Mr. Governor Takes Us On Deep Dive Down
Mr. Governor Takes Us On Deep Dive Down
Mr. Laporte’s attempt to legislate confidence in the Seychelles Rupee, also has a stiff cash penalty and term of imprisonment for non-compliance. That should get everyone to shake in their boots.
He could not have chosen a worse time to threaten the Public and the Tourism Trade with prison sentences, when the Judiciary has only one (1) magistrate, after six(6) resigned for want of better pay. An average drug charge can take ten (10) years to get to trial these days, according to those in the know. It will get worse if Finance does not come up with a lot of money fast.
Euro Strong on the World Market, but Weak In
Under Mr. Laporte’s “hocus-pocus” central banking, the Euro is weak in
How does Mr. Laporte pull off such miracles with the system? Divine intervention maybe?
A small part of the answer is that
But the answer is more complicated than that.
Pierre Laporte’s Plan was focused on Inflation Primarily
The reason why we are in an economic grave hole, is that Pierre Laporte’s prognosis for our economic woes focused primarily on inflation fighting by empowering the Seychelles Rupee. He has been successful at that. Initially, after devaluation last year, Reuters reported Inflation in
Now he has proposed to buy up Euros and US Dollars from commercial banks to stabilize the rates. Of course, this a great way for Central Bank of Seychelles to buy foreign currency on the cheap seeing the Seychellois people have no rupees left to buy currency from the commercial banks, let alone rupees to buy food. All this is good and normal, but it is not enough. I hope Mr. Laporte will not be travelling over the next 60 days.
What He Did Not Do
What Pierre Laporte did not do while he sat in his leather chair at the Central Bank and plot the countries recovery is establish an early program to ensure that liquidity in the market was preserved to foster economic stimuli and activity. He ignored that and admits in the Sunday evening news, he was relying on the “good morals of bankers to do the right thing”.
Since when do central bankers rely on the good morals of bankers to run the economy? For that matter, the good morals of anyone? Did Mr. Laporte rely on the good morals of the Tourism Trade to establish confidence in the Seychelles Rupee? No, he legislated it, however improper it was. But why is Mr. Laporte treating the biggest profit centres in
What Mr. Laporte has not done, and he better do it fast, is establish a global banking standard in Seychelles instead of letting the commercial banks run amok like they are currently doing at the detriment of the Seychellois business community. Banks, lest we forget, are those little institutions that are in the business of earning money at small amounts at a time in the form of reasonable interests rates, and reasonable commissions, for money related transactions that make the economy of a country run efficiently and hence allow it to prosper and grow.
Banks must not be in the LOAN-SHARKING business, or in the business of charging exaggerated fees and interest, that go beyond what is acceptable trade practice in the industry. Not just in
Exxagerated Commissions or Simply Robbing The Seychellois Customer?
Where in the world does a bank buy a British Pound for SR 15.05, and then turn around and sell it at SR 19.25 rupees, making a SR 4.20 gain or 28% profit in less than a minute? Where in the world does a bank sell a US Dollar for SR 9.30 and then turn around and sell the same for SR 11.98, making a SR 2.68 profit or a 29% profit?
But tell us where in the world, other than
And while Mr. Laporte wants to put local hoteliers in jail for not following Central Bank’s par rates, the commercial banks are free to gouge their customers to financial oblivion! And Mr. Laporte has even suggested that if hotels don’t like it, they can apply to become an official money changer through a Bureau De Change. Pity the small guest houses and small hotels that will now be burdened with another license fee and running a bureau de change in order to satisfy their guests who simply want to pay their bills!
So, it is now up to Mr. Laporte to set the parameters for the commercial banks in
What Is Wrong With Our System
Interest rates are not controlled or subjected to any controls. Banks and for that matter, any one with a license, can charge any interest rate they choose. Interest rates can mercilessly be compounded monthly under
This is a medieval business practice found in the days of King Arthur, the Patriarch of the
We must set limits to prime rates of interest and additional interest charged for risk analysis. Banks must then start working within those margins. After all that is what banks do. This will encourage them to lend more and spread their lending and business base; as opposed to restrict their lending base to 1.PUC, 2.Seybrew, 3. SEPEC, 4. Cable and Wireless, 5. SPTC.
The wider the base for loans is spread, the more penetration and impact money will have in the economy. It will be a critical tool to remove us from this stagflation status we are now living under.
But banks must direct capital to solid partners as well, and not toss their reserves to every one and anyone that has an idea, albeit a bad one.
As money circulates, and properties are placed as mortgages in real terms, then citizens will become active participants in the economy in a meaningful way. And more responsible citizens too.
Government must allow properties to be marketable to enrich its citizens. This means it will have to get rid of the “Gardette Law”, “no construction at or above 50 meter topography”, found on Praslin and La Digue. This type of policy is a disincentive towards economic prosperity. If we are to watch every fruit bat pass by as an economic principle, then SPPF-LP must say so. Then we will judge who is the fruit bat, or sick-bat!
I remember the quote in a meeting not so long ago where one smart intelligent businessman was explaining to an idiot about the fundamentals of business (without having to steal from his neighbour that is): “You cannot promote growth and restrict it at the same time”. The idiot of course answered: “Yes We Can”! Maybe he was an Obama groupie!
Why Spread The Access To Loans
Because that is what banks are suppose to do. Make money available and not hoard it. Banks must make reasonable profits from involving others, and this fosters greater stability. When banks restrict access to funds unreasonably, banks in turn foster greater instability themselves. In fact, they will be in a big way, responsible for high risk they assess to borrowers when they say
Now that we are in a stagflation-depression, our Rupee is mighty again, hotels are cutting costs, freezing hiring, unemployment will rise, occupancy rates will drop further, total receivables will drop further than -25% as Seychelles will structurally get more expensive then any 5 star investor ever imagined, to the point that goods in warehouses will rot, the public will suffer greatly. I ask Mr. Laporte and the LP, wake up and seek a second opinion my friends, for you have made a royal mess of an ordinary communist mess.
I suggest you provide the business community a few seats on your board Mr. Laporte. Then make the Central Bank Governor present bi-annual plans to the board. Once approved, implement. If a crisis arises, call for an emergency meeting and resolve the matter. But do get a bit more serious over the affairs of our economy because we are now in a truly royal mess.
That means we are in a royal communist mess......nothing moderate about that, huh!
May God Bless