Monday, April 22, 2024

WILD COOT: Grievous bodily harm


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Any Barbadian interested in the history of Barbados should take time to go out and purchase a copy of the October 6, 2013 SUNDAY SUN, just as you would keep a copy of the edition that marked November 30, 1966, when Barbados became independent, or the edition marking the knighthood of Sir Garry.
The analyses outline a watershed in the development of Barbados. Remember, the Wild Coot said that the junk bond status would come back to haunt us; that if you saw a sign marked “junk” in the corner of a store, you would not shop there. There ought to be a remedy against people who seek to persuade innocent citizens otherwise. It is the height of folly to go to the market to float 8.5 per cent bonds to redeem 7.5 per cent bonds in this case. As expected, the market has thrown our junk bond status in our face.
This folly has taken place over the past eight months and even before, when Government put expediency in winning first, instead of common sense. All of this with flair and pomp!
It will not get better, considering the apparent mindset of those in power. As the structure implodes, instead of seeking measures that may be now harsh but may lead into calm water, such people as we have in Government will think primarily of how any such measures will affect them politically and personally.
There is an even greater fear on the horizon. There is talk of devaluation if we are unable to meet our foreign exchange requirements, and if the help from the International Monetary Fund requires that stipulation. The Democratic Labour Party knows that if that route has to be taken, the Sahara desert would not be wide enough for their future wanderings. The members who are leading us to this recourse would have to go about with a leprosy sign pinned to their backs.
Countries that face a difficulty in debt repayment can  go to the loan sharks whose terms are mostly onerous on the financial prospects of the country. I outlined in several articles a few years ago the mechanism of “debt for equity” swaps; how a country “benefits” from this arrangement. However, the country is held up in a negative light by reputable international investors. Investors caught up in these transactions are usually those taking advantage of the situation – very much like a lady in a desperate situation having to sacrifice her dignity on an open pasture.
For example, an investor shark may want to buy your debt on the market; a debt owed to someone that is now overdue. The holder of the debt might be prepared to take US$0.50 of the US$1. The shark investor would pay US$0.50 for the US$1 debt, then demand from our Central Bank BDS$2 for the debt owed for which he only paid US$0.50. He will invest the BDS$2 in Barbados in many ways, either in tourism, manufacturing, property or business, at the same time destroying the market in Barbados in that particular industry.
What is more iniquitous is that investors described as “vultures” are now not only doing this but also demanding the full US$1 from central banks for debt that they have only paid US$0.50. Indeed, when central banks are unable to pay, many are held to ransom or even taken to court. Back in 2009, Congresswoman Maxine Waters was imploring the United States Congress to take steps to eradicate this practice.
So you see, the steps along the slippery slope that Dr Courtney Blackman spoke about are real.
Now who will be a man and bell the cat? Shakespeare says: “Ay, in the catalogue ye go for men; as hounds and greyhounds, mongrels, spaniels, curs, shoughs, water-rugs and demi-wolves are clept all by the name of dogs.” Sadly enough, bounteous nature has not closed in this case many gifts. Who will find heaven for the country?
“Wild Coot, who is the mongrel?”
• Harry Russell is a banker.


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