[private] The last two months have been one of the most turbulent times since the Great Depression stock market crash of 1929. But while most people see gloom and doom as their life savings dwindle, some see opportunities. Opportunities as far from Wall Street as the Bay Islands.
The adjustments on the retirement dreams for hundreds of thousands of baby boomers is likely to produce windfall for places in Mexico and Central America. These baby boomers who fine-tuned their portfolio to retire on a fixed income in Florida or somewhere next door to their grand children now have to adjust their expectations. Some who lost a big portion of their retirement money might have to delay retirement or get a part-time job during retirement. Some might have to adjust their expectations from retiring in Florida or Texas to retiring in a more affordable third world destination. Bay Islands could benefit directly from this.
The archipelago has many elements going for it: warm climate, familiar English language culture, a place to stay active through volunteering or sports, less expensive housing, affordable and sometime even free basic healthcare, affordable dental care. The global recession presents an opportunity for the Bay Islands, a chance to gain long term from this short term financial crisis. While US-only recessions typically end in eight months, world recessions usually last 18 months; so this crisis is likely to last until February 2010.
While there are only a couple thousand foreigners living on the Bay Islands, the archipelago can easily expand its capacity to accommodate 20-30,000 foreign residents and tourists. Yet while the islands are big enough and attractive enough, the infrastructure–road, sewer, legal, environmental–has been delaying and impeding the “discovery” of the Bay Islands for last 20-30 years. While Cozumel, Cayman Islands and Belize boomed, the Bay Islands slept. It may have been for the better.
For now Bay Islands will have to weather some hard times. Banks in the Bay Islands–HSBC, BAC, Lafise-all have international connections and are part of a global lending network which has been hit hard by “toxic mortgages” and lending crunch. Lending for construction projects in the Bay Islands has gotten more difficult and real estate sales have slowed down.
The fishing industry, another pillar of the Bay Islands economy, has been hit hard. Due to a decrease in consumption at US restaurants, prices for lobster in the US have plummeted from $20 to $14 and are likely to fall still. Bay Islands fishermen and fish packing plants are in crisis mode.
Still, more dangerous to the Roatan and Bay Islands economy is not the behavior of US banks, but the behavior of the island’s residents. The damage done to the reputation of Roatan as a dependable and welcoming place for tourists has been damaged. Three days of protests which paralyzed the island and forced cancellation of two cruise ships could spell disaster greater than any financial crisis.
Over the next season or two, the number of cruise ships, cruise ship tourists and money spent per person on Roatan is likely to decrease. With the continual growth of the cruise ship market, this should be a blessing in disguise. The island infrastructure is bursting at the seams and 300,000 cruise shippers stepping off on Roatan is plenty.
The perception of Honduras, Central America’s least developed country, has affected the Bay Islands, and rightfully so. Still Honduras belongs to a more nimble, flexible niche of economies which can shape their futures more independently from the overall downturn of the US market. Foreclosures of the US financed properties held by some Bay Islands banks have been quickly scooped up by island and mainland investors. “Real estate is bound to benefit from that sentiment in the long run. The Bay Islands and much of Central America should benefit from that, though residential sales may be slow for a while,” writes Alston Boyd, a new liaison between the President of the National Association of Realtors and ANABIR. [/private]