of Bermuda is going to improve. Some of what we see as improvement seems to stem purely from optimism which may result from growing buoyancy in the United States following the election of President Bill Clinton. There is little doubt that a prevailing atmosphere of gloom is lifting even as many people continue to suffer from the worst economic downturn since the Great Depression.

There is hope even though individuals and businesses in Bermuda have seen no real sign of economic relief. There are, for Bermuda, a large number of people who are personally threatened because they are unable to service their debts and there are a substantial number of businesses facing gloom because they have been living on credit hoping for better times. We think that is not going to change very quickly. It takes a long time to build back from a major recession and it took the United States until the Second World War to recover from the Great Depression.

The important thing is that Bermuda recognises that hard times can come. The recession should tell us that there is no room for excess in the economy and that private individuals, businesses and Government have to exercise great care. Government is cutting back and should be cutting back. Civil Service salaries set a pace which increased inflation in Bermuda and damaged private business because it was unable to compete. Too often Government hired people the private sector found lacking and hired them at salaries the private sector could not afford for the good people it kept.

The private sector was guilty of thinking that the good times would just go on and so it followed a lead which made it difficult to respond to tough times.

We think the private sector, including the hotels, catered for the past where it had met success. Thus Bermuda in general was still serving a visitor who existed only in the mind. That is nowhere more true than in restaurants which lack variety and price differential. We even managed to abandon some of the Bermudian things which the visitor wanted in favour of what they could get at home. There were those who wanted to give up the "English atmosphere'' which visitors like so much and which draws them here. The real visitor wanted a livelier, more open and more entertaining Bermuda but that same visitor wanted Bermuda to be Bermuda. Hotels charged top dollar but Bermudians lost interest in serving Bermuda's income.

Thus it is clear that we may take longer to recover from the recession than our market will take because we have problems to solve which have nothing to do with the recession. We were happy to see the Bermuda Industrial Union accept the Haughton decision on hotel wages with such speed. The hotels were not totally happy but the agreement does allow Bermuda to get on with serving visitors without the continuing threat of disruptive wage talks. We suspect that the BIU was not happy with the award either but the hierarchy was aware that its members wanted to work and earn. While denying it publicly, the BIU must be aware that the hotels are on hard times. They will have to cut costs despite a higher wage bill and there will be efforts to serve better while cutting staff. The BIU knows that is a danger to some of their members.

We do not think the solutions are easy or that they can be provided quickly but they will happen because the cash registers demand it. Exactly the same thing is true for all of the United States which so greatly influences what happens here. President Clinton has been diverted in his early days as President by his promise over gays in the military. He has not yet approached the gigantic deficit which which he inherited and which strangles America. The American public, dedicated to the automobile, is unable to face the bitter pill of gasoline taxes yet America was willing to go to war in the Gulf over oil. America has some of the cheapest gasoline in the world but the people do not want to pay the price it takes to be economically strong again.

Bermuda has expensive hotels and there is a price to be paid to keep those hotels efficient and busy.