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Dilemma of the 'alternative investment schemes'
Monday, November 26, 2007
This newspaper remembers well the 1990s meltdown of the local financial sector which left thousands of depositors confounded and out-of-pocket, as the nation now faces, a decade later, the issue of alternative investment schemes.
It is our sense that the current level of participation in these financial schemes is close to unprecedented, and logic suggests that there is a good reason for their popularity.
We believe that there are several perspectives which need to be faced frontally, and importantly, not merely from a point of view of those who have an axe to grind, namely the owners and investors in the schemes and their perceived competitors, the established financial institutions.
In between the vested interests, there is the overriding interest of the nation which must never at any time be sacrificed for the narrow benefit of the few over the many.
And in this respect, we await the early enunciation of the policy of the new government on this issue, certainly before it gets to the point where it tears our nation apart. It is clear that nerves are getting more jangled every day and we ignore this at our peril.
The alternative investment schemes are popular because, at the extremely high interest rates being offered - an average of 10 per cent per month - Jamaicans see a real chance of lifting themselves out of poverty.
While there are those who are caught up in a vortex of greed, it is crystal clear that many believe and are willing to risk their money for the prospect of a comfortable life.
Too many Jamaicans have worked all their lives, saved and invested their hard-earned money only to receive a little pittance, while they see the owners and executives of the established institutions which receive their money living high off the hog.
Some of the stories we hear about the transformation in the lives of ordinary people who invest in these schemes are quite touching, like the 50-something year-old woman who lost her job and with no early prospect of another, was able to buy her first car and provide an income for her family, from interest earnings off her severance pay.
On the other side of the coin, the banks, which appear to be taking a stance against the new financial schemes, are behaving as competitors would and perhaps should be expected, if they perceive a threat to their operations.
As currently structured, these traditional institutions could not immediately hope to compete viably with the alternative schemes.
They have vast sums of money in the market based on much smaller interest rates that have years to go before maturity.
In this scheme of things, we must want to know - all of us - that nothing happens that could pose a threat to our national economy. Even those now benefiting from the high-interest schemes cannot expect to escape unscathed, if the country's economy comes to a crash.
We suggest that what is needed is a national debate, devoid of rancour, where we look at the issue as a national family. Together we can determine if these non-traditional means of prosperity should be accepted as a sustainable alternative to what we already know, or whether they will harm us in the long run.
Copyright © 2000-2001 Jamaica Observer.
Monday, November 26, 2007
This newspaper remembers well the 1990s meltdown of the local financial sector which left thousands of depositors confounded and out-of-pocket, as the nation now faces, a decade later, the issue of alternative investment schemes.
It is our sense that the current level of participation in these financial schemes is close to unprecedented, and logic suggests that there is a good reason for their popularity.
We believe that there are several perspectives which need to be faced frontally, and importantly, not merely from a point of view of those who have an axe to grind, namely the owners and investors in the schemes and their perceived competitors, the established financial institutions.
In between the vested interests, there is the overriding interest of the nation which must never at any time be sacrificed for the narrow benefit of the few over the many.
And in this respect, we await the early enunciation of the policy of the new government on this issue, certainly before it gets to the point where it tears our nation apart. It is clear that nerves are getting more jangled every day and we ignore this at our peril.
The alternative investment schemes are popular because, at the extremely high interest rates being offered - an average of 10 per cent per month - Jamaicans see a real chance of lifting themselves out of poverty.
While there are those who are caught up in a vortex of greed, it is crystal clear that many believe and are willing to risk their money for the prospect of a comfortable life.
Too many Jamaicans have worked all their lives, saved and invested their hard-earned money only to receive a little pittance, while they see the owners and executives of the established institutions which receive their money living high off the hog.
Some of the stories we hear about the transformation in the lives of ordinary people who invest in these schemes are quite touching, like the 50-something year-old woman who lost her job and with no early prospect of another, was able to buy her first car and provide an income for her family, from interest earnings off her severance pay.
On the other side of the coin, the banks, which appear to be taking a stance against the new financial schemes, are behaving as competitors would and perhaps should be expected, if they perceive a threat to their operations.
As currently structured, these traditional institutions could not immediately hope to compete viably with the alternative schemes.
They have vast sums of money in the market based on much smaller interest rates that have years to go before maturity.
In this scheme of things, we must want to know - all of us - that nothing happens that could pose a threat to our national economy. Even those now benefiting from the high-interest schemes cannot expect to escape unscathed, if the country's economy comes to a crash.
We suggest that what is needed is a national debate, devoid of rancour, where we look at the issue as a national family. Together we can determine if these non-traditional means of prosperity should be accepted as a sustainable alternative to what we already know, or whether they will harm us in the long run.
Copyright © 2000-2001 Jamaica Observer.