Garth Rattray

Dreams of opulence only intrigue a particular ilk. Regular folk dream of good health, good nutrition, education, some leisure, providing for their family, comfortable and safe surroundings and old age security.

Unfortunately, too many end up living their worst nightmares - little or no employment and inadequate earnings that are instantaneously vapourised by our meteoric cost of living.

People who are barely able to keep their eyes and noses above water live with trepidation every day. They certainly can't provide for their own future or for the future of their loved ones - so much for their dreams. The spectre of possible destitution haunts our lower-middle class and lower-class citizens. The fear of abject helplessness drives some to rapaciousness and others to criminality.

In our economy, saving for a rainy day with regulated traditional financial entities is futile. From the dreamer's perspective, therefore, banks, and the like, only provide some modicum of security for storing money and/or acquiring loans; hence, the preponderance of games of chance and now the emergent risky, high-interest-bearing 'schemes'.

The very detailed and all-encompassing Caribbean Policy Research Institute (CaPRI) study, dated January 7, states that they have identified 21 or more informal investment schemes (IIS) operating in Jamaica. I prefer 'alternative investment entities' because 'schemes' sounds secretive and devious.

Secretive

The CaPRI report portends national financial ruin if investment clubs are allowed to operate unfettered, and it essentially deduces that the schemes are unforthcoming (secretive) and therefore cunning (devious). On page 13 under Probabilistic Assessment of the IIS, CaPRI proposes that there must be something amiss because no straightforward finance-generating business can produce the humungous returns being offered by investment clubs. The report also speculates that even those clubs claiming to be involved solely in foreign exchange (FX) trading must be doing some 'pyramiding' or a hybrid consisting of 'pyramiding', investments and regular FX trading. Of course, FX traders deny this.

The true motives behind the recent, sudden assault by the Finance Services Commission (FSC), the Bank of Jamaica (BOJ) and some commercial banks against the IIS remain murky. Regulating the IIS is fair, but why were the IIS allowed to operate for four to six years if their business practices were so suspect? And, the suggestion of money laundering impugns the banks because (as far as I am aware) only manager's cheques are accepted for investment deposits.

Cease-and-desist orders

Our 'protectors' (the FSC, BOJ, et al) allowed the IIS to operate for so long and accumulate so many investors that they effectively legitimised their operations. If the plan was to protect the investors, then long before executing cease-and-desist orders (that stop everything including payouts), the FSC should have extensively publicised their intent to give the IIS specified periods of time to become regulated.

And, the banks should have amply and publicly forewarned their clients before closing IIS accounts. Paradoxically, therefore, thousands of dreamers and 'schemers' (investors in the IIS) were, for the most part, realising their dreams until their 'protectors' intervened and wreaked havoc. It makes you wonder who's being protected.

As a rule, dreamers become 'schemers' out of a desire for a better life and economic security. Timid traditionalists like me, clung tenaciously to the relative safety of the low-interest-generating institutions and watched as others benefited from the maxim - 'use it or lose it'. Financial establishments obviously have their own agenda; room must be made for regulate investment entities in order to give our people a chance to fulfil their dreams.

Next week: The other side of the dollar.