Dr. Mascoll Exposes the Central Bank

Dr. Clyde Mascoll

Dr. Clyde Mascoll

BU read Dr. Clyde Mascoll’s weekly column with great interest. The fact that it has not garnered any serious critique on the talk shows and on social media says a lot about our level of discernment.  An advantage over the traditional media is that we (social media) tell it like it is.

Last week the BLP member of parliament for St.James North Edmund Hinkson made the attention grabbing request for Minister Denis Lowe to repay the state the financial loss suffered as a result of his error in judgement concerning the NCC workers matter. To add to Hinkson’s call the BU household calls on the commercial banks of Barbados to redistribute the profit to customers collected as a result of the Governor of the Central Bank Delisle Worrell removal of the minimum savings rate commercials banks had to pay their customers.

Read Mascoll’s column to understand how one of the biggest scams in our post Independence history is being perpetrated on Barbadians. Now go and buy some savings bonds!

WHAT MATTERS MOST: The interest rate gap

CLYDE MASCOLL,

Added 20 October 2016

whatmattersmost-new

 THE LATE PROFESSOR Roland Craigwell once told me that “a man who has time to read is a dangerous man”. It was his way of emphasising the need to read almost everything in an area of study if you want to present your case.

Those words never stopped resonating with me. He reinforced the need to never go public with anything on the economy, unless I have verified the evidence. In this vein, I read all that I can on issues in the Barbados economy. This requires reading material from the distant past.

There are two issues that engaged me over the last weekend: (1) the increasing gap between loan rates and deposit rates, and (2) the ongoing printing of money that some still want to deny.

In its most recent economic press release, it was noted that the financing needs of the Government had widened the gap between the United States and Barbadian treasury bill rates.

The Central Bank attempted to narrow the gap by intervening in the treasury bill auction after the commercial banks were allowed to set the minimum deposit rate. The concern now is “since April 2015, commercial banks have lowered their deposit rates more substantially than their loan rates”.

First of all, why was the Central Bank trying to narrow the gap between the two rates? There is no good economic reason why the local treasury bill rate should mimic that of the United States.

Why should the widening interest rate spread surprise anyone? This caused me to read material from the past. Worrell (1997) identified powerful reasons why the Central Bank should lead on changes in interest rates. He suggested that “it is the most fully informed, being the repository of a wealth of data, producing the most comprehensive assessment of the economy and maintaining constant economic oversight”.

In analysing interest rate spreads in the past, he noted in periods of Central Bank regulation, they widened. He concluded that the Central Bank “was never able to persuade the banks to agree on narrower spreads and was wisely never willing to risk evasion by defying the banks’ wishes”. So what has changed to expect the banks to act differently now?

On the second issue, Worrell (1997) wrote that “the Central Bank of Barbados was concerned from its inception with the need to avoid money creation [printing of money] through lending to Government”. He also stated “there is no problem of excessive money if banks are happy to leave excess cash with the Central Bank at no interest rate, as they have for extended periods in countries that have stable exchange rates”.

There is evidence that the banks have been leaving excess cash with the Central Bank, which it is using to help finance Government spending. For example, Government needed $273 million in domestic financing between April and June. It received $92 million from the National Insurance Scheme and the private sector not including commercial banks. In fact, the banks reduced their lending to Government by $120 million over the quarter.

As a result, the Central Bank had to provide $301 million in financing to the Government. It did so by using the commercial banks’ additional deposits with the Central Bank of $198 million for the same period April to June. This means that the Central Bank had to print money to the tune of $103 million.

Why did the commercial banks reduce their lending to Government but still put additional deposits at the Central Bank? In the face of excess cash, there is still a problem with financing Government spending from domestic sources.

Why is the Central Bank holding $775 million in treasury bills and $592 million in debentures? The Central Bank is using the commercial banks’ deposits and the printing of money to purchase Government securities. Worrell (1997) also found that “in circumstances where banks were not actively seeking to employ excess cash, the Central Bank has never been able to effect a sale of bills by offering a more attractive return on them”.

In the current circumstances, the Central Bank has become too big a player in the treasury bill market and therefore the banks are prepared to take advantage of the low deposit rates. This is done by widening the spread, while the loan rates are slightly more attractive.

The Central Bank has tried to use monetary policy to accommodate fiscal madness. There is scope for monetary policy to support fiscal adjustment that is well thought out. It cannot correct fiscal adjustment that is inappropriate and insufficient.

• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy. Email: clyde_mascoll@hotmail.com

Clyde Mascoll’s Insight to the Barbados Economy

History will first remember Dr. Clyde Mascoll as an aspiring politician who misread the tea leaves when he failed to accept the return of the late David Thompson to lead the party. Then only will his study of economics and other academic achievements be referenced. BU however will always define Mascoll as the  quintessential economist. Few if any of his profession understand the numbers behind the Barbados economy the way he does. His many years spent at the Central Bank has prepared him for the role as chief spokesman on the economy.

BU recommends Mascoll’s recent column reproduced from the Nation newspaper.

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Call for Immediate Forensic Audit into the Operations of GEMS

rodney_wilkinson

Rodney Wilkinson in handcuffs

The news that the bagman has been arrested on 67 counts of fraud is big news in Barbados. In BU’s opinion it ranks in the top three memorable moments since our Independence because of his high profile status given his connection to high profile politicians. Time will tell if our competent legal system will work to make at least 25% of the charges ‘stick’.

Those who wonder if the bagman would have had to suffer the same public ridicule as the former Prime Minister’s brother Richard Arthur had a different administration been in office, probably not. The scenario playing out gives hope to the optimists that the wheels of justice may yet turn on one of its own.

Rodney Wilkinson was the CEO of GEMS/HRL project that included at the time Savannah Hotel, Blue Horizon, Time Out, Eastry House and Silver Rock properties. The W in JAWS is for Wilkinson?

BU will be labelled as being foolishly optimistic by some to expect the justice system to wheel into motion to work like it is suppose to in the matter of Wilkinson versus Globe Finance and NASSCO.  The Auditor General has been unflattering in several reports regarding the management of Hotel Resorts Limited aka GEMS. In light of recent events BU is calling for a forensic audit into the operations of Hotel Resorts Limited in the period when Wilkinson was CEO.

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Owen Arthur ‘Hits’ Mia Mottley, Again – Clyde Mascoll, Clear Heir Apparent, With Kerrie Symmonds as Placeholder

Submitted by Pachamama
Will Clyde Mascoll take the spoils?

Will Clyde Mascoll take the spoils?

The Nation Newspaper today carries the essential components of an internal party memorandum from Owen Seymour Arthur (OSA) to Kerrie Symmonds. A memo which is reported to have expressed a ‘lack of confidence’ in Mia Amor Mottley (MAM) as leader of the Barbados Labour Party (BLP), the official  opposition, in the Parliament of Barbados. This comes after last fortnight’s revelations that the same OSA had called a significant policy initiative by MAM as a ‘gimmick’.  Indeed, these are amongst the most sever blows that have ever been delivered to any political leader in the history of Barbadian politics. Maybe in the history of Christendom.

Arthur’s animus towards Mottley is now clearly too deep for this party to present any semblance of a united front against a weakened Democratic Labour Party (DLP), far less play a larger role in helping the country to navigate the presently deep and widening economic circumstances. These public disclosures are indeed the tip of the iceberg of the deeply negative personal relationship between Arthur and Mottley that have built up over several years. Arthur has also expressed disappointment about the circumstances which led to Mottley’s most recent elevation to the leadership of the BLP, as happened after the elections.

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Mottley, Mascoll, Affonso-Dash, Wickham: Liar Liar Feet on Fire!

Submitted by Douglas
Patricia Alfonso-Dass, President of the BHTA

Patricia Alfonso-Dass, President of the BHTA

Please check the statistics below that I got earlier today from the Caribbean Tourism Organisation.  For ease of scrutiny, Barbados is highlighted in green and St. Lucia is in red. Also look at the % market share and the decline in arrivals this year from the UK for both countries.

Actually, so far this year, our market share has increased, while St. Lucia’s has declined. These stats need no analysis, they are clear. Barbados is ahead of St. Lucia vis-à-vis all arrivals, including those from the UK.

So, I really do not know where Mia Mottley, Clyde Mascoll,  Mrs.Patricia Affonso-Dash from the BHTA, and Mr. Omniscience, aka Peter Wickham, got their figures. They have been telling Barbadians that we are slipping to St. Lucia, and that St. Lucia’s arrivals from the UK are growing by leaps and bounds.

In fact, Wickham stated emphatically the last two Mondays that he was on VOB’s Brass Tacks call-in programme, that all the other tourist destinations in the Eastern Caribbean were doing better than Barbados. We had reached our nadir. Well, check for yourself. Statistics don’t lie, political prostitutes do.

Stat Table (PDF format)

Can Barbados Export Services?

Clyde Mascoll was paid more than $32,000 to to prepare three speeches from 2010 to 2012 as a consultant.

Clyde Mascoll was paid more than $32,000 to to prepare three speeches from 2010 to 2012 as a consultant.

On an earlier blog the point was made that Barbados should be selling services given the high level of investment in education. The fact that we have been unable to do so suggest we have not done the job of educating our citizens for the global market.   The irony is that we are being beaten out of the unskilled jobs as well offered by the Canadian farm labour program similar opportunities.

In the same way the country remains in a tizzy as to the correct approach to take to give impetus to the agriculture sector to bring a level of food security.  The fact that we are churning out grads with a mindset that to earn their way in the world they must work for organizations, what conclusion can we make. Barbados does not have a significant entrepreneurial class. BU goes as far as to suggest that the self employed class is not highly regarded.

The few consultants we have can we say they represent a pioneering breed? Is there an opportunity for other Barbadians to follow? These are questions Barbadians have to answer. Why do we educate ourselves – in the case of Barbados – allocate a significant percentage of the national budget to education, if the output will not generate contribution to GDP. The fact that we have to ask the question maybe an indictment already.

Despite the pessimistic outlook as to where Barbados finds itself to earn its way in the world, BU was pleased to read of two Barbadian consultants blazing a trail.

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Elections People Lose

Submitted by William Skinner
Clyde Mascoll, BLP spokesman of economic matters deemed a liability

Clyde Mascoll, BLP spokesman on economic matters deemed a liability

Many years ago, during the turbulent years of political rivalry between Edward Saga and Michael Manley, in Jamaica, there was a very violent election and at the end it was dubbed: ”elections that people lose”. Sometimes, the only victors are the politicians and their lackeys. The victory of the Democratic Labour Party is a victory for Prime Minister Freundel Stuart. The jury will be out for sometime as to whether it was a victory for the people.

This election clearly demonstrated that the fed-up level, with both the Barbados Labour Party and the Democratic Labour party is rising; the electorate, caught between a rock and a hard place, decided that the money offered “to be put back in their pockets’ by the Barbados Labour Party, was not enough to convince them that they should bring the Bees back into office. They worried about the transport being privatized and pensioners having to pay bus fares; they worried about the Sanitation Services being privatized and having to pay for garbage removal. A people under the heavy yoke of a recession, that is not going away, are very circumspect. So, Stuart went out there and reminded them about schools that the Democratic Labour Party built and told the voters that while money in their pockets is good, their character and understanding the value of a vote is more important. A less colourful but more effective message in the end.

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Are VIPs Exempt From Paying VAT?

Submitted by HAMILTON HILL

Acting Director of the VAT Division, Anthony Gittens

As a young man fresh out of school and a recent member of the work force in what was at that time a very placid public sector in beautiful Barbados, I evoked the ire of my boss who had consented to a day off, presumably through an acute case of diarrhea only to find me seated in the law courts, a favourite pastime I had developed back then. On the spot I was fired.

Years later in a different country and working in a much less tolerant society, I almost suffered the same fate as I pulled my truck to a halt on a Connecticut highway at the sound of the voice of one Clyde Mascoll on Brass Tacks this past week. For fear that the signal that feeds the Smart Phone might be lost, the dumb ass that owns the same made the decision that this load would have to wait. Even though I know full well that global satellite provides the type of scrutiny of which local politicians know nothing, I took the chance. I listened, I took notes and I concocted a reason why dispatch was not notified of what turned into a twenty five minute break.

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According To Clyde Mascoll

Submitted by DLP Supporter

Leader of the Opposition Owen Arthur and Clyde Mascoll Chief BLP Spokesman on economic matters

The Democratic Labour Party family and the entire country looked on in total amazement last weekend when Owen Arthur conferred the highest BLP honour, the Grantley Adams Award, on none other than Clyde Mascoll who once served as a Leader of the Opposition of our great party. What a betrayal of the name of Grantley Adams. It is no wonder that the vast majority of the rank and file of the BLP are hopping mad over this gross insult to their collective intelligence. A dismal act of betrayal of the ancestry of that party that has clearly lost its way.

Mascoll’s reply to Arthur’s 2004 budget.

“Mr. Speaker, as I sat yesterday listening to the Right Honourable Member for St. Peter, once again I became convinced that the Right Hourable Prime Minister does not have any clue as to where he wants to take this country Barbados. The Right Honourable Prime Minister has no clear vision of the kind of Barbados that he wants to leave when he exists the political stage….The Right Honourable Member for St. Peter does not speak from a deeply-held philosophical position. His positions and policies reek of political opportunism and pragmatism. His blunderings and meanderings have been masked by excellent public relations machinery…

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Governor Dr. DeLisle Worrell the Controversial

Dr. DeLisle Worrell, Governor of the Central Bank of Barbados

Dr. DeLisle Worrell will go down in history as one of the most visible and controversial Governors of the Central Bank of Barbados. He is certainly not a Kurleigh King, Calvin Springer or Winston Cox, perhaps closer to a Dr. Courtney Blackman.

Some Barbadians have become concerned by what appears to be virulent attacks directed at Worrell coming by the Barbados Labour Party (BLP). Attacks led by Arthur and Mascoll, which have reduced Worrell to an economist of lilliputian status. That Arthur, Mascoll et al would be so harsh about one of their own merits scrutiny. Bear in mind the Central Bank of Barbados has always been regarded as a respectable institution.

In the same way many believe governments managing world economies at this juncture in history are unfortunate so too Governors of Central Banks. All have to agree that the unprecedented challenges posed by the protracted global economic slowdown mean that modalities in boom times are not relevant at this time. It is in this context that we have to debate and evaluate the economic outpourings from Dr. Worrell since his appointment in 2009.

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Owen Arthur and Clyde Mascoll Playing The Numbers

Former Prime Minister Owen Arthur and Clyde Mascoll Chief BLP Spokesman on economic matters

Arthur revealed that deposits by Barbadians in local banks which stood at $9.333 billion in 2008 had now shrunk to $8.222 billion in 2011.

Nation Newspaper (11.06.2012)

Leader of the Opposition Owen Arthur announced recently at a Christ Church constituency branch meeting that Barbadians have been forced to drawdown on their savings caused by a rising cost of living. Consequently the purpose of savings to provide for a ‘rainy day’ has been compromised. Arthur was Prime Minister and Finance Minister for 14 years and many – the traditional media with the exception of David Ellis – seem to cower when he (Arthur) quotes financial information for public consumption.  Local media sadly seems driven by agenda and ignorance.

The information quoted by Arthur can be verified from the Central Bank of Barbados website. We welcome feedback on our conclusions when compared to the statistical gurus.

It is true that total deposits in 2008 stood at $9.333 billion. It is also true to state the deposit balance stood at $8.222 million in 2011. A more critical analysis shows that the $9.333 billion figure was at March 2008. The $8.222 billion was as at December 2011. Clearly Arthur did not factor seasonality in his politically provocative statement.

For example, in March 2008 the $9.333 billion  (quoted by Arthur) when compared to March 2011 figure of $9.045 (Arthur makes the comparison to December 2011) – so that an apples to apples comparison between Mar 2008 and Mar 2011 shows a fall of $288 million.

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A Call To Cut Public Sector Workers

Ryan Straugn, President of the Barbados Economic Society

Recently on a Voice of Barbados Talk Show – the government was a no-show – president of the Barbados Economics Society Ryan Straughn stated that government needs to retrench civil servants if it is serious about cutting public expenditure. The government’s fiscal strategy has come under pressure from many quarters in the last three years. There is concern that government’s fiscal deficit needs to be more aggressively managed. It is a fact public sector wages is a significant slice of government’s budget. Clyde Mascoll represented the Barbados Labour Party (BLP) and did not challenge the statement uttered by Straughn. BU remains flabbergasted that such a weighty pronouncement by lead spokesman for the Barbados Economics Society (BES) would not have generated significant debate in the country. Traditional media, unions and general populace continue to be consumed by the Alexandra matter.

One is left to speculate why Straughn’s suggestion has not been challenged, supported or discussed by others. It is understandable why the BLP would dippsy doddle around the issue with a general election on the horizon. The same cannot be said for CTUSAB and specifically the NUPW, the trade union which represents the majority of public sector workers in Barbados. Bear in mind Cedric Murrell, the head of CTUSAB as recent as December 2012 served notice that it will press for a public sector wages and salaries agreement in 2012.

The government’s policy position on the matter is known, it intends to protect jobs. In fact Prime Minister Fruendel Stuart defended the need to protect the social fabric of Barbados at the  monthly luncheon of the Barbados Chamber of Commerce and Industry (BCCI) at the Hilton Hotel yesterday [25/01/2012]. Whether one agrees with Straughn, the issue of sending home thousands of workers at this time should stoke debate.

Solutions To The Economic Crisis Facing Barbados

Submitted by the People’s Democratic Congress (PDC)

Mark Adamson, leader of the PDC demonstrating outside Barbados Light & Power against high electricity charges by Barbados Light & Power

The current political economic depression in Barbados, and the depth and duration of it, ought NOT to have come as a surprise to the broad masses and middle classes of people of this country.

As that, a few years before the coming about of this depression, the PDC was warning the public of Barbados that if certain political financial systems remain in existence in this country in the long term, that they were going to substantially cause very staggering and profound amounts of decay and decline in the production and exchange structures in the country.

Furthermore, too, then, the PDC warned the public of Barbados that certain actions that were  from time to time being taken by the so-called leaders of the national tripartite social arrangement (esp. those of BLP/DLP Governmental leaders), to disgracefully expand these very systems, such as TAXATION; INTEREST RATES; REPAYABLE INSTITUTIONAL PRODUCTIVE  LOANS; IMPORTATION OF THE COST OF GOODS AND SERVICES FROM OVERSEAS; EXCHANGE RATES PARITIES; WORK; etc. (which invariably are some of the same fundamental causes of the massive production and exchange decline that is now being witnessed by many people in Barbados), were going to mean the guaranteeing of political economic recession soon after political economic recession, for Barbados.

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It Is Time For Arthur To Cut A Deal With Mamma Mia!

Opposition Leader Owen Arthur (l) Mia Mottley MP (r)

BU has to confess the politics on the Barbados Labour Party (BLP) side at the moment is puzzling. With just over a year to go to a constitutionally due general election the commonsense strategy for both parties is to agree to a competitive slate of candidates and settle any grievances between members – especially if they are prominent – have them resolved quickly.

The recent DLP general conference appears to have Jack and Jill lining up behind Prime Minister Fruendel Stuart. If there was plan to hatch a Chris Sinckler plan it seems to have been placed on the backburner for the moment. What is shaping up to be intriguing is unravelling on the BLP side.

We all recall how Mia Mottley was taken out by the so-called gang of five. It came as a surprise if for no other reason it required George Payne to throw his hat behind Arthur. All kinds of reasons have been floated why Mia Mottley lost the support of parliamentary colleagues – the fear of Mottleyism, concerns about how party funds were being spent, the profile of persons she had following her which crowed out the ‘regulars’, her lifestyle, and the list is long.

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The BLP Also Lost On The Facts

Submitted by Old School

Minister of Finance, Chris Sinckler (l) Opposition Leader, Owen Arthur (c) Clyde Mascoll, BLP Spokesman on economic matters (r)

  1. Mascoll and Arthur made much of the fact that there was a difference between nominal and real GDP growth in 2010 and that the Central Bank was hiding the true picture.  Sinckler pointed out that it had happened in 2003 as well and there was no contradiction from Owen.
  2. Mascoll kept claiming that a major cause of the fiscal deficit was not the global recession but the DLP padding the public sector payroll.  He claimed the DLP had added about 4 or 5 thousand to the payroll since 2008, we now find out that is far from correct.  Instead of the 34,000 public servants claimed by Mascoll we find out we have less than 28,000.
  3. Owen made much of the fact that even though there was a global recession and we would be affected, that due to poor DLP management, Bim was falling behind its peers and was ranked 197 out of 217.   We found out that the same ranking of countries in 2002 had Bim at 181 out of 191, during a far milder recession than the current one.
  4. For me the ability of Owen and Clyde to portray themselves as Trained Economists espousing purely economic views based on their training has been shattered.

I had also begun to think that the DLP was not well placed to manage the economy during a crisis time.  However, the facts seem to suggest to me that the economic outcomes are not that different from the last recession in 2001/2002 when the BLP were in charge.