THERE IS A STORY TOLD years ago of which the Wild Coot was reminded by a 94-year-old woman. She called. “Wild Coot, you remember the story of the parts of the body that were vying for which one was the most important part?” I said yes.
“Well, Wild Coot, do you not see the same thing now as the commercial banks rack up charges and put down roots?”
What perspicacity coming from this old biddy.
I began to see the reference. If the commercial banks refuse to lend their savings, then the only way that the Central Bank can perform its function as an intermediary in the financial system is to give the money directly to the Government to distribute as it sees fit. Money creation without structural business activity. Printing. Commercial banks create money too when they lend, but mostly for business purposes.
My beef with former governor of the Central Bank Dr DeLisle Worrell was that he made it too easy for commercial banks to be exceedingly profitable without fulfilling their activity as lenders. Also, he allowed the banks to dictate behaviour in Barbados. Branch managers manage only the branch today in Barbados, are paid less and receive fewer prerequisites.
I have criticised the Central Bank from day one for acceding to the wishes of the commercial banks, especially the Trinidad banks, in setting their own savings interest rate. Having done so, the consequent spread (difference between paying and charging interest) increased significantly. Coupled with runaway commissions (still running) and the proliferation of credit cards where the interest rate is often more than 28 per cent, the banks have been boasting superior profits in a sterile environment. Also, our Central Bank has drawn the savings out of the commercial banks (again reducing their expenses) and facilitated the Government’s inefficient restoration of the pre-2013 wages and salaries bill.
Although there is a hue and cry now to go to the International Monetary Fund (IMF), we baulk. Was not the IMF telling us what to do “ere” now? Cut wages, renegotiate, and reduce spending – all hard decisions. Has not Mr Owen Arthur been saying so all along? What about now? We now have all talk and no action. Unions say no devaluation. If balancing the budget means reducing the cost of the public sector and statutory corporations, will they shut down the country? Hobson’s choice.
But let us not forget the story of the body parts. Which has been the victor up to now? If the commercial banks were not productively lending, then in plain language there is need for some Epsom salts. It cannot be more obvious that going forward we have to free up the process of lending for business activity. We have no local bank. The Wild Coot is not sure of the intentions of the Trinidad banks. Our minister must liaise with his colleagues to find which banks are financing hotel investment with Barbadian cheap savings. Why has the Wild Coot been railing against this constantly? When a foreign investor invests, he is supposed to bring in foreign currency, not borrow from the local banks. This is imperative if he is receiving tax and other benefits.
So on we go printing money, creating a situation between the Ministry of Finance and the governor of the Central Bank that has not been solved by firing the governor, a situation that has been made even worse going forward. You fired one scapegoat and you are searching for other scapegoats. A think tank does not have implementation powers. Think tanks are all over Barbados.
Not without reason have the words of Macbeth returned to mind. “For Banquo’s issue have I filed my mind./ For them the gracious Duncan have I murdered (fired Worrell)/ Put rancours in the vessel of my peace/ (now appeal for help) Only for them, and mine eternal jewel (as Minister) given to the common enemy of man (the electorate).” One can just imagine our minister of finance in deep soliloquy quietly saying: “To be thus is nothing; but to be safely thus/ Our fears in Banquo (DeLisle) stick deep,/ Under him my Genius is rebuked.”
Recently the Wild Coot has been reading a book by Edward Seaga. It is interesting to see how Barbados is now mirroring the situation of Jamaica in the 1970s and ’80s when there was a choice about living within its means. I say, take the bitter pill and be damned.
All jokes aside, the situation is too serious to be a laughing matter. But the comedy and the talk continue.
• Harry Russell is a banker. Email: quijote70@gmail.com