LebGeeks

nuclearcat

Member

Re: Lebanese lira to USD exchange

So go broke. No one forced you to assign prices in USD.
Let's say I have a company called Haddad Chicken. I make chicken products. If I insist on distributing them at dollar prices, eventually no one will afford to buy my products. Sure I can lose sales profit at LBP but it's not the end of the world.
And for your information, this is exactly how this situation was fixed 30 years ago. They soft-banned trading in US dollars and the economy became great. By the mid 90s, people would stalk you to offer you jobs.
When I was 17, I was offered a chance to manage a chain of coffee shops. I said no because I chose to go to university instead. You could find a job at 11PM on a Sunday evening back then.
Your explanation is accurate according to text books but does not apply to Lebanon's real life situation.
But my ideas are exactly what fixed this issue the last time it happened.
We need to separate the dollar from the LBP and stop assigning prices by the dollar. Even at large losses to companies, it needs to happen. They put themselves in this situation by choosing to trade locally by USD. No one forced them to do so and they are not suffering from it.
My statement is the only verified-to-work solution.
There is no excuse for greed and no excuse for Lebanon not to be manufacturing many things and setting prices that are independent of the US dollar.

Its not about losing sales profit, it is about going bankrupt, because you sell literally deeply below cost of product.
In case if i am "haddad chicken" i will rethink my strategy, and either i find way to convert my chickens to something more long-term storable and wait, or i will just sell stock, fire all employees and close until better times.
And most likely, i will sell remaining produce as export with some profit losses, but much less losses than if i sell it inside and move my business to another country.

It was not fixed before, it was patched ugly way, and eventually it was expected to hit even harder. And it did, now.
Lebanon "real life situation" and "lebanon special recipe solutions" is illusion many people have, they think regular laws doesn't apply to them here, while in reality, when they think they fixed some problem "yalla yalla Lebanese way", it turns out just temporary luck and same temporary hack with consequences.
This particular "magic" that lasted for 20 years is simple. Whole Lebanon was burning money that supposed to be deposits of other people  (mostly expats, who worked hard outside to earn them) .
That beautiful life that everyone had was at the expense of others. Now the one who unwittingly credited Lebanon is very angry, their money is gone and they need them more than ever.

Lebanon is too small  country to produce domestically "near independent from dollar" something more serious than some fruits and vegetables. And even for this, in order to fight new plant diseases, pests and increase the yield - it is necessary to import technologies, chemicals and other things.

Sure, alternatively, you can raise chickens on the balcony and some hydroponics/veggies. But this is more about personal consumption, this will not be an export or any kind of competitive product, you even unlikely will fully sustain your own family needs on such scale. Still, it can improve personal situation with very real looming famine.

So, what are you going to produce that doesnt depend on import?

A strategy to reduce imports is possible, but dont expect miracles, in most cases, it is a very painful and long process.
There is a quick solutionstoo  that might improve situation significantly, but these are very tough and unpopular measures, it makes no sense to list them, anyway, nobody decides anything here and nobody will listen in government.

NuclearVision

Member

Re: Lebanese lira to USD exchange

That's unprecise nuclearcat, you can rant all day about how we are spending expacts money, about the magic or whatever but you see, our debt is the result of failure of development, commissions projects, etc. The 40 billions debt is for electricity and not for paychecks. Another god knows where 10 billions. Lebanon is a small country, but that doesn't mean it can't be productive, production is not about surface area... Imagine if, for instance, the country invested in bitcoins, stock, whatever... Or other productive projects.
i want to add, I refuse what you say, that the expats Work hard, and lebanese are lazy and spend the momey or whatever you are implying. In fact, the depositors share responsibility in the kidnapping of their own money. what did they expect after years of incredible interest rates, one should have prudent enough not to keep all savings in such a country.
Bottom-line: The deposits were stolen in majority NOT spent for our happiness as you think.

nuclearcat

Member

Re: Lebanese lira to USD exchange

. The 40 billions debt is for electricity and not for paychecks.

https://oec.world/en/profile/country/lbn/
Check import (especially percentage of specific types of products). Check export. Think, from where difference appeared (and disappeared)?
Its definitely not in electricity only.
Fuel - maybe. Country should be rich, when each member of family have personal, often fuel guzzling car, and most are contemptuous about public transport.

but that doesn't mean it can't be productive, production is not about surface area... Imagine if, for instance, the country invested in bitcoins, stock, whatever... Or other productive projects.

Investing in something like bitcoin and waiting when coins will start ring is called "renteer economy" and is exactly opposite of productive.
For some reason, so many people in Lebanon amuse me with their illusion that if they earned $Xk, then invest somewhere like bitcoin, they will magically receive $X*N k and it is guaranteed income, because some other guy just need their money and will share with them profit. LOL.
This is just another kind of gambling.
Being productive is creating a business, products, this is quite different.

i want to add, I refuse what you say, that the expats Work hard, and lebanese are lazy and spend the momey or whatever you are implying.

Lazy or not, it is THEIR money. Maybe of course they don’t carry coal from wagons, but many of them sacrifice family happiness and lived in an unfriendly atmosphere for years, to get this money.

In fact, the depositors share responsibility in the kidnapping of their own money. what did they expect after years of incredible interest rates, one should have prudent enough not to keep all savings in such a country.
Bottom-line: The deposits were stolen in majority NOT spent for our happiness as you think.

Agree about those who kept them with high interest rate in LBP, but can't say same about those who kept money in "current" accounts and lost money too.

By the way, you advised a couple of words ago to invest in bitcoin, and at the same time you indirectly call stupid those who hoped that banks will invest their money in something real. Double LOL.

Last edited by nuclearcat (April 27 2020)

Adnan

Member

Re: Lebanese lira to USD exchange

The image with the Taanayel halloum cheese is inaccurate. The price shown is for 1KG but the items on the shelf are 0.2KG.

Still expensive though

NuclearVision

Member

Re: Lebanese lira to USD exchange

By the way, you advised a couple of words ago to invest in bitcoin, and at the same time you indirectly call stupid those who hoped that banks will invest their money in something real. Double LOL.

Ironically, Bitcoin would have been more productive that anything they invested in.
Anyway, you're missing the point I'm trying to make and taking my words literally in an attempt to outsmart me.

I hope this situation gets to end soon, the curfew is almost over and people are back on the streets.

nuclearcat

Member

Re: Lebanese lira to USD exchange

Excellent thread on producing and sustainability: https://twitter.com/MouhanedD/status/12 … 2120037377

eWizzard

Member

Re: Lebanese lira to USD exchange

Home hydroponic gardening is a great idea, especially when the sun is the light source instead of LEDs, which makes it a good option for condensed urban plant agriculture. However, unlike traditional crop growing, it requires constant attention and monitoring, and small mistakes can lead to huge losses. I also find it bizarre that the system on display is open to the environment, as it's an invitation for all kinds of pests to come take a shit in your plants and solution. Also not fond of aquaponics.

Anthroponics seems to be the most sustainable version, but it's a long way into the future before it sees wide implementation.

Anyways... I wonder if anyone's melting 100, 250 and 500 liras for their metals. Surely the metals in the coins have become more valuable than the coins themselves.

Last edited by eWizzard (April 28 2020)

Tech Guru

Member

Re: Lebanese lira to USD exchange

The dollar’s rise was caused by the Bank of Lebanon raising support from the exchange rate since last year, due to its inability to use the bank’s reserves, which has become very low, and therefore not tolerating more losses.

It is not decided where the dollar exchange rate is going, and this is due to the policy that the state will follow, indicating that the exchange rate can stand at the limits of five thousand.

Provided that we reduce our consumption of some matters and raise support for importing oil and impose some taxes on luxury matters, but if in the case of a convincing a masked haircut , giving USD  deposits in pounds, then the price of the dollar could exceed ten or twenty thousand pounds.

The minimum wage is currently 675,000 LBP that has an equivalence of 170USD now.

jsaade

Member

Re: Lebanese lira to USD exchange

I do not see it going down. As product prices are affected by the exchange rate, it seems obvious that we have not yet reached the actual LBP to USD rate.
I believe we will reach a point that LBP to USD will stagnate and that will be our new Rate. And after that, we will see decrees and laws in place to ban foreign money being traded in banks (i.e Loans, Salaries, etc.) will all be in LBP but you will be able to transfer foreign currency to outside using this new Rate.
What this Rate can be, it could be 5,000LL if we are optimistic, but we seem headed to 20,000LL.

rolf

Member

Re: Lebanese lira to USD exchange

What this Rate can be, it could be 5,000LL if we are optimistic, but we seem headed to 20,000LL.

I didn't think that the Central Bank was still publishing numbers but it seems that it is (thanks God!).

Note that the trend started in October last year. M0 means the amount of coins and bills in circulation.

https://tradingeconomics.com/lebanon/money-supply-m0

It is interesting that if you look at M3 it is actually going down so it is interesting to see how people are withdrawing all their money from their savings (M3 is basically long term savings, etc.), so this is what feeds the increase in M0 at least partially.

https://tradingeconomics.com/lebanon/money-supply-m3

Last edited by rolf (April 28 2020)

Tech Guru

Member

Re: Lebanese lira to USD exchange

The current cabinet is in a major problem if they are implementing  the International Monetary Fund plan . If the dollar is fixed on  3500,  Everything with BDL support imports  like wheat, petroleum, medicine , dollar loans , and rents .. will be paid 3500 LBP Rate instead of 1515 .. with  a minimum Wage  of 675,000 and many public/private sector employees are getting paid on 1515 base without any inflation adjustment ..

This step will expose  more than 90% of the Lebanese workforce, who get paid in Lebanese pounds , to direct poverty.  Without increasing  the minimum wages and adjusting them  to the  high cost of living,  Diab like his predecessor , is adding more  debt on the country  again, without  recovering the stolen money, show who is  accountable for that , and prosecute the corrupt. 

Same Ex governments trend , nothing change added to that liberating the LBP to 3500 official rate.

Last edited by Tech Guru (May 1 2020)

rolf

Member

Re: Lebanese lira to USD exchange

PM Diab must resign as soon as possible

There is a rule against discussing politics in this forum.

Tech Guru

Member

Re: Lebanese lira to USD exchange

PM Diab must resign as soon as possible

There is a rule against discussing politics in this forum.

Edited. It not political related to him or any  one. The major point is librating the 1515 official rate to 3500. Just trying to show it is catestrophical complications on already tired citzens. Hopefully the core message is understandable & you may have elaborated more on this issue not think I am going into a political debate. It is my least interest to put my input into. Of you skim in all my inputs , you may find that.

Last edited by Tech Guru (May 1 2020)

NuclearVision

Member

Re: Lebanese lira to USD exchange

Honestly, I don't think it's even possible to fix usd at this stage, let alone at 3500....

VincentKeyboard

Member

Re: Lebanese lira to USD exchange

The current cabinet is in a major problem if they are implementing  the International Monetary Fund plan . If the dollar is fixed on  3500,  Everything with BDL support imports  like wheat, petroleum, medicine , dollar loans , and rents .. will be paid 3500 LBP Rate instead of 1515 .. with  a minimum Wage  of 675,000 and many public/private sector employees are getting paid on 1515 base without any inflation adjustment ..

This step will expose  more than 90% of the Lebanese workforce, who get paid in Lebanese pounds , to direct poverty.  Without increasing  the minimum wages and adjusting them  to the  high cost of living,  Diab like his predecessor , is adding more  debt on the country  again, without  recovering the stolen money, show who is  accountable for that , and prosecute the corrupt. 

Same Ex governments trend , nothing change added to that liberating the LBP to 3500 official rate.

Because there is blindness towards that most people get paid a fixed amount in LL and not dollars convetred to LL.
Frankly, I am very scared.

m0ei

Member

Re: Lebanese lira to USD exchange

I don't understand how BDL allows external payments via debit/credit card up to a certain limit depending on the amount but disallow local businesses to benefit from it.

If they allowed that same amount to be used locally for local businesses, and allow these businesses to cash out the amount in USD after X weeks or whatever, similar to how they handle external payments, it would be much better for the dying economy.

This way, USD would stay inside the country, rather than sending the last amounts we have to foreign banks.

Last edited by m0ei (May 1 2020)

xazbrat

Member

Re: Lebanese lira to USD exchange

I don't understand how BDL allows external payments via debit/credit card up to a certain limit depending on the amount but disallow local businesses to benefit from it.

If they allowed that same amount to be used locally for local businesses, and allow these businesses to cash out the amount in USD after X weeks or whatever, similar to how they handle external payments.

This way, USD would stay inside the country, rather than sending the last amounts we have to foreign banks.

Our banking system is 15 years behind and fundamentally flawed.  While it was sound and weathered the 2008 crash, it never evolved  I feel sorry for small businesses who cannot accept credit cards any more because they don't get access to that money.  They can't buy goods to stock in theri store without going through the sarafeen mafia. The business model in this country is bank centric--all transactions flow through local banks and while it makes them happy, the people get screwed over when there are problems.

There should be an effort made to decentralize some of the decision making of BDL and start allowing peer to peer transactions.  Would be safer than cash and you would have access to it at any time and wouldn't require a bank unless you wanted to go to an ATM.

eWizzard

Member

Re: Lebanese lira to USD exchange

According to the government's reform plan the LBP won't stay fixed at 3,500 to the dollar as there shall be a more flexible exchange rate (page 10) and public sector employees shall see an annual wage increase as an adjustment for inflation.

nuclearcat

Member

Re: Lebanese lira to USD exchange

According to the government's reform plan the LBP won't stay fixed at 3,500 to the dollar as there shall be a more flexible exchange rate (page 10) and public sector employees shall see an annual wage increase as an adjustment for inflation.

Same problem as everywhere...
At one side it is not acceptable at all that depreciation put some of them below poverty line. But it puts everybody.
At another side, if trade balance is not fixed before that, all this banking tricks (audi * 2 for fresh money, etc) + wage increase - will cause lira to skyrocket even more, and private sector who only can help country to recover will be totally dead, because they can't just follow "trend" and increase salaries by changing numbers. It seems to me fair to tie public sector salaries to average private sector salaries.
Therefore, any public sector employee who are choking private sector will understand that he is strangling himself in an indirect way.

And IMO knowing how the IMF works, no one will give Lebanon loan with such plans, unless other spending reductions and taxes increase  - will please them. But guess what, taxes increase is even worse for private sector.

vengeance666

Member

Re: Lebanese lira to USD exchange

The usual half assed plans our officials make. Put all the losses on the already screwed up average citizen and bail out the 1%. Did anyone in their right minds have hopes that they would make an actual reform plan that would cater to everyone's hopes and dreams ?

Tech Guru

Member

Re: Lebanese lira to USD exchange

According to the government's reform plan the LBP won't stay fixed at 3,500 to the dollar as there shall be a more flexible exchange rate (page 10) and public sector employees shall see an annual wage increase as an adjustment for inflation.

Mate where  it is mentioned that public sector employees shall see an annual wage increase as an adjustment for inflation. I was drilling in the whole plan and page 10 , however I didnot spot that. Usually when the LBP is librated , it will be librated by a law voted by the parliament and not a BDL circular. The new law must take into consideration adjusting wages to the new currency liberation , as an adjustment for the inflation. Reason, all existing salaries are paid on 1515 bases. Private sector adherence remains per business owners / board of directors profitability analysis which are highly sensitive to economic volatility.

Last edited by Tech Guru (May 3 2020)

jsaade

Member

Re: Lebanese lira to USD exchange

The issue is not with fixing rate, it is with missing liquidity.
whatever the official rate is, if we USD is needed and you cannot "officially" exchange to USD in banks, then that price will go up. These last few days USD rate is lower (3700-3800) but you cannot even buy or exchange USD, so this does not mean anything, I can still sell USD at 4000+ as it is in demand.

VincentKeyboard

Member

Re: Lebanese lira to USD exchange

So a real solution is to limit our need for USD?

vengeance666

Member

Re: Lebanese lira to USD exchange

So a real solution is to limit our need for USD?

Yea or a source for USD. But it's actually the same since when you become productive locally and limit your need for USD, USD will start then flowing in from exports. Without doing that, you're stuck in an endless loop of debts and interests payments (this is what happened, we racked up shit ton of debt over the years to pay the debts before that to a point where everything collapsed).

eWizzard

Member

Re: Lebanese lira to USD exchange

Mate where  it is mentioned that public sector employees shall see an annual wage increase as an adjustment for inflation. I was drilling in the whole plan and page 10 , however I didnot spot that. Usually when the LBP is librated , it will be librated by a law voted by the parliament and not a BDL circular. The new law must take into consideration adjusting wages to the new currency liberation , as an adjustment for the inflation. Reason, all existing salaries are paid on 1515 bases. Private sector adherence remains per business owners / board of directors profitability analysis which are highly sensitive to economic volatility.

Page 17: In order to mitigate the impact of high inflation on the purchasing power of civil employees, the government also intend to compensate for the real depreciation by one-off increases of nominal salaries to be determined on an annual basis based on previous year inflation estimate figures