CARIBBEAN STOCK REPORT 14 May to 18 May 2011 – European Union Expects To Sink Into Recession In 2012

Compiled by the Department of Management Studies, UWI Cave Hill – Click image to read in PDF

The European Union (EU) expects to sink into another recession in 2012. Against the background of the PIGS with Greece currently labouring on the brink of economic disaster with threats to be booted out of the EU and Spain about to follow, what does 2012 portend for the UK where rising unemployment is rampant?

Of particular concern for Barbados and other small islands in the English speaking Caribbean, this cannot be good news. In the case of Barbados the UK is a key tourism market and significant foreign direct investment originates. A flagging UK and EU market is not good news.

A reasonable question is what alternative investment opportunity does the regional equity market offer as a risk mitigating strategy.

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0 responses to “CARIBBEAN STOCK REPORT 14 May to 18 May 2011 – European Union Expects To Sink Into Recession In 2012

  1. I hope that the policy makers in our region are paying close attention the struggles being experienced by the EU. We can see clearly that the political directorate plays are huge role in the economic union, and that the austerity measures agreed to by one party may not be adhered to by another.
    Think that there are all important lessons and that we can learn as our region tries to move towards unity with the CSME.

  2. Thanks for your comment. It bears observation that what happens in the EU and other global economies continue to have devastating impact on our small economies. Surprising the spectre of collapsing global markets do not seem to be resonating with commenters.

  3. Financial issues do not give the same ‘thrills’ as politics and some other topics. Despite the fact that what is going on will affect us in one way or the other we are content in our little bubbles…
    That is until we feel it personally either when we try to get a loan, or at the gas pumps or in the supermarket.

  4. @ David
    “Surprising the specter of collapsing global markets do not seem to be resonating with commentators”
    ***********************
    You playing that you don’t know that small things occupy small minds?
    Your commentators are too busy mulling over exactly which set of idiots get to lead us into chaos and ruin.
    Apart from the ones who stand to get a little job, a contract, or maybe a little pick on a board somewhere to give some temporary meaning to their otherwise dreary existence, how can anyone justify our obsession with this B vs D debate?
    …when our very world is falling apart?

    Bushie was preaching for decades now, the folly of putting our faith in CSME and such concepts of “unity”, rather than looking at the REAL meaning of our existence and focusing on what REALLY constitutes success.
    Now we are seeing the spectacular collapse of the very model that we sought to emulate…. What can we expect to be our inevitable fate?
    So…..how would you describe a people who, in the face of such circumstances, continue to consume their thoughts, efforts and time to the choice between two proven sets of political jokers?

    ….seriously!! tell the Bushman how you would rate such commentators David….!!

  5. @Bush Tea

    If BU can be used as a barometer to measure the mood of the country on the many issues at play then the lack of debate on how we defend and grow our little country is very much lacking. Our intelligence can be therefore challenged as a people.

    In face the Barbados position can be extrapolate across the Caribbean.

  6. old onion bags

    Yo ho Bushie
    The man above it all …..condescension will get you nowhere. I tell you already you fixation of Onions looking for largess is just that. Love vines and shrubs, all Onions want is his due… CLICO money and fighting n having fun…so if helping those gives just cause….why not The DLP your party really ….I say no more..’get it up’…guess you will hear that later tonight too so you accustomed….such a poor rakey showing compared to the days of Dipper eh.
    As to the World coming to an end …so whatanew ? . You would say the same too if you were wearing the right sandals.Now that is a big gulp to swallow aint it bush.
    Ho Ho Ho Bushie…..its better when you rooted in the right flower bed. transplant now!

  7. Interesting article:
    What austerity looks like around the world
    Posted by Brad Plumer at 11:40 AM ET, 05/22/2012
    We’ve noted before that most countries in Europe are engaged in “austerity” — defined as some mix of spending cuts and tax increases. But what’s the actual mix?
    Here’s a helpful graph from the OECD’s latest Economic Outlook. It shows the projected change in the “primary balance” of the world’s wealthiest countries between 2011 and 2013. (This is the budget after accounting for the effects of economic growth — after all, if there’s a recession and tax receipts go down as a result, we don’t want to count that as a “tax cut.”)

    Some countries, like Italy, are relying heavily on tax increases. Others, like Spain and Greece, are relying far more heavily on spending cuts:


    (And yes, these forecasts could prove wrong. The OECD, for instance, expects that the United States will improve its primary balance through a balanced mix of spending cuts and tax increases in the next year — but that assumes that Congress will let all of the various tax cuts expire at the end of 2012, which is far from certain.)
    Some economic commentators like Paul Krugman and Martin Wolf have argued that Europe in particular is relying too heavily on austerity, period. They argue that attempts to tighten the budget during an economic slump will only hurt growth, which in turn makes it even harder for these countries to rein in their debt. Indeed, the OECD predicts that Europe’s economy will contract by 0.1 percent this year.
    Some conservatives, by contrast, have recently started arguing that it’s not austerity per se that’s the problem — it’s the type of austerity. In the National Review, Veronique de Rugy argues that many European countries are relying too heavily on tax increases to rein in their deficits. (This mainly seems to describe Austria, Italy, Belgium, and the Netherlands — the rest are leaning more heavily on cuts.) She cites a few economists, including Scott Sumner, who argue that spending cuts combined with more stimulus from Europe’s Central Bank is the way to go.
    There aren’t many countries around, the world that have pursued this route, however. Sweden stands out as one country that has cut spending a bit while enjoying a big monetary stimulus from the Riksbank. By contrast, there are plenty of euro zone countries that are leaning very heavily on cuts — especially Spain, Portugal, Greece, and Ireland, the most troubled nations. They’re not faring much better, growth wise, than euro zone countries relying largely on tax increases to curb deficits. On the other hand, none of these countries are getting a big boost from Europe’s central bank, so perhaps that’s the relevant variable here.

  8. Doan mind Bushie. he done got he personal survival plan in action. A Bushman lives off the land. Food security is in his portfolio.

    As for the world economic situation, it is not looking good.

    BLPajans not worried cause dey will be goin wid Owin.

  9. @ David
    “if BU can be used as a barometer…”
    *****************
    From Bushie’s experience, BU is not a good barometer since BU is generally more balanced, constructive and relevant than most other fora. (with the obvious exception of old onions of course :) )
    Herein lies the tragedy.

    When BU contributors can ignore the urgent need to analyse the real and present dangers facing us from dangerous global threats and concentrate instead on comparitively petty distractions such as regionalization and local party politics….what hope do we have of being prepared for the storms to come…?

    @ Onions
    Continue to have your fun. Best wishes in recovering your CLICO funds.
    Bushie understands that it may be asking too much of you to delve into such complex matters as global recession, economic collapse, or a breakdown in society as we know it…
    You remind us of the fellows who, after the mortal damage to the Titanic, with water rushing in below deck, ascended to the upper deck to party…

    Moral of that story- after putting a big hole in the economy of the ship of state, you and your party friends now fighting to get to the top of the heap….which is on its way to the bottom…..but all you are doing is getting yourself further and further from the lifeboats. :)

  10. I think the importance of stimulating growth is useful to note. Capital accumulation is essential for this growth to occur. Investment in our regional firms/initiatives is therefore critical.
    Reducing government spending and or increasing taxes can only work to a certain extent. Governments still need to provide certain services no matter what, and taxes can only increase so much.
    So although austerity measures are useful, and often quite necessary, generating real sustainable growth is essential…

  11. @Bush Tea

    BU commenters from where we sit have shown little interest in the above matter but as you have opined the CADRES blog continues to attract high interest.

    We do like the Nation and give the people what they want or continue to push what we know to be critical issues?

  12. @frafile80

    The bottomline is that our island economies are not generating secots which drive real growth. We continue to rollout industries which eat forex. For example in Barbados we have Cost u Less, a Mall (Moutett) and cable company which government is boasting. Our economic model is all wrong. If our leaders are demonstrating by their ‘success’ what they are capable off how will the people be inspired to do differently? We have a problem.

  13. @ David
    I think that until the Caribbean electorate start to look beyond partisan politics and start to ask pertinent questions and weigh what is being said, politicians will not inspire anything.
    Like a wise man once said ‘ we get the government we deserve’. If malls and cable companies satisfy us. That is what we will get…

  14. @fragile80

    But how do we define leadership? In the scenario you paint you are saying as a region we are not capable of producing those who can lead us?

  15. @ David
    I am not saying that we can not produce leaders. I am saying that if we do not expect certain things from our leaders or pay attention to what is going on around us, then we will not progress.

  16. @fragile80

    Fair enough but if we cast our eyes at what is happening around us in Jamaica, Guyana, St. Kitts battle lines/attitudes are hardening behind political colours and not the issues. What will it take to disrupt this movement? What you say is fine but esoteric. From a pragmatic slant where do we go from here?

  17. David wrote “The bottomline is that our island economies are not generating sectors which drive real growth. ”

    Maybe BU commenters can take a break from politics and help identify these sectors.

  18. @ David

    No idea actually. Think it is a very difficult balance between doing what is right (what will benefit the country in the long run) and getting re-elected. Most times the two are mutually exclusive… We suffer from myopic vision in the region. And sometimes memory loss too.

  19. @fragile

    A serious indictment because if we look at the Singapore Model which is touted by leaders in our region it was led by one man.

    We come back to leadership.

  20. Well yes it does come back to leadership. But we choose the leaders…We have to hold them accoutable for what they do and say. And not just accept things blindly. Otherwise things will not improve.
    I will not be satisfied with the promise of jobs, jobs, jobs for instance. I want to know how the job creating initatives will be funded; how the country as a whole will benefit; if the intiative is sustainable…
    Most people happy for the job and do not care where the money comes from.

  21. @ David & fragile
    Good leadership and being re-elected are not necessarily mutually exclusive. The problem is that good leadership requires the kind of wisdom needed to bring the masses along with the leader’s vision and goals.
    The kind of potential leaders who possess this level of vision and wisdom are not by default, particularly interested in leading a bunch of sheep to any paradise.
    …on the contrary, boldface idiots who see mainly opportunities to enrich themselves BEG, fight and kill for such ‘leadership’ status….to the detriment of the people.
    it would therefore require a level of wisdom among the PEOPLE in the first place in seeking out and installing the leaders that we NEED rather than the parasites that seek to impose themselves on us.

    This is a catch 22 situation, and it explains why we are going in ever meaningless circles.

  22. We elect leaders in a so called democratic system of government. It may not be that leaders are not available but more the system of government we have which disuades the types of people we want to serve from venturing forward.

  23. @ Bushtea
    I see your point.Not sure the sheep would necessary recognise or appreciate the qualities in a ‘good’ potential leader though…We like what we get, that’s why we keep on getting it.

  24. What democratic election what??!

    What is democratic about a once -every-five-year choice between two morons who are equally clueless?
    It is amazing that we could be so gullible.

    If Barbados was a serious Corporation, do you think we would choose a CEO by having a vote between which ever of two or three jokers took it upon themselves to lobby for our support? …or turns out to be the best compromise for THEIR party?

    …or would we set out our requirements and INVITE suitable applicants to apply for the position?
    would we not check their backgrounds, their psychometric profiles, records, health, teeth and interview them extensively BEFORE hiring them ON PROBATION?

    O$A got our CEO job so he could feed his family.
    DT got it because he wanted it from birth
    FS got it because DT died
    ..and the next one will get it because we have to have SOMEONE.

    ….there is only one way this can end….and it is not good.

  25. Observing (and polling)

    @bushie
    I agree with everything you’re saying but I’ve long accepted that enough people won’t(can’t) understand themselves far less what you’re advocating.

    Added to that the “modern day mental massas” who desire the status quo, separation and political-religious hierarchy to remain. The type of leader you describe and I believe in is a rarity. To find one with the will and strength to die (figuratively, politically or literally) for the upliftment of man and spirit and thus country is an almost impossible task.

    People enjoy being led. Being told what they need. Being shown what’s better for them. Its an unfortunate human condition but it is what it is. The matrix shall continue to exist until a Morpheus believes and a Neo arises. Even then, it would most likely be a return to the beginning of the cycle.

    One day coming…not sure how soon though.

    @all
    Great discourse on this thread. Makes for stimulating reading. Keep the flames of thought burning.

  26. @Fagile et al

    Are we prepared to say that there is a nexus between the lack of success of the regional stock market i.e. the ability of our people to be bullish on stock and the lack of political and other leadership?

  27. @ David,

    Yes I would say our general disinterest, is the link here. We accept what we get. Not sure how bullish one could be on some of these irresponsive/inefficient regional markets though.

    Look at the facebook IPO for instance. It fascinates me how investors quickly decided that the too many stocks were sold and started to pull out, even if at a loss. The stock price then went below the initial offering price.

    We need to be discerning and stop accepting what is handed down as if leaders and or decision makers are infallible. The regional stock markets and the politicians need a jolt for them to work for US.

  28. The facebook example may not be the best comparison. We are looking at a mature versus nascent. The FB IPO was a classic pump and dump in what is a zero sum game. Some investors became rich overnight.

  29. Ok fair enough. Just saying that our markets do not operate in a way for investors to be bullish. If you buy stocks in some companies you may have to consider yourself to be stuck with them…
    That is not enticing

  30. For a long time many persons in Barbados have been telling these two foolish jack o lantern DLP/BLP factions that whenever they become at the helm of government in this country they must properly diversify Barbados’s trade and development away from this excessive dependence on Europe (UK included) and North America to aid and fuel such, and to look more to Africa, Asia, and South America for more of Barbados’s trade and development.

    And far from taking heed of that urging, each time either of these factions have got in they have greater accentuated the country’s hitherto chronic dependence on those said regions.

    The latest manifestation of this virulent obnoxious syndrome has been the coming about of this Cariforum/EU EPA, mainly forged by the so-called regional politicians and bureaucrats of these particular regions.

    Also, there have been many Euro-centric business people, academics, public sector bureaucrats, lawyers, doctors, teachers, journalists, entertainers and those of other relevant professional classes that have been part and parcel of this shameless dependence which has as its counterpart, the vicious political exploitation by the core of the periphery .

    Now, Europe is tumbling down relentlessly, not many individuals of these same professional classes are providing any real answers to the type of overarching model of development that the country must pursue and the direction in which the country must go at this juncture.

    Down with the DAMNED DLP and the BLASTED BLP

    PDC

  31. Why are we still talking about recession? DEPRESSION should be the key word.

  32. @fragile80

    A big part of the problem holding stock in the caribbean stock market is the way minority shareholders are treated. Check Almond for example.

  33. @ David

    As you mention Almond. Has any press release been sent out to inform the shareholders of what is going on?

  34. Fragile

    None that we are aware but there was an article in the local press recently that the government and NIS are to meet with Butch Stewart this week and the ARI Board is to make a decision shortly. The good thing is that the NIS is a significant minority shareholder, hopefully other small shareholders can draft on the coattails.

    Unfortunately this is a reality.

  35. How significant is significant David?

  36. @observing

    Would have to research it but 2.8% comes to mind.

  37. @David, you said ”David | May 22, 2012 at 8:36 PM |

    @Bush Tea

    BU commenters from where we sit have shown little interest in the above matter ”

    Untrue, untrue, untrue!!!

    For YEARS, indeed at least two years before the last election, Straight Talk, Green Monkey, Bush Tea and myself ALL raised the spectre of global economic recession and restructuring BEFORE it all happened.

    Between ‘this’ blog and ‘the other’, those comments are all archived somewhere, go back and check if you want, we accurately predicted the commencement of the recession and the necessary solutions, at least 5 or so years ago.

    That is fact, evidenced by electonic records.

    The harsh reality is that there is no need to rehash what we all know and continue to know, albeit we will be discussing amongst ourselves ad nauseam.

    A further reality is that I have posted on both the Irag and Libyan issues, and only yourself really commented much.

    The ironic thing is that those issues go as much ahnd in hand with the European economy and our own economy, as anything else. Yet people refuse to accpept the connection.

    Well, as to the above article, I would say that Europe is not only in danger of sinking into recession as we speak, it is danger of sinking into widespread civil unrest and almost anarchy, starting with Greece and Spaiin.

    That is how serious this whole thing is and if it does, our own economy will feel the strife, because many majopr financial corporations will fall as a result.

    There, happy now?

  38. @Crusoe

    One has to be repetitive until we hit the g-spot.

  39. Micro Mock Engineer

    “You remind us of the fellows who, after the mortal damage to the Titanic, with water rushing in below deck, ascended to the upper deck to party”

    Bushie… these chaps on the strings remind me of you… Nearer BBE to thee… :-)

    “all you are doing is getting yourself further and further from the lifeboats.”

    Lifeboats? Steupse… when you could close the forepeak scuttle hatch and fother the leak :-)

  40. @ MME
    Bushie got 5 minds not to speak to you yuh know…. :)
    ….seems that ever since that Gulf oil spill scenario when BP finally got around to implementing the solution offered by the Bushman from the very beginning (and which was scorned by you :) ) you have been dissing the BU family…
    Anyway – good to hear you.
    ….now back to the matter at hand….

    What close what forepeak scuttle hatch what?

    Bushie was trying to get that message out now since the inception of BU and even before….
    A serious national attempt to invoke some degree of righteousness (honesty, fairness, justice, love, ….) would have represented a closure of that hatch.
    Putting some serious patchwork on the crooked political, justice, economic and religious systems to stem the greed and wickedness would have fothered the leak….
    …and we may well not have sunk… or at least we may have survived until the rescue ship arrived.

    ALAS, no one heeded the advice, and even YOU ran off dancing to the tune of a different drummer (or is it violinist…)
    Now the water is at the bridge and the bow is below the water….

    ….dont try and find a lifeboat…or prepare to hold your breath for a few months.

  41. @Bush Tea & MME

    The following maybe of interest:

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