Saturday, September 6, 2014

Spend Now, Pay Later

10 comments:

Anonymous said...

How many TODAY, in government ON BOTH SIDES, UNDERSTAND one thing about what you wrote up there? For the benefit of their yardfowls I wish those with the highest decision making authority could be interested. But ... I don't think so. The short-term view is to do projects like the VFort road-surfacing without a real multiplier in time for the next general election.

Anonymous said...

Mr.Wulf-Soulage, another very pertinent article which seeks to address our urgent economic problems and not party political issues. Keep it up sir.

Anonymous said...

totally free of politics, very good Mr. Wulf-Soulage

Anonymous said...

Respect, Mr Wulf-Soulage Keep it up sir.

Anonymous said...

I don't believe those praising this charlatan actually understand what he's going on about or economics more widely. This clown has clearly thumbed through a few books and is trying to pass off what he's read as the prescription. This is just a continuation of last weeks theme where he is basically saying more debt should be taken on. He just flowers it up to disguise the rancid turd, this proposal actually represents.

St lucia doesn't have the economic firepower in the private sector to pay for its current expenditures incurred by the politicians for the public sector. Borrowing more money will just increase the interest that needs to be paid.

No one who comes to talk about the finances of this nation and excludes mentioning the the hundreds of millions wasted by KDA, King etc should go away until they have done some proper analysis.

C- for you boy. Try again next week.

Anonymous said...

So how else are we going to save the blood country? Wulf-Soulage is right. The altenative is continuing high unemployment, stagflation and a generally depressed economy and society. Who the hell cares about future high interest rates. As long as the economy is growing, things will work out.

Anonymous said...

Sir, how do you propose a government of a country buried in debt with dim prospects of paying back same borrow more, and from whom, and to what end?

The country is broke and we have absolutely no sense of the seriousness of our fiscal problems. The lending institutions are wary of extending more credit to us because all the economic indicators point to a country on the verge of default. Struggling to even pay the interest on its debt muchless the billions in principal.

With government revenue averaging about 25% of GDP and government spending averaging about 33% of GDP and underperforming VAT regime, and constantly declining foreign exchange earning capability we need to first put our fiscal house in order before we can embark in ay expansionary fiscal policy that exacerbates our fiscal crisis.

We are a bad credit risk, high debt to GDP, low Investment, little export earning capacity, very high unemployment, unsustainable current deficit, high public sector wage bill, can I go on..

Because of all these factors we are unable to borrow at favourable rates and terms which compounds or debt servicing challenges.

When we ask the government to borrow more and spend more what should the government spend that money on? More STEP, NICE and SMILE? Is it on a modernized airport terminal to an airport with minimal airlift and capacity that will not be able to contribute enough to repay that bill? Or should it be on paying for more salary increases demanded by clueless union leaders?

We cannot spend our way out of this economic predicament we have to export and invest our our way out. So the focus should be on attracting more FDI, encouraging increased banana production, finding ready markets for niche products like virgin coconut oil, cocoa, encouraging local industry from indigenous fruits, vegetables, for local consumption.
Putting people to work, in export oriented or import substitution industry giving then earning power to spur consumption spending, and increasing the tax base.

This should be our main focus not on adhering dogmatically to economic theory that does not apply to our specific conditions and endemic sociocultural and economic realities.

Anonymous said...

Mr Thomas, your suggestions will take years to come to happen, if at all. Attracting foreign investment is great for the longterm, but St. Lucia needs immediate relief in the short term through a stimulus. Compounding the problem is VAT. Come on sir, Are you proposing austerit at this time for our small island? I dont think what Mr Wulf-Soulage is proposing is old economic theory, it has work in many countries, even those with heavy debt and fiscal prioblems. You need to understand that St Lucia's economy needs a filip right now and that can only happen through a borrowing. Why cant the ECCB provide medium term credit to governments as a form of QE at low,interest rates. Fiscal and monetary policies, when used in concert can do a lot to tame the recession. The proble is, we are not a creative people when it comes to economic innovation. Until that foreign investment which you rightly suggest comes in, it may be too late for our small island. What you are suggesting Mr Thomas has been in discussion for years and it still has not happened. Mr Wulf- Soulage is not entirely off bases with his practical short-term suggestions. That 100 million that KDA promised originally would have probably done the trick. Instead he took money away from the economy through VAT. Now it's time to correct the error. Now we need both short term stimulus and longterm fiscal planning for economic sustainability.

Anonymous said...

Mr Thomas,

You said that we should first put our fiscal house in order. In the meantime, what should happen? Unemployment heading to 30 percent, business bankruptcies, high cost of living. The priblem is there isnt enough money going around in the economy and that has to change fast before the conditions I mentioned earlier get unmanageably worse. It may be more difficult to get out of a sustained and deep recession than to get out of debt in the long term.

Anonymous said...

The world has changed since Keynes. States are no longer the powerful actors they once were.
The text books need updating.