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


  1. @ 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


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


  3. 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…..


  4. @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.


  5. 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.


  6. @ 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….


  7. 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.


  8. 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.


  9. 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!


  10. 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.

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