Quarterly Jamaica Diaspora & Returnee Update — October to December 2007

Published: 2 January 2008 | Jamaica Homes News

Key Takeaways

• JLP Wins Jamaica Election by a Razor-Thin Single Seat
• Golding Becomes PM After 18 Years of PNP Government
• US Subprime Crisis Spreading Anxiety to Global Markets
• UK’s Northern Rock Sees First Bank Run in 150 Years
• Benazir Bhutto Assassinated in Pakistan on 27 December
• Christmas Remittances Resilient Despite Growing Economic Worry

Introduction: Jamaica Changes Course

Q4 2007 opened with Jamaica’s diaspora still processing the extraordinary outcome of the 3 September general election — a one-seat JLP victory that ended eighteen consecutive years of PNP government — and closed with the first serious signs of global financial stress and a political assassination that shocked the world. This update draws on Jamaica Gleaner, Jamaica Observer, Bank of Jamaica, PIOJ, MFAFT, and Caribbean diaspora media through 31 December 2007.

Jamaica’s Election: The Diaspora Reads the One-Seat Mandate

The Jamaica general election of 3 September 2007 had produced one of the most dramatic results in the nation’s electoral history: the Jamaica Labour Party under Bruce Golding defeating the People’s National Party under Portia Simpson Miller by a margin of 32 seats to 28 — a single seat net advantage in the 60-seat parliament, achieved with 49.8 per cent of the popular vote against the PNP’s 49.6 per cent. The election’s closeness was such that the result was not clear until after a period of ballot counting that extended past midnight, and Simpson Miller took time before conceding.

For Jamaica’s diaspora, the election result carried political significance beyond the change of government. The eighteen-year PNP tenure had coincided with the period in which the Biennial Diaspora Conference series had been established and the formal diaspora engagement framework had been built. Golding’s JLP had campaigned on governance reform, economic reform, and the eradication of corruption — all themes that resonated with diaspora community members who had watched Jamaica’s governance challenges from abroad with frustration. The question was whether the new government’s reform agenda would translate into the improved institutional environment for return migration and diaspora investment that community organisations had been calling for.

Golding’s first months in office through Q4 saw the new government establishing its economic team and signalling its priorities. The 3rd Biennial Jamaica Diaspora Conference — the next in the biennial cycle — would be held in June 2008 under the new government, providing an early opportunity to reset the diaspora engagement agenda. Community organisations in New York, London, and Toronto were preparing their submissions and planning their participation.

The Northern Rock Crisis and British-Jamaican Savers

The images broadcast globally on 14–15 September 2007 — queues of depositors stretching around Northern Rock branches across Britain, withdrawing their savings in the first bank run in the United Kingdom since the Overend Gurney collapse of 1866 — had produced a direct impact on British-Jamaican savers who were among the bank’s depositor base. Northern Rock had been a significant provider of mortgages and savings products across the UK, including in the urban communities where British-Caribbean populations were concentrated. The bank run, resolved only by the government’s emergency guarantee of all deposits, had been followed by months of uncertainty about the bank’s fate that were resolved in Q4 when the Treasury confirmed that no buyer could be found and nationalisation was the likely outcome.

The Northern Rock episode was the UK’s earliest visible signal of the global credit crisis that had begun with the US subprime mortgage market’s collapse. For British-Jamaican households whose wealth was concentrated in property — the asset class that had driven Northern Rock’s growth and whose price inflation had fuelled the credit conditions that were now unwinding — the bank crisis raised uncomfortable questions about the security of the financial infrastructure upon which community wealth had been built through the boom years.

The US Subprime Crisis: Signals Become Alarms

The US subprime mortgage market’s collapse — whose origins lay in the aggressive lending of the 2004–2006 boom years, when mortgage originators had extended credit to borrowers who would never have qualified under traditional lending standards — was, through Q4 2007, moving from being a visible sectoral crisis to a systemic one. The major US financial institutions’ Q3 and Q4 earnings reports were revealing write-downs of mortgage-backed securities that suggested losses far larger than had been publicly acknowledged. Citigroup, Merrill Lynch, Morgan Stanley, and other major institutions announced write-downs totalling tens of billions of dollars in the autumn of 2007.

For Caribbean-American diaspora households in the Florida, New York, and New Jersey housing markets that had been most overheated, the subprime crisis’s downstream effects were already visible: mortgage lending conditions were tightening, adjustable-rate mortgages were resetting to higher rates, and house prices in the overextended markets were beginning to decline. The communities where Caribbean-American first-time buyers had entered the housing market in the 2004–2006 period were among those most exposed to the adjustable-rate reset risk.

Benazir Bhutto: A Diaspora Community Mourning

The assassination of former Pakistani Prime Minister Benazir Bhutto on 27 December 2007, in Rawalpindi, following a campaign rally, shocked the world and produced immediate reactions in diaspora communities of all backgrounds. For Caribbean diaspora communities with strong traditions of respect for women in political leadership — communities that had recently experienced Portia Simpson Miller’s prime ministership in Jamaica and that were following the early stages of Hillary Clinton’s US presidential campaign — Bhutto’s killing resonated as both a human tragedy and a political one. Community organisations that had been following the Pakistani political crisis — President Musharraf’s emergency rule, Bhutto’s return from exile, the bomb attacks on her return convoy — mourned her death as a loss to democratic politics globally.

Christmas remittances to Jamaica closed Q4 at a level that maintained the approximately US$2.0 billion annual pace for 2007, with the traditional December surge intact. The coming year’s political and economic shape — with the US presidential election approaching and the financial system’s stresses increasingly visible — would test the diaspora’s remittance resilience as it had not been tested since the early years of this series. We report next from 2 April 2008.

This Quarterly Jamaica Diaspora and Returnee Update is researched and published by Jamaica Homes News. Sources include Jamaica Gleaner, Jamaica Observer, Bank of Jamaica, PIOJ, MFAFT, and PICA. All figures and developments are accurate as of the publication date, 2 January 2008.

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