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YOUR MONEY INSIG H T S

The Big Question: Can Ben Bernanke survive a second term?

The morning of August 24, birds are chirping, gentle zephyrs complement a gentle late- summer sun and major stock indexes are up. We can thank Mother Nature for two of the aforementioned conditions but President Obama’s nomination of Federal Reserve Chairman, Ben Bernanke, for a second term can take most of the credit for that third condition. The positivity of the stock market could be taken to mean that Bernanke’s Ben Bernanke - Chairman of the reappointment is welcome Federal Reserve news on Wall Street, which it is. A total of 42 out of 43 economists gave Bernanke a positive nod in a survey published by the Wall Street Journal in early August. This however isn’t the common view as there are many in the United States that are of the view that Bernanke did more harm than good in his tenure.

Bernanke threatened to fire him if he backed out of the cancerous deal. This claim was refuted by Bernanke and former Merrill Lynch CEO, John Thain. Despite criticism about his unprecedented and somewhat radical lending policies, it has to be said that Bernanke has successfully navigated the US economy from the brink of ruin. Obama’s affirmation of his confidence in the chairman’s ability to perform may lay as much in politics as it does in economics. It also has to do with the need to keep some semblance of stability. In the end, his moves were unprecedented, somewhat unpredictable but they seemed to have worked. The world hopes.

Bernanke, an economist by trade, took over from Alan Greenspan as Fed Reserve Chairman in 2006 following a long career in academia. The Fed Chairman is listed among the top 50 most published economists and has written extensively on the economic and political factors that precipitated the Great Depression in 1930’s USA. His penchant for “throwing” money at economic crises in order to increase liquidity has been the main source of criticism directed at Bernanke and earned him the nickname “Helicopter Ben” in certain factions. The nickname alludes to a Milton Friedman concept of dropping money into the economy to fight deflation. Bernanke’s bailout and lending policies have been described by his detractors as “socialist” and counterproductive. The argument is that intervention by the Federal Reserve with an influx of “cheap” money effectively keeps private money out of the economy and further exacerbates the financial crisis. Bernanke was also embroiled in controversy involving the merger between banking giants, Bank of America (BOA) and Merrill Lynch. BOA head, Ken Lewis, testified at a hearing in Washington that

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BUSINESS LOUN G E

Risk and Reward:

Wayne Dass, CEO of CariCris speaks about the agency’s role in the Caribbean

ayne Dass’s enthusiasm about the work that he does is palpable, even as his voice is converted into millions of tiny signals from his office in Trinidad and reassembled at the Your Money office in Jamaica. Speaking with an ardor usually reserved for doting fathers, Mr. Dass spoke about the job that his agency, CariCRIS, has been doing for the past five years and its role in the recently launched Enterprise-wide Risk Management and Financial Programme (ERMFP).

“It is important to realize that even though a firm is rewarded for having a good score by being poised to obtain financing at better rates than a firm that performed poorly” said Mr. Dass, the firm that did poorly will find that with the ratings, come a report with a set of very specific recommendations that if followed will see an improvement in their score”

Wayne Dass - CEO of CariCris

CariCRIS has been operating since 2004 in the capacity of the Caribbean region’s only credit rating agency. The agency publishes ratings which serve as independent, objective assessments of an institution’s creditworthiness. According to the website, CariCRIS ratings will enhance credibility and expand access to funding sources. CariCRIS provides ratings for banks, financial institutions, sovereigns and recently Micro, Small and Medium sized businesses (MSMEs). “We were contracted by the Institute of Law and Economics to carry out risk ratings on 20 participating firms in Jamaica, explained Mr. Dass, “we developed a framework, carried out the exercise and our ratings were used as part of the framework for the development of the ERMFP”. The CEO emphasized that especially now in this time of a downturn, MSMEs are the engine of growth in an economy and as such the ERMFP was a welcome step in helping these businesses access funding. According to Mr. Dass, the MSME’s that took part in the exercise were given ratings based on four key factors; the industry in which they operated, the risk of the business, the level, skill and training of management and financial risk. The firms are then given an overall score ranging from MSME 1-6, “MSME 1” being the best.

Mr. Dass said that CariCRIS had no immediate plans to enter into personal risk ratings but he was very pleased with the progress made with regards to making the market more sophisticated in terms of pricing risk. “With the help of CariCRIS a large firm can no longer price its bonds according to its reputation but will have to do so, on the merit of its risk potential” stated the CEO, “and that I think is something that we can all appreciate.”

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An Entrepreneur’s L ife

The Trust Factor By Cherryl Hanson Simpson

One of the biggest obstacles to overcome in establishing your business is the fact that many of your potential customers don’t know who you are, and they aren’t sure about the quality of your offering. While you may be convinced that your product or service can provide the solutions they need, why should they have faith in what you have to sell?

Don’t over-promise

What can budding entrepreneurs do to break down the barriers to trust?

In fact, if you present a free offer that’s too good to be true, and subsequently disappoint your paying customers, you might end up having the trust factor work against you. Studies have shown that an upset customer tells more people about bad service than a satisfied one does about a good experience.

Give it away for free

Providing a potential customer with a risk-free opportunity to test out your business is a simple strategy that can help to create sales. Go to any food court in a major mall in the United States and you’ll see restaurants giving away samples of their dishes in the hope of wooing customers. What better way to entice you to buy than by showing you how great their food tastes? When I first started marketing my financial wellness courses, at first I was a little discouraged by the lessthan-positive responses. Then I put myself in my potential clients’ shoes and realised that I wouldn’t jump to buy something new either, without first knowing if it was worthwhile. I decided to offer my services for free to key clients, fully confident that once they saw what I could do, they would be happy to purchase. Allowing them to check out my service delivery gave them the confidence that their money would be well spent by hiring my company in the future.

On the other hand, don’t misrepresent yourself in order to hook new customers. Giving away your product or service in a manner that’s not sustainable for your business will only give your customers false expectations for the future.

So if you’re struggling to convince your target market that they need to buy what you’re offering, try to create their trust in your product or service by first giving it away! © 2009 Cherryl Hanson Simpson ……………………………………………………… Cherryl is a financial consultant and coach, and founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallysmartonline.com. Email Cherryl at advice@financiallysmartonline.com. Please add this address to your email address book in order to ensure you receive a response.

Do it like you’re being paid

Although you may not be making money from your free offer, don’t hold back on the quality of your delivery. Ensure that you put in the full 100 per cent effort, just as if you were expecting a pay cheque at the end of the day. I have seen business people miss out on potential high returns by scrimping on what they gave away, which only left their potential customers with a bad impression of their product or service. Remember this could be your only chance to convince them why they should buy from you next time!

Watch your savings go up, up, up! Open with $20,000 or more TODAY!

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