Recession was predictable: Save the country and jail the culprits

This recession did not creep up on us like the proverbial thief in the night. It was long in the making.

Photo: Former Clico chairman Lawrence Duprey. (Copyright Jamaica Observer)
Photo: Former Clico chairman Lawrence Duprey.
(Copyright Jamaica Observer)

In fact, from as far back as the global financial crisis of 2008-2009, when Clico collapsed and the price of oil plunged from a brief high of US$140 a barrel to US$30, informed, patriotic citizens were warning governments: to go easy on the wild spending, to set aside more savings in the Heritage and Stabilisation Fund, to wean the population off dependency on subsidies, and, most of all, to diversify the economy from its over-reliance on oil, gas and petrochemicals.

Those who dared to speak out, who tried to inject sobriety into a society that was immersed in the stupor of oil dollars, were deemed prophets of doom and gloom.

While predicting oil and gas prices is risky business, the advent and rapid development of shale oil and gas in the USA since 2000 was a portent of the changing face of global energy.

Between 2008 and 2012, the USA ceased being our biggest market for gas (LNG). Fortunately for us, other markets in South America, Europe and the Far East still paid well.

But in October 2014, the price of oil plunged from US$90 to US$45 a barrel and remained there. And based on Saudi Arabia’s stance at the OPEC meeting in Vienna last week, it may well go lower—US$30, US$20, who knows?—before it stabilises or rebounds.

Photo: Oil prices remain a real source of concern. (Courtesy
Photo: Oil prices remain a real source of concern.

In the face of such stark realities and grim prospects, the PP Government increased spending, scraped the bottom of the NGC barrel for every available dollar, sold off some of the family jewels (FCB and PPG-NGL shares), extracted everything it could from the Central Bank, and, on top of that, borrowed beyond the $70 billion debt ceiling it established in 2011.

Note well that this looting of the Treasury and mortgaging of the nation took place when oil prices averaged US$90.

The spending spree intensified: laptops for all secondary school students, including the boys and girls who specialise in bullying and fighting.

The GATE programme, which was intended to broaden the base of young academics and professionals who would help build the country, was opened wide to include many who were not receptive to tertiary education.

A billion-dollar children’s hospital was constructed even as the paediatric wards in existing institutions remained under-utilised and health facilities were left under-staffed, under-equipped and short of vital medications.

Photo: Former prime minister Kamla Persad-Bissessar opens the Couva Children's Hospital. (Courtesy 103FM)
Photo: Former prime minister Kamla Persad-Bissessar opens the Couva Children’s Hospital.
(Courtesy 103FM)

And rest assured that, based on precedence, many people who love freeness will expect the Prime Minister to don a Santa Claus suit and traipse around the country sharing trinkets to the natives!

All of this nonsense has brought us to this sorry pass where the Government has to raise the debt ceiling to $120 billion, nearly 70 percent of GDP, just to run the country.

Had the previous Government—and Mr Patrick Manning’s before that—exercised restraint in spending our money, we might have been able to better weather the perfect economic storm and the recession that Central Bank governor Jwala Rambarran grandiloquently declared last Friday.

People like me who lived through the first oil boom when crude prices surged from US$1.80 a barrel in 1970 to $36 in 1980, and heard Dr Eric Williams boast “money is no problem” know only too well that oil dollars could be a big problem.

By 1981, with prices receding to around $20, prime minister George Chambers called for the tightening of belts.

Photo: Central Bank governor Jwala Rambarran. (Courtesy
Photo: Central Bank governor Jwala Rambarran.

“Fete done! Back to wuk!” Chambers advised a people who had become the Sheiks of the Caribbean.

Nobody heeded ‘Georgie’. The fete continued. By 1987, the NAR Government had to cut allowances and freeze wages in the public sector, and Selby Wilson introduced VAT.

The middle and upper classes who had wallowed in some wealth ended up losing their new cars and abandoning houses they could no longer pay for.

It was bad. Thousands lost their jobs. Businesses collapsed, among them insurance and finance companies. People lost their shirts, almost literally.

We witnessed the fall of the oil-giant, and it was heart-rending.

Now, I don’t expect this recession to be as bad or to last as long at that one did—seven years. We have some savings and elbow room to manoeuvre in. And once we share the sacrifices we must make equitably (not equally), then we can pull through and hopefully emerge from it stronger, wiser and better positioned to face the future.

Photo: Prime Minister Dr Keith Rowley.
Photo: Prime Minister Dr Keith Rowley.

Prime minister Dr Keith Rowley has an opportunity to lead the nation in a time of crisis.

I am, however, very angry with those who led us down this trip to nowhere, this descent into hell. What hurts even more is that they will continue to live in luxury as the masses suffer the consequences.

How I wish they could be in jail instead.

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  1. Excellent perspective Raffique Shah !!!

  2. Mr. Shah says “….. and heard Dr Eric Williams boast “money is no problem” ….”
    As someone who boasts of being a keen observer of events in the 1970s Mr. Shah should not perpetuate the lie that Dr. Williams ever said “money is no problem”.
    At the opening of MTS in 1979 Dr Williams said that “money was NOT the problem” but that we as a people did not maintain and preserve our physical infrastructure. Hence the need for an MTS.

  3. Yesss if Bernie Maydolf could make a jail … why he can’t?

  4. Correct, this man start the whole ting jail him

  5. The laptop spending could have been better by simply ensuring at the end of it students were certified in MS Office, typing, and general office skills with a focus on use of Windows. Properly trained and certified students would be useful in the workforce as opposed to persons with “trial by error” knowledge.

  6. I can understand Keith Look Loy. I gave KPB a chance until it was clear that she was incapable. I can do no less for KCR. I do admit that I live in hope that maybe once we will have a government of which we can be proud.

  7. ..Agreed. I am cynical about the chances of anything happening. We shall see..

  8. This is a new PNM government and should not be judged by the actions of the past PNM governments until they show us otherwise.

    • what bull crap….

      Rowley can be judged by HIS past actions…
      and so can imbert ….

      If NOT …

      then we can Bring Back Panday ? why judge HIM by his past actions ? if we are also giving Keith and Colm a “pass” on previous misdeeds ?

  9. ..No-one will be prosecuted. Never mind jailed. There’s the proverbial cocoa still in the sun from past PNM governments. This is and will always be “Sweet T and T”..

  10. but the PP had all the info on Duprey and they did nothing with it.

  11. Kamla said her Gov’t is not to blame for the recession Rhoda Bharath. Apparently recession happened between September 7 and December 7!

  12. I am not convinced that anyone in T&T will ever be made to pay restitution, serve prison time, arrested and prosecuted for white-collar crime. They will be allowed to carry on, retire with lucrative packages, and treated with high regard whenever in public. Look at former permanent secretary Ashwin Creed and former minister of sports Anil Roberts; they are sent off into the sunset free as a bird with their pocket fat, fat, fat. T&T law enforcement is a joke.

  13. The columnist pointed out our financial problems did not start with the UNC. It started with Lawrence Duprey and Clico’s collapse during the PNM’s term.
    It sure as hell gathered further momentum under the UNC. But that doesn’t mean Clico “wasn’t so bad.”

    • If we look globally we will see it was the norm

    • If you mean when the tide withdrew, we saw all who were skinny dipping. Then sure.
      It wasn’t bad luck at all. The financial bubble bursting exposed the smart men.

    • That might be so but had CLICO and the response to CLICO not been so badly handled the economic downfall globally would not have affected us as much…and the spiral deepened in the last five years…our last Central Bank Governor was a voice crying in the wilderness about CLICO long before the bubble and none heeded him

    • Oh yeah. Duprey was a big benefactor of all political parties. Everyone had reason to act slowly on that.

    • The last CB Gov knew what was going on and withdrew his money along with Texiera who was the MoF

    • Savitri Maharaj I don’t know about that what I referring to is long before the crash I am talking about almost five years before the crash when CLICO and it’s subsidiaries were having problems servicing their local debt and the then Prime Minister kept giving them bligh and when they wouldn’t comply with request from the Central Bank and stuff like that…he was advising the then Government against certain behaviours and they totally ignored him

    • There were others who raised flags. They just didn’t have access to the public spotlight like Ramesh.
      I know one guy who I believe was a UTC director. He said he implored the Business Editor at a daily newspaper and tried to convince him as to how the whole CLICO business was a scheme.
      He said the editor, who I won’t name, didn’t want to take down another black man or something to that effect.
      Now, it might be that editor wasn’t fully convinced. But many people were too willing to look the other way

    • The only person who raised red flag was Ramesh Maharaj when he was AG. After that it was business as usual. The Gov of the CB and the MoF withdrew their money mere months before the crash.

  14. Nice post but wrong picture. Should be some more recent ones

  15. What stormy weather we have ahead! According to our Prime Minister, we are not in the times of milk and honey. Spend wisely this Christmas people, please only buy what you need. For Carnival time, go to one or two all inclusive as opposed to fête after fête after fête.

  16. This government has no choice but to deal with them. Anything else will accelerate the decline in our systems, ethics and morality that we have been seeing openly over the last few years.

  17. Somehow I believe this govt will make a difference

  18. I’m tired of all these tantalizing suggestions of jail for white collar crime and government corruption.
    At this point it is still nothing more than a tiny carrot at the end of a really long stick!

  19. One thing we know for sure no millions will be spent on fete tickets this year. I agree with Rafique. Jail all ah dem from Kamla, Jawala. SIS and all those other idiots who buried their heads in the sand and fed at the trough and felt Aunyy Kamla could do no wrong.

  20. The spending spree intensified: laptops for all secondary school students, including the boys and girls who specialise in bullying and fighting.

  21. Raffique took us back to 1981 and 87..I remember those days and now we have white elephants on top of white elephants. Good but not happy reminiscing and it seems as if our politicians will never learn because they spend 5 years campaigning not working for the betterment of society.

  22. Agreed, time to make them pay for their greed

  23. Worse than it being predictable. If we go by the details read out in the house…it was created.

  24. I think Duprey was on the right path with respect to risk taking and growing maybe not risk hedging however it shows no matter who’s the visionary leader middle management is a more important factor

    • Duprey downfall was hubris . He believed the success of the company was only his doing and forgot that his lieutenants played a critical part in making it happen . He got rid of the key persons and replaced them with yes men and women in 2004 when he hired Claudius Dacon. His downfall was then assured . Every year from then the group deteriorated .

  25. “Prime Minister Dr Keith Rowley has an opportunity to lead the nation in a time of crisis.”
    Raf, if Dr Rowley really had what it takes to lead us in a time of crisis, Mrs Rowley would not have gone to Malta. Or, more accurately, Mrs Rowley would not have gone to Malta at taxpayers’ expense.
    No leader can hope to be successful if he does not understand the import of symbolism and subliminal messages. And “Band allyuh belly but I not banding mine” will not cut it given the heightened public awareness and the shrunken public purse that are certain to be features of the 2015-2020 period.

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