…in the real economy
The government has rushed to deny that there’s a shortage of foreign currency — read US greenbacks — in the system. Both the Finance Minister and the Governor of the Bank of Guyana have insisted that it ain’t so. This is not surprising since such a shortage has grave implications in the real economy — which is concerned with “real stuff” that you and your Eyewitness produce and ship on trucks and ships and suchlike.
While the rarefied area of finance, like buying and selling currencies and stocks might seem removed from our everyday experience and the real economy, there‘s a direct link that can hit us where it hurts — in our wallets and purses. It all comes from the fact we’re a small open economy that gets most of its inputs for the real economy from abroad. And we need foreign currency — mostly greenbacks — to buy those inputs.
If there’s a shortage of greenbacks, then the inexorable law of supply and demand kicks in — and the price of greenbacks go up. And this leads to a rise in prices in the real economy. Take rice and sugar which are as “real” as you can get for us Guyanese. Both, for instance, use fertilisers, and when the importer has to pay more for the greenbacks to import these items, he passes on his increased costs — denominated in local currency. Our prices rise and we become more uncompetitive in the global markets for these products.
But we have to sell… which we do at prices lower than it costs us to produce. And a vicious circle sets in where we produce less of the products and the real economy shrinks. So the question is — is there a foreign currency shortage in Guyana as the Muckraker claims and the two official big guns in the financial sector denies? Well they trotted out statistics about our official and commercial reserves of foreign currency to “prove” their case — but they missed the point about these matters.
Since all these decisions to buy and sell both real goods and greenbacks are made by people like you and your Eyewitness, an element dubbed “animal spirits” by one of the greatest economists of the last century enters the picture. Basically what he meant is in moments of uncertainty — such as we’re facing with this cockamamie budget — folks throw reason out of the window and panic.
And we have “runs” on banks by ordinary folks and cutbacks in production that can throw the real economy into a deeper recession.
All because the Finance Minister unleashed Guyanese “animal spirits” with his budget.
Which should be withdrawn immediately!!
…from deportees
Your Eyewitness has been writing about this “criminal deportee” business for a while now because he sees it as a clear and present danger to our stability and well-being. And very frankly we accept the latest twenty deportees with criminal records like a hole in the head. Like with the foreign currency tempest, the Police and the Public Security Minister have also stoutly denied there’s a crisis in crime. Which no one’s buying.
Especially when the statistics released about the criminal deportees make no sense. The official State media Chronicle said: “between 2008 and 2013 1035 persons were deported” yet showed in the yearly breakdown actually there had been 2491 persons deported. So since this crisis isn’t due to “animal spirits” — and is a real as you can get, with real people being robbed and beaten and killed out there, we really need to know how many criminals with graduate degrees from the US penal system are joining their local comrades.
Especially since they’ll make this more a season of “taking” than giving.
…from spite
Imagine after becoming multi-millionaires with their salary increases, a Minister of this government can spitefully say folks who go to private hospitals are ‘rich’ and should be charged VAT.
Not that even the poor will save for better services.
