The global financial crisis, the global economic slowdown/downturn; it has many names. But call it what you will, the circumstances remain the same. It all started with a mortgage crisis in the United States last year, which began to make its presence known and early as the first quarter for those who were paying attention. And at first it seemed like only homeowners were going to be affected.
But the domino effect soon began to be seen on the stock market, investment companies and banks. Pretty soon the auto industry began to crumble like a house of cards. All the while, the darkness was ballooning outside North America as well; Europe, Asia, Australia and other parts of the world began to feel the effects.
Naturally, once the developed world began to tighten its belt in response to the crisis, the foreseen effect would be a pinch on aid to developing nations, particularly those in Africa where it appears that the more money poured into the dark hole of poverty, the deeper it gets. And from the first hint of trouble, the UN had begun appealing to the donor countries and agencies not to let crisis hamper the much needed provision of aid.
In Latin America and the Caribbean, it was at first assumed that only the trickle-down effects would hit nations. The obvious impacts, it was believed, would be from a direct hit to tourism as a result of there being less disposable income in developed countries for vacations and fun; a drop in exports as there was expected to be a reduction in the demand for certain raw materials and products sourced from these parts. Remittances were also expected to take a hit. Once US firms started laying off workers, obviously there would no doubt be less money to send back home. Observers said that poor people: farmers, itinerant vendors and those who make a living selling craft items to tourists, those employed in the tourism industry as housekeepers, waiters and tour guides as well as those who depend on monthly subsistence from relatives overseas would bear the brunt of the hardship.
Right here in Guyana, it had been said officially by President Bharrat Jagdeo that the country was insulated from the effects of the crisis as its banks and agencies did not have the kind of overseas investments that would have been affected. Perhaps this was only meant to reassure, since as a former finance minister the President must have at least had an inkling about how money managers tended to speculate with other people’s money in the hope of making a bundle.
As it happened, the crisis has hit home in the case of Clico (Guyana) and its investment in Clico (Bahamas) and Hand-in-hand Trust Corporation and its investment in Allen Stanford’s business. The amounts involved have not yet been clearly stated. Officials have quoted round figures; there has been nothing laid out that shows what sums were invested, when they were invested and in what. One hopes, of course, that for the sake of the persons whose pensions, life and fire insurance policies, investments and jobs are at stake that the exposure will turn out to be minimal. However, one cannot help but look back at the genesis of the crisis when it was felt that it would affect only a segment of the global economy and how it has in fact snowballed out of control.
When it all ends, whenever that is, what ought to be the lesson here is that when something seems too good to be true, it usually is, and making a dollar out of 15 cents is best left to poor single-parent women who have been known to spend 15 cents and get a dollar’s worth. It never works any other way, no matter what the scam artists say.