Page 1 and the front page of the Business section in yesterday's Royal Gazette made for extraordinarily grim reading.

And the stories on those pages should hammer home the point to anyone who thinks that Bermuda will somehow finesse its way through the global recession that the Island is in for very hard times.

Yesterday's news will also provide scant comfort to those, including this newspaper, who have been warning for some time that the Island's economic condition is precarious.

There were many in the Government, although not, to her credit, Finance Minister Paula Cox, who should have known better but dismissed virtually all such concerns as fearmongering.

Yesterday, the pigeons came home to roost. Three international companies all announced within 24 hours that they are planning to move their domiciles to Switzerland.

That alone would not be a terrible thing. Foster Wheeler and Weatherford moved to Bermuda primarily for tax reasons and established little in the way of a physical presence here. While the US tax code is more to blame than anything else for US companies becoming less competitive with overseas rivals, these redomestications brought little financial benefit to Bermuda and gave some credence to those who see Bermuda as nothing more than a tax haven – a lose-lose situation.

Tyco International is slightly different in that it does have a small presence here, but nonetheless, this wave is worrying.

The situation is much more serious when it comes to reinsurance companies with a genuine physical and operating presence here who also redomiciled from the US. Although tax may have been part of their reason for moving, there is no doubt that the vibrant Bermuda market and other reasons also played a part.

But they may now be caught up in this as well, especially as it now looks much more likely that legislation "punishing" Bermuda reinsurers and trying to put them on a level playing field with US competitors now looks like it has better than even chances of passing Congress and becoming law.

That's because Sen. Max Baucus, the influential chairman of the Senate Finance Committee, now supports those moves. Because the Democrats have a near fillibuster-proof majority in the Senate, and because this legislation causes little pain to the American taxpayer, the odds of it passing are now much higher than they were even months ago.

That does not mean Bermuda should not heighten its lobbying efforts – but that effort has become much tougher.

Even for those reinsurers who did not redomicile from the US but were formed from the start in Bermuda, US tax changes will make their position in the Island more tenuous. With Ace Ltd. having already moved its holding company to Switzerland and others with one foot already out the door, legislation in the US Congress will make such moves more compelling.

Many of these factors are to a lesser or greater degree out of Bermuda's control, not least the dismal state of the US economy.

But it must be said that the Island, and especially its political leadership, have not helped.

A mixture of arrogance, complacency and not a little xenophobia have made many international companies uncomfortable, along with, at least until now, intransigence on issues like term limits.

There are signs that this is now being recognised. But changes now may well be too little too late, and it is Bermuda that will pay.