Absorbing Caricom’s pain by Michael Harris

Absorbing Caricom’s pain
By Michael Harris
Story Created: Dec 22, 2013

FINANCE ministers cannot be expected to speak the whole truth. When they speak they must choose their words with care. If their words are too gloomy they may have unintended consequences such as causing a run on the banking system, spurring capital flight or scaring off both external and internal investment. But if they paint too rosy a picture, and the expectations and actions of investors, businessmen and ordinary citizens are shaped by that picture and such expectations are not realised, then the same problem of negative consequences arises.

So when Minister Howai stated recently that he has a “very positive” outlook for the T&T economy in 2014 we have to examine carefully not only what he is saying but as well what he is not saying to arrive at some approximation of what he really intends to say. We must note therefore that his “very positive” outlook is based on the “reasonable expectation” that there will be “normal performance” in the economy. If those conditions are met then our Minister of Finance expects to see growth of about 2.5 per cent over the coming year.

Clearly if we were to examine that forecast more minutely we would want to ask the good Minister exactly what he meant by “normal performance”. But let us for the moment take the term at face value because a more urgent question to be posed to the Minister is whether and how, his “reasonable expectations” have factored in the effects on the “performance” of the economy of the impending collapse of much of the Caricom economy.

The collapse of a large part of the Caricom economy is going to be brought about by the dire economic circumstances currently facing two of the so-called “more developed” states, namely Jamaica and Barbados, both of which are facing virtual economic implosions.

In the case of Jamaica the core problem is the horrendous accumulation of debt incurred by that country over the last 20 years. The debt now stands at close to US$20 billion, representing some 140 per cent of GDP. Servicing of that debt now accounts for about half of the government’s expenditure. Forty-five per cent of the 2012/13 budget was financed by borrowing.

Indeed Jamaica has become a prime example of the classic debt trap. So much of the country’s revenue is spent on debt servicing that after paying public service wages and salaries, there is nothing left to spend on the type of investments which would generate future growth which is, in turn, the only path to escaping the debt. In the meanwhile unemployment grows, poverty deepens, and productivity declines, all of which result in decreased revenues.

Lest it be thought that I am exaggerating the problem, let me quote from the present Minister of Finance in Jamaica who justified the decision to go back to the IMF by saying that, “This is essentially a matter of the survival of the Jamaican nation as a viable nation.”

In the case of Barbados the entire Caricom region was shocked by the recent announcement by the government of that country that it intended to lay off over 3,000 public servants in January as a first step in cutting government expenditure and reducing national demand for goods and services.

For many in the region that announcement was the first real indication of how desperate the economic situation in Barbados really is. But the fact is that the Barbadian economy has been in trouble ever since the world economic collapse of 2008 and the government has steadfastly refused to make the difficult choices which its problems entailed.

The recent IMF report of Barbados showed that government’s debt had risen to 94 per cent of GDP; the government’s deficit is expected to rise to 9.5 per cent of GDP by the end of the current fiscal year; the government’s wage bill had risen to 10.3 per cent of GDP in 2012/13; and, most worryingly of all, international reserves had fallen to US$468 million at end-October (from 19 to 16 months’ cover).

What “reasonable expectations” can we derive from this gloomy economic outlook in Jamaica and Barbados with regard to the performance of the T&T economy in 2014? It does not take a great deal of insight to recognise that our economy will be significantly impacted in at least two areas.

In the first place the growth of some 1.5 per cent in the local economy over the last fiscal year was considerably driven by growth rates in excess of two per cent in the so-called non-energy sector. And growth in this sector is heavily dependent upon growth in the level of exports to Caricom and, in particular, to the economies of Jamaica and Barbados.

“Reasonable expectations” would suggest that what is happening in Jamaica and Barbados would therefore impact significantly on the fortunes of the non-oil sector in this country and ultimately affect levels of growth in the economy as a whole even if there is no major “maintenance” in the oil sector.

The second area of impact on this country, from what is happening to the Caricom economies in general, is to be found in the increasing migration of Caricom citizens to these shores. Trinidad has historically attracted immigrants from other Caribbean countries. The difference this time around is that we are now attracting thousands of people from Jamaica, the most populous of the English-speaking Caricom countries.
The attraction of T&T to Jamaicans who hitherto had sought escape north to the United States arises first from the fact that the economic recovery in the US has been very sluggish and moreover growth in employment has lagged behind overall economic growth.

Meanwhile, here in T&T, not only is the economy still experiencing modest growth but there is in place an extensive system of social protection and welfare programmes which provides the immigrant, at very low risk of being caught, with an immediate and reasonable expectation of a sustainable level of existence.

As the economies in Jamaica, Barbados, and the OECD countries worsen in the coming year, the levels of migration to this country from our Caricom neighbours, particularly Jamaica, are only going to rise, with or without Caricom-agreed rules of entry.

Our Minister of Finance may want to explain to us just how he factored in the impact of such reduced exports and increased migration on our economic performance, as well as our social fabric, in arriving at his growth estimates for next year.

• Michael Harris has been for many years a writer and commentator on politics and society in Trinidad and the wider Caribbe

what I would like to know chin is where did the debt come from. how was it built up, what did they use the money for..where is the accounting of it?

how can you borrow 20 billion dollars and not set up infrastructure that is capable of servicing that debt?did you eat the money and now have nutten that earns anything to pay it off ::confused::

can somebody please explain how jamaica came to be owing 20 billions of dollars no doubt usd::confused::

ok chin!  T-bills and other forms of raising money is incurring debt..or spending by debt.  agreed.  it is a form of debt.

but my argument is that debt creation is far more extensive than what you list here.

answer this question:  why must the Jamaican government spend by debt when it can print the Jamaican currency and spend that way... debt free?

why do the governments we know spend by debt and not print their currencies which they own and control in the name of their people, DEBT FREE?

you know some accounting apparently so here:

the Yardy government wants to build a road.  it costs 5 billion dollars.  it takes pains to ensure that 100% of the materials come from the Yard/Region.  that the contractors, desingers, engineers, craftsmen and labourers are Yardy/regional.

it prints up the 5 billion at no interest to itself and spend it into the creation of the road.  the road completed we have balance..expenditure/asset.....

the government has stimulated the economy to the tune of 5 billion with all its multiplier effects in the local economy.  there is no inflation...all is value based.  the government taxes transactions at the business levels but charges no income taxes.  the money does not have to be repaid and there are taxes on the business activity.

the government also establishes a minimum road tax on the use of the new highway for its up-keep.

all is balanced, and very profitable and much expansion in the economy.  and no inflation because the money is deb free.

now on that principle the government..indeed any government at all... has as much money as it will ever need, debt-free to build up the nation. so why are they spending by debt ::confused::

every year every budget is paid for by debt..money borrowed..not out our national revenues.  what happens to national revenues collected by internal revenue/treasury departments.  go take a look and see!

also governments do not need to charge income tax on salaries which cuts purchasing power and retards development.  it does not have any interest to pay on debt free use of the national currency or script, so no need for income tax.

the government must take care to spend only in balance.  if the government spends out of balance then that is corruption and inflation pops up and the currency is weakened.

and in a great array of taxes for services the government will always have money for recurrent expenditure...stamps, custom duties, taxes on the rentiers, all business activities, especially on excess profits etc etc etc.  but no income taxes.  income tax is the single most egregious burden ever put on people.

and if you go back in history you will see periods in which there were no such income taxes...like the USA before 1913.

if you go to Hungary right now you will see how recently a new government stopped spending by debt..struggled to pay of existing loans then kicked out the IMF, the WB and all european and international financial agencies when they did... and are now in the financial black and doing fine.

now I ask you again...go find out the full extent of the Yardy debt,  the creation of the Yardy debt... as an example of all such in the world.  find out who holds the debt and to whom the interest is paid..apart form those who may own Yardy paper from T-bill sales etc.

I am sure that the whole Yardy debt is not made up of government paper.

then answer the question WHY DOEs THE YARDY GOVERNMENT SPEND BY DEBT, INCURRING INTREST CHARGES WHEN THERE IS THE MOST POSITIVE OPTION OF SPENDING DEBT FREE ::confused::

AND I WILL ALSO WAGER THAT IT IS ENSHRINED IN THE YARDY INDEPENDENCE CONSTITUTION THAT THE GOVERNMENT MUST NOT SPEND BY DEBT BUT MUST SPEND THE NATIONS CURRENCY DEBT FREE IN THE NAME AND INTEREST OF THE PEOPLE

the fact of the matter is that Jamaica prints its own money and lends it to itself for which the government pays interest....to who?

that appears to be the situation.  the build-up of debt is deliberate in order to collect interest..and to deepen external control.  through this debt Jamaica will be forced to sell to multinational corporations its entire social infrastructure to pay off debt.

so who holds the debt that Jamaica imposes on itself?

who forces Jamaica to commit suicide?

that is how I see the process chin.  that is what explains 20 billion in debt that was not used to build up Jamaica so that it could pay off the debt rather than letting it build up to un-payable levels.  there was no interest at all in building up Jamaica...only to use it as an interest bearing cow.

it is the same thing with central banking everywhere..a financial tactic that permits the international bankers to strip mine the word

that is my case chin..about that is going on in the world.  you not observe and pose the questions that beg..like how there is so much debt in Jamaica and there is little on the ground in terms of infrastructure to account for it.  how come it was not used to improve Jamaica's economy that would reflect itself in Jamaica's ability to repay the debt?

are the Jamaica leaders so stupid as to allow so much debt to accrue for no apparent purpose

I did not say print money to pay off debt.  dat is not possible.  the payments will not be accepted as the dollar is eviscerated.  those who hold the debt will accept Jamaica land and essential infrastructure

also the money printed to pay debt would be worthless.  you have to print the money debt free to use to build what you need so that it becomes asset backed..and also leads to increased domestic economic ac tivity that increases the pie so you can pay off faster.

you want the forriners out of your hair bleeding you all the time

which is why I pointed out in building the road that all materials and labour be domestic and regional. the region will accept Yardy currency..and of course it is acceptable in Jamaica itself

if Jamaica wants to start using its money debt free now it can but it would be be for apyiong down debt...  but what that would do would be to free up forrin exchange to pay off the debt.  since Jamaica cant beat the usa in a war it would have to pay off its debt, and then kick out the forriners and proceed on its own, in cooperation with the region.

and now is the time for there is petrocaribe in place.  Jamaica has no energy reserves and would have to pay for that in USD.  petrocaribe has saved such as Jamaica and Guyana from total collapse already with that deal. if Jamaica had to pay market prices in USD the disaster would have already taken place.

this crisis is also a great opportunity for Jamaica to break free of its chains if the people have the bACKBONE,  IT SIMPLY CANT CONTINUE THE WAY ITS GOING AND THE ONLY WY TO GET OUT OF IT IS TO USE THE CURRENCY AS IT WAS INTENDED TO BE USED...DEBT FREE!

for Jamaica to save itself it must kill its political system and evolve one that can bring new and nationalist government to power, kick out, arrest and try the current parties and jail them for selling out the country..use its own money debt free which will stop immediately the growth of the debt while sacrificing to pay off the debt from forrin earnings..set a goal of 10 years or so to pay it off.

once that is done kick out the world bank, IMF and all forrin financial institutions and use Jamaica money for development

and look at this..as the money is begun to be used debt free..equalizing sanctions put on american exports especially for food products, re-instating local produce to competitive level saving massive forrin exchange and helping to pay down the debt.. local inflation is cut quickly and the Yardy dollar begins to strenghten  and better value internationally.  confidence in Yardy governance also grows and provides an opportunity to bring in the Yardy/west indian diaspora in mutually benefical investment to pay off the debt faster.., using forrin curency..CDN, USD, Sterling/Euro

make T-bill sales/offers of a strengthening Yardy dollar to the disapora alone..through west indian diasporic entities/associations in Canada, USA, England etc.  that could become a popular and profitable investment for Jamaica and west indians.  in 10 years time the debt is gone, the currency strong and everybody happy.  no more debt.

BUT NOWHERE DID IS SAY PRINT YARDY MONEY TO PAY DEBT.  THATS ABSURD.. THE MONEY WOULD HAVE NO VALUE.  THERE IS NOTHING BACKING IT.

BUT IT CAN BE ISSUED DEBT FREE AND THAT WOULD STOP THE GROWTH OF THE DEBT AND LEAD TO ITS REPAYMENT AND ULTIMATELY FREEDOM FROM FINANCIAL SLAVERY

so what are you suggesting..that the Jamaican people give themselves up to forrin interests..voluntarily allow themselves to be directly physically enslaved from the current financial slavery?

does not compute..my computer break up in consideration of dat wat you say there ...wat!  it too late ::confused::  nutten at all go so!

there are any number of positive and creative ways to get rid of that debt.  what must stop right away is the growth of that every year by the use of regional currencies debt free.  call for renegotiation of the existing debt at the same time.

the crucial factor is to stop spending by debt..and organize domestic debt in such ways as to make lending non-usurious.  if debt is not controlled we will  lose our souls, out lives, our homes.

don't you understand that ::confused::

that is the problem right there..the one and only economic problem hat has smashed the worlds economy..concentrated all the wealth in very few hands.  that is the basis of global economic crisis and the source of the power of the global oligarchy.

we are all almost totally enslaved right now.  another generation...10 years..and we are in mortal danger of self immolation. it must stop right now. 

the Jamaica problem will only grow worse.  the same way everywhere if the debt building or growth does not stop..or is not stopped.  debt service is now a trap that gobbles up world liquidity, concentrates all the wealth in few hands which is no good at all.  it is inflationary and stagnating at the same time
social crisis in the world.

the Jamaica answer is the answer for the whole world.  it is the answer implemented by Hungary and Iceland.  it is the answer implemented by Vlad Putin who took  the Russian bank back from the international fraudsters to whom Yeltsin had given it and issued the Russian currency debt free.  that is what is responsible for the downward slide and heated relations between American and Russia..Putin and Obama.

Saddam and Gaddafi were blasted for this and associated reasons.  and now Iran faces the guns of the west for the same reason..control of its own finances with no dictation from anyone.

WHAT YOU HAVE TO UNDERSTAND CHIN IS THAT THE OPTIONS ARE BAD.  THERE ARE 2 FROM THE WESTERN POINT OF VIEW WHERE WE ARE CONCNED: SLAVERY... OR MILITARY ATTACK AND DESTRUCTION OF OUR HOMES AND LIFE... LIKE IRAQ, LIBYA, SOMALIA, YEMEN ETC.  THAT IS EXAMPLE FOR US TO KNOW WHAT WILL HAPPEN IF WE FIGHT BACK

but we have no choice but to fight for whether we do or not, their plans for us includes what has happened to those listed countries anyway. that's what you do not see.  nuuten like that.  it is inherent systematically in the way we have arrived at this stage.

it is an exploitation, horrifically hostile and and comprehensive.  it can be resoled in one way only..the people rise and put the system to death..or the elites win and put us to death, reducing the human population by huge numbers

that's the way it is whether you can analyse the situation and see the picture whole or not

the positives contain the fact that basic material problems have been solved and that all human needs can now be met plentifully on an on-going and developing bas.  we just cannot put in place a system of social organization to deploy the stage full with an elite in charge whose social position was derived from exploitation society and depends on that way of life to remain in power...hence the crisis and struglle  for democracy vs fascism

take it or leave it chin.  that is the way I see things....

if there is debt in a situation where there is supposed to be none a fraudulent substitution has taken place that exploits the people.  that fraud will lead to... and has already led to.. concentration of all the wealth in few hands.

to keep that wealth the few who have pulled off the fraud must enslave the people and keep them unable to change that reality.  that means you all of us are at risk  by the way the system functions.

take it or leave it that's the way it is.  your class interest is to fight that system.  you have no choice otherwise.  if you do not see this than you are co-opted to live and behave in position to you own class interest..your own best interest.  or you are your own worst enemy. 

there is no balance of in-between.  you are either exploited or exploiter.

ok..wat is the state of Greece, Spain, Portugal right now?

exactly what you anticipate for Barbados

what was the state of Iceland just a couple of years ago..the same way.  what did Iceland do to bring itself very quickly back to black ::confused::

exactly what I recommend here

and why then has not Spain, Portugal and Greece done the same thing?

do you know what the nationalist head of state is doing now in Hungary?

he has initiated prosecution of all the government officials including the prime minister before him for selling out the nation, betrayal for miring the nation into debt to the bankers. 

do you know that Iceland has done the same..jailed many of them already for the same fraud! ::confused::

I don't get you chin.  here you are lamenting the pain of the caribbean one would imagine that you are in the market for a solution.  but you are not you know.  you are not in the market for a solution.  your response to my comments illustrate that

you now know what the cause of the problem is:  DEBT... mounting compounding interest charges. 

and you now know that constitutionally most countries aware of the dangers of such global financing put in prohibitions against the very practice of central banking.  if that is the case in the west indies every government at the moment, all the leaders, are outlaws... are outside the law of their own countries, participating in fraud against their own people.

what you see in Jamaica and in Barbabados is deliberate.  they knew what was going on and benefited from it. they are all crooks.  and for that all you express in fear for the people will come to pass and much, much worse.

they are the ones who gave the national currency to the forriner to exploit.  they are the major players in effecting the substitution from debt free currency to debt based economy..or never fought against it from the start.  and they have played the game fooling the people for generations.

there is only one solution and that is to take back the currency, shut down the central bank and remove debt based economy..replace it with financial controls to ensure that debt never becomes the dominant financial way ever again...pay off the debt and drive the crooks away.

there is no choice.  just watch and see!

that's it chin!  you can dance everywhere you want but that's the problem... and the solution

occams razor...it is all very simple in the end!

I am not into  economics but South Africa should have defaulted on all debts accrued during  the apartheid  years but that was one of the reasons that Mandela  and his successors were selected  ... Mandela , Mbeki . Zuma ... Traitors all ., They continued the neo liberal policies to enslave the Black South Africans 

  Chin are you for real    Vibrant economy  for who? Quote me figures as to how South Africa was  not highly  indebted during the Slave  apartheid years ... they were actually bankrupt