Better get a bucket

GNL's growing financial mess will not have a pretty finish

The London Stock Exchange CEO (left) welcomes the Government of Newfoundland and Labrador (right) to the exchange’s government bonds department for GNL’s recent eurobond offering. (Not exactly as illustrated)

Quibble all you want.

Mount a substantive argument as some did against the way Wednesday’s column combined the exchange rate on foreign currency bonds and the yield to produce another number that was the effective interest rate on Canadian dollar bonds.

The idea was to remind folks that there are plenty of hidden and high-risk costs in the provincial government’s rush into currency speculation. That’s effectively what the Government of Newfoundland and Labrador is doing with the new euro-debt program. And while plenty of people make money in currency speculation, they lose a lot too, and it isn’t a sensible way to fund core public services for the people of Newfoundland and Labrador.

The people behind the scheme are no doubt convinced not of the soundness of the idea but of their brilliance to manage the high risks as well as all the complex swaps they’ve started with outfits like the Royal Bank of Canada to make their plan work. Well, sort of work because they really cannot control the exchange rate of the currency, which is what adds the risk to the whole thing in the first place.

Besides, the whole idea they can save serious money compared to debt in Canadian dollars is just a hair under of the Certifiable Delusion marker on the Crazy Scale. As it is, the first bond offering will save each year for 10 years the equivalent of one clerical salary in cost. That’s it. Someone pointed that out in the comments on Wednesday’s column. A simple, brilliant point that shows how utterly pound foolish that sort of pennywise rationalization really is. And rationalization is *all* it is. There are red balloons going up all over the place or ought to be and folks should be paying attention.

Ego played no small role in this project, just as Ego was entirely behind more obvious fiascos of the past 20 years or so. And we should not forget that the people behind *those* legendary fiascos are the same people who in name or spirit continue to cook up them up and backing them. We are only a few months away from some genius assuring us that soon booking debt in bitcoin is a safe way to pay for Nan’s old age home meals and Pop’s heart surgery.

Pennywise? Meet Pound Foolish, d.b.a. the Newfoundland and Labrador government.

While we are arguing about the effective interest rate thing, we can also debate the ethical and intellectual bankruptcy of our political class. But, we cannot debate the proposition that the Government of Newfoundland and Labrador is functionally insolvent. That is a fact. Broke. Not dead broke. There is still *some* life in the old gal. All the same, the Newfie Punt of State is firmly lodged sideways at the headwaters of Le Ruisseau du Merde. No one in the political crowd is the slightest bit concerned to dislodge her from the mud flats before the next heavy rains of economic change dump a ton of water into the pond even, which we can see from the punt, if we dare stand up as the river already slops over the top of our gunwales.

The 3,000 or so kids born in Newfoundland and Labrador this year come into the world owing roughly $100,000 in public debt. A declining birthrate, a shrinking, aging population - the add-ons of late are almost all transients - and a massive public debt do not make for a good combination but here we are, by design.

That figure of $100,000 a head is rough math from the total pile of liabilities for the province compiled by the expert team Andrew Furey appointed and whose advice Furey tossed aside as inconvenient as soon as they handed it to him in 2021. Not wrong. Not bad. But not helpful to the man who wanted to spend a couple of years cosplaying Premier before sliding off to some corporate boardroom somewhere. Their plan needed real work and real thoughts not a crowd humming Brian Tobin’s old campaign song We’re here for a good time, not a long time. Trooper. 1977. From the album Knock ‘em dead, kid, which seems appropriate.

We’re here for a good time. Not a long time. So have a good time in the rainy city. The sun can’t shine every day.

In four short years, Furey and his crew have added to burden hanging around the necks of every living human in Newfoundland and Labrador another $9.0 billion. Barely above water level, he’s adding weights to their backs. Every four years we are going another whole year’s spending further down. The Liberals in total since their first budget in 2016 have pushed us a total of $18 billion further into the murk. That is more than the $15 billion Muskrat Falls added all by itself, and that project as we know is still racking up costs because it is still not finished. We realistically have to add more costs to it since Muskrat Falls will not function as promised even when they finish all the work on it. And every penny is added to every living person in Newfoundland and Labrador because the Liberals broke their promise to make sure we did not pay for the disaster. we are - as Danny Williams and his cronies and enablers wanted it - the *only* people paying.

The disaster course Danny Williams and his gang of incompetents set us on was never just about the moronic Muskrat Falls. It was always about the chronic over-spending that started almost 20 years ago, in 2006, on top of which they piled the crowning achievement of their stupidity. Williams and his crew based their spending on oil and when the oil revenues turned down as they inevitably would, they just started borrowing to fill in the gaps. They also whined for more federal handouts, another cowardly cry the current lot have kept up.

Twenty years of this bungling by successive political gangs means that our total liabilities - as presented in the most recent budget’s first page - is roughly the same size as the total value of goods and services produced in the provincial economy. The economy has been roughly the same size - $34 billion for a while now and goes up and down randomly.

The number is not the same as Moya’s number because they counted differently. Moya’s crowd did not use half-truths like “net debt” the way the bureaucrats and politicians do. They just gave the numbers straight up. Now that the numbers are worse, the bureaucrats and politicians changed the way they report things. Make it harder to see what is going on. Harder to compare one year accurately and truthfully to the ones before. And by appointing former bureaucrats involved in the budget fudging as auditors, there is no one to call them out officially for it. All the while, the bureaucrats and politicians pile up debt relentlessly, deliberately and so we are once again in the same very bad spot we were in about 30 years ago.

Worse, really, since oil and gas is closer to being over than starting and those same political gangs that add debt have given away the control of offshore development hard won 40 years ago to the federal government. The crowd currently running the place - all three political parties here and in Ottawa - gave away control to the federal government again and, as we have seen, they have shut down the offshore oil industry’s future.

No one wants to invest in new exploration in a place that is hostile to it like Canada is. There is nothing to replace it in Newfoundland and Labrador. Government after government since 2003 has ignored economic development other than oil and then when they tossed oil aside got scammed with a gas known to explode into nothing. Hydrogen is a scam and politicians federally and provincially have been foolishly sucked into giving away more cash we don’t have to make it seem to the punters struggling under all that debt some illusion of hope. Meanwhile all the sensible, straightforward things we could be doing to spend our money more wisely and to encourage sustainable, private-sector economic development without bankrupting the public treasury is ignored. Locked away. Shouted down.

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March 2020. Before the pandemic. Dwight Ball wrote a panicked letter to the federal government that we were skint. Could not borrow money and we could not pay our bills without more debt. Ball and Furey have taken hand-out after hand-out from Ottawa to deal with Muskrat Falls. They devoted the biggest chunk of the cash Ottawa gave not to Muskrat Falls but to more spending and then borrowed billions more each year besides. The $150 million for a new prison to replace His Majesty’s Penitentiary went the same way. The traded away offshore control for those cheques, too, and still did no good with it.

This eurodebt scheme is just a way of carrying on now that Ottawa is tapped out. They can find no more excuses to shovel cash to us. If the Liberals have cut us off, then we can only imagine what the Conservatives will do even if we send them all of our elected members of Parliament. This is not because the Conservatives are mean. It is because they have sense enough to know what stupid is. More of the same, expecting a different result.

Three decades ago, the provincial Liberals knew stupid by name and called it out. They inherited a government that had total public liabilities the size of the economy. They found the books full of debt in yen, Swiss francs, and American dollars. They struggled to borrow money to keep things afloat. But they did two things and worked hard to gain popular support for those ideas. They changed how government spent public money. Included in their plan was switching all that foreign currency debt and the risk and headaches that went with it for Canadian dollar debt. They also started to change the economy and promoted sustainable, locally-rooted growth. it was working too until the crowd that came after thought what they were doing was smarter because they were smarter. That’s how Stupid came back, with its old mask Ego.

Go back a century and we were in the same place we are today but arguably worse since then *all* our debt was in foreign currency. The failure then, as now, was in not doing anything to change direction. They gave up. Wanted others to fix our mess. No price was too high, including self-government. Remember a few years ago all those locals who thought we should just become a territory and let Ottawa run it all? well, it was a familiar dodge.

There was near universal agreement among the leaders in Newfoundland from 1925 onwards that Newfoundland needed to surrender self-government. At the 1926 Imperial Conference at which the Dominions like Newfoundland gained even more control of their own affairs, Newfoundland Prime Minister Walter Monroe told the other Prime Ministers that his country had no interest in that. The year after he said being a Dominion was no good if it meant London might not bail us out. Monroe told the 1926 conference he was just an on-looker since his country had no interest in anything but being directed by London on most matters.

The year before, the popular politician William Coaker said the country needed to elect a dictatorship of 10 men representing the major religious sects. on religious grounds that would run the country for a decade. Get this bit. Coaker said that if a Mussolini figure appeared in Newfoundland, he would back him to the fullest measure. This was long before the Depression, long before the price of fish collapsed utterly but Coaker and others like him clamoured for dictatorship.

When the time came in 1933, the legislature of Newfoundland voted for a Commission Government not because it had been foisted on them by a conspiracy of Canadians and the British. They decided for themselves to give up governing themselves. They wanted it. They got it and only started to complain when they realized they were no longer reaping the spoils as they’d done before. Coaker got his wish but only quibbled in 1933 - the same year Germans elected their fascist dictatorship - because the public had not generally voted for it.

Germany is not Newfoundland. Then is not now. But you have to stand, chin dropping, at the similarities between the crowd leading Newfoundland century ago and the crowd doing so now.

Same words.

Same ideas.

Same end?

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