Dollars anyone - part II

The Lebanese economy consistently defies gravity.

What do I mean by that, well, imports exceed exports every month, but the economy grows and the amount of money in the place increases. How can that be? There is a huge Lebanese Diaspora which supports the home country’s economy as the exiles keep sending cash back home. Lebanon has the distinction of being world number one for remittances (the technical term for spare cash sent home) compared to total GDP (that's roughly total income)

The Lebanese dream seems to be to send enough money home to be able to build an apartment block, reside in the penthouse and live on the rents from the flats below. Judging by the number of finished apartment blocks sprouting all over the place, the dream often comes true. Sadly, judging by the number of unfinished ones, sometimes it doesn’t. But I digress.

Now, as explained in the last item most currencies are losing value against the dollar. So the dollar value of the total input into Lebanon from remittances is going to go down, for the simple reason that although some comes from North America, a lot finds its way from Brazil, from Europe and from Africa.

Lebanon is itself a dollar zone, in the sense that the Lebanese Lira is pegged to the dollar. I can understand why Arab countries with oil do that, as oil is traded in dollars, but apart from the Olive variety, Lebanon has not been blessed with much in the way of oil. So on world markets, Lebanese products are set to look more expensive which will push down the revenue to Lebanon from that source too. And if you’re an economist, please send learned papers on elasticity elsewhere, personally I do the simple thing of finding cheaper alternatives for stuff when its price goes up, or just buy less of it.

Whatever way you view it then, the effect of the PIGS and BRICS problems, which as shown yesterday are tending to push a dollar resurgence, is going to be negative as far as the Lebanese economy is concerned.

What’s going to happen? Well, if I could confidently predict that sort of thing I’d be a lot richer, but my guess is that the traditions and skills developed by five thousand years of entrepreneurship and trading will inspire ways to continue to escape Newton’s universal pull to earth.

Dollars anyone?

Do you remember the story of the three little pigs?

Well, for those whose memory of children’s bed-time stories needs a bit of a refresh, three little pigs beat the gluttonous intentions of a Big Bad Wolf by staying inside a house built of brick by the little pig who was the cleverest, most far-sighted and hardest working of the three. Yes, s/he does sound a bit of a pain in the back bacon, but it’s meant as an allegorical fable on the benefits of planning and hard work.

Obviously the world’s financial wizards took it rather more literally as they named the collective financially walking wounded of the Euro zone (Portugal, Ireland, Greece and Spain) the PIGS, which rather messes up the allegorical message. Not content with that, the BRICs are the world’s emerging economic wonders (Brazil, Russia, India and China).

Two of the PIGS have had to have financial help this year. Though heaven only knows how forcing enormous loans at interest rates that would send the discerning home buyer scurrying off to look for a different mortgage lender immediately if not before can be described as “help”, I certainly don’t. Now where’s this helpful money for the PIGS to support their banks, ‘cos that’s what it’s for, to support the piggy banks (sorry, couldn’t resist it) come from? Well from other countries in the European Community, including non-Euro Britain. And where did they get it from? Err, well, they borrowed it; which presumably is why the UK government posted its biggest borrowing ever in November, the month that Ireland got bailed out. So Sterling dipped against the dollar, investors in Euros and Sterling having taken a bit of a fright at the sums involved and moved their money elsewhere. So I, as an ex-pat paid in dear old pounds and living in a dollar zone got poorer.

And then the BRICs got a hit. One of them actually. To be precise, the C. Since the days of Mao’s Little Red Book, China has supported its communist neighbour, North Korea. According to wikileaks, C is not too happy with NK but they go back a long way. The Koreas (NK and SK) had a bit of a spat a few weeks ago with NK being all active and aggressive, and that frightened investors in “emerging markets” – the BRICs and their satellites. They took out some of their money and put it into … Good question, where do you put money when you need a safe haven?

The traditional answer is either gold or a strong currency. Gold has had a ride like you wouldn’t believe, ever since Gordon Brown (remember him) sold off a lot of the UK’s yellow stuff at just under $300 an ounce. It hit $1,400 an ounce recently but no-one is expecting another five times growth in the heavy metal, so try to look for something better. Good time for the American economy to post a growth rate knocking on the door of 3%, so it did! And thus, for the first time since sub-prime entered the public lexicon, the green-back, aka the once-almighty dollar became attractive again. Investors went in and the dollar rose in response. So I, as an ex-pat paid in dear old pounds and living in a dollar zone got poorer. The Swiss franc is the other star when it comes to defensive investing, so no surprise that that hit a record high last week.

Now it’s pretty clear what all this means to me, I’ve said it twice and that’s enough, but what about Lebanon? Enough for one day, I’ll put that up tomorrow. Anyway it’s lunch-time, roast pork anyone?

After Christmas time

Well that’s it then. Santa Claus has done his job for the year, gone back home, fed his sled and polished his reindeer while we’ve all been polishing off turkey with or without the trimmings.

Listening to “oh, little town of Bethlehem” takes on a different feeling when Bethlehem is about the same distance from Beirut as Birmingham is to London. Yet, sadly, it is probably easier to get to from either of those English cities than it is to travel to it from Beirut.

This year, the Dickensian ideal of a White Christmas has come to pass in London and in some of the mountain villages here in Lebanon. A good friend even invited me to ski with him on Christmas day but I couldn’t accept – I was too busy with mulled wine, champagne and mince pies on offer at another friend’s house about half way up the skiing mountain.

Christmas is not just a time of presents, families, celebrations and over-indulgence, it carries with it connotations of peace, of renewing friendships, of burying enmities, of resolving, or at least patching over, differences. The BBC web-site carried pictures of Christmas celebrants in Indonesia, Pakistan, Bethlehem and Korea. But I don’t get a good feeling about imminent resolution of all conflicts. What is missing for me is the evidence of reaching out, of trying to find points of contact rather than points of difference.

On Boxing Day, I walked into Beirut’s main Bridge Club. And everyone was wishing “merry Christmas” to everyone else with warmth and enthusiasm, even between some whose mutual antipathy had been apparent in times past. Religious adherence didn’t seem to matter, Protestants, Maronite Catholics, Greek Orthodox, Muslims of both flavours, Druze and Armenians (whose Christmas is twelve days after 25th December) all joined in, as doubtless did members of all the eighteen official religions or confessions recognized in Lebanon. Forgive me for not listing them all.

Now if only we could capture that and keep it going rather than putting it away with Santa’s sled and the Christmas decorations.

We've upgraded our service to you

Now there’s another phrase to dread – “we’ve upgraded our service” and once again it’s a bank that’s stuck it to me.

“We’re revoking your on-line service” said my bank - BLOM, here in Beirut.
“Why?” I asked.
“Because we’ve upgraded the service.”
“Ah, well, if you’ve upgraded it, why can’t I keep using it?”
“You need to come into the bank and apply for the new improved, upgraded, bigger and better service.”
“Can’t I do it on-line.”
“No, you have to come in”. Sounds like a Len Deighton spy thriller, or one of the Bourne trilogy, where “coming in” is a euphemism for “we want to damage you”.
“Could you fax me the documents and I’ll fax them back?”
“You have to come in.”
“Well what if I don’t?”
“The on-line banking service has been upgraded, so yours will be withdrawn if you don’t come in.”

Realising that I’m not even close to winning this, I give in and “come in”. I’m looked after by a charming, attractive and sympathetic young lady who stays all three while I deliver my tirade on compulsory inefficiency bordering on stupidity. She gets out the form and asks me to choose user name, password and secret question with answer. She writes down all my replies and asks us both to sign.

“What do you mean, both of us??”
“Well, it’s a joint account.”
“But my wife is off visiting her daughter … in Saudi Arabia, she didn’t have to sign last time, only one signature was needed”
I suppose you can guess the answer by now …
“We’ve upgraded the service.” At least the pretence at improvement had gone.

This time we compromised, I could take the documents home, get my wife to sign and then bring the forms back.

We did this (why insist she signs and then give me the opportunity to forge her signature? Oops, this is Lebanon, I think I've just answered my own question!) and I logged onto the service for the first time.

As far as I can judge there are three changes. The first is that instead of clicking on a desk-top icon, I now have to hunt for the portal, as it is NOT available or even referenced on the bank’s web-site. Second, I need my mobile phone to get information from a previously sent text message. Finally, I keep a history of all transactions stored in the on-line service, one of its really good facilities. And the history has gone. Oh, and there’s a piece of paper somewhere with all my detailed security data on it.

Dear BLOM, please think harder before you upgrade anything else.

Christmas and a Pension

Christmas has come early this year, for me anyway. Santa has taken the unfamiliar guise of a buff letter from Her Majesty’s Department of Work and Pensions. “We have decided that you are entitled to a UK State Pension”.

Now there’s a lot in that sentence. That “we” (no I don’t think it’s the Royal we) suggests discussion and debate, not just ticks in boxes. The “decided” adds weight to that idea, with the extra thought that there was an alternative, presumably containing the word “not”. Then comes “entitled”, a real teaser that one, “you are entitled to a refund, but we aren’t giving one”, “you are entitled to a free a bag of chips with every large fish”.

I think that the key thing here is that, although popular perception is different, getting a pension from the state as a UK citizen is not a right, it has to be earned, by paying National Insurance contributions for thirty years to get the full benefit. And then by filling in a twenty page form listing, amongst other things, the current addresses of all the payroll departments of all the companies that you’ve ever worked for. Actually I gave up on the first company I ever worked for, as it had been the object of a hostile takeover and then broken up in 1992. It didn’t seem to matter.

Which brings me to another little thought – that form took some constructing with great attention to detail and the kind of questions that need to be preceded by a drum role and serious voice intoning “you have three days to answer questions on your specialist subject – your personal history since the age of sixteen”. Since I got most of the answers to the difficult ones through talking to HM Pensions, perhaps someone should be giving some thought to what can be removed from the twenty page form and so save the odd tree or two from the reduced printing – oh! yes I forgot to mention that the form has to be completed with pen and ink, none of your electronic stuff.

Please don’t get me wrong, I’m delighted with some extra cash, particularly as, in accord with family tradition, we’ve already spent it about three times over and before the first payment has actually been made.

And where has all the yet-to-be-paid-money gone? Well on preparations for Christmas of course. Just as well Santa arrived early.