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Barbados Pushing Back on External Creditors

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Some have been following the intense negotiations in motion between the government of Barbados and external bondholders. Whether one agrees with the decision of the Mottley government to trigger SD, the bottomline is that this is where we find ourselves and ALL Barbadians must support the effort of the government through its agent White Oaks to close the best deal for the country.

Barbados is not the first country to trigger SD and will not be the last, let us get over it. Debt restructure comes in all shapes and sizes, if we breath some life into the economy the opportunity to improve credit ratings will come.

It is unfortunate some members of the political class prefer to nitpick instead of rallying around the flag at this juncture. The decision was made, move on!

White Oak is being paid very well to negotiate the best deal for Barbados. They have done similar deals for other countries and the principals are known to those sitting across the table. That some will want Barbados to cave to the creditors because we are the defaulter and therefore should accept terms offered by the lender is nonsense.

However this blogmaster agrees there is a need to demystify the matter for the average Barbadian to  assist with informing a national debate on the ramifications of a protracted negotiation.

Here is another article planted in the international press by the other side to pressure the government of Barbados.

-David, Barbados underground

Creditors prepare to push back on Barbados debt proposal

June 12, 2019, 05:00:00 PM EDT By Reuters

By Miluska Berrospi

NEW YORK, June 12 (IFR) – Investors are preparing to push back on a restructuring proposal released this week by the government of Barbados, sources told IFR on Wednesday.

After months of discussions with creditors, the government, which suspended debt payments last year, laid out on Tuesday two options for holders of its 7.25% 2021s, 7% 2022s and 6.625% 2035s.

But creditors, which had feared the government would launch an exchange without their consent, said such terms were unsatisfactory.

“We hope that before they actually launch an offer, the government will re-approach us and try to reengage in conversations,” said an investor involved in the process.

“If they launch something we’re prepared to reject it and wait,” he added.

The creditor committee comprising both dollar bond and loan holders are preparing a response for later this week, sources said.

“The government of Barbados has improved the proposed terms as much as it possibly can given its commitment under the IMF-support program,” the Barbados government said in a statement on Tuesday.

In October 2018, the International Monetary Fund (IMF)approved a US$290m bailout for the Caribbean nation.

“We are disappointed that they’re taking the tone that they are. We think it’s damaging to the country and to foreign investment,” added the investor.

Creditors would have about three weeks to respond were the government to launch a formal exchange offer on the options presented.

No payments have been made on outstanding debt since Prime Minister Mia Mottley took office in May of last year.

The country restructured around Bds$12bn (US$6bn) of domestic last October.

https://www.nasdaq.com/article/creditors-prepare-to-push-back-on-barbados-debt-proposal-20190612-00956

 

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221 responses to “Barbados Pushing Back on External Creditors”

  1. john2 Avatar
    john2

    How will we get back there?

    That would mean we also have learnt nothing from our experiences now.

  2. John A Avatar
    John A

    On the plus side the percentage of foreign debt as a percentage of total debt is not overwhelming.

    On the negative side unlike the local creditors who we were able to dictate to, these guys will not be treated that way. We also got to realise we will have to go back to the foreign creditors in the medium term whether we like it or not. Even if we avoid those we now owe and try going to others,the results will be the same if we don’t be careful.

  3. fortyacresandamule Avatar
    fortyacresandamule

    @David. Not really. I am hearing about low reserve for ages now. You have BU commentors from as far back as 2009 forecasting the eventual collapse of the fixed exchange regime on the basis of our low reseve to no avail. In theory, Barbados currency should have at least selectivley devalue given the dire economic metrics( eg. low reseve, high current account deficit, money printing etc).

    Hurricne season. Barbados is outside of the core hurricane belt, unlike the more northernly caribbean Islands.

    If the external debt was say 40% of total debt and we had a floating exchange regime I would gladly welcome the default. But this is not the case.

  4. David Avatar
    David

    @fortyacresandamule

    Government of Barbados proposes cuts to bondholders

    Sunday, June 16, 2019

    In its latest Creditor’s Update, the Government of Barbados (GoB) indicated that is was going to propose a second round of haircut proposals to bondholders.

    Barbados is going to offer holders of its 7.25% Notes due 2021, 7.0% Notes due 2022, 6.625% Notes due 2035 (collectively, the “Eurobonds”), and the Credit Suisse 2018 and 2019 loans the option to exchange their existing instruments either into new Amortising Step-Up Notes due 2033 (issued at a 33.3% discount to face value), or for new 3.25% Amortising Notes due 2044 (issued at par).

    The GoB led by Prime Minister Mia Mottley said it is continuing consultation with restructuring its 12 billion-dollar US dollar-denominated commercial debt under reforms being implemented under the current four-year Extended Fund Facility (EFF) with the International Monetary Fund (IMF).

    The GoB has set a target of a 60% debt-to-GDP by FY2033/34 target, a key anchor for the IMF-supported programme under the EFF, with an intermediate target of 80% by FY2027/28.

    Weighing the impact of the news, chief executive officer of Sterling Asset Management, Charles Ross, who had encouraged investors to exit Barbados from as far back as 2012, says that the development highlights the contrasting performance of Jamaica’s economy and those of Barbados and Trinidad.

    Jamaica is now being viewed as a ‘turnaround story’ economically, “given the overall high levels of confidence, political stability and Jamaican dollar liquidity”, he said.

    Speaking ahead of Sterling’s investor briefing next week, Ross said that Jamaica’s economy was characterised by macroeconomic stability, falling debt-to-GDP ratios and fiscal surpluses, in marked contrast to its Caribbean neighbours, Barbados and Trinidad.

    “Barbados has gone from an investment grade rated territory to one in default on its international debt; Trinidad was just having difficulty refinancing the debt of its state-owned oil company. Jamaica in contrast has raised financing at very low yields.”

    He added that the economies of the two CARICOM neighbours were suffering “from a myriad of problems, among them is an overvalued exchange rate and a reluctance to let the free market do its work. Both Barbados and Trinidad are committed to a fixed exchange rate. It is possible that this has been a large contributor to the current challenges they are experiencing. A fixed exchange rate has made their exports globally uncompetitive. The flexible exchange rate regime in Jamaica is critical to our ability to facilitate export led growth”.

    He viewed Jamaica’s recent attempts at reducing interference in the FX market as a way of avoiding the dilemma facing Trinidad and Barbados.

    Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at http://bit.ly/epaperlive

  5. William Skinner Avatar
    William Skinner

    I won’t be too impressed with any report touting Jamaica as a “turn around “ success story at this time. The wounds that the IMF has inflicted on the country are perhaps never going to heal. A similar outcome awaits our country.
    However, I suspect that there is very strong residential construction going on in Jamaica. Many Jamaicans are remitting millions of USD to build mansions because of the exchange rate. This is not our case.
    We may not want to admit it but eventually it would be found that , in our case, collective mismanagement, led to panic.
    One of the critical areas that we should review is the failure of Arthur who when the economy was said to be buoyant for several years, never demonstrated any tenacity in restructuring the economy.
    This was then followed by Sinckler’s failed policies.
    What we have now apart from the IMF and Default is too much blundering and apparently i’ll conceived decision making. The very latest is the fiasco regarding the twenty four hour service at some polyclinics. Prior to that we had tremendous confusion with the laying off process and pure stupidity regarding the transport service.
    While any Barbadian would want the government to succeed, we cannot just sit and accept events without critical analysis.
    There is a reason why Arthur’s legacy is being quickly forgotten. Compare that to Tom Adams’ relatively brief stay and at the wicket and we see why his innings is more remembered.
    History may very well condemn both Sinckler and Arthur.
    I suspect they will have others joining them just now.

  6. Piece the Legend Avatar
    Piece the Legend

    Are you for real with this title?

    Who you see as going to be the winner in this “push back” contest

    Just wait till the Emergency Funding run out!

    AND WHEN THE MUDDER COUNT EXCEEDS 50 watch how many Bajan Yankees and Canabajans and mad ass britishers GOING BE COMING HOME TO 2020

  7. fortyacresandamule Avatar
    fortyacresandamule

    Error. The total external debt is US$$ 1.2 billion and not us$12 billion. Mr Ross analysis about Jamaica economy is full of half-truths. Yes, Jamaica have managed to achieved marco-economic stability since the IMF 2013 programme was implemented. However, it comes at a steep price. Jamaica’s primary surplus is the highest in the world( 7% of gdp) not even debt-ridden Greece come close.

    Emperical evidence has shown that the flexible exchange rate regime does very little in the growth of the Jamaica economy. It only benefits the tourism sector by maintaining a low wage environment.

    With all the macro-stability happening in Jamaica, the country still struggle to even grow at 2% annually and the exchange rate movement is volatile. As a matter of fact, Jamaica’s growth rate since its independence, is akin to a country at war, less than 1% annually.

  8. David Avatar
    David

    @fortyacres

    Why is Jamaica still able to attract such positive reviews from market analysts?

  9. NorthernObserver Avatar
    NorthernObserver

    @Blogmaster
    Sterling is a Jamaican company with some interesting connections. They don’t count.

  10. David Avatar
    David

    @NO

    We have had Oppenheimer and a few others?

  11. Hal Austin Avatar
    Hal Austin

    @ John A (7.29)

    You are right. As I have said President Mottley does not do details. Waving her hands about, she talked about the need to grow the population, then we had the announcement of 400 Ghanaian nurses; she talked about a hotel corridor running from Hastings to Black Rock, then we heard of the Hyatt expansion, and turning the old Hastings Police station in to a hotel, no more details; she talked about expanding the airport, then we were told of a so-called concession, no more details; and, of course, we heard about BERT, along with mass sackings and head line announcements.
    The president talks about moral and ethical politics, but what exactly does she mean: does that include changing the constitution as an emergency to accommodate childhood friends? Does that mean going to Canada and promoting a private company headed by one of these friends? Does it include having so-called economic consultants some of whom (at least one) were close friends prior to government? Or does she mean Bajan ethics? When are we going to have serious discussions in parliament about public policy? When are young ministers going to walk out of this Cabinet?
    She gets away with it because our print media is badly in need of proper training. That should be a priority. And what public conversation we have is narrated in party political terms.
    Barbados is a failed state.

  12. John A Avatar
    John A

    @ Hal

    The truth is the print media in terms of finding and printing data is useless. Were it not for the foreign media we would know little to nothing on some matters. The society on a whole though doesn’t seem to care and as long as the government plays to this every body happy.

    The press now and it’s followers will soon be led like sheep to focus on Cropover, so that will distract them at least to the end of August. If you read some of the responses on this blog you can see how illiterate many are to the crisis at our door step. As for the so called opposition, I put them in the same boat as the media. Were they of any use they would of held on to this issue like a dog with a bone, then again I am assuming they too understand the crisis we are in with it.

  13. John A Avatar
    John A

    @ Hal

    You also realise that at no time has the pressed published the offers made from the foreign creditors in detail. All they have stated is that ” to accept their offer would mean government would meet the IMF target a year late.”

    Do you honestly think the creditors are concerned with targets set between a defaulting government and the IMF? They are looking for closure on the matter not pandering to the IMF demands.

  14. Vincent Codrington Avatar
    Vincent Codrington

    @ Fortyacres
    @Hal
    @ John A

    Good submissions. Thanks for hanging in there and rescuing this debate from mediocrity. From time to time we need to do a reality check rather than accept the outpourings of self appointed experts.

  15. John A Avatar
    John A

    @ Vincent.

    Thanks, I have read both options offered to the creditors. In one they are offered discount bonds at 66% of original value with a 2 year grace giving them 3.5% for 2 years and 7.5 % over the balance. So you asking them to lose 33% there.

    Option 2 you want to give them new bonds of 25 years but you want a 15 year grace period on principal! Oh and you want ALL the interest written off too. So they losing 7% interest over 25 years there.

    Then you put In a ” disaster clause” too as a back door on the agreement. So who will decide what a “disaster” is CERO?

    So why wunna don’t now publish in detail the counter offer by the creditors for us to see too? Or you feel we too ignorant to make our own judgement on what separates us.

    Vincent you would recommend a client of yours to take either of the 2 offers with an unspecified “disaster clause, that could be anything from a heavy rain to a hurricane or death of a politician?

  16. Vincent Codrington Avatar
    Vincent Codrington

    @ David at 8 : 43 PM of 17 June

    Assuming that is the official explanation of GoB, they have no foundation in economic analysis.

    We have had a hurricane season every year from the date that Barbados folded up out of the Caribbean sea. And we have always made sensible preparations for them. They are rare occurrences. This is an uncertainty. The risk cannot easily be calculated for uncertainties. You prepare for them.

    We have from time to time had reserves much lower than these. Adequate foreign reserve is a flow not a stock. The important question is have we been meeting our foreign payments if and when they are due.
    Heavy loan repayment is what the DLP Admin had to face in 2008. Nothing new or surprising about these.

    No these are not good economic reasons for Sovereign Default. It was a bad mistake. Especially if you plan to depend on borrowing to tide the finances over short falls of revenue below expenditure in the future. Which sane creditor lends to a country that defaults. Trust is very important in finance. Do not undermine it.

  17. John A Avatar
    John A

    In the middle of the Puerto Rico debt restructuring they were hit by a massive hurricane, are we trying to say that should of given them the right to walk away from contracts they entered into? No it didn’t nor would the creditors there agreed to any attempt by them to do so.

    Left out the yardfowlism and party loyalty and think for yourselves here for a change. Ask yourself as a creditor what would you accept?

  18. John A Avatar
    John A

    Vincent you like you was tapping your key board the same time I was tapping mine. Lol

  19. Hal Austin Avatar
    Hal Austin

    @ Vincent

    Go to the top of the economic class. The hocus pocus abut foreign reserves is irritating. The purpose of foreign reserves is to meet liabilities, not just for show.
    To meet those liabilities we can trade on the derivatives markets. Simple. Financial economics 101. Even Milton Friedman supported this.

    @ John A

    I do not like bashing the local press, but where is their magneton? Why can’t they appoint specialist reporters? Economics? Caricom? Politics? Health? With specialist reporters you get more in-depth reporting. The purpose of the media is to educate, inform and entertain. Our media fail on all those fronts.

  20. Vincent Codrington Avatar
    Vincent Codrington

    @ John A at 9 :07 AM

    Short answer as to my recommendation of acceptance? No.
    .Please refer to an article uploaded by Pachalacha outlining the model which inadvertently he proffered because he assumed that I was mathematically challenged. You may be witnessing an experiment in Game Theory with a high propensity of Barbados getting “huff”.

  21. John A Avatar
    John A

    @ Hal

    Yes you are right but ours is to entertain and pander to the political elite. Plus the majority of Bajans love that!

    I will say something now that may annoy many, but based on the 2 offers made as were published I too would of refused both. Not only are you asking me to lose over 33% of my capital in one and forfeit all interest in the other, but you ain t even guaranteeing that return with your so called ” disaster clause” serving as a get out of jail free card in case of heavy rain.

    Cuss me all you want that’s my view based solely from looking at it without bias to either party.

    I will go further and say that the international finance market would also of turned these offers down so the GOB will get no sympathy there either.

  22. John A Avatar
    John A

    @ Vincent

    I agree we will never come out of this a winner. Our offer is weak and does not hold up to financial scrutiny. The ” disaster clause ” also reeks of a government looking for a loophole to default again on their commitments. If this is the best WO could come up with after 13 months at $85000 A month fire them now!

  23. Tron Avatar
    Tron

    @ Wily Coyote June 17, 2019 5:42 PM

    Much worse than the absolute debt level is the absence of any economic growth compared to 2008. The relative level of government debt compared to GDP will thus hardly decrease apart from debt cuts.

    Economic growth will only be achieved if the state apparatus is reduced in size, regulations (e.g. the disastrous, outdated protection of workers or minimum wages and numerous building regulations) are softened or abolished altogether, and if large parts of the state economy are privatized (i.e. sold or better liquidated). Barbados must abolish at least half of all laws, rules and state institutions.

    The economy also needs greater tax incentives. Imports for the production of export goods must remain tax- and duty-free. We must shift the tax burden entirely from entrepreneurs to employees.

    With the current encrusted structures and poor working ethic (as a result of inadequate education and of an excessively high tax burden), there will be no economic growth. I have been looking for growth all over the island for 10 years with binoculars and a microscope. So far, however, only the debt and the termite hills have grown. Nothing else.

    So far it has been the state religion to generate economic growth through new debts and even more lazy civil servants. Thank God no one believes the false idol Barrow anymore. His time is up. It is now time for our honoured Prime Minister to open a new chapter for the island under the banner of austerity and to move forward courageously. Let us set up the demolition unit and remove the welfare state with all its flaws so that people can breathe freely again.

    A first start should be to abolish the false public holiday for Barrow. He did far more harm than good. We need new heroes and new role models. We do not find them in old history books. Our Prime Minister must now lead the country into freedom and become a national hero herself. But she will only succeed if she overcomes the lazy caste of civil servants and throws large parts of the welfare state into the sea.

  24. Hal Austin Avatar
    Hal Austin

    @ John A

    You are being generous. If I were the creditors, I would demand 100 per cent of my money and give them a deadline to pay. If they fail, I would sell to a vulture fund at a discount. Easy. Let them battle with the vulture fund.
    That is exactly what Barrack should have done with the previous government.

  25. Mariposa Avatar
    Mariposa

    However one can easily say that PR was giving some form of economic easement from the creditors similar to what Haiti received because of the disaster

  26. John A Avatar
    John A

    @ Hal

    Yes I believe that is what many will push for. But they also know the rates of return they got from a desperate sinkler, were a bit higher than what the market would of yielded at the time. I feel they would of taken an offer in the 5% range without the ” disaster get out of jail free clause.” Since then though they have been hung out to dry for 13 months without a cent and now offered 2 options with no guarantee in the event of us getting a little heavy rain.

    To bring them now to a table for settlement is not going to be as easy as if the matter was dealt with differently.

    I guess the learned well paid negotiators learnt nothing from the Argentina scenario.

  27. Mariposa Avatar
    Mariposa

    White Hoax what a joke

  28. William Skinner Avatar
    William Skinner

    What a scenario. A country in debt decides not to pay its debts and it’s supporters say : don’t pay; its poker; its draughts; its like playing dominoes ; somebody has to blink; other countries owe too; we ain’t the first and we won’t be the last……….
    Absolutely brilliant

  29. John A Avatar
    John A

    @ Hal

    The other option you mentioned of selling the debt in block to vultures could also become a reality especially based on these 2 offers which guarantee nothing in the event of rain. Let me explain why I say that.

    Offer one for example offers the creditors only 66% of their capital over several years, assuming the disaster clause is not played.

    Is would actually be better to sell that debt, at 50 cents on the dollar to a vulture and walk away than keep it over the next 20 years. So yes this government and the highly paid W0 are sailing close to having to possibly deal with guys that will cease your underpants on the line to get paid.

  30. Hal Austin Avatar
    Hal Austin

    @ John A

    Investors in treasuries are usually insurance companies and pension funds. They depend on their returns to meet their obligations. if you try to punch above your weight you must expect to be punched back. No forgiveness.

  31. Miller Avatar
    Miller

    @ Tron June 18, 2019 9:51 AM

    LOL!!!

    You are an ‘enfant terrible’ of the outrageous kind! A real maverick in the Bolshevik-like vanguard in the (R)evolution to kill off the Bajan economic dinosaur.

    But you are omitting one vital ingredient from the planned economic coup d’état?

    Where is the monetary fuse (blasting cap) to trigger the dynamite of necessary change?

    MAM is just the dynamic Nobel prize carrier of the political sticks of nitroglycerine.

    An ‘official’ devaluation of the Mickey mouse dollar would surely blow the top off the well of the current economic morass.

    Let it, by fiat, find its ‘natural’ place value in the brave new Monetary’ world!

    Why wait until the Bajan dollar is removed totally from the draughts board by the rising Sun King called “E-money”?

  32. John A Avatar
    John A

    @ Hal

    Problem is we got this misguided idea we are heavy weight when in fact we in the super light weight class.

  33. Tron Avatar
    Tron

    Devaluation is only a matter of time. Even if the negotiations with the international creditors are successfully concluded, we still have a large state apparatus. Has the honourable Prime Minister not promised her civil servants new housing? She pours oil into the fire, where she would have to extinguish it with special foam called austerity. As long as the people on the island believe that they do not have to make an effort because the state will take care of them, productivity and work morale will remain at the lowest level.

    Nobody should understand my statements as criticism of our esteemed Prime Minister. On the contrary. She has already taken many right measures – unlike the last government. But we do not want a 5% salary increase for civil servants and in return higher taxes. We have to come to the end of the road. We need a purification of the state apparatus which is just as brutal as the debt cut for the locals with their worthless state securities.

    I very much hope that our honourable Prime Minister will develop her reform plans further and present new wonderful steps towards liberalising the island once negotiations with creditors have been successful.

  34. fortyacresandamule Avatar
    fortyacresandamule

    @David. The reason Jamaica has become the poster child of IMF austerity measures is because it is the first time in Jamaica’s history the country has managed to achieve macroeconomic stabilty. To be fair, this is a massive accomplishment by the government of Jamaica given where they are coming from.

    However, the economy still has a long way to go. Its inability to grow in a robust manner is one such drawback. The miniscule 1.5 %
    GDP growth is just not good enough.

    Jamaica has managed to reduce it debt stock and ratio without handouts and haircut from 150% in 2013 to 95% today by having the highest primary surplus in the world (7% of GDP) along with a restructuring of its domestic bonds ONLY. The restructuring process was done without a haircut cut on the bonds.

  35. Miller Avatar
    Miller

    (Quote):
    The purpose of foreign reserves is to meet liabilities, not just for show.
    To meet those liabilities we can trade on the derivatives markets. Simple. (Unquote).

    HMMMM! That simple, is it??

    How come China has over US$ 3,095,000 million in foreign reserves?

    How about Singapore’s US$ 293,889 million while Barbados cannot even report theirs to reflect the current position?

    Who are the China and Singapore external lenders requiring them to build up such large reserves to meet ‘those foreign liabilities”?

    How come Barbados, according to MAM and her finance sidekicks, have argued convincingly that the Bajan dollar was staring the bull of Devaluation in the eyes hence the decision to default on the foreign loans?

    Why her highly paid economic consultants did not recommend that the little foreign reserves left at the end of April 2018 be used to meet the then due liabilities?

    Foreign reserves are kept as a sign or symbol of a country’s financial stability and economic strength. It’s a country’s patrimony for economic rainy days.

    This is especially so for countries (like Barbados) whose economic activities are largely based on the importation of goods and services, including food and oil.

    The trick is to ensure that the reserves are accumulated through the earning of forex (sale of goods and services to foreign customers) and not through borrowings from loan-shark creditors like what Barbados has been undertaking for the past 20 or so years.

    For Barbados it’s time to repay the piper(s) who would soon be calling the Devaluation tune.

    It’s time to be weaned off living on foreign people’s (borrowed) monies.

    Sweet life, aint long life!

  36. David Avatar
    David

    @Fortyacres

    Thanks, this is the point we want those here pointing to Jamaica as the model to understand.

  37. Tron Avatar
    Tron

    @ fortyacresandamule June 18, 2019 11:59 AM

    It is important to read that Jamaica has abstained from a debt cut and is still on the path to recovery.

    In Barbados such an achievement would be unthinkable without a massive debt cut, if we consider the population that howls about every little social cut. They are not used to any deprivation and believe that they have the right to celebrate at other people’s expense. Not only do we have an ISO Taliban on the island. No, about 90% are as reform resistant as the Taliban in Kandahar.

    It is now the right time for our Prime Minister to get the population in the mood for ten more years of structural reform.

    Those who lack a lot need to worry less.

  38. john2 Avatar
    john2

    John A

    Please stop that foolishness about the event of heavy being a disaster

    A Disaster is a devastating hurricane, earthquake, or tsunami

  39. john2 Avatar
    john2

    key word is DEVASTATING

  40. William Skinner Avatar
    William Skinner

    It is patently incorrectly to state that this is the first time that Jamaica has achieved some form of economic stability.
    It is an historical inaccuracy as well. Jamaica had a stable and vibrant economy only equaled to Tand T before the onset of economic difficulties in the 80s.
    Quite frankly it can be successfully argued that most economies in the region started to sputter around the same time. Barbados included.
    Trinidad and Tobago because of the oil boom held its own until quite recently.
    Jamaica was a bauxite exporting country and for sometime the leading tourist destination in the region.
    Stability here does not suggest an endorsement of the economic system. Many believe that when Manley flirted with Cuba and socialism the economy was sabotaged. Seaga emerged as the darling of the USA and all hell broke loose.
    Just saying we should stick to facts. Jamaica has not and probably will not recover because of any IMF program.
    Kindly engage Jamaicans before making such outrageous conclusions.
    Also remember in our case, the real date to judge recovery is 2033.
    Sounds familiar?

  41. William Skinner Avatar
    William Skinner

    Patently incorrect not incorrectly

  42. Hal Austin Avatar
    Hal Austin

    SHANGHAI — China reduced its holdings of U.S. government debt again in April even as Beijing’s gold reserves continued to grow, diversifying away from the dollar as ties with Washington fray.
    The $7.5 billion dip on the month brought China’s total Treasury stockpile to $1.11 trillion, down $90 billion from the most recent peak in August 2017. This follows a roughly $10 billion decline in March.
    The downtrend in recent months parallels the escalation of the trade war between Beijing and Washington, even as the latest data precedes the breakdown in talks last month that led to another round of tariffs. A shrinking current-account surplus has left China with less wherewithal to buy Treasurys, and Beijing appears to have decided that overextending itself to do so is unnecessary given the souring bilateral relationship.

    But few other options are available for stashing large amounts of capital, and selling off U.S. government debt too quickly would risk further antagonizing Washington. Such a move also would drive up long-term yields, reducing the value of China’s remaining holdings.
    Rather than dumping Treasurys as a way to gain leverage in trade negotiations, Beijing seems to be taking a subtler approach through trimming its holdings by $20 billion or less per month.
    Some of this capital is going into gold. China’s gold reserves have grown for six straight months since December, the first time the country increased its holdings of the precious metal in more than two years. Russia has made similar moves, slashing its dollar-denominated assets while purchasing gold as essentially a borderless currency.
    China’s Treasury stockpile long stayed above $1.2 trillion, but after the yuan’s sharp depreciation in 2015, Beijing is believed to have sold some of the securities to fund intervention to shore up its currency. The country’s overall foreign-exchange reserves dropped below $3 trillion, though the bleeding was stemmed by controls aimed at curbing capital flight, including restrictions on overseas acquisitions. Chinese Treasury holdings bottomed out in January 2017 and returned to $1.2 trillion that August.(Quote)

  43. Vincent Codrington Avatar
    Vincent Codrington

    @ Hal at 1 :32 PM

    Just speculating.
    Are we moving back to the Gold Standard? Something we moved away from after WW2? What happens if gold ceases to be legal tender? How does this impact the move to a digital currency? Right now I believe that gold is performing the role of a store of value. Interesting moves . I think.

  44. Hal Austin Avatar
    Hal Austin

    @ Vincent

    I do not believe so. I think we are moving towards a number of reserve currencies. There are no new findings of gold and the dollar as the dominant reserve currency will weaken, as US economic dominance weakens. We are living in interesting times. Russia and Iran are now trading largely outside the dollar.
    Cryptocurrencies have no long-term future. It is a digital South Sea bubble. Instead of tulips, we have mickey mouse money.

  45. John A Avatar
    John A

    @ John 2

    If you read the contract it speaks to having a ” disaster release clause in it”. Who will determine what a disaster is CERO? To agree to that in a contract that is so broadly worded would be madness.

    Puerto Rico had a massive hurricane in the middle of their debt restructuring did it stop them from settling on their debt, No.

    Read the dam contract conditions before you make foolish comments based on party loyalty.

  46. John A Avatar
    John A

    @ Vincent

    Let me ask you a question based solely on economics? If you had a choice between waiting years to get back 66 cents on the dollar or take a cash offer today at 50 cents on the dollar from a vulture, would you not consider the 50 cents?

  47. Dullard Avatar
    Dullard

    Cryptocurrencies have no long-term future

    Wrong!
    Actually I am opposed to the Blogmaster for plugging BITT but digital ‘money’ is where this is all heading. Not in its current form but a more robust, slightly more sophisticated and widely acceptable/ accepted version.

    The world has to reach the stage where every single financial transaction can be logged, monitored and recorded in real time. We are not far from that stage now. Widely used digital currency is the ONLY way to achieve this.

    Doubt the Dullard?

    https://www.bbc.co.uk/news/business-48664253

  48. John A Avatar
    John A

    Now that we have shown the flaws in option 1 let’s look at option 2.

    A 25 year bond
    Another natural disaster clause
    A 15 year period exempt from principal payment
    A 3.5 rate of interest.
    A complete write off of the PDI AND ALL ACCRUED INTEREST.

    ok in bajan terms now .

    Wunna ain t getting a cent in principal for the first 15 years, even though it’s a 25 year bond. Wunna will only get 3.5% interest fixed over the same period regardless of what the market rate is over the said period . Oh and them old charges that we ain t pay while WO was getting $85000 A month, wunna forget them too!

    Finally if we get a storm or ” disaster ” as designated by us all bets are off.

    That is what 13 months at $85000 A month has come up with and presented to the foreign creditors. Really now put yourself in the foreign creditor shoes and tell me what your reply would be?

    Any that want to discuss it don’t come back with no party loyalty or rally around the flag crap either, bring sound financial reason or don’t choke up David blog!

  49. Dullard Avatar
    Dullard

    @Tron touched on the point tangentially in one of his more sober posts.

    But it appears that Bdos will endure a grim period of austerity and at the end of the day will have little to show for it. Besides some IMF box ticking, there wont be any major changes in behaviour on the ground.

    No increased productivity/ efficiency.
    No diversification away from selling time in the beaches and sun.
    NO shrinking the public sector.
    NO culture of business startups.
    NO improvements in the ease in doing business, etc.

  50. David Avatar
    David

    When and where has the blogmaster plugged BITT? By BITT you mean bitcoin or Bitt.com. Asking for a friend.

The blogmaster invites you to join the discussion.

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