It was hard to blame them, after what one called a ‘seismic’ week. In just five days, they had witnessed a government-brokered buyout of Bear Stearns, America’s fifth-largest investment bank; a three-quarters of a percentage point cut in interest rates from the Federal Reserve; and a rash of warning signs that the American economy had already slipped into recession.
Source: Guardian UK
Barbadians have not been told if the Bear Stearns collapse will have any direct impact on Barbados. It is a possibility that such a large North American investment bank must have tentacles far and wide. The Barbados media continues to regurgitate the news falling off the international news wires such as AP, Reuters and the like. In contrast their Jamaican counterparts have already dissected the possible implications for Jamaica, and if we go by the stories in the Jamaican newspapers, the media there continues to investigate the implications for Jamaica. The Jamaican media reported last week what Bear’s Head of Emerging Markets Fixed Income Research Dr Carl Ross had to say literally a week before the demise of Bear Stearn, here is what he has to say about emerging markets and the problem of raising capital. Barbados as we understand it falls into the emerging market category:
Emerging markets such as Jamaica’s have not been spared from the carnage. Dr Ross notes that “Debt issuance from emerging market has collapsed from the first two months of last year. Investors don’t want to buy, and issuers don’t want to issue, at these higher spreads and yields”.
The risk aversion in the international capital markets has direct implications for Jamaica. It will be “very, very difficult for Jamaica to access the international capital market”, says Dr Ross. The news is not altogether bad, as Dr Ross notes that there is still time as “it not like Jamaica has to access the international capital market in the near term”.
Source: Jamaican Observer
Our layman interpretation of the statement by Dr. Ross points to Barbados having to be very prudent when attempting to borrow in the United States capital market. Does the BU family agree with our conclusion? At a time when Barbados has assumed such a high level of debt as a result of the aggressive capital works program of the past government, not being able to borrow because of depressed market conditions maybe a good thing.
An angle which the local media can pursue is to explore any leads which might link fallout of the Bear Stearns collapse to Barbados. For example it is being reported that English billionaire Barbados based trader Joe Lewis losses could top one billion United States dollars. Of interest to Barbadians is the fact that Joe Lewis is part of a group comprised of John Magnier, JP McManus, and Dermot Desmond. For those of you not familiar with these names they are the owners of the plush West Coast Sandy Lane property.
Magnier(l) McManus(c) Desmond(r)
Joe Lewis, the East End-born billionaire investor, lost his magic touch, ploughing heavily into Bear Stearns – even hours before it collapsed. The Barbados-based trader’s losses in Bear could top $1bn. Lewis, close mates with Tiger Woods, rarely acts alone in his daring raids. Did his regular compadres, the Irish horse-racing tycoons John Magnier and JP McManus, along with Dermot Desmond, also pile in?
Source: Guardian UK
How the hell does a man who looses 1 billion dollars feel?
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