We need some economic solution NOW!!!!

[Assasin]

A currency crisis is when a currency depreciate more than 12% in one year. This is currently what is happening to the Jamaican dollar. This is prompting people to put their savings in US dollars or other foreign currencies. This is causing a contraction in the economy and local business who deals mainly in Jamaica dollars are not able to plan as operating cost is going through the roof. This includes fertilizer, feed, electricity, and other input cost. Small business who mainly deal in local currency are not able to invest and go into survival mode. Most businesses will not expand under these condition.

The demand for foreign currency now in increases as people try to hold unto their savings. This is not good for the economy and if this trend continue for 6 more months Jamaica is in real trouble again. One financial jerk right now or a failed IMF test and it would be FINSAC all over again. The only difference I see is the promise of Chinese dollar to ease some of the pain but this is putting more Jamaican small businesses out of business. That mean Jamaicans having less capital and control over their business.

In the short term I can only hope we have a very good winter tourist season to bring in some dollars, US shutdown don't last long, remittance increases and the government find some solution to this crisis and inflation other than raising interest rate to unacceptable level. It is not business as usual.

[Gamma]

has it not been posited that this is actually GOOD for the economy? for the life of me i cannot see HOW .... but people who supposed to know a claim seh let it find its level ... well all wi a si is escalation and if it nuh find its level yet ....!!!!!

[Lazie]

A currency crisis is when a currency depreciate more than 12% in one year. This is currently what is happening to the Jamaican dollar. This is prompting people to put their savings in US dollars or other foreign currencies. This is causing a contraction in the economy and local business who deals mainly in Jamaica dollars are not able to plan as operating cost is going through the roof. This includes fertilizer, feed, electricity, and other input cost. Small business who mainly deal in local currency are not able to invest and go into survival mode. Most businesses will not expand under these condition.

The demand for foreign currency now in increases as people try to hold unto their savings. This is not good for the economy and if this trend continue for 6 more months Jamaica is in real trouble again. One financial jerk right now or a failed IMF test and it would be FINSAC all over again. The only difference I see is the promise of Chinese dollar to ease some of the pain but this is putting more Jamaican small businesses out of business. That mean Jamaicans having less capital and control over their business.

In the short term I can only hope we have a very good winter tourist season to bring in some dollars, US shutdown don't last long, remittance increases and the government find some solution to this crisis and inflation other than raising interest rate to unacceptable level. It is not business as usual.

You people need to get serious. What kind of a economic solution yuuh want?

[Assasin]

Confidence is an important factor in deciding the value. Something most of the expert forget and if people see it sliding they will pull their dollars and put more pressure on it. If I had a million Jamaican dollar in the bank, I would pull it and put it in US. That is worst for the Jamaican economy but at the end of the day, if it is in US I will not lose any value.

One top businessman from JMA said he is currently sourcing dollar higher than the 104.00 so he can buy his goods. Now where does he get it from??? Is that blackmarket???

Unless devaluation is managed it not good. The fact is most Jamaican manufactured goods have to import product, cutting expenses like telephone, goods and services going to result in contraction and less sales for business.

Yes buying less saltfish don't meaning buying more yam or locally produced goods and if the farmer can't buy feed for his chicken then it ain't good for Jamaicans. Eventually good for the foreign capitalist who was not affected or the few Jamaicans who have money save up to buy when others go bust.

[Islandman]

The only times that I can see where a currency devaluation is good for an economy is if it was artificially overvalued to begin with.

A constantly sliding dollar cannot be good. There is no magical level that is defined by the laws of nature for it to stop at. It is all about confidence.

An unstable currency affects planning, there is a cost in constantly managing pricing, and like any financial asset that is losing value it can cause fear and panic resulting in even more loss of value.

Bottom line, the devaluation is a symptom not a cause of the real problem.

[Gamma]

people WILL speculate on the USD and hoard it as it gains value daily.

it makes sense to open a USD account and immediately convert your liquid J$ to USD and convert it back when you are going to use it because it will undoubtedly be worth a little bit more even over the course of a month. would not be surprised if some people use that means to "hold strain" so that the constantly rising $ doesn not continue to bite too deep into thier stagnant income.

[Assasin]

you are right on that. That is good for the individual but not for the country in a time like now. That put more pressure on the dollar on a macro basis.

[Karl]

A currency crisis is when a currency depreciate more than 12% in one year. This is currently what is happening to the Jamaican dollar. This is prompting people to put their savings in US dollars or other foreign currencies. This is causing a contraction in the economy and local business who deals mainly in Jamaica dollars are not able to plan as operating cost is going through the roof. This includes fertilizer, feed, electricity, and other input cost. Small business who mainly deal in local currency are not able to invest and go into survival mode. Most businesses will not expand under these condition.

While such "currency crisis" is not welcome the following statements are lies:

1.

local business who deals mainly in Jamaica dollars are not able to plan

2.

Small business who mainly deal in local currency are not able to invest and go into survival mode

The below #3 suggests most businesses are led by persons who do not have the wherewithal to lead towards success in this described challenging environment.

Give us stats on what occurs in countries with the described type rapid depreciation of those nations currency? ...please?


3.

Most businesses will not expand under these condition.

--------------

...and... what does the below say?

The demand for foreign currency now in increases as people try to hold unto their savings. This is not good for the economy and if this trend continue for 6 more months Jamaica is in real trouble again. One financial jerk right now or a failed IMF test and it would be FINSAC all over again. The only difference I see is the promise of Chinese dollar to ease some of the pain but this is putting more Jamaican small businesses out of business. That mean Jamaicans having less capital and control over their business.

In the short term I can only hope we have a very good winter tourist season to bring in some dollars, US shutdown don't last long, remittance increases and the government find some solution to this crisis and inflation other than raising interest rate to unacceptable level. It is not business as usual.

What the hell is this last?
Is it a "on one hand and on the other hand"

btw - Sass: Gi wi di source nuh?

[Gamma]

sho nuff ....

[Muadib]

Get thee behind us Satan !

[Assasin]

How can you plan when you don't know what your labour cost, input cost or raw material cost will be??? Explain that to me.

Show me one country with rapid depreciation with consistent high growth and progress. Just one.

BOJ governor said instability in the economy is affect growth in the economy so don't take my word for it.

[Gamma]

that is a conundrum, if you plan and speculate too much then in the goods and servises market, the cost of both will go up.

e.g. car dealer speculate and buy dollars at a higher rate than current to be able to actually cover their costs when it comes time to sell the vehicle several months later.

if you make your income in us dollars then it is minimised but how many persons can do that especially when imports are likely to be costing USD and cannot or are not available locally at competitive prices.

businesses who are doing well, tend to be ones earning foreign exchange....

[Assasin]

if the don't speculate and charge more or guess wrong, they will lose their shirt.

Yep, if you dealing in dollars you are good to go.

[Don1]

Karl... of course Sass is 1000% correct... it is both plain economics and plain Jamaican reality that this is so as he says

The context of this situation however are the "demand suppression" policies which the IMF insists on...which the current Termite regime is applying faithfully.

Such policies inevitably result in a reduction in living standards as consumption is reduced and the currency is devalued.... and supposedly a rise in export production to eventually generate foreign exchange & increased economic competitiveness. That is the PLAN

Unfortunately, in Jamaica's history with IMF policies... the former ALWAYS occurs.... but the latter almost NEVER does. So Jamaica has never completed an IMF program with a good growth agenda in place. Therein lies the conundrum.

So as the GOJ with its back against the wall slavishly follows the IMF prescription Jamaican people are very unhappy at the squeeze... but the IMF is at the moment very satisfied.

It was One Turd's/Golding's failure to take some of these poison pill actions (which the Termites were forced to take) which scuttled that JLP govt IMF program.... they clearly wished to wait until after winning the impending election for the inevitable "bitter medicine"

Too bad that tactic didn't work too well for them.

[Assasin]

The IMF was never involved in the 90s. We can't blame the IMF for our failure to govern and rule, and our failure to understand economics.

A lot of countries who went with the IMF a few years ago looking to turn themselves around, what is the difference with Jamaica?