Debt – Go Lean…Caribbean

Tag: Debt

Banking on the Bank: IDB

Posted on October 10, 2020 in Economics, Government, Industries, Strategy

Go Lean Commentary

All you parents of grown children already know this, right?

Your grown children – married or not – will come to you for financial help when “push comes to shove”.

This is true for families and countries.

This is especially actuated right now as the Coronavirus COVID-19 Pandemic has been devastating communities, economies and healthcare systems around the world, and even more so here in the Caribbean.

Your sons and daughters can turn to you fathers and mothers for help – if you are able.

Who do countries turn to?

For the 30 member-states of the Caribbean, the answer is:

Inter-American Development Bank (IDB)
The Inter-American Development Bank (IADB or IDB or BID) is the largest source of development financing for Latin America and the Caribbean.^[1] Established in 1959, the IDB supports Latin American and Caribbean economic development, social development and regional integration by lending to governments and government agencies, including State corporations.

The IDB has four official languages: English, French, Portuguese, and Spanish.
…

History
At the First Pan-American Conference in 1890, the idea of a development institution for Latin America was first suggested during the earliest efforts to create an inter-American system. The IDB became a reality under an initiative proposed by President Juscelino Kubitshek of Brazil. The Bank was formally created on April 8, 1959, when the Organization of American States drafted the Articles of Agreement establishing the Inter-American Development Bank.^[2]

Member states

Borrowing members in green, non-borrowing members in red

The Bank is owned by 48 sovereign states, which are its shareholders and members. Only the 26 borrowing countries are able to receive loans.

Borrowing: Argentina, The Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay, Venezuela

Non-borrowing: Austria, Belgium, Canada, China, Croatia, Denmark, Finland, France, Germany, Israel, Italy, Japan, Korea, The Netherlands, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, United Kingdom, United States.

…

Governance
The IDB is governed by its Board of Governors, a 48-member body who regularly meets once a year. In March 2010, reunited in Cancun, Mexico, the Board of Governors of the Bank agreed on a $70 billion capital increase, along with full debt forgiveness for Haiti, its poorest member country, devastated by an earthquake that had destroyed its capital, Port-au-Prince, two months before.

The developing countries that borrow from the IDB are the majority shareholders, and therefore control the majority of the decision-making bodies of the Bank. Each member’s voting power is determined by its shareholding: its subscription to the Bank’s ordinary capital. The United States holds 30 percent of the Bank’s shares, while the countries of Latin America and the Caribbean combined hold 50.02 percent but with another 20% from Europe the US can veto decisions.^[5] This arrangement is unique in that the developing member countries, as a group, are the majority shareholders. Though this arrangement was first viewed as risky, it is believed by some that strict peer pressure prevents the borrowers from defaulting, even when under severe economic pressure.

Source: Retrieved October 5, 2020 from: https://en.wikipedia.org/wiki/Inter-American_Development_Bank

———-

About Us: Inter-American Development Bank
We work to improve lives in Latin America and the Caribbean. Through financial and technical support for countries working to reduce poverty and inequality, we help improve health and education, and advance infrastructure. Our aim is to achieve development in a sustainable, climate-friendly way. With a history dating back to 1959, today we are the leading source of development financing for Latin America and the Caribbean. We provide loans, grants, and technical assistance; and we conduct extensive research. We maintain a strong commitment to achieving measurable results and the highest standards of integrity, transparency, and accountability.

The IDB prioritizes social inclusion and equality; productivity and innovation; and regional economic integration in its development work across Latin America and the Caribbean. In doing so, it addresses the cross-cutting issues of gender equality and diversity; climate change and environmental sustainability; and institutional capacity and the rule of law. Learn more about the Institutional Strategy here.

Source: https://www.iadb.org/en/about-us/overview retrieved October 5, 2020.

Yes, the Caribbean is Banking on the Bank, the IDB.

The IDB doesn’t lend to anyone else other than these Latin American & Caribbean (LAC) member-states. It’s a ” personal piggy-bank”, just for its members – membership has it’s privileges.

Look here at the Bahamas; they are hurting very bad, due to the pandemic and also 2019’s Category 5 Hurricane Dorian; so all they have to do – all they are doing – is ringing up their personal banker and getting their requested money … on demand:

VIDEO – [Bahamas] Government To Borrow $1.3B – https://www.facebook.com/OURNewsREV/videos/251591122579990/

Posted May 27, 2020 – The Minnis administration will seek parliamentary approval to borrow $1.3B in the 2020/2021 fiscal year. In his Budget Communication today, Deputy Prime Minister and Minister of Finance Peter Turnquest said the fiscal deficit is budgeted at some $1.3B, or 11.6% of GDP.

Yes, the Bahamas is Banking on the Bank, the IDB.

Despite the tune of this writing, this easy access to cash, loans or debt is not a good thing. The money is not free and not cheap.

It must also be repaid in US Dollars – OUCH!!!

The perils of this fiscal practice is evident in this news article here, describing how the Bahamas, in an attempt to source funds cheaper than their IDB options, have issued bonds for public consumption with a return rate of 9.25 percent. (To me, this means that IDB lending must be even more expensive). See the article here:

Title: Gov’t offers high-yield bond
By: Chester Robards
The government of The Bahamas has issued its $600 million, 12-year unsecured foreign currency bond, with a 9.25 percent yield, telling a tale of the Moody’s June credit rating downgrade to junk bond status, and the country’s continuing dependence on a depressed tourism market.

Guardian Business caught a glimpse of the government’s offering synopsis. The offering was reportedly released on Wednesday.

The government has gone to international markets in hopes of covering half of its projected $1.3 billion fiscal deficit for 2020/2021, brought on by the devastating consequences of Hurricane Dorian and the economic stopping effects of the global COVID-19 pandemic.

The government listed its use of proceeds as “general 2020/2021 budgetary needs and the repayment of $248 million under 2020 bridge facility”.

The bond matures in 2032.

The government announced last month that it had already closed on about half a billion in financing over July and August, and revealed then that it would go to capital markets to access more financing when market conditions were right.

The government received $200 million from the Inter-American Development Bank (IDB); a $40 million facility with the Caribbean Development Bank; and in August accessed $248 million, as part of a $300 million bridge financing deal approved by Parliament for the fiscal year 2020/2021 budget.

CFAL Senior Financial Analyst Angelo Butler explained to this paper that this most recent bond’s interest rate has likely been set at a high 9.25 percent to attract sufficient investors to make the offering successful.

He added that the high coupon could compensate for a low pool of potential investors as a result of the country’s recent downgrade; uncertainty surrounding tourism and our dependence on it; a deterioration in government finances; and growing foreign debt as a percentage of total debt and gross domestic product.

“Fortunately, the rate is attractive and should attract investors,” said Butler.

“Interest rates are very low in developed markets, thus fund managers and banks are having to search for yield to meet investment targets.”

The government’s past 2029 and 2033 bonds have taken a hit this year with price declines of close to 30 percent earlier in the year. The 2033 bond is trading at about 8.7 percent.

Cruise ship companies, which have also had to go to the markets to raise money as they have been shut down most of the year, have also placed high-yield bonds.

Source: Posted and retrieved October 9, 2020 from: https://thenassauguardian.com/govt-offers-high-yield-bond/

It is so sad that the Bahamas is Banking on the Bank, the IDB. They are in desperate need of alternative funding schemes, ones that mitigate debt. This theme, that debt is bad for Caribbean member-states, aligns with many previous commentaries from the movement behind the 2013 book Go Lean … Caribbean; see a sample list here:

https://goleancaribbean.com/blog/?p=19572	MasterClass: Economics and Society
https://goleancaribbean.com/blog/?p=11647	Righting a Wrong: Puerto Rico’s Bankruptcy
https://goleancaribbean.com/blog/?p=7601	Beware of Vulture Capitalists
https://goleancaribbean.com/blog/?p=7268	Detroit’s ‘debt reality’ giving schools their ‘Worst Shot’
https://goleancaribbean.com/blog/?p=5183	A Lesson in History – Troubles from Mexico’s Unpaid Debt

We are not limited to the Status Quo for Debt Management in the Caribbean. The challenge is money … or capital. We can be Better. We must be Better.

The Go Lean book presents a plan to reboot the region’s fiscal and monetary landscape. The starting approach is to form a cooperative among the region’s existing Central Banks, branding the cooperative as the Caribbean Central Bank (CCB). Then facilitating and regulating the Capital Markets in the region. (The Go Lean book – on Page 200 – identifies 9 different Stock Exchanges in the region).

The example from the United States is that of Treasury Bonds and Municipal Bonds trading on Wall Street with bond rates and “coupon rates” lower than 2% – see example here; compare this 2% to the 9.25% in the foregoing news article:

The Go Lean book, serving as a roadmap for the introduction of the Caribbean Union Trade Federation (CU), presents an actual advocacy to present the strategies, tactic and implementation to Better Manage Debt. See here some of the specific plans, excerpts and headlines from Page 114, entitled:

10 Ways to Better Manage Debt

1	Lean-in for the treaty for the Caribbean Union Trade Federation (CU) & the Caribbean Central Bank (CCB). This treaty allows for the unification of the region into one market, thereby creating a single economy of 30 member-states, 42 million people and a GDP of over $800 Billion, according to 2010 figures. The CU will reboot the economic engines of the region with investments in infra-structure and business inducements. Many times these projects require up-front capital but the returns will be garnered slowly over time. These projects therefore require debt, from the capital or lending markets. The issue of debt not only concerns governments, but individuals as well. The CU will impact this dynamic by mastering credit ratings and offering to buy back foreign debt for local C$ financing and CCB controls. This tactic lets the CCB function as a local IMF, fostering a new regime for the economy.
2	M1 & The Interest Economy The CU seeks to consolidate the currency of each member-state around the Caribbean Dollar (C$); then by inducing more electronic transactions as opposed to paper currency, there will be more lendable funds in the money supply (M1). Plus having viable capital markets will allow governments, institutions and businesses to get the capital they need, and investors/lenders can garner interest income for the use of their funds. Most Pension funds depend on this model.
3	Public Financing Every independent country in the Caribbean is a member of the IMF, only the Overseas Territories are not engaged in this arrangement. Why not? Their host countries (US, UK, France and the Netherlands) provide the capital access that the island territories need. The CU quest is to shift this dependency to a Caribbean source, not European or American.
4	Bonds & Add-on’s (Warrants)
5	CU Federal Bankruptcies
6	Credit Reporting – Sharpening the Tool
7	Retail Credit Reboot and New Engines
8	Student Loans Sensible Dynamics
9	Mortgage Loan Sensible Dynamics
10	Crowd Sourcing – *Community Capital Sharing Mitigates Debt*

The points of fostering best-practices in Debt Management is not a “magical formula”, but rather a viable technocratic plan. It is conceivable, believable and achievable to accomplish these goals.

It is just heavy-lifting …

… and trust …

… and cooperation.

Let’s get busy … and make our homeland a better place to live, work and play. 🙂

About the Book
The book Go Lean…Caribbean serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU) and the Caribbean Central Bank (CCB), for the elevation of Caribbean society – for all member-states. This CU/Go Lean roadmap 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.

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.

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

Who We Are
The movement behind the Go Lean book – a non-partisan, apolitical, religiously-neutral Community Development Foundation chartered for the purpose of empowering and re-booting economic engines – stresses that reforming and transforming the Caribbean societal engines must be a regional pursuit. This was an early motivation for the roadmap, as pronounced in the opening Declaration of Interdependence (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.

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.

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

Share this post:

Banks, Debt, Transform

Blog # 1000 – MasterClass: Economics and Society

Posted on April 21, 2020 in Economics, Social

Go Lean Commentary

Here’s an urgent inquiry to the 30 member-states that comprise the political Caribbean:

What do you need right now?

With the “pangs of distress” of the Coronavirus (COVID-19) pandemic devastating the world today, it may be obvious what the communities’ needs are:

Universal Testing
Treatment Protocols for anyone affected
A Flu-Shot / Vaccine
Rebooting of the Economy

This is right for the Caribbean member-states … and the whole world actually. This last item – Rebooting of the Economy – was an acute need even before this pandemic. This was truly what was needed; and what is needed now even more urgently.

The publishers behind the 2013 book Go Lean…Caribbean – with no foresight of 2020’s Coronavirus threat – detailed the sad state of affairs for the Caribbean economy and societal life in general. The book stated in its opening words (Page 3):

There is something wrong in the Caribbean. It is the greatest address in the world for its 4 language groups, but instead of the world “beating a path” to these doors, the people of the Caribbean have “beat down their doors” to get out. …

Many people love their homelands and yet still begrudgingly leave; this is due mainly to the lack of economic opportunities. The Caribbean has tried, strenuously, over the decades, to diversify their economy …

So how now …? How do we reboot the Caribbean economy now, even though we needed to do it all the while in the past? The answer is found in a previous blog-commentary that was published early in the history of this movement (April 21, 2014), at the start of the practice of publishing these commentaries:

‘Only at the precipice, do they change’
We’re on the brink of destruction and you’re right. But it’s only on the brink that people find the will to change. Only at the precipice do we evolve. This is our moment. Don’t take it from us. We are close to an answer.

April 21, 2014 – exactly 6 years to the day – was only the 2^nd month of this publishing practice; that was the 51^st blog in our history. Today, we are publishing this one, the 1000^th. This 1000^th submission is truly a monumental milestone; and ideal for these monumental times.

The reality of the Coronavirus-COVID-19 here in April 2020 means that we are truly “at the brink of destruction”; this is the State of our Caribbean Union; we must now “find the will to change”, to reform and transform our society.

How do we go about this change? What is the answer?

Now, is the time for a class, a MasterClass … a MasterClass on Economics in Society.

Huh?! What?! Why?!

This MasterClass was taught by this Nobel Laureate Economist Paul Krugman – see his profile in Appendix A below – and see the Topic Highlights of the MasterClass here:

See this introduction to this MasterClass in this VIDEO here:

VIDEO – Paul Krugman Teaches Economics and Society | Official Trailer | MasterClass – https://youtu.be/JRhvnlQHKc0

MasterClass
Paul Krugman’s work is defined by his belief in the power of economic thought to open minds and change history.

Learn more about Paul Krugman Teaches Economics and Society: https://www.masterclass.com/pk

In his economics class, Paul says that “economics covers 70% of life.” Not the passions and deep meanings, but everything that keeps clothes on our backs, food on our plates, and the trains running on time. The economic lens can help tell us how income inequality happens, it can predict how tariffs on Chinese steel will play out, and it can steer us toward more effective policies to get us out of a recession.

Over the course of his 40+ year career, Paul Krugman has become one of the most influential economists of our time. He is a New York Times columnist, lecturer, best-selling author, and won a Nobel for his theories on international trade and economies of scale. Through it all, he’s made it his mission to translate complex and abstract economic concepts into plain English.

Paul Krugman’s MasterClass on economics and society will teach you the core economic concepts that drive our world, how those concepts impact current issues, and how to develop strategies to become a better informed and empowered citizen. His online economics course includes case studies of his works, his process for writing a column, his resources for reliable news and data, and more. Through 22 video lessons and a customized workbook tailored to each chapter Paul teaches you:

The principles of economic thought

How to think beyond bias, slogans, and partisanship

The basics of international trade • Debunking myths about taxes

What’s wrong with the health care market and how to fix it

How the Fed works and its role in recessions and crises

What happened in the ‘08 crash

The impact of China’s rise on the US job market

How to be an informed and skeptical reader of economics

His process for writing a column

More from MasterClass:

David Axelrod and Karl Rove Teach Campaign Strategy and Messaging: https://www.masterclass.com/dakr

Bob Woodward Teaches Investigative Journalism: https://www.masterclass.com/bw

Dr. Jane Goodall Teaches Conservation https://www.masterclass.com/jg

About MasterClass:
MasterClass makes it possible for anyone to learn from the best. Get inspired with classes from 75+ world-renowned instructors on cooking, photography, writing, performance, and much more. Watch video lessons anytime, anywhere on mobile, desktop, Apple TV, and Amazon Fire TV.

Subscribe: https://mstr.cl/30SH1wj

Facebook: https://www.facebook.com/masterclasso…

Instagram: https://www.instagram.com/masterclass

Twitter: https://www.twitter.com/masterclass #MasterClass #PaulKrugman #economics

Category: Education

Seriously, we urge all Caribbean stakeholders to consume this MasterClass. See the thorough review of the MasterClass in Appendix B below. (Connect to the actual link for the paid class here: https://www.masterclass.com/pk)

One definition of insanity is to do the same things again and again expecting a different result.

The movement behind the Go Lean book has consistently messaged against the Zombie Economic Ideas operating in the Caribbean region. It is inconceivable how one Caribbean member-state after another repeat the same economic mistakes – suicide actually. Let’s revisit some examples here-now, and see how this theme had been highlighted in these previous Go Lean blog-commentaries; see this sample list here:

Prevalence of fossil fuels despite abundance of alternative energy sources
Former slaves doubling-down on the same failed governing structures that their former slave masters championed.
Giving incentives to cruise line operators to undermine stay-over tourism.
Charging excessive aviation taxes to deter airline traffic into the region – making cruises more feasible.
Getting in debt in a foreign currency. Getting new debt to pay-off old date? Why repeat?
Charging fees – rent – for doing nothing which curtails entrepreneurship and direct foreign investments.
Monopolizing domestic banking business with foreign banks.
Repeating the same Economic Policy Disasters in History – Learning nothing.

A MasterClass on Zombie Economic Ideas …

Yeah! Bring it on.

This is the latest milestone, a nice round figure of 1000. But this is also a nice juncture to look back at the previous milestones. See these previous Go Lean blog-commentary milestones here (in reverse chronological order):

Date	Description
June 7, 2019	Blog # 900 – 2020: Where Vision is Perfected
September 14, 2018	Blog # 800 – An Inconvenient Truth – Caribbean Version
May 17, 2017	Blog # 700 – We Need to Talk!
March 4, 2017	Blog # 600 – State of Caribbean Union: Hope and Change
November 2, 2016	Blog # 500 – Vision and Values for a ‘New’ Caribbean
February 20, 2016	Blog # 400 – A Vision of Freeport (Bahamas 2nd City) as a Self-Governing Entity
May 18, 2015	Blog # 300 – Legacies: Cause and Effect
November 28, 2014	Blog # 200 – Ignorance is no excuse – Milestone in Enlightenment
August 26, 2014	Blog # 150 – Why So Long? Can’t We Just…
June 15, 2014	Blog # 100 – College World Series Time

The movement behind the Go Lean book has consistently monitored and messaged about the need to reform and transform the Caribbean societal engines. This need is heightened all the more so during this current fight against the Coronavirus threat.

The ordinary times are no more; these are extraordinary times.

We have no excuse now not to change, adapt, transform, improve, optimize, thrive … finally. Let’s get started. Let’s lean-in to this Go Lean roadmap to make our regional homeland a better place to live, work and play. 🙂

About the Book
The book Go Lean…Caribbean 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 has these 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 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.

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

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.

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.

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

———————

Appendix A – Nobel Laureate Economist Paul Krugman

Paul Robin Krugman (born February 28, 1953)^[3] is an American economist who is the Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for The New York Times.^[4] In 2008, Krugman was awarded the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography.^[5] The Prize Committee cited Krugman’s work explaining the patterns of international trade and the geographic distribution of economic activity, by examining the effects of economies of scale and of consumer preferences for diverse goods and services.^[6]

Krugman was previously a professor of economics at MIT, and later at Princeton University. He retired from Princeton in June 2015, and holds the title of professor emeritus there. He also holds the title of Centenary Professor at the London School of Economics.^[7] Krugman was President of the Eastern Economic Association in 2010,^[8] and is among the most influential economists in the world.^[9] He is known in academia for his work on international economics (including trade theory and international finance),^[10][11] economic geography, liquidity traps, and currency crises.

Krugman is the author or editor of 27 books, including scholarly works, textbooks, and books for a more general audience, and has published over 200 scholarly articles in professional journals and edited volumes.^[12] He has also written several hundred columns on economic and political issues for The New York Times, Fortune and Slate. A 2011 survey of economics professors named him their favorite living economist under the age of 60.^[13] As a commentator, Krugman has written on a wide range of economic issues including income distribution, taxation, macroeconomics, and international economics. Krugman considers himself a modern liberal, referring to his books, his blog on The New York Times, and his 2007 book The Conscience of a Liberal.^[14] His popular commentary has attracted widespread attention and comments, both positive and negative.^[15] According to the Open Syllabus Project, Krugman is the second most frequently cited author on college syllabi for economics courses.^[16]
…
Source: Retrieved April 19, 2020 from: https://en.wikipedia.org/wiki/Paul_Krugman

———————

Appendix B VIDEO – Paul Krugman Masterclass Review – Is It Worth the money? – https://youtu.be/efel_G9C_XI

LouisPee
Posted Dec 19, 2018 – Grab Paul Krugman’s economics Masterclass here: http://bit.ly/2Qt4tyf

Today we complete a review of Paul Krugman’s Masterclass course on economics and society. We discuss each component of the Masterclass from the workbook to the lesson plan and go into the curriculum as though you purchased it. We then consider if it’s worth it for you based on your interest and existing knowledge in economics and society.

If you’re a fan of Paul Krugman’s writings from the New York Times, or blog. You may want to support him by getting his [official] Masterclass here: http://bit.ly/2Qt4tyf

I personally purchased the all-access Masterclass which gives me access to all the present and future classes. http://bit.ly/MasterclassAll

#PaulKrugman #Masterclass #Review #Economics #Society #NYTimes #Krugman #Economy #Crash #PropertyMarket

Category: Education

Share this post:

Debt, Disaster, Milestone, Model, Transform

[Top]

Righting a Wrong: Puerto Rico’s Bankruptcy

Posted on May 7, 2017 in Ethos, Government, Implementation, Strategy

Go Lean Commentary

How do you measure success … or failure?

In school, there is a simple measurement: there is the perfect “A”; everything else – B, C and D – was less desirable. But the actual grade “F” means you fail.

How can we measure success and failure for our community’s societal engines: economics, security and governance? There are so many approaches, but just like in school, there is a definitive “F” grade, a Failed-State status. In the case of a municipal entity, there is no doubt that a Bankruptcy filing is an “F”, a failure!

This is Puerto Rico today.

Their Governor, Ricky Rosselló, just announced (May 3, 2017) that the US territory will invoke the bankruptcy-like powers that were extended to them by Congress last year. This was designed to bring an end to their intractable crisis, despite the assurances that they had given to investors that bankruptcy-style “haircuts” could not be considered. There are so many issues afoot with this move:

Can other American states/territories push lawmakers (Congress) for this same legal recourse – Chapter III of the Bankruptcy Code, the Promesa Provision – that has been ceded to Puerto Rico if they are ever at the end of their financial ropes?

(Chapter 9 Bankruptcies are allowed for municipalities, but not state governments).

This is a slippery slope!

“If Puerto Rico can achieve this level of debt relief through Promesa as the initial plan suggested, it will only make sense for Virgin Islands to attempt the same” – Wall Street Analyst

This commentary is 2 of 4 in a series considering how to “Right a Wrong”. Surely, reneging on a pledge to repay debts is a “Wrong”. This type of move could affect every other community seeking to raise funds on the capital markets (bonds). So there are lessons that we need to glean from the “Righting of these Wrongs”. 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

As related in the first submission in this series, these “Wrongs” relate to bad actions and inaction by different actors. The image and reputations of stakeholders “take a hit” while these issues are fresh. This is definitely the case for Puerto Rico right now. “Righting the Wrong” can override the bad image and the “comeback” or recovery could be the lasting legacy.

The book Go Lean…Caribbean addressed Puerto Rico from the beginning; starting with the opening assessment of the State of the Caribbean region. The book identified Puerto Rico on Page 18 as:

The Greece of the Caribbean
Puerto Rico’s population is declining. Faced with a deteriorating economy, increased poverty and a swelling crime rate, many citizens are fleeing the island for the U.S. mainland. …

Puerto Rico has been through austerity and made tough decisions: It has cut government jobs, privatized a couple of highways, and is in the process of privatizing the international airport. But unlike the case of Greece, the economic mess is on America’s hands. For U.S. citizens on the mainland who have a 401(k) account or pension for retirement, it’s possible that they have money invested in Puerto Rican bonds, which are now no longer worth much. So citizens in the states could feel the pain if Puerto Rico’s economy collapses.

This book was published in November 2013, projecting verbiage like “if Puerto Rico’s economy collapses”. According to the latest developments and this news article here (and VIDEO), that collapse is now a reality:

Title: Puerto Rico Declares a Form of Bankruptcy
By: Mary Williams Walsh

With its creditors at its heels and its coffers depleted, Puerto Rico sought what is essentially bankruptcy relief in federal court on Wednesday, the first time in history that an American state or territory had taken the extraordinary measure.

The action sent Puerto Rico, whose approximately $123 billion in debt and pension obligations far exceeds the $18 billion bankruptcy filed by Detroit in 2013, to uncharted ground.

While the court proceedings could eventually make the island solvent for the first time in decades, the more immediate repercussions will likely be grim: Government workers will forgo pension money, public health and infrastructure projects will go wanting, and the “brain drain” the island has been suffering as professionals move to the mainland could intensify.

Puerto Rico is “unable to provide its citizens effective services” because of the crushing weight of its debt, according to a filing on Wednesday by the federal board that has supervised the island’s financial affairs since last year.

The total includes about $74 billion in bond debt and $49 million in unfunded pension obligations.

While many of Puerto Rico’s circumstances are unique, its case is also a warning sign for many American states and municipalities — such as Illinois and Philadelphia — that are facing some of the same strains, including rising pension costs, crumbling infrastructure, departing taxpayers and credit downgrades that make it more expensive to raise money. Historically, Puerto Rico was barred from declaring bankruptcy. In the end, however, financial reality trumped the statutes, and Congress enacted a law last year allowing bankruptcy-like proceedings.

Puerto Rico has been in a painful recession since 2006, and previous governments dug it deeper into debt by borrowing to pay operating expenses, year after year. For the last two years, officials have been seeking assistance from Washington, testifying before stern congressional committees and even making fast-track oral arguments before the United States Supreme Court.

At the same time, Puerto Rico’s efforts to coax its creditors to agree to concessions have gone nowhere. Now the coming court proceedings will give Puerto Rico extraordinary powers to impose losses on holdout creditors unilaterally.

The island’s many creditors — whose lawsuits filed against Puerto Rico on Tuesday prompted the island’s request for court relief on Wednesday — are likely to receive far less of their money back than they want. Their predicament may turn out to be a cautionary tale for bond holders of other troubled states and cities. Puerto Rico’s case could show public workers and retirees that seemingly inviolate pension systems can be changed, too.

The next step is for the Supreme Court — specifically, Chief Justice John G. Roberts Jr. — to designate a bankruptcy judge to handle the case.

The island’s lawyers may view some bankruptcy courts as more likely to be favorable to them than others. Some creditors fear Puerto Rico will seek to have the case handled in the Southern District of New York.

Puerto Rico’s governor, Ricardo Rosselló, issued a statement Wednesday aiming to offer some reassurance, even as he sought the federal court’s protection. “We remain committed to holding good-faith negotiations to reach agreements with our creditors,” he said, adding that he hoped the court proceedings would “accelerate the process.” He appeared to be referring to the extraordinary power Puerto Rico will now have in court to unilaterally impose big losses on creditors.

Some of those creditors are furious.

“The Commonwealth’s proposal is not a credible starting point for negotiations,” Andrew Rosenberg of Paul, Weiss, Rifkind, Wharton and Garrison, an adviser to the Ad Hoc Group of Puerto Rico General Obligation Bondholders, said in a statement. He said that moving the proceedings to bankruptcy court would put the situation in “free-fall.”

The creditors got a shock this year when Mr. Rosselló issued a five-year fiscal plan that allowed only about $800 million a year to pay principal and interest on Puerto Rico’s bond debt, far less than the roughly $3.5 billion a year it would cost to make those payments on time. The prospect of losses on that scale prompted some creditors to argue that most of the $800 million was rightfully theirs.

“That things are starting out in such a highly adversarial way strongly suggests this will be a long and contentious journey for Puerto Rico,” said Matt Fabian, a partner at Municipal Market Analytics who closely tracks activity in the municipal bond market.

Puerto Rico’s case will be the first ever heard under a federal law for insolvent territories, called Promesa, which was enacted last summer; the Obama administration had warned that a “humanitarian crisis” would ensue if Puerto Rico were not given extraordinary powers to abrogate debt. There is no existing body of court precedent for Promesa, but the island’s creditors — who range from hedge fund managers to mom-and-pop investors — are bracing for a titanic battle.

Despite the depth of the island’s troubles, many Republicans in Congress have opposed debt relief, saying that the island has long received big federal subsidies for its health system, public housing and other works. They said Puerto Rico should explain what it had done with that money before it got any more help.

Last week President Trump suddenly added fuel to those fires, saying on Twitter that there should be no “bailout” for Puerto Rico.

On the island, Washington is not seen as a helper but as an unsympathetic colonial overlord. The step toward bankruptcy-like proceedings, under a federal judge, intensified complaints that Puerto Rico has lost all control of its own future.

But at the same time, some Puerto Ricans say quietly that if the court proceedings really do allow their government to cancel debt, their island may finally get the fresh start it needs.

The coming court proceedings will not be formally called a bankruptcy, since Puerto Rico remains legally barred from using Chapter 9, the bankruptcy route normally taken by insolvent local governments. Instead, Mr. Rosselló petitioned for relief under Title III of the Promesa law, which contains certain Chapter 9 bankruptcy provisions but also recognizes that, unlike the cities and counties that use Chapter 9, Puerto Rico is not part of any state and must in some ways be treated as a sovereign.

Bankruptcy lawyers and public finance experts are watching Puerto Rico’s case closely, to see if it shows a path that financially distressed states like Illinois might also one day take. States, like United States territories, currently cannot declare bankruptcy.

The only creditors who reached an agreement with Puerto Rico were the holders of a class of bonds, about $9 billion worth, that were sold to raise money for the island’s public power utility. Those creditors gave concessions that the governor pointed to Wednesday as a good example for other creditors to follow.

The governor’s fiscal plan also calls for shifting all current government workers from pensions into 401(k)-style retirement plans. Current retirees will continue to receive their traditional monthly pensions, but the amounts are to be reduced by about 10 percent on average.

The governor’s hand was forced by the expiration on Monday, at midnight, of a court stay that had been keeping Puerto Rico’s creditors from suing. On Tuesday, as soon as the stay expired, bondholder groups and at least one bond insurer sued. Wednesday’s actions by the governor and the federal supervisory board effectively blocked the lawsuits from proceeding.
Source: Posted May 3, 2017; retrieved May 4, 2017 from: https://mobile.nytimes.com/2017/05/03/business/dealbook/puerto-rico-debt.html

————-

VIDEO – Miller Buckfire MD Says Title III Will Help Puerto Rico – https://www.bloomberg.com/news/videos/2017-05-04/miller-buckfire-md-title-iii-will-help-puerto-rico-video

Published on May 3, 2017 – Puerto Rico made the decision to use a U.S. court to escape from its debts. This casts a few ripples in the state and local bond market. But this action — once inconceivable for a territory that didn’t have authority to file for bankruptcy — sets a precedent that could resonate with struggling states in the decades ahead. See the full article here: https://www.bloomberg.com/news/articles/2017-05-04/puerto-rico-collapse-shows-debts-seen-as-iron-clad-may-not-be-so

What will Puerto Rico do now?

The recommendation of the movement behind the Go Lean book is to pay the debt … eventually. (Though bankruptcy filings usually involve “haircuts” where creditors will get “pennies on the dollar”).

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) and the Caribbean Central Bank (CCB). The Go Lean/CU/CCB 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.

Had the CU/CCB been in force now, we would not look to Washington for answers!

The Go Lean movement asserts that Caribbean communities need to resolve their challenges together. One Go Lean mission describes the process of consolidating legacy debt and refinancing them to ease the burden on local governmental finances. Imagine a personal household that just incurred a BIG BILL for repair – think a new roof. The best strategy is to refinance and add it to the 30-year mortgage, therefore only enduring “bite-size” payments for now. The book relates this:

10 Ways to Better Manage Debt – Page 114

1	Lean-in for the Caribbean Single Market, Caribbean Dollar & Caribbean Central Bank. This treaty allows for the unification of the region into one market, thereby creating a single economy of 30 member-states, 42 million people and a GDP of over $800 Billion, according to 2010 figures. The CU will reboot the economic engines of the region with investments in infra-structure and business inducements.Many times these projects require up-front capital but the returns will be garnered slowly over time. These projects therefore require debt, from the capital or lending markets. The issue of debt not only concerns governments, but individuals as well. The CU will impact this dynamic by mastering credit ratings and offering to buy back foreign debt for local C$ financing and CCB controls. This tactic lets the CCB function as a local IMF, fostering a new regime for the economy.
2	M1 & The Interest Economy The CU seeks to consolidate the currency of each member-state around the Caribbean Dollar (C$); then by inducing more electronic transactions as opposed to paper currency, there will be more lendable funds in the money supply (M1). Plus having viable capital markets will allow governments, institutions and businesses to get the capital they need, and investors/lenders can garner interest income for the use of their funds. Most Pension funds depend on this model.
3	Public Financing Every independent country in the Caribbean is a member of the IMF, only the OverseasTerritories are not engaged in this arrangement. Why not? Their host countries (US, UK, France and the Netherlands) provide the capital access that the island territories need. The CU quest is to shift this dependency to a Caribbean source, not European or American.
4	Bonds & Add-on’s *(Warrants)* Rather than international loans, the CU strategizes bond issues in C$ capital markets for government financing. There are a number of ways to make bonds more attractive to investors, like adding warrants as “sweeteners” (premiums on sale price, leverage, expirations and exercise restrictions). Warrants are often detachable and tradable in markets.
5	CU Federal Bankruptcies
6	Credit Reporting – Sharpening the Tool
7	Retail Credit Reboot and New Engines
8	Student Loans Sensible Dynamics
9	Mortgage Loan Sensible Dynamics
10	Crowd Sourcing – Community Capital Sharing Mitigates Debt

The points of effective, technocratic stewardship of Public Debt have been elaborated upon in previous blog/commentaries. Consider this sample:

https://goleancaribbean.com/blog/?p=7989	Transformations: Money Matters – ‘Getting over’ with ‘free money’
https://goleancaribbean.com/blog/?p=7601	Beware of Vulture Capitalists
https://goleancaribbean.com/blog/?p=7268	Detroit’s ‘debt reality’ giving schools their ‘Worst Shot’
https://goleancaribbean.com/blog/?p=7235	Flint, Michigan – A Cautionary Tale for bad debt management
https://goleancaribbean.com/blog/?p=6563	Lessons from Iceland – Model of Recovery
https://goleancaribbean.com/blog/?p=5818	Greece: From Bad to Worse
https://goleancaribbean.com/blog/?p=5759	Pressed by Debt Crisis, Doctors Leave Greece in Droves
https://goleancaribbean.com/blog/?p=3582	For Canadian Banks: Caribbean is a ‘Bad Bet’
https://goleancaribbean.com/blog/?p=3311	Detroit’s Municipal Bankruptcy – Lessons Learned

Overall, the Go Lean book stresses the community ethos, strategies, tactics, implementations and advocacies to reform and transform the economic, security and governing engines of Caribbean society. This effort will be technocratic! It will make “sure all ends meet”. We must properly administer the finances of our communities. This vision was anticipated from the beginning of the Go Lean book, opening with these pronouncements in the Declaration of Interdependence (Page 12):

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.

xiv. Whereas government services cannot be delivered without the appropriate funding mechanisms, “new guards” must be incorporated to assess, accrue, calculate and collect revenues, fees and other income sources for the Federation and member-states. The Federation can spur government revenues directly through cross-border services and indirectly by fostering industries and economic activities not possible without this Union.

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.

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.

Yes, the purpose of this commentary is to project the better plan for reforming and transforming Caribbean municipal financing. But it is also about reforming and transforming Puerto Rico. An agenda for Puerto Rico has always been a priority for the Go Lean roadmap. This island is just sitting there in the middle of the Caribbean region. No effort to reboot the Caribbean neighborhood could reasonably ignore this island.

“But they are an American Territory, a subset of the richest, most powerful nation on the planet”.

And yet … they are a Failed-State!

In a previous blog-commentary from the Go Lean movement, it was declared that “Puerto Rico needs the strategies, tactics, implementations and advocacies of the CU. [And] the CU needs Puerto Rico!” This is true now more than ever!

Now is the time for all stakeholders – state and municipal governments and their citizens – in the Caribbean to lean-in for the empowerments described here-in and in the book Go Lean … Caribbean. We must do better with public finance than our predecessors. They tried to “go for it alone” – this is why Puerto Rico always failed – let try this different approach of “going for it together”. This is guaranteed to make Puerto Rico and all of the Caribbean 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 the roadmap for the Caribbean Union Trade Federation.

Share this post:

Debt, Disaster, Model, Power, PR

[Top]

ENCORE: For-Profit Education – ‘Another one bites the dust’

Posted on September 6, 2016 in Economics, Industries

The ‘Evil Empire‘ – For-Profit Educational firms and institutions – is finally facing resistance from governmental authorities. Companies in this industry have come under fire for their bad practices and abuse of their customers: young students.

… and now, today, ITT Educational Services, one of the largest operators of for-profit technical schools, ended operations at all of its ITT Technical Institutes. See a summary of the story here:

Title: ITT Technical Institutes shuts down after 50 years in operation
ITT Educational Services … ended operations at all of its ITT Technical Institutes on Tuesday, citing government action to curtail the company’s access to millions of dollars in federal loans and grants, a critical source of revenue.

The move to shut down the chain of career schools after 50 years arrives two weeks after the Education Department said ITT would no longer be allowed to enroll new students who rely on federal loans and grants, award raises, pay bonuses or make severance payments to its executives without government approval. The department’s unprecedented move sent shares of the publicly traded company tumbling to an all-time low and raised questions about the future of the company.
…
See the full article here at: https://www.washingtonpost.com/news/grade-point/wp/2016/09/06/itt-technical-institutes-shut-down-after-50-years-in-operations/ posted & retrieved September 6, 2016.

Previously, on June 8, 2015, this commentary detailed the similar case against Corinthian Colleges; see an ENCORE of that commentary here:

——————————-

Go Lean Commentary

Follow the money…

This is a familiar plot-line in Hollywood Police dramas. Its “life imitating art” because this is the same eventuality for the American For-Profit education industry. There is a lot of money available in the US for post-secondary education of American students. Federal Student Loans are available to any American citizen regardless of credit or income. This constitutes a fertile ground for abuse.

According to the following news article, this one education company Corinthian College – see Appendix A below – is a bad example of For-Profit schools making a lot of profit but providing very little education to its customers: students.

“Scratch a liar, catch a thief”.

The article is presented here:

1. Title: My college degree is worthless

Sub-title: Students across the country are shelling out tens of thousands of dollars for degrees that end up being completely worthless.

Rosalyn Harris, an unemployed single mother who had never gone to college, thought getting a degree would be the ticket to a new life. So at age 23, she enrolled in a two-year criminal justice program at for-profit Everest College in Chesapeake, Va.

But the wealth of job opportunities the school had touted never transpired, and all she ended up with was more than $22,000 in student loan debt. She said classes were terrible, she didn’t receive any of the training she needed, and as a result, she spent months after graduation searching for criminal justice jobs without ever getting a call back.

Desperate to start paying some of her bills, Harris eventually applied for any entry-level job she could find. A full year after she graduated, she finally found a minimum wage job stocking shelves at Victoria’s Secret.

“My sole purpose of going to school was bettering my life for me and my son,” she said. “But now I wish I had never gone.”

Everest is a member of for-profit behemoth Corinthian Colleges, which has been accused by federal agencies of operating a predatory lending scheme, preying on low-income students and falsely inflating job placement numbers. Corinthian is currently closing and selling its schools, leaving thousands of graduates on the hook for loans they took out.

A Corinthian spokesman confirmed that Harris graduated in good standing, but it was unable to place her in a job. He said the school did provide her with career assistance and claims the criminal justice program has a 75% job placement rate, which he said is “a strong outcome for any educational program.”

He also disputed the allegations against the school, noting that Corinthian’s student loan default rate (of up to 27% for its EverestCollege campuses) is lower than other community colleges and its graduation and job placement rates are higher.

And while Corinthian has a particularly bad reputation, the for-profit college industry as a whole is often criticized for luring low-income students with false promises and failing to provide educations that qualify students for jobs.

Not only that but for-profit schools are generally double or triple the cost of public institutions like community colleges, and the default rate (19% last year) was the highest of all sectors.

Vantrell Echols, a 36-year-old from Georgia, wishes he never received a phone call from for-profit Lincoln College of Technology back in 2008. He said the school spent six months convincing him to enroll — promising to provide all the training and help he needed to find a high-paying computer science job. He had been unemployed for more than a year and he was desperate, so he gave it a shot.

But upon enrolling in the computer science program, he said the quality of education “was a complete joke” and job assistance was nonexistent.

“They sold many of us dreams about helping us, getting us qualified to work, to help us with jobs, [but] I had to ask fellow students to help me because the teachers wouldn’t. Many of us graduated with honors but didn’t learn anything in our fields,” he said.

Lincoln Educational Services president Scott Shaw defended the school’s reputation to CNNMoney, touting its 75% job placement rate and pointing to examples of successful graduates like the CEO of VMWare (who graduated in 1979).

But Echols said that after accumulating more than $20,000 in debt to attend the one-year program, he wasn’t able to find a single job in computer science. He’s still unemployed, is now homeless — and he is convinced he’d be better off without the degree even listed on his resume.

He says multiple employers have told him that they don’t view his degree as credible because of the for-profit industry’s reputation and because other people they’ve hired from the school haven’t had the necessary skills for the job.

“They’ve ruined my life and the lives of many of my classmates,” he said.

Shaw said extensive career assistance was provided to Echols and that he isn’t sure why Echols couldn’t find a job. “There’s only so much we can do — at some point the student has to partake,” he said.

But these kinds of stories are popping up so often that even the Obama Administration took action this week. Going forward, for-profit colleges will risk losing federal student aid if average loan payments of graduates exceed 20% of discretionary income or 8% of total earnings.

“Too many hard-working students find themselves buried in debt with little to show for it,” Secretary of Education Arne Duncan said in a statement.

Senators Jeff Merkley of Oregon and Tom Harkin of Iowa are pushing for legislation that goes a step further. They argue that a loophole in federal laws allow some institutions to offer programs that aren’t licensed or accredited at the state or federal level. That means graduates end up with degrees that may sound legitimate but are meaningless to many employers.

The two senators introduced legislation last month aimed at cracking down on these “worthless degrees.” The legislation would require courses to be licensed before allowing schools to accept federal money like student loan dollars or financial aid.

“Passing this bill will ensure that a college can no longer charge thousands of dollars for a degree that does not prepare them to work in the field they were promised‎,” according to a statement about the bill.

Related: U.S. sues Corinthian Colleges
2. Title: Embattled for-profit education behemoth Corinthian Colleges is facing yet another legal fight: This time, from the Consumer Financial Protection Bureau.

The consumer agency announced Tuesday it is suing Corinthian for “illegal predatory lending” and is demanding that the school forgive more than $500 million in private loans it has given to students since July of 2011.

According to the CFPB’s complaint, Corinthian convinced students to enroll in the school by inflating its job placement rates. It even paid employers to hire graduates for at least one day in order to boost its numbers.

Meanwhile, Corinthian’s tuition and fees — which can climb to as high as $75,000 for a bachelor’s degree — are higher than what federal loans generally cover, forcing many students to take out private loans from the school. These loans, called “Genesis loans,” came with origination fees of 6% and interest rates of around 15% as of 2011 — much higher than the 3% and 7% charged on federal loans.
…
CNNMoney (New York); posted September 16, 2014 from: http://money.cnn.com/2014/09/16/pf/college/cfpb-corinthian-lawsuit/index.html?iid=EL

The references to “low-income students” in the foregoing article are most commonly the “Black and Brown” of the American population. This is a frequent demographic for victimization in American life.

This issue in the article is just another example of Crony-Capitalism and institutional racism. The book Go Lean…Caribbean and subsequent blogs posit that the Caribbean must not be vulnerable to these negative American forces.

The dread of Crony-Capitalism and institutional racism have been highlighted and detailed in many previous blog commentaries; see the many Crony-Capitalism models in Appendix B below. Now we have to add the reality of Big Education to the discussion. The issue underpinning this dilemma is the easy availability of guaranteed student loans from the US federal government. Unfortunately this is not just an issue for For-Profit institutions, many not-for-profit colleges and university also exploit the federal student loan funds to garner revenues at the expense of innocent students. The Crony in this case is a direct consequence of a rich pool of federal monies.

Rich pool? This brings to mind the visual of an isolated pool/pond on the African Plain, a watering hole on the Serengeti where many animals seek hydration and refuge, but the terrain is endangered with predators: lions, crocodiles, hyenas, cheetahs, etc.. Yes, in the American commercial eco-system, “follow the money”, and you will find many “bad actors” looking to exploit the situation for unfair gain and quick profits.

VIDEO – Is the cost of college crippling? – http://money.cnn.com/video/news/2013/09/03/n-cost-of-college-rising-education-middle-class-jobs.cnnmoney/

The Caribbean must do better! We must also dissuade our citizens from emigrating to this American eco-system.

The consideration of Crony-Capitalism in the For-Profit Education industry aligns with the book Go Lean…Caribbean, a roadmap to elevate the economic, security and governing engines of the Caribbean. The Caribbean wants to model many of the good examples of the United States, and learn from the many bad models. Education is one such model. While optimization of education can systemically raise a country’s economy, the Caribbean experience has been more negative than positive. Too many of our students have left … to study abroad; then refused to return home, taking with them the return on community investments and repayment of their student loans. The Go Lean book has reported in detail on how traditional college career paths have been disastrous policies for the Caribbean in whole, and each specific country in particular.

This Go Lean book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). The CU has a complete education agenda, applying lessons learned from the consideration of the American models. This roadmap represents a big change for the region. The CU/Go Lean roadmap has 3 prime directives:

Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs..
Establishment of a security apparatus to police “bad actors” and protect the resultant economic engines.
Improvement of Caribbean governance, including a separation-of-powers, to support these engines.

The Go Lean roadmap provides turn-by-turn directions on how to reform the Caribbean tertiary education systems, economy, governance and Caribbean society as a whole. There is a plan for a regional student loan pool, where we mitigate the dangers that are so evident in the American eco-system. Our primary threat now is the constant abandonment rate among the college-educated populations. So as a planning tool, the roadmap commences with a Declaration of Interdependence, pronouncing the dread of societal threats and the Caribbean brain drain (Page 12):

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.

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 …

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… This responsibility should be executed without incurring the risks of further human flight, as has been the past history.

The Go Lean book posits that education is a vital consideration for Caribbean economic empowerment. The vision of the CU is a confederation of the 30 member-states of the Caribbean to do the heavy-lifting of championing better educational policies. The book details those policies; and other ethos to adopt, plus the executions of the following strategies, tactics, implementations and advocacies to impact tertiary education in the region:

Community Ethos – Deferred Gratification	Page 21
Community Ethos – Economic Systems Influence Individual Choices and Incentives	Page 21
Community Ethos – 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 – Apply Lessons of American Lax Oversight	Page 26
Community Ethos – Ways to Foster Genius	Page 27
Community Ethos – Ways to Help Entrepreneurship – Training & Mentoring	Page 28
Tactical – Separation of Powers – Education Department	Page 85
Tactical – Separation of Powers – Labor Department – On-the-Job-Training Regulator	Page 89
Implementation – Ways to Better Manage Debt – Lessons of American Student Loan Crisis	Page 114
Advocacy – Ways to Grow the Economy – Essential Role of Tertiary Education	Page 151
Advocacy – Ways to Create Jobs – Vital Need for Better STEM* Education Empowerments*	Page 152
Advocacy – Ways to Improve Education – Mitigating the Brain Drain	Page 159
Advocacy – Ways to Impact Student Loans – Regional Pools for Cross-Border Enforcements	Page 160
Advocacy – Ways to Improve Governance	Page 169
Appendix – Education and Economic Growth	Page 258
Appendix – Measuring Education Progress and Success Criteria	Page 266
Appendix – New American Student Loan Debt Crisis – Now Over $1 Trillion in Debt	Page 286

The American Tertiary Education Student Loan eco-system is badly broken; (tuition has increased 500% since 1985). The large pools of money has attracted “bad actors” or predators. The party in the foregoing news article – Corinthian Colleges – has been charged and adjudicated with predatory lending violations. Their victims: poor students who would have to repay these non-dischargeable federally-insured student loans. How sad? All of that time, talent and treasury and nothing to show for it. No wonder the economic effects of this affected population are now showing in other aspects of the economy, such as retarded home-buying output among the younger generations.

The Caribbean is urged to do better.

The people, educational and governing institutions in the region are urged to lean-in for the empowerments described in the book Go Lean … Caribbean. Education reform can suceed in elevating Caribbean society; we can make our Caribbean homeland a better place to live, work, learn and play. 🙂

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

———-

Appendix A – Corinthian Colleges, Inc.
(Source: http://en.wikipedia.org/wiki/Corinthian_Colleges)

Corinthian Colleges, Inc. (CCi) was a large for-profit post-secondary education company in North America. Its subsidiaries offered career-oriented diploma and degree programs in health care, business, criminal justice, transportation technology and maintenance, construction trades, and information technology.^[1]

At its largest, CCi had over 100 Everest, Heald and WyoTech campuses throughout the United States and Canada.^[2]

Corinthian’s campuses in Canada closed on February 19, 2015 after the Ontario government suspended their operation license. After a series of legal challenges by state and federal agencies, on April 26, 2015 Corinthian Colleges announced that they would cease operations at all remaining US locations effective April 27, 2015. The closure affected more than 16,000 students and employees.

Corinthian Colleges was founded in February 1995.^[3] The five founders — David Moore, Paul St. Pierre, Frank McCord, Dennis Devereux, and Lloyd Holland — were executives at National Education Centers, Inc. (NECI), a for-profit operator of vocational schools based in Irvine, California. The founders planned to acquire schools that were fundamentally sound, but which for one reason or another were performing below their potential.^[4]

Historically, CCi grew rapidly through acquisitions and through organic growth, including opening new branch campuses, remodeling, expanding or relocating existing campuses, and adopting curricula into existing colleges.^[3]

Acquired Schools
The following institutes and colleges were acquired [through the years]:^[5]

American Motorcycle Institute
AshmeadCollege
Blair College
Bryman College
Bryman Institute
Duff’s Business Institute
Florida Metropolitan University
Georgia Medical Institute
Kee Business College
Las Vegas College
National Institute of Technology
National School of Technology
Olympia Career Training Institute
Olympia College
Parks College
Rochester Business Institute
Tampa College
Western Business College

Corinthian Colleges faced numerous investigations and lawsuits, including a federal criminal investigation.^[6]

Financial Aid Financing
The Higher Education Act provides that a private, for-profit institution, such as CCi’s institutions, may derive no more than 90% of its revenue from the Title IV federal student aid programs.^[39] In 2010, CCi reported that it received 81.9% of revenue from Title IV federal student aid programs. ^[40] Corinthian Colleges (CCI) acquired QuickStart Intelligence in summer 2012, an Irvine, California-based, privately held technology training company. As a B2B revenue stream; CCI acquired QuickStart Intelligence to leverage the 10%, non-government funding essential to back the additional student loans for CCi’s core adult learning programs.

Student Loan Default Rate
A significant requirement imposed by Congress is a limitation on participation in Title IV programs by institutions whose former students default on the repayment of federal student loans in excess of specified rates (“Cohort Default Rates”).^[41] On March 25, 2013, CCi received a draft three-year Cohort Default Rates from the U.S. Department of Education for students who entered repayment during the federal fiscal year ending September 30, 2010 (the “2010 Cohort”), measured over three federal fiscal years of borrower repayment. The weighted average of CCi’s institutions was 19.0%, a 9.0 percentage point decrease from the 28.0% weighted average for the three-year cohort default rate for students who entered repayment during the prior fiscal year.^[42] For the 2010 Cohort, none of CCi’s institutions exceeded the default threshold set by the U.S. Department of Education.^[42]

———-

Appendix B – Models of American Crony-Capitalism

Big Defense	Many theorists indicate that the “follow the money” approach reveals the Military Industrial Complex work to undermine peace, so as to increase defense spending for military equipment, systems and weapons.
Big Media	Cable companies conspire to keep rates high; kill net neutrality; textbook publishers practice price gouging; Hollywood insists on big tax breaks/ subsidies for on-location shooting.
Big Oil	While lobbying for continuous tax subsidies, the industry have colluded to artificially keep prices high and garner rocket profits ($38+ Billion every quarter).
Big Box	Retail chains impoverish small merchants on Main Street with Antitrust-like tactics, thusly impacting community jobs. e-Commerce, an area of many future prospects, is the best hope of countering these bad business tactics.
Big Pharma	Chemo-therapy cost $20,000+/month; and the War against Cancer is imperiled due to industry profit insistence.
Big Tobacco	Cigarettes are not natural tobacco but rather latent with chemicals to spruce addiction.
Big Agra	Agribusiness concerns bully family farmers and crowd out the market; plus fight common sense food labeling efforts.
Big Data	Brokers for internet and demographic data clearly have no regards to privacy concerns.
Big Banks	Wall Street’s damage to housing and student loans are incontrovertible.
Big Weather	Overblown hype of “Weather Forecasts” to dictate commercial transactions.
Big Real Estate	Preserving MLS for Real Estate brokers only, forcing 6% commission rates, when the buyers and sellers can meet without them.
Big Salt	Despite the corrosiveness of salt on roads and the environment, it is the only tactic used to de-ice roads. Immediately after the weather warms, the roads must be re-constructed, thus ensuring a continuous economic cycle.
Big Energy	The For-Profit utility companies always lobby against regulations to “clean-up” fossil-fuel (coal) power plants or block small “Green” start-ups from sending excess power to the National Grid. Their motive is to preserve their century-long monopoly and their profits.
Big Legal	Even though it is evident that the promotion of Intellectual Property can help grow economies, the emergence of Patent Trolling parties (mostly lawyers) is squashing innovation. These ones are not focused on future innovations, rather just litigation. They go out and buy patents, then look for anyone that may consume any concepts close to those patents, then sue for settlements, quick gains.
Big Cruise	Cruise ships are the last bastion of segregation with descriptors like “modern-day-slavery” and “sweat-ships”. Working conditions are poor and wages are far below anyone’s standards of minimum. Many ship-domestic staff are “tip earners”, paid only about US$50 a month and expected to survive on the generosity of the passengers’ gratuity. The industry staff with personnel from Third World countries, exploiting those with desperate demands. Nowhere else in the modern world is this kind of job discrimination encouraged, accepted or tolerated.
Big Jails	The private prison industry seem motivated more by profit than by public safety. They attempt to sue state governments when their occupancy levels go too low; a reduction in crime is bad for business.
Big Housing	The American legacy is one of the institutional segregation in American cities. The practice was administered by real estate agents and housing officials executing policies to elevate property values and generational wealth for White families at the expense of a life of squalor for Non-Whites.
Big Charities	Big Not-For-Profit organizations that fleece the public under the guise of charities but retain vast majorities of the funding as administrative costs, thusly benefiting mostly the charities’ executives and staff rather than the intended benefactors.

Share this post:

College, Crony-Capitalism, Debt, Power, Transform

[Top]

Transformations: Money Matters – ‘Getting over’ with ‘free money’

Posted on May 12, 2016 in Economics, Government, Implementation

Go Lean Commentary

Here is a fact we have learned about transformations: there must be political transformations and practical transformations.

The Go Lean quest is to transform the 30 member-states in the Caribbean region. We are not the first …

… and we guarantee that we will not be the last.

So there are good, bad and ugly lessons for us to consider from other societies at other times. Take the recent example of Iraq. This is one of the lessons we have learned from that society: the practical transformation is easier than the political transformation. After the regime change by the United States in 2003 – a practical transformation – the country had a very tough time forging a stable society … because they could not succeed with the required political transformations. This is heavy-lifting, requiring collaboration, compromise and consensus-building. Iraq is not so homogeneous; they have sectarian discord, multiple ethnic groups that compose the country: Shiite, Sunni, Kurds, Yazidis and others; different religions, races, ethnicities, languages, values and goals.

The dysfunctions created voids in leadership, administration and security. Enter ISIS!

This experience relates that one benefit of getting the political transformation right is some assurance of peace and security.

Another benefit: Money!

Once political transformations transpire, the opportunity emerges to acquire free money. Again, consider Iraq:

On November 20, 2004, the Paris Club of creditor nations agreed to write off 80% ($33 billion) of Iraq’s $42 billion debt to Club members. Iraq’s total external debt was around $120 billion at the time of the 2003 invasion, and had grown another $5 billion by 2004. The debt relief will be implemented in three stages: two of 30% each and one of 20%.^[133]Source: Retrieved May 11, 2016 from: https://en.wikipedia.org/wiki/Iraq#Economy

This point aligns with the book Go Lean…Caribbean, which asserts that the societal engines in the Caribbean (economy, security, and governance) are deficient and defective; in some cases we even feature Failed-States (think: Haiti, Cuba, Puerto Rico and others). The book posits that the region can improve and make our homelands a better place to live, work and play.

How? One way we can “get over the hump” of transformation is to acquire Free Money… as much as possible.

This is commentary 2 of 4, from the movement behind the Go Lean book, on the subject of transformations: how to move our region from the deficient-defective status quo to the undisputed title of “greatest address on the planet”. All these commentaries detail these issues, considering:

Perfecting our Core Competence
Money Matters – “Getting over” with “free money”
Caribbean Postal Union (CPU) – Delivering the Future
Civil Disobedience – Still Effective

The Go Lean book details the quest to transform the Caribbean; it features a how-to guide, a roadmap for elevating the region’s societal engines of economics, security and governance. It leads with economic issues, not political ones!

It recognizes that while political transformation is heavy-lifting – requiring collaboration, compromise and consensus-building – economic ones are a little easier. Show up in any community with a boatload of jobs and people will line-up around the corner to transform and accept the jobs … and any dependent conditions. (Free Money always comes with conditions!)

This is the Go Lean quest … but first, we acquire all the “free money” possible. (There should be no entitlement attitude to Foreign Aid).

A previous blog related how the community of Haiti was granted $500 million in grants-aid for the 2010 Earthquake; the money was collected and administered by the American Red Cross … but very little of it reached it’s target destination in Haiti. The assertion is that we must take the lead for our own administration and stewardship.

Build it, and they will come. – Movie Quotation

The Go Lean position is that if we put the technocratic processes in place, we will benefit from a lot of available grant-aid monies. These “free” monies can help us to “get over the hump”, to succeed with the needed transformations in our society; see VIDEO here:

VIDEO: Foreign Aid 101 – https://youtu.be/s0Ps0UIY2Xc

Published on Mar 4, 2014 – Everything you need to know about U.S. foreign aid in 3 minutes, i.e. foreign aid is only less than 1 percent of the US federal government’s budget.

The book Go Lean … Caribbean serves as a roadmap for the introduction and implementation for the technocratic Caribbean Union Trade Federation (CU). As a federation or federal government representing all 30 member-states, the prime directives of this roadmap is the cause of elevating society by addressing these 3 focus areas:

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, including efforts with non-governmental agencies, to support these engines.

The samples and examples of so many other societies provide us with role models for how to procure grant/aid for our cause; see photo here.

Source: “Foreign Aid Explorer website”. Foreign Aid Explorer. USAID. Posted July 27, 2015.

Continuing with Iraq, that country was able to procure a lot of grant/aid/loans from different international sources; see here:

Foreign aid to Iraq has increased to handle reconstruction efforts.
In 2004 the U.S. Agency for International Development was responsible for awarding contracts totaling US$900 million for capital construction, seaport renovation, personnel support, public education, public health, government administration, and airport management. The World Bank committed US$3 billion to US$5 billion for reconstruction over a five-year period, and smaller commitments came from Japan, the European Union, Britain, and Spain. Russia canceled 65 percent of Iraq’s debt of US$8 billion, and Saudi Arabia offered an aid package totaling US$1 billion. Also, Iran has been accused of giving some monetary support to individual political parties. Some US$20 billion of US 2004 appropriations for Iraq were earmarked for reconstruction. Effective application of such funds, however, depends on substantial improvement in infrastructural and institutional resources. Because Iraq’s international debt situation had not been elaborated in 2005, for the foreseeable future US funds are expected to pay for capital investments in rebuilding.
Source: Retrieved May 11, 2016 from: https://en.wikipedia.org/wiki/Foreign_aid_to_Iraq

We can, and must, do better in the Caribbean, compared to Iraq, a country still in disarray. We are able to be more accountable, transparent and productive with grants/aid that we receive. The Go Lean book fully anticipated this strategy, as Page 115 cited:

The Go Lean/CU roadmap provides the scale and the means by which to plan and act for our Caribbean emergencies and natural disasters… But … the Caribbean must not be perennial beggars; we do need capital/money, especially to get started.

CariCom -vs- the Caribbean Union
The conclusion of consultants hired to advise the CariCom [(Caribbean Community Secretariat)] confessed that the Pact’s tacit strategy is to exploit the international donor community. The CU represents a break from this “Rich Man-Poor Man-Beggar Man-Thief” stance, and leans in to the alternate ethos of “Butcher-Baker-Candlestick Maker”. The CU vision is a Trade Federation that earns its keep thru trade and industriousness. In the Federation roadmap, the CariCom is re-constituted to the CU in Year 3.

In the Caribbean, we need grants/aid … to get started, to “get over the hump”; then we want to be able to stand-alone as a mature democracy – a regional Single Market. We need the initial help to optimize all 3 societal engines: economics, security and governance:

The economic help we seek should be viewed as seed money, so that we can sow in the fields of our marketplace, and later reap bountiful harvests. See Appendix VIDEO below.
The security help will allow us to foster a regional homeland security apparatus of our own; there is the specific need for military “hardware”; (think watercrafts, helicopters, and unmanned aerial drones).
For governance, we need technical assistance; the focus here is more on “software” or intellectual property, to provide better shepherding to the federal government, member-state governments and non-governmental organization (NGO) so as to execute the roadmap.

The following list from the Go Lean book is a sample of the strategies, tactics, implementation and advocacies of the Go Lean/CU roadmap related to the quest to foster more international aid:

Community Ethos – Lean Operations	Page 24
Community Ethos – Ways to Improve Sharing	Page 35
Community Ethos – Ways to Impact the Greater Good	Page 37
Strategy – Customers – Member-State Governments	Page 51
Strategy – Agents of Change – Globalization	Page 57
Tactical – Confederating a Permanent Union	Page 63
Tactical – Fostering a Technocracy	Page 64
Tactical – Separation of Powers	Page 71
Anecdote – Turning Around the CARICOM construct	Page 92
Anecdote – “Lean” in Government	Page 93
Implementation – Ways to Pay for Change	Page 101
Implementation – Foreign Policy Initiatives at Start-up	Page 102
Implementation – Ways to Deliver	Page 109
Implementation – Ways to Better Manage Debt	Page 114
Implementation – Ways to Foster International Aid	Page 115
Planning – Ways to Make the Caribbean Better	Page 131
Planning – Reasons Why the CU Will Succeed	Page 132
Planning – Lessons Learned from the West Indies Federation	Page 134
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Create Jobs	Page 152
Advocacy – Ways to Improve Credit Reporting – Improve Debt Management	Page 155
Advocacy – Ways to Improve Governance	Page 168
Advocacy – Better Manage the Social Contract	Page 170
Advocacy – Revenue Sources … for Administration	Page 172
Advocacy – Ways to Foster Cooperatives	Page 176

The Caribbean can truly be a great place to live, work and play. With the proper structures, we can qualify for a lot of ‘free money’, but free always comes with conditions and strings. That makes us dependent, not independent; we maintain a status of a parasite, not a protégé. This is why the strategy in the roadmap is not to depend on Foreign Aid for the long term, but rather to tease and tempt the people and institutions in the region to conform and acquiesce to behavioral changes needed in the community. Consider this as a “carrot and stick” motivation:

Comply and get the money
Non-compliance and future money is taken away

Remember, political transformations versus practical transformations…

… many politicians are arrogant, dogmatic and defiant; but when the budgets do not add up, they begrudgingly become willing to be practical and pragmatic. Math rules … over mania. Consider this:

There is a current issue in some Caribbean member-states where there is the need to correct constitutional deficiencies for gender equality; (the Bahamas in particular has a public referendum slated for June 7, 2016). One strong motivation is the compliance with the United Nation’s Convention on the Elimination of All Forms of Discrimination Against Women. Future foreign aid and grants are tied to the successful execution of these constitutional reforms.

Previously, Go Lean blogs commented on transformations, identifying the status in Caribbean member-states; as sampled here:

https://goleancaribbean.com/blog/?p=7963	Being a ‘Good Neighbor’ – Like Puerto Rico needs right now
https://goleancaribbean.com/blog/?p=7198	State of the Caribbean Union
https://goleancaribbean.com/blog/?p=6231	China’s Caribbean Playbook: Helping Transform the region
https://goleancaribbean.com/blog/?p=4360	Dreading the ‘Caribbean Basin Security Initiative’ and planning for better
https://goleancaribbean.com/blog/?p=2953	Funding Caribbean Entrepreneurs – The ‘Crowdfunding’ Way
https://goleancaribbean.com/blog/?p=2887	Caribbean must work together to address rum subsidies
https://goleancaribbean.com/blog/?p=2435	Latin America’s Korean dream – A Model of a Rebuilt Economy
https://goleancaribbean.com/blog/?p=2359	CARICOM calls for innovative ideas to finance SmallIsland development
https://goleancaribbean.com/blog/?p=1965	America’s Naval Security – Model for Caribbean Security
https://goleancaribbean.com/blog/?p=1554	Status of Forces Agreement = Security Pact
https://goleancaribbean.com/blog/?p=1193	EU willing to fund study on cost of not having CARICOM
https://goleancaribbean.com/blog/?p=1014	Canada’s assessment: All is not well in the Caribbean – willing to help
https://goleancaribbean.com/blog/?p=816	The Future of CariCom
https://goleancaribbean.com/blog/?p=451	CARICOM deliver address on reparations – Looking for Free Money

There is a community ethos that fosters the building of effective economic engines, deploying an efficient security apparatus and organizing governing stewardship. It is called the Greater Good! The Go Lean roadmap describes any continuation of a dependent attitude, or expectation of entitlement to foreign aid, as “parasite” but the mature, independent attitude as “protégé”. So this roadmap calls on the Caribbean region to be collectively self-reliant – interdependent – both proactively and reactively.

Transformations …

… any transformation to the Caribbean societal engines must be permanent! The Go Lean book declares that for permanent change to take place, there must first be an adoption of new community ethos, the national spirit that drives the character and identity of its people. The roadmap was constructed with the primary community ethos of the Greater Good, not a profit motive, not a perennial-beggar motive nor a nationalistic motive; but rather a commitment for the “greatest good for the greatest number of people”.

Now is the time for all Caribbean stakeholders to lean-in to this Go Lean regional solution. With this roadmap, the Caribbean can transform to a better society; a better place to live, work and play. 🙂

Download the book Go Lean … Caribbean – now!

——————–

Appendix VIDEO – What’s Wrong With International Aid? – https://youtu.be/xNfOnqf5g6Y

Published on Oct 15, 2012 – Bran Dougherty-Johnson and Jennifer Holt designed the animated clip for Building Markets. Hatfarm produced the sound design.
Category: Nonprofits & Activism

Share this post:

Debt, Foreign Policy, History, Transform

[Top]

ENCORE: Celebrating ‘Cinco De Mayo’

Posted on May 5, 2016 in Ethos, Government, Social

This Go Lean blog-commentary from May 5, 2015 is re-distributed on this occasion of Cinco De Mayo 2016. As always, this year’s commemoration is a celebration of Mexican culture, more so than Mexican history.

Bienvenido Amigos …

————–

Go Lean Commentary

Today (May 5) is Cinco De Mayo – celebrating this is a move of solidarity with Mexico; its people and culture – Enjoy the festivities!

Enjoy the Mexican food, spirits, music and culture. The country and people of Mexico have so much to offer the world – see VIDEO below – this includes the Caribbean.

One thing more that they can offer us in our region: A Lesson in History!

The summary of this celebration is simple on the surface: Mexican forces commanded by General Ignacio Zaragoza defeated the French army in the Battle of Puebla on 5 May 1862. 4 days later, on 9 May 1862, The then-President Benito Juárez declared that the anniversary of the Battle of Puebla would be a national holiday,^{[14][15][16][17][18]} regarded as “Battle of Puebla Day” or “Battle of Cinco de Mayo”. Although today it is recognized in some countries as a day of Mexican heritage celebration, it is not a federal holiday in Mexico.^[19]

Considering the real history of Cinco De Mayo is a really big deal. For starters, while Mexico was not the aggressor in this war, they were not exactly blameless.

The 1858 – 1860 Mexican civil war known as The Reform War had caused distress throughout Mexico’s economy. When taking office as the newly-elected president of the Republic in 1861, Juárez was forced to suspend payments of interest on foreign debts for a period of two years. At the end of October 1861 diplomats from Spain, France, and Britain met in London to form the Tripartite Alliance, with the main purpose of launching an allied invasion of Mexico, taking control of Veracruz, its major port, and forcing the Mexican government to negotiate terms for repaying its debts and for reparations for alleged harm to foreign citizens in Mexico. In December 1861, Spanish troops landed in Veracruz; British and French followed in early January. The allied forces occupied Veracruz and advanced to Orizaba. However, the Tripartite Alliance fell apart by early April 1862, when it became clear the French wanted to impose harsh demands on the Juarez government and provoke a war. The British and Spanish withdrew, leaving the French to march alone on Mexico City. French Emperor-President Napoleon III – the first democratically elected French President – wanted to set up a puppet regime, the Mexican Empire.

Thus started this French Intervention in Mexico. The effects of these 5 years were far-reaching, even to this day – consider the similarities in flags for these countries.

Title: French Intervention in Mexico 1862 – 1867
Emperor Napoleon III of France was the instigator, justifying military intervention by claiming a broad foreign policy of commitment to free trade. For him, a friendly government in Mexico would ensure European access to Latin American markets. Napoleon also wanted the silver that could be mined in Mexico to finance his empire. Napoleon built a coalition with Spain and Britain while the U.S. was deeply engaged in its own civil war from 1861 to 1865.

Here is the main timeline of this French Intervention period:

1. 1862: Arrival of the French
After the initial victory by the Mexicans at the Battle of Puebla, the war continued in a different direction. The pursuing Mexican army was contained by the French at Orizaba, Veracruz, on 14 June. More British troops arrived on 21 September, and General Bazaine arrived with French reinforcements on 16 October. The French occupied the port of Tamaulipas on 23 October, and unopposed by Mexican forces took control of Xalapa, Veracruz on 12 December.

2. 1863: The French take the capital
The French army of General François Achille Bazaine defeated the Mexican army led by General Comonfort in its campaign to relieve the siege of Puebla, at San Lorenzo, to the south of Puebla. Puebla surrendered to the French shortly afterward, on 17 May. On 31 May, President Juárez fled the capital city (Mexico City) with his cabinet, retreating northward to Paso del Norte and later to Chihuahua. Having taken the treasure of the state with them, the government-in-exile remained in Chihuahua until 1867.

French troops under Bazaine entered Mexico City on 7 June 1863. The main army entered the city three days later, led by General Forey. General Almonte was appointed the provisional President of Mexico on 16 June, by the Superior Junta (which had been appointed by Forey). The Superior Junta with its 35 members met on 21 June, and proclaimed a Catholic Empire on 10 July. The crown was offered to Austrian Prince Archduke Ferdinand Maximilian, following pressures by Napoleon. Maximilian accepted the crown on 3 October.

3. 1864: Arrival of Maximilian
Further decisive French victories continued with the fall of Guadalajara, Zacatecas, Acapulco, Durango by 3 July, and the defeat of republicans in the states of Sinaloa and Jalisco in November.

Maximilian formally accepted the crown on 10 April, signing the Treaty of Miramar (between France and Mexico), and landed at Veracruz on 28 May. He was enthroned as Maximilian I, Emperor of Mexico, [under French occupation].

4. 1865: Beginning of Republican victories
After many more French victories, finally on 11 April, republicans defeated Imperial forces at Tacámbaro in Michoacán. In April and May the republicans had many forces in the states of Sinaloa and Chihuahua. Most towns along the Rio Grande, [(the border with the US),] were also occupied by republicans.

The decree known as the “Black Decree” was issued by Maximilian on 3 October, which threatened any Mexican captured in the war with immediate execution.

5. 1859-1867: U.S. Diplomacy and Involvement
The United States did not condone the French occupation of Mexico but it had to use its resources for the American Civil War, which lasted 1861 to 1865. Then-President Abraham Lincoln expressed his sympathy to Latin American republics against any European attempt to establish a monarchy; and the Congress passed a resolution in disgust of these French actions. In 1865, The US supported the sale of Mexican bonds by Mexican agents in the US to fund the Juarez Administration, raising up to $18-million dollars for the purchase of American war material.^[16] By 1867, American policy shifted from thinly veiled sympathy to the republican government of Juarez to open threat of war to induce a French withdrawal, invoking the Monroe Doctrine, a policy to thwart any aggression by European powers in the Americas.

6. 1866: French withdrawal and Republican victories
Choosing Franco-American relations over his Mexican monarchy ambitions, Napoleon III announced the withdrawal of French forces beginning 31 May. Taking advantage of the end of French military support to the Imperial troops, the Republicans won a series of crippling victories in Chihuahua on 25 March, Guadalajara, Matamoros, Tampico and Acapulco in July. Napoleon III urged Maximilian to abandon Mexico and evacuate with the French troops; [but he persisted]. The French evacuated Monterrey on 26 July, Saltillo on 5 August, and the whole state of Sonora in September. Maximilian’s French cabinet members resigned on 18 September. The Republicans defeated imperial troops in Oaxaca in October, occupying the whole of Oaxaca in November, as well as parts of Zacatecas, San Luis Potosí and Guanajuato.

7. 1867: Republicans take the capital
The Republicans occupied the rest of the states of Zacatecas, San Luis Potosí and Guanajuato in January. The French evacuated the capital on 5 February.

On 13 February 1867, Maximilian withdrew to Querétaro. The Republicans began a siege of the city on 9 March, and Mexico City on 12 April. On 11 May, Maximilian finally resolved to try to escape through the enemy lines. He was intercepted on 15 May. Following a court-martial, he was sentenced to death and executed on 19 June.
Source: http://en.wikipedia.org/wiki/French intervention_in_Mexico

This subject has relevance for the Caribbean. Mexico is a stakeholder in Caribbean affairs. They have a vast coastline (Yucatan Peninsula) on the Caribbean Sea, plus a few Caribbean islands (Cozumel, Isla Mujeres, Isla Contoy, and Isla Blanca). This country is also a member of the ACS – Association of Caribbean States – one of the relevant entities that must be assembled for this regional integration movement championed in the book Go Lean…Caribbean.

The underlying theme of this Lesson in Mexican History is the lack of effective security for the people and societal engines of Mexico. Now, after 150 years, this historic pattern has continued; Mexico proceeded to endure one revolution-rebellion-overthrow-coup d’etat after another until recent times.

The Caribbean cannot afford this same disposition: the dread and damage endured from decades of dysfunction.

Today, Mexico is known as a lawless society in many pockets, especially along the US border. Considering the art and science of security, it is sad that they never got it right! They resemble a Failed-State in so many perspectives. This is where their history, especially those 5 years of the Franco-Mexican War, provides lessons for the Caribbean people and institutions. But this Go Lean movement does not seek to remediate Mexico; this is out of scope. Rather the focus is strictly on the 30 Caribbean member-states: islands of the Caribbean plus the Central & South American states that caucus with the Caribbean Community (Belize, Guyana and Suriname).

This effort to elevate Caribbean society fully recognizes that security mitigations must be prioritized equally with economic and governing remediation. This is an underlying theme of the book Go Lean…Caribbean. The book declares that the region is in crisis, at the precipice of Failed-State status. This is the assertion of the Go Lean book, that the region must prepare its own security apparatus for its own security needs.

This book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). So while the CU is set to optimize Caribbean society through economic empowerment, the security dynamics will be inextricably linked to this same endeavor. Therefore the Go Lean roadmap has 3 prime directives:

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

The book contends, just as the French proved to be a “bad actor” to Mexico in 1862, that new “bad actors” will emerge for the Caribbean to contend with. This will be as a by-product of new economic successes in the region. This point is pronounced early in the book with the Declaration of Interdependence (Page 12) that claims:

x. Whereas we are surrounded and allied to nations of larger proportions in land mass, populations, and treasuries, elements in their societies may have ill-intent in their pursuits, at the expense of the safety and security of our citizens. We must therefore appoint “new guards” to ensure our public safety and threats against our society, both domestic and foreign. The Federation must employ the latest advances and best practices … to assuage continuous threats against public safety.

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, including piracy and other forms of terrorism, 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.

The need for the Caribbean to appoint “new guards” or a security pact to mitigate foreign and domestic threats in the region is the primary lesson to glean from the foregoing encyclopedic article – a consideration of the history of Cinco De Mayo. This security pact is to be legally constituted by a Status of Forces Agreement which would be enacted as a complement to the CU confederation treaty. The Go Lean roadmap provides 370-pages of turn-by-turn directions on how to deploy cutting-edge strategies, tactics and implementations to succeed in this goal.

In addition, there are other lessons – secondary – that we learn from this consideration of the history of Cinco De Mayo:

Bullies only acquiesced to a superior force – Only when the more powerful USA turned their attention to the Franco-Mexican War, was France willing to retreat. – There must always be monitoring, accountability and due-process to mitigate all level of bullies in society.
‘Other People’s Money’ is very important to ‘them’ – One of France’s motivation was the cancellation of expected interest payments – Debts to foreign parties should always be prioritized for repayment; it is better to use domestic sources.
Self-exploit natural resources – France saw value in Mexico’s untapped natural resources; they reasoned that they could be exploited to repay debts – Local economic engines should plan for responsible management of natural resources; avoid too-much or too-little development.
Neighbors have their own self-interest to prioritize – the US was occupied with its own domestic priorities, a Civil War – No expectation should be placed on any Super Power to come to our aid; we must be protégés not parasites.
Alliances with others make heavy-lifting easier – France originally formed an alliance with Spain and Britain to pursue the big goal of subduing Mexico – The CU is an alliance and confederation of 30 member-states.
There are consequences to abusing other peoples’ rights – France/Spain/Britain felt justified for their actions because of prior abuses to the rights of their citizens in Mexico – Human and Civil rights, including minorities, should always be a priority for Justice institutions.
Image and global impressions lend value to respect and recognition – The impression of Mexico was that they were dysfunctional and a “joke” to the European world – Caribbean brand and image must be feverishly protected and promoted.

The Go Lean book details a roadmap with turn-by-turn directions for transforming the Caribbean homeland. The following is a sample of the community ethos, strategies, tactics, implementations and advocacies to impact the Caribbean region for this turnaround:

Community Ethos – Economic Principle – Economic Systems Influence Choices	Page 21
Community Ethos – Economic Principle – Consequences of Choices Lie in the Future	Page 21
Community Ethos – Anti-Bullying and Mitigation	Page 23
Community Ethos – Minority Equalization	Page 24
Community Ethos – Cooperatives	Page 25
Community Ethos – Ways to Improve Sharing	Page 35
Strategy – Vision – Confederating a Non-Sovereign Union	Page 45
Strategy – Mission – Protect Economic Engines from threats	Page 45
Tactical – Fostering a Technocracy	Page 64
Tactical – Separation of Powers	Page 71
Implementation – Start-up Foreign Policy Initiatives	Page 102
Implementation – Security Initiatives at Start-up	Page 103
Implementation – Ways to Deliver	Page 109
Implementation – Ways to Better Manage Debt	Page 118
Implementation – Ways to Promote Independence – Interdependence	Page 120
Planning – 10 Big Ideas – Defense / Homeland Security Pact	Page 127
Planning – Ways to Make the Caribbean Better	Page 131
Planning – Ways to Better Manage Image	Page 133
Planning – Ways to Improve Failed-State Indices	Page 134
Planning – Lessons from the American West	Page 142
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 Better Manage the Social Contract	Page 170
Advocacy – Ways to Impact Justice	Page 177
Advocacy – Ways to Improve Homeland Security	Page 180
Advocacy – Ways to Mitigate Terrorism	Page 181
Advocacy – Ways to Protect Human Rights	Page 220

Mexico is a beautiful country, with a beautifully diverse population plus a lot of natural resources. They experience a vibrant tourism product where millions visit annually for Mexican hospitality – they are a fit competitor of Caribbean tourism, even for cruises. See VIDEO here:

VIDEO: Mexico: Live It to Believe It – Cultural Diversity 2015 – https://youtu.be/jciVmLL_UgY

Published on Feb 27, 2014 – A production of the Mexico Department of Tourism; commissioned for the Central American and Caribbean Games in Veracruz from November 14 to 30, 2014.

Many people visit Mexico, but few would consider moving there permanently. In fact just the opposite occurs, the societal abandonment problem in Mexico is very pronounced. Their northern neighbor, the United States, has constant security issues of illegal Mexican migrants. Mexico has been dysfunctional for their entire history as a Republic. They must do better! While this quest is out-of-scope for the CU/Go Lean roadmap, we can learn lessons from their actions and inactions.

The Go Lean book posits (Page 3) that the Caribbean islands are among the greatest addresses in the world. But like Mexico, instead of the world “beating a path” to our doors, the people of the Caribbean have “beat down their doors” to get out; despite the absence of any war or revolution … like our Mexican neighbors. Our abandonment is inexcusable.

May we learn from this history of Mexico! Mexican culture is great! Enjoy the festivities: their people, food, drink, music and dance. But let’s do better … than they have done. Let’s make the Caribbean even better, where our citizens can prosper where they are planted; let’s make our homeland better places to live, work and play. 🙂

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

Share this post:

Civil Rights, Debt, Foreign Policy, History, Model, Power, Security

[Top]

Beware of Vulture Capitalists

Posted on February 25, 2016 in Economics, Implementation, Industries

Go Lean Commentary

We repeat the strong caution …

… just say “No” to debt!

Many bad things happen when people, institutions and countries depend on debt. A “slippery slope” can emerge … from dependence, to reliance, to requirement, to a “vital” status, to … debt slavery. Emancipation from debt slavery is not so easy, as many times its a voluntary slavery. The ransom to redeem from slavery is all about money, finance and/or economics. This is why the sage advice from a Subject Matter Expert in Economics is: The further one stays away from debt, the better!

It’s a lesson learned, as chronicled in the book Go Lean … Caribbean, from Detroit; not only does debt impact the past, but the future as well. Debt can be so bad that at times the providers … and collectors of debt may be derisively called “vultures”, as follows:

The term “vulture fund” is a metaphor, which can be considered a pejorative term,^[9] used to compare hedge funds to the behavior of vulture birds “preying” on debtors in financial distress by purchasing the now-cheap credit on a secondary market to make a large monetary gain, in many cases leaving the debtor in a worse state. The term is often used to criticize the fund for strategically profiting off of debtors that are in financial distress, and thus is frequently considered derogatory.^[10][11][12] However financiers dealing with vulture funds argue that “their lawsuits force accountability for national borrowing, without which credit markets would shrivel, and that their pursuit of unpaid commercial debt uncovers public corruption.”^[13] A related term is “vulture investing”, where certain stocks in near bankrupt companies are purchased upon anticipation of asset divestiture or successful reorganization.^[14]

The term has gained wide acceptance from governments, newspapers, academics and international organizations such as the World Bank, Group of 77, Organization of American States and Council on Foreign Relations, among others.^{[15][16][17][18][19]}
Source: https://en.wikipedia.org/wiki/Vulture_fund retrieved February 24, 2016.

This dire disposition of debt is not exclusive nor limited to Detroit. This applies to many other communities, in North America, Europe (think Greece), Latin America and even in the Caribbean.

See the news article here – plus the accompany encyclopedic reference and VIDEO regarding Vulture Capitalists – conveying the harsh economic and governing realities in Argentina:

News Article: New Argentine govt resumes talks with ‘vulture’ creditors

By: Mariano Andrade, AFP

New York (AFP) – The new Argentine government reopened talks with bondholders in New York that for years have blocked the struggling country’s access to global capital markets.

Officials said they plan to submit a proposal later this month, which they hope will finally provide a resolution to the long-running financial crisis.

Talks between bondholders and representatives of the new government of President Mauricio Macri, who has pledged to reform and revitalize the Argentine economy, opened in Manhattan under the guidance of the court-appointed mediator Daniel Pollack.

“We’ll be presenting Argentina’s proposal during the week of Monday, January 25 to Pollack and to the holdout firms” Luis Caputo, an official representing Buenos Aires said at the close of five hours of negotiations on the first day of talks.

The previous administration of Cristina Kirchner had refused to compromise with the creditors, mainly hedge funds it branded “vultures,” after a US court ordered the country to pay the full value of bonds that Buenos Aires defaulted on some 15 years ago.

The leaders of the so-called “holdout” group, the hedge funds NML Capital and Aurelius Capital Management, bought up Argentine debt cheaply around the time of the default and over the next decade refused to join 93 percent of bondholders in restructuring the debt.

Speaking in Buenos Aires on Wednesday, Argentine Economy Minister Alfonso Prat-Gay said the South American country would negotiate “with toughness” but was committed to finding an agreement.

On Tuesday, Macri said he hoped for a “reasonable agreement” with the creditors, who have demanded 100 percent payment of their bonds even though most of the creditors in the country’s $100 billion default in 2001 accepted sharp losses in a negotiated debt restructuring.

“We will tell the mediator that there has been a change, another vision for our debts and how to stop being a defaulter and to resolve the pending issues,” Macri said.

To the great dismay of Argentina and its restructured bondholders, NML and Aurelius won a New York court judgment in 2012 that ordered Argentina to repay the full value of their bonds.

The decision roiled the sovereign bond world.

The court said, moreover, that Buenos Aires could not make payments on the restructured bonds without first paying off in full the two hedge funds. And it forbade banks from handling any other bond payments before the hedge funds were paid.

Kirchner’s government refused, and talks on an ostensible compromise went nowhere.

– Heavy price tag –
The two hedge funds hold about $1.3 billion worth of bonds, whose accrued value is now about $1.7 billion.

Last October, the New York court further ruled that 49 other holdouts were covered by the 2012 ruling and also had to be paid first, adding another $6.1 billion to the sum Argentina is ordered to pay. Pollack has said the total amount owed to holdouts is around $10 billion.

The Argentine economy minister said the US court ruling gave the creditors lavish interest payments — up to 95 cents out of every dollar Buenos Aires has been ordered to pay, in the case of certain bonds.

“That is what we want to discuss quickly and resolve the problem,” he said.

But he blamed the Kirchner administration for the heavy price tag.

“This is the cost of washing our hands of the problem for more than 10 years,” he said.

With foreign reserves believed to be at less than $30 billion, Kirchner’s government said it could not afford to pay, and Macri’s government will face the same challenge.

The conservative new president has launched into a program of difficult structural reforms for the economy that includes a more than 30 percent devaluation of the peso.

He has indicated he wants to resolve the problem with the bond holdouts quickly, as it impedes the country’s access to global capital markets.

Within days of assuming office on December 10, Macri sent representatives to let Pollack know the country was ready to negotiate in earnest.
(Source: http://news.yahoo.com/argentine-govt-resumes-talks-vulture-creditors-180051669.html posted January 13, 2016; posted February 23, 2016).

Related Stories

Argentina resolves a bond debt claim for over $110 million – Associated Press

US judge tentatively backs Argentina on debt payments – AFP

———-

Reference Title: Vulture Capitalists

Vulture capitalists are investors that acquire distressed firms in the hopes of making them more profitable and selling them for a profit.^[1] Due to how vulture capitalist make firms more profitable, and their aggressive investing nature, vulture capitalists are often criticized.^[2]

Venture vs. vulture capitalist

A venture capitalist is an investor who provides funding for start-ups, early stage firms and companies with growth potential.^[1] These types of firms seek out venture capitalists, as they are too small or too new to have credit profiles, making them ineligible for bank loans and other forms of raising capital.^[3]

Although risky, venture capitalists invest in firms as there are very lucrative returns on their investments when the company they are investing in is successful.^[1][4] Furthermore, venture capitalists will often invest in a range of firms rather than just one or two, in order to mitigate risks if the investments are unsuccessful.^[5]

On the other hand, vulture capitalists are a type of venture capitalist, which provide a final attempt at gaining funding.^[4] Whereas venture capitalists seek firms with growth potential,^[1] vulture capitalists seek firms where costs can be cut in order to increase profits. Most often, these firms are distressed and on the brink of bankruptcy.^[4] Due to this reason, vulture capitalists are able to buy these firms for very low prices.^[4]

Once the firm is acquired, vulture capitalists cut-down costs wherever possible, which often means firing workers and cutting benefits. With reduced costs, the firm becomes more profitable, raising share price, giving investors profit. Lastly, the vulture capitalists sell any equity they own, allowing for more profit to be made.^[6]

Criticism

Vulture capitalists receive a lot of criticism as they often go for firms that are in very poor shape,^[4] meaning these firms are unable to secure capital from banks or even venture capitalists as they are too risky of an investment.^[3] Due to this, vulture capitalists are able to acquire the firms for prices that are way below the actual market value price.^[4]

Once vulture capitalists acquire a firm, they often fire workers to reduce costs,^[6] in order to raise profitability for their own gain. Vulture capitalists are criticized for this as the newly unemployed people put pressure on the social system through needing unemployment benefits, which comes from taxpayers’ money.^[6] Meanwhile, vulture capitalists pay only 15% tax^[6] on their profits. In other words, while vulture capitalists reap in the rewards, they put more pressure on the social system.

Due to these reasons, venture capitalists can be accused of being a vulture capitalist, or vulture for short, depending on how they conduct their business.^[7] In this sense, vulture capitalist is used as a derogatory word for venture capitalists, as the vulture capitalists are considered to be preying on firms in distress for their own profit.^[2]
———-

VIDEO – Argentina – Vulture Capitalism Takes Another Step – https://youtu.be/NhGhrRZ8NJg

Published on Aug 14, 2015 – Greg Palast, Billionaires & Ballot Bandits/Vultures and Vote Rustlers, joins Thom. A dispute between the country of Argentina and a block of New York hedge funds led by Paul Singer’s “Elliot Management” just entered a new chapter.

Argentina, according to the foregoing article, definitely has a crisis. But according to the book Go Lean … Caribbean, “a crisis is a terrible thing to waste”. Argentina – and all of Latin America and the Caribbean – needs to use crises to re-boot their debt-finance-economic eco-system. Though Argentina and Latin America is out-of-scope for the focus of the Go Lean book.

The focus is strictly on the Caribbean. The Go Lean book – with the simple pretext that only at the precipice do people change – serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU) to provide new oversight for the Caribbean region’s economic, security and governing engines. The book was conceived in the wake the 2008 Global Recession, heightened with the collapse of Investment Bank Lehman Brothers, by stakeholders intimate with the anatomy of that crisis – worked for Lehman – and composed a prescription for a Caribbean turn-around from all crises.

The publishers of the Go Lean book, used the insights and experiences of good, bad and ugly examples of debt servitude in the modern world. The book considered Egypt (1800s), Greece and Detroit to forge the roadmap for effecting change in the Caribbean without “Vulture” debt. The book also stresses the art and science of better Credit Ratings.

The better the Credit Rating – see Jamaica’s example in the Photo here; an Appendix from the Go Lean book (Page 274) – the less of a chance to be limited to Vulture Capitalists. Many lessons on debt (sovereign, municipal and personal), finance and economics have been detailed in previous blogs/commentaries. Consider this sample here:

https://goleancaribbean.com/blog/?p=7268	Detroit’s ‘debt reality’ giving schools their ‘Worst Shot’
https://goleancaribbean.com/blog/?p=7235	Flint, Michigan – A Cautionary Tale for bad debt management
https://goleancaribbean.com/blog/?p=7140	Azerbaijan sets its currency on free float
https://goleancaribbean.com/blog/?p=6800	Venezuela sues Black Market currency website in US
https://goleancaribbean.com/blog/?p=6563	Lessons from Iceland – Model of Recovery
https://goleancaribbean.com/blog/?p=6531	A Lesson in History – Book Review on the 2008 Crisis
https://goleancaribbean.com/blog/?p=5818	Greece: From Bad to Worse
https://goleancaribbean.com/blog/?p=5759	Pressed by Debt Crisis, Doctors Leave Greece in Droves
https://goleancaribbean.com/blog/?p=5183	A Lesson in History – Troubles from Mexico’s Unpaid Debt
https://goleancaribbean.com/blog/?p=3814	Lessons from the Swiss un-pegging the franc
https://goleancaribbean.com/blog/?p=3582	For Canadian Banks: Caribbean is a ‘Bad Bet’
https://goleancaribbean.com/blog/?p=3311	Detroit to exit historic bankruptcy
https://goleancaribbean.com/blog/?p=709	Student debt holds back many would-be home buyers
https://goleancaribbean.com/blog/?p=372	Dominica raises EC$20 million on regional securities market
https://goleancaribbean.com/blog/?p=273	10 Things We Want from the US – # 3 American Capital

The Go Lean/CU roadmap proposes debt, finance and economic solutions designed to avoid the tragedy of Argentina, Greece, Detroit and other communities that have succumbed to debt slavery. In summary, the strategy is to model the American capital markets, not with the same liquidity (initially on a per capita basis), but with similar accessibility and universal participation. With the success of this roadmap, Caribbean member-states and municipalities will be able to tap regional capital markets for bond financing in Caribbean Dollars (C$). This means repaying in C$, not US Dollars as related in the foregoing news article about Argentina. This means no foreign currency risks for repayment, and no foreign oversight on sovereignty.

The CU is designed to do the heavy-lifting of organizing Caribbean society to benefit from the lessons from sovereign, municipal and personal debt crises from other communities. The Go Lean book details the community ethos to adopt, plus the executions of the following strategies, tactics, implementations and advocacies to impact the economic turn-around of Caribbean communities:

Community Ethos – Economic Principles – Economic Systems Influence Individual Choices	Page 21
Community Ethos – Economic Principles – Voluntary Trade Creates Wealth	Page 21
Community Ethos – Economic Principles – Consequences of Choices Lie in the Future	Page 21
Community Ethos – Economic Principles – Money Multiplier	Page 23
Community Ethos – Governing Principles – Lean Operations	Page 24
Community Ethos – Governing Principles – Return on Investments	Page 24
Community Ethos – Ways to Impact the Future – Count on the Greedy to be Greedy	Page 26
Community Ethos – Ways to Impact the Greater Good	Page 37
Strategy – Mission – Fortify the Stability of the Securities Markets	Page 45
Strategy – Provide Proper Oversight and Support for the Depository Institutions	Page 46
Tactical – Growing the Economy – Minimizing Bubbles	Page 69
Tactical – Separation-of-Powers – Depository Insurance & Regulatory Agency	Page 73
Implementation – Assemble Caribbean Central Bank as a Cooperative	Page 96
Implementation – Ways to Better Manage Debt – Optimizing Wall Street Role	Page 114
Implementation – Ways to Foster International Aid – Technical Assistance	Page 115
Planning – 10 Big Ideas – Single Market / Currency Union	Page 127
Planning – Lessons Learned from 2008	Page 136
Planning – Lessons Learned from New York City – Wall Street	Page 137
Planning – Lessons Learned from Detroit	Page 140
Planning – Ways to Measure Progress – Allow strategy of Plan, Do & Review	Page 147
Anecdote – Caribbean Currencies	Page 149
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Create Jobs	Page 152
Advocacy – Ways to Control Inflation	Page 153
Advocacy – Ways to Better Manage Foreign Exchange (fx) – Strong regional currency	Page 154
Advocacy – Reforms for Banking Regulations	Page 199
Advocacy – Ways to Impact Wall Street	Page 200
Advocacy – Ways to Impact Main Street	Page 201
Appendix GA – Caribbean Member-States Credit Ratings – December 2012	Page 274
Appendix – Tool-kits for Capital Controls	Page 315
Appendix – Lessons Learned from Floating the Trinidad & Tobago Dollar	Page 316
Appendix – Controlling Inflation – Technical Details	Page 318

The Go Lean roadmap posits that change is coming to the Caribbean so that we can divorce ourselves from the dependence of Vulture Capitalists; see sample Vulture Capitalist in this commentary. Many Go Lean blog-commentaries have reported that change is now afoot to reboot public finances. Though Argentina is out-of-scope for the Go Lean roadmap, we can observe-and-report on the progress and regression of that country and other Latin America’s economies.

The Go Lean book declares: “A crisis is a terrible thing to waste” – quoting noted Economist Paul Romer. The opportunity exists now to forge change in the economic, security and governing engines of the Caribbean. The region’s economic engines can be better optimized with the Single Market integration of the 42 million people in the 30 member-states; together we can do much more – and effect more turn-around – than anyone member-state can accomplish alone.

The roadmap calls for a confederation of the 30 Caribbean member-states; thereby creating the larger Single Market that can absorb economic shocks and downward trends. The Go Lean book provides the details of this vision; in fact the following pronouncements are embedded in the opening Declaration of Interdependence (Page 13 & 14):

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.

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, [and] Egypt …

According to the foregoing news article, Argentina is trying to recover from faulty decisions regarding debt repayment. They are attempting to turn the corner and turn-around to a better community ethos: other people’s money is important to them and needs to be repaid. Other communities have successfully applied a turn-around strategy, consider Iceland.

The Caribbean must also reboot and “bounce back”; to “step back from the precipice”. The effort is not easy; the Go Lean book describes it as heavy-lifting. We need to burn-off old debris and build new eco-systems. The returns – new Caribbean structures – will be worth the investment and sacrifice. This is true for Detroit … and the Caribbean.

The quest of the Go Lean roadmap is to elevate Caribbean society and economic engines from the parasite role we currently assume, where we were dependent on Vulture Capitalists (Wall Street Hedge Funds) for funding, to a new world where we garner funding from our own regional sources: the people and institutions of the Caribbean. We want to be a protégé of Wall Street, not a parasite! We want to master the credit rating metrics so that our member-states are considered safe investments, not prone to default. Despite the previous realities of credit unworthiness, the roadmap seeks to optimize the regional economics with advanced empowerments, “Economics 901”. Yes, we can!

All the stakeholders in the Caribbean – people, governments and institutions – are urged to lean-in to this Go Lean roadmap for the CU and the C$. We have so many lessons to learn from this case study from Argentina – past, present and future. We mostly learn that concept of a successful “Turnaround” is conceivable, believable and achievable. 🙂

Download the book Go Lean … Caribbean – now!

Share this post:

Debt, Detroit, Model, Power

[Top]

Detroit giving schools their ‘Worst Shot’

Posted on January 22, 2016 in Economics, Strategy, Tactical

Go Lean Commentary

Want to give it ‘your best shot’ …

… then we strongly caution – anyone and everyone – against the practice of taking on debt. Many bad things happen when people depend on debt. A “slippery slope” can ensue … from dependence, to reliance, to requirement, to vital, … to debt slavery. The further one stays away from debt, the better.

Even the Bible admonishes:

“Let no debt remain outstanding, except the continuing debt to love one another…”. Romans 13:8 New International Version

The Fist – Detroit’s Tribute to Boxing Legend Joe Louis

The problem with debt is that it trades the future for the past! It gives the ‘worst shot’, not the ‘best shot’. To continue the boxing analogy, debt burdens the boxer down with additional pounds and pressure; bad formula for success.

This is truly the experience in Detroit today. The City’s well-documented Failed-City status (and Bankruptcy) not only impacts its past, but apparently also it’s future – as in the education of its children. The schools in Detroit are below standard, below quality and below acceptability. This applies to their physical structure, budgets, teacher appreciation, student experience and student preparation.

Why?

Detroit, both the “City” and “School District” had been too indebted, so that the first priority of all revenues/funding has to go to debt servicing. This means other vital functioanlities (physical structure, teachers and students) must be de-prioritized or many times outright ignored.

The relevant stakeholders for Detroit Public Schools are truly giving the ‘worst shot’, not the ‘best shot’.

(For Detroit, the municipal City and the School District are separate legal entities. While the City of Detroit filed for Bankruptcy protection and re-organization in 2013, the School District has not).

This dire disposition is not exclusive to Detroit. Unfortunately, this applies to many other communities around the world (think Greece); and even in the Caribbean.

See the news article here conveying the harsh realities that many in the Detroit Public Schools are now faced with:

Title: Detroit school system wants judge to end teacher sickouts

An attorney for the Detroit Public Schools has asked a judge to issue a restraining order and preliminary injunction to force teachers to stop sickouts and return to work, according to court documents filed Wednesday.

The motion names the Detroit Federation of Teachers, interim teachers union president Ivy Bailey and 23 Detroit Public Schools teachers.

“DPS has requested the court’s intervention in addressing the ongoing teacher sickouts that are plaguing the district,” Michelle Zdrodowski, the spokeswoman for the Detroit Public Schools said in a statement.

The teachers union responded to the filing, noting “Detroit deserves better.”

“It is regrettable that the Detroit Public Schools seeks to punish those who speak out about the deplorable conditions in our schools,” Bailey said. “It would be so much more productive to actually do something to fix Detroit schools rather than file restraining orders against those who expose the miserable conditions.”

Nearly all Detroit’s public schools were closed Wednesday as many protesting teachers called in sick, turning what was supposed to be a day to celebrate into one shining a harsh spotlight on one of Michigan’s struggling cities.

President Barack Obama was in Detroit for the North American International Auto Show. He praised the American automotive industry’s resurgence, which many people view as a major victory for Detroit.

But those inside the city tell a sharply different story, one illustrated in leaflets showing pictures of dead rats found at public schools, mildew taking over ceilings and walls and damage to school buildings.

Detroit teachers have pressed their case against what they call deplorable conditions and inadequate funding. They’ve also decried decisions made by the school system’s emergency manager, who was appointed by Republican Gov. Rick Snyder — criticism that echoes complaints in Flint, a Michigan city mired in a water crisis after state officials largely took over because of budget troubles, just as they did in Detroit.

Detroit teachers have backed up their words with mass sickouts, starting January 11, when 62 schools closed as a result.

Bailey estimated the doors of “over 30 schools” ultimately would be affected.

Zdrodowski said there would be no class Wednesday in 88 schools, about 90% of those in the system.

But as of Wednesday night, the Detroit Public Schools’ Facebook page indicated all schools will be open Thursday. The announcement included a request for students and parents to check the page again for updates.

The speaker of the House in Michigan called for absentee teachers to be dismissed.

“These teachers deserve to be fired for turning their backs on the children in their care,” said Kevin Cotter, a Republican from Mount Pleasant. “Their actions also go against any possible resolution on potential (Detroit Public Schools) reforms, because any long-term agreement on Detroit schools has to put the kids first.”

Cotter said more than 700,000 instructional hours have been lost.

Budgets leave children by wayside in 2 Michigan cities

Obama meets with Detroit’s mayor

The timing — on the day of Obama’s visit to the Detroit auto show, with the national media attention that it brought — was no coincidence.

The Detroit Federation of Teachers indicated as much on its website, saying now is the time to “fight for Detroit kids (who) are struggling in schools with hazardous environmental and safety issues (and) educators have made significant sacrifices for the good of students.”

“As the city celebrates this ‘ultra-luxury’ automobile event,” the teachers union said, “Detroit’s public schools are in a state of crisis.”

Protesters planned to hand out fliers to car show attendees and urge them to sign a petition — which had over 11,000 signatures as of Wednesday morning — entitled “Our Kids Deserve Better.”

“Enough is enough!” the petition states. “… We demand real answers and fully funded schools.”

Obama had lunch with Detroit Mayor Mike Duggan. Before the meeting the White House said they would likely discuss the mass school closures as well as larger funding problems plaguing the city.

Duggan has “met with several teachers and understands what they’re going through,” his spokesman John Roach told CNN. But he doesn’t think that calling in sick is the right approach.

“(The mayor feels) the best thing for them to do is go back to school and teach,” Roach said.

Governor: ‘Time to act is now’

This isn’t just Detroit’s problem. It’s one for all of Michigan, which took control over much of the city’s government due to its well-documented financial woes.

One man who has been a frequent target of critics is Darnell Earley, appointed by Snyder a year ago to oversee Detroit Public Schools.

Michigan Senate Democrats took a swipe at him in a tweet: “Crumbling #DPS schools are a direct result of damage that can be done by unelected emergency managers.”

Bailey, the teachers union chief, piled on, saying, “If the goal was to destroy DPS, emergency management has done an excellent job.”

Before going to Detroit, Earley served as the emergency manager in Flint. He was in that position in April 2014 when Flint’s water supply switched from Lake Huron to the Flint River, a decision reversed more than a year later after reports of corroded pipes and elevated blood lead levels.

How tap water became toxic in Flint

Earley has said he was not responsible for the decision, only for implementing it after it was approved. Whoever was to blame, Flint still faces a serious health crisis and the costly, complicated task of cleaning up its water and possibly replacing damaged water pipes across the city.

Another person Detroit and Flint have in common is Snyder, the governor who sent Earley to both cities and who is officially in charge.

In his State of the State address Tuesday night, the governor called for money spent on debt service, close to $1,200 per student, to be shifted into classroom funding to give teachers what they need to do their jobs.

“(The) time to act is now,” he told lawmakers. “The Detroit schools are in need of a transformational change.

“The state needs to ensure that a complete failure to educate schoolchildren never again happens to this extent in one of Michigan’s districts.”

Governor’s outlook for school reforms

‘Teachers are fed up and have had enough’

A proposal introduced last week in the state Legislature would appear to find a way of doing that while handling the school system’s massive $515 million debt.

It would create a second school district within the city that assumes control over all of its schools and students, while leaving the current Detroit Public Schools system with only the district’s debt, said Republican state Sen. Goeff Hansen, author of the proposal.

“It’s a high priority. It’s an emergency situation,” Hansen said.

About $7,400 of school funding is allocated per student each year. But close to $1,200 of that goes to pay down debt and other costs, Hansen said.

Under the proposal, tax revenue would continue to pay off the debt isolated in the DPS system, but the state would gain room to inject additional funding into the new school system.

It has left many teachers worried that Detroit Public Schools will go out of existence, said Bailey, the teachers union leader. Under the current system, funding could run out by April.

Teachers feel pushed over the edge to protest against a litany of resulting troubles. There have been recent concessions. The school district agreed to demands on staff meetings, sick leave accrual and a labor-management committee on curriculum, the teachers union said.

And last week, Duggan ordered inspections of all the city’s public schools.

Duggan hopes to have the first 20 school buildings fully inspected by month’s end and all of them wrapped up in about three months, according to Roach, his spokesman.

Yet Bailey says a lot more still needs to be done.

“It’s because of the lack of respect that has been displayed toward teachers in this district, the hazardous working conditions, oversize classes, lost preparation periods, decrease in pay, increase in health care cost, uncertainty of their future,” she said.

“I could go on and on. Teachers are fed up and have had enough.”

Detroit teachers demand fix to ‘hazardous’ school

CNN’s Jean Casaraz, John Newsome, Dominique Debucquoy-Dodley, Phil Gast, Steve Almasy, Mallory Simon and Eliott C. McLaughlin contributed to this report.
Source: CNN – (Cable News Network); posted January 20, 2016 retrieved January 21, 2016 from: http://www.cnn.com/2016/01/20/us/detroit-public-schools-michigan-governor/index.html

———

Complimentary Story/VIDEO – Detroit’s Teachers Are Tired Of Their Schools – https://youtu.be/H-h0Db3P4ic

Published on Jan 20, 2016 – Teachers in Detroit have been protesting about their working conditions by taking to the internet. After a mass “sick out,” they’re now going on social media to share the daily difficulties they and their students face in schools.

The petition for Judicial action was denied.

Good! Do not just “swipe these issues under the rug”. Deal with them!

A “crisis is a terrible thing to waste”. Detroit needs to use this crisis to re-boot its school eco-system.

First, the School District – see Appendix – needs to petition for its own Chapter 9 Bankruptcy. There is the need to write-off much of that previous debt; “pay pennies on the dollar”. That debt – from the past – is shortchanging the future for Detroit’s children. And since the City is smaller today, population-wise compared to decades ago, many more schools can be closed – sold to creditors – and consolidated to a smaller number (from the 97 today).

Jesus answered … you are anxious and troubled about many things, but only few things are needed… prepare the good part, and it will not be taken away. – Bible Luke 10:41-42 World English Bible paraphrase.

This strong prescription for Detroit Public Schools is a lesson learned from another crisis, the Great Recession of 2008. The events of September 15, 2008 parallel Detroit Public Schools today; this is when the American Investment Bank Lehman Brothers filed for bankruptcy. This action brought the US (and the world’s economy) to the brink of disaster. The ultimate solution for Lehman in 2008 was dissolution and a wind-down of those assets and excessive debt.

Death can sometimes bring peace!

The economy eventually re-bounded. The old debts are only in the past, no future considerations.

This 2008 consideration is part-and-parcel of the book Go Lean…Caribbean which serves as a roadmap for the introduction of the technocratic Caribbean Union Trade Federation (CU) to provide new oversight for the Caribbean region’s economic, security and governing engines. The book was conceived as a result of this 2008 crisis, by stakeholders intimate with the anatomy of the 2008 crisis – worked for Lehman Brothers – and composed a prescription for Caribbean turn-around.

The pretext of the Go Lean roadmap is simple, and applies equally to the Caribbean, and any other community:

Only at the precipice do they change!

The lessons learned, and codified, in the pages of the Go Lean book can now be enhanced with the examination of the realities of Detroit’s Public Schools. This examination considers the reality of the economic, security and governing aspects of this distressed community.

The publishers of the Go Lean book are here in Detroit to “observe and report” the turn-around and rebirth of the once-great-but-now-distressed City of Detroit and its metropolitan areas, including the even more dysfunctional community of Flint. There are so many lessons to learn from Michigan: good, bad and ugly.

Lessons learned from Michigan communities have been frequently conveyed in previous blogs/commentaries. Consider this sample here:

https://goleancaribbean.com/blog/?p=7235	Flint, Michigan – A Cautionary Tale
https://goleancaribbean.com/blog/?p=6609	Before and After Photos Showing Detroit’s Riverfront Transformation
https://goleancaribbean.com/blog/?p=6269	Education & Economics: Welcome to Detroit, Mr. President
https://goleancaribbean.com/blog/?p=6022	Caribbean Diaspora in Detroit … Celebrating Heritage
https://goleancaribbean.com/blog/?p=5597	The Dire Straits of the Unions and Collective Bargaining
https://goleancaribbean.com/blog/?p=5055	A Lesson from an Empowering Family in Detroit
https://goleancaribbean.com/blog/?p=4913	Ann Arbor: Model for ‘Start-up’ Cities
https://goleancaribbean.com/blog/?p=4476	De-icing Detroit’s Winter Roads: Impetuous & Short Term
https://goleancaribbean.com/blog/?p=3713	NEXUS: Facilitating Detroit-Windsor Cross-Border Commerce
https://goleancaribbean.com/blog/?p=3326	M-1 Rail: Alternative Motion in the Motor City
https://goleancaribbean.com/blog/?p=3311	Detroit to exit historic bankruptcy
https://goleancaribbean.com/blog/?p=3164	Michigan Unemployment – Then and Now
https://goleancaribbean.com/blog/?p=2480	A Lesson in History: Community Ethos of WW II
https://goleancaribbean.com/blog/?p=1656	Blue is the New Green – Managing Detroit’s Water Resources
https://goleancaribbean.com/blog/?p=970	JP Morgan Chase $100 million Detroit investment not just for Press

The CU is designed to do the heavy-lifting of organizing Caribbean society to benefit from the lessons from Detroit and other Michigan communities. The Go Lean book details the community ethos to adopt, plus the executions of the following strategies, tactics, implementations and advocacies to impact the rebirths, reboots and turn-around of Caribbean communities:

Community Ethos – Deferred Gratification	Page 21
Community Ethos – People Respond to Incentives	Page 21
Community Ethos – “Crap” Happens	Page 23
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 Help Entrepreneurship	Page 28
Community Ethos – Ways to Impact a Turn-Around	Page 33
Community Ethos – Impact the Greater Good	Page 37
Strategy – Vision – Integrate a Single Market for more Financial Leverage	Page 45
Tactical – Fostering a Technocracy	Page 64
Tactical – Modeling Post WW II Recovery: Germany – Marshall Plan	Page 68
Tactical – Modeling Post WW II Recovery: Japan – with no Marshall Plan	Page 69
Separation of Powers – Public Works & Infrastructure	Page 82
Separation of Powers – Housing and Urban Authority	Page 83
Implementation – Ways to Pay for Change	Page 101
Implementation – Ways to Re-boot Freeport – A Sample Caribbean city needing turn-around	Page 112
Implementation – Ways to Better Manage Debt	Page 114
Planning – Ways to Improve Failed-State Indices	Page 132
Planning – Lessons Learned from 2008	Page 136
Planning – Lessons Learned from Detroit	Page 140
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Improve Education	Page 159
Advocacy – Ways to Improve Local Government	Page 169
Advocacy – Ways to Better Manage the Social Contract	Page 170
Advocacy – Ways to Impact Urban Living	Page 234
Advocacy – Ways to Re-boot Cuba	Page 236
Advocacy – Ways to Re-boot Haiti	Page 238
Appendix – American Student Debt Crisis “Ripping Off Young America”	Page 286

The Go Lean roadmap posits that change is coming to Detroit, (many Go Lean blog-commentaries have even reported on the change that is now afoot) and also that changes need to come to the Caribbean. Though Detroit is out-of-scope for the Go Lean movement, we can observe-and-report; we can apply the lessons – the good, bad and ugly – for optimization in our Caribbean homeland under the scheme of a Single Market. With the integration of 42 million people in the 30 member-states we will be able to do so much more – effect more turn-around – than anyone member-state can accomplish alone.

The roadmap calls for a confederation of the 30 member-states of the Caribbean into a Single Market of 42 million people; thereby allow an adequate size to absorb economic shocks and downward trends. The Go Lean roadmap provides the details for the creation of 2.2 million new jobs and GDP growth to accumulate to $800 Billion. This vision is at the root of the Go Lean roadmap, embedded in the opening Declaration of Interdependence (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.

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 … Detroit …

Detroit Public Schools should recover…eventually! Their status will go from “bad-to-clean-to-better” but then they would have a reboot, much like many communities around the country and around the world – consider Iceland. This is an established best-practice; paralleling a forest fire in many ways; except these are human lives being impacted, not trees.

The Caribbean also has Failed-State issues to contend with. There are real-and-perceived Failed-States now (Haiti, Cuba, Dominican Republic, Jamaica and Puerto Rico) and many more that are almost there, so we have to master the art-and-science of turn-around strategies for our region.

The Go Lean roadmap declares that the responsibility for fixing the Caribbean though must fall first-and-foremost on the Caribbean, its people and institutions.

The Caribbean must also reboot and “bounce back”; to “step back from the precipice”. The effort is not easy; the Go Lean book describes it as heavy-lifting. We need to burn-off old debris and build new eco-systems. The returns – new Caribbean structures – will be worth the investments and sacrifices. This is true for Detroit … and the Caribbean.

This is the goal of the Go Lean roadmap: set aside the past, catalog the lessons, then forge the future. This is the only way to make the Caribbean a better place to live, work and play. 🙂

Download the book Go Lean … Caribbean – now!

———-

Appendix – Detroit School District

Detroit Public Schools (DPS) is a school district that covers all of the city of Detroit, Michigan, United States and high school students in the insular city of Highland Park. The district has its headquarters in the Fisher Building of the New Center area of Detroit.^[6][7]

Students	47,959 (2014–15)
Teachers	3,235 (2012-13)
Staff	15,535 (2007)^[3]

Besides DPS, the Education Achievement Authority (EAA) operates 15 of the district’s schools totalling 6,556 students as of the 2014-15 school year.

Emergency Financial Manager

The district is currently under a state of a financial emergency and is currently run by an emergency manager instead of the school board and superintendent.

Currently all matters are under the control of Emergency Manager Darnell Earley was appointed as the new emergency manager for the school district by Snyder, appointed by Governor Rick Snyder in January 2013.^[4]

From 2009–2011, DPS finances were managed by Robert Bobb who was appointed by former Governor Jennifer Granholm^[33] and from 2011 to January 2015, Roy Roberts who was appointed by Governor Snyder.

Source: https://en.wikipedia.org/wiki/Detroit_Public_Schools retrieved January 22, 2016.

Share this post:

2008, Debt, Detroit, Disaster, Model, Power, Transform

[Top]

Flint, Michigan – A Cautionary Tale

Posted on January 19, 2016 in Government, Tactical

Go Lean Commentary

In a previous commentary ranking American State governing engines, the overall scores were listed from Good-to-Bad-to-Worse-to-Detroit (Michigan). The State of Michigan, in which Detroit is its principal city and economic center, was ranked “dead last” among the 50 states. This was not an assessment of city governments but rather of state governments. But is it fair to label the entire State of Michigan based on the dysfunction of just the one city of Detroit?

Enter Exhibit 2: Flint, Michigan.

Encyclopedic Reference: Flint, Michigan
Source: https://en.wikipedia.org/wiki/Flint,_Michigan

Flint is the seventh largest city in Michigan, while its Genesee County comprises the entirety of Flint’s metropolitan area and constitutes the fourth largest metropolitan area in Michigan with a population of 425,790 in 2010.^[11]. Located along the Flint River, 66 miles (106 km) northwest of Detroit.

The community was founded as a village by fur traders in the early 1800’s and became a major lumbering area on the historic Saginaw Trail during the 19th century; it incorporated as a city in 1855. It later became a leading manufacturer of carriages and other vehicles earning it the nickname “Vehicle City”.

In 1908, William Crapo Durant formed General Motors in Flint. After World War II, Flint became an automobile manufacturing powerhouse for GM’s Buick and Chevrolet divisions, both of which were founded in Flint. However, by the late 1980s the city sank into a deep economic depression after GM closed and demolished several factories in the area, the effects of which remain today.

In the mid-2000s, it became known for its high crime rates.^[12] Since this time, Flint has been ranked among the “Most Dangerous Cities in the United States”, with a per capita violent crime rate seven times higher than the national average.^[13] The city was under a state of financial emergency from 2011 to 2015, the second in a decade.^[14][15] It is currently in a public health state of emergency due to lead poisoning (and possibly Legionella) in the local water supply. ^[16]

On November 3, 2015, Flint residents elected Dr. Karen Weaver as their first female mayor.^[17]

[This move is on the heels of the exit of the last State-appointed Emergency Manager].

Flint serves as a “cautionary tale” for other communities near “Failed City/Failed State” status. From this perspective, this community may be a valuable asset to the rest of the world and especially to the Caribbean.

The publishers of the book Go Lean…Caribbean are here in Detroit to “observe and report” the turn-around and rebirth of the once-great-but-now-distressed City of Detroit and its metropolitan areas, including Flint. (Previous commentaries featured the positive role model of the City of Ann Arbor).

What happened here?

According to the Timeline in the Appendix, Flint, MI suffered this fate as a chain reaction to its Failed-State status. Outside stakeholders – Emergency Managers – came into the equation to execute a recovery plan with focus only on the Bottom-Line. The consideration for people – the Greater Good – came second, if at all. They switched water sources, unwisely!

The assertion of the Go Lean book is that the Caribbean region can benefit from lessons learned from Good, Bad and Ugly governance. The book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). The Go Lean book and related commentaries call on citizens of the Caribbean member-states to lean-in to the empowerments described in the roadmap for elevation. This will require a constant vigil to ensure the Greater Good as opposed to personal gains.

The City of Flint is desperately in need of governing “best practice”. The Financial Emergency Status that just ended, 2011 to April 2015, was the 2^nd one in a decade; (the first was from 2002 to 2005). Every time the city is penalized with the advent of a state-appointed Emergency Manager (EM), they lose out on a local stakeholder pursuing the city’s best-interest, rather the EM’s serve as a Receiver (without the formal Bankruptcy proceedings, which is a Federal not State action).

This is highlighted by the current Health Emergency due to the City’s switch of their water source to the Flint River – a contaminated source – and now endangering the health and wellness of many of its citizens; with the most damaging effects being on young children. That decision was made by the Emergency Manager to save money, as opposed to the community’s best interest. There is no checks-and-balances on the EM, other than the appointing Governor (and courts), as the EM has both Executive (Mayor) and legislative authority (City Council).

Absolute power …

… see example here:

Michigan Governor Rick Snyder appointed Michael Brown as the city’s Emergency Manager on November 29, effective December 1.^[37] On December 2, Brown dismissed a number of top administrators including City Administrator Gregory Eason, Human Resources Director Donna Poplar, Citizen Services Director Rhoda Woods, Green City Coordinator Steve Montle and independent officials including Ombudswoman Brenda Purifoy and Civil Service Commission Director Ed Parker. Pay and benefits from Flint’s elected officials were automatically removed.^[38] On December 8, the office of Obudsman and the Civil Service Commission were eliminated by Brown.^[36] Brown resigned in September 2013 and was replaced by Darnell Earley, who served in that post until January 2015 – Retrieved January 18, 2016 from: https://en.wikipedia.org/wiki/Flint,_Michigan#First_financial_emergency:_2002.E2.80.932004

Now, the report is that this one EM role-player has effectively sacrificed the children of Flint on the altar of financial expedience. This is a bad example of absolute power exhibited abusively. See details here:

In April 2014, Flint switched its water supply from Lake Huron (via Detroit) to the Flint River. ^[51] After two independent studies, lead poisoning caused by the water was found in the area’s population. ^[52][53] This has lead to a federal lawsuit, the resignation of several officials, and a public health state of emergency for all of Genesee County. ^[54][55][56]

See VIDEO here of the story in the national media and the Timeline in the Appendix below.

VIDEO – Citizens’ Anger Continues Over Toxic Water in Flint, Michigan – http://abcnews.go.com/WNT/video/citizens-anger-continues-toxic-water-flint-michigan-36348795 –

Surprise, surprise! Most city officials involved in this debacle had been dismissed or resigned. And there is national outcry for Governor Rick Snyder to resign. (At one point his stock in national politics was so highly rated that he was considered viable for the Vice-Presidency for the eventual 2016 Republican nominee for President).

This tragic story – cautionary tale of Flint – is an analysis of failure in the societal engines of economics, security and governance. These 3 facets are presented in the book Go Lean … Caribbean as the three-fold cord for societal harmony; for any society anywhere. The Caribbean wants societal harmony; we must therefore work to optimize all these three engines. As exhibited by Flint, this is easier said than done. This heavy-lifting is described in the book as both an art and a science.

The focus in this commentary is a continuation in the study of the societal engine of governance; previously, there was a series on economics and one on security. This commentary though, focuses on the bad eventually of Social Contract failures. The Social Contract refers to the unspoken expectations between citizens and the State. In many cases, State laws limit ownership of all mineral rights to the State; so citizens will be dependent on State systems to supply water. In the case of Flint, the City’s Water and Sewage Department has a monopoly; this supply is the only option for residents!

The Go Lean book describes “bad actors” wreaking havoc on the peace and security of the community. The book relates though that “bad actors” are not always human; they include bad events like natural disasters and industrial spills. Plus, actual “bad actors” may have started out with altruistic motives, good intentions. This is why the book and accompanying blogs design the organization structures for the new Caribbean with checks-and-balances, mandating a collaborative process, because sometimes even a well-intentioned individual may not have all the insight, hindsight and foresight necessary to pursue the Greater Good. This the defect of the Michigan Emergency Manager structure; it assigns too much power to just one person, bypassing the benefits of a collaborative process. This is one reason why this review is important: power corrupts…everyone … everywhere.

The Go Lean book asserts that Caribbean people deserve the best-of-the-best for governmental processes, and that Caribbean society – the 30 member-states – can be elevated with the prudent application of these best-practices for economics, security and governance. The roadmap features these 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 – with oversight over economic crimes – to protect the resultant economic engines.
Improvement of Caribbean governance to support these engines, including ranking and ratings of Social Contract effectiveness.

The City of Flint, Michigan is a cautionary tale for the Caribbean. We can glean lessons from their dysfunction and apply mitigations in our Caribbean effort, the CU/Go Lean roadmap. This point was strongly urged in the Go Lean book, in the opening Declaration of Interdependence (Pages 10 & 12) with these pronouncements:

Preamble: And while our rights to exercise good governance and promote a more perfect society are the natural assumptions among the powers of the earth, no one other than ourselves can be held accountable for our failure to succeed if we do not try to promote the opportunities that a democratic society fosters … and so we must put aside the shackles of systems of repression to instead formulate efficient and effective systems to steer our own destiny.

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.

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 … Detroit …

The Go Lean book details all the community ethos to ensure the right attitudes and practices among the government stakeholders and leaders of the community. Plus the book identifies the strategies, tactics, implementations and advocacies to promote collaboration in the governing process:

Economic Principle – Economic Systems Influence Individual Choices	Page 21
Economic Principle – Consequences of Choices Lie in Future	Page 21
Community Ethos – Security Principle – Privacy –vs- Public Protection	Page 23
Community Ethos – Security Principle – Whistleblower Protection	Page 23
Community Ethos – Security Principle – Witness Security & Protection	Page 23
Community Ethos – Security Principle – Anti-Bullying and Mitigation	Page 23
Community Ethos – Security Principle – Intelligence Gathering	Page 23
Community Ethos – Security Principle – Light Up the Dark Places – Openness	Page 23
Community Ethos – Governing Principle – Minority Equalization	Page 24
Community Ethos – Governing Principle – Cooperatives Among Member-States	Page 25
Community Ethos – Ways to Foster Genius – Interpersonal; Leadership	Page 27
Community Ethos – Ways to Manage Reconciliations	Page 34
Community Ethos – Ways to Improve Sharing	Page 35
Community Ethos – Ways to Impact the Greater Good	Page 37
Tactical – Confederating a Non-Sovereign Union	Page 63
Tactical – Fostering a Technocracy	Page 64
Tactical – Separation of Powers – Justice Department – Jurisdiction for Public Integrity cases.	Page 77
Tactical – Separation of Powers – Federal Courts – Truth and Reconciliation Commissions	Page 90
Implementation – Assemble “Organs” – including Regional Courts and Justice Institutions	Page 96
Implementation – Start-up Security Initiatives	Page 103
Planning – Ways to Make the Caribbean Better	Page 131
Planning – Ways to Improve Failed-State Indices – Accountability of Governing Officials	Page 134
Planning – Lessons from the US Constitution – Checks and Balances	Page 145
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Improve Governance	Page 168
Advocacy – Ways to Better Manage the Social Contract	Page 170
Advocacy – Ways to Improve Leadership	Page 171
Appendix – Lessons Learned in Open/Collaborative Government – Floating the Trinidad Dollar	Page 316

Other subjects related to collaboration, whistle-blowing and public integrity have been blogged in other Go Lean…Caribbean commentary, as sampled here:

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=5506	Whistleblower Edward Snowden – One Person Making a Difference
https://goleancaribbean.com/blog/?p=5304	Mitigating the Eventual ‘Abuse of Power’
https://goleancaribbean.com/blog/?p=5002	Managing a ‘Clear and Present Danger’
https://goleancaribbean.com/blog/?p=2994	Justice Strategy: Special Prosecutors … et al
https://goleancaribbean.com/blog/?p=2818	Dominican Republic, Perception of Corruption
https://goleancaribbean.com/blog/?p=2338	Welcoming the Dreaded ‘Plutocracy’

The goal of the Go Lean roadmap is to make the Caribbean homeland, a better place to live, work and play. Many of the Caribbean member-state governments feature the Westminster-style Parliamentary system with a Prime Minister. These structures lend to the tendency of autocratic leadership, as a Prime Minister leads his party, the Legislature, Executive branch and appoint the judges of the Judiciary. As demonstrated in Flint Michigan, this is not the best practice in leadership, as there are many subject matters that may be outside the core competence of an autocratic leader.

We must do better, than Flint! (Flint must do better; too many lives are involved).

We know that “bad actors and bad incidences” will always occur, even in government institutions, so we must be “on guard” against abusive influences and encroachments to Failed-State status. The Go Lean roadmap calls for engagement and participation from everyone, the people (citizens), institutions and government officials alike. We encouraged all with benevolent motives to lean-in to this roadmap, to get involved to effect a turnaround for the Caribbean Failed-States.

Our Caribbean stakeholders deserve the best … from their leaders. 🙂

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

———

Appendix – Timeline of the Water Crisis in Flint, Michigan
By: Associated Press – Jan 16, 2016, 3:18 PM ET

A look at some of the key events in the development of the Flint water crisis:

———

APRIL 2014: In an effort to save money, Flint begins drawing its water from the Flint River instead of relying on water from Detroit. The move is considered temporary while the city waits to connect to a new regional water system. Residents immediately complain about the smell, taste and appearance of the water. They also raise health concerns, reporting rashes, hair loss and other problems.

SUMMER 2014: Three boil-water advisories are issued in 22 days after positive tests for coliform bacteria.

OCTOBER 2014: A General Motors engine plant stops using Flint water, saying it rusts parts.

JANUARY 2015: Flint seeks an evaluation of its efforts to improve the water amid concerns that it contains potentially harmful levels of a disinfection byproduct. Detroit offers to reconnect Flint to its water system. Flint insists its water is safe.

JAN. 28: Flint residents snap up 200 cases of bottled water in 30 minutes in a giveaway program. More giveaways will follow in ensuing months.

FEB. 3: State officials pledge $2 million for Flint’s troubled water system.

FEBRUARY: A 40-member advisory committee is formed to address concerns over Flint’s water. Mayor Dayne Walling says the committee will ensure the community is involved in the issue.

MARCH 19: Flint promises to spend $2.24 million on immediate improvements to its water supply.

MARCH 27: Flint officials say the quality of its water has improved and that testing finds the water meets all state and federal standards for safety.

SEPT. 24: A group of doctors led by Dr. Mona Hanna-Attisha of HurleyMedicalCenter urges Flint to stop using the Flint River for water after finding high levels of lead in the blood of children. State regulators insist the water is safe.

SEPT. 29: Gov. Rick Snyder pledges to take action in response to the lead levels. It’s the first acknowledgment by the state that lead is a problem.

OCT. 2: Snyder announces that the state will spend $1 million to buy water filters and test water in Flint public schools.

OCT. 8: Snyder calls for Flint to go back to using water from Detroit’s system again.

OCT. 15: The Michigan Legislature and Snyder approve nearly $9.4 million in aid to Flint, including $6 million to help switch its drinking water back to Detroit. The legislation also includes money for water filters, inspections and lab testing.

NOV. 3: Voters elect newcomer Karen Weaver over incumbent Mayor Dayne Walling amid fallout over the drinking water.

DEC. 29: Snyder accepts the resignation of Department of Environmental Quality Director Dan Wyant and apologizes for what occurred in Flint.

JAN. 5: Snyder declares a state of emergency in Flint, the same day federal officials confirm that they are investigating.

JAN. 12: Snyder activates the Michigan National Guard to help distribute bottled water and filters in Flint and asks the federal government for help.

JAN. 13: Michigan health officials report an increase in Legionnaires’ disease cases during periods over the past two years in the county that includes Flint.

JAN. 14: Snyder asks the Obama administration for major disaster declaration and more federal aid.

JAN. 16: President Barack Obama signs emergency declaration and orders federal aid for Flint, authorizing the Federal Emergency Management Agency and the Department of Homeland Security to coordinate relief efforts.

Source: http://abcnews.go.com/Health/wireStory/timeline-water-crisis-flint-michigan-36331514; retrieved Jan 18, 2016

Share this post:

Debt, Detroit, Disaster, Model, Power

[Top]

Greece: From Bad to Worse

Posted on July 7, 2015 in Economics, Government, Implementation

Go Lean Commentary

Here a prediction for Greece: Things will get worse before they get worse!

This commentary has previously asserted that there are 3 kinds of people in the world:

1. Those who make things happen
2. Those who watch things happen
3. Those who wonder “What happened?”

Many people are now waking up to the harsh realities that a Failed-State – Greece – is emerging, right in front of their eyes. Unfortunately, this applies to people in the Caribbean as well.

On Sunday (July 5, 2015), a referendum was put to the Greek people to vote whether to accept further bail-out monies with harsh austerity measures from the international community … or go at it alone. They chose the latter!

Now they are waking up to the reality that the “cupboards are bare”; and many international trading partners will not trade with them. Many people are now wondering “What happened?”

See the news article here (and a related VIDEO from just before the referendum) conveying the harsh realities that many in Greece are now faced with:

Title: The economic consequences of Syriza
By: C.R. and S.N. | London And Athens

AFTER the party in Syntagma Square celebrating the landslide victory for the “no” campaign in Sunday’s referendum comes the hangover. They went wild “because we are tired of everything, from all the lies, from paying for the rich, and from years of austerity, especially for young”, as one partying Athenian told us. To be fair, with youth unemployment rates of over 50%, many have had little to celebrate for a long time. Young Greeks support the aggressive stance taken towards the country’s lenders by Syriza and its leader, the Greek prime minister Alexis Tspiras, whose position in domestic politics has been strengthened as a result of the referendum.

But two days after the close of the polls the fact remains that Greece’s real economy is in a mess. Capital controls imposed after Mr Tsipras called the referendum on June 26th have kept banks closed. Ordinary Greeks have been limited to cash withdrawals from ATMs of just €60 ($67) a day (which is now in effect down to €50 as smaller notes have disappeared from circulation). Many cash machines in Athens have run completely out of money.

Firms have also been hit particularly hard. Foreign bank transfers have been banned by the Greek government, with few exceptions. Greek credit is no longer accepted outside the country. That has hit firms that rely on foreign credit to import goods, as well as the Greek tourists who found themselves stranded when their credit cards stopped working. Supplies of food and some medicines are running short (see picture); a black market for cancer drugs has even emerged. As we reporte d on Sunday:

Greece relies almost entirely on foreign imports for its pharmaceutical supplies. But since capital controls imposed last Sunday brought the country’s banking system to a sudden halt, some suppliers have stopped delivering key medication because they cannot get paid…As things stand, she has another week’s worth of insulin in stock for diabetics but will then have to start turning her patients away. “Do you know what that means?” she asks, trying to keep a proud face, “Do you know what insulin does?”

Unsurprisingly, as a result, Greek economic growth—which began to falter shortly after Syriza came to power in January—has collapsed. Consumption has slumped by 70% since capital controls were imposed, according to the National Confederation of Hellenic Commerce, a business group. Individuals and firms are hoarding cash at the same time that essential goods are becoming unavailable—a toxic mix for any economy. The decision taken yesterday by the European Central Bank—to keep in place the cap on emergency lending to Greek banks, and to increase the discount applied on Greek bonds accepted as collateral—will tighten the short-run financial crunch.

Greece is running short of time; in the next few days either a new deal will be done that allows the ECB to reopen the liquidity spigots or bank failures will lead to Grexit. In either case, the damage done by this period of uncertainty and financial drought will be severe.

Economic history suggests that economies can be surprisingly resilient when hit by shocks, such as the temporary imposition of capital controls or a reduction in the supply capacity of the economy. The Cypriot economy, for instance, started to grow again just one year after it imposed capital controls in 2013. And as Britain’s experience of general strikes indicates, temporary one- or two-week supply disruptions do not tend to have much impact on output after about a year. Leaving a single currency may also not be a complete disaster; countries such as Ireland (which left the British pound in 1928) have managed it before. And many countries ditching fixed-exchange rates—such as Britain in 1931 and 1992—exited long recessions almost immediately after they bit the bullet.

But there are three main reasons why economists think that the Greek economy will be wounded for far longer than other unfortunates. First, current uncertainty is probably damaging future demand as well as current demand; future tourist bookings have fallen by around a third since capital controls were imposed, for instance, which matters greatly given that the sector produces almost one-sixth of the country’s GDP. And with summer bookings so vital, the likely conclusion of the crisis in early July could not have been timed worse. Second, most countries that experience fast recoveries from supply-side shocks and fixed-exchange rate exits are able to count on a solvent and liquid banking system, which is needed in order to fund investment and growth through loans.

But Greece’s, which is about to collapse because of capital controls and deposit flight, is in a less comfortable position. The speedy introduction of new economic reforms post-Grexit, combined with capable macroeconomic management, could nonetheless cushion the Greek economy against the worst effects of exit and lead to a rapid bounceback. Yet few outside Greece reckon that the Syriza government has the inclination or competence to execute the transition smoothly and responsibly. Whatever Greece’s political fate, its economy is bound to get much worse before it gets better.
Source: The Economist Magazine – Online Edition – July 6, 2015
http://www.economist.com/blogs/freeexchange/2015/07/greeces-economy

—————–

VIDEO – Yes or No? Greece Again on the Brink: Greek Debt Crisis – https://youtu.be/reU7wWgFmDU

Published on Jul 3, 2015 – For the past five years, Greece has been struggling with a financial crisis that has led the country to the brink of an exit from the euro and an economic collapse.

Add this word to your vocabulary: Grexit; meaning a Greek Exit from the European Union.

This experience in Greece is a cautionary tale for the Caribbean, as so many aspects of Greek life parallel those of the Caribbean:

The harsh reality of Greece is a reminder of another crisis, the Great Recession of 2008. The events this week – with the referendum – mirrors September 15, 2008 when the American Investment Bank Lehman Brothers filed for bankruptcy, thus bringing the US (and the world’s economy) to the brink of disaster. This 2008 consideration is part-and-parcel of the book Go Lean…Caribbean which serves as a roadmap for the introduction of the technocratic Caribbean Union Trade Federation (CU) to provide new oversight for the Caribbean region’s economic, security and governing engines. The book was conceived as a result of this 2008 crisis, by stakeholders intimate with the anatomy of the 2008 crisis – People who make things happen – and composed from a position of strength, while in the location of one of the most successful communities to endure the Great Recession crisis: Omaha, Nebraska.

The pretext of the Go Lean roadmap is simple, and applies equally to Greece and the Caribbean:

Only at the precipice do they change!

The lessons learned, and codified, in the pages of the Go Lean book can now be enhanced with the examination of the realities of Greece. This examination must consider the reality of the economic, security and governing aspects of Greek society.

This country now has new leadership – the political party Syriza was swept into office on 25 January 2015 – trying to forge change in a dysfunctional environment. Until recently, the Minister of Finance for this sovereign nation was Yanis Varoufakis. (He resigned on July 5^th, after the passage of the Referendum). To project transparency, Mr. Varoufakis presented the arguments in favor of their request for more compromise from the European Central Bank, the IMF, and other creditors demanding more austerity from Greece; he vocalized the following:

Our political mandate is to find an honourable, workable compromise. Is it so difficult to do so? We do not think so. A few days ago Olivier Blanchard, the IMF’s Chief Economist published a piece entitled ‘Greece: A Credible Deal Will Require Difficult Decisions by All Sides.’ He is right, the three operative words being ‘by all sides’. Dr Blanchard added that: “At the core of the negotiations is a simple question. How much of an adjustment has to be made by Greece, how much has to be made by its official creditors?”

That Greece needs to adjust there is no doubt. The question, however, is not how much adjustment Greece needs to make. It is, rather, what kind of adjustment. If by ‘adjustment’ we mean fiscal consolidation, wage and pension cuts, and tax rate increases, it is clear we [Greece] have done more of that than any other country in peacetime.

The public sector’s structural, or cyclically adjusted, fiscal deficit turned into a surplus on the back of a ‘world record beating’ 20% adjustment

Wages fell by 37%

Pensions were reduced by up to 48%

State employment diminished by 30%

Consumer spending was curtailed by 33%

Even the nation’s chronic current account deficit dropped by 16%.

No one can say that Greece has not adjusted to its new, post-2008, circumstances. But what we can say is that gigantic adjustment, whether necessary or not, has produced more problems than it solved:

Aggregate real GDP fell by 27% while nominal GDP continued to fall quarter-in-quarter-out for 18 quarters non-stop to this day

Unemployment skyrocketed to 27%

Undeclared labour reached 34%

Banks are labouring under non-performing loans that exceed 40% in value

Public debt has exceeded 180% of GDP

Young well-qualified people are abandoning Greece in droves

Poverty, hunger and energy deprivation have registered increases usually associated with a state at war

Investment in productive capacity has evaporated.

Source: http://www.businessinsider.com/full-greece-proposal-leaked-by-yanis-varoufakis-2015-6

Mr. Varoufakis’ appeal has been rejected. Greece is now at the precipice. They are willing to change and correct many inequities. But maybe, this is too little, too late? They want to work to build up their communities, not necessarily build up their neighboring countries. They are willing to accept the Grexit.

In this status quo is the primary lesson for the Caribbean. Are we now willing to change and correct the inequities in our society?

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

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

The following details from the book Go Lean … Caribbean are the community ethos, strategies, tactics, implementations and advocacies necessary to effect the turn-around of the Caribbean societal engines – to learn from Greece:

Who We Are – SFE Foundation and 2008 Role	Page 8
Anecdote: Puerto Rico – The Greece of the Caribbean	Page 18
Community Ethos – Economic Systems Influence Individual Choices	Page 21
Community Ethos – Economic Principles – Money Multiplier	Page 21
Community Ethos – Governing Principles – Lean Operations	Page 24
Community Ethos – Ways to Impact the Future	Page 26
Community Ethos – Ways to Impact Turn-Arounds	Page 33
Community Ethos – Ways to Impact the Greater Good	Page 37
Strategy – Vision – Confederate all 30 Member-States into a Single Market	Page 47
Strategy – Mission – Build and foster local economic engines	Page 45
Strategy – Mission – Fortify the stability of our mediums of exchange	Page 45
Strategy – Mission – Dissuade further Brain Drain	Page 46
Tactical – Confederating a Permanent Union	Page 63
Tactical – Fostering a Technocracy	Page 64
Implementation – Assemble all Member-States	Page 96
Implementation – Ways to Pay for Change	Page 101
Implementation – Foreign Policy Initiatives at Start-up	Page 102
Implementation – Ways to Better Manage Debt	Page 114
Planning – Ways to Model the European Union (EU)	Page 130
Planning – Ways to Improve Failed-State Indices	Page 134
Planning – Lessons Learned from 2008	Page 136
Planning – Lessons Learned from Omaha	Page 138
Advocacy – Ways to Grow the Economy	Page 151
Advocacy – Ways to Create Jobs	Page 152
Advocacy – Better Manage the Social Contract	Page 170
Advocacy – Ways to Preserve Caribbean Heritage	Page 218
Advocacy – Ways to Protect Human Rights	Page 218
Advocacy – Ways to Help the Middle Class	Page 223
Advocacy – Ways to Re-boot Cuba	Page 236
Advocacy – Ways to Re-boot Haiti	Page 238
Appendix – Caribbean Failed-State Indicators and Definitions	Page 271

Greece will become a Failed-State before it is all said-and-done. We hope that this country, and their European neighbors, can secure their society to assure peace and the protection of human rights.

Greece will recover…eventually! Their disposition will go from bad to worse – see Appendix VIDEO – but then they can reboot, much like Cyprus did just recently, as detailed in the foregoing news article. Take their tourism for example:

Travel and tourism contributed a total of €28.3 billion ($31.3 billion) to the economy in 2013—or 16.3% of GDP. But after one to two years, after the country returns to local drachma currency and it stabilizes after devaluation, destinations in Greece will be cheaper than its competitors. This will eventually be an advantage. – http://www.economist.com/node/21657058

Greece will be a European Failed-State … and will “bounce-back” … eventually.

We also have Failed-States in the Caribbean: Think: Haiti, Dominican Republic and Cuba; plus a host of countries just slightly behind them. We have to foster our own turn-around strategies for our region.

The Go Lean roadmap declares that the responsibility for fixing the Caribbean though must fall first-and-foremost on the Caribbean, its people and institutions.

The Caribbean must also reboot and “bounce back”; to “step back from the precipice”. The effort is not easy; the Go Lean book describes it as heavy-lifting. But the returns will be worth the investment. This is true for Greece … and the Caribbean.

This is the goal of the Go Lean roadmap: not to wonder what happened, or watch things happen, but rather to make the things happen … that make the Caribbean a better place to live, work and play. 🙂

Download the book Go Lean … Caribbean – now!

—————–

Appendix VIDEO – The Economic Collapse of Greece. Whiteboard Animation by Angelow – https://youtu.be/dt6w4eE_tg0

Published on Mar 17, 2013 – VIDEO on the previous need for Greek bail-outs. Greece is bankrupt!

Share this post:

2008, Debt, Disaster, Image, Jobs, Model

[Top]

Go Lean…Caribbean

Live, work, and play in the Caribbean? Let's make it better…together!

Tag: Debt

Banking on the Bank: IDB

Righting a Wrong: Puerto Rico’s Bankruptcy

ENCORE: For-Profit Education – ‘Another one bites the dust’

Transformations: Money Matters – ‘Getting over’ with ‘free money’

Beware of Vulture Capitalists

News Article: New Argentine govt resumes talks with ‘vulture’ creditors

Related Stories

Reference Title: Vulture Capitalists

Detroit giving schools their ‘Worst Shot’

Flint, Michigan – A Cautionary Tale

Greece: From Bad to Worse