Sunday, October 28, 2012

No to More Prisons, and Yes to More Education & Job Creation

Recently, the Jamaica Observer published an article: "Build new prisons to fight crime, says Wayne Chen." Immediately, I was compelled to respond to said article.
I don't think the US model is the best model for fighting/reducing crimes. Is Mr. Chen going to promote private (for profit) penitentiaries, too, for Jamaica? Yes, he's pushing for privatization of prisons. I recommend that Mr. Chen do further research - researching other countries' models (including those with a homogeneous culture/society); unless, of course, his findings are solely motivated by profits/personal gain versus the public good (Jamaica's).
Mr. Chen's ideas could easily lead to abuses such as the "jailing kids for cash" scandal that took place in Pennsylvania years ago.
We need to tackle the problem at its root, in part, the politics (or politricks). If not, Jamaica will end up becoming an island prison due to profitable prison expansions buoyed by foreign investments, of course. We have to find a way to pay (starting with the usurious interest rate) for the loans borrowed from IMF and the World Bank, don't we?
And, of course, Mr. Chen could research on how to create more jobs for the educated jobless youth of Jamaica. Jamaica needs more Penn States (plus job creation) than state pens. The US model is a fiscal failure since it takes more money to finance a prisoner than it would take to educate said prisoner at Harvard (see Prison Policy's "Education and Incarceration" thesis).
Jamaica - my Jamaica - the land of my birth deserves better than Mr. Chen's half-baked ideas; ideas floating around in New York and California by the growing private corrections business interest group (see Newsweek's "Classrooms or Prison Cells" & "How the Recession Hurts Private Prisons"). If I'm not mistaken, last February, Mr. Chen was invited to one of these conferences held in Los Angeles, California.
Moreover, according to the Roman Emperor Marcus Aurelius, "poverty is the mother of crime." Therefore, let's tackle the mother before tackling the child. If not, the mother will only produce another child and another child and another child. In other words, you tackle the mother with education and job creation, instead of tackling the child with incarceration (only).
Remember, a for profit prison system needs a steady stream of prisoners (year after year) to be successful and profitable for its shareholders. For the public good (Jamaica's good), we don't need a successful for profit corrections system with a very bright future - not in my Jamaica - the land of my birth.

Sunday, October 7, 2012

A Financial Education in Investment Basics

Never has a financial education in investment basics been more important. Since the financial crisis of 2008 it has been difficult to find attractive investment options. The question is: where to invest in 2010 and beyond. In answering that question, this article will start you on your road to a financial education by focusing on the investment basics that few average investors understand.
You have the same basic investment options that a big money manager with a financial education from one of the best universities in the country has. The difference is that he or she has to decide where to invest billions of dollars. The good news is that there are only four basic investment options out there. The bad news is that deciding where to invest in 2010 and beyond is not an easy task. Let's look at the four options, often referred to as asset classes: safe investments, bonds, stocks, and alternative investments.
SAFE INVESTMENTS are savings products and cash equivalents like: bank CDs, savings accounts, money market securities like U.S. T-bills, and money market mutual funds. These safe investments pay interest, but with interest rates near all-time lows, they don't pay much. Most safe investments are paying less than 1% a year in interest.
BONDS are long-term interest-paying investments. Today you can make over 5% in interest income a year in bonds and bond funds. This might make them sound attractive, but there's a catch here: interest rates are presently very low and are likely to go up in the future. When interest rates go up the price or value of bonds will fall. That's the investment basics of bond investing. It's called interest rate risk, and it is real.
STOCKS were the investment option of choice for the big money managers in 2009 and early 2010. Looking at the two above investment options you can see why. The big money went into stocks and this sent prices higher. Then, uncertainty returned to the international financial scene, and stock markets fell as a debt crisis in Europe took center stage. If stocks continue to fall, deciding where to invest in 2010 and beyond will get even tougher, with only one basic investment option left to consider.
ALTERNATIVE INVESTMENTS are the final frontier, and they are increasing getting attention from big money managers who manage pension funds and other large pools of money. Included in this asset class: gold, silver, other commodities, real estate, and natural resources like oil and natural gas. Virtually any other investment, or security that is traded on an organized exchange (other than the first three basic investment options discussed) could be classified as an alternative investment.
Given the state of today's financial markets, you can see why deciding where to invest in 2010 and beyond is a challenge. One more thing should be crystal clear. Without a financial education the cards are stacked against you. The best way for most people to invest in all of the above asset classes is through mutual funds. Invest in all four of the basic investment options with funds; and in times of high uncertainty like today... diversify, diversify, diversify.
A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.