Jamaica’s Perilous Position

After all of the uncertainty last week some semblance of stability seems to have returned to the U.S. equity markets with the Dow Industrials rising for the third straight day.  One might be forgiven for thinking that the crisis is over, however the fundamental problems remain.  When the financial sector was bailed out in 2008 the debt was simply switched from the banks to the various countries which are now experiencing the problems.  In addition the recovery process is proving to be a slow one resulting in low levels of investor and consumer confidence.  The world governments made the same mistake as FINSAC in that they attempted to bail out every single investor.  The problem with this theory is that the government (tax payers) is left with all of the losses.

The situation for Jamaica is that no matter what happens on the worlds markets we will probably not benefit much.  The one good point about the down turn in the markets is that the price of oil dropped to eighty dollars but over the last three days the price has surged to eighty seven.  Jamaica would thus benefit from lower oil prices but would lose from lower remittances and decreased revenue from exports and tourism.  If the economies improve then Jamaica which is heavily dependent on oil for power generation and transport will suffer from high oil prices which results in higher electricity bills and gas prices.  Add to this the fact that we import a significant portion of the food that we consume and the higher commodity prices that we will experience and the situation looks pretty grim for the future.

Problems Ignored

Over the last thirty years successive governments have chosen to ignore the problems with JPS and this has led to the infrastructure and equipment becoming old and inefficient.  In addition no serious efforts have been made to improve the agricultural sector.  Rising commodity prices threaten to push the price of goods beyond the reach of the average consumer and this may result in public demonstrations similar to what were experienced in many western countries.  The decisions that have been taken by our leaders were not done for the benefit of the country but were done to ensure the retention of power and now we are feeling the effects of those choices.  The time to put aside our differences is now and we must unite if we want to see the country grow and develop.  We need to rethink our energy and agriculture policies in light of what is happening in the world because it is likely that higher prices are in the future for us.

Popular bad decisions will eventually end up being mocked and scorned but unpopular good decisions often lead to legendary status.  The question for us is whether we have a government that will make the difficult decisions and take the steps to financial independence or whether we will continue to walk down the path that leads nowhere.