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And you thought things were bad here…
By Jon Menaster | November 19, 2008
Check this story out from the LA Times: Colombia declares emergency over investment scams
From the piece:
Colombian government officials declared a state of emergency Monday, boosting their powers of arrest and money seizure, to help deal with multimillion-dollar investment scams that have targeted mostly poor investors.
I mean, wow. Rioting and a state of emergency? Just think about what would happen here if people took to the streets hardcore like that. Chaos. This also brings to light the problem that smaller countries have with enforcement of laws and even creation of laws surrounding financial protections for consumers. Let’s take a look at the Heritage Foundation’s Economic Freedom report for Colombia, specifically the Financial Freedom section:
Colombia’s financial sector is relatively large and sophisticated. Banking has undergone significant consolidation and privatization since the 1998–1999 financial crisis. The government has strengthened regulations and seized some banks for falling below solvency requirements. As of December 2006, there were 17 commercial banks: 11 domestically owned and six foreign-owned; one is state-owned. All financial institutions nationalized during the crisis were privatized or liquidated by mid-2006 except for the state-owned Granbanco-Bancafé. Foreign companies are prominent in the insurance sector, and competition has intensified since 2003. The informal credit market is extensive. Foreign investors face few restrictions in small equity markets, and renewed enthusiasm for investing in developing markets has stimulated foreign investment in Colombian equities.
Looks good, right? Until you read the corruption index below it:
Corruption is perceived as significant. Colombia ranks 59th out of 163 countries in Transparency International’s Corruption Perceptions Index for 2006. Despite significant advances in fighting corruption, criminal narcotics organizations influence the military and the lower levels of the judiciary and civil service.
Not so great. Developing countries still have a long way to go in terms of removing corruption, which I’m about 99% sure led to the current crisis they are having. SOMEONE must have known what was going on in government. People in the American government sure knew what was going on during the past few years, nobody did anything because the good times kept rolling. When they stopped, just like when Colombia’s did, problems emerged.
