Roland Clarke Disagrees with Owen Arthur’s Recommendation on Currency Peg

Roland Clarke posted the following to BU’s Facebook Timeline

Roland Clarke

Here are my thoughts in regards to the budget debate contributions of the Rt Hon Owen Seymour Arthur on the occasion of his response to the Barbados Budget 2017. Mr Arthur is the immediate past Prime Minister of Barbados and Minister of Finance. My thoughts are focused on Barbados’ fixed currency peg and the need for strategic thinking to chart the way forward for Barbados.

I thank Mr Arthur for his clarity of thought, especially in respect to the currency peg of the Barbados dollar which is now fixed against the US dollar at 2:1. He was brilliant overall. His currency recommendations are quite optimistic in respect to how he thinks the rest of the world might respond to a devaluation of the Barbados dollar to 2.43:1 together with an annual reviewed of the peg. His recommendation follows the example set by Singapore, who have ended their fix peg against the US dollar in favour of a peg to a basket of currencies that reflect the relative weigh of their trading partners. In the case of Barbados, the basket would be 40% to the US dollar, 40% to the British pound, 10% to the Euro, and 10% to the Canadian dollar.

I do not share the optimism of Mr Arthur. For example:

1. Mr. Arthur seems to forget that foreign investors and banks prefer relative certainly in their long term investments. At present, relative certainly is provided for in part by the fixed exchange rate of the Barbados dollar. The annual review of the exchange rate suggested by Mr Arthur will introduced a level of uncertainty that is likely to deter investment, increase the expected returns of investors and increase the interest rates of lenders. The likely consequence would be to make Barbados even less competitive.

2. Mr Arthur presumes that returning UK nationals and investors would rush to invest in Barbados, especially in the area of real estate. IMHO our problems in real estate relate to the lack of expeditious planning approval processes and the lack of perfect honesty in local contractors and lawyers. These speak to productivity and governance issues in Barbados, rather than a lack of willing returning retirees and investors. Yes, they are exchange issues with the British Pound due to Brexit, but these pale in comparison with our local issues. Further, the British know full well that theirs is a self inflicted wound and thus cannot past blame to others. In any event, it should be understood that there will be a fall off in tourist arrivals and investors from the UK. Barbados should simply wait until the dust is settled before making any drastic knee jerk moves on its currency exchange rate. Similarly so for Trump’s America.

3. There is a presumption by Mr Arthur that the US dollar will appreciate in the future, hence dragging Barbados into the ground as we become more uncompetitive (particularly exports). What if the rest of the world abandon the US given the escapades of Mr Trump? In such a case, I suspect that the US dollar will likely fall (and gold and oil will most likely rise). We would need a strong Barbados dollar to help pay for the price inflation caused by the oil markets.

4. Barbados does not have a problem with tourist arrivals, but rather with their “spend”. A weaker exchange rate is not likely be the only factor that would cause tourists to spend. We need to develop clever marketing programmes that would lead tourists to the point of spending within the local economy e.g. cash back vouchers redeemable only in Barbados. Alternatively we could try to insert ourselves earlier in the supply chain, and capture foreign currency well before the tourists get to Barbados e.g. taxes on hotel rooms and all inclusive tour packages at the point of sale.

I agree with everything else Mr Arthur said in his speech, e.g. Barbados should go to the International Monetary Fund (IMF) as the lender of last resort, and should seek policy based loans from the Caribbean Development Bank (CDB) and the Inter-American Development Bank (IDB). We are at that stage.

My sole concern with Mr Athur’s contributions is with the currency peg (and the growing chorus that seem to think that Barbadians should be punished for having such a policy).

Moreover, I do think that Barbados should also think about the next big strategic initiative for growth. I suspect that this could lie in the areas of computer software, science and technology, renewable energy, energy efficiency, off-shore oil and gas (especially gas), cultural industries, and the diversification of the tourism product to include business meetings, sports, culture, heritage, etc.

Indeed, student’s education in the above strategic areas would he paid for through the introduction of the parental education saving plan suggested by Mr Arthur (as a strategy to selectively move away from free education for all). I simply think that he should go the extra step and suggest the areas in which this money might be spent.

In other words, Mr Arthur and others should have a strategic growth plan for Barbados. Such strategic plans are sorely lacking from ALL of the political parties in Barbados at this time crucial time. I want to know where our leaders intend to take us. What is the next big thing for Barbados?

Regards,
Roland Clarke

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48 Comments on “Roland Clarke Disagrees with Owen Arthur’s Recommendation on Currency Peg”

  1. Well Well & Consequences Observing Blogger June 3, 2017 at 8:17 AM #

    So many economists none can agree on anything and not one can fix the economy permanently.

    Economists are all useless.

    Like

  2. Well Well & Consequences Observing Blogger June 3, 2017 at 8:20 AM #

    “Moreover, I do think that Barbados should also think about the next big strategic initiative for growth. I suspect that this could lie in the areas of computer software, science and technology, renewable energy, energy efficiency, off-shore oil and gas (especially gas), cultural industries, and the diversification of the tourism product to include business meetings, sports, culture, heritage, etc.”

    More importantly…get rid of the small time crooks calling themselves monopolies, they are parasites draining the economy.

    Like

  3. David June 3, 2017 at 8:26 AM #

    Roland Clark wrote the following:

    Mr. Arthur seems to forget that foreign investors and banks prefer relative certainly in their long term investments. At present, relative certainly is provided for in part by the fixed exchange rate of the Barbados dollar.

    While what he states is true in theory the reality is that Barbados must manage to defend the peg i.e. be productive in generating forex. And there is the market realities. The expectation of the investor is only one consideration.

    Like

  4. Andrew Simpson June 3, 2017 at 8:47 AM #

    I am sharing a comment made prior to this publication and Mr Arthur’s budget reply; a relatively long held belief, not to pump my ego but to illustrate a problem in the world today. Many people have ideas, but no framework exists for them to impact the National policy nor decision making in a timely manner. Technology must be leveraged to facilitate the ‘real-time’ voting by citizens, If only on a sectoral basis, if democracies are to be effective and efficient.

    “The USD value has been climbing in relation to other currencies. What effect does this have on the unrealistically pegged BBD; hanging on for dear life, and our economic pulse rate, so to speak.
    And what when the mighty greenback comes under scrutiny and is found to be vastly overrated? If our currency was floating, but anchored to a basket of the six most commonly traded currencies, in proportion to the degree to which we are exposed by trade, what might it be in relation to the USD? Value might be calculated and published by CBB at least quarterly, or on the day if technology is optimized.
    CBB might also have the authority to sell other individual currencies held at a more favorable rate (variable exchange rate) if the purpose for which it is being used is deemed to be in the wider public interest, or charge more should use be otherwise determined.”

    Like

  5. Lee June 3, 2017 at 9:29 AM #

    The economy doesn’t have time to “think about the next big strategic initiative for growth”. It has untenable levels of debt and a bad reputation among investors because of a dithering leadership. Barbados can get out of this situation without the punishment that the IMF will impose by voluntarily adjusting its currency exchange to a firm Bds$ 2.70 to the US dollar WHILE SHE CAN. If we don’t take the initiative (and be seen to be addressing our problems ourselves) the country will end up going to the IMF and devaluing by much more anyway !! Even with an adjustment of the peg the economy will need to embark on a fiscal consolidation programme. There can be no strategic initiative for growth when you are lying down flat !!!

    Like

  6. Bush Tea June 3, 2017 at 10:09 AM #

    Arthur may be past his ‘used by’ date.
    When he had the perfect opportunity to implement sound financial initiatives, he wasted time and resources on CSME and electioneering – minding Enuff…

    Things like devaluation; going to the IMF; reduced standard of living; etc, are NOT strategic initiatives…. there are INEVITABLE CONSEQUENCES.

    As Grenville has been correctly trying to explain, the basis of these ‘impending consequences’ were laid by the idiotic strategies followed by successive governments since Sandiford.

    He is ALSO correct that Arthur (BLP) is MUCH more to blame than Thompson or Stuart … simply because Arthur is actually quite intelligent ..and should have done better.
    Thompson was a crook with skeletons to hide …and Stuart is an idiot – whose mantra (along with his fellow idiot Stinkliar) is to try to replicate the flawed economic policies that their unwitting hero Arthur actually launched….

    Had Arthur been more prudent – after the philosophy of EWB, for example, then – first of all, he would still be in office – and even if not, …the semi-literate jokers who followed him would have been hard pressed to deviate from his policies (they do not possess the ability).

    Grenville is therefore on point – he just needs a good press secretary to properly explain his thinking…
    Like Moses needed Aaron… 🙂

    Like

  7. millertheanunnaki June 3, 2017 at 10:29 AM #

    @ Mr. Roland Clarke:
    ““Mr. Arthur seems to forget that foreign investors and banks prefer relative certainly in their long term investments. At present, relative certainly is provided for in part by the fixed exchange rate of the Barbados dollar. The annual review of the exchange rate suggested by Mr Arthur will introduced a level of uncertainty that is likely to deter investment, increase the expected returns of investors and increase the interest rates of lenders. The likely consequence would be to make Barbados even less competitive.”

    Why are you contradicting yourself? Aren’t the internal devaluations which have been taking place over the last 8 years doing the same thing of making Barbados a rather expensive and uncompetitive destination and investment jurisdiction for FDI?

    If using a basket of internationally-traded currencies to link your local currency is such a turnoff to investors how come Singapore is one of the top ten jurisdictions for FDI and other ‘offshore’ business?

    Don‘t you think investors would take such currency risks into account by including a risk premium in their cost/benefit analyses?

    The Barbados dollar is woefully overvalued and in need of urgent adjustment to reflect economic realities. Either do it through a financial policy decision rubberstamped by the political directorate or the international financial markets will do it for you; pure and simple.

    Time is longer than twine with your country at the forex “ba(w)ller” and the devaluation kite ready to “pop”.

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  8. SETH June 3, 2017 at 11:22 AM #

    It is highly unlikely that the US$ is going to decline in value. The USA currently has a bill in process called H.R.1576 — 113th Congress (2013-2014). This bill has the effect at some unannounced time in the future of making gold worth $1.00 per ounce on the NY commodity exchange. That bill was introduced about the same time as the BRIC currency plan.

    If the US$ rises in value it is because they have stronger economic growth than other countries and have the largest economy in the world that even BRIC could not put a dent in. If you tag along with a fixed exchange rate to the US$ you better have the economic growth to justify or match it. If you don’t, you won’t have the US$ cash inflow to support the balance of payments. Eventually reserves drop and a crisis is created. In the 1950’s the British pound was about 4 to 1 US Dollar. Now is is about 1.25 to 1. How did that happen?

    What eventually makes its way into the Barbados FX reserves is US dollar bills not exchange rates. If Barbados is one of the most expensive destinations in the world, how are we going to maintain US$ in our reserves? One way is stop spending them. The other way is to get more coming in by being more competitive. Keep in mind that printing Barbados dollars leads to the trickling out of US$….that is what is now going on.

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  9. David June 3, 2017 at 11:26 AM #

    The problem we have is that Bajans hear the word DEVALUATION and there is no ability to relate to what it means except to react in an irrational way.

    Like

  10. Enuff June 3, 2017 at 11:34 AM #

    Good morning Bushie.

    Like

  11. Hal Austin June 3, 2017 at 11:50 AM #

    Seth,

    What are you talking about? The Greenback is in the process of decline as we speak. As to the value of gold, thanks for pointing me to the future. If you do not know what you are talking about please keep quiet. Every man and his dog knows China and India are the two fastest growing economies in the world, and will remain so until at the very least 2050, by which time China would have 30 per cent of global trade with India the second biggest, unless something serious happens.
    When was the British pound valued at one US$? After Brettons Wood? After the 1967 devaluation of the pound? After the two devaluations of the Greenback in 1973? After the abandoning of the gold standard?
    Since the 1970s we have had about 400 global money crises, mainly involving banks.
    I keep warning people that although the internet is spectacularly brilliant, a lot of it is rubbish.

    Like

  12. Bush Tea June 3, 2017 at 11:51 AM #

    @ Seth
    Skippa, you are so wrong that it is DEFINITELY funny….

    The SINGLE plank that maintains the illusionary value of the US dollar is an agreement made by Henry Kissinger with the Saudis to mandate that all transactions in oil be tagged in US dollars.
    This has had the effect of giving value to the dollar ONLY because any country wishing to purchase oil, (every one) MUST source US dollars in order to do so.
    A GLOBAL demand for dollars has been the result.

    This ‘demand’ has also been sustained ‘viet armis’ …. with exercises from Vietnam all the way to the current Venezuela debauchery…and explains what happened to Saddam, Gaddafi and others who promoted a change in this arrangement.

    Now that no one seems to be any longer afraid of the ‘big bad wolf’….
    …and now that the ‘big bad wolf’ is even ‘trumping’ around the world pissing off his dearest and nearest friends, even in Europe, ….you should EXPECT that those world leaders who are upset will gladly sign off an a new international currency – with which to trade in oil….
    …leaving endless amounts of near-worthless US dollars piled up around the world….

    Coming to a global news network near you ….REAL soon….
    LOL
    ha ha ha

    Like

  13. Bush Tea June 3, 2017 at 11:53 AM #

    LOL @ Enuff
    Skippa, you like you have a software tool that detects every time Bushie cuss Owen and CSME… ha ha ha

    Good morning Boss…. 🙂

    Like

  14. angela Skeete June 3, 2017 at 12:32 PM #

    Bush Tea you are a two face mule it all depends on which choir is out doing the early morning chant before you join the chorus .Hypocrite

    Like

  15. Well Well & Consequences Observing Blogger June 3, 2017 at 12:35 PM #

    https://www.barbadostoday.bb/2017/06/01/sell-resort-to-barbadians-government-advised/

    The people should own Hilton hotel, their tax dollars have funded it and everything else.

    Like

  16. David June 3, 2017 at 12:37 PM #

    A good time to remind many posting to BU that sincere people discuss ideas, idiots discuss people.

    Like

  17. John Everatt June 3, 2017 at 12:43 PM #

    When you tax solar energy out of existence do you really think that is encouraging new businesses to establish themselves here in Barbados. With this new budget the tax burden on solar components will be much greater than it was. People talk about growth in technology as being the next big thing here but it needs to be encouraged not discouraged.

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  18. SETH June 3, 2017 at 12:47 PM #

    @Hal Austin

    China and India… Could you please tell us what the average annual income of an individual is in these two countries that you say are becoming world leaders and explain how they will reach the average income of a Barbados, Canadian, British or US individual Are you suggesting that people in Barbados should be paid in Indian or Chinese currency. Perhaps you are suggesting that Barbados is on its way to becoming the equivalent of these two favorite counties of yours. When exactly would you like to trade your Western currency for the currency of these two counties?…..just give us a date. I am hanging on to all the US$ I can. I bet you are doing the same.

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  19. Gabriel June 3, 2017 at 1:06 PM #

    John F Kennedy met an untimely death when he had the idea that control of the Federal Reserve Bank belonged to the US Federal Government and not the 12 or so private indivduals that control the world’s banks with the power the FRB affords them.It is said that the Rothschild fortune is estimated at 5 trillion.Kennedy was removed.Muammar Gaddafi also had the idea that oil should not have to be traded in US dollars and set about bringing about change.He was removed.Russia would love the removal of the US dollar and the power it permits the US to strangle them with sanctions and frozen assets.Donald Duck the fool doesn’t know what he is taking on when he plays with the world’s power brokers.

    Like

  20. Vincent Haynes June 3, 2017 at 1:19 PM #

    Bushie

    Kudos today for two excellent rebuttals.

    Sad to see that you are so hard up now, that you are creating a Moses and begging for Aarons job…..price of petrol for the wacker getting high….I understand….lol.

    Like

  21. Gabriel June 3, 2017 at 1:21 PM #

    John Everett
    All the criticism levelled at Owen Arthur comes to nought when you look at his record as MoF and PM.The man used the big head he has to empower every bajan who was interested,by a series of measures in tax policy,in employment and business policy,in savings policy,in investment policy and generally an improvement in the living standards of Bajans.I too believe that every bajan should live a life such that every home is comfortable and with all the 21st century amenities.There are enough tax dollars to do this over a period of time,say within 10 years.Further, black Bajans should be in full control of the commanding heights of this economy.No messing with either of these initiatives.We should neither be begging nor prostituting to live.Its demeaning when a servant of the people like Sinckler and Stuart can levy taxes and create conditions that lead to prostitution for vulnerable people.They are sickasasss.

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  22. GreenMonkey June 3, 2017 at 1:36 PM #

    The history of the US dollar in a half hour lesson

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  23. Bernard Codrington. June 3, 2017 at 1:44 PM #

    Good article Mr. Roland Clarke

    Because Singapore pegs its currency to a basket of currencies is no good reason for Barbados to do so. I think the supporters of that idea need to outline and explain the real economic benefits of such a move. Is this another example of band wagon hopping? Or following the new mantra ” Do something even if it is foolishness”?

    Somebody should also remind some commentators that we missed the Singapore bus in the 1970s.

    Like

  24. William Skinner June 3, 2017 at 1:59 PM #

    “In other words, Mr Arthur and others should have a strategic growth plan for Barbados. Such strategic plans are sorely lacking from ALL of the political parties in Barbados at this time crucial time. I want to know where our leaders intend to take us. What is the next big thing for Barbados?” (Roland Clarke)

    To those who have been trying to justify the budget (Dees) and those who have been trying to praise the reply(Bees). Please note the author has made the salient point that strategic plans for growth are sorely lacking from ALL the political parties.
    His views are consistent with those who see beyond the nonsense and poor theatre of the BLPDLP. Only Arthur spent his time speaking wisely and intelligently. The rest were so poor that outside of the caterwauling , none of the BLPDLP apologists on BU can point to one significant idea coming from the BLPDLP of a strategic growth plan.
    The next “big thing” for Barbados should be a comprehensive rejection of the BLPDLP. This game of political music chair must be discarded in the interest of our country.

    It was by far the most shallow budget debate ever in the parliament of our country. I am personally delighted that Arthur finally found his mark as an elder statesman. Had he done that during his third term, he would have been still PM today.

    In the meantime I thank all the BLPDLP comedians for the entertainment on BU over the last couple of days. I was afforded the opportunity to enjoy much laughter. At least, the budget was good for that. May you Bees and Dees continue to entertain us. Please see it as a public service in these otherwise very tough times. The country owes you a debt of gratitude.

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  25. Hal Austin June 3, 2017 at 2:42 PM #

    Bernard,
    Apart from economic common sense, the reasoning is that in the daily trades currencies go up and down. The Greenback is the main – not the only – reserve currency otherwise there si no real economic or financial reason for fixing to the US dollar.
    The IMF’s Special Drawing Rights, the synthetic reserve currency will in time over take the dollar, which was the intended purpose of its creation.
    And, of course, there is the growing influence of the renminbi, which is already the dominant currency in Asian markets. Given the money we borrow from China I hope we are doing so in yuan and not dollars.
    Fixing to the US dollar in the mid-1970s introduced stability and certainty in the turmoil of the market. But with the rise of currency derivatives and their growing influence (financial engineers have ironed out much of the initial risks) it I time to decouple, fix against a market of commodities and currencies, the real purpose for the foreign reserves, and allow us to invest in the domestic economies and play the wider global markets.

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  26. Hal Austin June 3, 2017 at 3:06 PM #

    Seth,

    You are talking about per capita income, not GDP growth. There is difference. Barbados has a per capita income of about US$19000 (we know that is bogus), and China has one of US$6500. Let us live in the real world. Which is the second biggest economy in the world?

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  27. Lee June 3, 2017 at 3:07 PM #

    Yada yada yada. We should peg to the breadfruit and grow the trees !!

    Like

  28. Gabriel June 3, 2017 at 3:29 PM #

    Lee
    I might go for the Robinson Crusoe economy.After all,2moro takes care of itself.Reap enough for today,exchange like for unlike if you need unlike and thank the almighty for good health.Who wants to be a cow or a bizzy.Where they plan to carry that stored up wealth…to heaven?Fools,for tonite thy soul is demanded of thee.Wherewithal the wealth,dey en got nuh turning back.

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  29. William Skinner June 3, 2017 at 5:16 PM #

    @ Hal
    What we are witnessing here is fear. We are still very much in the colonial mode because there has been a dire lack of intellectual leadership and there is little, if any , to be found in the current political class. You would note that progressive minds like George Belle and Trevor Prescod, have removed themselves from serious intellectual input. There is a pervasive malaise undermining progressive reform of existing structures at all levels. Retail politics and a retail corporate culture are sucking the lifeblood out of our country.
    You and I were exposed to the minds of Harewood, Connell, Cumberbatch, Duncan, Clarke and others. That period of vibrant national discourse cannot be now found. We find ourselves holding on to the words of jokers.
    Anybody who missed the recently concluded 2017 budget debate can pick up the 2015 and read the same garbage from both sides. They have reached the level where they now repeat themselves almost word for word. They end up “cussing” and denigrating each other accusing each other of stealing and professional misconduct; homosexuality, vote buying.
    One is going to expose the other at Haggat Hall; the other one will expose them at Queens Park-pure political theatre. It is like red meat for the supporters. They walk away with blood in their eyes. It is a culture of political violence that is accepted like by the ones who want to beat up and lock up wayward children.
    Lynette Eastmond in a video of less than 40 minutes , was more interesting than all the jokers who had almost three days of television . Grenville who has never run for anything can bring better ideas in less than 1000 words than all the crap we heard for the last three days.
    Man Hal these guys aint got no vision they aint even got eyes, Suh !!!

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  30. SETH June 3, 2017 at 5:33 PM #

    https://www.congress.gov/bill/113th-congress/house-bill/1576

    here is the real world, HANG ON TO YOUR US DOLLARS

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  31. Hal Austin June 3, 2017 at 5:40 PM #

    William,

    You are right and it is very sad. Sticking to the so-called Budget speech, it is amazing the level of waffle which passes for serious discussion.
    At a time like this in our history, with an economy in intensive care, nine months or so out from a general election, the nonsense that passes for debate is embarrassing.
    Without being rude, Chris Sinckler should not be our minister of finance, he has not got the understanding or intelligence. Stuart, for whatever reason, has kept this incompetent in this position for nearly nine years. Can you believe it.
    Out media is stunned by its inability to understand, far less debate the key issues; our academics are as silent as their students; the traditional white business class is playing a silly game by not participating in active politics; the New Barbadians are waiting in the wings, hoping they can bribe their way in to power; the trade unions are so politically illiterate that the BWU has brought back Trotman as a consultant, a buffoon of a trade unionist; the so-called Social Partnership has produced two secret reports which, from Sinckler’s Budget speech, look as if they recommend taxing the poor even more – shifting what little wealth poor people have to the well off.
    @William, this is not the Barbados we grew up in; even in this forum of mature people, look at the standard of the debate by the regulars. Eric ‘Fly’ Sealy would be at home with this.
    Barbados is at the gates of hell.

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  32. Hal Austin June 3, 2017 at 5:44 PM #

    Seth,
    A bill in congress is not even important to Americans. What is important is that it appears to signal the end of the Fed’s independence. The end of neo-classical central banking.

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  33. William Skinner June 3, 2017 at 6:33 PM #

    @ Hal

    In all fairness to Eric Sealy, he would have been far more ahead of some on the BU scene. At least Sealy understood the inner workings of the BLPDLP. Walter Rodney actually mentioned Sealy in a very positive light in one of his books. So while I understand where you are coming from, I would easily give Sealy a higher grade than some here on BU.

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  34. Pachamama June 3, 2017 at 6:55 PM #

    Neither OSA, Roland Clarke, the MOF nor anybody else above really understands the new problem/s of which they speak.

    Had OSA understood the real problems his perceived solution/s would be less spurious.

    But yet an old idea could capture imaginations because an old ‘doyen’ remains committed to aged thinking.

    Again, there is nobody in the Caribbean trading in establishment economic theory who has any solutions for us.

    And the sooner we come to that realization the better.

    Like

  35. de pedantic Dribbler June 3, 2017 at 7:13 PM #

    @William Skinner at 6:33 PM….That is a very interesting juxtaposition of Eric Sealy and Walter Rodney.

    Yes indeed Sealy was smart…much more so than I for sure. I accept that.

    But without being rude, intemperate or attempting to attack any one’s character I’ll ask you Hal or any of those who were young men in the hurly burly of the day these leading questions.

    1)Would Eric Sealy in his activist mode seen in Barbados not have suffered the same fate of Walter Rodney if he Sealy behaved similarly in Guyana, or…

    2)Would he have moderated his tone and lived long and prospered because as you so sweetly (and euphemistically, in my opinion) noted he “understood the inner workings of the BLPDLP”. Thus in that case Burnham’s psychopathy.

    One could argue that he understood the politics so well that he worked the local leaders like the proverbial dose of salts and in his case got them ‘running’ to him!

    Just asking!

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  36. curious June 3, 2017 at 8:02 PM #

    Before the budget all the stake holders were saying it was going to be painful. Why are we now so surprise? If I was the PM I would have gone to the IMF because Barbados needs to be brought back to the reality that we were living on borrowed money for too long. In the times of plenty the foreign exchange earnings were not sustainable because it was earned from selling land and building houses for the rich. The IMF would say lay off a large number of civil servants and that would make some of them do some actual work during the day. One teacher per 45 students and they will not have time to hold meetings during the school term.

    Can someone explain why is putting 2% tax on credit card purchases in US dollars at this time so devastating.

    I can remember blogger called BAF I think always argued that if you did not earned foreign exchange you should not get to spend it.
    Too much junk is bought with our scarce foreign exchange.

    Bushie have you given up on your third party ideas?

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  37. Gabriel June 3, 2017 at 8:40 PM #

    Eric Fly played a huge role in the politics of Barbados.I heard him cuss the clothing off Dame Nita at the top of Quakers Rd,right outside Govt House the same night he told Barbados that Sandy was in Zimbabwe wide de belly,that the marches got Sandy wild de trots,crapping ‘eself.And it turned out to be true.How Fly knew Sandy had de sh…tings all out in Zimbabwe,we don’t know but it was true.Then another Sunday night Fly told a massive crowd in River Rd that a minister’s wife died from the big A.He called the name fearlessly 5 times.Certain ethnic groups were afraid of Fly and contributed to his silence because he always seem to have the lowdown on most.Walter Rodney love his groundings and perhaps admired a simlilar quality in Fly’s brand.

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  38. Alvin Cummins June 3, 2017 at 9:00 PM #

    Seth,
    It is against the law “to hang on to U.S. dollars. All U.S dollars are to be deposited in a Bank.

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  39. Alvin Cummins June 3, 2017 at 9:15 PM #

    Hal;
    You said: “Barbados is at the gates of hell.” But if YOUR advice were followed and implemented, Barbados would be IN Hell.
    I continue to say I do not agree with going to any IMF. We do not need to. What would we br doing? Borrowing Foreign exchange to increase our foreign exchange levels, we would enter a program from which we would not be BLE TO ESCAPE; THE FOREIGN IMF EXPERTS WOULD ENSURE THAT WE WOULD NOT BE ABLE TO GET OUT OF IT, AND WE WOULD BE LIKE JAMAICA, TRINIDAD AND JAMAICA, WHO, RATHER THAN GETTING OUT ARE SINKING FURTHER NTO THAT DEBT (DEATH) TRAP. AS EWB SAID, IF YOU DON’T WANT TO GO TO JAIL, KEEP OUT OF COLERIDGE STREET, so if you don’t want the poison, keep away from the IMF. We are not in their clutches and we should not get in there in the first place. We can solve our own problems. All economists use the same textbooks, which advocate the same things.

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  40. Bush Tea June 3, 2017 at 9:18 PM #

    @ Curious
    Too much junk is bought with our scarce foreign exchange.
    Bushie have you given up on your third party ideas?
    +++++++++++++++++++++++++++++++++++++++++++
    One man’s junk is another man’s dream.
    The problem is that we have no national vision of ‘success’. There is no ‘dream’ that we collectively pursue, so what we have is a collection of brass bowls all busily chasing different ideas of ‘success’. No wonder there is chaos.

    As to Bushie’s ‘third party’, It seems that we will need to import some individuals to constitute such an entity if we want to put together something other than yet another shiite B/DLP party.

    Bushie was simply outlining the fact that there DID EXIST a simple and clear option for relative ‘success’ for Barbados – despite the deep pit of doo-doo in which we found ourselves. We even had the required talented individuals were were available and ready to take the mantle…

    But there is none so blind as those who WILL NOT see …. not for shiite!!
    Anyway, it is now too late….

    As it was in the days of Noah, so shall it be before the coming of the son of man….
    we are in the period when the doors of the Arc were sealed, … but before the water REALLY began to pour….

    The only ‘third party’ of relevance now is the BBE party….

    Like

  41. William Skinner June 3, 2017 at 10:55 PM #

    @ de pedantic dribbler
    I don’t know if Burnham would have
    gotten rid of Sealy.
    I can’t know how Sealy would have
    functioned in Guyana.
    You are absolutely correct when you said
    he “worked” the two parties.
    He was certainly one of our best public
    speakers .

    Like

  42. David June 4, 2017 at 6:04 AM #

    @William

    Have you read in the local press where your hero Dr.George Belle has endorsed Mia Amor Mottley? To quote him ‘she is tried and proven’.

    Oh well!

    Like

  43. William Skinner June 4, 2017 at 8:49 AM #

    @ David

    All I said was even progressive thinkers have been subsumed by the BLPDLP. Dr. Belle like anybody else , is free to state his opinions.

    Like

  44. Vincent Haynes June 4, 2017 at 10:19 AM #

    Alvin Cummins June 3, 2017 at 9:15 PM #

    Why are St.Kitts and Grenada enjoying their respective IMF programmes?

    For 7 successive years this govt has tried its illconceived austerity budgets to no positive effect…..so we going to try it for the 8th time and you expect a different result?

    cuhdear….even Ninja man would have dun wid it after 5 tries.

    So if you cannot get your home grown to work by yourself why not not let some one help you with it at a far cheaper cost than what your chaps have come up with…..makes sense???

    Like

  45. SETH June 4, 2017 at 8:15 PM #

    @Hal Austin

    I don’t think the intention of bill 1576 is to have all Americans read it. It is undoubtedly for everyone else to read.

    I am sticking with a lot of US$ assets in my portfolio including China Mobile which, by the way, trades and raises money on the NYSE.

    And when you talk about Debt the USA has no NATIONAL SALES TAX SUCH AS VAT… Florida for example has a STATE SALES tax of 7%. Europe, China and Russia have VAT taxes on the minimum side of about 19% and on the high side 24%. The USA would eliminate its national debt in about 3 months if it applied VAT at the rates other counties apply it at but it doesn’t have to because the US$ is and is going to be the worlds reserve currency for a very very long time.

    Barbados FX problem is really quite simple. There is more FX money going out than coming in. That is what has to be fixed. You simply cant keep printing money that eventually leads to it being converted into buying goods that requires payment in
    freely trading FX. Undoubtedly a difficult situation.

    Like

  46. Roland Clarke June 4, 2017 at 8:59 PM #

    The following link depicts a US dollar index over the last 43 years. It shows a strengthening of the dollar after 1974 when Barbados pegged it’s currency. The strengthening continued into the mid-eighties when the dollar reached an all time high. It has weakened since then until present with a few local hikes along the way. Other graphs show a weakening of the dollar since Trump won the elections in November 2016.

    The evidence clearly shows that Barbados does not have a “currency problem” as Mr Arthur suggested in his reply to the 2017 Barbados Budget Speach by the Minister of Finance and Economic Affairs.

    I contend that any current economic problems experienced by Barbados are totally self inflicted, and not a result of any external factor such as the relative value of the US dollar to which the Barbados dollar is pegged.

    See http://www.macrotrends.net/1329/us-dollar-index-historical-chart

    Like

  47. NorthernObserver June 5, 2017 at 10:35 AM #

    “Barbados FX problem is really quite simple. There is more FX money going out than coming in. “……”I contend that any current economic problems experienced by Barbados are totally self inflicted, and not a result of any external factor such as the relative value of the US dollar to which the Barbados dollar is pegged.”

    Exactly. Both accurate and true.

    Our dollar could be pegged to the Moon, it makes little difference. We have bloated the money supply side for so long, what are Bajans to do with the cash? Today the demand for Fx exceeds the supply.

    Unofficially the Bajan dollar has already devalued. People are already paying more than the official peg to get their hands on Fx.

    Like

  48. Yolande Small June 10, 2017 at 8:23 AM #

    Thanks Roland Clarke for the clarity you brought to this discussion. The issues mentioned here are not unfamiliar to me as a returning national and a member of the RN currently living in Barbados. I’m in agreement with the suggestions you put forth.

    Like

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