Friday, July 18, 2008

There's a sucker born every minute

Over the past few months, Jordan has seen the proliferation of agents working for “bourses”; taking money from people on the promise of 10, 15, 20% or more monthly interest. Ads are even placed in small advertising newspapers offering incredible rewards for “investors” interested in cashing in.

And since greed usually wins over good sense, these brokers are taking in millions from people, collecting more as they make their promised payments on time. Some people believe that tens or hundreds of millions have been collected this way as people empty their bank accounts, sell their assets and even take out loans from banks so that they can invest in the “boursa”.

Another adage says that the law does not protect the gullible. However, many people are wondering why the government is not doing anything about this situation. One story says that the government prevented one of these agents from traveling on his honeymoon, fearing that he wanted to flee. However, little is being done to shut these operations down or, if they are technically legal, to raise awareness on how these people work and what are the risks involved in these investments. Obviously, no legitimate operation can guarantee such high returns. These are either high risk or they are simply scams. In either case, many people will soon be in for rude awakenings.

And some of these schemes are starting to fall apart. One broker is reported to have fled the country, leaving behind over a million dinars in losses. Another is said to be in jail after losing 35 million dinars in oil trading. I am sure more are on the way.

But the question remains: Why is the government so passive about this? Is it negligence, impotence or complicity?

On the bright side, at least we don't have a CASINO!

14 Comments:

At 11:31 PM, Blogger Mohanned said...

Oh and also, you do know that bank accounts are insured with a maximum compensation of 10,000 JDs..Sweeeeet..And you do know that the arab bank is giving out huge loans left and right, with the last one to hariri boulevard..

Will we be seeing the petra bank story again and again?

 
At 11:46 PM, Blogger Khalaf said...

I am not sure this is equivalent. Banks are protected because they can lien assets. On the other hand, I can't understand the great foreign "investment" in Abdali that requires local funding. WTF. They take over our assets and make us pay for them. Why can't I get involved in a scam like that?

 
At 11:52 PM, Blogger Mohanned said...

I wasn't trying to draw paralells. I was simply pointing to the fact the your money in the bank is not covered. And this money is being lent to projects that most probably won't be filled with residents. It is like a dejavu of the aisan powers in the 90's, but we are not as robust as they are..

 
At 6:52 AM, Blogger Khalaf said...

Even in the US, only deposits up to $100,000 are covered by FDIC. And this is the last line of defense. Regulators should be involved a long time before a bank gets in trouble. "Should" being the operative word, of course.

 
At 8:33 AM, Anonymous kinzi said...

The last line was great!

 
At 8:49 AM, Blogger Khalaf said...

:)

 
At 8:16 AM, Anonymous khald said...

Khalef you asked a good question at the end of your blog and I quote “But the question remains: Why is the government so passive about this? Is it negligence, impotence or complicity?)

And my humble answer is this they don’t care, it really doesn’t matter to them, the main goal of the Jordanian regime is to stay in Power, its like any dictatorship that we have in the middle east, if someone said anything about the king, the government and the security forces will act swiftly and immediately, any thing that threaten there rule and power they will fight it immediately, but fighting corruption is not a priority, my friend there is only one major priority and that’s staying in power anything else doesn’t really mater.

 
At 10:23 PM, Blogger Don Cox said...

I'm not sure what the government should be doing, except in cases of outright fraud, which are a police matter. Presumably there is a fraud squad in Jordan? ______ But as for ordinary bad investments, people have to learn by their mistakes. It isn't the government's job to nurse them, or to tell them where to put their money. Any adult should know that lending your money to another is a risk - the question then is, do the possible gains outweigh the risk?

 
At 10:31 PM, Blogger Khalaf said...

It does seem like fraud, but there is limited information on what these ventures are. I guess people need to be informed. It wouldn't hurt to tell people what's going on. While I agree that the government is not a nanny (except in cases they care about, as mentioned by Khaled), there should be information out there on the issue.

 
At 7:25 PM, Blogger Tallouza said...

Hi Khalaf, it seems to me that you are a gainst the idea of the Casino. Why is that? This is a serious question and I would love to hear your opinion on this. If no Jordanian is allowed in, what is the harm from having one?

 
At 8:54 PM, Blogger Khalaf said...

I am not against the casino. I was just being facetious.

Cheers!

 
At 9:00 PM, Blogger Tallouza said...

You lost me on this one. I will take your word for it. And I am not being facetious:-)

 
At 7:43 PM, Blogger Laurien said...

The reason dictatorships are threatened by uprising is because it is a flawed system that does not work when "the people" being ruled are unhappy. I do not feel Jordan is at risk as much as other dictatorships in other Arab countries. In Jordan, it more seems like a power struggle regarding religious beliefs which is a subject I rather not touch or go into for obvious reasons. But the King has done a good job of being like Switzerland and staying neutral regarding many world affairs but when it comes to the country you rule, you should not continue with the same point of view. Like the U.S., the President does not get involved, that is the purpose of the Judiciary system created within the U.S. For the King, it should ideally be the same but when his people are poor and suffering, he must take action or he will likely be overthrown. In the U.S. when such crimes occur, the criminal is found, tried, and the victims are awarded the losses they incurred. The government sells off the criminals assets to give to the victims until the criminal can pay it after their jail time. For example, Maddoff. Therefor, the King should create safeguards and be more involved in this matter for the fear alone that his people are suffering. It is not fair for the arabic people to not see justice at the very least. Also, people need to be more responsible with their money, if they are not, they invite such things to happen to them.

 
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