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Gov't secrets and the dollar
published: Thursday | November 29, 2007
Martin Henry
Scoring political points is a dangerous double-edged sword. And I am not now talking about termites and 'chi chi'. Prime Minister Golding ran afoul of both common sense and political wisdom when he chose to 'fly off him mouth' about the exchange rate that the last Government had used to calculate the 2007/2008 Budget which his Government inherited.
The Prime Minister is now naturally obliged to divulge to the country the exchange rate that his Government will use to cast the 2008/2009 Budget. Any victory in the revelation must be purely pyrrhic, that is, obtained at too high a cost to be beneficial.
Mr. Golding was, in the revelation, seeking to absolve himself and his Government from any responsibility for the sharp price movements since they took office. But even if he won that victory, it is highly unclear how the previously unrevealed higher exchange rate is a culprit in the matter. And even if it is, the former Minister of Finance, Dr. Omar Davies, is quite right.
This is not the kind of thing which a responsible government broadcasts, however much it desires to damage its opponents.
Blabbed delicate secret
The technocrats in the BoJ, MOF and PIOJ who advised Davies on silence and are sworn to advise his triumvirate successors must have wet themselves fighting to stave off a heart attack when the head of Government blabbed such a delicate secret.
I hope this gross indiscretion is not an indication that the honourable Prime Minister does not understand the nature of modern money. Then the termites would have spread.
If it ever was, money is not now just 'the means of exchange'; it is itself the largest tradable commidity in the market with trillions of units bought and sold daily at the dazzling speed of electronic data transmission.
Money is merely 'worthless' bits of paper and electronic blips except for the store of confidence that people are prepared to deposit in a currency. Which is why, with the removal of the gold standard [tangible backative], the U.S. dollar, backed by the biggest, strongest economy, became the benchmark of value for more than half a century.
Today, it is speculation in the money markets of a globalised, electronically connected world which really determines the value of money, not raw economic performance.
No cartoon joke
So Golding's indiscretion has enormous repercussions with respect to speculative pressure on the already weak and falling Jamaican dollar. It really is not a three-card man cartoon joke as Davies was portrayed in Las May's cartoon on November 23.
The words, and even the moving lips of leaders, move currencies. Now that the country has heard loud and clear from the current horse's mouth that the previous Government expected the Ja-maican dollar to decline over the course of the current fiscal year, what is to stop expectations that the same can be expected 2008/2009 with accompanying speculative behaviour?
Even if that were already the case, Mr. Golding has now firmly ensured that his Government must calculate its first budget at a higher rate than the prevailing exchange rate. And he may well have launched by his political point scoring indiscretion 'a bruk wey' slide of the local currency.
So the matter of Government secrets surfaces again. And it may appear strange that a media man who actively engaged the development of the Access to Information Act should argue, as his peasant mother advised that, "a nuh everyting good fi eat good fi talk." A delicate balance has to be struck between the right to know and the sacred responsibility to protect the welfare of the state and, in this case, of its currency.
Every state and its government has to hold secrets if it is to be governed at all. And there is a code of honour not to divulge these secrets with change of administration.
It certainly is not the PNP which stands to lose most from Mr. Golding's exposé, it is Jamaica which he leads and whose interest he is sworn to protect.
Martin Henry is a communication consultant.
published: Thursday | November 29, 2007
Martin Henry
Scoring political points is a dangerous double-edged sword. And I am not now talking about termites and 'chi chi'. Prime Minister Golding ran afoul of both common sense and political wisdom when he chose to 'fly off him mouth' about the exchange rate that the last Government had used to calculate the 2007/2008 Budget which his Government inherited.
The Prime Minister is now naturally obliged to divulge to the country the exchange rate that his Government will use to cast the 2008/2009 Budget. Any victory in the revelation must be purely pyrrhic, that is, obtained at too high a cost to be beneficial.
Mr. Golding was, in the revelation, seeking to absolve himself and his Government from any responsibility for the sharp price movements since they took office. But even if he won that victory, it is highly unclear how the previously unrevealed higher exchange rate is a culprit in the matter. And even if it is, the former Minister of Finance, Dr. Omar Davies, is quite right.
This is not the kind of thing which a responsible government broadcasts, however much it desires to damage its opponents.
Blabbed delicate secret
The technocrats in the BoJ, MOF and PIOJ who advised Davies on silence and are sworn to advise his triumvirate successors must have wet themselves fighting to stave off a heart attack when the head of Government blabbed such a delicate secret.
I hope this gross indiscretion is not an indication that the honourable Prime Minister does not understand the nature of modern money. Then the termites would have spread.
If it ever was, money is not now just 'the means of exchange'; it is itself the largest tradable commidity in the market with trillions of units bought and sold daily at the dazzling speed of electronic data transmission.
Money is merely 'worthless' bits of paper and electronic blips except for the store of confidence that people are prepared to deposit in a currency. Which is why, with the removal of the gold standard [tangible backative], the U.S. dollar, backed by the biggest, strongest economy, became the benchmark of value for more than half a century.
Today, it is speculation in the money markets of a globalised, electronically connected world which really determines the value of money, not raw economic performance.
No cartoon joke
So Golding's indiscretion has enormous repercussions with respect to speculative pressure on the already weak and falling Jamaican dollar. It really is not a three-card man cartoon joke as Davies was portrayed in Las May's cartoon on November 23.
The words, and even the moving lips of leaders, move currencies. Now that the country has heard loud and clear from the current horse's mouth that the previous Government expected the Ja-maican dollar to decline over the course of the current fiscal year, what is to stop expectations that the same can be expected 2008/2009 with accompanying speculative behaviour?
Even if that were already the case, Mr. Golding has now firmly ensured that his Government must calculate its first budget at a higher rate than the prevailing exchange rate. And he may well have launched by his political point scoring indiscretion 'a bruk wey' slide of the local currency.
So the matter of Government secrets surfaces again. And it may appear strange that a media man who actively engaged the development of the Access to Information Act should argue, as his peasant mother advised that, "a nuh everyting good fi eat good fi talk." A delicate balance has to be struck between the right to know and the sacred responsibility to protect the welfare of the state and, in this case, of its currency.
Every state and its government has to hold secrets if it is to be governed at all. And there is a code of honour not to divulge these secrets with change of administration.
It certainly is not the PNP which stands to lose most from Mr. Golding's exposé, it is Jamaica which he leads and whose interest he is sworn to protect.
Martin Henry is a communication consultant.
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