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President Obama has a daunting challenge before him, as do most of the world's leaders, including our own, for despite early optimism expressed in the global community that an American financial and economic collapse would not prove to be contagious, the opposite has clearly occurred.

This global crisis as proven by recent statements coming out of Davos, which annually hosts the financial and political 'masters of the universe', indicates that no country has been spared the wrath of a largely American and Western led orgy of greed and avarice, otherwise known as 'classical economics'.

It was Bermuda's own Michael Douglas who, as Gordon Gekko in the movie 'Wall Street', famously said 'Greed is good'. No phrase epitomized the closing era better than that one.

In fact there has only been one winner out of the world's financial woes, at least on the short term, other than those savvy investors who sold out before the crash occurred; and that ironically is Obama himself.

Let us not forget the heady days of summer when we were tearing our hair out, dismayed at how close the race had become. John McCain, the Republican nominee, was increasingly competitive coming out of the Republican convention in late summer.

It was not until the shock of a virtual collapse of America's financial and economic system that Americans - particularly older white Americans - were prepared to throw in the racial towel and reject the economic orthodoxy which had brought the country literally to its knees.

So while the world curses the architects of this now concluding era, such as Allan Greenspan the former Federal Bank Chairman and his mentor Milton Friedman; and while effigies to the Anglo Saxon god Adam Smith are burnt at the stake, Mr. Obama quietly and alone should say a prayer of thanks to them all. They helped to make his election day victory possible as much as Martin Luther King did.

On the local front, if one has listened to Shadow Finance Minister Bob Richards, Grant Gibbons or any number of the prophets of economic and financial doom and gloom, one would think that Bermuda's economy went into the tank about three years ago.

Their pronouncements have seldom reflected the real state of the economy however, nor the state of the government's relationship with the international business sector.

The robust nature and expansion of this economy under the management of the current government and its management of that sector in particular, has been stellar by any measure.

Meanwhile, the IMF says that more than two trillion in bad assets now clog the world's financial system and has slashed projections for global economic growth for 2009 from 2.2 per cent to 0.5 per cent - the slowest pace in 60 years and even that may be wishful thinking.

In Bermuda we will be facing some significant challenges over the next 18 months. Our relative position in the world will no doubt be under threat quite possibly in ways that we have not seen in this country, since the advent of World War II.

Perhaps the biggest threat, which conflates with the so called tax haven issue, is the likely re-ordering of the global financial and economic architecture. The new structures which will likely be erected to govern commerce and trade upon the looming wreckage of the old world order, which used to be called until very recently 'the new world order', could be designed in such a way, that undermines our competitive advantage.

Bermuda benefited tremendously during over the last twenty five years by leveraging and maximizing its competitive advantage, with respect to low taxes, modest regulation, good infrastructure, a disciplined workforce and location, to its advantage. Any global structural shift toward economic and financial protectionism by the so-called on shore tax and regulatory regimes, could seriously affect our status as a major offshore player.

But for now, as with so many around the world we can only sit and hope for the best.

Yet it is beginning to feel that with five to six large cranes still dotting the Hamilton skyline, and despite growing weakness in the tourism sector, Bermuda, at least for now, is continuing to fiddle along relatively well, even as the global economy burns.[[In-content Ad]]

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