>> No, people can't make wire transfers anymore. All bank accounts are frozen
This is only true for old funds (precrisis). However, you can wire any "fresh money", AKA funds put in a lebanese bank from a foreign bank
>>The local currency collapsed, lost more than 90% of its value.... they play money conversion tricks
'Lost value' as measured in the black market float. The peg has been fixed for decades and its never floated freely. In fact, banks are giving you the official central bank conversion rate, which is awful and benefits banks (which is why it was never changed)
>> because his father (and some people said his child as well) were in the hospital
This is not true.
>> Why is this all happening? Bad economic and financial policies for 40 years, rampant corruption
No. This is happening because the federal govt issued sovereign debt that was primarily purchased by local lebanese banks, using depositors money. The government budget was chronically in deficit, with exoenses exceeding taxes for decades, so the govt resorted to pay its debt with more debt. Finally they run out of other people's money to keep buying debt, the govt couldnt raise taxes to pay (remember the laughable WhatsApp msg tax??), so govt could not pay banks, thus banks couldn't pay people, so people's cash was turned out to be fake numbers stuck in a bank screen. Banks have since refused to lose money (insolvency really) on their govt debt purchases, so the bank holiday ensued.
Its important that we spell this out because to put a face to Lebanons predicament. There was no 'corruption' vodoo. Its just debt.
The only differences between USA and Lebanon are Lebanon's gdp/debt ratio is higher , and USA quick ratio (interest expense/tax collection) is better vs Lebanon.
It was bad financial policy to peg the Lira to the Dollar. It should have been free so that the exchange rate reflect its true value. The lifestyle with all the things you could buy in the country since the 90s at the official 1,500 LBP rate was a big lie; things should have been more expensive.
It was bad economic policy to ignore agriculture and industry, and make everything about tourism and services. So many imports could have been produced locally but weren't. E.g. as it became evidently clear when people couldn't find things like cheese and milk to buy anymore.
> There was no 'corruption' vodoo. Its just debt.
Debt that was spent to do nothing, to build nothing, but to fill the pockets of politicians and their cronies. Through 10 levels of contractors who fix nothing, to 100K new government jobs given in one year to people who don't even know where their offices are...
There was about 80B dollars lost only in the Ministry of Energy, presumably spent to get electricity to people, all now unaccounted for and still no electricity.... Politicians are billionaires, and only their cronies can get the important jobs and the big projects. And on and on...
Yes, there was rampant corruption. Still is. And it had a lot to do with the crisis.
Having the global reserve currency is a pretty big difference too. The base economy of the Lebanese government is Lebanon, the base economy of the US government is the world.
This is only true for old funds (precrisis). However, you can wire any "fresh money", AKA funds put in a lebanese bank from a foreign bank
>>The local currency collapsed, lost more than 90% of its value.... they play money conversion tricks
'Lost value' as measured in the black market float. The peg has been fixed for decades and its never floated freely. In fact, banks are giving you the official central bank conversion rate, which is awful and benefits banks (which is why it was never changed)
>> because his father (and some people said his child as well) were in the hospital
This is not true.
>> Why is this all happening? Bad economic and financial policies for 40 years, rampant corruption
No. This is happening because the federal govt issued sovereign debt that was primarily purchased by local lebanese banks, using depositors money. The government budget was chronically in deficit, with exoenses exceeding taxes for decades, so the govt resorted to pay its debt with more debt. Finally they run out of other people's money to keep buying debt, the govt couldnt raise taxes to pay (remember the laughable WhatsApp msg tax??), so govt could not pay banks, thus banks couldn't pay people, so people's cash was turned out to be fake numbers stuck in a bank screen. Banks have since refused to lose money (insolvency really) on their govt debt purchases, so the bank holiday ensued.
Its important that we spell this out because to put a face to Lebanons predicament. There was no 'corruption' vodoo. Its just debt.
The only differences between USA and Lebanon are Lebanon's gdp/debt ratio is higher , and USA quick ratio (interest expense/tax collection) is better vs Lebanon.