2008 – Go Lean…Caribbean

Tag: 2008

Lessons Learned from 2008: Still Recovering

Posted on September 20, 2018 in Economics, Ethos, Government, Industries

Go Lean Commentary

“Count on the Greedy to be Greedy” – Book: Go Lean…Caribbean Page 26

When policies are put in place that allow greedy people – bad actors – to continue unabated, bad things happen … to the bad actors and to society in general. This reality is something that stewards of every society must contend with. Every community is required to implement public safety provisions – at great expense. But the lesson is undisputed: whatever law enforcement costs, pales in comparison to lawlessness.

This actuality applies all the more so to economic crimes and misdeeds; this was definitely true with all the economic crimes leading up to the Great Recession of 2008 – lost of net worth estimated at $11 Trillion. And yet, the US is throwing out much of the wisdom gleaned after 2008. There is the trend now to undo a lot of the reforms that were implemented after the Financial Crisis – to de-fang the Dodd-Frank regulations. This is unwise! The regulations that were imposed are designed to mitigate the risk of subsequent economic meltdowns.

History does repeat itself.

Before the Great Recession of 2007 – 2009, there was the Great Depression of 1929 – 1933. A lot of lessons were learned in its aftermath and new regulations instituted; these protected the American economy – from Bad Actors – for more than 60 years. One regulation was Glass-Steagall. The Go Lean book relates this summary:

The Bottom Line on Glass-Steagall
Glass–Steagall legislation is four provisions of the US Banking Act of 1933 that limited commercial bank securities activities & affiliations between commercial banks and securities firms. The entire Banking Act of 1933 is often referred to as the Glass–Steagall Act.Starting in the early 1960s, federal banking regulators interpreted provisions of the Glass–Steagall Act to permit commercial banks and especially commercial bank affiliates to engage in an expanding list and volume of securities activities. [Slowly over the decades, more provisions were chipped away]. By the time Glass–Steagall was repealed officially through the Gramm–Leach–Bliley Act of 1999 (GLBA), many commentators argued Glass– Steagall was already “dead”. These commentators have stated that the GLBA’s repeal of the affiliation restrictions of the Glass–Steagall Act was an important cause of the 2008 financial crisis. Some critics of that repeal argue it permitted Wall Street investment banking firms to gamble with their depositors’ money that was held in affiliated commercial banks.

It is now 10 years after the peak day of the 2008 Financial Crisis. We all now have an expanded vocabulary with phrases like “Too Big to Fail”. This theory in economics – that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system ^[1] – transcends to other aspects of society, like government. The contention is that “Too Big to Fail” institutions must be supported by the people – their government – when these institutions face potential failure. Otherwise, things go from bad to worse.

For the Great Recession of 2008, the Caribbean did experience the “worse”.

Even now, many of our economies are still recovering. (Many aspects of modern life is still reeling – see Appendix A).

This is because our primary economic driver is tourism; and the primary source of Caribbean tourists had been the countries at the epicenter of the Financial Crisis (North America and Western Europe).

This commentary completes the series relating the Lessons Learned from 2008. This entry – 4 of 4 from the movement behind the book Go Lean … Caribbean – is in consideration of the post-2008 recovery and reconciliation since that Financial Crisis. Our parasitic condition was exposed during this crisis; we now want to do better, and be better.

The commentaries in the series are cataloged as follows:

Lessons Learned from 2008 – The Long View – ENCORE
Lessons Learned from 2008 – Too Big to Fail –vs- Too Small to Thrive
Lessons Learned from 2008 – Righting The Wrong – ENCORE
Lessons Learned from 2008 – Still Recovering

All of these commentaries relate to “how” the stewards for a new Caribbean can shepherd the economic engines of the region to apply the economic best-practices to finally make progress, think: diversification. The book quotes the convenient timing:

A crisis is a terrible thing to waste – Page 8

The book Go Lean…Caribbean serves as a roadmap to implement the technocratic Caribbean Union Trade Federation (CU) and aligning institutions, like the Caribbean Central Bank (CCB). These are designed to provide better economic stewardship, to ensure that failures of the past do not re-occur. There is the need for a regional sentinel (watch dog and attack dog); we do not want to just sound the alarm; we also want to effect change by employing strategies, tactics and implementations.

This is an example of a Watch Dog, the group FocusEconomics – see Appendix B VIDEO; they monitor the economic activity in the Latin America & Caribbean region and report to their clients accordingly. This is their summary of the full Caribbean region:

Strong fixed investment and spillovers from the expansion in the U.S. economy.

FocusEconomics do not rate each of the 30 Caribbean member-states, just a select few. This group of professional economists recognize that the Caribbean region has been burdened with repercussions from the Great Recession, and declare that only now is the recovery starting to take hold. See here, a sample of their projections for 2018 and beyond:

Belize	FocusEconomics panelists expect GDP to expand 1.9% in 2018; continuing the recovery trend in the last 5 years: 2013: 1.6; 2014: 1.7; 2015: 1.8; 2016: 1.8; 2017: 1.9 Source: https://www.focus-economics.com/countries/belize
Dominican Republic	FocusEconomics panelists expect GDP growth of 5.2% in 2018; continuing the recovery trend in the last 5 years: 2013: 4.9; 2014: 7.6; 2015: 7.0; 2016: 6.6; 2017: 4.6 Source: https://www.focus-economics.com/countries/dominican-republic
Haiti	Reconstruction efforts should continue to drive growth rates, but political instability risks derailing the outlook. Haiti is vulnerable to the ending of the Temporary Protected Status for Haitians in the U.S. starting in July 2019, which will hit remittance inflows. FocusEconomics panelists foresee growth of 2.1% in 2018, which is down 0.1 percentage points from last month’s forecast. The panel expects the economy to expand 2.8% in 2019. The last five years recorded these growth rates: 2013: 4.2; 2014: 2.8; 2015: 1.2; 2016: 1.5; 2017: 1.2 Source: https://www.focus-economics.com/countries/haiti
Jamaica	Moderating growth but still robust global economic activity and a pickup in mining output are expected to drive growth this year and the next. Panelists expect GDP growth of 1.9% in 2018, up 0.3 percentage points from last month’s forecast, and 2.2% in 2019. The last five years recorded these growth rates: 2013: 0.5; 2014: -0.7; 2015: 0.9; 2016: 1.4; 2017: 0.5 Source: https://www.focus-economics.com/countries/jamaica
Puerto Rico	Due to a low base effect from last year’s dismal economic performance (i.e. Hurricane Maria) and the stimulus received from federal disaster relief funding, the economy is likely to grow in FY 2019. Our panelists forecast that GNP will expand 4.3% in FY 2019, and 2.9% in FY 2020. The last five years recorded these growth rates: 2013: -0.1; 2014: -1.8; 2015: -0.8; 2016: -1.3; 2017: -2.4 Source: https://www.focus-economics.com/countries/puerto-rico
Trinidad and Tobago	Growth should accelerate in 2018 and over the following few years as new gas projects come online; these which should also support recovery in the non-oil economy. FocusEconomics panelists expect growth of 1.4% this year, and 2.0% in 2019. The last five years recorded these growth rates: 2013: 2.7; 2014: -0.6; 2015: -0.6; 2016: -2.3; 2017: NA Source: https://www.focus-economics.com/countries/trinidad-tobago

Considering these assessments, there is no doubt about the Caribbean’s economic disposition: we are parasites of the US economy, not protégés. Our primary activity for our service based economy is tourism – catering to North American snowbirds; those escaping harsh winters during the peak months. Their leisure is our business; our business is their leisure.

The prime directive of the CU/CCB roadmap is to optimize the economic engines of the region to elevate the economies from the parasite status to starting the journey to become protégés. This need was pronounced early in the Go Lean book, in the opening 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 CU and of the member-states.

The Go Lean book – available to download for free – provides 370-pages of turn-by-turn instructions on “how” to adopt new community ethos, plus the strategies, tactics, implementations and advocacies to execute so as to reboot, reform and transform the societal engines of Caribbean society. We never want to be in such a vulnerable position again, as we were in 2008, and the years thereafter. We must have technocratic oversight of the systems of commerce so that we can finally enjoy some diversification. This is perhaps the biggest-best lesson to glean from the 2008 crisis. But there are more lessons too; in fact, there is an advocacy in the book that relates specifically to lessons from that crisis. Consider the specific summaries, excerpts and headlines from the book on Page 136 entitled:

10 Lessons Learned from 2008

1	Lean-in for the Caribbean Single Market This treaty unifies the region into a single economy of 30 countries, for 42 million people and a GDP of over $800 Billion. The neighbor to the northwest of the Caribbean, the US, is a unified economy of 50 states & 300 million people; they are the best example of economic prosperity in history. But the US suffered an economic “blood-bath” in the 2008 Great Recession; they lost $11 Trillion in net worth, mostly due to mortgage-based securities (MBS). Many lessons abound. The danger stemmed from banks initiating bad mortgages, then packaging them on the capital market for sale (globally) as bonds with no outsiders discerning the strength, or weakness, of the underlying mortgage assets.
2	Wall between Commercial and Investment Banking
3	Lax Oversight – NINJA Loans In the aftermath of the Great Recession, there were many “autopsies” and post-mortem analysis on the root-causes and systemic risks. Most blamed the lax oversight in the housing and mortgage industries, where there were sub-prime mortgages jokingly described as NINJA loans (No-Income-No-Job-no-Assets). Many legislators attempted to return to some of the common sense provisions that protected the economy for the 65 years of “Glass-Steagall”; there were all these failed bills: the “Banking Integrity Act of 2009”, “SAFE Banking Act of 2010”, and the Return to Prudent Banking Act of 2011. A softer banking reform did pass, Dodd–Frank Wall Street Reform and Consumer Protection Act (2010).
4	Volcker Rules The Dodd-Frank Act included the Volcker Rule, which among other things limited proprietary trading by banks and their affiliates. This proprietary trading ban prevents commercial banks and their affiliates from acquiring non-governmental securities with the intention of selling those securities for a profit in the near term. Some have described the Volcker Rule, particularly its proprietary trading ban, as a return to some prudence of “Glass-Steagall”, as “Glass–Steagall Lite”.
5	Credit Rating Reporting – Institutional and Individual
6	Opinions: Disclosure Requirement
7	Derivatives: As Insurance Product, Should Have Reserves
8	Leverage – Common Sense Restraints Banking risk is managed by controlling leverage, the magnifying factor compared to equity that borrowing money allows for a bank. Banking regulations best practices keeps leverage amount near 12-to-1. In 2008, Lehman Brothers leverage rate was pegged at 31-to-1; the more they borrowed the less capital equity they featured, so profits, and losses, were magnified. The mortgage crisis led to Lehman Brothers massive losses, then bankruptcy; the US largest at $691 Billion.
9	Consumer Protections
10	Systemic Risk – Economic Security The CU will monitor and mitigate systemic risks in the financial systems because failure can be cascading. This area, financial markets oversight, is where laissez-fare government oversight should end – economic security is too vital.

2008 was a giant mess for the US. We want to learn and apply lessons from their experiences. But truthfully, we have no power there. We have no vote and no voice to change them. We can only protect ourselves from their abusive activities; (the abuse to the American-self and the interconnected world). The bad trend of America stripping the new financial protections has begun – already after less than 10 years. This has been addressed in prior Go Lean commentaries; see a sample here:

https://goleancaribbean.com/blog/?p=8379	Fallacy of Going back to Self-Regulation of Economic Centers
https://goleancaribbean.com/blog/?p=7601	Returning to the Abusive Policies of Debt
https://goleancaribbean.com/blog/?p=3397	Christmas Present for the Banks – Rolling back some of Dodd-Frank
https://goleancaribbean.com/blog/?p=2259	Lax Regulation and Prosecutors again ,,, for American Business

So if we cannot change America, all we can do to prepare for the worst. We must first diversify our economy away from America First; we must no longer be parasites. The related subjects of rebooting the Caribbean economy – starting first by diversifying away from tourism – has been a frequent topic for Go Lean blog-commentaries; see a sample here:

https://goleancaribbean.com/blog/?p=15346	Industrial Reboot – A Series on Diversified Jobs
https://goleancaribbean.com/blog/?p=14242	Leading with Money Matters – Follow the Jobs
https://goleancaribbean.com/blog/?p=10585	Two Pies: Economic Plan for a New Caribbean
https://goleancaribbean.com/blog/?p=833	One currency, divergent economies

This is the quest of the Go Lean/CU roadmap, to reboot the societal engines of the region, the member-states individually and the region as a whole – in a Single Market. The roadmap details these 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 ensure public safety and protect the resultant economic engines.
Improve Caribbean governance to support these engines.

This is the quest for the Caribbean region, it is not unrealistic. It is conceivable, believable and achievable. Now is the time to lean-in to this roadmap for the CU. This is how we can make the the Caribbean homeland a better place to live, work and play. 🙂

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

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

—————

Appendix A – Opinion: We’re Measuring the Economy All Wrong
Sub-title: The official statistics say that the financial crisis is behind us. It’s not.
By: David Leonhardt

Ten years after the collapse of Lehman Brothers, the official economic statistics — the ones that fill news stories, television shows and presidential tweets — say that the American economy is fully recovered.

The unemployment rate is lower than it was before the financial crisis began. The stock market has soared. The total combined output of the American economy, also known as gross domestic product, has risen 20 percent since Lehman collapsed. The crisis is over.

But, of course, it isn’t over. The financial crisis remains the most influential event of the 21st century. It left millions of people — many of whom were already anxious about the economy — feeling much more anxious, if not downright angry. Their frustration has helped create a threat to Western liberal democracy that would have been hard to imagine a decade ago. Far-right political parties are on the rise across Europe, and Britain is leaving the European Union. The United States elected a racist reality-television star who has thrown the presidency into chaos.

Look around, and you can see the lingering effects of the financial crisis just about everywhere — everywhere, that is, except in the most commonly cited economic statistics. So who are you going to believe: those statistics, or your own eyes?

Over the course of history, financial crises — and the long downturns that follow — have reordered American society in all sorts of ways. One of those ways happens to involve the statistics that the government collects. Crises have often highlighted the need for new measures of human well-being.

The unemployment rate was invented in the 1870s in response to concerns about mass joblessness after the Panic of 1873. The government’s measure of national output, now called G.D.P., began during the Great Depression. Senator Robert La Follette, the progressive hero from Wisconsin, introduced the resolution that later led to the measurement of G.D.P., and the great economist Simon Kuznets, later a Nobel laureate, oversaw the first version.

Almost a century later, it is time for a new set of statistics. It’s time for measures that do a better job of capturing the realities of modern American life.

As a technical matter, the current batch of official numbers are perfectly accurate. They also describe some real and important aspects of the American economy. The trouble is that a handful of statistics dominate the public conversation about the economy despite the fact that they provide a misleading portrait of people’s lives. Even worse, the statistics have become more misleading over time.

The main reason is inequality. A small, affluent segment of the population receives a large and growing share of the economy’s bounty. It was true before Lehman Brothers collapsed on Sept. 15, 2008, and it has become even more so since. As a result, statistics that sound as if they describe the broad American economy — like G.D.P. and the Dow Jones industrial average — end up mostly describing the experiences of the affluent.

The stock market, for example, has completely recovered from the financial crisis, and then some. Stocks are now worth almost 60 percent more than when the crisis began in 2007, according to a inflation-adjusted measure from Moody’s Analytics. But wealthy households own the bulk of stocks. Most Americans are much more dependent on their houses. That’s why the net worth of the median household is still about 20 percent lower than it was in early 2007. When television commentators drone on about the Dow, they’re not talking about a good measure of most people’s wealth.

The unemployment rate has also become less meaningful than it once was. In recent decades, the number of idle working-age adults has surged. They are not working, not looking for work, not going to school and not taking care of children. Many of them would like to work, but they can’t find a decent-paying job and have given up looking. They are not counted in the official unemployment rate.

All the while, the federal government and much of the news media continue to act as if the same economic measures that made sense decades ago still make sense today. Habit comes before accuracy.

Fortunately, there is a nascent movement to change that. A team of academic economists — Gabriel Zucman, Emmanuel Saez and Thomas Piketty (the best-selling author on inequality) — has begun publishing a version of G.D.P. that separates out the share of national income flowing to rich, middle class and poor. For now, its data is published with a lag; the most recent available year is 2014. But the work is starting to receive attention from other academics and policy experts.

In the Senate, two Democratic senators, including Chuck Schumer, the party leader, have introduced a bill that would direct the federal government to publish a version of the same data series. Heather Boushey, who runs the Washington Center for Equitable Growth, told me that it could be the most important change in economic data collection in decades.

Source: New York Times – Posted September 15, 2018; retrieved September 20, 2018 from: https://www.nytimes.com/2018/09/14/opinion/columnists/great-recession-economy-gdp.html

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Appendix B VIDEO – About FocusEconomics – https://youtu.be/L2Ys5GH_tmw

Published on Aug 2, 2018 – FocusEconomics is a leading provider of economic analysis and forecasts for 127 countries in Africa, Asia, Europe and the Americas, as well as price forecasts for 30 key commodities. The company is supported by an extensive global network of analysts.

Since its launch in 1999, FocusEconomics has established a solid reputation as a reliable source for timely and accurate business intelligence among Clients from a variety of industries, including the world’s major financial institutions, multinational companies and government agencies.

Source: Retrieved September 19, 2018 from: https://www.focus-economics.com/about-us

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2008, History, Model

Lessons Learned from 2008: Righting The Wrong – ENCORE

Posted on September 19, 2018 in Economics, Industries, Strategy

Learning lessons from the past means that we will not succumb to the same risks, threats and dangers.

Is this the case for the Caribbean? Have we truly learned from the Great Recession of 2008? Are we able to avoid those threats and overcome any dangers that may arise … anew.

Doubtful!

In the 10 years since 2008, our Caribbean region have only declined, not improved. We have still not recovered. 🙁

This is the continuation of a series of commentaries relating the Lessons Learned from 2008. This one – entry 3 of 4 in this series from the movement behind the book Go Lean … Caribbean – is in consideration of the “economic chaos” that led-up to the 2008 Financial Crisis and the lack of recovery in the Caribbean region. Our economic engines have been based primarily on tourism, so when the economic crisis befell our trading partners, we were affected worse – think parasites attached to a sick host.

Lesson for us: We must diversify!

The commentaries in the series are fully cataloged as follows:

Lessons Learned from 2008 – The Long View – ENCORE
Lessons Learned from 2008 – Too Big to Fail –vs- Too Small to Thrive
Lessons Learned from 2008 – Righting The Wrong – ENCORE
Lessons Learned from 2008 – Still Recovering

All of these commentaries relate to “how” the stewards for a new Caribbean can shepherd the economic engines of the region to apply the best-practices to finally make progress. We need a more diversified economy. So we must learn from the mistakes of the past, ours and others.

This is the purpose of this commentary to apply lessons learned from the mistakes of the US housing crisis and apply the lessons here. We must learn how “they righted that wrong”. See this Encore of a previous blog-commentary here from May 6, 2017, as follows:

——————————-

Go Lean Commentary – Righting a Wrong: 2008 Housing Crisis

Have you ever made a mistake?

“Let him that is without sin, cast the first stone” – Jesus Christ (The Bible @ John 8:7)

Since everyone makes mistakes, a good measure of a good character is how we “Right the Wrongs” that we may have caused to others. This could be the measurement of a good man (or woman), a good company and a good community. People want to be associated with goodness. They will travel great lengths and at great cost to associate with good people, affiliate with good companies and live in a good community.

There are lessons to be learned when people, companies and communities make mistakes and then make concerted efforts to “Right the Wrongs”. These are lessons that can be applied right here in the Caribbean so as to supplement our efforts to elevate our society, to make the Caribbean homeland a better place to live, work and play.

This is more than just an academic discussion for the Caribbean; we are known to have our defects – we repeatedly make mistakes, we endanger people, oppress them, suppress their rights and then carry on unrepentant – this all results in “pushing” people away, causing societal abandonment. We must recognize these defects and repent, reconcile, reform and “Right the Wrongs” of our society.

This is the purpose of the book Go Lean…Caribbean, to help reform and transform the societal engines in the 30 member-states of the Caribbean region. The book serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU). The Go Lean/CU roadmap applies best-practices for community empowerment and features these 3 prime directives, proclaimed as follows:

Optimization of the economic engines to grow the regional economy to $800 Billion & create 2.2 million new jobs.
Establishment of a security apparatus to protect public safety and ensure the economic engines of the region.
Improvement of Caribbean governance to support these engines.

What “Wrongs” exactly can we consider to glean lessons-learned for our community empowerment? This commentary is 1 of 4 in a series considering how to “Right a Wrong”. The full series is as follows:

Righting a Wrong: 2008 Housing Crisis
Righting a Wrong: Puerto Rico’s Bankruptcy
Righting a Wrong: Volkswagen Emissions Crisis
Righting a Wrong: Takata Air-Bags

These “Wrongs” relate to bad actions and inaction by different actors. The image and reputations of stakeholders “take a hit” while the issue is fresh. But eventually the recovery – Righting the Wrong – can override and became the lasting legacy. This first wrong – 2008 Housing Crisis – was one of the episodes of the recent Great Recession. The Go Lean book sought to catalog the cause-and-effect of many 2008 developments from an inside perspective. The book identifies its authority to comment on these developments. See this “Who We Are” quotation (Page 8) and the VIDEO in the Appendix below:

This book is published by the SFE Foundation, a community development foundation chartered for the purpose of empowering and re-booting economic engines. …

2008 – The peak day of the recent global financial crisis was September 15, 2008. On this day, Wall Street giant Lehman Brothers filed for bankruptcy protection, and eventual dissolution, after succumbing to the weight of over-leverage in mortgage-backed securities. There is an old observation/expression that states that “there are 3 kinds of people in the world, those who make things happen, those who watch things happen and those who wonder ‘what happened?’“
Principals of the SFE Foundation were there in 2008 … engaged with Lehman Brothers; on the inside looking out, not the outside looking in. Understanding the anatomy of the modern macro economy, allows the dissection of the processes and the creation of viable solutions.

Omaha – The book was initially composed in Omaha, Nebraska, the home of one of the world’s richest men, Warren Buffet – the “Oracle of Omaha” – CEO of corporate giant Berkshire Hathaway. While the United States experienced boom and bust during the Great Recession, Omaha remained a stable, consistent model of prosperity (in March 2008 the unemployment rate in Omaha was 3.9 percent). This was no accident. This community embraces a certain ethos that is fundamental for stability and vibrancy: good corporate citizenship. Omaha is home to other corporate movers-shakers in addition to Berkshire Hathaway; (see Appendix A [on Page 254]). This community example is purported as a model for assimilation by the Caribbean region.

The Go Lean book, though composed in 2013, set the pattern for the Caribbean region to look-listen-learn from models, samples and examples like these. This allows for the regional stewards and administrators to structure policies and procedures so as to apply the lessons learned in their jurisdictions. This was an original intent. As a planning tool, the Go Lean book commenced with a Declaration of Interdependence, pronouncing the need for regional integration so as to improve our society based on lessons learned from other societies. See a stanza here (Page 14):

xxxiii. Whereas lessons can be learned and applied from the study of the recent history of other societies, the Federation must formalize statutes and organizational dimensions to avoid the pitfalls of communities like East Germany, Detroit, Indian (Native American) Reservations, Egypt and the previous West Indies Federation. On the other hand, the Federation must also implement the good examples learned from developments/communities like New York City, [Omaha,] Germany, Japan, Canada, the old American West and tenants of the US Constitution.

So here is the Wrong … and here is the “Righting of the Wrong” associated with the 2008 Housing Crisis:

The Wrong:
In 2008 a perfect storm of economic disasters hit the US and indeed the entire world. The most serious began with the collapse of housing bubbles in California and Florida, and the collapse of housing prices and the construction industries. Millions of mortgages (averaging about $200,000 each) had been bundled into securities called collateralized debt obligations that were re-sold worldwide. Many banks and hedge funds had borrowed hundreds of billions of dollars to buy these securities, which were now “toxic” because unknown values and no buying markets.

A series of the largest banks in the US and Europe collapsed; some went bankrupt, such as Lehman Brothers with $690 billion in assets; others such as Citigroup, the leading insurance company AIG, and the two largest mortgage companies (Fannie Mae, Freddie Mac) were bailed out by the US government. Congress voted $700 billion in bailout money, and the Treasury and Federal Reserve committed trillions of dollars to shoring up the financial system. But the measures did not reverse the declines – banks drastically tightened their lending policies, despite infusions of federal money. The government, for the first time, took major ownership positions in some banks. The stock market plunged 40%, wiping out tens of trillions of dollars in wealth (estimates tallying $11 Trillion); housing prices fell 20% nationwide wiping out trillions more. By late 2008 distress was spreading beyond the financial and housing sectors, especially as the “Big Three” of the automobile industry (General Motors, Ford and Chrysler) were on the verge of bankruptcy, and the retail sector showed major weaknesses. Critics of the $700 billion Troubled Assets Relief Program (TARP) expressed anger that much of the TARP money that had been distributed to banks was seemingly unaccounted for, with banks being secretive on the issue.^[45] [See this portrayal in these photos or the VIDEO at https://youtu.be/N9YLta5Tr2A.]

Righting the Wrong:
In February 2009, [the newly inaugurated] President Barack Obama signed the American Recovery and Reinvestment Act; the bill provided $787 billion in stimulus through a combination of spending and tax cuts. The plan was largely based on the Keynesian theory that government spending should offset the fall in private spending during an economic downturn; otherwise the fall in private spending would perpetuate itself and productive resources, such as the labor hours of the unemployed, will be wasted.^[46] Critics at the time claimed that government spending cannot offset a fall in private spending because government must borrow money from the private sector in order to add money to it. However, most economists do not think such “crowding out” is an issue when interest rates are near zero and the economy is stagnant.

The recession period officially expended only 6 quarters (Q4-2007 to Q1-2009), but the effects were longer lasting. This was deemed the Great Recession because of the fundamental shifts the economy made. For example, in the US, jobs paying between $14 and $21 per hour made up about 60% those lost during the recession, but such mid-wage jobs have comprised only about 27% of jobs gained during the recovery through mid-2012. In contrast, lower-paying jobs constituted about 58% of the jobs regained.

As of December 2012, the US Federal Reserve Bank reported that the net worth of US households recovered by $1.7 trillion to $65 trillion during Q3-2012. It was still below the record high of $67 trillion during Q3-2007, but up $13.5 trillion since its recent cyclical low during Q1-2009.^[47]

Source: Book Go Lean…Caribbean Page 69 – 70

None of the Boom-and-Bust homes in this drama were in the Caribbean; (though Puerto Rico and US Virgin Islands are American territories and did have crises, their home pricing were only mildly affected, going up or going down only a little).

While this was a crisis for continental America, due to inaction on the part of Caribbean regional stewards, this 2008 crisis brought devastation to our region. In some cases, we are still reeling from it; they are near Failed-State status as a result.

There were bad actors in this crisis. They had their Day of Reckoning as well. See these previous blog-commentaries that detailed the aftershocks of the 2008 economic crisis:

https://goleancaribbean.com/blog/?p=10187	Day of Reckoning for NINJA Loans
https://goleancaribbean.com/blog/?p=8379	Economic Fallacy: Self-regulation of the Centers of Economic Activity
https://goleancaribbean.com/blog/?p=6531	A Lesson in History – Book Review of the ‘Exigency of 2008’
https://goleancaribbean.com/blog/?p=1896	The Crisis in Black Homeownership
https://goleancaribbean.com/blog/?p=1309	5 Steps of a Bubble
https://goleancaribbean.com/blog/?p=353	Book: Wrong Economic Policy Disasters and What We Can Learn

One mission of this Go Lean roadmap is to apply the lessons from this American Drama in the stewardship of our Caribbean homeland. Since we also had financial upheavals in our region, many things these were due to contagions of the American crisis. So we needed remediation of our financial institutions as well. This point was detailed in this previous blog-commentary from November 14, 2014:

‘Too Big To Fail’ – Caribbean Version

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

Global – The banks labeled “Too Big To Fail” impacted the world’s economy during the Global Financial 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. 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.^[48]
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.

Going forward, there needs to be a solution to mitigate systemic threats that may plague the Caribbean region.

This is the quest of the Go Lean roadmap. The book first presents the community ethos that the region needs to adopt; then it presents detailed strategies, tactics, implementations and advocacies for the economic stewards to deploy. These constitute Big Ideas for the Caribbean region.

For one, there is the plan for a Caribbean Central Bank!

Among the Big Ideas of the Caribbean Union Trade Federation is the introduction and assimilation of the Caribbean Central Bank (CCB) and the Caribbean Dollar. The CCB is actually a cooperative among the region’s Central Banks. All the existing Central Banks, at the time of ascension, will cede their monetary powers to the CCB and continue their participation using well-established cooperative principles. – Go Lean…Caribbean book Page 73

Secondly, there is the tactic of a separation-of-powers between the CU/CCB entities and the member-states in the region. This directive allows for the transfer of oversight and administration of certain state functions to the CU federal authorities. This is modeled after the European Union and the European Central Bank.

This is how the Go Lean roadmap proposes to “Right the Wrongs” of the recent financial crises: to incorporate the organizational structure with the mandate to administer and shepherd the region’s monetary and banking eco-system. This intent was pronounced at the outset, in the opening Declaration of Interdependence, enshrining the need for regional integration on monetary matters for Caribbean society. See the related stanzas here (Pages 12, 13):

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

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.

Now is the time for the Caribbean to embrace change. From an economic perspective, we have done wrong … in the past – at a minimum, we are guilty of inaction. We now need to “right those wrongs” or especially to develop the defenses to ensure no future damage to our economy by dysfunctional administration of the region’s monetary and economic engines. It is 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 our past and that of our trading partners. We must do better and be better.

A lot is at stake: the hopes and dreams of our people, young and old. They all want; we all want a better Caribbean; better places to live, work and play. 🙂

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

Sign the petition to lean-in for the roadmap for the Caribbean Union Trade Federation.

————

Footnote References

45 – Holt, Jeff. “A Summary of the Primary Causes of the Housing Bubble and the Resulting Credit Crisis: A Non-Technical Paper”. 2009, 8, 1, 120-129. The Journal of Business Inquiry. Retrieved 15 February 2013.

46 – Congressional Budget Office – “Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from October 2011 Through December 2011”. February 2012; retrieved June 2013.

47 – American Enterprise Institute – Retrieved December 2012 from: www.aei-ideas.org/…/u-s-net-worth-hasrecovered-13-5-trillion-but-still- below-2007-peak/

48 – Retrieved November 14, 2014 from: http://www.centralbank.org.bb/WEBCBB.nsf/WorkingPapers/DB0CF759B9E97FB9042579D70047F645/$FILE/Exploring%20Liquidity%20Linkages%20among%20CARICOM%20Banking%20Systems.pdf

————

Appendix VIDEO – The 2008 Financial Crisis: Crash Course Economics – https://youtu.be/GPOv72Awo68

Published on Oct 21, 2015 – Today on Crash Course Economics, Adriene and Jacob talk about the 2008 financial crisis and the US Goverment’s response to the troubles. So, all this starts with home mortgages, and the use of mortgages as an investment instrument. For years, it seemed like the US housing market would go up and up. Like a bubble or something. It turns out it was a bubble. But not the good kind. And the government response was…interesting. Anyway, why are you reading this? Watch the video!
More Financial Crisis Resources:
Financial Crisis Inquiry Report: http://www.gpo.gov/fdsys/pkg/GPO-FCIC…
TAL: Giant Pool of Money: http://www.thisamericanlife.org/radio…
Timeline of the crisis: https://www.stlouisfed.org/financial-…
http://www.economist.com/news/schools…

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2008, Banks, History, Housing

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Lessons Learned from 2008: Too Big to Fail –vs- Too Small to Thrive

Posted on September 18, 2018 in Economics, Industries, Strategy

Go Lean Commentary

It is now 10 years later. The world is remembering the Financial Crisis of 2008.

This is the anniversary of the peak day, that of Lehman Brothers bankruptcy filing on September 15, 2008. The world has endured a lot since that time, we have looked, listened and learned. We have even added some new phraseology to our vocabulary; think …

… “Too Big to Fail”, a theory in economics that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system, and that they therefore must be supported by government when they face potential failure.^[1] .

“Too Big to Fail” was a Big Deal. This is more than just an academic discussion – see AUDIO Podcast below. In 2008 the biggest impact of the global financial contagions was the dilution of net worth for the citizens of the affected countries: US, Canada and Western Europe. These economies are the primary source of Caribbean tourists; since tourism is the primary economic driver, this was a real problem for the pocketbooks of every individual and institution in the region.

This is the continuation of a series of commentaries relating the Lessons Learned from 2008. This one – entry 2 of 4 in this series from the movement behind the book Go Lean … Caribbean – is in consideration of the “economic chaos” that led-up to the 2008 Financial Crisis and the contrast between “Too Big to Fail” and “Too Small to Thrive”. Due to the contagions of 2008, the Caribbean also had economic collapse, but not because our banks are too big; rather they are too small – think parasite attached to a sick host – they have no leverage or shock-absorption from servicing the full region.

The commentaries in the series are fully cataloged as follows:

Lessons Learned from 2008 –The Long View – ENCORE
Lessons Learned from 2008 – Too Big to Fail –vs- Too Small to Thrive
Lessons Learned from 2008 – Righting The Wrong – ENCORE
Lessons Learned from 2008 – Still Recovering

All of these commentaries relate to “how” the stewards for a new Caribbean can shepherd the economic engines of the region to apply the best-practices to finally make progress; move forward, not stand still and not go backwards.

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 economic stewardship, to ensure that failures of the past do not re-occur.

What economic failures?

In a previous Go Lean blog-commentaries, it was detailed how our region has had to endure financial crises; yes this includes the Too Big to Fail collapse in the US but also home-grown ones in our neighborhood. The financial system we live in today has been transformed because of the impact and consequence of previous crises. So the banks that have the Too Big to Fail designation now get additional protection and can thusly grow – with less regard to risk. And grow, they have!

NEW YORK – MARCH 24: (FILE PHOTO) The JP Morgan Chase building is seen March 24, 2008 in New York City. The banking giant posted a $2.7 billion profit in the second quarter July 16, 2009, a 36% jump from 2008. Revenues were up 39%, at $25.62 billion. (Photo by Chris Hondros/Getty Images)

This was the summary from this news article/PODCAST here, where it explains that “just six banks now manage more than half the assets in the whole banking industry”. In fact, one sample bank, JPMorganChase, now manages US$2.8 trillion in assets; that’s more than the gross domestic product of Canada, Italy or Brazil. Listen to the PODCAST here and see that full transcript in the Appendix below:

Audio-Podcast– Once “too small to thrive,” now some banks are “too big to fail” –https://play.publicradio.org/api-2.0.1/d/podcast/marketplace/segments/2018/09/11/mp_20180911_seg_19_64.mp3

So how and why did community banking become national banking or global banking? One word: Consolidation. The foregoing PODCAST quotes:

“There’s been a tremendous amount of consolidation during the last four decades,” … “The American banking system went from about 13 or 14,000 commercial banks four decades ago down to closer to 5,000 now.”

This is the advocacy for the Caribbean, here in the Go Lean book. The strategy is for all the 30 member-states in the region to consolidate, collaborate and confederate to form a Single Market economy. The regional leverage allows for more growth because of a larger, stronger market. This consolidation – across 30 countries of 5 different colonial legacies and 4 languages – is for banking as well. This is to be shepherded by the CCB, a formal cooperative (collusion) of all the Central Banks in the region. The CCB will be ready for the heavy-lifting of this regional stewardship.

Without this cooperative, we will never have “Too Big to Fail”, instead we will only have “Too Small to Thrive”.

So imagine 1 currency, the Caribbean Dollar! Imagine the proliferation and liquidity of vibrant Capitals/Securities Market.

Welcome to the new Caribbean economy.

Here is where the Lessons from 2008 weigh heavy. A consolidated, integrated banking system will mean more linkages among the member-states of a new economic union. So the issue of financial contagions among these linked communities will now be a constant concern – so there must be a constant sentinel: the Caribbean Central Bank.

The prime directive of the CU/CCB roadmap is to optimize the economic engines of the region despite the reality of financial contagions. 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 PODCAST relates the peril associated with banks only tied to a mono-industrial local economy; this quotation:

… Texas, where oil was king in the ‘80s. Texas had more banks than any other state. Regional banks, like those in Texas, were not diversified. They were tied to the local economy. So when the price of oil fell to $10 a barrel, hundreds of Texas banks failed.

The foregoing PODCAST helps us to appreciate the regional vision: We do NOT want to be “Too Small to Thrive”, but we do not want to grow to be “Too Big to Fail” either. There must be a happy medium, a “Goldilocks” destination.

VIDEO – Goldilocks and the Three Bears – https://youtu.be/PGI-4MrC_b8

TheLearningStation – Kids Songs and Nursery Rhymes

Published on Jul 8, 2016 – Your children will love this popular children’s fairy tale, “Goldilocks and the Three Bears” song and story! Goldilocks and the Three Bears is from the CD and CD Download “La Di Da, La Di Di, Dance with Me.” “La Di Da, La Di Di, Dance with Me”.

CD Download: http://store.learningstationmusic.com…

“La Di Da, La Di Di, Dance with Me” CD http://store.learningstationmusic.com…

Category: Education

The Go Lean book provides 370-pages of turn-by-turn instructions on “how” to adopt new community ethos, plus the strategies, tactics, implementations and advocacies to execute so as to reboot, reform and transform the societal engines of Caribbean society … including banking and monetary control. We must have the technocratic bank supervision and oversight: assessing risk factors, monitoring risks, managing leverage and regulating industry performances. There is an advocacy in the book that relates specifically to bank supervision; consider the specific plans, excerpts and headlines from the book on Page 199 entitled:

10 Reforms for Banking Regulations

1	Lean-in for the Caribbean Single Market This treaty allows for the unification of the region into one market, creating a single economy of 30 member-states, 42 million people and the GDP impact of over $800 Billion. In addition, the CU treaty creates a security apparatus to defend against regional threats and systemic risks. When it comes to banking, without proper oversight, the financial systems can imperil the region’s economic security. Deficient oversight can also foster an environment for lawlessness with bad actors exploiting the lack of controls for money laundering, tax evasion and even funding terrorists. Many countries in the region have (had) a vibrant offshore banking industry. But with international reforms from the OECD (an arm of the IMF), US Treasury/Justice Departments, and other institutions, there has been external and internal pressure to reform the industry to curb illegal activities and cooperate more with cross border investigations. … The CU economic and security reboot will bring the balanced oversight, plus added protections like deposit insurance.
2	Foreign Currency Considerations The Caribbean Dollar (C$) will be traded in the international market, so the need for various currencies will be minimized. Domestic currency devaluations were among the Failed-State indices that drove a lot of Caribbean citizens to emigrate. The reforms associated with securing the new regional currency, C$, is therefore vital. For example, all casinos in the region will be expected to “game” in Caribbean dollars.
3	Debit Cards & e-Government Disbursements
4	e-Purse and Internet Commerce
5	NFC and Mobile Payment Systems
6	Mortgage Banking
7	Credit Card Banking
8	Fair Credit Reporting
9	Fair Collection Practices
10	Bankruptcy Reform

The related subjects of banking oversight and optimizing financial governance have been a frequent topic for Go Lean blog-commentaries; see a sample here:

Leading with Money Matters – The Almighty Dollar

Failure to Launch – Economics: The Quest for a ‘Single Currency’

West African Case Study: ECOWAS to Launch ‘Single Currency’

Transforming ‘Money’ Countrywide

European Central Bank launch 1 Trillion Euro Stimulus

For Canadian Banks: Caribbean is a ‘Bad Bet’

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

Canadian Imperial Bank of Commerce failing investment in FirstCaribbean Bank

Barbados Central Bank records $3.7m loss in 2013

Dominica raises EC$20 million on regional securities market

The 2008 Great Recession / Financial Crisis exposed the trappings of the interconnected global economy. If we, in the Caribbean, are going to “play in this sandbox” – transact in this marketplace – then we must be prepared and On Guard, for the risks, threats and dangers.

Big Hairy Audacious Goal (BHAG)!

We were not prepared in 2008! We were Too Small to Thrive.

We must be ready now … and going forward! We must learn and apply this lesson from 2008.

This is the quest of the Go Lean/CU/CCB roadmap, to elevate the societal engines of the region, the member-states individually and the Single Market as a whole. Yes, we can! The roadmap details these 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 ensure public safety and protect the resultant economic engines.
Improve Caribbean governance to support these engines.

This quest is the BHAG for the Caribbean region, but it is conceivable, believable and achievable. Now is the time for change; time for all regional stakeholders, individuals and institutions, creditors and debtors, to lean-in to this roadmap for the CU and CCB.

The functioning of this roadmap is complex and complicated, requiring heavy-lifting. But the destination of this roadmap is simple: a better place to live, work and play. 🙂

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

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

——————–

APPENDIX – Once “too small to thrive,” now some banks are “too big to fail”
By: Sabri Ben-Achour

The idea behind “too big to fail,” of course, is that some institutions are just so massive and interconnected that their failure would mean disaster for the economy.

And today? Lots of firms seem to fit that classification.

Let’s just take JPMorgan Chase. It manages $2.8 trillion. That’s more than the gross domestic product of Canada, Italy or Brazil. Just six banks manage more than half the assets in the whole banking industry. Most of them would be considered too big to fail.

There was a time when banks were small and plentiful.

“At the all-time peak in the United States, around 1921 or 1922, there were 31,000 or 32,000 banks,” said Richard Sylla, New York University financial historian and professor emeritus.

The Great Depression wiped out thousands of banks, but for about 40 years after that, the number was stable. Until it wasn’t.

“There’s been a tremendous amount of consolidation during the last four decades,” Sylla said. “The American banking system went from about 13 or 14,000 commercial banks four decades ago down to closer to 5,000 now.”

One reason there were so many banks is because state laws ensured it. Federal law left the regulation of bank branches up to states. Different states had different rules, and rules within states could be pretty restrictive.

“For most of American history, banks were not able to cross state lines,” said Frederic Mishkin, Columbia University professor of banking and financial institutions. “In some states you could only have only one branch.”

Some banks lobbied for it to be this way, Mishkin said.

“This actually was a way for banks to not be as competitive, and particularly if you’re a bank in one state you don’t want to have people from other states come in and take away some of your business. So you’ll fight like hell to keep them out,” he said.

Just because there were a lot of banks back in the ‘70s and ‘80s does not mean they were good banks.

“I lived in Chicago in the 1980s, and the service was just horrendous because the competition was just terrible,” Mishkin said. “I had a case where they had a check that that was forged. They cashed it and they’re supposed to give me the money back. I never got it back. So it was a different world.”

But the real problem for banks of that era was that because they were small, they were fragile, said Robert Hendershott, hedge fund portfolio manager and Santa Clara University associate professor of finance. “Having tens of thousands of tiny little banks is economically insane,” he said. “It is not an efficient way to organize a banking system.”

Today we talk about banks being too big to fail, but back then they had the opposite problem.

“The U.S. banking industry was too small to thrive,” Hendershott said.

He points to Texas, where oil was king in the ‘80s. Texas had more banks than any other state. Regional banks, like those in Texas, were not diversified. They were tied to the local economy. So when the price of oil fell to $10 a barrel, hundreds of Texas banks failed. The number of banks in the United States also shrank during the thrift crisis in the late ‘80s and the recession in the early ‘90s.

It’s at this point that Congress started to take notice, and in 1994, it passed the Interstate Banking and Branching Efficiency Act.

“That was where Congress tore down all the barriers and banks became free to merge and grow across state lines,” Hendershott said.

And that is exactly what banks did. Through the Great Recession, banks consolidated even further as some failed and were bought up by others. And more banks went from “too small to thrive” to “too big to fail.”

This story is part of Divided Decade, a yearlong series examining how the financial crisis changed America.

Source: Posted September 11, 2018; retrieved September 17, 2018 from: https://www.marketplace.org/2018/09/11/economy/divided-decade/once-too-small-thrive-now-some-banks-are-too-big-fail

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2008, Banks, Model, Transform

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Lessons Learned from 2008: The Long View – ENCORE

Posted on September 15, 2018 in Ethos, Implementation

10 years ago today (September 15, 2008) …

… Lehman Brothers filed for bankruptcy … and brought the global financial system to its knees.

The whole world was watching, as global markets immediately plummeted.

But this writer was there, on the inside of Lehman Brothers. This fact was related in the opening of the 2003 book Go Lean … Caribbean (Page 8), as follows:

2008
The peak day of the recent global financial crisis was September 15, 2008. On this day, Wall Street giant Lehman Brothers filed for bankruptcy protection, and eventual dissolution, after succumbing to the weight of over-leverage in mortgage-backed securities. There is an old observation/expression that states that “there are 3 kinds of people in the world, those who make things happen, those who watch things happen and those who wonder ‘what happened?’“ Principals of SFE Foundation were there in 2008 … engaged with Lehman Brothers; on the inside looking out, not the outside looking in. Understanding the anatomy of the modern macro economy, allows the dissection of the processes and the creation of viable solutions.

This is the first of a series of commentaries relating the Lessons Learned from 2008. This first one – entry 1 of 4 in this series from the movement behind the book Go Lean … Caribbean – is in consideration of the “economic chaos” that led-up to the Great Recession and why it is necessary for these commentaries to be so long and comprehensive. The Caribbean problems are complex and complicated – there are no short and simple solutions. It will take a thorough roadmap to effect the necessary changes for the region to reform and transform. If we do not learn the applicable lessons from 2008, we will only repeat the mistakes of 2008.

The commentaries in the series are cataloged as follows:

Lessons Learned from 2008 – The Long View – ENCORE
Lessons Learned from 2008 – Too Big to Fail -vs- Too Small to Thrive
Lessons Learned from 2008 – Righting The Wrong – ENCORE
Lessons Learned from 2008 – Still Recovering

All of these commentaries relate to “how” the stewards for a new Caribbean can shepherd the economic engines of the region to apply the economic best-practices to make progress. As a Caribbean region, we need those lessons, and progress.

Some of these commentaries are Encores, as is this one. So as follows is the original submission from August 26, 2014. See that entry here:

—————–

Go Lean Commentary – Why So Long? Can’t We Just…

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, History

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Flying the Caribbean Skies – New Regional Options

Posted on April 24, 2018 in Economics, Government, Industries

Go Lean Commentary

Look back at Economic History and we see a consistent lesson: nations that deploy efficient transportation systems always thrived as world powers. Consider these examples of the interchangeability of transportation and trade:

Romans built roads, facilitating trade and military advancement.
British, Dutch, French and Spanish empires thrived in trade due to their efficient shipbuilding and navigational artistry.
Railroad expansion across North America allowed the manifestation of the greatest industrial might in the history of mankind.
Banana boats created foreign markets for a tropical perishable produce, and originated cruise travelling.
Highway deployments allowed America to regroup and exceed competitors just as other nations where catching up with rail.
The “Jet Age” opened the Caribbean up to be the ideal winter tourism destination; “get there fast and then take it slow”.

This last one, is the focus of this series of commentaries; the economic realities of “flying the Caribbean skies”. This commentary commences a 3-part series on Flying the Caribbean Skies. This entry is 1 of 3 in this series from the movement behind the book Go Lean … Caribbean in consideration of societal defects in the region’s management of air travel. There is a lot wrong and a lot of remediation that needs to be done. The other commentaries in the series are cataloged as follows:

Flying the Caribbean Skies: New Regional Options
Flying the Caribbean Skies: ‘Shooting Ourselves in the Foot’ – ENCORE
Flying the Caribbean Skies: The Need to Manage Airspace

All of these commentaries relate to “how” the stewards for a new Caribbean can empower regional commerce by optimizing the air travel eco-system, and the dependent industries. Our efforts to reform and transform the Caribbean economic engines would be incomplete without re-addressing air travel. Problems emerged in the last decade; there was one dominant airline that used to service most of the Caribbean member-states, and then they downsized their Caribbean footprint. That was American Airlines. In a previous Go Lean commentary, this debilitating history was related:

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.

The stakeholders for American Airlines met and deliberated; then they made a decision and executed a plan that devastated Caribbean commerce. Caribbean stakeholders were “not at the table” but we were “on the menu”.

Now that American Airlines have downsized, the Caribbean has become totally dysfunctional with the air travel eco-system. A few other airlines, stepped into the void, but not at the same level and production; air travel options are now more limited, and expensive. So more and more tourists are travelling to the Caribbean by cruise ships. With less and less air travel fulfillments, that means less stay-overs, so less hotels, restaurants, taxi cabs, etc.. This type of dysfunction affects all “job multipliers” (indirect employment down the line) in the society.

No wonder our Caribbean member-states are nearing Failed-State status.

With cracks in the economic “chain-link”, the whole job creation utility becomes dysfunctional, and the Caribbean landscape for jobs is dire. We have some work to do, to fill the void.

If the one airline, the foreign American Airlines, is a primary culprit for Caribbean Airspace dysfunction, then facilitating a local airline solution would be moving in the right direction. See one news article here, identifying a new regional carrier:

Title #1: Saint Lucia welcomes new regional airline

Press Release: The inaugural flight of InterCaribbean Airways arrived at the George FL Charles Airport, on Thursday, March 22, at 6:55 pm, from the island of Dominica. The flight marks the commencement of a direct service, 3 times a week, between Saint Lucia’s George FL Charles Airport (SLU) and Dominica’s Douglas–Charles Airport (DOM).

Flight JY293 was welcomed by the Minister of Tourism, Information and Broadcasting the Hon. Dominic Fedee, Chairperson of the Saint Lucia Tourism Authority Agnes Francis, Airport Manager for George FL Charles Kirby Toussaint and other tourism officials. The honoured guests included airline Owner and Chairman Lyndon Gardiner along with CEO Trevor Sadler. Guests were greeted with steel band music and welcome refreshments upon disembarking the aircraft.

The new route will be serviced by an Embraer EMB120, with a seating capacity of 30. The flights will arrive from DOM at 6:55 pm on Sunday, Monday and Thursday and depart from SLU at 9:00 am on Monday, Tuesday and Friday. The service provides onward connections to the northern Caribbean including the BVI reaching as far north as Havana with an additional direct service to Saint Croix commencing on April 12.

Speaking on the airlines role in regional travel Owner/Chairman Lyndon Gardiner stated, “Our dream is connecting the entire Caribbean, we feel that once we have better air connectivity we will be able to have better integration and be able to market the Caribbean as a single destination, offering more multi-destination vacations in our region”

The airport’s proximity to the island’s main business hub and largest cluster of hotels makes it the ideal point of entry for regional travel. In 2017 the Caribbean market overtook the United Kingdom as the second largest producer of stay-over arrivals, generating 76,349 or 19.8% of total stay-over arrivals to the destination.

Minister of Tourism, Information and Broadcasting the Hon. Dominic Fedee commented on the value of the increased airlift saying, “We look forward to the opportunities that this flight allows, which connects us to even more gateways across the Caribbean.”

Source: Retrieved April 21, 2018 from: https://stluciatimes.com/2018/03/30/saint-lucia-welcomes-new-regional-airline/

There is a heightened deficiency in the region today, and now only a small number of airline carriers have answered the call. 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 book Go Lean…Caribbean – available to download for free – serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU), for the elevation of Caribbean society – for all member-states. This CU/Go Lean roadmap fully has these 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 ensure public safety and protect the resultant economic engines.
Improve Caribbean governance to support these engines, including a separation-of-powers between the member-states and CU federal agencies.

American Airlines is more than just a regional carrier; they are the world’s largest airline; see VIDEO in the Appendix below. In addition to their planes-flights, they also facilitate an alliance with other carriers around the world, to form the OneWorld Alliance. This alliance was detailed in that previous blog-commentary, listing this inventory as of May 2014:

*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

So the Caribbean took a beating, economically, because of the decline and failure of this one private American company.

You see it, right? You see the “too many vulnerable eggs in one basket”; this is called “country risk”:

Country risk also refers to the broader notion of the degree to which political and economic unrest affect the securities of issuers doing business in a particular country. – Source.

Yes, there is vulnerability of placing our own economic fortunes in the hands of just one foreign entity. This is a consistent complaint of the Go Lean movement against the Caribbean member-states:

We have subjected ourselves to be parasites, rather than protégés.

A more appropriate Caribbean solution would be to forge an equivalent multi-airline alliance. In fact, there is such an effort in place now, though limited. See the news article here identifying a new alliance in the Eastern Caribbean:

Title #2: Caribbean airline alliance promises lower fares

Barbados Nation – Three Caribbean airlines have formed an alliance which promises to make it easier and cheaper for travellers to move between 32 countries.

Antigua-based LIAT, Air Antilles of Guadeloupe and St Maarten’s Winair have joined forces under the CaribSKY project which is co-funded by the European Union’s INTERREG Caribbean programme to the tune of 4.7 million euros.

The details of the project were revealed on Tuesday during a media conference at La Creole Beach Hotel and Spa in Guadeloupe.

Air Antilles chief executive officer Serge Tsygalnitzky said CaribSKY would allow passengers to travel on any of the three airlines on one ticket. This will be facilitated through codeshares and interline agreements.

“Sometimes, a customer has to purchase two tickets, three tickets to get to a single place. Now, what we want you to be able to do is travel seamlessly anywhere you want to with a single ticket,” he told regional media.

Tsygalnitzky said passengers would benefit from more direct flights and connections, lower fares, a better airport experience and a loyalty programme.

At the same time, LIAT, Winair and Air Antilles will be able to share know-how, optimise schedules and bring their teams together while maintaining separate identities.

Together, it projected that the three airlines will operate 25 aircraft and transport 1 400 000 passengers annuals on 70 000 flights.

LIAT’s chief executive officer Julie Reifer-Jones said inter-regional travel was declining and it was hoped that CaribSKY will make it easier for passengers to move through the English, French, Spanish and Dutch-speaking territories.

In brief remarks, LIAT chairman Dr Jean Holder pointed out that the Caribbean was the most airline dependent region in the world and social, economic and cultural life depended on the extent to which there is connectivity.

St Maarten’s Minister of Tourism, Economic Affairs, Transportation and Telecommunications, Cornelius de Weever also highlighted the importance of CaribSKY.

He pointed out that it is often easier and cheaper to cross the Atlantic than to visit a Caribbean territory.

Source: Retrieved April 23, 2018 from: https://stluciatimes.com/2018/04/19/caribbean-airline-alliance-promises-lower-fares/

This too is a good start, though limited to the small Eastern Caribbean sub-region. The Go Lean movement presents the plan to forge an alliance of multiple parties throughout the whole Caribbean region, all 30 member-states in benefit to the 42 million people. The book stresses that regional alliances are the best ways to reform and transform the Caribbean societal engines. This was an early motivation for the roadmap, as pronounced in the opening Declaration of Interdependence (Pages 12 – 13):

viii. Whereas the population size is too small to foster good negotiations for products and commodities from international vendors, the Federation must allow the unification of the region as one … agent, thereby garnering better terms and discounts.

xvi. Whereas security of our homeland is inextricably linked to prosperity of the homeland, the economic and security interest of the region needs to be aligned under the same governance. Since economic crimes … can imperil the functioning of the wheels of commerce for all the citizenry, the accedence of this Federation must equip the security apparatus with the tools and techniques for predictive and proactive interdictions.

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.

Aviation plays a key role, and so there is the need for regional coordination and promotion of the region’s domestic and foreign air carriers.

Yes, we can better promote air travel in the Caribbean; we can make our homeland a better place to live, work, fly & play. 🙂

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

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

————-

Appendix VIDEO – World’s largest airline fleet || American Airlines Current And Future Fleet – https://youtu.be/ULGL_yTORMs

Great Aviation
Published on Jan 23, 2018 – American Airlines current as well as the airplanes it has ordered. All the types as well as their seat configurations.

Category: Autos & Vehicles
License: Standard YouTube License

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2008, Aviation, Jobs, Model, Tourism

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Righting a Wrong: The 2008 Housing Crisis

Posted on May 6, 2017 in Ethos, Government, Industries, Strategy

Go Lean Commentary

Have you ever made a mistake?

“Let him that is without sin, cast the first stone” – Jesus Christ (The Bible @ John 8:7)

Optimization of the economic engines to grow the regional economy to $800 Billion & create 2.2 million new jobs.
Establishment of a security apparatus to protect public safety and ensure the economic engines of the region.
Improvement of Caribbean governance to support these engines.

Righting a Wrong: 2008 Housing Crisis
Righting a Wrong: Puerto Rico’s Bankruptcy
Righting a Wrong: Volkswagen Emissions Crisis
Righting a Wrong: Takata Air-Bags

This book is published by the SFE Foundation, a community development foundation chartered for the purpose of empowering and re-booting economic engines. …

2008 – The peak day of the recent global financial crisis was September 15, 2008. On this day, Wall Street giant Lehman Brothers filed for bankruptcy protection, and eventual dissolution, after succumbing to the weight of over-leverage in mortgage-backed securities. There is an old observation/expression that states that “there are 3 kinds of people in the world, those who make things happen, those who watch things happen and those who wonder ‘what happened?’“
Principals of the SFE Foundation were there in 2008 … engaged with Lehman Brothers; on the inside looking out, not the outside looking in. Understanding the anatomy of the modern macro economy, allows the dissection of the processes and the creation of viable solutions.

Omaha – The book was initially composed in Omaha, Nebraska, the home of one of the world’s richest men, Warren Buffet – the “Oracle of Omaha” – CEO of corporate giant Berkshire Hathaway. While the United States experienced boom and bust during the Great Recession, Omaha remained a stable, consistent model of prosperity (in March 2008 the unemployment rate in Omaha was 3.9 percent). This was no accident. This community embraces a certain ethos that is fundamental for stability and vibrancy: good corporate citizenship. Omaha is home to other corporate movers-shakers in addition to Berkshire Hathaway; (see Appendix A [on Page 254]). This community example is purported as a model for assimilation by the Caribbean region.

xxxiii. Whereas lessons can be learned and applied from the study of the recent history of other societies, the Federation must formalize statutes and organizational dimensions to avoid the pitfalls of communities like East Germany, Detroit, Indian (Native American) Reservations, Egypt and the previous West Indies Federation. On the other hand, the Federation must also implement the good examples learned from developments/communities like New York City, [Omaha,] Germany, Japan, Canada, the old American West and tenants of the US Constitution.

So here is the Wrong … and here is the “Righting of the Wrong” associated with the 2008 Housing Crisis:

The Wrong:
In 2008 a perfect storm of economic disasters hit the US and indeed the entire world. The most serious began with the collapse of housing bubbles in California and Florida, and the collapse of housing prices and the construction industries. Millions of mortgages (averaging about $200,000 each) had been bundled into securities called collateralized debt obligations that were re-sold worldwide. Many banks and hedge funds had borrowed hundreds of billions of dollars to buy these securities, which were now “toxic” because unknown values and no buying markets.

A series of the largest banks in the US and Europe collapsed; some went bankrupt, such as Lehman Brothers with $690 billion in assets; others such as Citigroup, the leading insurance company AIG, and the two largest mortgage companies (Fannie Mae, Freddie Mac) were bailed out by the US government. Congress voted $700 billion in bailout money, and the Treasury and Federal Reserve committed trillions of dollars to shoring up the financial system. But the measures did not reverse the declines – banks drastically tightened their lending policies, despite infusions of federal money. The government, for the first time, took major ownership positions in some banks. The stock market plunged 40%, wiping out tens of trillions of dollars in wealth (estimates tallying $11 Trillion); housing prices fell 20% nationwide wiping out trillions more. By late 2008 distress was spreading beyond the financial and housing sectors, especially as the “Big Three” of the automobile industry (General Motors, Ford and Chrysler) were on the verge of bankruptcy, and the retail sector showed major weaknesses. Critics of the $700 billion Troubled Assets Relief Program (TARP) expressed anger that much of the TARP money that had been distributed to banks was seemingly unaccounted for, with banks being secretive on the issue.^[45] [See this portrayal in these photos or the VIDEO at https://youtu.be/N9YLta5Tr2A.]

Righting the Wrong:
In February 2009, [the newly inaugurated] President Barack Obama signed the American Recovery and Reinvestment Act; the bill provided $787 billion in stimulus through a combination of spending and tax cuts. The plan was largely based on the Keynesian theory that government spending should offset the fall in private spending during an economic downturn; otherwise the fall in private spending would perpetuate itself and productive resources, such as the labor hours of the unemployed, will be wasted.^[46] Critics at the time claimed that government spending cannot offset a fall in private spending because government must borrow money from the private sector in order to add money to it. However, most economists do not think such “crowding out” is an issue when interest rates are near zero and the economy is stagnant.

The recession period officially expended only 6 quarters (Q4-2007 to Q1-2009), but the effects were longer lasting. This was deemed the Great Recession because of the fundamental shifts the economy made. For example, in the US, jobs paying between $14 and $21 per hour made up about 60% those lost during the recession, but such mid-wage jobs have comprised only about 27% of jobs gained during the recovery through mid-2012. In contrast, lower-paying jobs constituted about 58% of the jobs regained.

As of December 2012, the US Federal Reserve Bank reported that the net worth of US households recovered by $1.7 trillion to $65 trillion during Q3-2012. It was still below the record high of $67 trillion during Q3-2007, but up $13.5 trillion since its recent cyclical low during Q1-2009.^[47]

Source: Book Go Lean…Caribbean Page 69 – 70

There were bad actors in this crisis. They had their Day of Reckoning as well. See these previous blog-commentaries that detailed the aftershocks of the 2008 economic crisis:

https://goleancaribbean.com/blog/?p=10187	Day of Reckoning for NINJA Loans
https://goleancaribbean.com/blog/?p=8379	Economic Fallacy: Self-regulation of the Centers of Economic Activity
https://goleancaribbean.com/blog/?p=6531	A Lesson in History – Book Review of the ‘Exigency of 2008’
https://goleancaribbean.com/blog/?p=1896	The Crisis in Black Homeownership
https://goleancaribbean.com/blog/?p=1309	5 Steps of a Bubble
https://goleancaribbean.com/blog/?p=353	Book: Wrong Economic Policy Disasters and What We Can Learn

‘Too Big To Fail’ – Caribbean Version

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

Global – The banks labeled “Too Big To Fail” impacted the world’s economy during the Global Financial 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. 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.^[48]
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.

Going forward, there needs to be a solution to mitigate systemic threats that may plague the Caribbean region.

For one, there is the plan for a Caribbean Central Bank!

Among the Big Ideas of the Caribbean Union Trade Federation is the introduction and assimilation of the Caribbean Central Bank (CCB) and the Caribbean Dollar. The CCB is actually a cooperative among the region’s Central Banks. All the existing Central Banks, at the time of ascension, will cede their monetary powers to the CCB and continue their participation using well-established cooperative principles. – Go Lean…Caribbean book Page 73

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

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.

A lot is at stake: the hopes and dreams of our people, young and old. They all want; we all want a better Caribbean; better places to live, work and play. 🙂

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

Sign the petition to lean-in for the roadmap for the Caribbean Union Trade Federation.

————

Footnote References

47 – American Enterprise Institute – Retrieved December 2012 from: www.aei-ideas.org/…/u-s-net-worth-hasrecovered-13-5-trillion-but-still- below-2007-peak/

————

Appendix VIDEO – The 2008 Financial Crisis: Crash Course Economics – https://youtu.be/GPOv72Awo68

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Day of Reckoning for NINJA Loans

Posted on January 19, 2017 in Economics, Government, Strategy

Go Lean Commentary

Be not deceived … whatsoever a man soweth, that shall he also reap. – King James Version – The Bible

It is time for the Day of Reckoning for one of the players in the recent housing bubble and financial crisis, referred to as the Great Recession of 2008. Industry stakeholders had been “skimming of the public coffers for mortgage guarantees and giving unwise mortgages to people who had what was considered NINJA qualification:

No Income
No Job & Assets

Such activities in the retail mortgage industry, plus bad practices in the wholesale lending, credit ratings and mortgage-back securities industries had congealed to form a “perfect storm” for disaster in the financial markets (Wall Street, et al) in the US and around the world.

Many innocent people lost fortune and faith in the American eco-system. There had to be an accounting of the “sins and sinister plots”; there had to be a Day of Reckoning. That day came for one Michigan-based (Detroit area) company, United Shore Financial Services. See the full story here:

Title: United Shore Agrees to $48M Settlement with DOJ
By: Jacob Passy

United Shore Financial Services, a Troy, Mich.-based lender, has agreed to pay $48 million to settle allegations that it violated the False Claims Act.

The Department of Justice alleged that USFS did not comply with certain origination, underwriting and quality control requirements while participating in the Federal Housing Administration’s direct endorsement lender program. Consequently, the Department of Housing and Urban Development insured hundreds of loans that UnitedShore approved that should not have been eligible for FHA coverage, subsequently taking losses due to claims on those loans.

“USFS acknowledged that it failed to comply with FHA underwriting and quality control requirements, resulting in improperly originated mortgages,” John Vaudreuil, a U.S. attorney for the Western District of Wisconsin said in a news release. “While USFS deserves credit for acknowledging and resolving its conduct, that conduct not only resulted in substantial losses of public funds, but also put Wisconsin homeowners at risk of losing their homes or ruining their credit.”

United Shore, which is both a retail lender and the parent of United Wholesale Mortgage, did not immediately respond to a request for comment.

In particular, the DOJ said that UnitedShore admitted to pressuring underwriters to approve FHA mortgages under a compensation plan that tied pay to the percentage of loans approved. United Shore also falsely certified that direct endorsement underwriters reviewed appraisal reports prior to mortgages being approved for FHA insurance; under the DEL program, the FHA does not review that lenders are complying with the agency’s requirements.

The DOJ also identified other issues with UnitedShore’s compliance practices. The lender allegedly did not provide senior management with “meaningful information” regarding quality control findings. Additionally, UnitedShore did not meet HUD’s self-reporting requirements, only self-reporting three loans to the department despite quality control reviews finding hundreds of FHA-insured loans that were materially deficient at issuance.

The alleged activities occurred between from 2006 through 2011. The DOJ also said that United Shore “made certain discretionary distributions to a shareholder in the company” after the federal government began investigating the company in January 2014.
Source: National Mortgage News – Industry Trade Journal; posted 12/28/2016; retrieved 01/18/2017 from: http://www.nationalmortgagenews.com/news/compliance-regulation/united-shore-agrees-to-48m-settlement-with-doj-1093769-1.html

This story aligns with the book Go Lean…Caribbean; it serves as a roadmap to introduce and implement the technocratic Caribbean Union Trade Federation (CU) and Caribbean Central Bank (CCB) for better stewardship of the Caribbean banking eco-system, to ensure the economic failures of the past do not re-occur in the Caribbean. The book was inspired by the events of 2008, by people engaged in the mortgage-housing-investments industries. These ones engaged in the post-mortem analysis – dissection of the crisis – of all the bad community ethos, strategies, tactics and implementations leading up to 2008 and saw the need for this Day of Reckoning.

The goal of this roadmap is to apply the lessons-learned from 2008 in the stewardship of the economic engines in the Caribbean region. It turns out that we were affected by 2008 as well; we were devastated by the elasticity in the global markets.

Welcome to the Caribbean’s Day of Reckoning!

The Caribbean economy is a parasite of the US and so when the American market “catches a cold, we sneeze”. (This is referred to as “financial contagions”). We can – we must – do better and guide our own economy away from American dependence to a regional interdependence.

We are on the way…

With the proposal for the CARICOM Single Market & Economy (CSME), a more integrated region is expected to emerge with greater linkages among the member-states of the economic union. Issues of financial contagions will now have to be a constant concern for a regional sentinel. The Go Lean roadmap calls for the deployment of the Caribbean Central Bank as that sentinel, to proactively and reactively shepherd the financial institutional processes (wholesale and retail). We do not want to “get caught with our pants down” in our region. We do not want government loan guarantees for mortgagors that have NINJA qualifiers. (That money would be better placed in more substantial investments in Caribbean people and processes). The lesson from 2008 is to follow the money and discern those who profited from this bad behavior; see the VIDEO in the Appendix below.

Mortgages with a government-guarantee stamp of approval are readily sold in the secondary markets. Bad actors are able to glean quick profits from loan origination fees and then “wash their hands” of any inherent risk from deficient payment collection. (See the VIDEO in the Appendix below). This was the direct charge against United Shore Financial Services in the forgoing article: “[funding] hundreds of FHA-insured loans that were materially deficient at issuance”.

Bad actors … profiting from existing supplies of capital!?!?

This is so familiar! The Go Lean book details (Page 23):

… history teaches that with the emergence of new economic engines, “bad actors” will also emerge thereafter to exploit the opportunities, with good, bad and evil intent. A Bible verse declares: “What has been will be again, what has been done will be done again; there is nothing new under the sun” – Ecclesiastes 1:9 New International Version.

This roadmap for Caribbean integration declares that peace, security and public safety is tantamount to economic prosperity. This is why an advocacy for the Greater Good must be championed as a community ethos. A prime precept is that it is “better to know than to not know” – this implies that privacy is secondary to security. A secondary precept is that bad things will happen to good people and so the community needs to be prepared to contend with the risks that can imperil the homeland.

The prime directive of the Go Lean/CU/CCB roadmap 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 article shows the type of functions executed by technocratic financial regulators: monitoring risks, policing the industry stakeholders, and reckoning bad practices. The “bad actor” in the article – United Shore Financial Services – had their Day of Reckoning.

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:

For Canadian Banks: Caribbean is a ‘Bad Bet’

Christmas presents (2015) for American Banks

Bad Actors profiting from a supply of capital in private education

Too Big To Fail – Caribbean Version

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 the Caribbean has experienced economic dysfunction due to the 2008 Global Financial Crisis. In line with the foregoing news article, the Go Lean roadmap seeks to mitigate bad behavior from bad actors like United Shore Financial Services in our local region. The book details the many infrastructural enhancements/advocacies to the region’s financial eco-system; to facilitate efficient management of the economy, and policing of this important financial/banking industry-sector:

Ethos-Strategy-Tactics-Implementation-Advocacy	Page
Anecdote – Caribbean Single Market & Economy	15
Anecdote – Puerto Rico – “The Greece of the Caribbean”	18
Confederating Non-Sovereignty Inter-Governmental Entity	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
Better Manage Foreign Exchange	154
Improve Credit Ratings	155
Improve Housing – Mortgage Standards Enforcement	161
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
Appendix – Credit Reporting and Ratings Good Governance	276

There is no doubt that there has been previous corruption of the American financial eco-system. They have “made themselves sick; given themselves colds”, and yet we, in the Caribbean, “have had to sneeze”. We hope that the new oversight methodology in the US is more effective for managing their stakeholders. But management of the US is out-of-scope for the movement behind the Go Lean book; our focus is limited strictly to the Caribbean economy. So now is the time for change to a new regulatory regime here in our region; now is the 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 bad American past. A lot is at stake: our financial security; our future.

We urge all stakeholders – residents, mortgage-holders, mortgage lenders, banks – to lean-in to this Go Lean roadmap to elevate Caribbean society. The destination is common and desired for all Caribbean men, women and children: a better place to live, work and play. 🙂

Download the book Go Lean … Caribbean – now!

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Appendix VIDEO – NINJA Loans: The Big Short – https://youtu.be/os1Etuv_gDE

Published on Apr 27, 2016 – Clip from Academy Award Winning Best Picture “The Big Short”.

Category: People & Blogs
License: Standard YouTube License

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2008, Banks, Model, Power

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ENCORE: Looking Back at the Obama Years

Posted on January 12, 2017 in Government, Social

Just one more week and the Obama years will be over. (The new President – Donald J. Trump – will be inaugurated on January 20, 2017).

This is good …
This is bad …

Barack H. Obama has been transformational as the 44th President of the United States. He has truly impacted American society, but the Caribbean, not so much. This was the theme of the previous blog-commentary (from March 31, 2016) that detailed Obama’s bad consequences on the Caribbean. See here:

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Title: Obama – Bad For Caribbean Status Quo

Go Lean Commentary

Yes, Barack Obama was elected in 2008 as the first Black President of the United States, with his campaign of “Hope and Change”. While one would think that would be good for all Black (African-American) people in the US – and around the world – alas, that has not been the case. It is the conclusion of many commentators and analysts that Obama has not been able to do as much for his race as he would like, nor his race would like. (Obama himself has confessed this). Or that another White person may have been able to do more for the African American community.

This seems like a paradox!

Yet, it is what it is. The truth of the matter is that race still plays a huge decision-making factor in all things in America. This reality has curtailed Obama in any quest to do more for his people.

This is the assessment by noted commentator and analyst, Professor Michael Eric Dyson, in his new book “The Black Presidency: Barack Obama and the Politics of Race in America“. Professor Dyson points out some actual events during the Obama presidency and concludes that a White President would have been more successfully championing certain race-related causes. (Think: the Black Lives Matter movement was ignited during the Obama presidency).

VIDEO – Michael Eric Dyson on Democracy Now – https://youtu.be/F7Uo06_NfCw

Published on Feb 3, 2016 – http://democracynow.org – As the 2016 presidential race heats up and the nation marks Black History Month, we turn to look back on President Obama’s legacy as the nation’s first African-American president. Georgetown professor Michael Eric Dyson has just published a new book titled The Black Presidency: Barack Obama and the Politics of Race in America. From the protests in Ferguson to the church shooting in Charleston, South Carolina, to the controversy over the arrest of Harvard professor Henry Louis Gates, Michael Eric Dyson explores how President Obama has changed how he talks about race over the past seven years.

Democracy Now! is an independent global news hour that airs weekdays on nearly 1,400 TV and radio stations Monday through Friday. Watch the live-stream 8-9AM ET: http://democracynow.org.

The summary is that White Privilege still dominates in America. See the review of this book in Appendix A below.

This conclusion aligns with the assertions of the book Go Lean…Caribbean, and many aligned blog submissions, that America is not the ideal society for Caribbean citizens to seek for refuge, that rather Caribbean people can exert less effort to reform and transform their homelands than trying to prosper in this foreign land. The conclusion is the priority should be on a local/regional quest to prosper where planted in the Caribbean. This is a mission of the Go Lean…Caribbean movement, to lower the push and pull factors that lead many in the Caribbean to flee their tropical homes. Highlighting and enunciating the truths of American “Race Reality” aligns with that mission. We must lower the “pull” factors!

It is this commentary’s conclusion that Obama has been a good president for American self-interest. (The economy has recovered and rebounded from the “bad old days” of the 2008 financial crisis).

It is also this commentary’s conclusion that Obama has been a bad president for the Caribbean status-quo! His administration has brought ” change” to many facets of Caribbean life – good, bad and ugly, as follows:

Consider the good: The American re-approachment to Cuba – under Obama – is presenting an end to the Cold War animosity of these regional neighbors – Cuba’s status quo is changing. A bad actor from this conflict, former Cuban President Fidel Castro, just penned his own commentary lamenting Obama’s salesmanship in his recent official visit to Cuba on March 15; see Appendix B.
Consider the bad:
- (A) The US has doubled-down on globalization, forcing countries with little manufacturing or agricultural production to consume even more and produce even less; a lose-lose proposition.
- (B) The primary industry in the Caribbean – tourism – has experienced change and decline as a direct result of heightened income inequality in the US, the region’s biggest source of touristic visitors; now more middle class can only afford cruise vacations as opposed to the more lucrative (for the region) stop-overs.
- (C) The secondary industry in the Caribbean – Offshore Banking – has come under fire from the US-led Organization for Economic Cooperation & Development (OECD) to deter offshore banking growth; the industry, jobs and economic contributions have thusly receded.
Consider the ugly: Emigration of Caribbean citizens to the US has accelerated during this presidency, more so than any other time in American-Caribbean history. Published rates of societal abandonment among the college educated classes have reported an average of 70 percent in most member-states, with some countries (i.e. Guyana) tallying up to 89 percent.

The Caribbean status quo has changed. It is now time for a Caribbean version of “hope and change”.

This book Go Lean…Caribbean serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU). This roadmap presents “hope and change” for empowering the Caribbean region’s societal engines: economic, security and governance. In fact, the following are the prime directives of the roadmap:

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.

A mission of the CU is to minimize the push and pull factors that lead so many Caribbean citizens to migrate to foreign lands – to America; and also to invite the Diaspora living there to repatriate home. The argument is that America is not the most welcoming for the Black and Brown populations of the Caribbean. Let’s work to prosper where planted at home.

Yes, there are societal defects in the Caribbean, as there are defects in America. But the defects in America are greater: institutional racism and Crony-Capitalism. Though it is heavy-lifting, it is easier to reform and transform the Caribbean.

The reference sources in the Appendices relate that the Obama effect is changing the status quo … in America … and the Caribbean.

This issue of reducing the societal abandonment rate and encouraging repatriation has been a consistent theme of Go Lean blogs entries; as sampled here:

https://goleancaribbean.com/blog/?p=7628	‘A Change Is Gonna Come’
https://goleancaribbean.com/blog/?p=7204	‘The Covenant with Black America’ – Ten Years Later
https://goleancaribbean.com/blog/?p=7151	The Caribbean is Looking for Heroes … ‘to Return’
https://goleancaribbean.com/blog/?p=7412	The Road to Restoring Cuba
https://goleancaribbean.com/blog/?p=7151	The Caribbean is Looking for Heroes … ‘to Return’
https://goleancaribbean.com/blog/?p=6016	Hotter than July – Still ‘Third World’ – The Need for Cooling …
https://goleancaribbean.com/blog/?p=5784	The Need for Human Rights/LGBT Reform in the Region
https://goleancaribbean.com/blog/?p=4613	‘Luck of the Irish’ – Lessons from their Past, Present and Future
https://goleancaribbean.com/blog/?p=4447	Probe of Ferguson, Missouri exposes Institutional Racism

All in all, the roadmap commences with the recognition that all the Caribbean is in crisis, with its high abandonment rate. These acknowledgements are pronounced in the Declaration of Interdependence (Page 13). The statements are included as follows:

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.

The Go Lean roadmap lists the following details on the series of community ethos, strategies, tactics, implementations and advocacies necessary to effectuate the “hope and change” in the Caribbean region to mitigate the continued risk of emigration and the brain drain. The list is as follows:

Community Ethos – Economic Systems Influence Individual Choices	Page 21
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
Community Ethos – Ways to Help Entrepreneurship	Page 28
Strategic – Vision – Integrated Region in a Single Market	Page 45
Strategic – Vision – Agents of Change	Page 57
Tactical – Fostering a Technocracy	Page 64
Tactical – Growing to $800 Billion Regional Economy	Page 67
Tactical – Separation of Powers	Page 71
Implementation – Ways to Pay for Change	Page 101
Implementation – Ways to Deliver	Page 109
Implementation – Reasons to Repatriate	Page 118
Planning – Big Ideas for the Caribbean Region	Page 127
Planning – Lessons Learned from the US Constitution	Page 145
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Create Jobs	Page 152
Advocacy – Ways to Improve Governance	Page 168
Advocacy – Ways to Impact the Diaspora	Page 217
Appendix – Source of 2.2 Million New Jobs	Page 257

The Go Lean roadmap allows for the Caribbean region to deliver success, to mitigate the risk of further push and pull. The world in general and the Caribbean in particular needs to know the truth of life in America for the Black and Brown populations. This heavy-lifting task is the mission of the CU technocracy.

Now is the time for all of the Caribbean, the people and institutions, to lean-in for the “hope and change” that is the Caribbean Union Trade Federation. Yes, we can … make this region a better place to live, work and play. 🙂

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

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Appendix A

Book Review: ‘The Black Presidency: Barack Obama and the Politics of Race in America’ By Michael Eric Dyson. 346 Pages. Houghton Mifflin Harcourt. $27. ISBN 978-0544387669
Review By: N. D. B. Connolly

What happens when the nation’s foremost voice on the race question is also its most confined and restrained? Michael Eric Dyson raises this question about President Obama in his latest book, “The Black Presidency: Barack Obama and the Politics of Race in America.” The book inspires one to raise similar questions about Dyson himself. For, while hardly restrained, Dyson appears noticeably boxed in by the limitations placed on celebrity race commentators in the Age of Obama.

Readers will recognize Dyson’s practiced flair for language and metaphor as he makes an important and layered argument about American political culture and the narrowness of presidential speech. The book argues that Americans live under a black presidency — not so much because the president is black, but because Obama’s presidency remains bound by the rules and rituals of black respectability and white supremacy. Even the leader of the free world, we learn in Dyson’s book, conforms principally to white expectations. (Dyson maintained in the November issue of The New Republic that Hillary Clinton may well do more for black people than Obama did.) But Obama’s presidency is “black” in a more hopeful way, too, providing Americans with an opportunity to better realize the nation’s democratic ideals and promises. “Obama’s achievement gestures toward what the state had not allowed at the highest level before his emergence,” Dyson writes. “Equality of opportunity, fairness in democracy and justice in society.”

A certain optimism ebbs and flows in “The Black Presidency,” but only occasionally does it refer to white Americans’ beliefs about race. Far more often, Dyson hangs hope on Obama’s impromptu shows of racial solidarity. One such moment was the president’s remarks after the 2009 arrest of the Harvard professor Henry Louis Gates Jr. (who was arrested trying to get into his own home). Another was Obama’s public identification with Trayvon Martin. Both acts may have been politically risky, but they also greatly heartened African- Americans. Hope builds, and by book’s end, readers find a chapter-long celebration of the president’s soaring invocations of “Amazing Grace” during last year’s memorial service for the slain parishioners of EmanuelA.M.E.Church. For Dyson, the eulogy at Emanuel seems to serve as a sign of grace that black America may still yet enjoy from the Obama White House.

Its cresting invocations of hope aside, the book ably maintains a sharp critical edge. Dyson uncovers a troubling consistency to the president’s race speech and shows that in spite of Obama’s reliance on black political networks and black votes during his meteoric rise, the president chose to follow a governing and rhetorical template largely hewed by his white predecessors. As both candidate and president, Obama’s speeches have tended to allay white guilt. They have scolded African-American masses for cultural pathology and implied that blacks were to blame for lingering white antipathy. Obama’s speeches have also often consigned the worst forms of racism and anti-black violence to the past or to the fringes of American political culture. One finds passive-voice constructions everywhere in Obama’s race talk, as black folk are found suffering under pressures and at the hands of parties that go largely unnamed. “Obama is forced to exaggerate black responsibility,” Dyson advances, “because he must always underplay white responsibility.”

Critically, Dyson contends that the president’s tepid anti-racism comes from political pragmatism rather than a set of deeper ideological concerns. “Obama is anti-ideological,” Dyson maintains, and that is “the very reason he was electable.”

That characterization, however, overlooks how liberal pragmatism functions as ideology. What’s more, it ignores the marginalization and violence that black and brown people often suffer — at home and abroad — whenever moderates resolve to “get things done.” If the Obama era proved anything about liberalism, it’s that there remains little room for an explicit policy approach to racial justice — even, or perhaps especially, under a black president. As Obama himself explains to Dyson: “I have to appropriate dollars for any program which has to go through ways and means committees, or appropriations committees, that are not dominated by folks who read Cornel West or listen to Michael Eric Dyson.”

Upon a careful reading of Dyson’s book, loss seems always to arrive on the heels of hope. As we might expect, the author explores Obama’s estrangement from the Rev. Jeremiah Wright in 2008. He also attends to his own very public and more recent split from Cornel West. But even beyond these signal episodes, “The Black Presidency” is suffused with a bittersweet tone about relationships strained. President Obama seems to leave a host of people and political commitments at the White House door as he conforms to the racial demands of a historically white office. Even Dyson seems unaware of all the ways in which “The Black Presidency,” as a book, both explicates and illustrates how the Obama administration leaves black folk behind.

All but the last two of the book’s eight chapters begin with the author placing himself in close and often luxurious proximity to Obama. The repetition has the literary effect of a Facebook feed. Here is Michael at Oprah’s sumptuous California mansion during a 2007 fund-raiser, sharing a joke with Barack and Chris Rock. Here is Michael on the private plane and in the S.U.V., giving the candidate tips on how to use a “ ‘blacker’ rhetorical style” during his debate performances against a surging Hillary Clinton. Here he is in the V.I.P. section of the 50th-anniversary ceremony for the March on Washington and, yet again, at the White House Correspondents’ Association dinner. Through these and similar moments, Dyson projects his status and, in ways less clear, his authority. Dyson knows Obama, the reader is assured, because he has kept his company. He has swapped playful taunts and bro-hugs with the president; he has been intimate, one might say, with history.

Moments like these have a secondary effect. They illuminate a tension cutting through and profoundly limiting “The Black Presidency” as a work of political commentary. Regardless of who Michael Eric Dyson may have been to Obama the candidate, Dyson now has barely any access to Obama the president. Time and circumstance have rendered Dyson, the man and the thinker, increasingly irrelevant to Obama’s presidency. He can be at the party, but not at the table.

Perhaps worse in relation to the book’s stated aim to be the first full measure of Obama and America’s race problem, Dyson, the author, has none but only the smallest role to play in assessing and narrating Obama’s legacy. When Bill Clinton decided to chronicle his own historic turn in the White House, he called on Taylor Branch and recorded with the historian some 150 hours of interviews over 79 separate sessions. Dyson, in 2015, gets far shabbier treatment. Chapter 5, “The Scold of Black Folk,” opens: “I was waiting outside the Oval Office to speak to President Obama. I had a tough time getting on his schedule.” In response to Dyson’s request for a presidential audience, the White House offered the author 10 whole minutes. By his own telling, Dyson “politely declined” and pressed Obama’s confidante, Valerie Jarrett, to remember his long history with and support of the president. “I eventually negotiated a 20-minute interview that turned into half an hour.” It appears to be the only interview Dyson conducted for the book.

In the end, “The Black Presidency” possesses a loaves-and-fishes quality. Drawing mostly on the news cycle, close readings of carefully crafted speeches and a handful of glittering encounters, Dyson has managed to do a lot with a little. The book might well be considered an interpretive miracle, one performed in fealty and hope for a future show of presidential grace, either from this president or, should she get elected, the next one.

Source: http://www.nytimes.com/2016/02/07/books/review/the-black-presidency-barack-obama-and-the-politics-of-race-in-america-by-michael-eric-dyson.html. Posted February 2, 2016; retrieved March 29, 2016.

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Appendix B

Title: Cuba’s Fidel Castro knocks sweet-talking Obama after ‘honey-coated’ visit
By: Marc Frank

Havana – Retired leader Fidel Castro accused U.S. President Barack Obama of sweet-talking the Cuban people during his visit to the island last week and ignoring the accomplishments of Communist rule, in an opinion piece carried by all state-run media on Monday.

Obama’s visit was aimed at consolidating a detente between the once intractable Cold War enemies and the U.S. president said in a speech to the Cuban people that it was time for both nations to put the past behind them and face the future “as friends and as neighbors and as family, together.”

“One assumes that every one of us ran the risk of a heart attack listening to these words,” Castro said in his column, dismissing Obama’s comments as “honey-coated” and reminding Cubans of the many U.S. efforts to overthrow and weaken the Communist government.

Castro, 89, laced his opinion piece with nationalist sentiment and, bristling at Obama’s offer to help Cuba, said the country was able to produce the food and material riches it needs with the efforts of its people.

“We don’t need the empire to give us anything,” he wrote.

Asked about Fidel Castro’s criticisms on Monday, White House spokesman Josh Earnest said the Obama administration was pleased with the reception the president received from the Cuban people and the conversations he had with Cuban officials.

“The fact that the former president felt compelled to respond so forcefully to the president’s visit, I think is an indication of the significant impact of President Obama’s visit to Cuba,” Earnest said.

After the visit, major obstacles remain to full normalization of ties between Cuba and the United States, with no major concessions offered by Cuba on rights and economic freedom.

“The president made clear time and time again both in private meetings with President Castro, but also in public when he delivered a speech to the Cuban people, that the U.S. commitment to human rights is rock solid and that’s not going to change,” Earnest said.

Fidel Castro took power in a 1959 revolution and led the country until 2006, when he fell ill and passed power to his brother Raul Castro. He now lives in relative seclusion but is occasionally heard from in opinion pieces or seen on television and in photos meeting with visiting dignitaries.

The iconic figure’s influence has waned in his retirement and the introduction of market-style reforms carried out by Raul Castro, but Fidel Castro still has a moral authority among many residents, especially older generations.

Obama did not meet with Fidel Castro during his three-day visit, nor mention him in any of his public appearances. It was the first visit of a sitting U.S. president for 88 years.

Fidel Castro blasted Obama for not referring in his speech to the extermination of native peoples in both the United States and Cuba, not recognizing Cuba’s gains in health and education, and not coming clean on what he might know about how South Africa obtained nuclear weapons before apartheid ended, presumably with the aid of the U.S. government.

“My modest suggestion is that he reflects (on the U.S. role in South Africa and Cuba’s in Angola) and not now try to elaborate theories about Cuban politics,” Castro said.

Castro also took aim at the tourism industry in Cuba, which has grown further since Obama’s rapprochement with Raul Castro in December 2014. He said it was dominated by large foreign corporations which took for granted billion-dollar profits.

(Reporting by Marc Frank; Additional reporting by Doina Chiacu in Washington; Editing by Bill Rigby)

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A Lesson in Economic Fallacies – Self-regulation of the Centers of Economic Activity

Posted on July 10, 2016 in Economics, Strategy

Go Lean Commentary

A lot of communities have one spot – a center of economic activity – that must be protected, promoted and regulated. Though they could, these centers do not normally refer to “downtown”. They refer to alternate destinations, like an industrial site (factory, quarry, mine, harbor, etc.), designated district, education campus, medical establishment (hospital or clinic), corporate park and most common in countries with tourism-based economies, a hotel resort property.

That one geographic spot would be the economic engine for the community.

This is an ancient model, dating to times of city walls to protect the inherent commerce. In the modern world, this reality can apply in either urban or rural settings; some small towns are designated “Company Towns” – see the model of Hershey, Pennsylvania in the VIDEO in Appendix A – where the entire community revolves around the one center of economic activity. (For Hershey, first the Chocolate Factory and then the Amusement Park). These centers of economic activities must be protected; but rather than the walls of ancient cities, today the protections are regulations.

A series of fallacies have emerged in regards to protecting economic engines.

We have all heard these one-liners:

1. “I’m from the Federal Government and I’m here to help” – Ronald Reagan tongue-in-cheek Campaign Attack against excessive government regulation; 1980.

2. “Cut taxes on the rich and they will always do the right thing” – Mantra for Trickle Down Economics.

Both of these ‘ultra free market’ principles have been adequately debunked by the actuality of market performance. They are among the economic fallacies that we must now acknowledge … along with this most notable mantra:

3. Industry stakeholders will always observe best-practices and desist from bad practices because damage to their industry will only damage their own bottom-line.

But we all know the truth, the historicity of the events leading up to the 2008 Housing Bubble and Great Recession; these same stakeholders could not resist the temptation for easy profits from the securitization trend.

No doubt, self-regulation is one of the biggest fallacies.

We are able to accurately conclude that self-regulation does not work in banking … because of the way the governments underwrite risk in the banking system. Leading up to 2008, when the Wall Street banks took risks, they gained (profit) from the upside but the taxpayers were the ones left with the costs of bail-outs when things went wrong – Too Big to Fail.

The purpose of the book Go Lean … Caribbean is the elevation of the economic engines in the region. The book serves as a 5 year roadmap to foster new developments and empowerments in the region. To be successful in the execution, there must be some degree of oversight and shepherding. The book refers to an agile regulatory framework structured with technocratic efficiency and effectiveness; and then dubs the strenuous effort as heavy-lifting.

This commentary is the 5 of 6 from the Go Lean movement on the subject of Economic Fallacies. As related in the first submission on this series, the situation in the Caribbean region is likened to the imagery of an animal foraging for food, but then gets distracted and “chases a squirrel up a tree”. The squirrel in the tree will never be a meal; it is just a waste of time and energy for the animal. This analogy conveys the waste of time associated with a frivolous and fallacious pursuit. The other commentaries detailed in this series are as follows:

Independence – Hype of Hope
Austerity – Book Review: Mark Blyth’s “History of a Dangerous Idea”
Education & Student Loans – Not a good Return on Investment
Phillips Curve – Fallacy of Minimum Wage
Self-regulation of the Centers of Economic Activity
Casino Currency – US Dollars?

All of these commentaries are economic in nature.

They refer to rules for managing the valuable resources of time, talents and treasuries. There are rules for winning and rules for losing. Normally these fallacies are discernible after the fact, not before hand. So examining the experience of other communities can be extremely helpful to our Caribbean quest. This is a mission of the Go Lean book, to teach lessons from how other communities have handled economic crises and apply the best-practices in the Caribbean.

This book Go Lean…Caribbean serves as a roadmap to introduce and implement the technocratic Caribbean Union Trade Federation (CU) and Caribbean Central Bank or CCB (a cooperative of central banks), to serve as a regional super-national entity to shepherd the economic, security and governing engines of the 30 member Caribbean states. Being technocratic includes studying and applying best-practices, while avoiding fallacies in governing oversight. There is a lot to learn from the study of self-regulation in the banking industry, especially before, during and after the catastrophic events of 2008 . Now is a good time for this review of crisis as the economy has recovered in some places, though it still lingers in the Caribbean.

Wisdom comes from experience. Experience comes from making mistakes. There was a lot of mistakes leading up to 2008 – especially in the banking and financial sectors – so there is a lot of wisdom to glean. Among the flawed practices, was the fallacy that the banking industry would self-regulate.

It seems so laughable now. This is why it is important to apply lessons learned from this experience. So in the Go Lean roadmap, self-regulation is replaced with CU/CCB oversight of banking and these controlled centers of economic activity.

In additional to regional banking, the roadmap calls for the installation of centers of economic activity or Self-Governing Entities (SGE) as job-creating engines in many communities; these sites are ideal for technology laboratories, medical campuses, corporate parks, industrial sites, educational facilities and other forms of establishments situated inside bordered facilitates. These types of installations will thrive under the strategies and tactics of the Go Lean roadmap. They allow for an efficient process to launch and manage projects and physical installations in the region, but the SGE concept does require governmental concurrence and maybe even public approvals – referendums – at the launch of these initiatives.

There is a lot of jurisprudence for the management of these centers of economic activity. For example, in the US, company-towns, though private, are still required to fulfill constitutional obligations. The legal concept is termed “state actors”. See the encyclopedic reference on state actors here:

Reference Title: State Actor

In United States law, a state actor is a person [or company] who is acting on behalf of a governmental body, and is therefore subject to regulation under the United States Bill of Rights, including the First, Fifth and Fourteenth Amendments, which prohibit the federal and state governments from violating certain rights and freedoms.

Although at first blush the term would seem to include only persons who are directly employed by the state, the United States Supreme Court has interpreted these amendments and laws passed pursuant to them to cover many persons who have only an indirect relationship with the government. Controversies have arisen, for example, over whether private companies that run towns (the “company-town”) and prisons (traditionally a state function) can be held liable as state actors when they violate fundamental civil rights. This question remains unresolved, but the Supreme Court has held private citizens to be liable as state actors when they conspire with government officials to deprive people of their rights.

Conversely, in National Collegiate Athletic Association v. Smith, the Supreme Court has found that the National Collegiate Athletic Association is not a state actor for the purposes of 28 U.S.C. 1983 because it was national, rather than acting on behalf of one state actor. For the purposes of a Bivens action, however, it might still be a state actor.[1]

The 1989 case of DeShaney v. Winnebago County was decided on the basis of the state action doctrine. Social workers separated a young son Joshua from his abusive father Randy, but concluded there was not enough evidence for a permanent separation, and later reunited son with father; later, the father beat his son into a persistent vegetative state. The Supreme Court ruled that despite involvement by state social workers, the state of Wisconsin was not a state actor and was therefore not responsible. Accordingly, theFourteenth Amendment protections did not apply, according to constitutional scholar John E. Finn.^[1]

Unlike state actors, private actors are generally not required to afford individuals the constitutional rights mentioned above. In nearly all U.S. states, private shopping center owners can eject protesters from their land for trespassing, and private associations can eject members or deny admission to applicants, with no warning and for no reason. But in a handful of states, notably California, state constitutional protections and certain common law rights have been extended to limit private actors. California allows the peaceful exercise of free speech in private shopping centers (see Pruneyard Shopping Center v. Robins (1980)) and requires certain types of private actors to afford current or potential members a rudimentary version of procedural due process called fair procedure.

There are a number of situations where the United States Supreme Court has recognized the conduct of individuals or private organizations to be “state action,” and therefore subject to provisions of the Constitution such as Equal Protection, Due Process, or the First Amendment. The Supreme Court has held the following:

1. Merely opening up a business to the public is not state action, but the performance of a “public function” (a function that has been traditionally and exclusively performed by the state) is state action (Marsh v. Alabama, 326 U.S. 501 (1946));

2. If an individual or organization merely enters into a contract or asserts a contractual right outside of court it is not state action, but if an individual or organization sues to judicially enforce a contractual right it is state action (Shelley v. Kraemer, 334 U.S. 1 (1948));

3. If the government merely acquiesces in the performance of an act by a private individual or organization it is not state action, but if the government coerces, influences, or encourages the performance of the act, it is state action (Rendell-Baker v. Kohn, 457 U.S. 830 (1982));

4. If the government merely enters into a contract with an individual or organization for the goods or services, the actions of the private party are not state action, but if the government and the private party enter into a “joint enterprise” or a “symbiotic relationship” with each other it is state action (Burton v. Wilmington Parking Authority, 365 U.S. 715 (1961));

5. If government agencies are simply members of a private organization, the actions of the organization are not state action, but if the government is “pervasively entwined” with the leadership of the private organization, the acts of the organization are state action (Brentwood Academy v. Tennessee Secondary School Athletic Association, 535 U.S. 971 (2002)).
Source: Wikipedia Online Encyclopedia. Retrieved 07-10-2016 from: https://en.wikipedia.org/wiki/State_actor

Self-Governing Entities are part-and parcel of the prime directives of the Go Lean roadmap, defined by these 3 statements:

Optimization of the economic engines – including SGE’s – in order to grow the regional economy to $800 Billion in GDP and create 2.2 million new jobs.
Establishment of a security apparatus – with regulations and oversight – to protect the resultant economic engines.
Improvement of Caribbean governance to support these engines and centers of economic activity; this reflects the separation-of-powers between CU agencies and member-state governments.

The issue of banking/financial regulation is important for this roadmap. Overseeing the financial elements SGE’s or “centers of economic activity” is also apropos for this Go Lean roadmap.

There is the need to protect SGE’s.

There is the need for (member-state) hands-off oversight for SGE.

How to reconcile these polar opposite positions? See the model here of the European Central Bank response to the dilemma of self-regulation in the Appendix below.

The Go Lean roadmap embraces the practice of technocratic oversight for the region’s economic engines, especially within the borders of SGE’s. As a planning tool, the roadmap commences with a Declaration of Interdependence, pronouncing the need for regional integration (Page 11 & 14) to foster the foundation to forge a better future. The declarative statements are as follows:

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

xxi. 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.

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… In addition, the Federation must invigorate the enterprises related to existing industries … – impacting the region with more jobs.

The new banking regime has also been detailed in the Go Lean book. The same Declaration of Interdependence, pronounced the need for the consolidated oversight with these statements (Page 13):

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.

Change has now come to the Caribbean. The driver of this change is technology and globalization. As a region, the Caribbean cannot only consume the tradable products of the world’s markets; we must innovate and develop some products too. The structure of SGE’s are perfectly designed for this endeavor, where innovators and developers can maintain their “own world” so as to foster the best practices for Research & Development (R&D) with no intrusion from municipal or member-state authorities.

These SGE’s will be centers of economic activities for the region. This subject of the promotion of SGE’s has been directly addressed and further elaborated upon in these previous blog/commentaries:

https://goleancaribbean.com/blog/?p=7822	The Model for SGE’s for Medical R&D
https://goleancaribbean.com/blog/?p=5921	Socio-Economic Change: Impact Analysis of SGE’s
https://goleancaribbean.com/blog/?p=4037	How to Train Your ‘Dragon’ – Case Study for Foreign Investments
https://goleancaribbean.com/blog/?p=3473	SGE Model: Haiti’s Caracol Industrial Park
https://goleancaribbean.com/blog/?p=3276	A Role Model – Ideal for SGE’s – Shaking Up the World of Cancer
https://goleancaribbean.com/blog/?p=2750	Disney World – Role Model for Self Governing Entities
https://goleancaribbean.com/blog/?p=2338	SGE Lessons how to mitigate any plutocratic abuses
https://goleancaribbean.com/blog/?p=2003	Where the Jobs Are – Ship-breaking under SGE Structure
https://goleancaribbean.com/blog/?p=1214	Fairgrounds as SGE and Landlords for Sports Leagues
https://goleancaribbean.com/blog/?p=286	SGE Model: Puerto Rico’s Comprehensive CancerCenter

The Go Lean book envisions the CU/CCB – a confederation of the 30 governments and central banks of the Caribbean member-states – as a charter to do the heavy-lifting of empowering and elevating the Caribbean economy – as the regulator – administrator – overseer of many centers of economic activity within the SGE design.
The book details the economic principles and community ethos to adopt, plus the executions of strategies, tactics, implementations and advocacies to streamline bank regulations and to forge Self-Governing Entities in the Caribbean:

Economic Principles – Deferred Gratification	Page 21
Economic Principles – People Respond to Incentives in Predictable Ways	Page 21
Economic Principles – Consequences of Choices Lie in the Future	Page 21
Economic Principles – Job 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 Foster Genius	Page 27
Community Ethos – Ways to Impact Research & Development	Page 30
Community Ethos – Ways to Impact the Greater Good	Page 37
Strategy – Agents of Change – Technology	Page 48
Strategic – Staffing – Sporting Events at Fairgrounds	Page 55
Tactical – Confederating a Non-Sovereign Union	Page 63
Tactical – Fostering a Technocracy	Page 64
Tactical – Growing Economy – New High Multiplier Industries	Page 68
Tactical – Separation of Powers – CCB: Bank Regulatory & Supervision	Page 73
Tactical – Separation of Powers – Self-Governing Entities – Example of a Space Agency	Page 80
Tactical – Separation of Powers – Fairgrounds Administration – SGE for Sports	Page 83
Implementation – Annexation of French Guiana – Embed the Space Agency as an SGE	Page 98
Implementation – Steps to Implement Self-Governing Entities	Page 105
Implementation – Ways to Deliver – Embrace of Project Management Arts & Sciences	Page 109
Implementation – Ways to Better Manage Debt	Page 114
Planning – 10 Big Ideas – # 6: Self-Governing Entities	Page 127
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Create Jobs	Page 152
Advocacy – Ways to Improve Government	Page 168
Advocacy – Ways to Impact Public Works	Page 169
Advocacy – Ways to Promote Fairgrounds	Page 192
Advocacy – Ways to Foster Technology	Page 197
Advocacy – Reforms for Banking Regulations	Page 199
Advocacy – Ways to Impact “Wall Street” – And the Regional Capital Markets	Page 200

The Go Lean book and accompanying blogs declare that the Caribbean needs to learn lessons from other communities, especially when it comes to common sense regulations. See the Bank Supervision model portrayed in Appendix B – VIDEO.

In retrospect of 2008, the conclusion is that the fallacious self-regulation practice during the build-up of the housing crisis was not common sense. But self-regulation can work in a controlled environment. Now we see that for banking, the controlled environment is assured by keeping the focus on making sure banks bear the costs of the risks they underwrite. This corresponds with the quest of many intra-industry Self-Regulation Organizations.

These Self-regulation Organizations (SROs) can be highly effective enforcers and complement the role of governments, especially in environments where traditional regulators are underfunded; (this is the case with the current Caribbean member-state governments). However, the experts argue, this is only true if the following conditions are met:

The SROs are well-funded;
They are technologically advanced;
There is government oversight of the SRO and the end company;
They are held accountable;
They act within their authority; and
They are structured to avoid conflicts of interest.

As a result of globalization, the tools being used today to coordinate global financial markets regulation are very different than what most professionals learned about in school. In addition, there are ad hoc, informal agreements, rulemaking and codes of ethics that are more commonly being relied upon as opposed to arduously negotiated international treaties. This is why the oversight of the region’s banks is designated for the CCB and the regulation of SGE’s are designed for the lean technocratic CU Trade Federation. These moves will assuredly bring the benefits of SGE’s (jobs) to the Caribbean.

Now is the time for all of the Caribbean, the people, institutions and governments to lean-in for the empowerments described in the book Go Lean … Caribbean. We need to dissuade the economic fallacies, and engage the best-practices throughout the region. These executions will make the Caribbean region a better place to live, work and play. 🙂

Download the book Go Lean … Caribbean – now!

—————-

Appendix A – VIDEO – Company Town: Hershey, Pa. – https://youtu.be/K-YRevHegL8

Uploaded on Aug 31, 2007 – Company towns have often been depicted as locations of worker exploitation. The 1950s song, Sixteen Tons, popularized by Tennessee Ernie Ford (and easily found on the web) reinforces that idea. Hershey, Pennsylvania had a different reputation, however. But it did not escape the labor unrest that swept the U.S. in the 1930s.

—————-

Appendix B – VIDEO – The Fed Explains Bank Supervision and Regulation – https://youtu.be/psahnlcr-C0

Published on Jan 8, 2015 – Healthy banks and healthy economies go hand in hand. The latest in the Atlanta Fed’s animated video series explains how the Federal Reserve ensures banks are doing business safely and providing fair and equitable services to their communities.

—————-

Appendix C – Monitoring, regulation and self-regulation in the European banking sector

Speech by Sabine Lautenschläger, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the Single Supervisory Mechanism, at the evening reception at the Deutsche Aktieninstitut in Frankfurt am Main, 21 April 2015; retrieved July 10, 2016 from: https://www.ecb.europa.eu/press/key/date/2015/html/sp150421.en.html

Do we need to do more to make sure that we never have to experience another financial market and banking crisis like that in 2008-09, or have we done too much and thus prevented the European banking industry from being able to offer financial services to the real economy?

After a long phase of deregulation, a comprehensive re-regulation has been in vogue since 2009. At the global, European and national level, we have tackled almost everything that can limit, reduce or prevent risks to and risks caused by banks. The general public, politicians, academics, supervisors and even bankers – simply everyone – called for comprehensive and tough rules for banks and for their close supervision. But the mood seems to have changed over the past year. In Germany and Europe, more and more people are complaining of overregulation. In the rest of Europe, a connection is being made between the words “credit crunch” and “regulation”.

Many people yearn for a pause in regulation, would perhaps rather leave the market to regulate itself – rely on self-regulation.

…

Conclusions

I don’t think that you were much surprised by my saying that I don’t think much of lax regulation. Given the obvious tendency towards exaggeration and erroneous developments in financial markets, and the potential damage for the economy and society, good regulations are an indispensable prerequisite for ensuring that the financial sector is able to function properly in the long term. …

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Lessons from Regional Elections

Posted on April 6, 2016 in Ethos, Government, Implementation

Go Lean Commentary

Imagine spending $5.3 Billion dollars to buy a “service” and then the logistics fail in the final delivery.

Unfortunately, this can describe the election process in the United States. In 2008, according to the book Go Lean…Caribbean, that amount of money was spent on the Presidential campaign. Surely those spending that money, wanted to have their candidates win. It would be so unfortunate that when Election Day finally comes around that the delivery – balloting – is flawed:

hanging chads
long lines
computer glitches
incorrect registration
wrong polling stations
absentee ballots
provisional ballots
photo ID

These and many other issues persist…

… the biggest problem being voter apathy, especially among the young.

With this greatest threat – voter apathy – that $5.3 Billion investment (for 2008, even though more have been spent in 2012 and the current 2016 campaign) maybe in jeopardy. “Say it ain’t so”…

Here come the solutions. Perhaps technology offers some mitigation to these risks. Consider this:

Question: Will US citizens be able to cast their vote online during the 2016 presidential election?

Answer: Probably not on a mass scale. Currently, Alaska is the only state that allows any eligible voter to vote electronically.

It is unlikely that this will become commonplace across the country in the next two years.

However, perhaps this will change over time if online security measures improve and as popular opinion changes. Among all age groups, Millennials tend to be more interested in online voting.

By: Steve Johnston, (Worked on Political Campaigns and in Congress) Written 11 Feb 2015 ; retrieved April 4, 2016 from: https://www.quora.com/Will-US-citizens-be-able-to-cast-their-vote-online-during-the-2016-presidential-election

Online voting seems so logical. What are the obstacles? Why not now? Who is doing it? When will the US (as the world’s leading democracy) see this utility?

What?
Why?
Who?
When?

These are powerful questions; appropriate ones considering that “power” is the commodity at stake.

Consider this article here based on 2012, that answers a lot of these questions:

Article #1 Title: Why you can’t vote online yet
By: Julianne Pepitone

CNNMoney (New York) – Online voting is taking off in local elections, particularly overseas. But Americans shouldn’t expect to vote for the president on their laptop or iPad anytime soon.

The battle over whether to digitize the voting process has become a full-blown war in the United States, even as countries like Canada, Norway and Australia have increasingly adopted online systems. Proponents say going digital will boost voter turnout, while naysayers cite hacking and other security threats as risks too great to overcome in the near future.

“It’s such a different world than it was 20 years ago, and yet very little has changed in our voting process,” says Rob Weber, a former IT professional at IBM (IBM), who started the blog Cyber the Vote in 2010.

Like many supporters of online voting, Weber points out that many young Americans don’t vote. Bringing the voting process to a format they’re familiar with — a website on a PC, tablet, or even a mobile phone — would overcome the “enthusiasm gap,” he believes.

But that argument hasn’t been enough to bring online voting into the mainstream. For that, Weber places the blame squarely on election officials whom he says aren’t interested in changing the status quo.

“They find online voting culturally distasteful,” Weber says. “They bring up theoretical hacking situations in order to make people afraid of the concept of change. And unfortunately it works.”

Security researchers don’t think those concerns are merely theoretical. Michael Coates, chair of the Open Web Application Security Project (OWASP) and director of security assurance at Firefox maker Mozilla, says hackers will attack anything worth hacking.

“It’s guaranteed that such a system [online voting] would be attacked, for sure,” Coates says. “All important systems, from financial to government, face skilled hackers. There are security flaws in every system; it’s a matter of how you detect and respond to them.”

Home PCs, in particular, are susceptible to a myriad of cyberattacks that could be used to alter a user’s vote.

“Until we can reliably foil malware and viruses — and who knows when that will be — it’s hard to consider a system in which we vote from our home computers,” Coates says.

Such issues have felled some past attempts at online voting in the United States.

In 2004, the military began testing the Secure Electronic Registration and Voting Experiment (SERVE), which would have let service members stationed overseas vote online in the general election. But Deputy Defense Secretary Paul Wolfowitz scrapped the plan after government-commissioned studies warned of extensive security flaws.

Another oft-cited failure came in 2010, when Washington, D.C., conducted a pilot project to allow overseas or military voters to download and return absentee ballots over the Internet. Before opening the system to real voters, D.C. invited the public to evaluate whether the system could be hacked.

It was. Within 36 hours of going live.

A University of Michigan team “found and exploited a vulnerability that gave us almost total control of the server software, including the ability to change votes and reveal voters’ secret ballots,” professor J. Alex Halderman later wrote in a blog post about the hack.

Halderman termed the system “brittle” and proclaimed online voting too dangerous to implement anytime soon.

“It may someday be possible to build a secure method for submitting ballots over the Internet, but in the meantime, such systems should be presumed to be vulnerable based on the limitations of today’s security technology,” he wrote.

Such high-profile debacles are a difficult obstacle for online voting companies like Everyone Counts, says CEO Lori Steele.

“The problem with the D.C. hacking is that it was a less-than-mediocre system run by people who had no experience,” Steele says. “When people use it as an example, it’s like, c’mon — those issues were all security 101.”

Bad PR for any online voting attempt undermines the entire cause, Steele says. Still, California-based Everyone Counts has run online elections for local and municipal contests in U.S. locations including West Virginia, Honolulu, El Paso, Chicago and Washington state, in addition to the United Kingdom and Australia.

Everyone Counts uses “military-grade encryption” for its ballots, and can also provide a paper trail for clients who want it, Steele says. A “transparent code” policy allows any client to inspect the company’s source code.

While Steele admits that online voting, like any system, is susceptible to attacks, she thinks the sheer number of devices in the wild would make it difficult for would-be hackers to hit their targets.

“They don’t know which PCs or tablets or phones will be used for voting,” Steele says. “Plus, people talk about paper being the Holy Grail of security, but that is so far from reality.”

The biggest limitation of paper ballots was on display last week, when Hurricane Sandy decimated parts of the northeastern United States. The storm’s destruction cut many voters off from their scheduled polling station.

On Saturday, New Jersey announced that displaced storm victims will qualify as “overseas voters,” meaning they are eligible to vote via e-mail or fax.

“The storm was awful, but it could serve as a wider reminder that we need to reform the system,” says Michelle Shafer, director of communications at Scytl USA.

Scytl’s Spanish parent company has conducted online voting in over 30 countries worldwide. In the U.S., it’s slowly gaining steam. The company has completed online “ballot delivery” — digitally delivering a paper-ballot-like form that voters can fill out and submit — in six U.S. states. Those digital ballots are typically used by military members and overseas residents. It has also run direct online voting for local elections in West Virginia, Florida and Alaska.

“I don’t think we’ll be voting online by [2016’s general election], but my hope is that we’ll continue to take slow and measured steps toward that eventuality,” she adds.

While the United States takes it slow, countries like Canada and Norway continue to expand online voting.

Dean Smith, president and founder of Canada’s leading online-voting firm, Intelivote, says the divide between his home country and the United States is vast. Popular Canadian labor unions have used online voting for years — which means users have grown accustomed to the process — and the country’s ballots tend to be far less complex than those in the United States.

“In general, people here see the benefits of online voting and there’s an acceptance,” Smith says of Canada. “The U.S. would be a great coup, but there are so many academics who made their name by being naysayers. There’s so much fighting about it. Right now, we don’t need the additional problems.”

Source: http://money.cnn.com/2012/11/06/technology/innovation/online-voting-election/ Posted November 6, 2012; retrieved April 4, 2016

VIDEO – How Your Vote Can Be Hacked – http://money.cnn.com/video/technology/2012/10/31/ts-voting-machine-hack.cnnmoney/

The experience in the US is that the politicians do not always represent the majority of the people, but rather the majority of the passionate. This country thusly provides good, bad and ugly examples as lessons for us in the Caribbean, where we do have our own challenges. Many times for Caribbean elections, there is the need for international monitors to observe and report on the fairness of our balloting. In the last few months, there have been elections in numerous Caribbean member-states, i.e. Jamaica and Haiti; (in fact every country must re-vote in 4 – 5 years). These have been fraught with contention and controversy.

We need to be better and do better. Facilitating an efficient election need not be “rocket science”.

The book Go Lean … Caribbean asserts that the current system for Federal campaigns and elections in the US is not the model that the Caribbean would want to emulate – we must do even better than our American counterparts. This book relates that $5.3 Billion was spent for the 2008 US Federal Elections (Page 116), a lot of it contributed by corporations and Political Action Committees (PACs) so as to peddle influence. Then when the voter turn-out is discouraged or suppressed because of any lack of efficiency, this results in even more influence, as now only the passionate will participate in the election process, as most other people cannot tolerate the dysfunction. Consider the example in the Appendix below of long voting lines in Arizona, suppressing the vote – people cannot wait around for 5 hours – especially in the minority communities.

The model sought for the Caribbean is to facilitate the polling of every vote for everyone wanting to participate in the political process, no matter who they are, where they are, what they are voting for or when they vote. Yes, this means local polling stations in convenient places (private/public) – like the shopping mall example in these photos.

The Go Lean book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). It advocates learning lessons from other societies so as to optimize the societal engines of economics, security and governance. Elections are an expression of all three of these branches of society. It should be about the people and their will, not about the power and retaining it. This book, roadmap and movement therefore advocates the CU being deputized/in-sourced to facilitate elections, including online, electronic systems in physical polling and absentee balloting – i.e. Diaspora.

The lesson from regional elections, like Arizona in the Appendix and Florida in the photos, is that the election process must submit to a higher oversight. For the member-states in the US, that oversight is wielded by the US federal government (Executive Branch – Department of Justice – and the Courts). We need similar oversight in the Caribbean; this is embedded in the roadmap for the CU Federation, our regional federal government. Despite our region’s size (only 42 million people in 30 member-states), we can do better than our American neighbors in the election-campaign process. We can be a protégé, not just an American parasite.

The CU’s prime directive, elevating the Caribbean’s economic-security-governing engines, recognizes that the changes the region needs must start first with the adoption of new community ethos and controls: the people need to feel empowered, that their voice and votes count, no matter their ethnicity, language or minority status. Early in the book, this need was pronounced in the opening Declaration of Interdependence (Page 12) with these statements:

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

xii. Whereas the legacy in recent times in individual states may be that of ineffectual governance with no redress to higher authority, the accedence of this Federation will ensure accountability and escalation of the human and civil rights of the people for good governance, justice assurances, due process and the rule of law. As such, any threats of a “failed state” status for any member state must enact emergency measures on behalf of the Federation to protect the human, civil and property rights of the citizens, residents, allies, trading partners, and visitors of the affected member state and the Federation as a whole.

The Go Lean book, and previous blog/commentaries, stressed the key community ethos, strategies, tactics, implementation and advocacies necessary to effect change in the region, to improve the oversight of the governing process. They are detailed as follows:

Community Ethos – Economic Principles	Page 21
Community Ethos – Security Principles – Private Interest –vs- Public Protection	Page 23
Community Ethos – Security Principles – “Light Up Dark Place”	Page 23
Community Ethos – Governing Principles – Lean Operations	Page 24
Community Ethos – Ways to Impact the Future – Give the Youth a Voice & Vote	Page 26
Community Ethos – Impact Research and Development – Develop Technology	Page 30
Community Ethos – Ways to Impact Turn-around	Page 33
Community Ethos – Ways to Impact the Greater Good	Page 37
Strategy – Mission – Embrace the advances of technology	Page 47
Strategy – CU Stakeholders to Protect – Diaspora	Page 47
Tactical – Separation-of-Powers – Secretary of State – Elections Bureau	Page 80
Anecdote – Turning Around CARICOM – Deputized for election oversight	Page 92
Implementation – Assemble Caribbean Election Oversight as Cooperative	Page 96
Implementation – Assemble Constitutional Convention – Start of federal elections	Page 97
Implementation – Ways to Impact Elections	Page 116
Planning – 10 Big Ideas – Cyber Caribbean	Page 127
Planning – Ways to Improve Failed-State Indices – Election Outsourcing	Page 134
Planning – Lessons Learned from US Constitution	Page 145
Planning – Ways to Measure Progress	Page 147
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Foster Technology – Heavy focus on systems	Page 197
Advocacy – Ways to Foster e-Commerce	Page 198
Advocacy – Ways to Promote Contact Centers – Big Data Analysis	Page 212

The points of effective, technocratic regional oversight and stewardship were further elaborated upon in these previous blog/commentaries:

https://goleancaribbean.com/blog/?p=7646	Going from ‘Good to Great’
https://goleancaribbean.com/blog/?p=7528	Sample Vision of 1 City, Freeport, as a Self-Governing Entity
https://goleancaribbean.com/blog/?p=7204	‘The Covenant with Black America’ – Ten Years Later
https://goleancaribbean.com/blog/?p=6965	Secrecy, corruption and conflicts of interest pervade state governments
https://goleancaribbean.com/blog/?p=6937	Women in Politics – Yes, They Can!
https://goleancaribbean.com/blog/?p=5353	POTUS and the Internet
https://goleancaribbean.com/blog/?p=4935	A Lesson in History – the ‘Grand Old Party’
https://goleancaribbean.com/blog/?p=3397	Bankers Campaign Contributions-Lobbying End Game
https://goleancaribbean.com/blog/?p=356	The Use & Abuse of Statistics in Politics

If we want to make our homeland a better place to live, work and play then we must learn/apply lessons from other communities and societies. We can protect the right to vote and give all people a voice by implementing technologically advanced electoral solutions. We can learn from Arizona and do better. Let’s not be blinded to the truth:

Opinion: “In the US, there are 2 main political parties: one with the population (Democrats), and one with the passion (Republicans)”. The Republicans depend on vote suppression tactics (i.e. Voter ID requirements) to win elections – it is not how much support one have, it is how many turn up to vote. Online voting would scare these stakeholders. So the other lesson we can learn and apply from places like Canada, Norway and Australia, is to deploy the online voting, and let the “chips fall where they may”; parties will simply adjust, the people’s voices will be heard and the leaders – survival of the fittest – will respond in kind.

We must look beyond the US for protégé models. We must do better; we must be better!

The Go Lean movement advocates being a protégé, not parasite, of our North American and European trading partners. These places are “frienemies” of the Caribbean now; we get our tourism from these source countries, yes, but we also lose our emigrants to them as well – the Caribbean brain drain is estimated at 70 percent. We must now seek out solutions that encourage participation in the nation-building process. We have no other choice, the alternative is more abandonment of our society.

This is the purpose of the Go Lean roadmap, to provide a turn-by-turn direction to accomplish the needed turn-round. The Go Lean roadmap does not seek to change America and their voting strategies and systems; our only focus is to change the Caribbean. Yes, we can! 🙂

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

————-

Appendix -Article (#2): The DOJ Is Investigating Arizona’s Election Mess
By: Samantha Lachman, Staff Reporter and Ryan J Reilly, Senior Justice Reporter

WASHINGTON — The federal government is investigating Arizona’s most populous county after its dramatic decrease in voting sites led to long lines during the state’s primary last month.

Elizabeth Bartholomew, communications manager for the the Recorder’s Office in MaricopaCounty, said the office received a letter from the Justice Department’s Civil Rights Division on Friday. Bartholomew said the feds want specific data about the office’s reason for cutting the number of polling places. She said the office “absolutely” plans to cooperate with the investigation and to provide federal officials with the requested information in the coming weeks.

“We have no problem cooperating with them, so we should have that over to them over the next couple of weeks,” she told The Huffington Post on Monday.

The county cut its voting sites from 200 during the 2012 presidential primary to just 60 for this year’s March 22 primary. Some Arizona voters reported waiting in line for five hours to cast their ballot, long after the GOP race was called for reality television star Donald Trump and the Democratic primary was called for former Secretary of State Hillary Clinton.

Maricopa County Recorder Helen Purcell (R), who is in charge of the county’s elections, partially blamed “the voters, for getting in line,” but later admitted that the county made “bad decisions” and “miscalculated” how many voting sites it would need.

County officials argued earlier this year that having fewer sites would save money. Purcell recommended that the county’s Board of Supervisors reduce the number of polling sites because her office suspected more people would vote early by mail. However, fewer people voted by mail than the office had predicted.

The county probably wouldn’t have been able to cut as many polling places as it did if the full force of the Voting Rights Act was still in effect; the Supreme Court gutted the landmark civil rights legislation in a controversial 5-4 decision in 2013. Before that ruling, states with a long history of racial discrimination, such as Arizona, were required to get permission from the DOJ or in federal court to change their election procedures or laws. States asking for approval of their proposed election changes had to show that such measures wouldn’t leave voters of color worse off.

But, as Phoenix Mayor Greg Stanton (D) pointed out in a letter asking the DOJ to investigate the county, Maricopa “distributed fewer polling locations to parts of the county with higher minority populations.”

Stanton wrote that Phoenix, a majority-minority city, had one polling place for every 108,000 residents, while predominantly white communities hosted more polling sites for significantly smaller populations.

Arizona Gov. Doug Ducey (R) said in a statement after the primary that he wanted election officials to investigate why lines outside polling places were so long. He called for making the state’s primaries open, rather than closed, so independent voters could participate, without mentioning that the state should allocate more funds to open more polling sites.

Lines weren’t the only problem in Maricopa, however. Some voters reported that the county had switched their party registration, possibly due to a computer glitch. Thousands of voters were forced to cast provisional ballots as a result.
Source: Huffington Post Online News; posted and retrieved 04/04/2016 from: http://www.huffingtonpost.com/entry/justice-department-arizona_us_5702b720e4b083f5c6085933
Aligning VIDEO: https://youtu.be/y_6kaWYjwCk

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