The Liming House

Good to see you again. Glad you enjoy the Limes.

Dear Trinidadian media: the Haitian earthquake is the biggest and most important Caribbean story, bar none, of the moment and the year to date.

What, exactly, is your excuse for your utter inability to update your sites to reflect this state of affairs, per the following screenshots (taken at approximately 8.55pm Trinidad time):

Screenshot of the Express front page at 8.55pm on Tuesday Jan 12

Screenshot of the Guardian Online's front page at 8.55pm on Tuesday Jan 12

Screenshot of the Newsday's website front page at 8.55pm on Tuesday Jan 12

Poor.

A friend forwarded me the following Guardian story, which was published on Friday with the sensational headline:

Trinis drink more alcohol than water—Hospedales

In a word, awful. In two words, bloody awful. Any more words and this post will no longer be fit for children.

But as I am of late attempting to be constructive as well as merely scathing, behold the thinking behind my righteous indignation:

T&T is ranked as the 98th among countries with the highest consumption of alcohol.

This is a non-statement. It tells one nothing. Worse, it doesn’t actually make any sense. What are these countries with the highest consumption of alcohol, pray tell? And how many of them are there? Or did the hapless reporter, Richard Lord, mean to say:

Measured in litres of pure alcohol consumed by its citizens in a given year, Trinidad and Tobago ranks 98th globally, Alicia Hospedales, Minister of State in the Social Development Ministry, said during Wednesday’s debate…

Onward:

She said that information was provided by the World health Organisation (WHO).

Did she, Richard Lord? Did she really mean that someone from the WHO handed her a report on the matter? Perhaps. Rather more likely, Ms Hospedales or one of her staff – unlike say, Richard Lord – did a cursory Google search and happened on this handy Wikipedia-provided, WHO-sourced list of countries ranked by alcohol consumption.

Onward:

Hospedales said the Government’s decision to increase taxes on alcohol and tobacco products was a good one as it is intended to act as a deterrent to users of those products. Responding to claims from Opposition MPs Ramesh Maharaj, Dr Roodal Moonilal and Chandresh Sharma that the initiative was not likely to succeed, Hospedales said she begged to differ. She said the measure would be successful.

SIGH. There is no evidence in this story of either fact checking or even the most cursory editing, so I shall provide some:

Hospedales said the Government’s decision to increases taxes on alcohol and on tobacco based products as part of its 2010 budget proposals was intended to act as a deterrent to users of those products. Higher taxes tend to be passed on to consumers in the form of higher prices,  which may lead to reduced demand for the more expensive goods.

Hospedales disagreed with Opposition MPs Ramesh Maharaj, Dr Roodal Moonilal and Chandresh Sharma, who claimed the initiative was not likely to succeed.

And again:

The minister said T&T had been ranked among the countries with the highest number of Alcoholics Anonymous groups per capita in the world.

She said from statistics it seemed that citizens of this country were drinking more alcohol than water.

Gobsmackingly awful, but *thinking constructive thoughts*:

The minister said T&T also ranked (is this true? And if so, where? would have to ACTUALLY DO SOME REPORTING) among those countries with the highest number of Alcoholics Anonymous groups per capita.

On that point, there’s only one study floating around on the interwebs as regards “AA groups per capita” – it dates back to 1991 and posits, among other things:

the highest ratio of A.A. groups in 1991 was in Iceland (784 groups/million people), which has among the lowest levels of alcohol consumption in Europe, while the lowest A.A. group ratio in 1991 was in Portugal (.6 groups/million people), which has among the highest levels of consumption.

Which is interesting, given what Hospedales apparently said next (according to Richard Lord, anyway):

She added that it was a strong indicator that alcohol use and abuse “was a major problem in T&T.”

The study noted above implies exactly the opposite. Ah well.

As for this:

She said from statistics it seemed that citizens of this country were drinking more alcohol than water

I demand to see those statistics, unless she was making a glib generalisation. In which case, WHY THE HELL DIDN’T THE REPORTER MAKE THAT CLEAR? Oh, right. Because it makes a sexy headline. *dies*

And so it ends:

Hospedales said the use of alcohol had caused a myriad of problems for individuals, families and the society as a whole. She quoted statistics which showed that in T&T “66 per cent of highway deaths was due to alcohol use, 63 per cent of fire deaths, 60 per cent of motor cycle deaths, 50 per cent pedestrian accidents, 50 per cent of drownings have all been due to alcohol consumption.”

And I edit, because someone should have:

Hospedales said alcohol had caused myriad problems for individuals, families and the society as a whole. She cited statistics [FROM? BECAUSE THIS IS QUITE CONTENTIOUS] which suggest that in T&T, 66 per cent of highway deaths were due to alcohol use. According to Hospedales, 63 per cent of fire deaths, 60 per cent of motor cycle deaths, 50 per cent of pedestrian accidents and 50 per cent of drownings have all been due to alcohol consumption.

For shame.

My day job has kept me so busy I haven’t yet had time to read beyond the headlines of the latest budget, but it seems that whatever Karen Nunez-Tesheira put together pleased Standard & Poor’s. Although the devil, as ever, is in the details.

The rating agency issued the following statement on Monday (any emphasis mine, as are the bracketed comments):

Republic of Trinidad and Tobago Ratings Taken Off CreditWatch And Affirmed; Outlook Stable

(CreditWatch negative is ratings agency speak for “we’re concerned about this country, and we may lower our rating on it in the not-too-distant future, unless its economics improves)

–Although Trinidad and Tobago’s bailout of the CL Financial Group could cost up to 6% of expected 2009 GDP, its solid fiscal and external position support its policy flexibility.

–In addition, the government’s debt profile and burden limit external vulnerabilities.

–As a result, we have taken the ratings off CreditWatch negative, affirmed them, and assigned a stable outlook.

NEW YORK, Sept. 14, 2009–Standard & Poor’s Ratings Services said today that it affirmed its ‘A/A-1′ foreign-currency and ‘A+/A-1′ local-currency sovereign credit ratings on the Republic of Trinidad and Tobago. Standard & Poor’s also said that it removed these ratings from CreditWatch, where they were placed on Feb. 3, 2009, with negative implications.

The outlook is stable.

In addition, Standard & Poor’s affirmed its ‘AA’ transfer and convertibility risk assessment on the republic.

“We removed these ratings from CreditWatch after evaluating the possible consequences and the cost associated with the government bailout of one of Trinidad’s largest financial conglomerate: the CL Financial Group,” explained Standard & Poor’s credit analyst Roberto Sifon-Arevalo. “Assuming no recovery from any asset sales, we estimate a potential gross loss for the government of about TT$9 billion, which is 6% of expected 2009 GDP.” At the same time, Trinidad and Tobago’s solid fiscal profile, which has resulted from several years of high-energy prices, gives the government the fiscal and external flexibility needed to manage this potential debt burden as well as the current international financial crisis without materially weakening public finances.

The government is responding to these shocks through countercyclical fiscal measures. In this context, Standard & Poor’s expects the general government will have a deficit of 4.5% of GDP in 2009, down from a surplus of 6.3% of GDP in 2008. In 2010, we expect the deficit to be at about 3.5% of GDP as the government continues with its public infrastructure program aimed to mitigate the impact of the world economic crisis in Trinidad.

Standard & Poor’s does not expect the government to contribute nor tap into the Heritage and Stabilization Fund (HSF) to finance the expected deficit in 2009 or in 2010, keeping the fund’s balance at about 11% of 2009 GDP. We believe that the government will finance the deficit with debt, mostly domestic. As a result, we also expect net general government debt to reach 7% of GDP in 2009 and 12% in 2010, which compares favorably with 28% and 31% for the medians of ‘A’ rated peers in the same respective periods.

“Improvements in transparency, governance, and regulation in the financial industry–and among public-sector enterprises, in particular–could further strengthen Trinidad and Tobago’s creditworthiness over the medium term,” Mr. Sifon-Arevalo added. “Conversely, a higher-than-expected fiscal deterioration because of higher-than-forecasted costs associated with the government bailout of CLFG as well as slippages in the pace of restructuring government-owned entities could lead to an unfavorable rating action.”

Are you listening, Mr Manning?

About damn time too.

The Express reports:

Citizens will no longer need a visa for the French overseas territories once their stay is 30 days or less.

Foreign Affairs Minister Paula Gopee-Scoon announced yesterday that following an approach by the Government, the French Government has agreed to exempt nationals of this country travelling to Guadeloupe, Martinique, St Martin and French Guiana from a visa requirement once their stay is for 30 days or less but does not exceed 100 days within a period of 12 months. Gopee-Scoon said the agreement would be in effect in about one week’s time with the exchange of diplomatic notes.

She also disclosed that the Government had also applied to the European Union for a waiver in the visa requirements for short trip stays in the Schengen zone which comprises 25 European countries.

Citizens of Antigua & Barbuda, Barbados and Saint Kitts & Nevis are already exempt from Schengen visa requirements.

Moody’s, the ratings agency, is reviewing the credit ratings of First Citizens Bank Limited for a possible downgrade. The agency has been conducting a broad review of global banks, so this is not entirely surprising.

Here are the comments from Moody’s, any highlighting is my own:

New York, June 02, 2009 — Moody’s Investors Service has placed the A1 long term local currency deposit rating of First Citizens Bank Limited on review for possible downgrade in light of its global review of systemic support for bank ratings in the context of the current credit crisis. As a result, Moody’s also placed on review for possible downgrade the A1 ratings for the foreign currency debt of First Citizens Bank (St Lucia) that is guaranteed by First Citizens. The bank’s C- bank financial strength rating, Prime-1 short term local currency deposit rating, and Baa1/Prime-2 foreign currency deposit ratings are not affected by this review and have been affirmed.

Government-owned First Citizens is the only bank rated by Moody’s in Trinidad and Tobago and as such is the only bank affected by the reassessment of systemic support. At present the bank’s local currency deposit and foreign currency debt ratings incorporate three notches of systemic support. “The review of First Citizens’ debt and deposit ratings will consider the extent to which the government of Trinidad and Tobago’s ability to support its banking system, should such support be needed, is converging with the government’s own debt capacity as a result of the ongoing global economic and credit crisis,” says Jeanne Del Casino, a Moody’s Vice President and Senior Credit Officer.

The rating agency believes that most governments are at least as likely, if not more likely, to support their banking systems as they are to service their own debt — a view that has traditionally led to bank ratings often benefiting from significant uplift due to systemic support. However, as the financial crisis continues, the capacity of a country and its central bank to support the nation’s banks converges with, and is constrained by, the government’s own debt capacity.

Moody’s has previously used the local currency deposit ceiling (LCDC) as the main input for its assessment of the ability of a national government to support its banks. Although anchoring the probability of support at the LCDC is appropriate in many circumstances — regarding the provision of liquidity to a selected number of institutions over a short period of time — this might overestimate the capacity of a central bank to support financial institutions in the event that a banking crisis may become both truly systemic and protracted.

The rating agency will review the specific circumstances of Trinidad and Tobago to determine the appropriate systemic support for Trinidadian bank ratings. Moody’s will reassess the level of systemic support for First Citizens to determine to what extent the systemic support incorporated in its ratings should be more closely aligned to the government’s local currency bond rating of Baa1. This approach is outlined in Moody’s special comment “Financial Crisis More Closely Aligns Bank Credit Risk and Government Ratings in Non-Aaa Countries” available on www.moodys.com.

Factors that the rating agency will consider in its assessment of systemic support include (i) the size of the banking system in relation to government resources, (ii) the level of stress in the banking system, (iii) the foreign currency obligations of the banking system relative to the government’s own foreign exchange resources, and (iv) changes to the government’s political patterns and priorities.

Moody’s noted that the size of Trinidad and Tobago’s banking system is modest relative to the government’s resources. Credit stress in the banking system has been muted so far during the current financial crisis, though banking fundamentals are experiencing some pressure in light of the economic slowdown in Trinidad and Tobago. Government actions during past crises are indicative of the Trinidadian government’s high focus on financial system stability. During Trinidad’s financial crisis of the early 1990s, the government acted purposefully to contain the potential contagion effects of troubled institutions in the market. More recently, in February 2009, the government took control of three local financial institutions owned by CL Financial Limited, the country’s largest conglomerate, to help stem funding pressures at that company.

In affirming First Citizens’ C- bank financial strength rating Moody’s said that the bank continues to exhibit sound profitability, liquidity, and capital adequacy which position it well to cope with potential asset quality deterioration in the context of the economic downturn. Moody’s noted that the ratings review is unlikely to lead to more than a one notch change in First Citizens’ foreign currency debt and local currency deposit ratings. The rating agency expects to conclude the review over the next few weeks.