Wilberne Persaud, Financial Gleaner Columnist

Persaud

On October 26, 2007, I said this about Finsac: "Debate shall continue and more might be discussed. My main views are published though they have yet evolved. I think I have said enough on this subject for the time being." I really meant this.

In my inbox two weeks ago was a reader's email urging, indeed, insisting it was my duty, to respond to a piece by Chen-Young: 'Assessing Finsac' published in the Jamaica Observer of January 23.

I considered these ideas shared with me and figured it was best to stimulate discussion with his observations set out mainly in the form of questions.

"1. Is the disaster Finsac, or was it the actions of those who caused the collapse?

2. Senator Don Wehby's statement is hyperbole when one in proportionate and absolute terms considers the difficulties of Argentina, Brazil and Mexico before.

3. Having failed in their financial endeavours, Chen-Young expected the government to return the failed entities to the same persons who played a central role in the failure. Would the United States return Enron to the CEO who played a central role in its demise?

4. Is the government to arrange mergers and joint ventures, or is the role of true entrepreneurs to structure such mergers and joint ventures in a way that is appealing and acceptable to government on a yardstick of financial viability?

Gross domestic product

5. Are Wehby's observations not the equivalent of Davies inflating the 20 per cent of GDP to 40 per cent?

"It seems that you are being called upon to state the empirical, as distinct from the descriptive basis for laying blame. He says you sold off the country to foreigners and didn't work with the local entrepreneurs. What say you? You have a duty to reply."

There is a mouthful here, perhaps rather more than a mouthful.

I, of course, immediately read Chen-Young's column. There are some interesting ideas in it.

The notion of cost-benefit from an economic versus financial accounting perspective is something that could usefully be done.

But such a study would have very little practical impact.

It takes no grey matter whatsoever to know that the financial sector meltdown was extremely costly to Jamaica - well beyond the internal financial costs to companies and individuals.

While Chen-Young may not know it, I am no longer with the University of the West Indies and, therefore, have no students 'officially' - though advising research students requires merely communication and discussion.

So, yes, students of finance and government may look at these issues, arrive at cost-benefit estimates and useful conclusions but I am not sure where knowledge of 'precise, real' costs would take us — apart from exercises in training.

But should Chen-Young wish to fund such a study, I would volunteer immediately. He couldn't make a better contribution to the creation of the next generation of economists, statisticians and econometricians. Come to think of it, what a great idea!

On the other, much more important matter of analysis of failure, Chen-Young continues to see Finsac as the disaster. Strange.

Finsac could never exist were it not for operations of an inadequately regulated and generally, with respect to risk, too loosely managed indigenous financial sector, which was the real disaster.

I have come to and have accepted the view that no amount of reasoned discourse shall change people's minds once they have a position of interest in this debate on the causes and consequences of Jamaica's mid-1996 financial sector crash and meltdown.

No conviction

So to my readers who may share the opinions expressed and reported here, my response is that I am neither convinced nor sure I have a duty to respond at all!

I think readers now have a duty to look at the available facts.

Happily, in this matter, they are not completely hidden from public view. Readers with an interest may look at records of the courts, affidavits surrounding various suits brought between and among owners and shareholders in companies, various company reports and the like.

There is a lot of material to be reviewed rather than merely spouting rehashed and ill-conceived opinions of interested parties.

wilbe65@yahoo.com