Colin Steer, Associate Editor - Opinion

While many parents may admire the pleasingly plump baby or toddler, paediatricians will often warn of the dangers of the onset of childhood obesity and the potential for this to continue through adolescence and into adulthood.

And, of course, medical doctors often warn adults that an excess of weight, which some like to interpret as a sign of healthy contentment, may, in fact, be pointing to an underlying unhealthy state of affairs.

In several of his many stump speeches on the hustings to regain prime ministership in 1989, Michael Manley compared the state of the Jamaican economy at the time to a man with a 'bang belly'. An expanding girth might have suggested prosperity, he argued, but it was largely unhealthy fat. If we had a 'bang-belly' economy then, we have since become grossly overweight.

As Dennis Chung argued in a recent article in the Observer newspaper, "the problem with paper profits is that there is no productive asset to back it up, so what it creates is a false sense of wealth for the country, with no productive base.

"When paper profits were being created by high rates of interest on government paper in the 1990s, in order to prevent the inflationary pressures from pushing prices up, we borrowed money to create an illusion that there was real stability when all the time we were only setting up ourselves for the pain that comes with debt repayment."

Investment schemes

We can add to that scenario, the phenomenon of the alternative investment schemes. In the last few years, we have seen spurts of growth in certain spheres of economic activity, but we have been slow in getting a better understanding of the people and networks involved and the likely impact on the wider society.

With our streets teeming with top-of-the-line sedans, SUVs, Escalades, F150s et cetera. we were happy to tell ourselves that 'dollaz a run'. Why bother to question where from and driven by what and whom?

Amid a boom in the construction sector a few years ago - in terms of new houses and renovations - I would ask colleagues and people in business where the money was coming from to pay for this. The standard response was: 'mostly remittances'. In succeeding years, that view was modified to suggest that returns from Cash Plus, Olint and similar schemes were significant contributors. Others would suggest that proceeds from the narcotics trade were still playing a significant role in the economy.

If those who are planning social and economic policies are slow to catch on to new developments in the economy, they may either be pleased with the illusion of wealth or propose solutions to perceived problems that fall short of the mark.

Did any of our economic planners question in any serious way the possible negative impact of many people depositing thousands and multiple millions of dollars in the so-called alternative investments schemes?

Where did people get these funds to invest?

While it was reported that, in some cases, people pooled family funds to invest, how widespread was this?

With some of the commercial banks making enticing offers of 'unsecured' loans, some of their customers and new clients reportedly borrowed money to invest in these schemes. Others tapped their credit union savings and in the initial phases were using 'returns' on their investment to pay off their loans and still have cash to do their business.

What now are the implications for loan repayment to the established, regulated financial institutions?

As it is with people's physical health, social and economic maladies are not immediately obvious. The illusion of wealth creates a sense of confidence and people often make plans for the future that are not built on solid foundations. Perhaps our state agencies need to be more aggressive and proactive, if not in saving people from themselves, then certainly the rest of the society from the domino effects of the actions of foolish people.

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