Thanks for the question.

I had a quick check and couldn’t find that.

But on that particular line of thought, if you fast forward to and through December 2012, the Auditor General formally and publicly reports that the previous administration handed on Gross Debt of $1,505,000,000 [$1.505bn] with $97,141,966 in the Sinking Fund account for a net Debt of $1,407,858,034 plus an Overdraft of $69,000,521.

So the final net Debt that was handed over or accounted for by the new administration on March 31st 2013 was $1,476,858,555.

Contrast that with the net Debt position of $119,500,962 on March 31st 2004.

It’s that humongous leap and addition of $1,357,357,593 [$1.358 billion], in just nine years that is so astounding.

How did that happen, without some financial manager somewhere shouting and screaming – STOP IT!!

Larry Burchall

We need to stop thinking OBA vs PLP and start thinking BERMUDA. There has to be away to turn things around. We the PEOPLE need to fix the issues not government. We keep looking for government to fix the issues but they can’t. They can only change policy and that has limitations. Policy isn’t the panacea to our problems nor was it the reason behind our economic growth in 1998-2008.

We need to come together and focus primarily on trade, business and tourism. We need ideas, innovation, and people to invest in Bermuda.

We can fix tourism and get International Business going. We just need ideas from everyone collectively. We should not sit around and wait for the OBA to come up with the magical plan. The OBA nor the PLP can fix our situation.

Making people unemployed in a recession isn’t necessarily an end to civilization as we know it. Many countries have had collapses of economies which has lead to migration, with many returning with new international experience and qualification. And sending money back home to prop up the economy! Thankfully Bermuda has friends and passports that allow our youth to work elsewhere. That is a very fortunate position to be in that many other “economic exiles” don’t have.

Since both the PLP and OBA want to revamp Education the obvious answer is abolish the Dept. of Education which must be full of people pushing useless paper around (in between surfing the internet and chatting on cell phones) and replace some with teachers. Have a small Board to set the curriculum, and give the school Heads the responsibility to follow the curriculum. Rather like the private school system in fact. About $50 million saved there.

If the BTUC refuse to talk about furlough days or layoffs then it will be forced on them by the outside world. The payroll cannot be supported, not the massive benefits such as health and pensions. Without cuts to bring the public sector down to pre 1998 numbers the future is very bleak but the Union executive do not want to face it. It will be the members who will have to take the consequences. If you try and get the private sector to pay more they will quickly vote with their feet as has happened since 2007/2008. That means less revenue, a lot less.

OBA has fallen down on its management of the economy and based upon this article receive a grade F.

Mr. Burchall a major cheerleader of the OBA continued attempt to write pieces to create fear in folks….or uses his condescending attitude that folks do not understand the economic realities. ….but in reality he should be working with his party to put forward solutions to reverse the backward falling of the OBA, more so their failure to address our failing ecomony.
So I ask….where is the Economic Plan?

I know what I write hits at the heart of the OBA fans, thus to click like would project their GOVT in a bad light….regardless the reality is what it is….OBA failure to improve our economy is smacking us in the face big time….

1. Why do we need to borrow in less than 2 years when OBA and Mr. Richards promised us differently?

2. Why has Bermuda’debt increased by 50% since the OBA leadership?

3. Why is the GOVT false hope that by only making cuts, it will save our economy?

4. Why has the government failed to examine alternative Revenues sources and diversified our economy ?

So many whys
….yet we see this same path of Blame Approach only…as the problem gets bigger and No Solutions. ..

So YES I expect OBA fans and diehards to click dislike……that’s what they do best…… I do not post for Clicks…I frankly do not care…

Fractional Reserve Banking – banks create all new money in the monetary system via debt instruments, such as mortgages, government bonds, loans etc.

They only create the principal, not the interest. So the money supply “principal” is always less than the debt “Principle + Interest”. Individuals that pay their debt and interest have actually dipped into the principal of another person. The system actively creates debtors.
Private central banks print lend and distribute (money oops) currency as opposed to the treasury department that should be doing it (not lending), as the central banks are private institutions.

The rich own the debt and the poor owe it. This is because money is a zero sum game, whereby if there were no debts there would be no money under the fractional reserve banking system.

. Bermuda Inc. has transferred the debt from the ‘company’ to the household.
Debt forgiveness would be a positive balance seeing that worldwide, banks are stealing from ‘we the people’ through ‘constructive trusts’ and the Roman practice of ‘pledging’. “Not one man in a million could figure this out but if so, we have the cover of plausible deniability.” -author known

Somebody please justify the 50% civil service inrease in size since 1998 without an increase in population size.

Stop the bleeding.

Cut the fat not those producing.

Get rid of the fat in the civil service, no matter who & no matter what level. There is plenty of it. The PLP increased the civil service by 50% since 1998 meanwhile the population has remained static.

Among many other things the PLP pronised to reduce the already bloated civil service as it was in 1998. Look what happened.

THIS IS THE COST OF THE UNION/PLP SOCIALIST AGENDA.

And this was basically over “Furlough Days”.

Imagine getting rid of 25/50-100 civil servants.

I have seen Hamilton burn 3 times and been subject to it.

I don’t think Bermuda needs that especially now when things are already hot.

The horse is out of the stable.

Time to get a round a big table.

Shalom.

Excellent article. For your next article, may i suggest you describe “the end” of this farce? In other words, can you assist the public in knowing when default may occurr and the circumstances associated with it. The people need to be scared and aware of their reality.

Regards,
Vincent Vega

Your stuff posted here is the closest to sensible I’ve ever seen from you – but I’m still going to give you a thumbs down because you’ve trained me to do that on all of your posts!

The credit rating was cut, along with 3,000 civil service jobs, due to the government’s inability to get their financial house in order which in turn resulted in an emergency bailout from the IMF.

Bermuda is not another world anymore and the above can be experienced here in the near future if we continue down the same path.

Excellent analysis as always. You have been telling “we the people” this for years and your warning seem to go unheaded. This past week’s spectacle shows that we asd a country have decided to avoid your inconvenient truth.

I sure hope that servcing our debt overhang becomes the topic of the day. What we seem to be avoiding is the truth of what heppens when we can’t say or as you say feed Nanci.

The events of the past week appear from a financial perpsective as us trying to beat a dead horse or vultures picking at the bones of a decaying carcass.

Again excellent, thoughtful and correct analysis Mr. Burchall. Thank you for taking your time to try to help us understand the enormity of our problem.

Oh and by the way Miss Betty Trump–the blame for this situatio does and should rest firmly at the feet of the PLP administration–no one else–try spinning it to meet your fancy but the truth is the truth.

Let’s tackle the debt.

Correct me if I am wrong but I think the number of govt staff on work permits is 20% or 1000 opportunities to cut our expenses…

Thanks for the comment and suggestion.

In this new borrowing, the credit rating that Bermuda has – at the time of borrowing and for the near future – is the key factor. Not the ‘prevailing interest rate’ .

That means that the interest rate will be determined on a different basis than the August 2013 borrow when we still had an A rating. It is entirely possible that going back to the market as early as Jan/Feb 2016, and so soon after taking up $800m, could find Bermuda with a lowered rating. Perhaps in the B grade.

That lower rating alone might add two or three points to the interest rate demanded by lenders.

This would mean an interest rate of 4.854% plus 2.00%/3.00% = 6.854%/7.854%.

Now add the Sinking Fund contribution at 2.5%. You get 9.354%/10.354%.

Those are the figures, the real figures, to understand and see.

Do the arithmetic. Calculate 10.354% of $400m.

Then tell me if you like the number that you see, especially after you’ve added it to the $166m + $30m = $196m Nanci that is already in place.

By the way, going for the $500m that you suggest means raising the Debt Ceiling – again, and so soon after 2013. That would send a bad message that might be worth another 0.5% to 1% on the rate charged. That would move the top rate as high as 11.834%.

Do the arithmetic.

Larry Burchall

Thanks for your analysis. You paint a terrifying picture, and I hope people pay attention to it.