Tweet
One reader, whose bona fides I trust, commends me for the column in the Financial Gleaner, 'A bit of advice for Justice Carey'.
He was not aware of Carey's performance during tenure on the bench and his judgement in the plagiarism-cum-libel case I mentioned, but is following the case to have Carey removed as chairman of the FINSAC commission of enquiry.
We can only await the court's ruling.
But beyond that, the true cause of Jamaica's mid-1996 financial melt-down, just as the November 2008 Wall Street meltdown, is known to all professionals in economics, finance, accounting, risk management, forensic accounting, etc., and also plain 'bandooloo' artists, some of whom, both on Wall Street and in Jamaica, know because, in part, of their own involvement.
It is absurd, decidedly hypo-critical, absolutely ridiculous, a calculated lie or perhaps plain silly - sorry for what appears to be showing off my extensive vocabulary, I'm merely flabbergasted searching for the right words - for our Government to claim it is seeking, by its commission, to understand the causes of the meltdown, hence avoiding recurrence in the future.
We have been exposed so far to nothing but political theatre with perhaps bad, unintended con-sequences and the added trappings of a circus, meant to appease elements of an irresponsible élite who normally have to offer no account of their actions to the Jamaican people, who indeed treat them with disdain or even scorn.
It is these élites' enduring power, plus the black underclass' induced self-deprecation - bleach, not beach syndrome! - which our immediate late departed cultural icon Rex Nettleford dared to expose (I thought of confront; ruled it out) in his 1970s classic Mirror, Mirror.
But this is not what I really want to share with you today.
Gordon Robinson, Gleaner columnist, whose wit and plain common sense I find thoroughly refreshing, suggests our banks that benefited from FINSAC, taxpayer bailout, should be asked to contribute to solving our fiscal crisis, in his column 'Banks must contribute', Wednesday, February 10, 2010.
He argues that: "The bailout of these banks was a significant contributor to our current fiscal disaster. Yet, Driva has dismissed any suggestion of a special levy on these banks without debate, discussion or input from the out-of-work Jamaicans whose hard-earned tax dollars rescued the banks and that at financial year ending Septem-ber 30, 2009, NCB "reported a net profit of $10,248,000,000, up 18 per cent on the previous year. During that same period, Jamaica recorded negative growth, thanks to a crippling fiscal deficit substantially brought about by the 1990s rescue of NCB. It seems only logical that a special levy on that net profit ought to result in at least 50 per cent being returned to the people who made it possible in the first place ... . As an involuntary contributor, where's my share?"
'Driva' is a reference to Prime Minister Bruce Golding.
This column previously reported that if National Commercial Bank's new owners had just closed the bank's loan operations and depended on their government paper holdings, they would have been profited exceedingly.
Government paper on NCB's books at time of sale to Michael Lee Chin's group was the FINSAC bailout.
Too big to fail
It was substituted in NCB's asset portfolio, for over $19 billion of sour, bad or delinquent loans that evaporated. Many of these went to Jamaican Redevelopment Foundation Inc.
Without this, NCB would have gone the route of Eagle Commercial and Century National Bank. The rationale for saving NCB, just as in the United States, is the notion of 'too big to fail'.
By the way, a slogan making the rounds today in the US is 'too big to jail'.
Robinson's suggestion is worthy of consideration. To sell NCB after bailout, no clause could have been included to bind the new buyer to pay, say, 10 per cent of earnings for the next decade to Government in recompense for the taxpayer bailout.
The potential buyer had no government bailout; so not his business.
Were I to advise and negotiate for the potential buyer, I would urge never.
Second, because the International Monetary Fund indicated that the Government of Jamaica was about to sell NCB by a certain date, all interested parties were immediately privy to the urgency, hence fire sale-like condition. Leverage was lost.
Business dealings, sadly, to the present moment at least, turn out to be cut-throat, no mere cut and thrust.
Under pressure today, our Government calls in bonds and banks and financial institutions comply. It is not their loss, really.
Furthermore, government funds exist to help newer, smaller financial kids, who might get bruised in the crush. Pensioners and nurses, however, get no cushion.
Let's see, what do we really have here? FINSAC, using taxpayers' money saved taxpayer-owned savings, insurance contracts and pension funds.
This act of rescue is itself a big contributor to overwhelming debt and lower level (quantity) and less efficient (quality) of national capital stock.
Lesser capital stock means less income generation hence a smaller tax base. This resulted from mandatory mopping up; cleaning mess after our private-financial services kids had a foul-smelling accident.
Today, new taxes and a putative default on government bonds extract a bailout of the bailout, back from taxpayers. No wonder ordinary people view high finance as a 'three-card trick'.
Once money must pass through so many hands, identifying the true beneficiaries rivals peering through Blue Mountain mist, except it's not beautiful — cost overruns, gully contracts, debt forgiveness, subsidy to Air Jamaica, duty waivers, bond recall for longer term and lower interest rates.
It does not matter who the enabling legislation states to be the targeted beneficiary. In the end, powerful interests win here in Jamaica just as in the US.
Place your bets for the white mark and win! Card in the middle, left, right or partisan contributor at the end? Your guess is as good as mine.
Wilberne Persaud
Financial Gleaner Columnist
wilbe65@yahoo.com
February 12, 2010
He was not aware of Carey's performance during tenure on the bench and his judgement in the plagiarism-cum-libel case I mentioned, but is following the case to have Carey removed as chairman of the FINSAC commission of enquiry.
We can only await the court's ruling.
But beyond that, the true cause of Jamaica's mid-1996 financial melt-down, just as the November 2008 Wall Street meltdown, is known to all professionals in economics, finance, accounting, risk management, forensic accounting, etc., and also plain 'bandooloo' artists, some of whom, both on Wall Street and in Jamaica, know because, in part, of their own involvement.
It is absurd, decidedly hypo-critical, absolutely ridiculous, a calculated lie or perhaps plain silly - sorry for what appears to be showing off my extensive vocabulary, I'm merely flabbergasted searching for the right words - for our Government to claim it is seeking, by its commission, to understand the causes of the meltdown, hence avoiding recurrence in the future.
We have been exposed so far to nothing but political theatre with perhaps bad, unintended con-sequences and the added trappings of a circus, meant to appease elements of an irresponsible élite who normally have to offer no account of their actions to the Jamaican people, who indeed treat them with disdain or even scorn.
It is these élites' enduring power, plus the black underclass' induced self-deprecation - bleach, not beach syndrome! - which our immediate late departed cultural icon Rex Nettleford dared to expose (I thought of confront; ruled it out) in his 1970s classic Mirror, Mirror.
But this is not what I really want to share with you today.
Gordon Robinson, Gleaner columnist, whose wit and plain common sense I find thoroughly refreshing, suggests our banks that benefited from FINSAC, taxpayer bailout, should be asked to contribute to solving our fiscal crisis, in his column 'Banks must contribute', Wednesday, February 10, 2010.
He argues that: "The bailout of these banks was a significant contributor to our current fiscal disaster. Yet, Driva has dismissed any suggestion of a special levy on these banks without debate, discussion or input from the out-of-work Jamaicans whose hard-earned tax dollars rescued the banks and that at financial year ending Septem-ber 30, 2009, NCB "reported a net profit of $10,248,000,000, up 18 per cent on the previous year. During that same period, Jamaica recorded negative growth, thanks to a crippling fiscal deficit substantially brought about by the 1990s rescue of NCB. It seems only logical that a special levy on that net profit ought to result in at least 50 per cent being returned to the people who made it possible in the first place ... . As an involuntary contributor, where's my share?"
'Driva' is a reference to Prime Minister Bruce Golding.
This column previously reported that if National Commercial Bank's new owners had just closed the bank's loan operations and depended on their government paper holdings, they would have been profited exceedingly.
Government paper on NCB's books at time of sale to Michael Lee Chin's group was the FINSAC bailout.
Too big to fail
It was substituted in NCB's asset portfolio, for over $19 billion of sour, bad or delinquent loans that evaporated. Many of these went to Jamaican Redevelopment Foundation Inc.
Without this, NCB would have gone the route of Eagle Commercial and Century National Bank. The rationale for saving NCB, just as in the United States, is the notion of 'too big to fail'.
By the way, a slogan making the rounds today in the US is 'too big to jail'.
Robinson's suggestion is worthy of consideration. To sell NCB after bailout, no clause could have been included to bind the new buyer to pay, say, 10 per cent of earnings for the next decade to Government in recompense for the taxpayer bailout.
The potential buyer had no government bailout; so not his business.
Were I to advise and negotiate for the potential buyer, I would urge never.
Second, because the International Monetary Fund indicated that the Government of Jamaica was about to sell NCB by a certain date, all interested parties were immediately privy to the urgency, hence fire sale-like condition. Leverage was lost.
Business dealings, sadly, to the present moment at least, turn out to be cut-throat, no mere cut and thrust.
Under pressure today, our Government calls in bonds and banks and financial institutions comply. It is not their loss, really.
Furthermore, government funds exist to help newer, smaller financial kids, who might get bruised in the crush. Pensioners and nurses, however, get no cushion.
Let's see, what do we really have here? FINSAC, using taxpayers' money saved taxpayer-owned savings, insurance contracts and pension funds.
This act of rescue is itself a big contributor to overwhelming debt and lower level (quantity) and less efficient (quality) of national capital stock.
Lesser capital stock means less income generation hence a smaller tax base. This resulted from mandatory mopping up; cleaning mess after our private-financial services kids had a foul-smelling accident.
Today, new taxes and a putative default on government bonds extract a bailout of the bailout, back from taxpayers. No wonder ordinary people view high finance as a 'three-card trick'.
Once money must pass through so many hands, identifying the true beneficiaries rivals peering through Blue Mountain mist, except it's not beautiful — cost overruns, gully contracts, debt forgiveness, subsidy to Air Jamaica, duty waivers, bond recall for longer term and lower interest rates.
It does not matter who the enabling legislation states to be the targeted beneficiary. In the end, powerful interests win here in Jamaica just as in the US.
Place your bets for the white mark and win! Card in the middle, left, right or partisan contributor at the end? Your guess is as good as mine.
Wilberne Persaud
Financial Gleaner Columnist
wilbe65@yahoo.com
February 12, 2010