Financial advice from 'Layman Brother'
By Raffique Shah
Oct 03, 2010
I Have never seen a million dollars in my life. The only time I gaped at big money—was it US$20 million?—was when the then high-flying "Sir" Allen Stanford stormed the hallowed Lord's cricket ground in London, bearing 20-20 prize money in what appeared to be a huge casket. Most appropriate, in hindsight, since shortly thereafter "Sir Allen" ended up in leg-irons in some US jail that may yet prove to be his final resting place.
I got around thinking big money when the CL Financial debacle re-surfaced recently, almost with a vengeance. Since I've never had the kind of money CL depositors are kicking up a storm over, I can only look on with bemused interest. As an aside, I note that HCU depositors, who benefitted from similar terms spelt out by Finance Minister Winston Dookeran, have maintained a stony silence during the CL storm. Presumably, they are happy with what the Government offered them as a settlement.
Now, being a layman, albeit one who lives above the poverty line, I cannot claim to fully comprehend all the issues at stake here. It seems thousands of people who all have more money than I do, invested their earnings, savings, retirement benefits, and, in instances, maybe lotto jackpots or laundered money, in CL's insurance company and investment bank.
I always admire thrift: in my case, I set aside a few dollars a month and hope that I never need heart by-pass surgery or some similar "procedure", as doctors would say. I have made it clear to my family that should I ever descend into that super-expensive abyss, let me proceed to Hell, not suffer in the purgatory of Hilton-priced nursing homes where they charge patients for water by the glass. Satan must have more heart: at least he would give his "sufferers" free water.
Whatever the CL depositors did, one cannot fault them on thrift. Maybe there was some greed in the mix, since CL agents offered interest rates that seemed too good to be true. I should declare my mala fides at this stage. In 2006, upon closure of the sugar industry, I negotiated compensation amounting to around $83 million for cane farmers who had stuck it out to the end. Before I signed the document (along with four persons from groups other than TICFA), I protested to then-Minister Lenny Saith that the sum was far less than the farmers deserved.
But with a government gun pointed at my head, I signed. Shortly thereafter, a CIB agent visited my home to discuss how best the farmers could invest their payouts, which ranged from $10,000 to close to $1 million. He touted high interest rates, and even suggested I could "get something" if I steered the farmers in that direction.
I was dumbstruck: didn't this man know that I have always stood firmly by principles, that I'd rather eat bhajee and rice than seek to make money off poor farmers? Anyway, I bluntly refused to go that route, although I did promise I would summon a meeting of interested farmers that he could attend and make his sales pitch.
Praise be to Jah, that meeting never came off. I smelled a rat. It seems others, who are financially smarter than I am, did not. Lured by promises of high interest rates, of having their cake while they feasted, they ploughed their money into CIB and other attractive "plans" the wizards of CL came up with.
I have been guided by common sense all my life. Banks—stingy though they are, and exploitative in the spread between savings and loans rates—were offering minuscule interest rates. How could CL, CIB and others offer ten times what the banks did? Something was rotting in the CL empire.
This layman knew that one's savings or deposits in banks are guaranteed to a limit of $75,000. It seemed that if I had multiples of that sum, I would split it up among as many banks as I could. That way I won't eat fruitcake every month. But should the shat hit the fan, I would at least get back my full savings.
We accept that today's world is a global village, and instant communications alerts us to what's happening elsewhere. From back in 2008, banks, finance houses and mortgage companies began falling like flies, from Scotland to New Zealand. Names that were global icons—Lehman Brothers, Merrill Lynch, Bear Sterns—were biting the dust, and taking down with them depositors, home owners, and some very big wigs in banking and finance.
Between 2008 and August 2010, in the USA alone, 277 banks failed. That meant depositors got only what was guaranteed by the FDIC. Governments across the world ploughed trillions of taxpayers' dollars to "stabilise" their financial systems as huge finance houses collapsed.
That was precisely what the previous government did in January 2009 when it announced a $7 billion plan to bail out CL. Although the Central Bank Governor said, "CL has not gone bankrupt", and Finance Minister Karen Nunez-Tesheira asked depositors and investors to "hold your hands", smart people would have known it was time to flee the sinking CL Titanic.
They did not. They believed the politicians. Now they demand that taxpayers pay for their greed or stupidity...with interest! Madam Prime Minister, bail out NIB pensioners and our spouses first. More on this later.
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