Lebanon - Banks, revolution and Immigration


Every Lebanese is an economist these days. At home and abroad, they are all proposing solutions to what has become the gravest economic crisis since the civil war’s devaluation of the Lira. The problem has lied dormant for years with the dollar peg which had been artificially maintained at 1500 Liras for 1 dollar.

As most Lebanese have come to understand now, the peg was maintained by Lebanese and foreigners depositing their money in local banks for high-interest rates. In return for these, banks would buy high-interest bonds from the central bank (La Banque Du Liban). The latter would use the funds to perform forex operations to maintain the peg. All was well as long as the depositors thought that their money was safe in Lebanon and they kept pouring more money. But the same as a Ponzi scheme it was eventually going to collapse.

I remember back in 2001 as a Sophomore at the American University of Beirut, taking my first ever economics class, the teacher – who only had a master's degree – telling the class that the dollar peg was artificial and it was bound to cause problems. Today reading about my Alma Mater in Wikipedia I learned that the governor of the Lebanese Central Bank and today’s second or third most hated person in Lebanon was also a graduate of AUB, he would have been wise to listen to what the economics department has been saying all those years ago.

So with every problem, there are many solutions being proposed. The central bank and the government sees as the best option right now to limit the withdrawals of deposits. There is an impossible financial trinity in banking: a fixed foreign exchange rate, free capital movement (absence of capital controls) an independent monetary policy. The Lebanese central bank had for years believed that it achieved this trinity, but now it has resorted to restricting capital movement to maintain the peg (which fails in the local currency black market).

So what is the solution? The heart of the problem is the national debt, which hovers at 86.8 Billion dollars or 157% of GDP. The country can’t function with this level of debt and something needs to be done. The option that the protestors on the street of Lebanon have demanded for the past few months was to hold the corrupt government official to account and liquidate their assets and take hold of their bank account. It is believed that the billions in their possession will pay for the national debt a few times over.

However, some think that it is not a realistic proposal. For one thing, they can escape the country and take their money with them. For another the real military power in Lebanon is Hizballah and the ruling elites are in cahoots with those Devils. So there needs to be a more pragmatic solution in the spirit of the mass pardons that took place after the civil war.

The solution, in the spirit of national unity, would be to ask the ruling elites to “donate” a part of their fortunes to pay for the debt. This would happen with the understanding that the rest of the ill-gotten gains would become “legitimate” in the country.

However realistically speaking, such a solution would not happen either, simply because it would mean that these leaders would have to declare their true wealth and irk the wrath of the People. Therefore a more realistic solution proposed by Lebanon’s and New York’s own Nassim Taleb of the “Black Swan’s” fame might end up being imposed on the Lebanese people. Taleb at a conference in a French Lebanese university proposed a hair cut that would be born by Lebanon’s most prosperous class which has benefited from the high-interest rates paid by the banks. This he deemed would be more than adequate to cover the national debt.

At the outset, it might seem reasonable that those who benefited from high-interest rates end up paying, but in practice, it will turn out to be any Lebanese non-politically affiliated person who ends up paying.

A Lebanese protestor reading this will have his sense of justice triggered. After all, those who have plundered the country should be made to pay first and foremost. But having been born during the civil war I can say that to make those politicians pay, arms will have to be taken up. They are all protected by the Party of Allah and their devils. And if they feel their grip on power weakened they will use their arms against the population and then what? Is any Lebanese willing to take up arms in return, after all, we have suffered a generation ago? Of course not. Best for the Lebanese freedom-loving people to learn their lesson and leave Lebanon. A recent story made the rounds on facebook that the Canadian Embassy opened up immigration for 6000 Lebanese, mostly highly educated and mostly Christians (this would later turn out to be fake news). A lot of Christians complained that they are draining the county of the brains and of the educated. I say to those people, the more the merrier. Best let them leave to have better lives and then take the rest with them. Lebanon after the civil war is no longer a land of freedom Loving people. It is the country of Hizballah and of terror. Let them have the Paris of the middle east and turn it into another Iran and let those who want Freedom to just leave and start over again. As someone who left three years ago and started his life again, I can tell you life is easy here and we are certainly free.




Comments

Popular posts from this blog

Beyond the Gaps of Weak AI: Deep Learning as the Path to Artificial General Intelligence

The Pincer after the North American Programmer’s Job

SuperIntelligence: A book Review