The repercussions of the financial crisis in Lebanon
What the financial markets have witnessed during the last two months are unprecedented events in the history of Lebanon. As there is almost unanimity in light of the repercussions of the financial crisis that the economic and financial conditions will not return to what they were before the outbreak of the crisis.
The economists and officials who previously denied the possibility of a crisis/recession, are now starting to talk about the worst crisis to hit the country from independence. Instead of the golden and diamond jubilee celebrations turning into demonstrations, demands and rebellion.
These economists are concerned about confidence in the financial markets and banks, given that they all believe that confidence and only confidence is the real reason behind the boom cycles, and the lack of confidence is the main reason for the crashes. But when it comes to the goal of achieving profits and accumulating them by any means possible, then things get out of control and trust, credibility and cooperation collapse. This has happened recently with major banks that were previously believed to be built on sound foundations, that do not break, burn, or sink, and are not liable to fall.
For over two and a half decades, banks have persisted in robbing customers of money and, under the supervision and participation of the powers of authority, and under the management of the central bank’s governance, have accumulated huge profits. Then, the violations of these banks were turned a blind eye to determining interest rates on loans and deposits, imposing discretionary restrictions recently on withdrawals within specific numbers, and permanently stopping transfers as a result of the lack of liquidity, which led to panic in the markets and the collapse of the exchange rate of the lira and instability in prices. Continuous and on the rise.
The black market began to control the exchange rate of the dollar against the lira, which reached, as of this writing, the number of 2100 LBP. Inflation is slowly seeping into commodity prices.
The financial crisis predicted by some analysts who are truly economists, intellectuals and insight fell on deaf ears at the time, as a result of gross mismanagement, intransigence and more manipulation of a stage of reckless speculation that produced the largest financial and economic crisis in the country's history.
On the other hand, some naive economists simplify the description of the economic collapse by saying that it is a transient crisis, and suddenly reviving a slogan only for the pound, not for the dollar.
It is recognized that everything that rises to the top in an exaggerated manner must rebound and fall to take its normal size based on supply and lack of demand in the market. For several years, home economics seemed to break the laws of economic gravity. And when it began to fall, it recorded a record speed due to the huge heights reached by speculation in the financial and real estate sectors.
The prices of apartments and land have fallen over the past two years to about 50% and are still quite expensive. The paradox of this crisis that the country is witnessing is that the banks were and are still collecting wealth at a time when they were continuing to implement the strategies that led to the collapse, with the possibility of neutralizing them and exempting them from responsibilities, knowing that they and the Central Bank are the head of the destruction of the economy by dissolving the funds of investors and depositors in the asset markets. And the absence of hard currency.
It is reported that there was no money for health care, insurance, old age, and education. But there is a lot of money for the banks for loans and dumping the consumer and the citizen with debt without any production plan in the field of industry, agriculture and others. This blatant contradiction and randomness in dealing will have enormous consequences in the future. Heavy debt burdens during the last 20 years will be placed on the shoulders of future generations, and this will inevitably lead to a profound change in society.
We had to limit the influence of banks in order to avoid the collapse we are witnessing today. As citizens, investors, and even as depositors, we cannot rely on banks. If it wins, the benefit is for the major shareholders, and if it loses, the depositors bear the consequences, so accounts in foreign currency (dollars and others) evaporate, and withdrawals are in pounds by drop. This is the main reason that motivates depositors to withdraw their money gradually from the banks until the latter empties of liquidity, and the citizen accumulates his money in his home, where peace of mind and great capacity lie.
And declaring war on banks and limiting their capabilities, because we can no longer bear a future in which the banking sector threatens the entire society, as we have reached now. Those banks used public deposits without planning, speculating in real estate, manipulating financial derivatives such as bonds and others, and even smuggling money or insisting on frozen long-term deposits with high interest and risk, and when due, the answer is no dollar after today, and dealing in the national currency, i.e. the lira, whose value is eroding weekly without any Little digital ceiling. Until now, there is no hope or program to reduce this crisis, whether by the concerned state or the accredited economic experts. One of the repercussions of this financial problem has prompted many private institutions to lay off some employees or reduce their wages.
During two decades, bank owners made huge profits, and now they claim the opposite. No one cared, they all got involved in the money-making madness. Their latest infernal creation was to increase interest on the frozen Lebanese pound by 16%-17% for one year. Today, they complain about the lack of liquidity, and the reason is that a large part of this liquidity is either fictitious or is in accounts outside the country. When the so-called "boom period" It was for very few people. As for the current financial crisis, it affected everyone, and its repercussions were not confined to the financial and banking sector only, but also extended to the real economy, and it raised questions related to the internal economic system and international economic relations that some are proud of.
Finally, I must strive to restore economic stability by controlling the deficit and public debt, working on developing local financial markets and following a policy of banking transparency, as it is necessary to build the confidence of depositors and investors alike in pumping money from abroad through transfers, which leads to an increase in foreign currency reserves and an abundance of liquidity, and thus stimulating economic movement as a whole.