Fault Lines: Life, Debt, Default and a Failure to Invest

The following blogs authored by a young Barbadian Economist Simon Naitram who is currently an assistant lecturer at the University of the West Indies while pursuing a PhD from the University of Glasgow (featured image: Simon Naitram)

  • David, Barbados Underground

Life, debt, and now default. Barbados has reached the final stage of its illness. This isn’t our sob story. This is the tale of how we got here. This post isn’t a eulogy—it’s a lesson, a warning to our future selves.

The reason the government has defaulted on the country’s public debt is simple: the government just doesn’t have enough money to both keep paying back its loans and keep the country’s services running. The government chose to keep the country running.

How did the government reach this breaking point? Did the government simply borrow more than it could repay? The economics of government debt aren’t that simple. The government might have borrowed too much—it certainly made some bad financial decisions—but that’s not the real economic story.

The underlying economic mistake leading to default is that our government did not invest. It’s not that we spent too much money. Instead it’s that we spent our money on the wrong things. For a decade we did not invest in a brighter future. Nodebtw that we’ve reached that future, it’s a dark and miserable place.

A government’s debt is measured relative to how rich its people are. Bill Gates borrowing a million dollars isn’t the same as me borrowing a million dollars. The richer we the people are, the more money the government gets from taxing us. A 20% tax on $100 gives the government way more revenue than a 20% tax on $20.

Read full textLife, Debt, and Default


Barbados’ giant economic hole is entirely of our own making. Our distress stems from one fatal flaw: we do not invest.

Let me make it plain. Investment in new businesses, new technologies, and new ideas is the only way to generate sustainable economic growth. Economic growth is not just an economist’s foolish cravings. Economic growth is the only path to prosperity. Investment is needed for economic growth, and without economic growth, we perish.

Why is it that we don’t invest? What can we do to fix this fatal flaw?

The first problem is that we save only 13.6% of our income. The rest of the world saves 23.1% of its income. Our savings are paltry in comparison to the investment hole we need to fill. We simply don’t put aside enough money for our businesses to invest.

And yet, commercial banks don’t want our cash. They offer us a ridiculous 0.05% interest rate on our savings. Why? In 1990, the banks lent 68% of our savings to businesses. Lending to businesses is risky, but it is productive investment that generates high returns and grows the economy. In 2018, the banks have lent only 28% of our savings to businesses! Banks have stopped channeling our funds into productive economic activity—which is in fact their one job.

Read full textFailure to Invest

339 comments

  • To reiterate…Caribbean people cannot say they did not know, Bajan people cannot say they did not know, the information is being SHARED EVERYWHERE..

    “The Department of Work and Pensions (DWP) has been forced to release updated Employment and Support Allowance (ESA) mortality statistics, in response to a Freedom of Information request from disability campaigner Gail Ward.

    The shocking statistics reveal that 111,450 ESA claims were closed following the death of claimants between March 2014 to February 2017.

    However, the DWP stress that “no causal effect between the benefit and the number of people who died should be assumed from these figures”.

    This is because the Department “does not hold information on the reason for death”, meaning they cannot be directly linked to any benefit problems faced by those claimants or whether some of these people had died after wrongly being found “fit for work”.

    The DWP has since been urged to update these statistics to include individuals who flowed off ESA after being found “fit for work” and who died soon after this time.

    The data also shows that more than 8,000 Incapacity Benefit and Severe Disability Allowance claimants died over the same period.

    Gail Ward told Welfare Weekly: “The fact the DWP know that disabled people are dying in such large numbers and refuse to adjust policy to reduce the stress on claimants and make sure the right outcome is 100% all the time, and with Universal Credit coming with such strict criteria, doesn’t bode well for the future for the disabled community”.

    Like

  • Waru when your husband reads your posts on trolling ugly men your gonna have to change your name again

    Like

  • lol..he need not worry, he is neither an ugly bajan white man nor an ugly Canadian…..ha, ha, ha..

    Did ya find a cheap ham in Barbados..ya shoulda walk with ya own…

    Like

  • I wonder what this one falls under…Sagicor now owned by the Canadians I believe…complete with majority shares….remember the Mutual cockup, now would be a really good time to stay the hell away from ALL insurance companies.

    http://www.nationnews.com/nationnews/news/217806/canadian-company-acquire-sagicor-shares

    “Sagicor Financial Corporation Limited, which is listed on the Barbados, Trinidad and Tobago and London Stock Exchanges, announced today that it has entered into a definitive arrangement agreement with Alignvest Acquisition II Corporation pursuant to which Alignvest will acquire all the shares of Sagicor by way of a scheme of arrangement under the laws of Bermuda, where Sagicor is incorporated, at a price of US$1.75 per share (such resulting entity, “New Sagicor”) with an aggregate value of approximately US $536 million.”

    Like

  • fortyacresandamule

    @Jeff. I am thinking The Carribean Development Bank, the IDB or a newly establish board of trustee that doesn’t involve UWI.

    Like

  • Bushie thinks that we should let Sir Cave and UWI keep the damn blood money…. it just suit those shiite-hounds.

    The Bushman don’t want a single cent of any pay-off from any albino-centric devils who treated the bushman ancestors like shiite… NOT A DAMN CENT…

    ..CAUSE when the REAL reparations start …not a boy come running to Bushie claiming that ‘we all square’ on account of any shiite blood monies paid to clear their consciences…

    And Bob Marley laments …

    Me nah know how we and them going to work this out…
    But somebody GOT TO PAY..
    for the innocent blood that they shed every day…
    Its what the Bible say….

    …and no amount of shiite money can EVER pay THAT debt…

    Like

  • fortyacresandamule

    The Sagicor transaction is more of a share swapping. The only operational difference the new owner will bring to the table is more restructuring and layoffs. That’s what private equity ownership is known for. Listing on the Toronto Exchange vs London Exchange doesn’t enhance the liquidity profile of the stock one bit.

    Liked by 1 person

  • @fortyacres

    Why is the share swapping necessary at this time? Is it about managing sovereign risk by anchoring in a safe domicile?

    Like

  • And Bushie

    We got we guillotine here for dah rassbowl.

    Liked by 1 person

  • fortyacresandamule

    @David. The Sagicor board is just selling out just for the sake of selling out. And Alignvest is paying out as little cash as possible. The share price in the offer is just a bit at premium, and over US$ 50 million below share holders equity.

    They are still going to be domiciled in Bermuda, so the issue of managing sovreign is not that important in my opinion. Barbados is still going to be the group headquarter, however, in a few months more people will join the bread line.

    Liked by 1 person

  • fortyacresandamule

    With Sagicor deep concentration in region life insurance market, I hope they don’t become another CLICO in the making.

    Like

  • @fortyacres

    You previous comment does not make sense, what is the logic in the transaction?

    Like

  • @ David
    what is the logic in the transaction?
    +++++++++++++++++++++
    You looking for logic…?

    …From incompetent brass bowls whose claim to fame is that they did the same shiite over and over in a protected environment making profits off poor policy holders – who they then screwed in their demutualisation scam.

    Those brass bowls cannot even run a sugar plantation they acquired – something that has been happening all over Barbados for centuries before the advent of free eddykashun.

    Steupsss…
    The ONLY difference between SAGICOR and CLICO is that Bajans continue to retain a deference to people who look like the CLICO elites….

    This transaction is yet another example of the local albino-centrics selling out assets from under the feet of their darker shade brass bowl compatriots….more from spite than anything else…

    Like Banks, BL&P, Bartel, BS&T, BNB … and Money Brain’s father’s company…..
    We are doomed to the grass.

    Like

  • Bushie,
    Is not the professor emertis for nuthing.

    Like

  • Barbados circa 2018..
    An obese truck driving bunch of posers with delusions of grandeur.
    Look what Singapore achieved in 50 years .
    Barbados missed the boat cuz dem act like little children.
    Hard ears ya won’t listen! Hard ears ya gine learn.
    Backdoor currency devaluation etc etc.
    U reap what ya sow.

    Like

  • “The door has been left open for Sagicor to accept an acquisition offer better than the US$536 million one now on the table from Canadian company Alignvest Acquisition II Corporation.

    Sagicor Financial Corporation group chief operating officer Ravi Rambarran revealed this on Wednesday and the possibility of a takeover battle is covered in the Arrangement Agreement between the two entities.”

    Like

  • fortyacresandamule

    @David. Okay. Plain and simple. Sagicor board decide to sell the company to a special purpose vehicle just for the hell of it. The talk about unlocking share holder value, growth, and liquidity is just BS.

    The issue of managing sovreign credit risk that you allude to is not a factor, because the NEW SAGICOR will still be domiciled in Bermuda.

    Like

  • With the sale of Sagicor and Scotia Bank, it would be nice to hear what the minister of economic affairs has to say.

    Like

  • pieceuhderockyeahright

    @ the Honourable Blogmaster

    De ole man would appreciate of you ask bloggers not to use the word rock in their posts here since it makes Piece uh de Rock seem to be a violent fellow

    Though on lady blogger was talking bout living, up under a rock or something like that which alludes to some sort of sexual subjugation or, in de case of Bulbados, one who parties with dem 4 men arrested in Guyana that the LUMINARY was talking about

    @ Pachamama

    You point regarding the UWI singularly benefitting from the Reparations money is quite a remarkable and astute observation.

    For one, I am amazed that it got this far, but like the Luminary, wondered, given that the were lead in the charge, who you think should be the beneficiaries?

    I do believe that the Pro Vice Chancellor would have construed a modality through which the proceeds would be conveyed to the common man who seeks a more practical application of these reparation proceeds.

    Though we can expect that there will be no end of consultancy fees for CUNTSULTANTS hired by the UWI to teach shite subjects

    Brother in Arms Bush Tea is right about our total adoption in the albinocentric model and subsequent paralysis and inability to “INVEST” in ourselves

    DAT MONET DUN LIK UP, and de white people who viving it, already know dat

    Like

  • The issue of managing sovreign credit risk that you allude to is not a factor, because the NEW SAGICOR will still be domiciled in Bermuda.

    +++++++++++++++++++++++++

    Like ICBL!!!!

    What is it with Bermuda, Canadians and Barbados insurance Companies?

    Like

  • The bribery associated with Donville came from a similar setup, linked back to a Canadian owned company in Bermuda!!

    Like

  • “Though we can expect that there will be no end of consultancy fees for CUNTSULTANTS hired by the UWI to teach shite subjects….”

    PUDRYR

    Do you care to share with BU who are these “CUNTSULTANTS hired by the UWI to teach shite subjects?”

    Like

  • Sagicor has been the single biggest sell-out and disappointment to Barbados since independence.
    To whom much is given, much is expected, but this organisation adopted an old boy’s club mentality and proceeded to impose an atmosphere of mediocrity and incompetence on the country that has come to permeate all aspects of the society.

    Their criminality exceeds the idiotic simple-mindedness of CLICO….. and will have far worse consequences for the Country.

    Surely David will post a blog to follow this travesty and this exercise in idiocy by Millar and his band of clowns.

    Like

  • I think The Mutual had no choice but to de mutualise!!

    One of the ways it made/makes money in Barbados is through land development.

    Fort George eg and more recently developments on lands of Barbados Farms which it owns.

    By demutualizing it is no longer as “dependent” on Barbados and its corrupt government as it was.

    It can raise capital wherever in the world it pleases.

    The profits no longer belong to the policy holders but the owners of the share capital who don’t have to be Barbadian!!

    Like Goddards, it has lots of investments here, but it is diverse enough worldwide not to be under the threat of a corrupt system of Government here as would be the case of an entirely Barbadian owned company.

    Like

  • What happens with Barbados Farms under new ownership will be intriguing to watch.

    Like

  • @Bush Tea
    You must be some kind of prophet. That you see these things with such clarity and regularity…Welcome to the club….hehehe
    It should be clear now that Barbados is well advanced along the well trodden path to mediocrity in a similar vein to Guyana.
    At least TnT has some oil and a fairly entrepreneurial core. Jamaica has a rich culture and a rebelliousness that is often handy in charting new paths.

    All we have in Bim is a bunch of well credentialed sheep masquerading as ‘consultants”, ‘ministers’ ,’businessmen’ and the like.
    That our well- entrenched local champion Sagicor could just sell out based on the flimsiest of arguments says it all really. What a bunch of losers.

    Expect more private sector job losses and even more austerity (as if the MM regime needed any more invitation).

    Like

  • AS HAL AUSTIN SAYS……………….A FAILED STATE WID LOT OF LONG TALK BUT NOBODY AINT GOT NO SOLUTIONS………..JUST TALK

    Like

  • “Sagicor has been the single biggest sell-out and disappointment to Barbados since independence.”

    yall still lucky that SOL/SImpson did not manage to TIEF the oil terminal from foolish ass Fruendel for a song and sell it to the Canadians for billions..lol

    Like

  • WARU
    HOW CAN YOU TIEF SUMTING IF YA PAY FE UM?

    Like

  • @ DULLARD
    RE A. Dullard November 29, 2018 8:33 AM

    @Bush Tea
    You must be some kind of prophet.
    A PROPHET IS ONE WHO CONVEYS MESSAGES FROM GOD TO MAN
    HOW THEN CAN BUSH SHIT BE A PROPHET? BUSHSHIT IS A DEVIL!

    WATCH NOW WATCH LOL

    Like

  • GP…ask someone who actually knows how real business works, besides me, cause ah know some people are business illiterates..

    Like

  • You have a good day too GP….
    Who knows, perhaps Trump will bless you ..and hoist you by your petards sometime soon….
    You know how wunna birds of a feather like to flock together…
    LOL

    @ A. Dullard (not!)
    Why prophet what??!!
    Strange things can happen when an EX- brass bowl, ‘son-of-the-Devil’ gets himself adopted….and handed a whacker.
    The problems come for those who DON’T get adopted…..

    Like

  • @John November 29, 2018 8:32 AM “The profits no longer belong to the policy holders but the owners of the share capital who don’t have to be Barbadian!!”

    And where did the share capital come from, if not from the policy holders, and their formerly enslaved and exploited foreparents?

    You want us to believe that “share capital” drops down from the sky?

    All “share capital” comes from labour.

    Like

  • John,

    I think The Mutual had no choice but to de mutualise!!
    One of the ways it made/makes money in Barbados is through land development.(Quote)

    The duty of an insurance company is to provide benefits for its beneficiaries. One of the ways it does this is through investing, to make money, and smoothing, in making payments.
    Land development is a million miles off beam. So tiny it is almost invisible. That was the problem with Clico, and one of the obvious failings of the insurance regulator.

    Like

  • @ Simple Simon
    Can’t you see that what John is saying (in plain Bajan) is that the brass bowl albino-centric scum could ONLY execute their selfish crooked schemes by de-mutualising.
    Had they remained a mutual company then the rules would have restricted such underhanded operations as is dictated by their natural wont. All the more reason that Bushie will curse the national traitor Sir Cave Hillary.

    Why do you think our Credit Unions have continued to be successful?
    ..because the leaders are honest…?
    LOLOL…. shiite…
    NO!
    Because the RULES in place make it almost IMPOSSIBLE to do shiite – especially with people like Caswell on supervisory committees….

    Like

  • Simple Simon
    November 29, 2018 11:31 AM

    @John November 29, 2018 8:32 AM “The profits no longer belong to the policy holders but the owners of the share capital who don’t have to be Barbadian!!”
    And where did the share capital come from, if not from the policy holders, and their formerly enslaved and exploited foreparents?
    You want us to believe that “share capital” drops down from the sky?
    All “share capital” comes from labour.

    +++++++++++++++++++++++++

    When the Mutual demutualized, every policy holder received shares commensurate with the investment they had in the Mutual.

    It did not drop from the sky!!

    They also kept their policies.

    What happened is most of the new holders of share capital sold it off at a premium for the cash.

    Many policy holders now are just policyholders, they don’t share in the profits.

    Those who kept their shares, share in the profits.

    Obviously if control of the company is vested in few hands now it is because the many policy holders chose to make it so.

    If a policy holder dies today, Sagicor pays out whatever sum was agreed between the Mutual and the policy holder.

    Nothing unfair as far as I can see.

    Like

  • The duty of an insurance company is to provide benefits for its beneficiaries.

    ++++++++++++++++++++++++++++++++++++

    My understanding is like this.

    The benefits are as outlined in the policy.

    When the policy holders owned the Mutual they received a share in the profits.

    When they became shareholders in Sagicor, they could sell that ownership, or not as they pleased without losing the benefits in the policy they signed up for.

    I sold my ownership stake ages ago but hopefully when I reach 65 … or pass, whatever benefits I signed up for I will get … or my beneficiaries.

    Like

  • The Mutual/Sagicor has been around for more than a century!!!

    CLICO never got to the century and failed miserably!!

    I reckon it was involvement by Governments and lackeys, official and unofficial!!

    When Credit Unions pass the century mark we can talk about success!!

    … except none of us will be around!!

    Credit Unions haven’t reached adolescence yet!

    Like

  • I too received shares in Sagicor. The policy I bought is still going and the premiums are being paid by Sagicor and have been for the past 9 years as per the conditions of the policy. I can and have made cash withdrawals from the savings component of that policy since Sagicor has been paying the premiums. So far Sagicor has been good for me.

    Off course only time will tell if it shall so remain.

    Like

Join in the discussion, you never know how expressing your view may make a difference.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s