Turns in the housing market

We’re seeing increasing signs of a significant turn in Bermuda’s housing market.  It began with the many for sale signs scattered around the island that seemed to linger endlessly.  Today’s surprise was a couple posts on my company’s kitchen notice board advertising 2 bedroom apartments for under $2500 a month near Heron Bay Marketplace.  This leads us to note that the ‘executive’ moniker so popular during the boom period is rare to be seen and despite it being the last day of the month, numerous rental listings still exist as available Sept 1st.  New monikers dotting the ads include ‘spacious’ and ‘REDUCED RENTAL’, things you were less likely to see in the past.  Also shockingly listed is a 3 bedroom condo in Hamilton parish for $695k, a price for which only a few years ago you would have been lucky to get a 2 bedroom condo.

Bermuda’s real estate market increasingly seems to have taken a turn away from the boom period and is something we’ve been expecting for some time.  While certainly a boon for those renting and hoping for market prices to drop it is not a good sign for those who overleveraged themselves during the boom period to take on huge mortgages with little down payments only to watch the value of their homes decline while the mortgage stays the same.  Worse are those who struggled to afford the payments in the first place and may now be facing layoffs or already have been in the wave we’ve seen. 

As they say, leverage is a knife that cuts both ways and this may yet only be the beginning.  Especially as we get a better picture of the state of jobs in our economy when the June July August September? employment brief is released.

No confidence?

Does the United Bermuda Party realize how ridiculous they make themselves look when Opposition Leader Kim Swan is suggested to have made comments like the low voter turnout was a vote of no confidence in Premier Ewart Brown's Government?  If low voter turnout is a benchmark of confidence then perhaps the opposition leader should more carefully examine the numbers and take a long hard look in the mirror.  Indeed the percentage of those who did turn out to support the UBP declined in comparison to the last election and if anything is a vote of no confidence in the UBP and its present leader.

Brief indicators

This year’s employment brief is an important one not for what it can tell us about the impact of the global downturn but instead what it can tell us about Bermuda’s economy before the downturn hit.  It was argued beyond the end of last year whether Bermuda would be impacted by the downturn, thus we can assume that any significant declines in job numbers are not likely to be tied to the downturn itself.  Instead, declines would point to larger perhaps forgotten issues that we would have created ourselves.  Indeed, we have yet to see the true impact of government policy decisions like term limits and whether the government is correct when they suggest it has had little impact or instead if people and the jobs they perform have quietly been moving off island.

Where is the 2009 Employment Brief?

It’s already August 26th so where is the 2009 Employment Brief?  Can someone explain how for at least 5 years in a row the annual Employment Briefs were released in June.  Last year they came late and were released in August, though still mentioned June in the actual report.  This year August is days away from being over and not a peep.  When should we expect the 2009 Employment Brief?

BermudaTourism.com

Last night we covered the very disappointing tourism arrival numbers, today we get wind of the promising results of the Bermuda Tourism website, which is encouraging.

Statistics released for the website suggest an 81% year on year increase in visitors for the second quarter which hopefully is an indication of an improving recognition of Bermuda abroad.   The suggested page view total of 2.7 million for 301,000 visits is a good sign as this indicates an average of about 9 pages viewed per visitor which is quite a good rating for any website.  Of note however is that it is preferable if we could be provided statistics of how many of those visits and page views were from Bermudian IP addresses and how many were from foreign sources.  This should not be a difficult nor unreasonable statistic to attain and if the Bermuda Tourism website has truly been a success this should be a statistic they happily provide.

Quoted in the article is the “bounce rate” of the website which had a decline of 48.5%, though the actual rate was unfortunately not provided and we can hope it will be.  For the uninitiated the bounce rate refers to how many people only visited a single page before leaving the site.  The bounce rate of a site is usually used to measure the old marketing principle that it takes less than 3 seconds for someone to decide whether they’re interested in learning more and thus is a good indication of whether you’re adequately capturing your audience.

The new look of the site is actually quite appealing though it is hard not to frown at the load time for the flash animation.  While it is quite good in comparison to most sites this writer has always believed that the core of a website is getting people the information they want as fast as possible with the least possible amount of effort.  Flash is usually gimmicky and turns off those who come looking for answers, not gimmicks.  Overall though the load time is quick enough that the flash load time isn’t very noticeable which is a positive if we’re going to have flash.

The site succeeds in having a clean and elegant look that doesn’t overload the user with too much information or leave the page looking empty.  The photos chosen are quite good and very fitting for both the site and Bermuda.  The layout of the site is well done and the navigation is good, though it is a bit confusing when you click on headers like ‘Travel’ under the meetings section and aren’t taken anywhere.  Despite there being a dropdown the color change of the heading suggests it is meant to take you somewhere and yet it confusingly refreshes to the same page.  The spacing of some informational items seem a bit off, though nothing really worth fretting over.  Overall the information provided on the site seems quite good and comprehensive which is definitely what we’re aiming for.  Finally, bonus points are necessary for having contact details on every page, this is something that should be stressed for every website as no one should have to struggle to figure out how to get in touch with someone quickly.

While we may be very disappointed with the present tourism numbers we can hold out some hope that the tide may be turning and that the Tourism Department may well have charted a course in the right direction for the future.  Their focus on our core markets and recent advertising schemes are much more promising than some of those that have been undertaken in the past and we can hold out hope that things will continue to improve.  Hopefully the new website is just one small step in a large scope of positive things to come, for certainly Bermuda needs it.

Misled with tourism statistics?

cartoon-spin-bull-vs-bear

Two great quotes and a great cartoon found by The Big Picture:

“The spring of 1930 marks the end of a period of grave concern…American business is steadily coming back to a normal level of prosperity.”
– Julius Barnes, head of Hoover’s National Business Survey Conference, March 16, 1930

“While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”
– Herbert Hoover, May 1, 1930

There are many market cheerleaders out there spinning recent poor economic data as less bad and the markets have happily followed along.  Hey, the economy is no longer crashing at a startling pace, that must be a sign of a recovery right?  We’ll certainly see…

In a breaking news piece on The Royal Gazette Premier Brown is quoted as suggesting that less bad tourism numbers are a good sign.

“Already, in just the first six months of 2009, we have seen a slowdown to the slowdown,” Dr. Brown said. “Visitor arrivals have improved pretty convincingly between the first quarter and the second quarter of this year. Visitor numbers were down 27.84 percent in the first quarter, but after the second quarter the 2009 year-to-date figure has improved to an 11.28 percent decrease when compared to the year prior.

“That is clearly a trend in the right direction. This trend is expected to improve even further in the third quarter.”

Well sure, it is really nice to say the 2009 Q2 figure has improved over the Q1 numbers while conveniently not mentioning that last year we also just happened to witness a near 12% drop in Q2 arrivals.  A question that arises is how spending performed as the hugely discounted promotions hotels have been offering to attract tourists likely boosted numbers while cut spending.  To be fair we should also be examining year over year performance for the last few years as opposed to just last year.

Let us put things into context.  Let’s take the very latest Caribbean Tourism Statistics (found via google as they’re not officially posted on their site yet) and normalize the gain and loss percentages of each country to 2003 levels (2003 = 100) so we can get an idea of how well we’ve performed.  For added interest we’ll even throw in Antigua & Barbuda statistics as they’ve already reported their full Q2 numbers.

image

Notice how Bermuda has vastly underperformed the average Caribbean destination?  Oh, but don’t worry about that, we’ve improved upon the Q1 decline, that must be a sign of a recovery, right? 

Insult the customer? That’s your winning strategy????

Bermudian retailers could learn the value to providing better service if they’re serious about staying in business.  The first rule of better service?  Don’t insult your customers.  The second rule?  Be more creative in how you offer your business, solve problems and provide better convenience.

When an article comes out in the paper quoting Kristi Grayston, the co-chair of the Chamber of Commerce, suggesting consumers are to blame if retail disappears on island it is clear that they’ve completely lost touch with what it means to be in the service industry.  The co-chair would be well advised to take her own advise to “take a look in the mirror”.

Competition is a fact of life, especially in business.  Ms. Grayston may whine about Bermudians not stepping up to the plate to give handouts to the retail industry but the real truth is people will buy from the place that makes the most sense.  Retailers need to find ways to better appeal to their customers and offer more advantages than are available buying online.

For example, yesterday I went into Brown & Co to look for a book I’ve been wanting for a while.  It is presently ranked #50 in the Investing category on Amazon.com so I don’t hold out great hope that it’ll be carried on island anyway. I didn’t see it so I asked at the cashier.  They tried looking it up and had never heard of it.  Now, had I been offered that they could bring it in for me I would have happily asked them to do so.  This is the second bookstore I’ve checked for the book and have spent over a half hour looking for it in what will take me less than a minute to order online.  Is it any surprise that I’ll end up doing so even though it’ll cost more in shipping?

Ms. Grayston suggests “People complain there's no selection in our stores, but they'll complain more when there are no stores.”  You won’t hear this writer complaining.  When you have a need for size 13W shoes even off island shopping can be a very harrowing experience.  Over the last couple years every once in a while I’d forget, walk into a local store and see a couple pairs of shoes I really like.  I’d ask the salesperson if they have my size, or even a size close to it.  “Oh, we don’t carry sizes above 11/12 but we do have…”.  No I don’t want the single shoe that is so hideous there is a reason why it has not been sold in years.  Is there not a simple solution?  Either A, offer to take my measurements and order me a pair with the next shipment or B, start carrying ‘display’ shoes that I can try on and order in.  What did I do?  I downloaded 5 different shoe sizing charts, measured my feet, read online reviews of the fit of various shoes and ordered 6 different pairs online.  Problem solved.  (Of which, I had excellent service from www.shoes.com and won’t be buying again from www.shoebuy.com, though in all cases the shoes have exceeded my expectations)

Ms. Grayston suggests “I'm not surprised but shocked by the continuous decline”.  Ms. Grayston have you had your head under a rock?  Let’s go back to February 2007 where Ms. Grayston was pictured in an article titled “’Frightening’ rise in value of overseas purchases”.  Let us revisit her quote from that article:

Kristi Grayston, co-chairperson of the Chamber of Commerce's Retail Division, said: "It's nice to see that retail sales are up, but the overseas spending figure is always the frightening one.

"Although sales were up 4.8 percent for us, overseas goods were up 14.5 percent — and that's only the items declared at the Airport. That sector is growing and growing."

Here’s a glaringly obvious question:  What did you do when faced with this statistic Ms. Grayston?  It was a booming economy back then, business was up but you were being outpaced by overseas purchases.

As for what Bermuda's retailers can do to stem the tide of overseas competition, Ms Grayston said it was a question of awareness.

"We'll be launching a campaign at the end of this month, an extension of the 'Buy Bermuda' campaign, focusing on education," Ms Grayston, owner of the Pulp and Circumstance stores, said.

"The message will be that a dollar earned in Bermuda and spent overseas is not coming back. When you buy in Bermuda, you invest in Bermuda.

Ok, so now we’re in a recession, Bermudians are even less likely to spend their money and your strategy clearly did not work.  What do you do now?  Oh right, you blame the customer!  That’s clearly a winning strategy.  Let’s revisit what this blog suggested in response to that article.

  • Change store hours so that you're open till 7pm in the evening at the minimum.  I shouldn't have to inconvenience myself by leaving work to shop.
  • Convince the government to let you open on Sundays.  Being forced to only be able to shop on Saturdays is very limiting as many people have things they like to do on the weekends.  Having two days to shop makes it a lot easier to run out and grab something.
  • Ensure you're employees have a good attitude and know the value of customer service.

What we can add to that list today is another suggestion:

  • If you don’t have it, offer to order it and if possible carry display samples. 

Really, I’d rather not have to deal with shipping and customs hassles but I do because of the lack of alternatives.

Now, while I’ve railed against retailers I would like to take a moment to point out that I do fully understand the implications of fueling the local economy.  Indeed, I’m a rather frugal person in good times so that in downturns like this I can take the opportunity to spend more than normal in an effort to help out the economy.  For example, a couple weeks ago I decided it was time to buy a new suit.  I found a basic one that fit my needs at the English Sports Shop and overall am pleased with the experience.  They’re a retailer who I’ve found offer reasonable prices on many items I go looking for and their service is quite good so I’m happy to give them my business.  This in comparison to what an expat friend suggested which was spend a little extra to get a trip off island and a suit for $200 which will be near the same.  Now, I don’t know suits but I can say I feel I made the right choice.  The English Sports Shop so far has earned my continued business and I’m happy to return and help Bermuda’s economy by shopping there.  Other retailers could do more to step up.

So in summary let’s review.  If Bermudian retailers are serious about staying in business they could learn the value to providing better service.  This namely includes being more creative in how they solve customer problems by offering better value, service and convenience.  Oh, and let’s not forget the golden rule that should be common sense to a 3 year old:  Don’t insult your customers.

Outliers 2: We need KIPP

When we last discussed Malcolm Gladwell’s latest book Outliers we reviewed the disconnect between the philosophies of how poor families raise their children vs. wealthy families, regardless of race.  What we learned is that wealthy families are more likely to challenge their children via a parenting style referred to as "concerted cultivation", which is an attempt to actively "foster and assess a child's talents, opinions and skills." This in contrast to poor parents who follow a strategy of "accomplishment of natural growth" who see their responsibility as caring for their children but to allowing them to grow and develop on their own.

Next up we discover later in the book Mr. Gladwell’s research into education and what creates a divide between rich and poor.  Here he uses the example of research undertaken by Johns Hopkins University sociologist Karl Alexander to demonstrate how the biggest problem between wealthy and poor students is that wealthy students are exposed to environments of continued learning during their evenings and summer breaks while poor students are not and tend to lag behind as they are more likely to forget elements of what they’ve learned.  Summer breaks, he suggests, are the biggest disadvantage to the success of education.

As an example Mr. Gladwell provides the story of Knowledge Is Power Program (KIPP) and how it has dramatically changed the lives of underprivileged youth.

KIPP Academy seems like the kind of school in the

kind of neighborhood with the kind of student that would

make educators despair—except that the minute you

enter the building, it's clear that something is different.

The students walk quietly down the hallways in single file.

In the classroom, they are taught to turn and address anyone

talking to them in a protocol known as "SSLANT":

smile, sit up, listen, ask questions, nod when being spoken

to, and track with your eyes. On the walls of the school's

corridors are hundreds of pennants from the colleges that

KIPP graduates have gone on to attend. Last year, hundreds

of families from across the Bronx entered the lottery

for KIPP's two fifth-grade classes. It is no exaggeration to

say that just over ten years into its existence, KIPP has

become one of the most desirable public schools in New

York City.

What KIPP is most famous for is mathematics. In the

South Bronx, only about 16 percent of all middle school students

are performing at or above their grade level in math.

But at KIPP, by the end of fifth grade, many of the students

call math their favorite subject. In seventh grade, KIPP students

start high school algebra. By the end of eighth grade,

84 percent of the students are performing at or above their

grade level, which is to say that this motley group of ran-

domly chosen lower-income kids from dingy apartments

in one of the country's worst neighborhoods—whose

parents, in an overwhelming number of cases, never set

foot in a college—do as well in mathematics as the privileged

eighth graders of American's wealthy suburbs. "Our

kids' reading is on point," said David Levin, who founded

KIPP with a fellow teacher, Michael Feinberg, in 1994.

"They struggle a little bit with writing skills. But when

they leave here, they rock in math."

There are now more than fifty KIPP schools across the

United States, with more on the way. The KIPP program

represents one of the most promising new educational

philosophies in the United States. But its success is best

understood not in terms of its curriculum, its teachers, its

resources, or some kind of institutional innovation. KIPP

is, rather, an organization that has succeeded by taking

the idea of cultural legacies seriously.

KIPP was founded on the realization that the biggest problem with education today does not lie with the teachers, nor does it lie with the resources or the curriculum.  Instead it was realized that it is the structure of schooling that is the biggest problem and thus KIPP is fundamentally different from traditional western schools.

"They start school at seven twenty-five," says David Levin

of the students at the Bronx KIPP Academy. "They all do

a course called thinking skills until seven fifty-five. They

do ninety minutes of English, ninety minutes of math

every day, except in fifth grade, where they do two hours

of math a day. An hour of science, an hour of social science,

an hour of music at least twice a week, and then you

have an hour and fifteen minutes of orchestra on top of

that. Everyone does orchestra. The day goes from seven

twenty-five until five p.m. After five, there are homework

clubs, detention, sports teams. There are kids here from

seven twenty-five until seven p.m. If you take an average

day, and you take out lunch and recess, our kids are

spending fifty to sixty percent more time learning than

the traditional public school student'

Alexander’s research showed that the problem wasn’t that schools weren’t working, the problem is the long breaks in between.  KIPP aims to change this by restructuring schooling and expands on it by taking extra time to make schooling more relaxed and a better environment for learning.

He continued: "Saturdays they

come in nine to one. In the summer, it's eight to two." By

summer, Levin was referring to the fact that KIPP students

do three extra weeks of school, in July. These are,

after all, precisely the kind of lower-income kids who

Alexander identified as losing ground over the long summer

vacation, so KIPP's response is simply to not have a

long summer vacation.

"The beginning is hard," he went on. "By the end of

the day they're restless. Part of it is endurance, part of

it is motivation. Part of it is incentives and rewards and

fun stuff. Part of it is good old-fashioned discipline. You

throw all of that into the stew. We talk a lot here about grit

and self-control. The kids know what those words mean."

KIPP spends extra time in the classroom but uses it more effectively.

"What that extra time does is allow for a more relaxed

atmosphère," [teacher Frank] Corcoran said, after the class was over. "I

find that the problem with math education is the sink-or swim

approach. Everything is rapid fire, and the kids who

get it first are the ones who are rewarded. So there comes

to be a feeling that there are people who can do math and

there are people who aren't math people. I think that

extended amount of time gives you the chance as a teacher

to explain things, and more time for the kids to sit and

digest everything that's going on—to review, to do things

at a much slower pace. It seems counterintuitive but we

do things at a slower pace and as a result we get through a

lot more. There's a lot more retention, better understanding

of the material. It lets me be a little bit more relaxed.

We have time to have games. Kids can ask any questions

they want, and if I'm explaining something, I don't feel

pressed for time. I can go back
over material and not feel

time pressure." The extra time gave Corcoran the chance

to make mathematics meaningful: to let his students see

the clear relationship between effort and reward.

On the walls of the classroom were dozens of certificates

from the New York State Regents exam, testifying

to first-class honors for Corcoran's students. "We had a

girl in this class," Corcoran said. "She was a horrible math

student in fifth grade. She cried every Saturday when we

did remedial stuff. Huge tears and tears." At the memory,

Corcoran got a little emotional himself. He looked down.

"She just e-mailed us a couple weeks ago. She's in college

now. She's an accounting major."

The entire chapter (Chapter 9, Marita’s Bargain) is an excellent read and identifies some clear cut solutions we should be trying in our own public system.  For that matter the entire book is worth a read and study of how we can improve things locally for the betterment of Bermudians.

What is a minority government?

Rummy helped me realize in my comments that I may take for granted my understanding of minority governments due to having seen it in the Canadian political system so I thought I’d present a simple explanation.

Put simply a minority government is one where the incumbent governing party does not control the majority of the overall number of seats in parliament.

To illustrate this let us examine what we have today, which could be considered a majority government.

At present we have 36 MPs. 22 are PLP, 12 UBP and 2 independent. This means the PLP have the majority and thus can pass anything they like in Parliament assuming PLP members toe the party line.

A minority government would be a government where the PLP for example would still be the incumbent but would not control the majority of seats.  Let us suggest that a new party had arisen last election and the results came out as 17 PLP, 13 UBP, and 6 for party X. This would mean that the PLP does not control the majority of the seats and thus would have to win support of either UBP members or members of party X to pass any law in parliament.

This kind of restriction means that the incumbent is now held accountable as they are unable to pass laws they cannot get support from either of the two oppositions.  Subsequently they are at risk of being called back to an election if the two oppositions agree on a vote of no confidence.

This kind of government promotes compromise and reduces the arrogance seen of majority governments because in order to succeed they must earn their support rather than assume it and take it forgranted.  It means we would see a return of issues being properly debated and fairer stances being undertaken.  Thus we end up with a stronger government because it is forced to be accountable and transparent.

We have already seen examples of a minority government in action when rebel MPs in the PLP stood against Premier Brown’s ridiculous attempt to pass his gambling law.  Since he did not control the majority of MPs he was unsuccessful and has subsequently had to reign in his overt ways in favor of greater compromise or he shall be held at a stalemate unable to accomplish anything.  It is this that we need to see continue and could likely shall if we saw a new party arise with the goal of pursuing a minority government.

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Disbanding defined

With Jonathan’s latest response over at Catch A Fire with regards to our back and forth I’m left wondering if we have different definitions of what it would mean for the UBP to ‘disband’.  In my view I see the hypothetical UBP’s dissolution as conforming to one of 3 scenarios.

  • Scenario A:  The UBP disbands completely, all present and former representatives go off into the blue yonder to leave their seats up for grabs never again to set foot in the Bermudian political arena.  I give the likelihood of Scenario A occurring a resounding 0%.
  • Scenario B:  The UBP disbands into independent candidates representing themselves and not affiliated to any party.  The UBP as an organization disappears into the blue yonder.  This happens to be my favored scenario and the one I feel is most likely as whether the party does it all at once or slowly and painstakingly loses members one by one I have yet to see any indication that the party will be able to reinvigorate itself with new talent.  Thus I give this scenario the likelihood of 50%
  • Scenario C:  The UBP disbands and former members work together to form a new party or parties.  This scenario I suspect may be closest to Jonathan’s definition though I also suspect that if it were to occur it would have already.  The rebel/reform faction within the UBP had ample opportunity to split off and form a new party and it seems that since they have not done so those individuals are slowly going independent.  While it is still possible to occur any new movement will have trouble gaining credibility and will likely maintain the UBP branding with whatever new name they produce.  I’d stake this one at a 40% likelihood
  • Scenario D:  The UBP doesn’t disband, manages to reinvigorate themselves, gain new talent and challenge well in the next election.  Similar to scenario B only instead of reaching an untimely demise through slowly bleeding out they achieve the impossible and heal like they’re wolverine.  Sorry UBP, I just don’t put a lot of faith in this scenario so I peg it at 10% likelihood.

Ok, so now that we’ve defined things let’s go back to Jonathan’s assertions.  As suggested, I suspect his expectation is that scenario C has the highest likelihood.  In that case I would tend to agree with him that we would likely find ourselves with a reformed (UBP’s new clothes) UBP and possibly a new upstart which either together would end up fighting over the UBP support base or one would suffer the UBP stigma while the other has the potential to flourish by attracting support from both sides.  My thought would rest on the composition of those parties and their ties to the UBP.  If the upstart had no ties to the UBP, wide representation and represented those things neither party will actually pursue (direct democracy?) it may have a fighting chance, especially if it pursued the strategy I outlined in my Minority Governance post.

So now that we’ve covered scenario C, lets look at the others.  Scenario D is very similar and could be considered the same only the UBP doesn’t try to play peek-a-boo with the public hiding behind a new name.

Scenario A is absolute absurd and does a disservice to those people who have worked very hard to try to make a difference in our community through public service.  The individual contributions of people should not be so readily forgotten.

Finally we get to Scenario B which I see as happening in one of two forms.  Either the UBP disbands into independents as a collective decision or they do so piecemeal.  If they do so as a collective decision it could be leveraged as a strength for Bermuda’s future.  It would free each MP to represent themselves and eliminate the party line.  While the collective group could still be cast under the UBP shadow it would be tougher for some than others like it has been for Wayne Furbert, who now votes purely on conscience and it’s been readily apparent.  It would subsequently free new individuals to stand given that the UBP would not collectively work to try to fill every constituency with a candidate and would allow for greater competition.  Multiple independents including possibly a new non-UBP linked party challenging PLP marginal's with no UBP candidate contesting could change the game as anti-UBP voters would no longer be voting against the UBP and would be presented with multiple options which may encourage them to vote based upon the issues. 

It is ultimately hard to say which way things would go nor how things would truly play out as it is all speculation.  Despite this, regardless of whether the UBP disbands or doesn’t disband it is my belief that the strongest case that could be made by individuals looking to form an alternative would be to do so as one that severely limits involvement of individuals with heavy ties to the UBP or PLP and pursues the route I’ve suggested in my piece on Minority Governance.  Regardless of the scenario it is my belief that such a group would have the best case to change our political landscape for the better.