Are We Headed for Recession? (BusinessWeek)

Talk of a downturn is in the air, and the numbers are squiggly

People who ordinarily ignore economic forecasters are eager for whatever intelligence they can glean. What’s grabbed their attention is the January plunge in the U.S. stock market,    the worst two-week start on record. If the bears are right, profits and economic growth in general are going to be weak in 2016. Even if the bears are wrong, the drop is making investors less willing to spend. Nobody knows what’s going to happen next. “The fact that economists have a particularly poor track record of calling turning points in growth only adds to underlying anxiety,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities, wrote to clients on Jan. 19. 

Weakness is emanating from China, where pessimism has driven stock prices down 40 percent   since June, vs. a decline of 12 percent in the U.S. With trade declining, there’s been a sharp drop in the Baltic Dry Index,    a measure of cargo shipping rates. Oil prices    are also down, reflecting not just an increase in supply but falling demand. That’s bad for businesses and workers in the U.S. oil patch. One way trouble abroad gets transmitted to the U.S. is through a rising dollar.    When other economies weaken, the world’s investors flood into the U.S. in search of higher returns, buying dollars as they do. The strong dollar is already showing up in a decline in import prices    —bad news for U.S. companies that compete with imports. The Morgan Stanley Business Conditions Index    fell this month to its lowest level since February 2009. Ellen Zentner, Morgan Stanley’s chief U.S. economist, headlined her report, “Losing Faith.” Auto sales    , which had been climbing steadily for years, have fallen from their peak. Manufacturers, more sensitive to trouble abroad because of their reliance on exports, have seen a sharp drop in their main index of activity.    The economies of more than 9 in 10 U.S. counties    still haven’t gotten back to their prerecession peaks. Analysts estimate that profits of Standard & Poor’s 500 companies    in the last quarter of 2015 had their biggest drop from the year before since 2009, according to data collected by Bloomberg. 

While all this is going on, the Federal Reserve has its finger on the interest rate trigger. The Federal Open Market Committee has already raised the federal funds rate target once, to a range of a quarter percent to a half percent. The midpoint of the “dot plot” of Fed officials’ forecasts is for the federal funds rate   to reach 1.25 percent to 1.5 percent by the end of 2016, a level that bears think could stop the fragile U.S. expansion. 

There’s nothing fragile about this expansion, answer the bulls. The economy has created millions of jobs    since the last recession, including 292,000 jobs in December. This is the longest run of consecutive monthly employment gains in records going back to 1939. The U.S. Bureau of Labor Statistics tracks an index of payrolls    consisting of average hourly pay multiplied by average hours worked per week multiplied by the number of workers. It’s up one-third from six years ago. In a virtuous cycle, payroll growth enables stronger consumer spending, which feeds back into more job growth. The number of openings    has more than doubled since 2010 to better than 5 million, indicating that the hiring expansion has room to run. Sure, the pace of initial filings for unemployment insurance    has picked up a bit, but it’s still far below its recent average. 

The cheap oil that the bears worry about is good news for the bulls, because lower gas prices   leave more money for people to spend on other things. Americans have been paying down debt, and their financial obligations    have been declining as a share of their disposable income Consumer sentiment    is close to its strongest of this business cycle. And there’s no hint of a bursting housing bubble: True, construction starts fell in December despite warm weather. But affordability    remains well above the worst levels of 2006 and 2007. The bottom line is that a 2016 recession is unlikely. The Conference Board’s index    of leading economic indicators points to growth. Macroeconomic Advisers    , a forecasting firm, expects the economy to bounce back from a very weak fourth quarter in 2015. Participants in the Federal Reserve Bank of Philadelphia’s latest Survey of Professional Forecasters see only a small chance of gross domestic product shrinking    in any quarter this year. Then again, those soothsayers weren’t predicting a recession at the start of 2008, either. They didn’t realize that one had already begun.

The 25 Best Jobs in America, According to Glassdoor (BusinessWeek)

Positions in health care and technology dominate the list.

Nearly half the people in the U.S. will be looking for a new job in 2016. Many will take into account everything from salaries to career prospects when they start their search. Career website Glassdoor has done some of the work for them. To compile its second annual list of the 25 Best Jobs in America, the company accounted for earnings potential, career opportunities, and the number of openings for a given job function.

Data scientist took the top spot for 2016, climbing from No. 9 on last year's list, and knocking last year's winner, physician assistant, down to seventh place. Jobs in the growing fields of technology and health care dominated the list, although there some finance and marketing jobs appeared in the mix. 

Jobs that dropped off the list this year were database administrator, sales manager, mechanical engineer, and physical therapist. New to the list are engagement manager, analytics manager, and UX designer. 

It's hard to find data scientists that don't like their jobs among the anonymous reviews submitted to Glassdoor. Sentiments such as this are common: "I get to work every day on interesting problems together with incredibly smart and committed coworkers." The specific employer can make a big difference. Data scientists at Airbnb, crowned the best place to work by Glassdoor about a month ago, are particularly happy. "There are a lot of things that make my job great: a majority of the employees at Airbnb are committed to the company's mission, the benefits and perks are the best you'll find ... there's a lot of flexibility in when and how you work." 

Other jobs that cracked the top 25 include tax manager, mobile developer, marketing manager, and electrical engineer. Here's a look at how the top 25 stacked up, according to Glassdoor's 5-point scale. 

Earning potential is a big factor when considering jobs. Here's a look at what the top 25 jobs take home annually. Software development manager took the top spot, with a salary of $135,000. The lowest salary was $69,500, for technical account manager.

As for what career paths to avoid, job seekers should pay attention to some of the lower-ranking jobs, such as insurance agent or reporter. The overall job score for the four of the "worst jobs for 2016" ranged from 1.6 to 2.1, and here are their median base salaries.

More on Glassdoor's methodology can be found at the bottom of its online report. 

¿Cómo comenzar el Nuevo Año? (Edwin Conrado Rivera)

Cada año que comienza, la mayoría de la gente repasa su nueva dieta física.                    

Sin embargo, lo primero que deberíamos de hacer es meditar como está nuestra dieta Espiritual, luego la Mental y al final la Física.

Repasemos como hacer una meditación consiente para una dieta Espiritual adecuada. 

¿Cómo te sientes espiritualmente? ¿Estás conectado con el ser supremo o estas desconectado del ser supremo? Como es tu relación contigo mismo, es de Amor o de Odio. Como lo es con tu pareja, tus hijos, tus amigos y con el resto del mundo.                   

Cada día podemos hacer un esfuerzo por ser mejores seres humanos. Cuáles van a ser los valores (honestos, sinceros, comprometidos, puntuales, etc.) por los cuales vas a vivir en el 2016.

La vida es corta, vívala con intención positiva y deseo de querer ser cada día mejor en todas tus relaciones. Yo sé que hay gente difícil, o que se quieren hacer los difíciles para manipular las emociones de los demás.  Esos ya tú los conoces, aprende a mantener una actitud de calma cuando vengan esos eventos que te perturban y te dan ganas de jalarles las orejas para que recapaciten. Acuérdate que no podemos cambiar a nadie,  el único que puede cambiar es usted.

Entonces, ¿Cómo puedo ser mejor?  Aquí te doy unos consejos prácticos para el diario vivir.

1.      Saber escuchar requiere de mucho esfuerzo y sacrificio. Trate de ser un mejor oyente. No solo escuchar las palabras, también escuchar su corazón y sus intenciones. Observa su lenguaje corporal para definir si el mensaje es congruente con lo que se dice.

2.      Cuando quiera saber algo que ha hecho alguien o averiguar alguna información, en vez de comenzar a quejarse, criticar o condenar, primero haga preguntas. Es posible que le den la respuesta y evite una discusión innecesaria. Acuérdese que la respuesta no siempre es lo que usted quiere escuchar.

3.      Si en el momento no está en condiciones de contestar, ya sea porque no se siente bien o tiene coraje, deje que la persona hable y dígale que trataremos el asunto en otra ocasión más adecuada. En algunos casos pasar el tiempo nos ayuda a reflexionar sobre el asunto y a encontrar una mejor solución.

4.      El respeto tiene que ser siempre mutuo. Si por casualidad le faltan el respeto, no reaccione de mala manera. En muchos casos la persona no tiene la información correcta para reclamar.  Cuando la persona esté calmada, hable sobre el asunto con mucho tacto, mucho amor y con total sinceridad. Así, le permitirá a la otra persona salvar su propio prestigio.

5.      Otra forma de respeto es llamar a la gente por su propio nombre. Yo se que en nuestra cultura latina nos pasamos cambiándole el nombre a las personal, especialmente a los familiares. Pero, cuando estés fuera de tu círculo personal evita ponerle sobrenombre a la gente. Muchos de ellos se molestan y hasta es posible que no te digan nada, aunque luego cambien de actitud contigo y no te des cuenta.

6.      La sonrisa sincera y honesta calma tempestades. Los asuntos negativos deben de atenderse con gracia y fe de que se van a resolver positivamente. Evite usar la risa de burla, esto no ayuda a que las comunicaciones mejoren, al contrario, las empeoran.

7.      Cuando nos ponemos los zapatos de los demás, comenzamos comprender mejor sus actitudes e intenciones. De vez en cuando deje de pensar en sí mismo y trata de buscar una relación ganar-ganar. Al tener este tipo de carácter, siempre vamos a encontrar una manera de unir esfuerzos y evitando crear separaciones.

8.      Trate a los demás como le gustaría que le trataran a usted. Esta actitud siempre gana amigos y desarrolla mejores relaciones humanas.

9.      En varias reuniones que he participado, he observado a dos personas hablando a la vez. No me parece que se puedan entender bien. Por lo tanto, cada persona debe tener su tiempo de hablar y tiempo de escuchar. Le recomiendo observar esta regla de oro para una comunicación eficaz.

10.  Lo único real que es suyo y se lo dieron de gratis, es su cuerpo. Asuma la total responsabilidad de cuidarlo con empeño, amor y cariño.  No lo maltrates, porque tarde o temprano se lo va a cobrar. La vida de hoy día es tan corta que no es necesario que acelere su despedida de este mundo por falta de conocimiento. Aprende como funciona su cuerpo, que necesita para vivir y defina un plan de acción para su cuidado. Esto incluye higiene, alimentación, ejercicios y descanso.

El Maestro Edwin Conrado Rivera, MPH es Adiestrador Internacional, Coach y Autor del libro: “La Diabetes: El Árbol de las Enfermedades”. Para conocer sus servicios,  lo puede conseguir en: EdwinConradoRivera@gmail.com

Enero 15, 2016     

E-Mail Spam Goes Artisanal

Scammers are turning to small-batch attacks to beat today’s more sophisticated e-mail filters.

When a group of hackers sought to steal iTunes passwords from Apple customers in France, they didn't spam the entire country. They sent out just 5,000 e-mails to French-speaking targets containing links to a fake login page.

The attack, which took place in October, was a success, at least by spamming standards. Most of the e-mails found their way to their intended recipients' inboxes, a rare occurrence with today's sophisticated spam filters. Agari Data, a cyber-security company that tracked the incident, said more spammers are adopting this kind of small-batch approach in the hopes of breaking through junk-mail blocking software.

As anyone with a Gmail or Yahoo! account knows, spam e-mail is mostly relegated to a folder you probably never check. Unlike the old days of the Internet, in-boxes are no longer clogged with poorly worded come-ons for Viagra pills and Nigerian banking scams. Modern anti-spam filters block more than 99.99 percent of junk messages.

Spam is still a big business. Unsolicited junk mail accounts for 86 percent of the world's e-mail traffic, with about 400 billion spam messages sent a day, according to Talos, a digital threat research division of Cisco Systems. While the vast majority will never see the inside of an inbox, the few that do worked hard to get there. "Spammers are getting much more focused, much more targeted, and this shows they are getting more concerned about quality," said Vidur Apparao, Agari's chief technology officer.

In the French iTunes case, attackers were able to operate their e-mail scam for eight hours before automated filters began to catch on, Agari said. They used e-mail accounts hosted through a small Belgian cloud company that wasn't a known offender on global threat lists. 

Attackers frequently use small hosting providers to execute their schemes because the companies often lack checks in place to catch fraudulent users, unlike, say, Amazon.com or Google, said Apparao. His company wasn't able to determine whether users clicked links contained in the e-mails, or how many were tricked into giving away passwords.

This increasingly popular technique is known in the industry as "snowshoe" spam. (The name refers to the small footprints it leaves.) This differs from the more commonly known spear-phishing attacks, which target specific, often-important people with personalized messages sent one by one. Craig Williams, a senior manager at Talos, said the amount of snowshoe spam has more than doubled in the past two years and now accounts for more than 15 percent of all junk messages distributed globally.

Snowshoe attacks continue to cause "severe" problems for spam filters, Cisco said. It's one of many vexing problems for the industry. Global spending on cyber-security technology is projected to surpass a record $83.6 billion in 2015, according to an estimate by researcher Gartner.

A separate attack, also in October, involved 169 e-mails targeting Italian PayPal users, Agari said. The messages came from a data-hosting company in France that hadn't been included on major blacklists before the attack. These e-mails, like most effective spam, didn't include attachments, which can be quickly scanned and flagged as malicious. Because Web links take longer to crawl, many filters don't bother.

As artisanal spam becomes a bigger problem, the cyber-security industry is pushing for adoption of new protections that could save our in-boxes. One, called DMARC, is a global registry that lets retailers and other companies register the servers they use to send the kind of mass mailers some people enjoy receiving. Messages purporting to be from those companies but coming from an unregistered address would get flagged. It's a compelling idea, but as with most proposed solutions, trying to get everyone on board has been costly and time-consuming.

CES 2016 photos:The unexpected...?

EHang 194 octocopter

No need for a runway with the EHang 184 AAV system. You can take off and land vertically with one-click control. A trip can last up to 23 minutes at 60 mph. It's not exactly a drone, since a drone by definition is unmanned. But it uses the same technology and will 

need to pass some degree of regulatory issues before it can go on sale

Chip K9 robot dog

No more dog hair on the couch with Chip the K9 robot dog. Currently part of an Indiegogo 

campaign, this is the perfect low-maintenance pe.

WonderWoof smart bowtie

The WonderWoof bills itself as a fashion forward activity-tracking device so that a dog can 

be as dapper and stylish as its owner

Casino...& Romance...February 13th @ 7:30 pm

How Facebook Makes Us Dumber (Bloomberg)

Why does misinformation spread so quickly on the social media? Why doesn’t it get corrected? When the truth is so easy to find, why do people accept falsehoods?

A new study focusing on Facebook users provides strong evidence that the explanation is confirmation bias: people’s tendency to seek out information that confirms their beliefs, and to ignore contrary information.

Confirmation bias turns out to play a pivotal role in the creation of online echo chambers. This finding bears on a wide range of issues, including the current presidential campaign, the acceptance of conspiracy theories and competing positions in international disputes.

The new study, led by Michela Del Vicario of Italy’s Laboratory of Computational Social Science, explores the behavior of Facebook users from 2010 to 2014. One of the study’s goals was to test a question that continues to be sharply disputed: When people are online, do they encounter opposing views, or do they create the virtual equivalent of gated communities?

Del Vicario and her coauthors explored how Facebook users spread conspiracy theories (using 32 public web pages); science news (using 35 such pages); and “trolls,” which intentionally spread false information (using two web pages). Their data set is massive: It covers all Facebook posts during the five-year period. They explored which Facebook users linked to one or more of the 69 web pages, and whether they learned about those links from their Facebook friends.

In sum, the researchers find a lot of communities of like-minded people. Even if they are baseless, conspiracy theories spread rapidly within such communities.

More generally, Facebook users tended to choose and share stories containing messages they accept, and to neglect those they reject. If a story fits with what people already believe, they are far more likely to be interested in it and thus to spread it.

As Del Vicario and her coauthors put it, “users mostly tend to select and share content according to a specific narrative and to ignore the rest.” On Facebook, the result is the formation of a lot of “homogeneous, polarized clusters.” Within those clusters, new information moves quickly among friends (often in just a few hours).

The consequence is the “proliferation of biased narratives fomented by unsubstantiated rumors, mistrust, and paranoia.” And while the study focuses on Facebook users, there is little doubt that something similar happens on other social media, such as Twitter -- and in the real world as well.

Striking though their findings are, Del Vicario and her coauthors do not mention the important phenomenon of “group polarization,” which means that when like-minded people speak with one another, they tend to end up thinking a more extreme version of what they originally believed. Whenever people spread misinformation within homogenous clusters, they also intensify one another’s commitment to that misinformation.

Of the various explanations for group polarization, the most relevant involves a potentially insidious effect of confirmation itself. Once people discover that others agree with them, they become more confident -- and then more extreme.

In that sense, confirmation bias is self-reinforcing, producing a vicious spiral. If people begin with a certain belief, and find information that confirms it, they will intensify their commitment to that very belief, thus strengthening their bias.

Suppose, for example, that you think an increase in the minimum wage is a sensational idea, that the nuclear deal with Iran is a mistake, that Obamacare is working well, that Donald Trump would be a fine president, or that the problem of climate change is greatly overstated. Arriving at these judgments on your own, you might well hold them tentatively and with a fair degree of humility. But after you learn that a lot of people agree with you, you are likely to end up with much greater certainty -- and perhaps real disdain for people who do not see things as you do.

On the basis of all the clustering, that almost certainly happened on Facebook. Strong support for this conclusion comes from research from the same academic team, which finds that on Facebook, efforts to debunk false beliefs are typically ignored -- and when people pay attention to them, they often strengthen their commitment to the debunked beliefs.

Can anything be done? The best solution is to promote a culture of humility and openness. Some people, and some communities, hold their own views tentatively; they are interested in refutation, not just confirmation. Moroever, those who manage social media (such as Google) can take steps to allow people to assess the trustworthiness of what they are seeing, though these efforts might be controversial and remain in a preliminary state.

In the midst of World War II, a great federal judge, Learned Hand, said that the spirit of liberty is “that spirit which is not too sure that it is right.” Users of the social media are certainly exercising their liberty. But there is a real risk that when they fall prey to confirmation bias, they end up compromising liberty’s spirit -- and dead wrong to boot.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:

Cass R Sunstein at csunstein1@bloomberg.net

China's Terrible Start to 2016 Has Beijing Fighting Market Fires (BusinessWeek)

China has started 2016 in fire-fighting mode.

After three months of relative calm in the nation’s $6.5 trillion stock market, a 7 percent rout to open the new year prompted government funds to prop up share prices on Tuesday, according to people familiar with the matter. The central bank injected the most cash since September into the financial system to keep a lid on borrowing costs, while the monetary authority was also said to intervene in the currency market to prevent excessive volatility.

With Chinese shares and the yuan posting their worst starts to a year in at least two decades, the ruling Communist Party is being forced to scale back efforts to let markets have more sway in the world’s second-largest economy. Private data this week showed the nation’s manufacturing sector ended last year with a 10th straight month of contraction, amplifying concern that the weakest economic growth in 25 years will fuel capital outflows.

“There’s no doubt China wants to liberalize markets, but it’s happening at such a time that it’s very difficult to do in an orderly manner,” said Ken Peng, a strategist at Citigroup Inc. in Hong Kong.

While Chinese policy makers have said freer markets are integral to their plans to make the country’s economic expansion more sustainable, authorities are also concerned that sinking asset prices will weigh on business and consumer confidence. Capital outflows from China swelled to an estimated $367 billion in the three months ended November, according to data compiled by Bloomberg.

The stock market’s selloff on Monday was triggered by this week’s disappointing manufacturing data, along with investor worries that an expiring ban on stake sales by major shareholders would unleash a flood of sell orders at the end of this week. Those concerns eased on Tuesday as people familiar with the matter said regulators plan to keep the restrictions in place beyond Jan. 8.

To support share prices, government funds targeted companies in the finance and steel sectors, among others, said the people, who asked not to be identified because the buying wasn’t publicly disclosed. The plunge on Monday triggered the nation’s circuit breakers on their first day, dealing a blow to regulatory efforts to restore calm to a market where individuals drive more than 80 percent of trading. The CSI 300 Index of large-cap shares rose 0.3 percent at the close on Tuesday.

Yuan Intervention

"Unfortunately, I think the reality is that we still need some of that state support or intervention, partly because of the investor base you have in China,” Tai Hui, the Hong Kong-based chief Asia market strategist at JPMorgan Asset Management, said at a briefing. “You simply can’t withdraw everything at the same time."

Policy makers went to extreme lengths to prop up share prices in the midst of a $5 trillion rout last summer, including ordering equity purchases by state funds, suspending initial public offerings and allowing trading halts that froze hundreds of mainland-listed shares.

In China’s foreign exchange market, the central bank intervened on Tuesday through state-owned commercial banks, according to a person with direct knowledge of matter. The onshore yuan strengthened 0.18 percent to 6.5219 at 5:43 p.m. local time, following a 0.62 percent drop on Monday. That was the biggest decline to start the year since 1994, when the official exchange rate tumbled as China ended a dual-currency system.

The central bank’s intervention followed a reverse-repo operation on Tuesday that added 130 billion yuan ($19.9 billion) to the financial system, far exceeding the 10 billion yuan drained by maturing contracts. The overnight repurchase rate, a gauge of interbank funding availability, fell one basis point to 2.01 percent as of 4:30 p.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. It climbed to 2.12 percent on Dec. 31, the highest since April.

Market Meddling

Of course, China isn’t the only country with a history of intervention in markets. Hong Kong authorities bought $15 billion of shares to help defend the city’s currency peg during the Asian financial crisis in 1998, while the U.S. Securities and Exchange Commission temporarily banned short selling on some stocks during the global financial crisis.

"Any government that sees some very unstable market movements these days cares," said Khiem Do, the Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd., which oversees about $45 billion. ”The U.S. cares, Europe cares, Japan cares, and I’m not surprised China also cares.”

For some investors, China’s meddling in markets has gone too far. When the six-month ban on selling by major shareholders was announced in July, it drew criticism from major money managers including Templeton Emerging Markets Group and UBS Wealth Management. At the end of last month, all seven strategists and fund managers surveyed by Bloomberg said they expected regulators to let the restriction lapse this week.

Market intervention is pushing domestic valuations further away from those in freely-traded markets just across the border in Hong Kong. The offshore yuan’s discount to the mainland rate is quadruple the average gap recorded in November, while yuan borrowing costs in the two cities are drifting apart. Dual-listed shares are now 38 percent more expensive in Shanghai after trading at parity as recently as November 2014.

Even after Monday’s drop, the median stock on mainland exchanges trades at about 65 times reported earnings -- more than three times higher than the multiple on U.S. bourses.

“We don’t really like market intervention,” said Stephen Ma, a Hong Kong-based senior portfolio manager at LGM Investments Ltd., whose parent oversees more than $254 billion. “The government should have learned their lesson last summer.”

E N M I O P I N I O N (Ricardo Tribin)

Es importante saber con qué se triunfará

Como es esto?, se preguntarán algunos. Quizás consultando una bola de cristal o mandándonos a leer las cartas?. No, nada de eso, sería la más cercana respuesta. Creo que el componente fundamental está en que es importante saber nuevas cosas con las que en el futuro se triunfará, y ello está basado en la capacitación.

Sí, pero es que el estudio no es fácil, y a esta edad, dirían bien el adolescente o el de mayor tiempo. Pues sí, pero nunca resulta tarde para poder aprender. El esfuerzo en formarnos en muchos casos dará su fruto, siempre y cuando tomemos la acción pronta de llevar la acción a cabo.

Un pueblo ignorante aprueba todo lo que le pongan enfrente de sus ojos puesto que su poder de análisis y crítica, sin educación se ve muy diezmado. De ahí que el estudio sea una fuente vital para salir adelante, y la fuente de solución a muchas de las problemáticas actuales.

http://ricardotribin.blogspot.com

Miami, Enero 6 de 2016

The Ghosts of Baha Mar: How a $3.5 Billion Paradise Went Bust (BusinessWeek)

Beyond the tropical waters, across palm-fringed sands and behind locked gates, looms Baha Mar -- the largest and, at $3.5 billion, priciest resort in the Caribbean.

Here, no one frolics pool-side, pina colada in hand, or hits irons on the Jack Nicklaus golf course. No slot machines jingle-jangle in the casino. The Flamingo Bar, the Brasserie des Arts and the Cartier boutique lie dark. On this bright October morning in the Bahamas, all 2,200 guest rooms are empty.

The quiet is almost spooky here on the outskirts of Nassau, where the waterscape frills of nearby Paradise Island give way to the vast ghost-resort that is Baha Mar.

Just how the place ended up like this -- in a bankruptcy so colossal that it’s jeopardizing the Bahamas’s credit rating -- is the biggest business story to hit this Caribbean nation for as long as anyone here can remember. It stretches far beyond the white beaches and across time zones, to none other than the State Council of China.

‘Big Boys in the Room’

Turns out that even in paradise, local aspirations can collide with China’s global ambitions. Baha Mar may have been dreamed up in the vacationland of the Bahamas, but the central government in Beijing controls the development bank and construction giant that will determine its fate. And China, some Bahamians say, is playing tough as its state-run enterprises project money and influence around the world, including to this small island 180 miles off the coast of Miami.

“Their attitude is, ‘We’re the big boys in the room, we’ve got the money -- so you do what we say,’” says Dionisio D’Aguilar, a prominent businessman and former Baha Mar Ltd. director.

Time is short. Bahamian officials have been counting on Baha Mar to invigorate the tourist economy. The developers claimed the resort could single-handedly generate 12 percent of the country’s gross domestic product -- provided it ever opens.

Izmirlian, center, Export-Import Bank of China President Ruogu, left, and Bahama’s Deputy Prime Minister Symonette. 

Understanding the island’s predicament requires going back more than a decade to 2005 when Prime Minister Perry Christie reached an agreement with a local businessman named Sarkis Izmirlian to help revitalize Cable Beach, the most popular beachfront destination on New Providence Island.

Izmirlian, then just 32, seemed a natural choice. He’s from a wealthy family -- his father is Armenian peanut tycoon Dikran Izmirlian -- and lives on nearby Lyford Cay, a billionaire enclave. Izmirlian sank nearly $900 million into Baha Mar and recruited marquee-name partners like a Caesars Resort hotel.

Then the 2008 financial crisis hit, and would-be partners balked. When China State Construction Engineering Corp., the world’s second-largest contractor, approached Izmirlian about stepping in, he said yes. The company directed him to Export-Import Bank of China, or Exim, which promotes trade and investment under the direction of Beijing.

Seeing a way into U.S. markets, China State Construction promptly invested $150 million. Exim kicked in $2.45 billion in construction loans -- with the proviso that Izmirlian could never fire the Chinese builder, no matter what, and that workers from China would do the job. Flush with Chinese money, Izmirlian declared four Baha Mar hotels would open by 2014.

All this was documented in court filings, and supported by interviews with Christie and other Bahamians. The Chinese and Izmirlian declined interview requests.

Endless haggling complicated by language barriers ensued -- about payments, invoices, workmanship, on and on. Deadlines were set and promptly broken. Emails flew back and forth to Beijing.

Burst Pipes

In May 2014, Izmirlian appealed to an independent mediation service based in Washington, D.C., but the troubles multiplied. Pipes burst when inspectors tested the fire sprinklers and faulty balcony railings had to be reinforced, people with knowledge of the construction said. When Izmirlian complained, China delayed its money, one said.

As construction dragged on, Izmirlian and Christie flew to Beijing. There, officials assured them the resort would be ready to open on March 27. Upon his return, the developer hired 2,070 hotel workers, ran a global ad campaign and stocked the casino with $4.5 million in cash.

For Izmirlian the affair was becoming the ultimate contractor nightmare. He was spending an additional $4 million a month to pay staff for a hotel with no guests. Concerned that China State Construction might gain a tactical advantage by filing first, he secretly planned to have Baha Mar declare bankruptcy in the U.S. rather than the Bahamas, whose laws would make liquidation all but inevitable.

He didn’t even alert the prime minister for fear he would tip off the Chinese, says D’Aguilar, the former resort director.

Baha Mar Ltd. filed for bankruptcy in Delaware on June 29 -- and all hell broke loose. China State Construction accused Izmirlian of disrupting the project with endless design changes.

“Baha Mar Ltd.’s decision to file for bankruptcy is the direct result of its failure to secure adequate financing and its mismanagement,” the Chinese company told the court.

Christie’s foreign minister, Fred Mitchell, spoke out in an August speech celebrating the end of slavery on the island, saying “the attempt to keep us bondsmen and slaves does not and has not stopped.”

At the Emancipation Day Service, Mitchell continued, saying: “It is therefore no surprise then that an investor -- because he has the word billionaire behind his name -- would think, would have the temerity to believe, that he can challenge the leader of our country.”

As the dispute dragged into September, a Delaware judge dismissed the U.S. bankruptcy and a Bahamian judge put provisional liquidators in charge, rendering Izmirlian’s $900 million investment nearly worthless. In October, they hosted negotiations at a nearby hotel. It was a bizarre scene, with Bahamian dancers gyrating in hot pants in the lobby as Chinese men in black suits hunched over laptops.

Still Negotiating

In November, Izmirlian said he was still negotiating with Exim and hoped to remain involved. Failing that, he’s also sued in the U.K., claiming about $192 million in damages for a breach of contract, a figure that could grow as another winter tourist season passes with the resort still in limbo.

How it’ll end is anyone’s guess. Fernando Menendez, a senior fellow at Washington think tank Center for a Secure Free Society, says the episode says less about the Bahamas or Izmirlian than it does about China and its state-owned enterprises.

China Exim wielded billions to guarantee work for one of its biggest customers, China State Construction. How and when that work got done didn’t really matter: Exim made sure the state-run company could never be fired. 

“State-owned enterprises don’t function as competitive entities,” Menendez says. “They’re protected from failure.”

Christie says he’s still optimistic the resort can open. In December, Exim said a number of potential investors had expressed interest. These include Guo Guangchang, chairman of a non-state Chinese conglomerate called Fosun Group, people familiar with the situation say. Fosun already owns stakes in Club Mediterranee SA and Cirque Du Soleil Group.

Back in Nassau, people worry that even with new investors, the promised economic boost will take time. It could be 2018 before Baha Mar makes a meaningful contribution to the economy, according to Standard & Poor’s, which lowered its Bahamas rating to BBB- and warned it could be heading for junk.

For now, Baha Mar faces mold and corrosion as it bakes in the tropical heat. Its pink and cream towers are ringed by a chain-link fence and blue tarps cover unused supplies. At night, lights pop on in several rooms -- a move the Bahamians hope will ward of the desolate air of this Caribbean ghost.