WILD COOT: Ossiemoron talk
I COULD NOT BELIEVE IT. It sounded like an Ossie Moore reply. I said to myself that the NATION reporter, whoever he/she is, got it wrong.
You reduce the liquidity of the National Insurance Scheme (NIS) from $525 million to $153 million while the day-to-day cash availability moved from $13.1 million to $10.8 million; so you have a squeezing of cash available. Your feed for national insurance is the general public, including the Government and the statutory corporations. Both Government and the statutory corporations are not paying on time, so Government gives the National Insurance Scheme government bonds instead of cash?
What are these government bonds? They are IOUs from the very Government that is part and parcel of the non-paying people not contributing to the Fund? That you say is logical. All that you are doing is kicking the beer can further down the road, because the only way that those bonds can help the NIS, is if the NIS can use the bonds in its cash flow. Do the bonds have liquidity? Only if the Government can redeem them at the drop of a hat. The drop of a hat means money from taxes, the printing of money by the Central Bank or, far be the thought, outside investors/international loans. A conundrum. Ossie Moore in person.
There is a situation of worsening unemployment. There is a situation of almost each and every area of the economy calling on Government in unanswered pleas to rectify from sewage to blood transfusion equipment and everything in between. There is expectation of lessening cash flow to the NIS as more elderly people call on the scheme as they age. That is why the Wild Coot wrote the article about Surprising Inconsistencies. There is a great historical event where Nero was playing a banjo or some kind of ukulele or fiddle while he admired the flames coming from Rome. The Wild Coot was not there as he would have accompanied him on the C pan in B flat.
Our standards have dropped and each day another sector feels the pinch of liquidity. The gap widens between what the Government is called upon to spend, and what it collects from the public and other sources. Then the governor of the Central Bank comes to its assistance. He wants to dampen demand. Dampening demand is another way of taking money out of our pockets so that people cannot spend and thereby impact on the foreign exchange. This is [poor judgement] at the highest level; it means less taxes collected.
Contradictory, if your policy up to now is to print money, make it available to Government to spend in the economy; it will impact on the same foreign exchange. Another Ossie Moore pronouncement. If you give carte blanche to the commercial banks to go on a spree with issuing credit cards, this is an even more direct impact of the foreign exchange. Then above all, it seems that you are hiding from the press.
A friend of mine once told me that belts and braces were needed in dealing with Needham’s Point Holdings Ltd. She said that the belts and braces were lacking and that is why returns from the investment were so paltry. Indeed, the Wild Coot has been itemising this weakness in our hotel operating system especially dealing with the latest contestant – Sandals (except that in another way Sandals is different). How are we to know the real turnover (or expenses) of the hotels so that we can gauge whether or not it was a wise investment? We shall never be benefiting from the true turnover of Sandals, as bookings are not paid here in Barbados. (Sandals and its tax benefits have opened up a Pandora’s box of other hotels wanting similar concessions.)
What Ian Gooding-Edghill has revealed about Needham’s Point Holdings Ltd in his contribution to the SUNDAY SUN of December 11, 2016, can hardly be refuted as he seems to be dealing with factual figures. His revelation that a balloon payment of $40 million is due to a commercial bank in approximately six years raises questions about sinking funds and such contingencies. Other loans due within four years and a bond issue point at a liquidity crisis within a short while, and Government having to pull its pocket on a yearly basis in a losing cause. So some so-called assets are really a drain on our resources.
Thus they directly contribute to the weakening of the balance sheet of the Government. The situation regarding the growing disparity in cash received and cash payment for the National Insurance Scheme will eventually come to a head, probably after the present lot has demitted office. But they will be on pension too.
• Harry Russell is a banker. Email: [email protected]