While Jamaicans in the Diaspora and at home who put their monies in investment clubs in the island are still reeling from the sanctions against those institutions, Jamaica’s finance minister is insisting that the Bruce Golding-led government will not bail them out.

Minister Audley Shaw repeated the government’s stance on Tuesday, as the clubs like Olint and Cash Plus fought with the Financial Services Commission in the Jamaican courts.

Shaw said while the government is working tirelessly to ensure that these investment clubs are properly regulated, his administration has not changed its position on the institutions.

The financial clubs which the FSC has called ‘investment schemes’, have been under fire from both government and the Financial Services Commission, for operating without the proper licenses in their business.

However, in a bid to resolve the issue, Shaw’s office ministry has sent a letter to the Attorney General’s office for counsel on any other legislative measures that can be taken to regulate the investment bodies.

It was announced earlier this week that Bank of America, one of the largest banks in the United States, plans to purchase Countrywide Financial, a giant in mortgage financing. In what economic analysts have called his biggest gamble yet, Bank of America CEO, Ken Lewis agreed to buy Countrywide, and relieve it from the possibility of bankruptcy, for approximately $4 billion in stocks.

Countrywide has made some 9 million loans to homeowners in the United States, including hundreds of people in Caribbean communities across the country. Loans made by the mortgage lender amounted to some $1.5 trillion dollars, but a percentage of its loan portfolio came under severe pressure due to problems encountered by mortgage lenders in collection on loans. Many of these loans were made below the prime lending rates, creating what has been called “the sub-prime rate mortgage crisis.”

Bank of America, with this new acquisition, takes on billions in problem mortgages, with foreclosures still on the rise and the odds of a national recession looming. It was not clear what plans Bank of America will develop to handle the mortgages it inherited. However, people holding mortgages with Countrywide must continue paying their mortgages as scheduled or face foreclosure.

Economists, and the general American public, are concerned that the United States economy is quickly slipping into a recession. The word is so casually tossed around, that people not versed in economics are asking, what exactly is a recession?

The official definition of recession is when a country’s gross domestic product (GDP) – the value of goods and services produced - is negative (decline) for two or more consecutive quarters. However, signs of a recession can appear even if there are no consecutive negative quarterly GDP reports. This occurs when there are reports of several quarters of slowing but positive growth; businesses stop expanding, employment falls, unemployment rises, credit slows down and housing prices decline. This is exactly what is happening across America today, giving rise to the fear that the country is falling into a recession. Recessions are feared, because like tropical storms which can grow into damaging hurricanes, they can escalate into much worse economic depressions.

An economic depression is basically a recession that lasts too long, where too many jobs are lost, too many business fail, prices rise too high – because of the scarcity of some goods, start up of new businesses become too sluggish, and real estate sales are too slow.

The anxiety of the offshore investors in the Diaspora who invested in Cash Plus Limited in Jamaica will continue for a while longer, as the sanction against the financial institution will continue at least until the end of this month.

Cash Plus, one of the many alternative investment schemes which are becoming a trend in Jamaica, was given a cease and desist order from the Financial Services Commission (FSC) will remain in effect until a hearing scheduled for January 23.

The alternative investment scheme which has sprung up on the island in recent years has remained at the center of controversy as the local banking system has continuously been probing their actions as it pertains to legality. To that end, some of the original institutions, such as David Smith’s Olint, in anticipation of a government clampdown, have sought to put their corporate offices in countries like Turks and Caicos in to avoid legal troubles. Cash Plus, headed by chief executive Carlos Hill, who is yet to secure an overseas base, came under fire from the financial regulatory body after several probes into the company’s practices. The FSC found that the institution was unlicensed and thus should not have been trading in securities as stipulated by the Securities Act. It also said Cash Plus breach a number of sections in the Securities Act and has to be regulated in order to continue its operations.

The FSC had ordered the company late last year, to discontinue its securities trading activities until it acquires the required license. The upcoming hearing will decide on whether Cash Plus must adhere to FSC’s order to continue its financial activities – until then Cash Plus is suspended. When the news first broke that the entity was being probed, hundreds of people were sent scrambling, many in long lines attempting to retrieve their funds before the tenuous investment ‘scheme’ went bust.

UNITED NATIONS - The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) has called for prudent approach to macroeconomic management in 2008 the face of what it describes as "global uncertainty".

"Probable international economic slowdown and recent macroeconomic warning signs highlight the importance of prudent economic management to avoid a return to the difficulties of the past," ECLAC said in its "Preliminary Overview of the Economies of Latin America and the Caribbean 2007".

"Latin America and the Caribbean have experienced a favourable economic situation since 2003, characterized by the growth of most of their countries.

"While this trend continued during 2007, the region is facing a more complex external context, due to the high volatility of international financial markets due to the US housing market crisis."

ECLAC said this is accompanied by the "relative deterioration of certain macroeconomic trends," including increased inflation and fiscal results that are "less solid than the previous year".

It said many of the challenges facing the region reflect the need to manage macroeconomic policies to allow it to take advantage of its current growth, so it can allocate extra resources to activities that contribute to sustainable development.

ECLAC said, despite several positive elements of the current phase of economic growth, changes were underway that, while they do not affect 2008 growth, challenge economic policy.