NMI’s bleak economic future

The combined pile of deficit spending, a huge cumulative deficit, exacerbated by heavy loss in revenue streams in recent past forces the question: What’s the severity of the impending economic crash when these factors annihilate every penny in the local coffers? More of a bleak future, isn’t it?

Part of the larger problem is the 100-year recession that drags most economies of scale to the abyss of loss of investments. The NMI wasn’t spared the net effect of global economic decline. On a narrow scale, this issue triggers a recession of the worse order never before seen in our developmental history. Or is it more of a depression? When would recovery return?

Even with recovery, it may still require cuts in services in order for private industries to rebound. In the process, those without jobs are more than likely to remain jobless. Those with jobs would have to take salary cuts from companies until they are back on their feet. But such condition is more of the latter altogether.

The CNMI’s worsening economic decline was further fueled by its discriminatory land policy, a suspect legal system that doesn’t provide equal protection for all folks—citizens and those legally situated, including investors; bigotry; tax-and-chase policies against private industries; uncertainty wrought by federal policies that literally annihilated the local economy; difficult labor policies; and, high utility costs, among major disincentives.

These disincentives have forced major decline in direly needed revenues. It paralyzes the ability of local government to pay its bloated payroll, gobbling the balance usually earmarked for public services. Though austerity was instituted, it still incurred some $25 million in deficit spending last fiscal year, a tale of the severity of revenue decline.

Certain measures were also undertaken to cut expenses, i.e., turning CHC into a health corporation that instantly inherited a $15 million deficit. It was only appropriated $5 million for this fiscal year. The intent is exclusion from the CNMI budget and told to go “sink or swim.”

But isn’t health one of three essential services you can’t leave to fend for itself without appropriate lead time? Can the administration superficially absolve itself from such fiduciary responsibility? I didn’t know it also specializes in synthetic truth.

There’s CUC who was given the green light to borrow some $10 million to fix certain EPA violations or suffer further fines. The new money would hopefully allow it to maintain the utility system. Its surcharge fee, though, is partly responsible for the closure of businesses that can’t fathom the horrendous cost of utilities. More businesses are marching toward Debt Cliff and Closure!

It’s troubling that many of us would be standing in the presence of fiery magma that torches everything in its way. As dizzying as it may be, we have our work cut out for us. Deficit spending isn’t the answer either. Must cut and cap spending, now!

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[B]Investors flock to Sunshine State[/B]

As we rail against the drain of investments from investors who’ve fled the islands, I salivate at huge investments flocking and descending on Florida State. “The world recognizes Miami as a major global gateway city—one that is key to economic growth for its southern and, now, even its eastern neighbors,” according to Rudy Martin, editor of Emerging Market Winners, an investment magazine out of Florida.

Said Martin, “Malaysian gambling company Genting unveiled a $3 billion master plan for a huge destination resort project right here in the United States. Genting wants to build what could be the world’s largest casino on prime land along Miami’s waterfront. The plans are already in motion, as the company has already spent about $450 million on real estate, pledged to help rebuild part of an interstate highway and hired 23 lobbyists to press for legalizing casinos in Florida.

“Genting’s cash-rich status gives it an advantage over many overburdened U.S. casino operators, who embarked on building sprees or leveraged buyouts just as the casino market in the U.S. began to sour. The company, which grew out of a single casino in Malaysia, has holdings in a range of industries and made a reported $3.4 billion profit last year on $15 billion in revenue.

“In Genting’s case, the land is purchased, so plans are on track to keep moving forward—even if the casino gambling battle doesn’t go exactly according to plan. The company bought prime downtown real estate at a price that is attractive for a long-term investor in this gateway city; it may simply have to adjust its timetable for developing the property to its own specifications.

“So, why Miami and not, say, destinations like Las Vegas or Atlantic City where gambling is already legal? Well for Genting, it also owns 50 percent of Norwegian Cruise Lines, which operates out of the Port of Miami. So, it already has a vested interest in the area and would benefit from increased tourism, particularly from emerging-market travelers with money to spend.”

So the sunshine state turns into the focus and center of investments not only from her southern neighbors, but East Asia and other countries as well. Here’s what it expects from all over the global village: Investments in Florida by Country in commercial real estate in the millions of dollars: Malaysia, $252.25M; Canada, $235M; Germany, $172M; Israel, $89.21M; UK, $77M; Mexico, $49.95M; Switzerland, $48.50; Argentina, $14.10M; Hong Kong, $13.10M; Total: $951.15M.