THE HARIRI LEGACY IS OVER … A CRASH OR NO CRASH
We are absolutely witnessing the beginning of the financial crisis. Say goodbye to the old monetary policy makers in Lebanon. Let’s flip the question by asking it properly: A slow recovery or a fast recovery
Beginning, no matter what you hear “we are doing all right”, re-think of what Mr. President Trump has been saying for the last 3 years: “fake news”. Sorry guys but at some point you should start consider to follow the US President Speech meaningfully. Y’all remember my repetitive famous slogan “Policy of Deception”
Why
Blame it on globalization. Post the globalized world, leaders of the free world agreed on pulling out from an open economy to bring back conservatism. Any country with the least prepared plan to move in alienation with the emerged political system will suffer the most. ‘Above the Law country leaders’ (that’s what I personally find the most professional and suitable word to describe the current representatives) have no interest in guiding their citizens and the public to what they have been missing in responsibility forming an organized system since the 80’s. The country has entered the very first phase of a paralyzed state, but on rare occasion anyone would take initiative to hit the truth of such a disease
The Government wants to avoid a clash, yet the people were ready for street battle
Shifting away from bottom up regime change to up down of the pyramid hierarchy
The scale of change should alarm anyone. The new era do not resemble any of the past decades. By electing President Trump, American thinkers of which my favorite Political Scientist, Ian Bremmer, President and founder of Eurasia Group the leading global political risk research and consulting firm and Professor at Columbia University-SIPA been saying, the WWII chapter is closed (1945-2016). Let me explain briefly. In the 80’s Lebanon was indirectly hit by the WWII (1945-2016). A new social and ethnic conception was on a rise. Palestinians saw Lebanon their small niche where they thought could establish their own prophecy post establishing the state of Israel. Ever since money has been floating inside the country to NGO’s and Lebanese Government Institutions in order to maintain a balance and create a proper economic and financial system. Yes, don’t blame western countries. Foreign countries have interest in stabilization, freedom of religion and ensuring security. Money was the purpose advancing all of the addressed policy titles. Unfortunately, it has been turned into a different story. Lebanon was slowly been dragged to pan-Arabism. I am not pointing out on culture, nor language, nor traditions. I am pointing out on an open economic system that has been replaced by centralization, monopolization and a political oligarchy system. But most importantly A CURRENCY THAT WANTS TO SHIFT AWAY FROM THE US DOLLAR
How Did It All Start
We all remember Rafic Hariri standings on the Lebanese Pound. The circulation of the Lebanese pound against the US Dollar started to take shape in the 90’s to hit its highest peak in the last decade. Actually, most of Lebanese salaries are given in Lebanese pound and all banks backing the Lebanese Pound against the US Dollar whether in savings or in loans. Well, I may say not in an economic explanation rather than more in a more accurate information for the public in its simplest form beyond complex terminologies and sophisticated equations: IT DOES NOT EXIST SUCH A THING : fixing an Exchange Rate 1500 LL and yet have a Monetary Policy. A Fixed Exchange Rate automatically eliminates the Monetary Policy while the Lebanese banking system was still applying it
A Few Economic Lessons vs The Lebanese System
Monetary Policy
Everyone got it all wrong. In the absence of the Monetary Policy, usually the Central Bank starts increasing the money supply through open market sale of Security Bonds while the Fiscal Policy is being supereffective. The advantages of the Fixed Rate keeping the inflation low and keeping down Interest Rates were also being abolished through the system applied by the Lebanese Central Bank. Defacto, the Lebanese financial system has been using the international policy of selling and buying Securities in the open market, but it has on the other hand abused the market, businesses, salaries, etc
The scale of unfair access to buying securities have been maintained to the top 1% by affording it through the Monopoly of tender bid under restricted bar price in the secondary market where the first open market was given exclusively to the Lebanese Banks
The market centralized and monopolized by the same top 1% holding the big firms and shifting the Banks regulations and policies to raise the Interest Rates instead of making them low. Has anyone witnessed a 0% Interest Rate on any type of loan? No
The top 1% are actually the politicians and their small circle who have turned the country into an Oligarchy yet shifting slowly into an Anarchy
The market price keep shifting up while the minimum wage is still fixed between $400-600 that lead to inflation with a gain advantage to the top 1% the owners of big firms
Fiscal Policy
While the Fixed Exchange rate helped the Fiscal Policy to rise sharp in reconstructing the country, the Government has failed to allocate them directly and effectively into Governmental Institutions for Education, Infrastructure, Business Development, Environment, Production, Technology, Health Care and Social Security
NGO’s
In addition to the corruption mentioned above created by the Lebanese political sector, NGO’s have been maintained by the same top 1% pitying the people pennies over their Civil Rights
Banking Sectors
The banking sectors have nonetheless contributed to establish a stronger Monopoly for the top 1% and backed strongly the centralization of businesses by leaving no room for competition in the market. Along with the deficit of allocation of money though the Fiscal Policy to small businesses, the Lebanese Banking System has put more burdens to make loans affordable. Only those who can afford the loan are able to ask for a loan. Ironically on top of affording loans for those who can afford it, the Lebanese Banking System created small departments for studies of starting-up small businesses in a traditional form. Stealing the Western system in a small country where employment has always been a risky tool isn’t applicable. Big countries keep room for people to choose whether the Business plan can be provided by the Bank customers or by the Bank itself where loans in return are fully available without securities, especially for students making thus a lucrative economic circle
Blame BDL Presidency
With all the money collected through the Fiscal Policy, the market prices in advantage of the top 1%, collecting the NGO’s money within the same sector makes Lebanon with the highest country in availability of money flow, unfortunately in a monopolized way keeping 1 Index available as an indicator of the country’s economic wellbeing: Tourism
As you noticed I haven’t mentioned employment, since employment is held by different political sectors who in return hold more than 90% of the companies leaving only 6% to the wealthier in the division of the social class
Politicians have underestimated small Businesses leaving it to the UN and the IMF to again pump their money in debt into the Lebanese Banks to empower that sector
CONCLUSION
Following again strategically my analysis, Trump advocating closed economy and ‘Each Nation For Itself’, creating a new World Chapter by cutting all forms of Aids along Britain causing a destabilization of the Euro puts Lebanon in a ‘check position’: There will be no foreign money flow in the country
The Eurobond in the Lebanese Central Bank is in high risk post Brexit. Brexit has put the BDL President under pressure to stabilize it against the Dollar, making the dollar less available
Stabilizing the country on currency exchange isn’t a big achievement while leaving the working class drown in stagnation. In order to pull out Lebanon from the hole, a foreign intervention is needed but this time will be under different conditions known by the OPPORTUNITY OF THE CENTURY AS KUSHNER STATED IT
Will Lebanon still be standing against what they have been digging for years without plan B
Absolutely Lebanon has no exit strategy from the unexpected Brexit crisis that no one thought of affecting the Middle East directly. It has also asserted my analysis through mentioning the Currency Diplomacy and the end of the Old World Order. Since now Europe is too busy fixing its own Economy, The USA will also make it harder for the Middle East to recover by putting America Fist and that is the correct choice. Every nation must be ready to take the responsibility of creating a fair structure. As Mr. Trump mentioned in one of his SOTU Speech: “Some Countries “Will Go To Hell”. I am afraid that Lebanon is one them if “The Opportunity” will not be on the Lebanese agenda
The new Lebanese Government formed during the last 4 years pledged a changed, where I foresee they have kept the same old policies and have been busy forming a so called ‘General Budget’ turning an illusion into a truthful scenario and fooling their citizens when no actual money was ever given rightly and all public savings are actually ZERO. How the country will take shape? On which path it will embark? You can read next in my new article
