Published: 2 January 2009 | Jamaica Homes News
Key Takeaways
- Barack Obama Elected 44th President of the United States
- Caribbean Diaspora Celebrates a Genuinely Historic Victory
- Lehman Brothers Collapse Triggers Deepest Global Crisis Since 1929
- US and UK Governments Bail Out Their Major Banks
- Jamaica Tourism Bookings Fall as US Recession Looms
- Christmas Remittances Squeezed by Recession and Job Losses
Introduction: The Election That Changed Everything
No quarterly update in this series has opened under the weight of two events of such magnitude simultaneously: an election result of world-historical significance for communities of African descent, and a financial crisis that threatened the deepest global economic contraction since the Great Depression. Q4 2008 contained both. This update draws on Jamaica Gleaner, Jamaica Observer, Bank of Jamaica, PIOJ, MFAFT, and Caribbean diaspora media through 31 December 2008.
Obama Elected: The Night Caribbean Communities Wept
When the television networks called the 2008 US presidential election for Barack Obama at 11:00 p.m. Eastern time on 4 November 2008, the reaction in Caribbean diaspora communities across North America, in the UK, and in Jamaica itself was unlike anything in the modern experience of these communities. In the Flatbush and Crown Heights neighbourhoods of Brooklyn — home to the largest Caribbean-heritage population in North America — people poured into the streets. In Brixton, Hackney, and Handsworth in the UK, where British-Caribbean communities had gathered at community centres and churches to watch the results, the announcement produced scenes of collective joy that community leaders described as unprecedented. In Kingston, crowds gathered at sports bars and community centres, and the Prime Minister made a public statement recognising the night’s historic significance.
Obama’s election was not primarily experienced by Caribbean diaspora communities as an American political event. It was experienced as a global racial event, a reconfiguration of what was possible in the political structures of the Western world. For the first generation of Caribbean migrants who had arrived in Britain and North America facing explicit racial exclusion from full civic participation, Obama’s victory was validation of a struggle that had been underway for decades before he was born. For their grandchildren, who had grown up in adopted societies where belonging was assumed but never fully assured, it was a new kind of invitation to full political citizenship.
The practical dimensions of what an Obama presidency might mean for Caribbean diaspora communities were already being discussed before the election night celebrations had ended. Immigration reform, which Obama had committed to pursue, was the most immediately significant policy priority. Healthcare reform, which would address the insurance gaps that left significant numbers of Caribbean-American workers without coverage, was a close second. The Caribbean-American community organisations that had been part of the voter mobilisation coalition — running registration drives, canvassing in Caribbean-heritage neighbourhoods, and turning out the community vote in the key swing states of Florida and North Carolina — arrived at the post-election period with a clear policy agenda and the sense that they had earned a hearing.
The Financial Crisis: From Lehman’s Fall to the Global Meltdown
Lehman Brothers’ bankruptcy filing on 15 September 2008 — the largest corporate bankruptcy in American history, involving $613 billion in debt — had occurred just before this reporting quarter but set the conditions for everything that followed within it. The weeks after Lehman’s fall produced the most intense period of financial market stress since the 1930s: money market funds broke the dollar, interbank lending froze, credit markets seized, and stock markets around the world fell at rates not seen since the Depression. The US Treasury and Federal Reserve’s response — the $700 billion Troubled Asset Relief Program, direct capital injections into major banks, Federal Reserve emergency lending facilities of unprecedented scale — stabilised the immediate crisis but could not prevent the contraction of the real economy that the financial disruption had set in motion.
In the United Kingdom, the Brown government’s bailout of Royal Bank of Scotland, HBOS, and Lloyds — a package that would ultimately involve the government taking majority stakes in institutions that had seemed among the pillars of British financial stability — was announced in October 2008. For British-Jamaican communities that included many NHS, public sector, and private sector employees whose pension funds and savings were invested in these institutions, the bank bailouts were simultaneously reassuring and deeply alarming. Reassuring, because the government’s intervention prevented the immediate collapse of institutions that held community members’ deposits. Alarming, because the scale of the public financial commitment created for the near-certain spending cuts that would follow.
Jamaica’s Economy: The Crisis Reaches the Island
The global financial crisis reached Jamaica’s economy through multiple simultaneous channels. Tourism, which had been recovering strongly through 2007 and into 2008, began to see forward bookings decline sharply in the autumn as US and UK consumers cut discretionary spending. Bauxite revenues, which had been elevated by the commodity price boom of 2006–08, began to fall as aluminium prices declined and global industrial production slowed. Jamaica’s financial sector, while not exposed to the toxic assets that had brought down US and European banks, faced liquidity pressures as global credit markets tightened.
The Golding government, which had been managing Jamaica’s fiscal situation in an environment of high debt and limited fiscal space, entered the crisis with less capacity to absorb the shock than many peer economies. The prospect of an IMF intervention — which would have been politically toxic for any Jamaican government in normal times — was already being discussed in financial circles by the end of Q4 2008. For diaspora Jamaicans who had been building Jamaican financial assets in preparation for eventual return, the macroeconomic deterioration was a direct concern.
Christmas Remittances: The Last Line of Support
Bank of Jamaica data would show 2008 closing with annual remittances of approximately US$2.0 billion — broadly maintained from 2007’s level but showing the first signs of the compression that would become more pronounced in 2009. The Christmas quarter’s transfer surge maintained its seasonal pattern, with diaspora households stretching their budgets to maintain Christmas giving to Jamaican family members even as their own financial situations deteriorated. The determination to maintain Christmas transfers was, community leaders noted, one of the most consistent expressions of diaspora identity: the remittance commitment persisted even when personal finances were most severely stressed.
2008 closes as a year of extremes: Bolt’s Beijing brilliance in Q3, the financial crisis’s devastating blow in Q4, and the Obama election that gave the year’s end an extraordinary charge of historic possibility. We report next from 2 April 2009, when the crisis’s depth and the new administration’s early actions will both be clearer.
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 2009.
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