 2014 in Ethos, Planning

Go Lean Commentary

This book Go Lean…Caribbean was written in Omaha, Nebraska. The timeframe of being in this Mid-Western American city has now come to an end.

The Great Recession is now over… from the experience of enduring the crisis. It is now only the paperwork that needs to be completed. The paperwork is the Go Lean book: a composition of lessons learned and a roadmap to effectuate change based on the lessons.

What is so special about Omaha?

Well, one thing: The Oracle of Omaha…

… Warren Buffet.

The foregoing article/photo highlights the adoration that the community has for Mr. Buffett.

By: Lance Ulanoff

Title: Nebraska Kid Takes Selfie With Paul McCartney and Warren Buffett

Sixteen-year-old Tom White of Omaha, Nebraska, stumbled upon a scene that could only happen in the movies or a New Yorker cartoon: Paul McCartney and Billionaire Warren Buffett sitting on a bench. He did what comes naturally to his generation: took a selfie.

McCartney, who recently recovered from a hospital stay is back on the road, with a touring stop in Lincoln, Nebraska on July 14. The photo was taken on the evening of July 13.

Buffett lives in Omaha, and the bench break apparently came as part of a lengthy evening of dinner and ice cream, according to Omaha.com. In fact, White’s photo is just one of many captured by Omaha locals as McCartney and Buffett did an eatery crawl through the Dundee section of Omaha.
Mashable.com Social Media Site (Retrieved 07/15/2014) – http://mashable.com/2014/07/14/nebraska-selfie-warren-buffet-paul-mccartney/?utm_cid=mash-prod-email-topstories&utm_emailalert=daily&utm_content=buffer75200&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Why is Warren Buffett such a great role model for consideration, especially for the Caribbean to emulate?

His entrepreneurship. His commitment to community. His concern for the Greater Good.

Warren Buffet is a good example/sample of someone who prospered where he is planted.

He was born in Omaha, Nebraska (1930), raised and educated there, attending the University of Nebraska. Now as one of the richest men in the world, (# 1 on the Forbes List for 2008 and # 3 since 2011), he has the resources to live anywhere in world. But he chooses to prosper right here in Omaha, where he is planted. Mr. Buffet is widely considered the most successful investor of the 20th century. He is called the “Wizard of Omaha”, “Oracle of Omaha”, or the “Sage of Omaha” and is noted for his adherence to the “value investing”^[a] philosophy and for his personal frugality despite his immense wealth (See photo of his home). Mr. Buffett is also a notable philanthropist, having pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Gates Foundation.

In 2012, American magazine Time named Mr. Buffett one of the most influential people in the world.

On April 11, 2012, he was diagnosed with prostate cancer, for which he successfully completed treatment in September 2012.

Despite his great wealth, power, and influence, Mr. Buffett is very much human, and humane. His capacity for charity is as compelling as his wealth generating prowess.

Many of the lessons/insights from the role model Warren Buffet and the community of Omaha align with the book Go Lean… Caribbean. The primary focus of this book is the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). The following 3 prime directives of the CU are explored in full details:

Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
Establishment of a security apparatus to protect the resultant economic engines.
Improve Caribbean governance to support these engines.

While the Great Recession may be over in Omaha in specific and the US in general, the effects continue to linger in the Caribbean. The Go Lean book serves as a roadmap for the CU. This commences with the assessment that the Caribbean is still very much in crisis, and that this “crisis would be a terrible thing to waste”. As a planning tool, the book goes on to detail lessons learned from the 2008 Crisis (Page 136) and the City of Omaha (Page 138). This roadmap accepts that the problems of the Caribbean are too big for any one member-state to effect change alone, but rather there should be an interdependent solution. This point is detailed in the Declaration of Interdependence at the outset of the book, pronouncing this need for regional solutions (Page 10):

When, in the course of human events, it becomes necessary for one people to unite with others so as to connect them together to collaborate, confederate and champion the challenges that face them, we the people of Caribbean democracies find it necessary to accede and form a confederated Union, the Caribbean Union Trade Federation, with our geographic neighbors of common interest.

The Go Lean strategy is to confederate all the 30 member-states of the Caribbean (Page 44), despite their language and legacy, into an integrated “single market”. Tactically, this will allow a separation-of-powers (Page 71) between the member-states governments and federal agencies, allowing for efficient economies-of-scale for delivering the benefits of a technocracy to the region.

This is the example of Omaha, personified!

It was practical, providential and inspirational to write this book in this city; see VIDEO here:

The metropolitan area of Omaha had been prominently featured in previous blog considerations:

https://goleancaribbean.com/blog/?p=1341	Blog Number 100: College World Series Time
https://goleancaribbean.com/blog/?p=740	Foreign Mission Offices – Why not … a profit center?
https://goleancaribbean.com/blog/?p=273	10 Things We Want from the US and 10 Things We Don’t Want from the US

Now is the time for all of the Caribbean to lean-in for the empowerments described in the book Go Lean…Caribbean. There are benefits for all to consider in reviewing all aspects of the metropolitan area of Omaha: people, students, patients, governance, institutions and community organizations. These are all a part of the eco-systems of society. So from Omaha’s society, it is time now to apply the benefits in Caribbean society.

The methodology of this assignment was to look, listen, learn, lend-a-hand, and then finally: lead!

The Omaha assignment is now complete! Now the publishers are moving on, back to the Caribbean.

Time to lead!

Download the free e-Book of Go Lean … Caribbean – now!

——————————————————————————————————————————

Referenced Citation:

a. Value investing is an investment paradigm that derives from the ideas on investment that Ben Graham and David Dodd began teaching at Columbia Business School in 1928 and subsequently developed in their 1934 text Security Analysis. Although value investing has taken many forms since its inception, it generally involves buying securities that appear under-priced by some form of fundamental analysis. As examples, such securities may be stock in public companies that trade at discounts to book value or tangible book value, have high dividend yields, have low price-to-earnings multiples or have low price-to-book ratios.

High-profile proponents of value investing, including Berkshire Hathaway chairman Warren Buffett, have argued that the essence of value investing is buying stocks at less than their intrinsic value. The discount of the market price to the intrinsic value is what Benjamin Graham called the “margin of safety”. The intrinsic value is the discounted value of all future distributions. However, the future distributions and the appropriate discount rate can only be assumptions. (Graham never recommended using future numbers, only past ones). For the last 25 years, Warren Buffett has taken the value investing concept even further with a focus on “finding an outstanding company at a sensible price” rather than generic companies at a bargain price.

Source: Retrieved July 15, 2014 from; http://en.wikipedia.org/wiki/Value_investing

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2008, Banks, Model, Omaha

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5 Steps of a Bubble

Posted on June 13, 2014 in Economics, Planning

Go Lean Commentary

What have we learned?

The Great Recession of 2008 – 2009 has come and gone – though many Caribbean member-states are still reeling from this crisis. The book Go Lean…Caribbean serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU); it declares that a crisis is a terrible thing to waste – quoting famed American Economist Paul Romer.

A popular leadership principle dictates a methodical progression as follows, identified as the 5-L’s:

Look
Listen
Learn
Lend-a-hand
Lead

The CU will assume the leadership role of exploring the opportunities presented as a result of this recent crisis. This leadership starts with the need to study/learn from the 2008 financial crisis, with the goal of minimizing future crisis or at least mitigating their effects. But 2008 is not the only crisis for Caribbean consideration, we also contend with an annual hurricane season. This subject is not an academic pursuit, but rather turn-by-turn directions to elevate Caribbean life and culture. In fact, the following 3 prime directives are explored in the roadmap:

Optimization of the economic engines in order to grow the regional economy to $800 Billion.
Establishment of a security apparatus (including disaster management) to protect the resultant economic engines.
Improve Caribbean governance to support these engines.

All in all, the roadmap commences with the recognition that since 2008 all the Caribbean is in crisis. This acknowledgement is pronounced in the Declaration of Interdependence (Page 13) with these statements:

xxiv. Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles. Thereby attracting direct foreign investment because of the stability and vibrancy of our economy.

xxv. Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the Federation and of the member-states.

This issue of learning from the 2008 crisis has been a consistent theme of the Go Lean blogs entries as sampled here:

a. https://goleancaribbean.com/blog/?p=841 – Post 2008: Having Less Babies is Bad for the Economy

b. https://goleancaribbean.com/blog/?p=782 – Open the Time Capsule: The Great Recession of 2008

c. https://goleancaribbean.com/blog/?p=709 – Post 2008 Student Debt Holds Back Many Would-be Home Buyers

d. https://goleancaribbean.com/blog/?p=528 – Facebook plans to provide mobile payment services and remittances

e. https://goleancaribbean.com/blog/?p=378 – US Federal Reserve Releases Transcripts from 2008 Meetings

f. https://goleancaribbean.com/blog/?p=353 – Book Review: ‘Wrong – Nine Economic Policy Disasters and What We Can Learn…’

g. https://goleancaribbean.com/blog/?p=235 – Post 2008 Tourism’s changing profile

The main lesson learned about the cause of the 2008 Great Recession is a poignant one: it spurned from a housing bubble.

Change has come to the Caribbean; the driver of this change is technology, globalization and climate change. From these 3 drivers, bubbles can easily inflate and deflate (burst). The Caribbean region must be astute to recognize the formation of such bubbles. Most importantly, we must apply technocratic skills to mitigate the risk of these bubbles and their eventual deflation.

The term “bubble,” in the financial context, generally refers to a situation in which the price of an asset exceeds its fundamental value by a large margin. During a bubble, prices for a financial asset or asset class are highly inflated, bearing little relation to the intrinsic value of the asset. The terms “asset price bubble,” “financial bubble” or “speculative bubble” are interchangeable, and are often shortened simply to “bubble.”

A basic characteristic of a bubble is the suspension of disbelief by most participants during the “bubble phase.” There is a failure to recognize that regular market participants and other forms of traders are engaged in a speculative exercise that is not supported by previous valuation techniques. Also, bubbles are usually identified only in retrospect, after the bubble has burst. Economist Hyman Minsky identified five stages in a typical credit cycle – displacement, boom, euphoria, profit taking and panic. Although there are various interpretations of the cycle, the general pattern of bubble activity remains fairly consistent.

1.       Displacement
A displacement occurs when investors get enamored by a new paradigm, such as an innovative new technology or interest rates that are historically low. A classic example of displacement is the decline in the federal funds rate from 6.5% in May, 2000, to 1% in June, 2003. Over this three-year period, the interest rate on 30-year fixed-rate mortgages fell by 2.5 percentage points to a historic lows of 5.21%, sowing the seeds for the housing bubble.

2.       Boom
Prices rise slowly at first, following a displacement, but then gain momentum as more and more participants enter the market, setting the stage for the boom phase. During this phase, the asset in question attracts widespread media coverage. Fear of missing out on what could be a once-in-a-lifetime opportunity spurs more speculation, drawing an increasing number of participants into the fold.

3.       Euphoria
During this phase, caution is thrown to the wind, as asset prices skyrocket. The “greater fool” theory plays out everywhere. Valuations reach extreme levels during this phase. For example, at the peak of the Japanese real estate bubble in 1989, land in Tokyo sold for as much as $139,000 per square foot, or more than 350-times the value of Manhattan property. After the bubble burst, real estate lost approximately 80% of its inflated value, while stock prices declined by 70%. Similarly, at the height of the internet bubble in March, 2000, the combined value of all technology stocks on the Nasdaq was higher than the GDP of most nations.

4.       Profit Taking
By this time, the smart money – heeding the warning signs – is generally selling out positions and taking profits. But estimating the exact time when a bubble is due to collapse can be a difficult exercise and extremely hazardous to one’s financial health because, as John Maynard Keynes put it, “the markets can stay irrational longer than you can stay solvent.” Note that it only takes a relatively minor event to prick a bubble, but once it is pricked, the bubble cannot “inflate” again.

5.       Panic
In the panic stage, asset prices reverse course and descend as rapidly as they had ascended. Investors and speculators, faced with margin calls and plunging values of their holdings, now want to liquidate them at any price. As supply overwhelms demand, asset prices slide sharply. One of the most vivid examples of global panic in financial markets occurred in October 2008, weeks after Lehman Brothers declared bankruptcy and Fannie Mae, Freddie Mac and AIG almost collapsed. The S&P 500 plunged almost 17% that month, its ninth-worst monthly performance. In that single month, global equity markets lost a staggering $9.3 trillion of 22% of their combined market capitalization.

Investopedia Online Investing Trade Journal (Retrieved June 12, 2014) http://www.investopedia.com/slide-show/5-steps-of-a-bubble/

The Caribbean region felt the brunt of the Panic of this 2008/2009 crisis. See this news article posted on Jan 18, 2009 in USA Today, describing the full economic devastation with this title: “Caribbean islands slammed with double financial hit” – http://abcnews.go.com/Business/story?id=6677886&page=1&singlePage=true

For the Caribbean, the lessons of the above 5 Steps of a Bubble was not academic, it was real-life, affecting every man, woman and child. But still, bubbles continue to be impactful; in addition to housing market bubbles, the Caribbean must contend with post-hurricane recoveries.

The Go Lean book envisions the CU as a confederation of the 30 member-states of the Caribbean to do the heavy-lifting of empowering and elevating the Caribbean economy by creating a “single market” for the region. Many benefits are due to abound, but there must be caution not to create bubbles.

The book details the community ethos to adopt to monitor, manage and mitigate risks and the emergence of bubbles. The roadmap also details the executions of the following strategies, tactics, implementations and advocacies to guide progress in the region; (a bubble can result in “1 step forward but 2 steps backwards”):

Anecdote – Puerto Rico – The Greece of the Caribbean	Page 18
Community Ethos – Consequences of Choices Lie in the Future	Page 21
Community Ethos – Money Multiplier	Page 22
Community Ethos – Lean Operations	Page 24
Community Ethos – Return on Investments (ROI)	Page 24
Community Ethos – Ways to Impact the Future	Page 26
Community Ethos – Ways to Impact the Greater Good	Page 37
Strategy – Agents of Change – Technology	Page 57
Strategy – Agents of Change – Globalization	Page 57
Strategy – Agents of Change – Climate Change	Page 57
Tactical – Confederating a Non-Sovereign Union	Page 63
Tactical – Fostering a Technocracy	Page 64
Tactical – Growing Economy – Avoid Economic Bubbles	Page 69
Tactical – Growing Economy – Trade and Globalization	Page 70
Tactical – Separation of Powers – Central Bank	Page 73
Tactical – Separation of Powers – Securities Regulatory Agency	Page 74
Tactical – Separation of Powers – Housing and Urban Authority	Page 83
Implementation – Ways to Deliver	Page 109
Implementation – Ways to Better Manage Debt	Page 114
Implementation – Ways to Benefit from Globalization	Page 119
Planning – 10 Big Ideas	Page 127
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Control Inflation – Post Natural Disasters	Page 153
Advocacy – Ways to Improve Housing	Page 161
Advocacy – Ways to Improve for Natural Disasters	Page 184
Advocacy – Ways to Foster Technology	Page 197
Advocacy – Reforms for Banking Regulations	Page 199
Advocacy – Ways to Impact Wall Street	Page 200
Advocacy – Ways to Impact Main Street	Page 201
Appendix – Controlling Inflation – Technical Details – Quick Recovery	Page 320

Now is the time for all of the Caribbean, the people and governing institutions, to lean-in for the empowerments described in the book Go Lean … Caribbean. We start by understanding “bubbles”. While the 2008 Great Recession crisis originated as an American bubble, the rest of the world felt its devastating effects. This case-in-point sets the model for the CU to emulate for the Caribbean region; we need a resilient economy that can grow in “ripe” conditions, but avoid any bubble effects. Every year the region is threatened by tropical storms and hurricanes; the spending for recovery, repair and rebuilding can always create a bubble-effect.

This has been the legacy in the past, but now the CU administration is proposed as “new guards” to shepherd the economy to avoid such pitfalls.

The CU/Go Lean roadmap is a complete solution for Caribbean elevation. Despite threats – natural disasters and economic bubbles – the region can be led to a better destination, a better place to live, work and play.

Download the book Go Lean … Caribbean – now!

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Lessons Learned from the American Airlines merger

Posted on May 7, 2014 in Industries, Strategy, Tactical

Go Lean Commentary – Lessons on Delivery Arts & Sciences

Tourism is the number one economic driver in the Caribbean region. But the eco-system has cracks …

More and more tourists are travelling to the Caribbean…by cruise ships. Less and less are travelling to the region by airplane. Therefore no air-flights, no hotels, no restaurants, no taxi cabs, no job multipliers, and no full economic “chain-link”.

The 2008 financial crisis placed a heavy strain on the US’s largest carrier: American Airlines. On July 2, 2008, American announced furloughs of up to 950 flight attendants, in addition to the furlough of 20 MD-80 aircraft. American’s hub at Luiz Muñoz Marin Airport in San Juan, Puerto Rico (PR) was truncated from 38 to 18 daily inbound flights. The holding company, AMR Corporation, filed for Chapter 11 bankruptcy protection on November 29, 2011, and the airline made cuts in July 2012 due to the grounding of several aircraft associated with its bankruptcy and lack of pilots due to retirements. American Eagle, the regional carrier, (the Caribbean’s largest), was to retire 35 to 40 regional jets as well as its entire Saab turboprop fleet. [b] American Eagle PR ceased operation in March 2013. This status created dysfunction for the entire Eastern Caribbean region.

This dysfunction has created the urgency for permanent change. This is a prime directive of the book Go Lean … Caribbean, to optimize the region’s economic engines, including enhancements for Caribbean tourism, cruise and “long stay” visitors.

The delivery story continues…

By summer 2012, American Airlines considered merging with another airline as part of a restructuring plan.

On February 14, 2013, AMR Corporation and US Airways Group officially announced that the two companies would merge to form the largest airline (and airline holding company) in the world, with bondholders of American Airlines parent AMR owning 72% of the new company and US Airways shareholders owning the remaining 28%. The combined airline would carry the American Airlines name and branding, while US Airways’ management team, including CEO Doug Parker, would retain most operational management positions, and the headquarters would be consolidated at American’s current headquarters in Fort Worth, Texas. The merger would create the world’s largest airline, which, along with United and Delta Air Lines, would control three-quarters of the US market. US Federal Bankruptcy judge Sean Lane approved the merger in March 2013.

The United States Department of Justice filed a lawsuit in August 2013 seeking to block the merger, arguing that it would mean less competition and higher prices. On November 12, the airlines reached a settlement (eliminating certain routes and hubs) with the US Justice Department to settle the lawsuit and allow the merger to be finalized. Thus restoring the public “trusts”.

AMR and US Airways Group completed the merger on December 9, 2013, with the new holding company American Airlines Group, Inc. being listed on NASDAQ that day. [b]

In a January 2014 letter [a] to frequent flyers of both airlines, it was announced: “It’s an exciting time at American Airlines, and we’re kicking off the new year with you — our most loyal customers in mind. For now, we’ll continue to maintain our separate loyalty programs — Dividend Miles and AAdvantage® — with rules and benefits of each program still applying, but rest assured your mileage balance and elite status are safe, secure and will continue to be honored”.

There remains a lot of work to do as both airlines are combined, and since the close of the merger, the two airlines have been working to deliver the first phases of enhanced benefits to their customers … and communities. Here are some highlights:

1. Pick “low-hanging fruit”

Earning and redeeming miles – Members can now earn and redeem Dividend Miles (US Airways) when flying on American or US Airways with their Dividend Miles number. All miles and segments earned when flying on either airline will count toward elite status qualification in the program of your choice.

Elite benefits – Elite members of each airline can now enjoy select reciprocal benefits when flying on either airline, including First and Business Class check-in, complimentary checked bags, priority security and boarding, and many more.

More lounge access – In addition to the US Airways Clubs, club members can now access 35 Admirals Club® locations in major airports worldwide.

2. Intermediate goals and plans

On March 30, US Airways exited the competing Star Alliance. The initiation with the oneworld® alliance started on March 31, giving customers opportunities to access the widest array of destinations around the globe. More and more benefits will emerge as the merger (and the oneworld alliance) consummates. Coming soon, customers will enjoy access to an enhanced network through the American/US Airways code-share, allowing for the seamlessly booking of travel on either airline.

3. Long-term objectives

The actual integration of the airlines under a single air operator’s certificate will not be completed until a much later date. The combined airline will carry the American Airlines name and branding, and will maintain the existing US Airways hubs in Charlotte, Philadelphia, Phoenix, and Washington DC for a period of at least five years under the terms of a settlement with the US Department of Justice.

4. End Game

The resultant single-branded airline will operate an extensive international and domestic network, with scheduled flights throughout North America, the Caribbean, South America, Europe, and Asia. Its route network will center around the five American “cornerstone” hubs in Dallas/Fort Worth, New York, Los Angeles, Miami, and Chicago; plus some US Airways hubs.

oneworld Alliance

What exactly is an airline alliance? It’s an agreement among multiple airlines to streamline, make customers travel experience more seamless. The oneworld alliance is particularly good at this. So much so that it’s been named the Best Airline Alliance by Global Traveler magazine’s 2013 Reader Survey for the fourth year in a row. A passenger can be checked (boarding passes and luggage) right through to the final destination when traveling on oneworld carriers. Other benefits include airport lounge access, priority check-in and priority boarding, and of course, a large number of destination choices.

The new alliance means more ways to get to top destinations. Here are the summary options…by the numbers:

981 destinations served

151 countries

14,244 daily departures

3,283 aircrafts in the fleet

474,825 million passengers flown annually

The oneworld Alliance Member Airlines:

Airline Base Country / Region

Airberlin Germany – Central Europe

American Airlines USA – North America

British Airways United Kingdom, Western Europe

Cathay Pacific Airways Hong Kong (China), Far East Asia

Finnair Finland – North Europe

Iberia Spain / Portugal – Southern Europe

Japan Airlines Japan – Far East Asia

LAN Airlines Chile/Peru – South America

Malaysia Airlines Malaysia – Southeast Asia

Qantas Australia – Austra-Asia

Qatar Airways Middle East

Royal Jordanian Middle East

S7 Airlines Russia – Siberia

TAM Airlines Brazil – South America

US Airways USA – North America

Go Lean Commentary … cont’d

Considering one specific country, there is now something wrong in Barbados. [d] In July 2013, Barbados recorded the lowest number of long stay visitors (47,953) during the same period for 13 consecutive years. This is thusly expected to affect the traffic for the annual festival of Crop Over (a traditional harvest celebration connected with Barbados sugar cane plantation culture) [e] for 2014. Long stay visitors usually travel by airplane. This is the issue; there is a supply problem with air travel in the Eastern Caribbean and there is a demand problem. The end result: airline dysfunction and higher prices.

The issue of declining tourism spending is tied to dysfunction in the airline industry. Has the Crop Over event become less attractive or is the blame on the higher airfares that has resulted due to the airline (American Airlines) dysfunction? The analytical conclusion is the problem is with the airline industry.

The 2008 Financial Crisis continues to wreak havoc on the economy of the Caribbean. This is a consistent theme in the book Go Lean … Caribbean; it serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU), an alliance of 30 Caribbean member-states.

The Go Lean roadmap calls for regulating and promoting the Caribbean’s aviation industry. We need American Airline and US Airways to deliver on their merger, and then deliver on facilitating air passengers to the Caribbean region.

This is how the CU will optimize the region’s economic engines. This is change!

The Go Lean book presents a series of community ethos that must be adapted to forge this change. In addition, there are these specific strategies, tactics, implementation and advocacies to apply:

Community Ethos – Job Multiplier	Page 22
Community Ethos – Lean Operations	Page 24
Community Ethos – Cooperatives	Page 25
Community Ethos – Ways to Help Entrepreneurship	Page 28
Community Ethos – Impacting the Greater Good	Page 37
Strategy – Customers – Visitors	Page 47
Strategy – Competitive Analysis – Event Patrons	Page 55
Strategy – Core Competence – Tourism	Page 58
Strategy – Anecdote – Caribbean Hotel & Tourism Assoc.	Page 60
Tactical – Fostering a Technocracy	Page 64
Tactical – Commerce – Tourism Promotion	Page 78
Tactical – Aviation Administration & Promotion	Page 84
Implementation – Ways to Deliver	Page 109
Implementation – Trade Mission Objectives	Page 116
Planning – Ways to Improve Trade	Page 128
Planning – Lessons Learned from 2008	Page 136
Planning – Lessons from Egypt	Page 143
Advocacy – Ways to Enhance Tourism	Page 190
Advocacy – Ways to Impact Events	Page 191
Advocacy – Ways to Market Southern California	Page 194
Advocacy – Ways to Promote World-Heritage-Sites	Page 248

There are lessons from the evolution and delivery of the American Airlines / US Airways merger in considering the quest for Caribbean optimization:

• When possible, Caribbean solutions should come from the Caribbean.

• When not possible, Caribbean solutions should be serviced by alternate sources, with no one player holding more than 50% of market share.

• Many Caribbean islands have close proximity, so there must always be alternative transportation modes, like ferry-boats.

• Do not “bite the hand that feeds you”; the Caribbean region must protect the engines that drive the economy.

Now is the time to lean-in to this roadmap for Caribbean change, as depicted in the book Go Lean…Caribbean. We cannot afford another American corporate giant, (i.e. Lehman Brothers) mishandling their public trusts. The Caribbean can – and must – be less elastic to American woes.

The Caribbean should be less of an American parasite and more of a protégé.

Download the book Go Lean … Caribbean – now!

————————-

References:

a. Andrew Nocella, American Airlines Senior Vice President and Chief Marketing Officer. AAdvantage Frequent Flyer Status Email. Retrieved January 5, 2014.

b. Wikipedia treatment on American Airlines. Retrieved May 6, 2014 from: https://en.wikipedia.org/wiki/American_Airlines

c. Titcombe, Tara. “The World at your fingertips”. US Airways Magazine. Retrieved May 6, 2014 from: http://tjt0325no2pencil.files.wordpress.com/2014/04/aprilfeature_oneworld_final.pdf

d. “Commentary: Tourism Matters: A better analysis is needed”. Caribbean News Now Online Magazine. Retrieved May 6, 2014 from: http://www.caribbeannewsnow.com/topstory-Commentary%3A-Tourism-Matters%3A-A-better-analysis-is-needed-20985.html

e. Wikipedia treatment on American Airlines. Retrieved May 6, 2014 from: https https://en.wikipedia.org/wiki/Crop_Over

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2008, Aviation, Image, Miami, Power, Sales, Tourism, Transform

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981	destinations served
151	countries
14,244	daily departures
3,283	aircrafts in the fleet
474,825	million passengers flown annually

Airline	Base Country / Region
Airberlin	Germany – Central Europe
American Airlines	USA – North America
British Airways	United Kingdom, Western Europe
Cathay Pacific Airways	Hong Kong (China), Far East Asia
Finnair	Finland – North Europe
Iberia	Spain / Portugal – Southern Europe
Japan Airlines	Japan – Far East Asia
LAN Airlines	Chile/Peru – South America
Malaysia Airlines	Malaysia – Southeast Asia
Qantas	Australia – Austra-Asia
Qatar Airways	Middle East
Royal Jordanian	Middle East
S7 Airlines	Russia – Siberia
TAM Airlines	Brazil – South America
US Airways	USA – North America