Wednesday, August 29, 2007

Adapting to the global environment

Over recent weeks we have seen both a global liquidity crunch and active political campaigning for Monday’s general election. Both will no doubt have a significant effect on Jamaica’s future and one of my disappointments with the economic debate is that we did not see enough coming out as relates to the global impact. Audley Shaw did mention Jamaica’s need to remain competitive in a global market, but the fact is that the questions did not bring out enough on this important issue.

Global markets are seeing a liquidity problem that has already started to affect Jamaica. We have seen where (1) the interest rate on July’s variable rate instrument was 20 basis points more than the June instrument; (2) recent pressure on the Jamaican dollar by the major currencies; and (3) declines in tourism over last year. This should of course come as no surprise for anyone who has been following the global markets, and in fact both Ralston Hyman and I have been saying for months that we would encounter this problem.

Inadequate debate
At the same time the elections will take place on Monday and there has not been much debate on how the parties will address the global challenge we face. No doubt this will call for fiscal prudence, not from the point of view of limiting expenditure, but ensuring the efficient allocation of capital. There can be no question that this is something that we have fallen down on, as is evidenced by the huge mountain of debt accumulated with no real benefit in our growth or GDP per capita numbers. And when I am looking at this I am not going to speak, as we always do, in isolation from the rest of the world. We must at some point in time confront the fact that we live in a global environment and improvements cannot be looked at in isolation from the rest of the world.

As an example the table shows average GDP per capita growth for Caricom states between 1990 and 2001. Isolating Jamaica one may think that we really have not been doing so badly, and certainly this may be confirmed by our experience of improved access to telecommunications, motor vehicles, and reduction in poverty. No doubt there has been development in Jamaica. But when we compare it to the other Caricom member states, we see that the only state that has fared worse than us is Haiti. And I am positive that there is not much to boast about it that. When we look at the other countries, however, we see that relatively Jamaicans are worse off. In fact, apart from Haiti, Jamaica is the only country that has seen an average real reduction in per capita GDP over the period, implying that over those eleven years the average Jamaican income level has been in effect declining. Between the period 1975 and 2001 the average growth for Jamaica was 0.10%,.

When we are therefore looking at the progress that Jamaica has made we cannot look at Jamaica in isolation but must compare us to the rest of the world, and especially the Caricom states. That is unless of course we do not consider ourselves world citizens and want to live in isolation from the rest of the world. And it is for this reason why I continuously say that 2 percent growth within the context of the global growth levels being experienced is far from satisfactory. Especially as Jamaica has so much potential.

Important micro level
At the micro level a significant reason why Jamaica’s growth is less than adequate is because of the performance of companies. Anyone who understands basic economics will know that economies are made up of firm (companies) and individual activities. So if we want to grow economies then certainly an effective way of doing so is increasing and influencing economic activity amongst firms and individuals. And this is why it is so important to create a business climate where investments are encouraged, bureaucracy is reduced, and taxation is used to encourage export of goods and services. The truth is that this is at the heart of the problems we have been experiencing. It is because we have not laid the appropriate environment why we have not seen the growth we need.

The result is that most of our companies are not geared towards efficiency and competition. Most of our companies aim their activities at the Jamaican market and do not look to develop overseas markets. This is primarily because we have developed into a trading economy. A far cry from the industrialization path we were on in the 1960s. If we are going to compete in the global environment it is important that we play by the rules for global competition. At the government level it is important to put in place policies that are going to encourage economic activity to move in that direction. Acting as if we are isolated from the rest of the world will only see us falling farther behind other countries.

An example of how much we do not recognize the changing rules is the fact that we do not realize that the inputs of production are changing. In today’s world, as opposed to 20 years ago, the reliance on things such as telecommunications, a reliable electricity supply, and internet connectivity was not as important. In Jamaica today where 70 percent of our economy is service based, more people are working from home, and access to real time information is necessary, one can see how important these inputs are. But even so we still have a looming crisis with electricity generation capacity come next year, and even when we do not have a hurricane regular power cuts plague us. It is not enough to say that the commercial districts have electricity as many businesses now operate from private offices at home. While the telecommunications industry is satisfactory (including internet access), the rates are still too high for a majority of our population. Additionally, because telecommunications is so essential for a competitive environment any forward thinking tax policy would ensure that GCT is not added to these services, just as GCT is removed on computer hardware. It makes no sense having the hardware and not being able to afford the services. Not all internet service providers are equal though, as I have found out having to move from one of the largest, because of the unreliability and long response time.

If we are going to compete globally then, we must realize that the rules of production have changed. The economy cannot be driven by government activity but must have private sector at the forefront. In order for this to happen though we need a private sector that is properly equipped to deal with the global environment, and need to see more companies like Sandals. We have to realize that the production inputs have changed and government policy needs to make these inputs reliable, affordable and available through tax policy and the regulatory environment. Unless we act like we are a part of a global environment then we will always celebrate small achievements while the rest of the world leaves us behind.

Thursday, August 23, 2007

Jamaica’s growth challenge

Hurricane Dean has come and reminded us of our vulnerable fiscal and growth situations. We will certainly see challenges to our macroeconomic environment, fiscal accounts, growth, and balance of payments. This will result primarily from the destruction to the agricultural and tourism sectors, which are significant contributors to inflation and foreign exchange earnings. The passage of Dean is also a reminder to us that hurricanes are a way of life in the Caribbean, and the fact that Jamaica has been so lucky is no reason for us to be complacent and not put the appropriate provisions in place.

I often wonder if it is because Jamaica is such a blessed country (geographic location, natural beauty, and agricultural resources) if this has led our politicians since 1962 to deliberately create problems for the country. The fact is that there has been no natural disaster, since 1962, that has caused greater devastation on Jamaica than the sustained mismanagement of our country by governments. While hurricanes and floods may have come and caused a few billion of dollars in damage, and resulted in lower growth performance, the mismanagement of this country has resulted in far greater losses. Examples of this mismanagement are (1) the cement crisis, which cost us billions of dollars in opportunity lost; and (2) the cost overruns on contracts.

Lacking growth capacity
I have long said, and regret that I am right, that Jamaica does not have the capacity to grow at 3 percent or more consistently. There is no doubt that Dean is going to negatively affect growth but even before Dean the growth target was already revised down by 1 to 1.5 percent. We had projected growth at 3 percent for the fiscal year, and this was revised down to between 1.5 to 2 percent. With the passing of Dean we can expect that target to be further revised down by 0.5 to 1 percent, resulting in growth of 0.5 to 1 percent for the fiscal year, consistent with our average since 1990.

If we look at the growth outturn for the January to March 2007 (Q1) and April to June 2007 (Q2) quarters we achieved total GDP growth of 2.0 and 1.8 percent respectively. The main sectors contributing to this growth included agriculture (Q1- 4%; Q2- 3%), Construction and Installation (Q1- 7%; Q2- 3.6%), Electricity and Water (Q1- 4.7%; Q2- 3.9%), Miscellaneous Services [Tourism] (Q1- (0.1%); Q2- (2.3%)). As a result of Dean we can certainly expect that these sectors will be further negatively affected. Some players have also said that the state of public emergency has negatively affected tourism, but this has been disputed by the authorities.

The main reason why we are always so distressed when a natural disaster occurs, however, is because when times are stable we do not take advantage of the growth opportunities. I come back again to last year, when we did not have any natural disaster, but then we created the cement crisis, which cost us significantly in a year when we should have been growing at a faster pace and taking advantage of the stable times. So when a natural disaster comes around it hurts us even greater because we have not capitalized on the opportunities.

Jamaica’s growth
The graph shows Jamaica’s GDP growth between 1962 and 2006, and I have assumed a growth rate of 1.5 percent for 2007. It shows that in the 45 years between 1962 and 2006 we have grown more than 2% in 17 of those years and more than 3% in 12 of those years. What is more is that of the 17 years we have grown more than 2%, 10 of those years was between 1963 and 1972, with the other years being 1981, 1987, 1989, 1990, 1993, 1995, and 2003. We have only grown 12 of the 45 years above 3%, with 9 of those years between 1963 and 1972, and the other years being 1987, 1989, and 1990. So we have not grown above 3% in over 16 years. Doesn’t this tell us that there is something seriously wrong with our capacity to grow in excess of 3%. And if we understand this concept then why do we project these growth rates when there is no fundamental change in our production factors. As a matter of fact, in my opinion, productivity and the pillars of growth are even more eroded than they were in 1990.

It is therefore apparent to me that there is no way that the economy will grow at 6 to 7 percent rates without some fundamental shift in our production arrangements. At the heart of this are the social and political policies that influence growth. I speak of things such as elimination of bureaucracy, crime, waste and corruption; functioning institutions such as the courts and police; quality education etc. Unless these things are dealt with then I regret to inform everyone that we will not see any sustained growth in excess of 3 percent. For me the concept is clear. When I heard the news report that the police were trying to restore public order after Dean, I thought to myself that there was not much to do as one of the primary problems we have, with or without a hurricane, is the inadequate level of public law and order.

It is for this reason why I continuously say that Jamaica does not primarily have an economic problem, but rather a social and political one. It is for this reason also why our governance relationships are of primary importance. So whoever forms the government after the election should understand that acceptable growth levels will only happen if we have the proper infrastructure and policies in place. Providing a stable macroeconomic environment and a positive primary surplus, while desirable, is not enough if unsupported by proper social and political policies.

Thursday, August 16, 2007

Manifesting economic growth and development

The main discussions over the past two weeks have focused around the manifestos issued by both political parties. The discussions though have focused more around the side shows, rather than the real issues. These comments would have no doubt been influenced by the parties, who use seemingly independent persons to voice their attacks. But the responsibility in the final analysis must remain with the individual commentators to remain independent and not compromise their credibility. I mean everyone will have their own personal preferences but when you prostitute yourself without any logic then that speaks to your own professionalism.

One such side show I have heard being mentioned repeatedly is the fact that neither parties outlined in the manifesto how they plan to achieve the objectives outlined. For those who believe that there is some merit in this argument let me help by looking at the definition of manifesto. A manifesto is “a public written declaration of principles, policies, and objectives, especially one issued by a political movement or candidate”. So we should not be looking for a road map for implementation but rather in a forum such as the National Debates. However, the Commission incorrectly used questioners on the economic debates panel that do not understand the real issues about the economy, and in that way short changed the Jamaican people and the quality of that particular debate.

In comparing both manifestos, I think that in terms of substance the JLP’s manifesto gets the edge. With respect to how the manifesto looks the PNP’s gets the edge. Why do I say this? Well starting with the easy one first, the PNP’s manifesto has a lot of colour and pictures, while the JLP’s does not, and so just looks better. In terms of content though I believe the JLP’s had a lot more measurable objectives, and showed more creativity inn dealing with issues, and I think that this came out in the debates.

I will deal with some of the reasons, but outside of the economic growth and development, I think that the JLP dealt more comprehensively with the matter of corporate governance and justice. Certainly the two proposals I am most attracted to, in these areas, are (1) sharing power with the opposition; and (2) giving the Commissioner of Police greater powers. These two I think will provide the foundation for greater accountability of politicians and the police.

The following table is what I consider to be the key points in relation to economic development and growth. The list is by no means exhaustive but focuses on the areas I believe will have the greatest effect on economic development. As I have always maintained, however, development and growth depends a lot on the social policies put in place. For example, an efficient justice system and police force, public law and order, and quality education and ensuring that children do not roam the streets. Without these social problems being addressed the economic policies will not generate any benefits.

While there is the realization of both that the state needs to create the business environment for private sector growth, it is still evident that the interventionist role that our governments have played since independence, is present. This is caused mainly by the expectations from the electorate of a government that is going to act like parents.

Both parties have not adequately addressed Jamaica’s interface with the global markets, and no questions were asked on this in the debate. The fact is that the world market today is going through a liquidity crisis that is going to have a significant impact on Jamaica and it is necessary to know how a future Finance Minister will handle this. Already we have seen a 10% fall off in tourism for the region and exports will also be affected. We have also seen where the five year variable rate instrument issued in July was 20 basis points more than the seven year issued in June. Whichever party forms the government on August 28th, the fiscal accounts are going to be a challenge and we can expect growth of about 1.5% - 2% this year, which is half of the projections. It was therefore a missed opportunity in the debate to bring out these issues, as knowing the flavour of our political rallies I really do not expect these issues to be discussed.

Friday, August 10, 2007

The price of debt

The euphoria surrounding elections has caused many of us to forget the economy that needs to be grown. Last week the JLP stated in its manifesto that it wants to place a constitutional level on debt/GDP of 95% within five years. This means they would have to reduce debt/GDP to 95% or lower by 2012. Many are legitimately asking, within the context of all the accomplishments the JLP wants to make whether this is possible? I would be the first to agree that not all the policies set out in the manifesto are achievable within the five-year period, and some amount of prioritising must be done, as well as reallocation of capital to its most efficient use.

Consideration would also have to be given to social consequences of any action, which is what the present government has had to do. No doubt, however, the debt/GDP ratio is an important factor to manage, as the higher the ratio is then the less monies are available for country spending, and the more debt we will have to borrow in the future to alleviate social hardships. The long-term solution, of course, is to address the social policies of proper education and law and order, as even with the best intentions in the world no Finance Minister will be able to improve the fiscal situation without proper social policies.

Effect of debt
We even see in the great USA where the massive trade deficit, and heavy reliance of the consumer on debt, has placed the economy in a quandary and the likelihood of a recession is increasing. This will of course have devastating effects for Jamaica, as 25 per cent of our exports are sent to North America and 75 per cent of our tourists come from there. We already are seeing lower tourist arrivals this year over last. These are the global issues that we should be discussing on the campaign trail, but then again politicians spin information to people and many of us, including those who should, do not understand these issues, so why bother? My thoughts are that if the Fed does not intervene soon, then the US economy will see greater negative effects.

A look at the June-07 quarter end fiscal accounts does show a promising sign - the lower than projected net borrowings over the period. After considering loan receipts and amortisations we have borrowed J$2.8 billion less than projected. This is a hope of some amount of fiscal prudence, especially when coupled with the fact that expenditures have come in under target while revenues are basically on target. The lack of accrual accounting could, however, reverse the position of the primary surplus and it is still early to comment. More importantly, though, I hope the lower than projected net borrowings will continue to be a hallmark of this year's fiscal accounts, and that no matter who assumes power on August 28th this trend will continue.

The graph shows the relationship between debt and nominal GDP since 1980. It shows that up to around 1997 we were still showing GDP growing at a faster pace than debt, and that this trend started to reverse at around the 1997 mark. Believe it or not though, in my opinion what happened after the 1997 period was more in the interest of the country than the prior period of the 1990s. This may sound silly, but in fact what caused the GDP to grow at a faster pace than the debt was inflation.

In 1991 we had inflation of 80 per cent, 1992 - 40 per cent, 1993 - 30 per cent, 1994 - 27 per cent, 1996 - 16 per cent, and 1997 - nine per cent. It was this inflationary pressure that caused the debt/GDP ratio to look good, but it also caused macroeconomic instability, causing unpredictability in the business environment. Reducing inflation caused the debt/GDP ratio to look bad, but was essential to create macroeconomic stability as a precursor for private-sector growth. The problem though is that the business environment was not conducive for investments and growth, and still is not where it should be.

Social policies
We continue to have high crime levels, a poor justice system, and high levels of bureaucracy that prevent the sort of investment, growth, and development we need. For this reason I continue to say that Jamaica has a social and political problem and not an economic one. And although we always complain about high interest rates, high interest rates are necessary because of these social policies we must fix, otherwise we will continue to live with even higher interest rates. Remember, the price of money is interest, and money goes where it feels safest. So while a stable macro environment is essential, this alone will not help. We need a business-friendly environment and low social and political risk to attract capital at lower relative rates of interest.
So can we achieve debt/GDP of 95 per cent in five years? My answer to that would be, whether the PNP or JLP is in government, it is highly achievable. It is going to depend, however, on the social and political policies we pursue. It is going to depend on how much we transform our environment into being business friendly. It is going to depend on how well we can deal with our education system and get young people in productive training rather than loitering on the roads and selling when they should be in school. It is going to depend on productivity and accountability in the public and private sector.

What the graph clearly shows is that from January 07 we see where the debt has been levelling off. This is a very important trend for us to maintain. Because if we can manage to keep the debt capped at around J$940 billion for five years, then even if we have average inflation of six per cent and growth of 2.5 per cent, over five years, we can achieve debt/GDP of 82% by 2012. And if we grow an average of five per cent over the period, we can see debt/GDP of 72 per cent. This will also set us up for lower relative real interest rates. But I would like to stress again that enlightened social policies will be critical to ensure this.

So it is going to be very important for us to prudently manage the fiscal side to ensure there is no increase in debt levels. One of the greatest threats to our expenditure is the energy bill, and therefore it is critical to do everything to encourage fuel efficiency and discourage fuel inefficiency, such as lower taxes on energy-efficient vehicles, and incentives to energy-efficient buildings. Not power cuts, JPS.

On the growth side we will have to ensure that crime is controlled, an efficient and equitable justice system is quickly put in place, and that quality education standards abound. If we can achieve this, then we will see an improvement on the numerator and denominator of the debt/GDP ratio, and more money available for spending.

Friday, August 03, 2007

FINSAC revisited

Last week the Observer quoted me to say that FINSAC is the worst thing that has happened to Jamaica. In particular I was speaking in relation to the economy, which I do believe, certainly as far as I can recall.

In the same week I received a call from a senior person in one of our media houses, representing a national association, to say that they had received complaints about the statement, as it was felt that this was a “strong view” being expressed and as such it could offend some people. He went further to state that they had not received any elevated complaint from any politician but that they were pre-empting any that may occur.

Threat to public expression
Now this high ranking media personality did not seek to find out first what my views are on FINSAC, but sought to take the shallow route of assuming offence to one side. Secondly, and most disappointing is that this is the position of a media leader, and leads me to wonder if the news reports from that organization are tempered to consider feelings, as they may not be allowed to have strong views on issues. And thirdly, there was no official complaint from any politician (I assumed he meant the PNP) and what I know of the politicians on that side is that they are articulate and I have not known of them being offended by any view on issues. As a matter of fact my own view is that media discussions have elevated under the PNP, and very much so under the Minister that had responsibility for FINSAC.

The implication is that the threat to public expression is greater from some of our citizens than politicians. After all I don’t think it was a politician that threatened Nationwide recently. And this is one reason why I went further to say at the luncheon that business persons need to unite around issues rather than speak out against issues that affect them individually. Isn’t this why the PSOJ and other such trade organizations were formed? So what is the big deal about saying it? The tribal nature of politics in many instances is the result of private citizens branding people as PNP or JLP, not having the ability to see things as pro-Jamaica or anti-Jamaica. Instead many of our educated do not vote on issues but are no different than the average Jamaican who votes based on the picture of the 1960s political leader in their home.

Anyway this brings me around to the issue the phone call has revived. That of FINSAC and why I say it is the worst thing that has happened to Jamaica’s economy. And again, as I said a few weeks ago, I am going to go slowly and try to inform the media especially so that they can follow what I am saying.

Now, the lesson starts with the question, what are some of the main inhibitors to Jamaica’s economic development? The main setback caused by FINSAC is not the high level of debt (over $900 Billion) that we have today. In fact in 1984 the debt/GDP ratio peaked at 212%, before it started to decline. The difference at that time was that it was on the decline after 1984 and growth rates ran in excess of 5%. So as I always say, there is nothing wrong with debt as long as the returns are higher than the cost of the debt. It was the high growth rate that caused us to be able to reduce the debt, as a percentage of GDP, at that time. The result is that, if GDP grows at higher rates than the debt then it means more money available for spending in the country.

Importance of growth
This is what the government is trying to achieve by aiming to accelerate economic growth. The position we are in today is that our productivity base has been reduced, over prior decades, while our lifestyles have increased. This means that we have had to borrow money to compensate for lost productivity.

The graph clearly shows that after the mid 1908s when we started to see growth rates in the region of 6% and 7%, the debt/GDP ratio started to decline. At the start of the 1990s, when the Jamaican economy was liberalized, the debt/GDP ratio increased, as we had to borrow more money to stabilize the economy from the effects of globalization. In 1997 FINSAC came into being, and from that point the debt/GDP ratio has increased and is just leveling off. But every five years or so we have a thing called an election and that of course always stops the progress.

So the high level of debt/GDP is nothing novel, as this trend of high levels of debt/GDP started in the 1980s. But at that time the economy was more productive and could grow at higher rates. This is the main reason why I always say that the problem with the Jamaican economy is its capacity to grow, as we have eroded the social and economic institutions that form the productive base.

Following on this then, I think it is fair to say that the main problem with FINSAC is not the high levels of debt. The main problems caused by FINSAC are (1) the erosion of an entrepreneurial mindset; (2) the lack of accountability and independence that came out of that period, which has contributed to the indiscipline today; and (3) the high involvement of government in the economy. One positive that has come out of the FINSAC period is a strong regulatory environment for financial institutions, which has been well managed by the BOJ, under the stewardship of the present governor, and the FSC, which I think is the most effective regulatory arm. Right now the global financial markets has reached a stage where creativity is moving farther ahead of regulation, but that discussion is for another time.

Fading entrepreneurialism
The reason why I think the waning of the entrepreneurial spirit is the main problem caused by FINSAC is simple. We all know that what drives economies to move forward is the small entrepreneur. It is not government spending and growth in distribution, construction, or increased debt through credit cards. In fact if we look at what is happening in the US, the domestic economy is suffering from an extension of debt to consumers and because countries such as China are looking to move away from holding US debt (treasuries). What is holding up the US economy is the entrepreneurialism that caused many US companies to invest in China, the next superpower.

The late 1980s to the 1990s saw a lot of Jamaicans come to the fore in terms of new business ventures. Many manufacturing and financial institutions were being headed by Jamaicans, which is the organic growth that drove the economy during this period. This meant that we were relying less on foreign investments, and certainly did not need imported police and teachers, which would be a return to colonialism. We had our own self made Jamaican entrepreneur and as this example spread, more and more Jamaicans saw the possibilities of starting their own business. Then came the high interest rate environment and FINSAC in 1997.

The high interest rate environment saw many existing variable rate loans ballooning overnight, and logically companies would not be able to service these loans. The high interest rates were used as a means to control devaluation, which also would have had a devastating consequence on the poor. The problem though was that monetary policy (high interest rates) was used for too long a period, when what was needed was fiscal policies, and the roll back of monetary policies.

The problem was not solely that of government policies however, as we did not have the regulatory framework to properly monitor the financial institutions, and so the poor risk management practices within many institutions contributed to the situation. Even before the government intervened the financial institutions should have called the loans long before they got to the point where the security could not cover the loan balances. If this were done then the high level of FINSAC intervention would not have been necessary. And it is because of the good regulatory environment today that I do not believe another FINSAC will occur.

But the end result of all of this is that the Jamaican entrepreneur went into hiding and has only recently started to emerge. This is why it was so necessary for Omar Davies to stabilize the macro environment to bring back confidence to the Jamaican economy, for local and international investors alike, an accomplishment he can claim. Being the ones burnt, though, the Jamaican entrepreneur had a longer recovery period, as markets are driven primarily by perception and confidence.

Lack of accountability
The FINSAC debacle has caused so much pain and yet still the level of accountability is low. This has contributed to the attitude that if people can get away with causing billions of dollars in damages, then why do I have to conform. The belief is that politicians will protect their “big friends”. I don’t know of any protection, which may have possibly happened knowing Jamaica, but certainly in the main the problem was not caused from this. We have seen where the government has pursued many persons but have been unable to get too far, after many years. The main problem is with the judicial and regulatory systems, which is why our institutions are critical in the development equation. At the time of the crisis the regulation and legislation were weak, and so it was difficult to get accountability in the time desired. Additionally, the need to call in forensic auditors meant that it was a web of documentation that needed to be sifted through.

This lack of accountability, no doubt, has contributed to the wider problem of indiscipline. Since that time much of the legislation has had to be updated, as Jamaican laws really did not have much teeth until recently. An example is the Companies Act that prior to 2006 was last updated in 1965.

Government bureaucracy
We all know that government is probably the most inefficient player to have in the economy. After FINSAC government got caught owning many private companies that no private investor wanted to touch, because of the FINSAC experience, resulting in foreigners buying our assets. This meant that government had become a major player in the economy, and became the main engine of economic growth.

There is definitely a problem when an organization founded on bureaucracy is the major player in the economy. Our government is no different from any other around the world when it comes to bureaucracy, as it is necessary for governments to have bureaucratic structures because of their size. As a matter of fact, this is one reason why even private companies in the US break up into pieces after attaining a certain size. The smaller you are then the less bureaucratic you have to be to maintain controls and the more nimble you can be.

When government found itself owning all these private companies, and being a major player in the economy, they truly did not know what to do. They did what they knew best, which was to apply bureaucracy to the control of these companies. The result of course is that productivity declined, and companies and the economy became less efficient. This inefficiency has now become engrained in the Jamaican culture.

So to my friends who were following me, and were able to understand what I have said, the problems with FINSAC were far reaching and way beyond any issue of debt. What made the situation bad was that the Jamaican environment was not prepared to deal with this situation, and the management of the crisis (both in the private and public sector) was handled poorly. Whilst I believe that government intervention was necessary, I believe that (1) it came too late, as the writing was on the wall long before; (2) not everyone should have been bailed out to the extent they were; and (3) they should have found a way to allow the private sector to carry on with the companies immediately instead of creating FINSAC to manage them for so long. There is a lot more that can be said about the FINSAC era, and it needs public discourse to avoid any recurrence and educate those amongst us that should know.