Finance, General T&T, Oil and Gas, People's Partnership, PNM, Politics, Recession

Recession was predictable

124 Comments

By Raffique Shah
December 07, 2015

Raffique ShahThis recession did not creep up on us like the proverbial thief in the night.

It was long in the making. In fact, from as far back as the global financial crisis of 2008-2009, when Clico collapsed and the price of oil plunged from a brief high of US $140 a barrel to $30, informed, patriotic citizens were warning governments to go easy on the wild spending, to set aside more savings in the Heritage and Stabilisation Fund, to wean the population off dependency on subsidies, and most of all to diversify the economy from its over-reliance on oil, gas and petrochemicals.

Those who dared to speak out, who tried to inject sobriety into a society that was immersed in the stupor of oil dollars, were deemed prophets of doom and gloom.

While predicting oil and gas prices is risky business, the advent and rapid development of shale oil and gas in the USA since 2000 was a portent of the changing face of global energy.

Between 2008 and 2012, the USA ceased being our biggest market for gas (LNG). Fortunately for us, other markets in South America, Europe and the Far East still paid well.

But in October 2014, the price of oil plunged from $90 to $45, remained there, and based on Saudi Arabia’s stance at the OPEC meeting in Vienna last week, it may well go lower–$30, $20, who knows?-before it stabilises or rebounds.

In the face of such stark realities and grim prospects, the PP Government increased spending, scraped the bottom of the NGC barrel for every available dollar, sold off some of the family jewels (FCB and PPG-NGL shares), extracted everything it could from the Central Bank, and on top of that borrowed beyond the $70 billion limit, the debt ceiling it had established in 2011.

Note well that this looting of the Treasury and mortgaging of the nation took place when oil prices averaged $90.

The spending spree intensified: laptops for all secondary school students, including the boys and girls who specialise in bullying the fighting.

The GATE programme, which was intended to broaden the base of young academics and professionals who would help build the country, was opened wide to include many who were not receptive to tertiary education.

A billion-dollar children’s hospital even as the paediatric wards in existing institutions remained under-utilised and health facilities were left under-staffed, under-equipped and short of vital medications.

And rest assured that based on precedence, many people who love freeness will expect the Prime Minister to don a Santa Claus suit and traipse around the country sharing trinkets to the natives!

All of this nonsense have brought us to this sorry pass where the Government has to raise the debt ceiling to $120 billion, nearly 70 percent of GDP, just to run the country.

Had the previous Government, and Mr Manning’s before that, exercised restraint in spending our money, we might have been able to better weather the perfect economic storm, the recession that Central Bank Governor Jawala Rambarran grandiloquently declared last Friday.

People like me who lived through the first oil boom when crude prices surged from US $1.80 a barrel in 1970 to $36 in 1980, and heard Dr Eric Williams boast “money is no problem” know only too well that oil dollars could be a big problem.

By 1981, with prices receding to around $20, PM George Chambers called for the tightening of belts. “Fete done! Back to wuk!” he advised a people who had become the Sheiks of the Caribbean.

Nobody heeded Georgie. The fete continued. By 1987, the NAR Government had to cut allowances and freeze wages in the public sector, and Selby Wilson introduced VAT.

The middle and upper classes who had wallowed in some wealth ended up losing their new cars and abandoning houses they could no longer pay for.

It was bad. Thousands lost their jobs. Businesses collapsed, among them insurance and finance companies. People lost their shirts, almost literally.

We witnessed the fall of the oil-giant, and it was heart-rending.

Now, I don’t expect this recession to be as bad or to last as long-seven years. We have some savings and elbow room to manoeuvre in. And once we share the sacrifices we must make equitably (not equally), then we can pull through, hopefully emerge from it stronger, wiser and better positioned to face the future.

PM Rowley has an opportunity to lead the nation in a time of crisis.

I am, however, very angry with those who led us down this trip to nowhere, this descent into hell. What hurts even more is that they will continue to live in luxury as the masses suffer the consequences.

How I wish they could be in jail instead.

124 thoughts on “Recession was predictable”

  1. Kian, rodwell decribes perfectly what they refer to in india as “The Caste Mind”…Dr. Annamalai decribes it also…Tman, Mamoo & The elderly individual called “Mr. Penal” who calls all stations to spread his propaganda (i95.5 also)…is a perfect example..the question of integrity never enters his mind…only the onjective…to deceive…to lie, spin etc. As Triniamaerican put it “circular logic” Mr. Penal admitted to being a past Maha Sabha teacher….the caste mind is arrogant and proud of its supposed intellectual & genetic suoeriority…even with evidence to the contraty…it expects constant praise & acknowledgement of its superiority from those it deems ‘inferior’…it is violent in thought…it doesn’t matter how much you prove them wrong (Tman, Mamoo,,,Mr. Penal are programmed to always look for an angle to suqeeze out of the truth…always seeking to cirrcle right back to the already disproved accusation,..

    1. Yawn I see the Hindus have sent a chill down your spine to your a**. Winnie you are messed up mentally as is clear by your continue reference to Hinduvta. Hindus are 23% of the population meaning 77% of the population is not Hindu. Now simple arithmetic tells me that 77% is more than 3/4 of the population. In India Hindus are 80% of the population and stands to reason that Hinduvta will flourish under such majority control. However, it is beyond me that you Winnie is so terrified of a few Hindus, it tells me that you are insecure with yourself and Trinis. Which is not unusual judging form your regular defecations on this board. You behaving like a “mocojumbie”.

    2. “Last year, former prime minister Kamla Persad-Bissessar gave a “Christmas present” of $55 million to Chistian churches,as she said Trinidad and Tobago should rise above personal agendas and partisan interests and instead focus on the continued growth, development and prosperity…” Express.

      The “Christian PNM” is not giving a farthing to churches this year Winnie. But the “Hinduvta UNC” gave over the past years. What do you and the other PNM apologist have to say about that? Go read Haggai chapter 2.

      But they will increase their giving for Carnival…..

  2. The recession was predictable but the behaviour of the Minister of Finance who remains unqualified for this position is also predictable. He possesses a level of arrogance that is a hall mark of the PNM leadership.

    The Central Bank Governor owes it to the nation to disclose where the economy is going. For instance in many developed nation there are quarterly reports on economic matters. They disclose what the state of the economy is. This minister of Finance appears to be the one wanting to hide the facts so that he can borrow billions to fulfill his dream of a rack rail and other PNM promises. But that is not the way a nation is managed by the whim and fancy of few in politics.

    As for disclosing who is using the most foreign exchange, I have two minds about that. First privacy is a good thing. However, one must note that recently foreign exchange has been low and as such the public needs to know where the money is going. That however, have to be balanced by the right of the businesses to be private in monetary matters, except this foreign exchange matter affects businesses and as such the disclosure is eye opening because it removes all perception of hording, monopoly and favouritism.

  3. it removes all perception of hording, monopoly and favouritism.

    Actually… no.

    To do that it is a different disclosure that is necessary, namely a disclosure of the *use* to which the forex was put. And a disclosure of the *changes* in that usage pattern. That is what is needed to reveal a pattern of hoarding.

    The disclosure given embarrasses perceived political enemies, but says nothing about what it is we need to know. Therefore, it was entirely unwarranted, and certainly does not satisfy any claimed public need to know.

    Btw, an emergent pattern of hoarding would be revealed in a *use* analysis, without at all having to name recipients. If a pattern of emergent hoarding is revealed by a use analysis, and a changes in use analysis, then and only then does the naming of recipients arguably could satisfy a public need to know. That PriceSmart is getting US$250 million tells me nothing in itself, if *all* of that is used up to provide consumers with foreign goods that they want. It might well be the 19th fellow on the list who is the hoarder that we need to know about.

    The country evidently needs more engineers, if the trained economists don’t know what they’re doing. Colm Imbert is well qualified for the job of Finance Minister. All he needs is the ability to ask the right questions, guided by what is in the public interest, and not be intimidated by any of the very much interested stakeholders. I am afraid to say that Rambarran, in overreaching unnecessarily this way, either does not know how to think, or is revealing himself as playing politics, and against the government of the day. Either way, he ought to be terminated for either incompetence, or misconduct in office.

    May the Holy Spirit continue to expose the wicked, and the wicked deeds that they wickedly do. And may He protect the innocent.

    Shalom.

    1. ” That PriceSmart is getting US$250 million tells me nothing in itself, if *all* of that is used up to provide consumers with foreign goods that they want” Yoruba.

      And why should it make the Minister of Finance upset? Obviously you are not upset. Most people who know now actually feel better that there is an open declaration of foreign exchange users. And so while privacy for me is still an issue sometimes it is necessary to clear the air. The Finance Minister has turned this into an issue because his friends are upset. He is a puppet.

      1. PriceSmart, Massy, and the others are upset. As they have a right to be. And as you would be if you were in their shoe.

        The Minister of Finance is not the one who misconducted himself in public office, and therefore has nothing to defend. If those whose confidentiality was breached complain to him, and he questions the misconduct, that is his obligation as the responsible minister. It hardly suffices to prove him anyone’s puppet.

        We already knew that Rambarran was a partisan appointment, ill qualified for the job, promoted over better qualified and more senior candidates. Fine. Sometimes the square peg grows to fill out the round hole. But clearly not in this case.

        He has messed up, due likely to a foetid combination of incompetence and partisanship.

        Under fire, he responds by playing politics at the expense of private companies, putting out confidential banking information that he is, under relevant law, obliged to keep confidential.

        Of course those affected have complained, as is their right. Under fire, Rambarran advances a convoluted Mendonca-esque argument that turns the issue on its head. He asserts public interest need to know.

        My point, which you conveniently, but clumsily attempt to evade, is that the information made public does *not* address the question of forex unavailability that the public is exercised about. Therefore, an argument of “public need to know” fails without even getting out of the block.

        Rambarran is either incompetent, or guilty of playing politics at other people’s expense, in derogation of his duty to serve the best interest of the public. He was unqualified when he was appointed. Now he has misconducted himself in office, either out of incompetence or political malice. He must be terminated before he does further damage.

        I carry no brief either for the PNM or Minister Imbert. But neither is the issue here. I carry no brief for PriceSmart, Massy, nor the others. But if Rambarran would so recklessly traduce the privacy rights of these rich and powerful, how much more easily the privacy and other rights of the poor and voiceless. Don’t trample others’ rights and tell me you are doing it in my name, when you haven’t even addressed my real concern. That is wicked in itself, more so in its crass hypocrisy, and most of all in taking the public for fools!

        May the Most High continue to expose the wicked, the wicked deeds that they wickedly do, and the devilish inspiration that motivates them. And may He protect the innocent, in all these matters unfolding in the land.

        Shalom.

          1. “If the facts are on your side, argue the facts. If the law, argue the law. If you have neither the facts nor the law on your side, call the other guy names”.

            Clearly Mamoo, you have neither the facts nor the law on your side.

            Shalom.

    2. Lol….the the hindutva like to bribe….
      This is how they influtrate christians…money….sneakily….

      1. Haha the Hinduvta like to bribe you are more stupid than I thought. There is no record of your Hinduvta bribing anyone this is a concoction of Dr. Cudjoe a man who obtain a questionable degree from a third rate US university that is a hot bed of black power and black ideology. There he taught Africana studies.

        I suppose if the PNM administration give money to the churches it would be a bribe…..lol As I said go read Haggai 2:7-8.

        2. …lol As I said go read Haggai 2:7-8

          Clearly you have not understood what you read.

          Do give the blog an exegesis, and tie it back to the point you’re seeking to make.

          I look forward. But I do not hold my breath.

          May the Most High continue to expose the wicked, and the wicked deeds that they wickedly do, as the apocalypse unfolds. And may He protect the innocent, and pour His spirit out over us, that we may, as Scripture assures, come to know the truth that will make us free.

          Shalom.

        3. Wesleyan University does not employ professors with
          “a questionable degree from a third rate US university”. Check your facts. You do have subjective denunciation of those you don’t like, don’t you? You could at least respect factual truths,if not the person, can’t you?

  4. “On Monday, the price of U.S. oil dropped below 38 dollars a barrel for the first time in six years. The last time the price of oil was this low, the global financial system was melting down and the U.S. economy was experiencing the worst recession that it had seen since the Great Depression of the 1930s. As I write this article, the price of U.S. oil is sitting at $37.65. For months, I have been warning that the crash in the price of oil would be extremely deflationary and would have severe consequences for the global economy. Nations such as Japan, Canada, Brazil and Russia have already plunged into recession, and more than half of all major global stock market indexes are down at least 10 percent year to date. The first major global financial crisis since 2009 has begun, and things are only going to get worse as we head into 2016.”

    Finance Minister and Prime Minister in a tizzy since Jwala declared recession. But read this Trinis and awake from the PNM stupor of “shooting the messenger” while ignoring the message.

  5. Jwala will win the day despite mounting pressure from the usual suspects to consult with the PNM on these matters.
    Foreign exchange is disappearing quickly as oil prices plummet. Today oil stood at $35 a barrel and set to reach the $20 mark next year due to a glut in the market intentionally created by OPEC to maintain market shares.

    This affects all areas of the economy and prudent fiscal management is badly needed. The PM need to fire the current Finance Minister and find someone with a high level of economic and finance qualification to see what is happening down the road and provide the right advice for the nation. Failure to do so will see TNT sink into a depression.

    The days of wanton spending is gorn, Ms Claus is not there and the Finance Minister need to stop acting as Mr. Claus and start reign in spending. Yet he had a record breaking budget and proposed $50 billion more in unnecessary borrowing. That is why he should be fired because he does not know the difference between a recession and oil boom. That can happen when you there too long in politics. Over to the P.M.

  6. If Jwala steps down now, i’m sure he could switch careers & Join “iMPATT”…i’m sure he’ll become a lifetime member

  7. Or he could join the Hindu spy agency set up during Kamla’s term…in other words, there are so many ways he could ‘contribute’ to “the fight”….you kniw….stick it to ‘dem rawan an dem in office’…

        1. Winnie the proud African that you are, whilst the African continent has been ablaze with horrible crimes against humanity you have been obsessing about Hinduvta, caste system, Sir Vidia Naipaul, Sat Maharaj….

          But here is a real cause you need to address in the fatherland. It is the rape culture that exist today in Africa. Women are mere pleasure “crafts” for these well endowed African men.

          Here is the great South Africa.
          How many are raped each day?
          “According to SAPS crime stats, roughly 1.25 million sexual assaults have been reported between 1994 and now. That’s roughly 170 per day. The key word here is “reported”.
          Interpol reported in 2012 that in South Africa, less than 1% of sexual assaults are reported. A police report around that time stated that only 1 in 36 (2.8%) cases are reported. A 2010 study by Gender Links and the Medical Research Council (MRC) found that in Gauteng, only one in 25 rapes had been reported to the police. It seems that the latest consensus is that around 1 in 30 (3.3%) of sexual assaults are reported, hence the statement that “a woman is raped every 17 seconds in South Africa”. What this roughly equates to is (rounded):
          · 5,000 per day
          · 35,000 per week
          · 150,000 per month
          · 1,800,000 per year
          · 18,000,000 every decade”
          https://m.youtube.com/watch?v=xUH8ZhmEyP8

          Winnie the sisters need your help…

          1. There are over 15,000 rapes per year in India…BUTTTTT they are not reported…the government suppresses ’embarassing’ statistics…as well as the fact that these rapes are religiously motivated (caste abuse) against Untouchables.

            Also, The state of africa Today is as a direct result of the trans atlantic slavert which was responsible for the enslavement & kidnapping of my ancestors in their homeland and dumping them all over the diaspora…to retrospectively, claim that africans should be ‘happy’ that the trans atlantic slave trade occurred, because in the process it placed me in the caribbean which us “better off” is flawed, caste minded logic to begin with!…If the Trans Atlantic slave trade had not robbed Africa of its valuable human resources & along with raping of the continent to THIS DAY of its minerals to enrich Europe & the rest of the world…it would not be in the state that it is…unlike india…Africa is not a country….but several ‘former’ colonies whose loyalties are to the former colonialists & not the homeland (exclusively)…Imagine if 10 strangers agreed to divide your house, land & family according to THEIR squabbles & allegiances while you & your family were indoctrinated for centuries…separately
            Unlike indians africans genuinely feel torn from their motherland…but Indians ran away…for good reason!

  8. Notice Moomoo’s T-Y-P-I-C-A-L canal concx comments about Dr. Cudjoe & his qualifications eh….also take note that Moomoo may very well be Ms. Kangal…Dr. Cudjoe’s Blue Fly cyber stalker

  9. This reproduction says it best:

    “John Heywood, the English author, almost 500 years ago, coined the saying, “Can’t see the forest for the trees”.

    So much focus is being placed on the Central Bank Governor’s disclosure of the main users of foreign exchange that the primary issue has been overshadowed.

    How have these businesses enhanced our economy with the forex?

    The key issue is whether or not the use of the foreign exchange is benefiting the economy of Trinidad and Tobago.

    The Manufacturers Association claim foul but what do they manufacture? Are they true manufacturers or merely assemblers of foreign products, which are labelled manufactured in Trinidad and Tobago?

    How much foreign exchange is earned by these manufacturers and how much return to Trinidad and Tobago?

    Having had the disclosure of the key players and the amounts of foreign exchange that they consume, the Minister of Finance, instead of making a big issue of the legality or not of the disclosure, should ask the Central Bank to now analyse the use of the forex, with a view of determining the value-add to our economy.

    With the benefit of the analysis, the Government can then make the relevant decisions regarding allocation of foreign exchange in a stagnant economy where forex earnings are dwindling and will continue to so do in the foreseeable future.

    This information will greatly assist the Economic Advisory Board to suggest tangible and practical means whereby our economy can be better managed.

    Since we import almost everything we consume, including basic food items, we may be considered a “foreign exchange-dependent economy”.

    What happens when our foreign exchange runs out? In anticipation of this, it seems, the Minister of Finance is already talking about utilising the Heritage and Stabilisation Fund to stabilise the economy. How profound!

    What is the value-add of the Economic Advisory Board? To rubber-stamp the decisions of the Government? I strongly believe this is certainly not what Prime Minister Dr Keith Rowley has in mind, based on his public utterings to date.

    He expects proper analysis and actionable solutions to key issues challenging our economy.

    There is a lot of talk about diversification, which may be happening on a too-small scale to materially affect our GDP, so now seems an appropriate time to so do, in light of our stagnated economy.

    Our Prime Minister has placed great focus on agriculture, so it is time to be serious about it.

    Talking about who got land, who illegally uses land or who uses the land for different purposes are of no value unless systems are in place to gainfully utilise the land.

    Ask any farmer, praedial larceny and workers are their key issues.

    Focus, seriously, on these. There will be enough workers for agriculture when the manufacturers begin their layoffs, as have already begun.

    The Prime Minister, our chief executive officer of the country, needs to be firm with the business users of foreign exchange, where the need is greater than the return to T&T’s economy. They will always lay off workers when their profits decrease, so let us transition job loss from the business community to gainful employment in the agriculture industry.

    Though I focus on agriculture, other industries also use foreign exchange to assemble their goods. Take for example, Carnival.

    How many Carnival bands use local materials for their costumes? Or, are they all “made in China”?

    Of what value is the Department of Creative and Festival Arts, at The University of the West Indies, if its output is not tangible enough to engender real creativity in our Carnival to make it number one in the world?

    Think of the spin-offs from such an effort, particularly for tourism, a comatose industry in Trinidad and Tobago.

    Let us refocus on the real issues of our economy rather than on the political points that can be scored from sensationalising issues, which do not redound to the benefit of us, the citizens of Trinidad and Tobago.

    Those whose names were called by the Governor of the Central Bank, if they truly add value to our economy, should be proud to stand up and say “this is how we utilised the foreign exchange and how much more we earned to benefit the economy of Trinidad and Tobago ”. Can they?

    There is a very great need to move away from textbook economics and into actionable economics”.

  10. On this occasion I have to agree with Mary King:
    The pronouncement by the Governor of the Central Bank that our economy has had declines in four successive quarters, signalling that our economy is in recession, has caused a furore particularly in the Government’s ranks.

    The Minister of Finance will not believe that we are in a recession until this is confirmed by the CSO and sought refuge in a comment made by an Independent Senator that recessions only applies to developed countries and are the descending side of capitalist business cycles of such countries.

    According to the senator, our economy has stagnated and coupled with increasing inflation we are not in a recession but in “stagflation”.

    Still, the Minister of Finance has called for data from the CSO—the same organisation that was deemed to be delinquent in providing up-to-date information by Moody’s—before he would be in a position to say whether we are in a recession or stagflation or whatever.

    But something real is indeed happening; there is an elephant in the room which is being tactfully ignored by our Government.

    Yet this Government is preparing for a massive borrowing programme and is attempting to spend in 2015-2016 an unprecedented $63.1 billion when all it expects (hopes?) to collect in taxes, etc is $41 billion.

    The Minister of Finance claims he cannot reduce spending since this will hurt the population, our economy, and he does not even acknowledge the definitive evidence of a massive and sustained shortfall in energy sector foreign exchange income to the country, into the Treasury, as an indication that our economy has turned down; is in recession, stagflation, call it what you may.

    Surely this minister is aware that we operate a small open economy that depends for its very survival on the foreign exchange income from the energy sector.

    An economy in which the business sector cannot respond to such a shortfall by earning new foreign exchange income or replacing imports by local products.

    Government cannot spend its way out of this situation by building the infrastructure announced by Minister Franklin Khan—spending that produces no new foreign exchange, which, instead exacerbates the situation by requiring more foreign exchange.

    When the foreign exchange income drops the economy can only continue on its merry way for a time if we live off its fat, our foreign reserves, or foreign borrowings.

    Petroleum and commodity prices are low and expected to remain so for some considerable time, moreso Government’s income from the energy sector has fallen from the usual $25 billion to an expected $5.5 billion in 2015-2016.

    This alone tells us that something is amiss, that our economy is in trouble; we are in a recession, stagflation, depression, whatever.

  11. “Having a lot of book sense does not mean you have common sense. Rememberbook was made after brains.” Moomoo

    Look at the DEPTHS that are sunk to, in order to validate winston dookeran’s nephew Jwala Rambarran’s placement as Central Bank Governor

    Lol…..Every single ONE of the persons whom i have ever heard mutter that anti-ontellectual baubble, never graduated past O’level education…just saying…

    1. Obviously you have a problem with Jwala being the nephew of one of best economist this nation ever saw Winston Dookeran.

      So I would assume you would be against this small list of PNM nepotism. If you are then keep your sad ideas to yourself.
      — John Rahael as Minister of Agriculture lease a house and parcel of land belonging to Caroni 1975 Ltd. To his sister
      —John Rahael as Minister of Health give his sons the contract to provide drugs for the CDAP programme
      — Penelope Beckles father got CEPEP contracts while she was an MP
      — Barry Sinanan law firm get government briefs while he was speaker of the house
      — Patrick Manning rented a house from Lenny Saith brother for $38,000 per month while the Palace was building
      —Jerry Narace Company got the contract to provide insurance for T&TEC
      —Kerwyn Garcia, husband of Christine Kangaloo, gets $530,000.brief from government
      — PNM Chairman Franklyn Khan wife get a $60 million contract days before the 2010 election
      — $5 million worth of materials from the Tobago Hospital went to develop Dr. Keith Rowley wife private project
      —-Robinson-Regis husband $50,000 per month job
      —1 St Alexandra place multi million rental by Faris family. Building was not used.

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