Category Archives: Economy

The Chinese credit bubble “China’s economy dangerously hooked on debt-fueled growth”

Hey… we Bajans know a thing or two about debt-fueled economies, don’t we?

Thanks to an old friend for this suggestion

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Filed under Barbados, China, Economy

If LIAT Chairman Jean S. Holder wants to communicate ideas, why didn’t he electronically publish?

Jean Holder LIAT Book

LIAT’s Chairman Jean Holder launched his new book last week. Caribbean Tourism is probably a very worthwhile read if for no other reason than the author is the current victim in charge of LIAT Airlines.

Our old friend Bajan Reporter posted an excellent review of the book by Sir Ronald Sanders that makes me want to run out and buy a copy, but alas… the book sells for US$40. Sorry old bean, I’ll have to defer that read.

Why oh why in this age of iPhones, iPads, MS tablets and online electronic publishing at Amazon did Dr. Holder only publish a dead tree version of his book and at a price that virtually assures only a handful of people will read what he has to say?

Dr. Holder won’t make any money anyway – few authors of such narrowly targeted books make anything worth talking about – so why not publish electronically and move a hundred times more copies than on paper?

Perhaps Dr. Holder’s choice of obsolete technology, high prices and limited distribution mirrors the way he runs LIAT? (Hey… it’s a cheap journalistic shot, but at least I’ll admit to it!)

Come on Doc… publish the new book electronically for US$10 a copy and I’ll buy and read your ideas.

Thanks to Ian Bourne for allowing us to steal his photo.

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Filed under Barbados, Barbados Tourism, Economy

LIAT disaster continues as Ralph Gonsalves challenges his critics to put their money up

“Put your money where your mouth is . . . . Everybody wants to talk about LIAT, but a number of these persons don’t want to have an authoritative position to speak about it. Being a chief executive officer of a company or the prime minister of a country which is not a shareholder doesn’t give you the right to talk authoritatively about LIAT,”

St. Vincent and the Grenadines PM Dr. Ralph Gonsalves in the Nation’s No place for buccaneers in LIAT says PM

Is the reality that LIAT’s failure is not about leadership, financing or equipment? Could it be that 70 years of Caribbean commercial aviation has revealed a basic truth that no Carib-based airline could ever be profitable?

Here is the fourth letter to LIAT shareholders from Dominica hotelier Gregor Nassief, urging PM Gonsalves to step aside as chairman of the LIAT shareholder’s committee.

Honourable Dr. Ralph Gonsalves of St. Vincent and the Grenadines
LIAT (1974) LTD
V.C. Bird International Airport
P O Box 819
Coolidge
Antigua

Dear Prime Minister Gonsalves:

Re: Run it like a business before it goes out of business

On the televised program Time to Face the Facts on Sunday, February 23rd, I appealed to you to step aside as Chairman of the Shareholder’s committee of LIAT. As mentioned on the program, given the respect and admiration I have for you, particularly on your stance and leadership on issues such as reparations and the cholera outbreak in Haiti, it was personally difficult for me to do this. But it is necessary.

LIAT has moved from an operational meltdown in the Summer of 2013 to a financial meltdown a mere 7 months later. LIAT drains our treasuries, operates inefficiently and stifles competition. The source of LIAT’s problem is its financial unsustainability and as with everything else at LIAT, no one is accountable. As Chairman of the Shareholder’s committee, the buck stops with you.

LIAT needs to fight the battle of its life to transform itself to be financially viable and sustainable. But you believe, and have stated so publicly, that LIAT can never be profitable. This battle, therefore, needs a different general.

Unsustainability

LIAT has lost ec$120m in the last four years. Last month, LIAT could not pay both the lease on its aircraft as well as its payroll. So it chose one and delayed the other. A leased ATR gives 36% more seat capacity than its closest Dash 8 equivalent but is double the (lease) expense. In 2015, repayments will begin on LIAT’s recent loan of us$65m to purchase new aircraft. So monthly cash outflows go up even more.

And the new inflows to cover this? Inter-island tourism is down 60% in 7 years and LIAT’s load factor is running at about 55%. The fantasy (aka “business plan”) is that the load factor will go up to 75%. The fantasy is also that LIAT will fly its way out of losses by expanding to new destinations – Jamaica, Haiti, Aruba, Panama, and eventually to cities in North and South America.  Continue reading

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Filed under Aviation, Barbados, Barbados Tourism, Economy

The other Barbados

Barbados Barrels CharityIt’s not all Platinum Coast, you know.

There are more than a few folks I know looking forward to barrels from friends and family abroad.

(Is is Christmas yet? No? Send them anyways!)

Things are going to get very very bad this year and next.

Hey you lot over there… please send some barrels.

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Filed under Barbados, Economy

Bitcoin Barbados connection

bitcoin_barbadosThe massive half-billion dollar theft of Bitcoins from Mt. Gox took a new twist today as allegations surfaced that Mt. Gox CEO Mark Karpeles lied about the alleged theft.

For me, I’ll put my little wealth in gold, silver, artificially low Chinese currency, land and tools. If everything else fails, tools can keep you fed and happy.

There’s nothing like a new 90 degree drill and a few good clecos to make me happy.

Bitcoin? Ya takes ya chances…

The recent success of Bitcoin, a decentralized cryptographic currency, has raised new research questions on the opportunities and risks of virtual currencies. A handful of research papers have appeared in multiple disciplines, spanning a range of outlets, including top security conferences, legal journals, and reports of international financial organizations. This workshop aims to bring together interested scholars who study virtual currencies, Bitcoin in particular, and their supporting ecosystems from a technical or socio-economic perspective.”

… from the website of International Financial Cryptography and Data Security AssociationThey sure got that one wrong!

While Media Chased Nakamoto, Crypto-Geeks in Barbados Marveled at his Creation

While the hunt for Satoshi Nakamoto morphed into a media circus last week, a community of cryptocurrency experts from which the bitcoin founder likely sprang was tucked away in sunny Barbados discussing the present and future of his remarkable invention.  Continue reading

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Filed under Barbados, Business & Banking, Economy, Technology

Forbidden questions about Extraordinary tax concessions to Butch Stewart’s Sandals Resorts

“I had no intention of offending anyone.”

Adrian Loveridge

Adrian Loveridge, tourism expert

Adrian Loveridge, tourism expert

While it was very tempting to write on any subject this week other than the ‘Butcherisation’ I received at the recent Barbados Chamber of Commerce monthly luncheon, that would have been the easy way out and certainly not in my character.

First for the record, I had no intention of offending anyone.

In fact I made it abundantly clear in my opening remarks that many of us greatly admire Mr. Gordon ‘Butch’ Stewart and the hotel empire he has spearheaded. I am not so remotely naive to believe that any one person can achieve this alone and a great part of the success is attracting the right people around you. This equally applies whether it is a small or large business.

Perhaps what surprises me more than anything is that a person who has received everything he has asked for within weeks and possibly more than we are aware of, yet was so unwilling to respond to legitimate concerns. Especially, while so many who actually live on Barbados have toiled to build the destination’s tourism industry over several decades while being consistently denied similar extraordinary concessions.  Continue reading

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Patrick Hoyos: Side effects from the drug of borrowing money

Estwick Gun

Barbados Minister of Agriculture David Estwick should stick to doctoring crops

I like to watch those drug ads on American TV in which the part at the end that starts with “Do not take such-and-such if you are, etc…” takes longer to recite than the part telling you about the benefits of the product at the beginning.

During this part of the ad you are warned of imminent serious side effects or even death from taking said drug if you happen to have any one of perhaps a dozen other ailments besides the one it is supposed to treat. But at the same time there are scenes of the happy patient enjoying a sunny life with his or her family, obviously not having any of the grim preconditions being read out as fast as possible by an anonymous voice.

I was reminded of these ads when reading the presentation to the Cabinet by Minister of Agriculture Dr. David Estwick, the text of which was published recently in the NATION.

The symptoms were outlined: Patient Barbados broke, mired in debt, can’t pay bills. Diagnosis: It needs a lot of money fast.  Prescription: Swallow US$3 billion from the United Arab Emirates and wake up feeling a whole lot better in the morning.

… read the full Broad Street Journal article by Patrick Hoyos: Take three billion and call me in the morning

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Sandals 9 month closure another blow to Barbados economy and employment

Adrian Loveridge, tourism expert

Adrian Loveridge, tourism expert

So entirely contrary to all the heady rhetoric that the introduction of Sandals brand will drive additional airlift: in fact the exact opposite will happen from their closure on 1st April for major renovations.

At least until the re-opening slated for December 2014.

Quoting their own projected occupancy of an average of 85 per cent with a typical stay of 7 nights and two persons per room, that’s almost 500 lost airline seats per week or a mind boggling 16,000 plus by the end of this year.

Will this further destabilise the remaining carriers that continue to service Barbados and lead to yet more airlines cutting routes or reducing capacity? Tour operators, already unable to match demand with the high cost of doing business here, are considering switching flights to other destinations where they can glean a profit.

Once again citizens are left speculating whether our Government was aware and factored in the almost nine months closure with hundreds of hospitality employees being thrown on the unemployment pile, before granting unilateral extraordinary concessions to the Sandals group.

Perhaps they calculated the NIS and income tax contributions collected from local construction workers hired for refurbishment would more than make up for this. Because clearly, the state is not going to collect other taxes like VAT and import duties from Sandals as they have all been waived.  Most materials used will also be imported, so a substantial percentage of the estimated US$65 million project will simply re-export foreign exchange (FX).

Several other issues also have to be considered: The lost revenue to our Direct Tourism Services with included package components like golf green fees, catamaran, diving etc., let alone secondary spending that 16,000 plus extra visitors would have generated on submarine excursions, taxis, car rental attractions, activities and shopping. The list goes on and on. Continue reading

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Filed under Barbados, Barbados Tourism, Disaster, Economy

Adrian Loveridge looks at government spin on the disaster of Barbados Tourism

Sandals isn’t paying VAT to Barbados

Government has a 10 point Tourism plan? Really?

In four years the Government of Barbados hasn’t paid VAT refunds to Loveridge’s Peach and Quiet Hotel.

“Water is up by 62%. Electricity up by 70%…

What government in their right mind increases land taxes by 50% in a recession? Tell me!”

On the incredible tax and other concessions given to Sandals…

“Put it in simple terms. For my hotel to buy a 750ml bottle of Johnnie Walker Scotch would cost me sixty US dollars. Sandals are able to pay ten dollars.”

“Unilateral concessions to Sandals immediately destabilized the other 120 hotels on the islands, not to mention the condos, villas, apartments and guest houses. Completely destabilized the industry.”

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Filed under Barbados, Barbados Tourism, Disaster, Economy

Harlequin’s Matthew Ames guilty of ponzi scheme fraud. Will father David Ames be next?

Matthew David Ames FraudDave Ames Harlequin Ponzi

Throw away the key to Matt Ames’ cell…  Wait a minute, let’s use it one more time!

Kate’s brother – James Middleton, right, at the carbon trade exhibition in London October 2010

Kate’s brother – James Middleton, right, at the 2010 carbon trade exhibition. Matt Ames also oversaw Harlequin’s Buccament Bay

Ruined lives, pensions destroyed, homes lost. Suicides. Marriage breakups. Families falling apart as the work of a lifetime vanishes.

That is the legacy of Harlequin’s Matthew Ames, who was just convicted of fraud for running a ponzi scheme. Ames took £1.2million from the rich, from the poor, from widows and pipefitters. He was an equal opportunity swindler who dressed well, talked with such easy confidence that people immediately trusted him.

His product was topical, sexy in its own way: carbon credits, green investments, Forestry for Life. And didn’t he drive a Lamborghini? Wasn’t he also part of the Harlequin Resorts team? Isn’t his father successful? Just look at the people Matt Ames is seen with: Jack Charlton, and even James Middleton – brother of our future Queen.

“Out of the £1.6m that was invested across both companies, only £250,000 was ever returned to investors.

“The rest went directly into the pocket of Matthew Ames, funding his profligate spending habits.”

Ames used people with “impressive CVs” to promote Forestry for Life and give it a sense of legitimacy.

From Echo News Echo nabs £1 million fraudster

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Filed under Barbados, Crime & Law, Economy, Offshore Investments

Hey Buddy, can you spare Barbados a dime?

How is it possible that we are here? Begging the EU, begging China, begging anyone to help us keep the lights on and the water flowing?

Leadership – that’s what got us into this mess, and the same leadership says it can take us out of the mess: but only if we beg and borrow…

BRIDGETOWN—The European Union says it is willing to provide Bds$100 million to Barbados in grant funding. A statement issued following talks between Barbados and EU delegations, noted that the funds would become available once certain macro-economic and public finance criteria were fully met. It said Bds$65 million could become available to Barbados this year. The European Union last year released Bds$28 million for the Barbados Human Resource Development Programme, while another Bds$15 million was provided through the Barbados Renewable Energy Programme, all in the form of non-reimbursable grants. The EU delegation was led by Ambassador Mikael Barfod, while Finance and Economic Affairs Minister Chris Sinckler led the Barbados team. “The EU would like you to know that it could assist Barbados in leaving the present crisis behind,” Barfod told Sinckler.

Guardian Media

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Barbados tourism industry having a wonderful year: lowest arrivals in a decade.

Adrian Loveridge, tourism expert

Adrian Loveridge, tourism expert

We are now midway through the peak winter tourism season and it is small wonder that the general populous becomes confused or even bemused when trying to monitor exactly how the industry is performing.

Especially when there are a number of proclamations emanating from our policymakers, who many may feel should be better informed.

Two of these recent utterings really stand out!

The first when a Minister of Government stated in the foreign press that we have had a good start to the season, when in fact December 2013 recorded the lowest long stay visitor arrivals for that month during the last eleven years.

Meanwhile, while accepting the numbers are down, the actual Minister of Tourism partially justifying the dismal sector performance by stating ‘value-added’ is up, totally contradicting the Governor of The Central Bank in his latest video report on our economic condition, who clearly revealed that factually, it is down.

If these incidents were rare or isolated, perhaps it could be just brushed off as possible journalistic misquoting, but the latest ones come after a long list of heady predictions that simply have not materialized.

Last year these included ‘a resounding success’, ‘upbeat about arrivals’ and ‘extremely strong’, when referring to Crop Over and July. Later in 2013, ‘it is already a November to remember’ and ‘November had been one of the best Barbados had seen in a while’.

In reality, both months set new records over the last decade for recording the lowest stay-over visitors for comparable periods. Continue reading

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Can MP’s leave their egos at home?

Journalist Ian Bourne

Journalist Ian Bourne

Like my old pal from Pull-Push, I also am not an Economist, but instead I wish to provide someways and means I have been mulling in the hopes Barbados would flourish once again, if they are used or adapted then at least progress is made – everyone is operating too close to the chest, as they seem to want to be the sole savior, Barbados needs to open up and thus advance in making the way forward as clear as possible!

DISAPPOINTMENT: BLP FAILS ALSO!

It is sad that David Estwick changed his mind so drastically from Saturday at 2 p.m. We may never learn what fair means or foul were used to achieve the base result which leaves more bitterness in many Bajans’ mouths already soured by the gall of hardships that continue to appear so odd when compared with the rest of the world, which appears to be mending at a steady pace…

The chance for either side of Barbadian politics to redeem itself saw the Grinch winning late last year when Mia Mottley failed to cut her own salary on Black Friday when the loss of 3,000 in the public sector was foreshadowed. She could have chosen to emulate, and even create a Bajan precedent, by doing like Nevis, Bermuda & St Vincent when their new leaders chose wage slashing as their first act in Office. Vance Amory chose to give his fellow Nevisians a savings of EC $70,000 a year for the next five years off of his salary; while Craig Cannonier in Bermuda did like Ralph Gonsalves in St Vincent – 10% for himself and 5% for the rest of Cabinet.

… continue reading this article at The Bajan Reporter

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Filed under Barbados, Economy, Politics

Family loses 3 jobs – exposes nepotism, cronyism at National Housing Corporation?

Barbados Jobs

But then I started to think “How can it be that a couple and their adult son are all hired into juicy NHC jobs all within the same time period 5 or 6 years ago?”

Barbados government lay-offs start to hurt

by passin thru

A little human interest piece in The Nation initially invoked my sympathy where three family members in the same household lost their jobs at NHC on the same day.

The house income instantly went from $7,000 a month to nothing. We can feel for these folks. $7,000 a month sounds like a lot of money, but in a house with three adults and two other children, there is not much left over once everyone is fed, clothed, sheltered and transported to work and schools.

“I don’t have a job. I owe the credit union. I owe the bank. I owe for the stuff in here and I have my son to support. What am I going to do?” said the woman, and I do feel sorry for her.

But then I read further and started to think “How can it be that a couple and their adult son are all hired into juicy NHC jobs all within the same time period 5 or 6 years ago?”

It could be luck, I suppose, that they all applied for NHC jobs and each was hired. Could be, I suppose.

But I know my Barbados too well. I know how things work around here.

This layoff of an entire family should be news and discussion for more reason than they are on the breadline.

There is another story here, and I don’t think that the island news media will cover it or ask the right questions.

Something to think about!

Read The Nation article here, but we have to print it all because you just know how that paper changes history!

Family Loses Jobs

ON FRIDAY MORNING, Hallam Gittens, his girlfriend Andria Brathwaite and stepson Kishmar Brathwaite were sitting on a monthly income of about $7 000 amongst them.

That sum was stripped down to zero in a matter of hours, through no fault of their own.  Continue reading

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Barbados government pretends to start billion dollar waste to energy plant with not a dollar to pay for it.

Courtesy of The Nation

Courtesy of The Nation

Environment Minister Lowe’s ground breaking ceremony nothing to do with reality

by passin thru

Let me get this straight: Bajans are supposed to believe that the Sanitation Service Authority is forging ahead with a billion dollar project list including a new office building ($32 million), waste to energy plant ($680 million), a leachate treatment plant ($42 million), landfill gas to energy plant ($10 million), solar power field ($120 million), wind power field ($24 million) and a mechanical workshop ($11 million).

All of this on borrowed money on the heads of our children and Lord knows how many other future generations.

This, at the same time that we don’t have money to replace/repair 84 buses that sit idle stripped for parts. We don’t have money to pave roads that are falling apart for ten years. No money to hire 100 ‘missing’ police officers. No money to fix a hundred water main leaks.

And we’re making 3,000 government workers redundant and taking the social unrest because there is nothing else to be done. Our tourism industry is shrinking when other countries are growing and building new resorts. Our hotels ‘feature’ a million empty beds a year, an average age approaching 30 years and I’d hate to hear the stats on the average age of the furnishing and mattresses.

No money for a sick, falling down hospital, no money to pay the hospital suppliers and employees on time – a big crisis every payday. Other government projects sit half finished, no work going on. Layoffs coming at the UWI too.

We had to withdraw our international bond issue because there aren’t any more fools left to ‘invest’ in a national retirement scheme that has as 80% of its ‘assets’ – the debt to itself. The government is so desperate for revenue that tax people are warning defaulters that they are coming to seize 10 year old vehicles and worker’s tools if they don’t pay up – and the people have nothing except their trucks and their tools.

And we’re supposed to seriously believe that the government is in ‘final negotiations with investors’ who are prepared to ‘loan’ a billion dollars to a country is on the verge of a currency devaluation that will shake its societal foundations to the core?

What a sick cruel joke.

Madness.

Read the lies for yourselves…

New Home for SSA

A WIND, gas and solar energy programme earmarked for Vaucluse, St Thomas, could involve investments of nearly $1 billion. Continue reading

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Filed under Barbados, Disaster, Economy

Ralph Taylor explains the Barbados tourism disaster

I’m about half way through this video of SoCo Hotel owner Ralph Taylor talking to a BLP meeting last Sunday the 12th of January 2014.

Mr. Taylor tells it like it is, but so far his analysis is missing two factors:

1/ There’s no money left after 20 years of BLP and DLP larceny, neglect and stupidity.

2/ Investors aren’t staying away in droves just because of the numbers: they know that Barbados governments have burned many foreign investors through broken promises and non-payment.

Nonetheless, it’s worth listening to Mr. Taylor, who starts in with how bad things have been in Barbados in terms of declining hotel rooms (and thus declining investment) for the last 34 years…

Number of Hotel Rooms 1980 and 2014

Country      1980        2014      Average Growth Hotel Rooms

Jamaica        10,000    30,000    486% for Jamaica, Cuba, St. Lucia

Cuba              7,226       57,000

St. Lucia        1,245       4,900

Barbados       6,680     5,400      -20%

“We are still not getting new hotel development. We must ask ourselves, why are we not getting this new development?

The reality is that investors are looking firstly for adequate returns on capital, and then all other factors are considered.

When there was a big hue and cry over the concessions to Sandals, my contribution to that debate is that I have long advocated that tourism is an export industry, and therefore its input costs must be free of duty.  Continue reading

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Filed under Barbados, Barbados Tourism, Economy

Sandals deal a bad deal

beaches by sandals

A fabulous read at Groundation Grenada…

… considering the DLP government gave the same sort of outrageous concessions to Sandals Barbados.

“To lay, with one hand, the power of the government on the property of the citizen and with the other to bestow it upon favored individuals to aid private enterprises and build up private fortunes is none the less a robbery…” ~ Samuel Miller

In an act screaming of blunderbuss and willful myopia, last weekend, the Government of Grenada saw it fit to award a multi-million dollar private enterprise (Sandals Resort International) a multiple tax break….

In layman’s terms (because taxation jargon is notoriously opaque) this means that Sandals pays zero taxes on all profits it makes in Grenada. For thirty years.

It certainly isn’t our intention to belittle an investment of $100 million US dollars (or rather far less, as earlier explained) in these tight economic times. Even with the promise of an additional 200 jobs raising rising to a headcount of 400 based on Sandals’ press release.

Still the forbearance on the revenues given a waiver in this deal strikes as way too much given for way too little.

Must we always genuflect before these gods of “foreign investment”? Without a doubt, with some ingenuity, creativity and imagination, our own local manufacturing and agro industries could be supported in a similar fashion to create much more than 200 jobs, and without requiring such deep tax cuts.

This decision is also a foolish one because it belies our naïve and amateur approach to marketing and foreign investment and our inability to recognise that our country is a partner, not a charity.

… a few sentences culled from a brilliant article at Groundation Grenada: Deal or No Deal: Grenada-Sandals Partnership Debunked

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Filed under Barbados, Barbados Tourism, Economy, Grenada

Bahamas blasts Barbados in Battle of the Bonds

Barbados_Flag125.jpg

How the world received two different bond offers…

Barbados forced to withdraw bond offer

“Cash-strapped Barbados’ efforts to raise urgently needed money on the international markets have suffered a major setback with its withdrawal of a bond tender offer and buyback for up to US$250 million (BDS$500 million).”

October 4, 2013 Govt move to raise money hits a snag

Bahamas bond offer over-subscribed by factor of 20!

The Bahamas has received “a huge vote of confidence” after the Government’s $300 million foreign currency bond issue was 20 times’ oversubscribed, with investors accepting an interest rate almost one percentage point lower than anticipated.

James Smith, the former minister who is now a key Ministry of Finance adviser, yesterday confirmed to Tribune Business that the $300 million sovereign issue had received “a fairly robust response” from the international capital markets.

“I think they were closing the offering some time yesterday [Monday] afternoon,” Mr Smith said, revealing that it had attracted subscriptions worth $5-$6 billion – more than 20 times’ the amount sought.

January 15, 2014 Gov’ts $300m Bond Issue Oversubcribed ’20 Times’

“The ultimate piece of bad news for ordinary Bajans, as they call themselves, is that their Social Security fund has essentially invested about 80 percent of its assets in Barbadian public debt, which is now almost worthless. And so, you know, we’re looking at a major social catastrophe in paradise here…”

December 7, 2013 – James S. Henry: Barbados debt crisis and the “offshore haven” industry

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