Letters to the Editor
The Value of Money
Dear Sir,
I write in reference to a front-page articlewritten in Issue #205/Volume #3 on June 28, 2002 in this popularpublication whereby the editor and his staff tried to quell anyvicious & politically dangerous rumors from spreading further.The article in which I make reference was in the context of "Revaluenot Devalue" the Cayman Currency.
As I read this article I was filled withshock, then dismay and finally disbelief. I was shocked to hearthat a Marl Road rumor suggesting that the Cayman Currency shouldbe devalued was in the air. I then became dismayed by the factthat in the editors attempts to dispel the rumor by taking thematter to those in the know, only to have a large portion (accordingto the article) of those contacted refuse to return the call toprovide comment.
I was then finally filled with disbeliefthat those who did return the editor's call, declined to comment.It is therefore my belief that in an attempt by this publicationto route out a potentially hazardous rumor such as Devaluing theCayman Currency, it has instead stumbled on a story that warrantsfurther review.
Please allow me to further explain the scenarioas I see it and please understand that I only offer a potentialargument that seeks further debate and at no time am I sidingwith either sides of government, be it the UDP or the PPM, inmaking this statement. As the Hon. Roy Bodden gave as part ofhis contribution to the Constitutional Debate, "I am neitheron the Left or the Right but in the Center."
I am merely offering an objective outlook.When the editor received a call from the Hon. Financial SecretaryMr. George McCarthy, the Secretary was quoted as saying that "TheCayman Islands government has given no thought about revaluingthe Cayman Dollar", however in the same interview, he mentionedthat "realignment (of the Cayman Dollar) would have beenmore accurate for the story". Now as I see it, this as aBattle on Words. Which is it? Has government entertained the thoughtor not?
In this tumultuous time when the governmentis separated on a "Take Note" motion, I would hope thatour leaders would not even consider adding yet another coal tothe fires of the PPM. However, in reading further, I read thatone hospitality industry official was quoted as stating "Asugly as it may seem, it (Devaluing the Cayman Dollar) may be theonly way to recovery in the tourism industry". Therefore,this leads me to believe that the matter has been, if not discussedopenly, entertained among lawmakers and decision makers in thiscountry.
The hospitality industry is correct in onerespect; the first steps to stimulating the economy must be focusedon revitalizing the tourism industry. However, Devaluing the CaymanDollar to make it more US Dollar friendly is not the way to go.Once you remove a currency from a position of dominance in termsof how it is exchanged, there is no going back. Especially whenthat currency is not traded anywhere, except within these islands.Instead, I suggest that we take a closer look at the costs associatedwith how the Cayman Islands sell its services as a tourist destination.
We must first focus on the costs associatedwith air travel. It costs more to fly to the Cayman Islands fromMiami than it does to fly from Miami to Toronto. This is so becauseCayman Airways and Government sets the price of air travel sothat the local airline can make a buck or two. However in doingso, the economy suffers. Is it not more sensible to lower thecost of air travel, thus filling more seats on not only CaymanAirways, but all other carriers entering the Cayman Islands?
This would stimulate the airlines cash flowwhile supporting the recovery of the economy. But the cost cuttingshouldn't stop there; government should then negotiate with thehospitality industry and devise a plan that will lower the ratesof accommodation. In doing so, the hotels earn higher occupancynumbers and the economy if further stimulated.
To further strengthen this economic recoveryprocess we must consider the second pillar on which the CaymanIslands economy is based, Finance. I urge the government to bewary of what rights and privileges corporate clients of theseislands are forced to give up in governments attempts to meetthe demands of our US and European neighbors.
It is all but impossible for banks to dealwith US clients because US clients are being forced to sign adocument that outrightly admits to their government that theyhave taxable offshore assets in Cayman banks. The only taxes aUS investor is seeking relief from while utilizing Caymans bankingservices are Capital Gains Taxes. Once their funds are repatriatedto the United States, they should be required to pay tax at thattime based on the value of assets being returned and thus distributedback into the US economy.
We must remember that in any negotiationthere is give and take and so far we have given much away withlittle returned other than to say we are no longer blacklistedas a nation of non-cooperation. A list, I may add, that no onereally pays much attention to these days. investor confidencemust be regained not diminished and "entertaining" thethoughts of "Realigning" the Cayman Dollar is not theway to improve on Investor relations. Aside from proving to ouroffshore investors that our political infrastructure is strong,we must also assure them that the local economy is also unshakable.
In closing, I ask the question of government,as remarked by Lindon Martin during his contribution to the "TakeNote" motion. Are we a government for the "merchant"or the "Laborer"? Are we willing to prove to the worldthat we are capable of sampling the best of both sides, Merchant& Laborer, and work together to create a workable solutionto the struggling economy without treading on the Cayman Dollar?I believe our leaders are capable of this task and as the GoodBook states, "will deliver us from Evil".
Austin O. Harris,Jr.