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.

Money Talks

“Money talks.” How often have you heard that expression?

It’s true though, and I know because mine keeps saying “Good Bye”.

Having been in England for three weeks, I got back late on a Monday, the eve of Eid al Adha or Festival of Sacrifice. It’s also Independence Day on the following Monday, so the Banks, Public Services and many of the shops (in predominantly Muslim areas at least) have closed down for a week. So, it seems to me, living here in West Beirut, that Lebanon just closed for my return. It shouldn’t have, but it took me rather by surprise, never mind, it’ll be a cheap week.

But wait a minute, there is a tradition that on the big Festivals, Ramadan, Christmas, Easter, and Eid al Adha gifts of money are given to trades people, concierges, and others who’ve given good service. Boxing Day comes four times a year!

At the same time, all those services that had continued in my absence, basic stuff like drinking water and electricity, fell due this week.

It’s got to the point that when the door bell rings I hide. I’m neither mean nor stingy, but being a Yorkshireman with Scottish ancestry I am a bit “careful” – I like to know where the spondoolicks have gone and that they got good value, but really I just want to leave the steadily lightening wallet by the door and nail up a notice asking anyone who comes just to help themselves! It isn’t that I mind paying my dues and giving, I just want to know how all these people knew I was back – and while the country is closed. Cash is just dashing madly off in all directions. Perhaps envious of my semi-vacational English sojourn, it’s just packing its bags and leaving as fast as possible. When will the blizzard stop?

The answer is today. Why? Because my wife came back today (although we left together, she extended her trip by a few days) and she normally deals with all these demands, so at least I won’t see the dripping, nay gushing tap.

The purpose of her extension by the way was partly to … wait for it … SHOP. “So how’s the plastic?” I asked her. She looks a bit blank for about half a second and then realizes that I mean the credit cards. She smiles. “Worn out from overuse” she says.

Hmmm, it seems that they’ll be getting a rest for a bit then, but no way will they be packing their bags and saying “Good Bye.”

A new tax year dawns

April 6th is a truly significant date in the calendar of the United Kingdom; it’s the first day of a new tax year.

Once upon a time (like when my Dad did his tax return) loads of huffing and puffing over an enormous buff form, replete with boxes for numbers to be written in was the order of the day, or actually more than a day as I recall it. In those days the currency of the realm included not only the familiar pound, but shillings and pence too. There were twelve pence in each shilling and twenty shillings in each pound. Calculators were still to be invented so a facility with mental arithmetic was needed just to go shopping. My father had the trick of running three fingers, at speed, down a foolscap column of figures, one finger for the pence, one for the shillings and one for the pounds, and writing down the (always correct) total in a single flourishing movement. So if he huffed and puffed for a couple of days over a tax return, doing the sums for the inland revenue each year must have consumed a fair bit of the UK’s total production capacity. Thank heavens for the home PC and FBI (for American readers, that stands for “file by internet”).

Incidentally, next time you buy something for, oh, let’s say fifty-seven pence, hand over a pound coin, a two pence piece and a five pence piece and watch the amazement on the face of the shop assistant after they’ve wrestled with the calculator for a bit

But I digress, at least twice, from my original intent. Why April 6th? Why don’t we have a normal date for the start of the fiscal year, like the Americans and the French who pick the more memorable, if less imaginative, January 1st?

I was going to say it’s all Pope Gregory XIII’s fault, but maybe Julius Caesar should take more of the blame as he got it wrong in the first place. I refer to the correction to the calendar by some eleven days, to bring the longest day (in the Northern Hemisphere) back to June 21st (well, sort of, on average, most of the time). Britain finally adopted the Gregorian calendar in 1752, a bit late, as Pope Gregory wanted a universal changeover a hundred and seventy years earlier, but better late than never.

Well I say Britain, but it wasn’t universal. His Britannic Majesty’s tax collectors refused to change, as they thought they’d lose eleven days’ taxes, so they continued blithely on using the old calendar of Julius Caesar. A few moments thought will convince you that eleven days before April 6th is March 26th which seems about as esoteric a choice of new year as you can get. Actually another shift of a day had taken place in 1800, a leap year in the old calendar, but not in the new, which takes us to March 25th, which from 352 AD was reckoned (incorrectly) to be the start of Spring and so the beginning of Christian year and so the date from which to start reckoning tax liabilities each year. Phew!

So there you have it. Presumably April 6th is not going to change anytime soon. Makes sense that Julius Caesar would be in there somewhere, after all “render unto Caesar …” and all that.