TIME TO RE-THINK
Monday, October 13th, 2008
As we to wake to yet another Monday morning signaling the start of yet another week of financial trading and not being certain of which direction the current ongoing financial crisis will swing, we as a nation need to be mindful of the links between the economy of the United States and by extension the global economic platform and how it relates to us.
It is totally naïve to believe that the impact for us here will be minimal. It may have shocked our financial authorities when oil prices closed last week at $78 per barrel. Although early indicators for this week show that on the New York Mercantile exchange, Light Sweet crude rose to just above $80. However a downward trend may continue whether or not the Bush Administration finds a way to stabilize the American financial crisis which would unlock the current freeze on lending by commercial US banks.
A more thorough analysis may be needed in order to assess our true position relative to the global economic meltdown. Since the greater part of our revenue is derived from taxation on exports such as Petroleum products, Natural Gas and other energy based products, we should take steps ahead of time to soften any necessary impact resulting from reduced earnings. While it can be said that the oil price is set on the “futures exchange”, very soon, existing contracts will be fulfilled and new ones negotiated.
Another point to ponder is the fact that our dollar is pegged to the US dollar and if there is any significant devaluation of the US currency against the Euro and other Asian Currencies then it will have a direct impact on goods we import from associated countries. We need to be also mindful that some of our Caribbean neighbors who are dependent on tourism as a mainstay of their economy will be experiencing a lull in business and thereby will be importing less from our manufacturers which will also affect revenue from taxation.
While nothing much has been said about it, the Unit Trust’s US Money Market fund may be affected in some way or the other.
It may be argued that no single aspect of what was mentioned above can in anyway significantly affect our stability, however a combination factors will be consequential.
Our government has embarked on projects which cannot be stopped or even be tempered in any manner. The thought of halting these will result in a zoo of “white elephants” along the Port of Spain Water Front. But still in the pipeline are high price projects like the Rapid Rail and maybe others which I can’t remember at this time. Now maybe a good time to review such projects, looking for alternatives which will achieve the same results of get us mostly there.
The Rapid Rail idea is a brilliant one which can move commuters in mass amounts freeing up vehicular traffic significantly. However given the present global situation, we need to ask ourselves if it is worth the risk which is expected to be in excess of TT$25 Billion? How about aggressively expanding our road network instead, building major freeways from Sea Lots to Sangre Grande, San Fernando to Icacos, and removing all traffic lights along any highway? These only impede traffic flow. The Water Taxi is easy to implement and should not be stopped. My only grouse with it is that I expected each vessel to have a larger seating capacity, much like those used on the Tobago sea bridge.
Should for any reason the Rapid Rail run into financial difficulty, we will not be able to use any aspect of it unless phases are completed and this can easily resemble the Caroni Racetrack. A massive highway development project will have more value even if the overall project is incomplete since there will be the ability to complete phases in an easier manner.
Another aspect we can look at is to forcefully move away from the centralistic approach to administration. Why do I have to go to Port of Spain to register a business? The same network which is used to connect the computers at the ministry of Legal Affairs can be expanded throughout the Country and thereby appropriate supervision be placed in satellite offices in each municipalities. Too many services can only be attained in the Capital City.
Such a move will also help reduce the bottleneck heading in and out of Port of Spain and should be attempted before initiating such a massive project as the Rapid Rail. Maybe upon completion of a highway Development/Modernization project and decentralization of administrative services, we may realize that there is not a need for a Rapid Rail. Then we can implement a toll system for highway usage so at that time we can cushion the cost impact of the advanced project which will then be the Rapid Rail.
All I am advocating at this time is that we sober up and realize that some steep corners are ahead which we need to navigate carefully.
Government need to understand that local investors may also curtail their spending being more cautious adopting a skeptic wait and see approach. Regardless how much government ministers try to play down the projected impact, there will be a high level of timidity among locals with high investment portfolios.
Notwithstanding all that was said before, I believe that should appropriate action be taken immediately, we will be able to soften the inevitable impact. Now is a good time to surface from the dive, take a look around and observe that the shoreline is not exactly where we expected. There should not be any panic but total awareness of the prevailing condition and steps taken to avert any negative impact.
Now is the time to re-think.
Photos taken from ttparliament.org
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