Dennie Quill, Contributor

To the man in the street, Fannie Mae and Freddie Mac could be mistaken for the names of grand old country folks, but, in reality, they are huge American mortgage banks, which went into a tailspin and were bailed out by the United States Government to the staggering tune of $5 trillion.

This week, the world watched in disbelief as the 158-year-old investment banking giant, Lehman Brothers Holdings Inc, made the largest bankruptcy filing in US history. The turmoil in the US financial markets has been going on since the summer of 2007 and is predicted to trigger a full-blown recession.

One is obliged to sit up and take notice when there is news that investment giants like Bear Stearns and Merrill Lynch are tumbling and that others like American Insurance Group, Washington Mutual and Wachovia are hanging by a thread.

If, for no other reason, savvy Merrill Lynch and Bear Stearns strategists were often heard on our local media making prescient points about how an economy should be run. So, what happened? Analysts suggest that greed, dishonesty and poor business ethics are to blame for the current crisis.

But, more to the point, in the current global environment, it is a fact that several pension plans outside of the US are invested in Lehman or in firms tied to Lehman. Many Americans are nervous.

Investors are running for cover. Confidence in the stability of US banks is shaky right now and more than a few persons in Jamaica are themselves concerned about their investment. Even those who are not high net-worth investors, but small savers, who have been putting away a little towards retirement, are now uneasy as they begin to wonder how safe is their investment and who is next to tumble? And, all of this is on the heels of the fallout in alternate investment schemes, which dealt a strong blow to many people.

I can't resist using the cliché: 'If America sneezes, the rest of the world catches a cold'. It is a fact that Lehman dealt with large financial institutions, but it is foolhardy to think that this current turmoil will not resonate, even a little bit, in Jamaica and, I am pretty sure, Finance Minister Audley Shaw will be told this when he meets with his advisers.

Survival mode

AIG, for example, is a major player in the aircraft-leasing industry, and its problems could affect its ability to do business with potential partners. One can also expect bankers and other credit institutions to be even more parsimonious to lenders as they move into survival mode. America's economic partners are said to be struggling against being pulled under.

So, the question I have been hearing all week is this: Where is the safest place to put one's money? My grandmother would answer that question without hesitation: "Under the mattress."

But, seriously, investments in mutual funds, certificate of deposits and money market funds have attracted many savers in the last few years, as they offer better yields than the traditional savings account. Now, many are wondering how exposed have they become in the current environment.

I talked to one financial adviser who told me that one should spread one's risks by placing small amounts of money in several banks that have deposit insurance.

I thought he was joking when he suggested buying jewellery and placing them in a secured vault, but when he showed me some of the gains made by persons who were able to stash away such treasures, over the long haul, then I realised that this was serious business.

Finally, he suggested buying good pieces of artwork which can be expected to appreciate over time.

Members of the local banking sector need to assure customers that they are strong and stable. This is also an opportune time for creative bankers to suggest alternative investment options to persons who may be nervous about their investment at this time.

Feedback may be sent to denniequill@hotmail.com or columns@gleanerjm.com.