The February 22, 2024 edition of Business Insider (BI) featured an article American are facing a credit card debit crisis which piqued the author’s interest. Barbadians are heavily influenced by consumer habits of the North American consumer. Our TV feeds are mainly North American, it is the preferred destination for leisure, study and work opportunities. Also many local households have at least one family that migrated to North America in the 60s and 70s. It is fair to say- whether we like it or not- what is trending in the USA will influence what happens in Barbados.
When there’s an elephant in the room, you can’t pretend it isn’t there and just discuss the ants.”
– Ellen Wittenlinger
The main point of the BI article is that credit card debt and delinquency reached record levels and with interest rate rising in the US market, it adds fuel to the fire. Based on the most recent Financial Stability Report credit card and other debt in Barbados has also been steadily increasing, interest rates on credit cards, although high, have been stable in the range of about 18% to 24%. It is noteworthy the emergence of many non traditional financial institutions not captured in official reporting.
The blogmaster’s perspective: household debt is increasing because of our insatiable appetite to engage in conspicuous consumption. For some, it is a method used to keep pace with the cost of living. Anecdotal research suggests unsecured debt is widely used to supplement salary income. In a nutshell, too many are living above their means and are in the grip of the debt trap.
Following years of casual observation by the blogmaster, it is obvious there is a careless approach to taking on debt at a personal level by Barbadians. Some will say it is because we are following the example of successive governments whose focus is on borrowing to solve problems instead of being a catalyst to encourage citizens and businesses to earn. It is too late to disrupt this pervasive consumption behaviour in Barbadians? It will possibly take a catastrophic intervention to force required change, unfortunately.
On a related matter, former Governor of the Central Bank of Barbados DeLisle Worrell recently reintroduced the benefits of Barbados pursuing dollarisation. Economists will happily share the financial benefits of dollarisation and neglect to talk about the struggle for small island states like Barbados to maintain our ‘identity’? Why give up control of our monetary system to be replaced by a Washington Consensus agenda. What does being a sovereign nation mean? Some will say under Prime Minister Mottley’s stewardship we are already marching to the beat of neoliberalists. It would be tantamount to selling our souls for a few pieces of silver. What would be the point of calling ourselves Barbadians? Where would the sense of national pride and patriotism come? That there has been nagging speculation for the last twenty four months about the US lurching into a recession – spiked by high unemployment – is another story to be told.
These kinds of matters are outside the pay grade of a lowly blogmaster, however, our system of government encourages citizens to value the right of participation. Hopefully others more intelligent will share perspectives about how Barbados needs to strategically bridge the gap between current and future state.
The blogmaster invites you to join the discussion.