Our debt crisis verges on catastrophe

Bermuda is already in debt. As I understand it, the public debt has grown from $119.5 million in 2004 to today’s reported $1,101.4 million.

This means about $981.9 million of debt has been added over the past seven years —more than 800 per cent.

As my fellow columnist Larry Burchall has pointed out, 92 per cent of this new debt was incurred in the past five years.

            Now we learn Government is looking to incur an additional $500 million in debt through the issuance of bonds.

            It will cost us $249,000 PER DAY to service the total debt — about 10 times the debt service cost we paid out daily in 2004.

When individuals or families get heavily into debt, the nag of it eats into virtually every aspect of their lives.

Being in debt is stressful.

It’s bad enough when you incur debt through your own need or folly.

It is worse to have others incur debt on your behalf for luxuries they have not earned, for giveaways they have the nerve to take credit for, for gifts or perks to their chosen few.

We Bermudians have a weakness for nice things — nice clothes, nice cars, nice sound systems, nice parties, nice toys.

But having nice things does not make us wealthy. If we have to go into debt to get them, it only makes us broke.

Nice things may keep us from feeling broke but that attraction only heightens the illusion.

Being in debt can be worse than being broke. Being in debt can put you below the poverty line — not only do you not have anything, you owe somebody everything you have not got yet.

Our Government is borrowing money to pay for the nice things they tell us are free — free bus and ferry passes, free car registration, free day care, free college attendance.

These are not free. In fact, by borrowing money to pay for them, they are costing us more than if we had to pay for them directly.

We in Bermuda expect our Government to be prudent, not just utter the word.

We expect them to practice responsibility in keeping track of the public’s money, not merely preach, and to hold itself as accountable for its actions, especially its fiscal actions, as it legislates accountability for parents and others.

Slave of the lender

It is easier to get into debt than get out of it. There are endless cautions about debt, ranging from the restrained advice of economists to the proverbial admonishment that  “the borrower is slave of the lender“.

Not all debt is bad. In fact, some debt is essential in our economic system.

Planned-for debt for a home or business, where the payments are a known and fixed proportion of one’s stable and predictable income, makes sense.

But going into debt for ‘looking-good’ trappings of wealth, or socialism, when income is shaky and going into deeper debt to pay off existing debt is a slippery slope to bankruptcy.

            Living within one’s means was the lesson taught in the stable and independent families that were the bedrock and the majority of Bermuda’s community.

But we have made debt into a cultural lifestyle and are now paying dearly for it.

Government seems close to being addicted to debt, which may be the worst addiction imaginable.

Debt itself is not the problem, it is just a symptom.

Debt comes from spending money you don’t have, for valid or frivolous reasons. But whether the reasons are good or bad, the most important thing to do is get a disciplined handle on spending.

Without reining in spending, the ability to pay off the debt is reduced and the risk of having to incur further debt is increased.

Robin Hood is portrayed as taking from the rich to give to the poor.

Government is taking from everyone and driving us all to being poor.

Government must first rein in spending, especially the frivolous spending, then take advantage of debt-counselling before this crisis becomes a catastrophe.