An­tho­ny Wil­son

As I come to the end of a two-week va­ca­tion in Eu­rope, all the dis­cus­sion in the fi­nan­cial news is about whether Greece will de­fault on its huge pub­lic debt and if coun­tries like Spain and Por­tu­gal will re­quire bailouts. A sig­nif­i­cant in­di­ca­tor of the glob­al fear about Eu­rope's eco­nom­ic fu­ture is the sharp de­cline in the val­ue of the eu­ro and the pound. When I first pur­chased these cur­ren­cies for my trip, the sell­ing rate was 1 eu­ro to $9.40 and $10.54 for the pound. To­day, a eu­ro can be pur­chased for $8.67 and the pound for $10.11. But while there is a great deal of con­cern about the fu­ture in Eu­rope, the cafes and restau­rants in both Paris and Lon­don are packed to over­flow­ing with (most­ly) Eu­ro­pean vis­i­tors en­joy­ing the un­usu­al­ly hot late Sep­tem­ber weath­er, many ho­tels are post­ing their of­fi­cial rack rates on the In­ter­net trav­el sites and the prices of goods in both cities seem out­ra­geous to some­one com­ing from a small is­land na­tion in the Caribbean. I paid 4.50 eu­ro for a cof­fee at a caf&ea­cute; in Paris and a co­la (served with­out the ben­e­fit of ice even on a blaz­ing hot day) is £1 at many of the mi­ni-marts in cen­tral Lon­don.

The is­sue for Trinidad and To­ba­go is that Lon­don and Paris are not sin­gu­lar in terms of suf­fer­ing from eco­nom­ic tur­bu­lence. The prob­lems that af­fect those cap­i­tals are sim­i­lar to the prob­lems that af­fect oth­er Eu­ro­pean cap­i­tals and that are hav­ing an im­pact on New York and Tokyo. Those prob­lems-and they don't af­fect all coun­tries to the same de­gree-in­clude coun­tries and peo­ples who have lived be­yond their means for decades, who have fi­nanced their lifestyles by cred­it cards or oth­er forms of bor­row­ing and who have in­ad­e­quate sav­ings to tide them through dif­fi­cult times.

A com­mon thread run­ning through much of the news re­port­ing and the com­men­tary in Eu­rope fo­cus­es on the dan­gers of debt. In a five-star ho­tel on the Champs El­y­sees in Paris-just min­utes af­ter a man pur­port­ing to be an Ital­ian and a man pur­port­ing to me to be a French po­lice­man tried to swin­dle me of my mon­ey-a French ex­ec­u­tive work­ing in Trinidad was ques­tion­ing the very fu­ture of cap­i­tal­ism. He ar­gued that peo­ple in the west­ern world were hav­ing to run just to stay in place and he ques­tioned whether the world as we know it was sim­ply run­ning out of steam. Cit­ing a con­ver­sa­tion he had had with a mem­ber of the Tapia House Move­ment, he seemed to be very tak­en up with the pre-col­lapse "the­o­ry" that Lloyd Best used to speak about. My point to him was that, at its core, cap­i­tal­ism was about cy­cles of rel­a­tive wealth and rel­a­tive de­cline-peaks and troughs-and that those who were smart enough and brave enough to buy when every­one else was sell­ing would be able to reap the re­wards of the cap­i­tal­ist sys­tem.

The is­sue is that the stan­dard of liv­ing of mil­lions of peo­ple around the world are af­fect­ed by the pe­ri­ods of de­clines as gov­ern­ments are forced to slash ex­pen­di­tures and raise tax­es in or­der to bal­ance the books. That is why the Greeks have tak­en to the streets in or­der to protest the aus­ter­i­ty pro­gramme that the gov­ern­ment there is about to un­leash on that coun­try. The oth­er point about the pe­ri­od in which we live is that much of pur­chas­ing of as­sets dur­ing the troughs of Cap­i­tal­ism is be­ing done with bor­rowed mon­ey and gov­ern­ments in democ­ra­cies where there is a five-year cy­cle of elec­toral re­new­al have bor­rowed much more mon­ey than they should in or­der to im­prove the stan­dards of liv­ing of their pop­u­la­tions.

An In­ter­na­tion­al Mon­e­tary Fund re­port pub­lished on Wednes­day-the Re­gion­al Eco­nom­ic Out­look for the West­ern Hemi­sphere Re­gion-out­lined the fact that debt re­mains the sin­gle most im­por­tant prob­lem af­fect­ing the Caribbean re­gion. "...Greater re­solve is re­quired in re­duc­ing pub­lic debt (which is up over nine per cent of GDP since the cri­sis) and re­sist­ing fa­tigue in some coun­tries, where pres­sures to in­crease wages and sub­si­dies have in­ten­si­fied. Fis­cal con­sol­i­da­tion ef­forts should, to the ex­tent pos­si­ble, pre­serve growth and com­pet­i­tive­ness by avoid­ing steep cuts in in­fra­struc­ture spend­ing."

The re­port ar­gued that the re­cov­ery in much of the Caribbean re­mained weak, with down­side risks to growth. Ac­cord­ing to the IMF-and the au­thors of the re­port ob­vi­ous­ly felt that the point was so im­por­tant that it de­served be­ing re­peat­ed: "Greater re­solve is re­quired in bring­ing down high pub­lic debt lev­els and de­ci­sive­ly ad­dress­ing per­sis­tent weak­ness­es in the fi­nan­cial sec­tor.

"Drags from fis­cal con­sol­i­da­tion and high­er en­er­gy prices con­tin­ue to con­strain pri­vate de­mand, while the re­cov­ery in tourism flows re­mains tepid amid high un­em­ploy­ment in ad­vanced economies," ac­cord­ing to the IMF, which means that the prospects for a speedy re­cov­ery in the coun­tries of the Caribbean that de­pend on tourism are re­mote, while economies that are de­pen­dent on nat­ur­al re­sources (and Suri­name and Guyana were men­tioned) face brighter prospects. The re­lat­ed is­sue-and this re­lates specif­i­cal­ly to T&T's prospects in the near term-is that giv­en the in­ter­con­nect­ed­ness of the world, there are very few coun­tries that are go­ing to re­main im­mune if the world ex­pe­ri­ences a slow down. In the Caribbean con­text, there are very few T&T man­u­fac­tur­ers who are go­ing to be will­ing to un­der­take new in­vest­ments in a con­text in which their Caribbean mar­kets are strug­gling to re­cov­er.

The al­lied point for T&T is that if Eu­rope and the US stop grow­ing or go in­to a re­ces­sion, the glob­al de­mand for oil, nat­ur­al gas, am­mo­nia, methanol and oth­er petro­chem­i­cal prod­ucts that T&T pro­duces is go­ing to take a hit. And if the de­mand for T&T's im­ports takes a hit, it is in­evitable that the price of T&T's ex­ports will al­so be af­fect­ed. As the Gov­ern­ment ap­proach­es its sec­ond bud­get of its term, what is the Gov­ern­ment to do? Among oth­er things, I would say that the Gov­ern­ment should be look­ing to change the char­ac­ter and pur­pose of the Her­itage and Sta­bil­i­sa­tion Fund from a pas­sive en­ti­ty to one that that makes ac­tive in­vest­ments through­out the Caribbean that will re­turn hand­some War­ren Buf­fet-like re­wards to tax­pay­ers.

Why is TCL re­struc­tur­ing its debt at terms that seem ex­treme­ly oner­ous when what it should have done is ap­proach the Gov­ern­ment for a loan at half of what it is pay­ing that would be struc­tured to pro­vide the lender (the State) with reg­u­lar in­ter­est pay­ments plus pref­er­ence shares as well as war­rants to ac­quire more shares. Since the State is the ma­jor pur­chas­er of ce­ment, how could such a trans­ac­tion fail?