Deflation – it’s become a buzzword on Guam during the past week. Attorney General Doug Moylan flat out stated he will not sign off on the government’s $243 million bond scheme, mainly because the government has not done an actual real property appraisal since 1993. Last Friday Ben Pangelinan was laughed off K-57 talk radio when he began defending the bond plan, using a 2001 property value analysis from the bureau of budget and planning as the basis for Guam’s real property value’s as the determination on how much the government can finance. Callers swarmed the radio call-in show, ridiculing his na�vete and delivering tale after tale about the declining value of property on the island.
It doesn’t take a genius to see that Guam is suffering from severe economic deflation. The Accion Hotel, a $45 million dollar project across Ylig Bay from my house, was sold to the Archdiocese for a paltry $1 million in cash. Joe Murphy wrote an excellent editorial in yesterday’s newspaper about this very crisis in Guam’s economy, citing the recent sale of beachfront property to local developer Al Ysrael for $7 million. The Japanese developer that unloaded the property paid $43 million for the land a decade ago. Stuff like that screams “STAY AWAY” to any off island investment.
To drive the point home further, today’s headline cites the surge in foreclosures in just the last quarter. Guam’s economy is contracting, painfully for many people. And I don’t think tourism is going to boost the island out of this hole. The specter of war, and the threat of SARS cast a pall upon the travel industry that shows no sign of relenting.