Larry Burchall
Larry Burchall

Arriving late on the afternoon of the day before Good Friday, the Standard&Poor’s downgrade sneaked in the way a foul smell sometimes arrives in one’s olfactory systems. But it still caused the same response — in some.

Overall the downgrade was a mild one-step from ’stable’ to ‘negative’. Rather like an aroma changing from rosy to rotten; or someone easing their war into a too cold or too hot bath.

All of the rating agencies got singed in the 2008 meltdown when all of them were giving glowing ratings to the about to crash giants of Lehman Bros, AIG, and others. All the agencies have taken a lot of heat over the fact that they were giving excellent ratings to people who either went out of business {Lehman) or had to rescued with billions of taxpayer’s dollars (AIG).

S&P express optimism about Bermuda’s GDP rebounding and rising. On that we agree. However, S&P do not say how this will happen. Neither does Finance Minister Bob Richards. Everyone says more or less the same thing. That they ‘hope for’ or ‘anticipate’ or ‘believe’ that Bermuda’s economy will rebound in 2014.

S&P go a wee bit further and intimate that the rebound might be driven by more and sustained growth in the US economy. I do not completely disagree.

However, given the facts that apply out here at 32N64W, I do know that any rebound or upwards tick in Bermuda’s economy will be generated by one thing, and one thing only. That one thing is re-growth in Bermuda’s Resident Population.

It is an admitted fact that overall cruise visitor arrivals in 2013 will be lower than in 2012. This, because several ships have curtailed their visits. This means that it will take 5,500 additional air arrivals just to compensate for the already known and anticipated loss of about 27,000 cruise arrivals. So Tourism 2013 will have to fight hard just to stay even with Tourism income 2012.

But Tourism affects only 5% (or less of GDP). So any real uptick in the very near future will depend, and depend entirely, on IB and its supporting services.

Siphoning off your money

Government nixes out of this growth issue because with Debt Service Costs [DSC] going up as fast as Jack climbed the Beanstalk; Government’s spending pattern – even under Bob – is no different than if the Seventh Minister was still calling (I believe not calling) the shots. This Government spending pattern now sees $13 out of every $100 of revenue shipped overseas to pay Bermuda’s high and still-rising DSC. This relentless siphoning-off acts as a Government applied brake on all growth in GDP.

What then will make Bermuda’s GDP grow? One thing and one thing only. An increase in Bermuda’s Residential Population [ResPop]. Bermuda’s ResPop must stop shrinking and start growing again.

By my careful reckoning, Bermuda’s ResPop was as high as 67,000/68,000 in 2008. By my careful reckoning, Bermuda’s ResPop had fallen to about 60,000 by December 2012. By my careful reckoning, between2008 and 2012, Bermuda’s ResPop fell from about 67,000 to about 60,000. That’s a drop of 10%.

But Government disagrees with me. The Ministry of Finance reports that between 2008 and 2012, Bermuda’s ResPop went up from 64,209 to 64,867 – adding 600 additional residents. The Registrar General goes higher. The Registrar General reports that between 2008 and 2010, Bermuda’s ResPop went up from 65,084 to 66,105. By extrapolation, the Registrar General believes that Bermuda’s 2012 ResPop would be 67,400. That means a 2008 to 2012 addition of 2,350 additional residents.

So both Ministries formally and publicly report that between 2008 and 2012, Bermuda’s population has grown – not declined. Grown by as many as 2,350 additional residents.

By my careful reckoning, Bermuda’s now four year long recession is caused by the population decline that I have described. By my careful reckoning, Bermuda’s turnaround will only occur when Bermuda’s ResPop begins increasing.

And that leads to one – and only one – conclusion.

Bermuda needs to be re-invaded by a new tranche of business residents (and their dependents) of the kind who came here between 2000 and 2008.

No re-invasion, no re-growth.