Saturday, January 03, 2009

CNN on Zimbabwe economics

Hyperinflation forces Zimbabwe to print $200 million notes
That's funny: I always thought that printing $200,000,000 notes was hyper inflationary. Silly me.
HARARE, Zimbabwe (CNN) -- Cash-strapped Zimbabwe revealed plans Saturday to circulate $200 million notes, just days after introducing a $100 million bill, Finance Minister Samuel Mumbengegwi said.
Cash-strapped? In a hyperinflation? CNN, the last thing Zimbabwe is, is cash-strapped. Some people may be cash-strapped, but somebody is spending a LOT of cash. I guess the qualifications for economic reporting at CNN don't include an introductory class in economics.
After the $100 million note began circulating on Thursday, the price of a loaf of bread soared from 2 million to 35 million Zimbabwean dollars.
Imagine that.
Amid allegations of illegal foreign currency trading, the government also fired top executives at four major banks Thursday, according to The Herald, a state-owned newspaper.
So, how does the government get to fire people at banks? Are the banks also state-owned?
Many anxious residents of the nation's capital, Harare, have been sleeping outside banks, waiting for them to open so they can make withdrawals before the institutions run out of cash.
That rare Zimbabwe cash sure must be worth camping out for. Especially the $100,000,000 notes: the new $200,000,000 notes made them instant collectors' items. Rare and strictly limited editions, never to be re-issued as such. Get yours now, while the supply lasts. Clearly these were not "anxious residents," they were serious and sophisticated collectors of rare currency.
The Reserve Bank of Zimbabwe had capped maximum daily withdrawals at 500,000 Zimbabwean dollars: about 25 U.S. cents, or about a quarter of Thursday's price of a loaf of bread.
If I was limited to a half million bucks a day, I would definitly feel cash-strapped. Sort of like a major Cali cocaine dealer is strapped for cash, I imagine. Still, 25 American cents doesn't buy much, even in Zimbabwe. Nearly anything would pay better than camping out for two bits, even there.
Last week, restrictions on cash withdrawals -- due to severe money shortages -- triggered riots.
Come on, CNN: Severe money shortages and hyperinflation do not belong in the same breath. Maybe you'll learn that when our trillion dollar bailouts filter thru the economy. But I won't hold my breath.
Sixteen soldiers now face possible court-martial due to alleged looting and assaults on civilians and police during the unrest, police spokesman Wayne Bvudzijena told The Herald on Saturday.

"We are still investigating the case," he said. "But we expect the soldiers to appear before a court-martial once investigations are completed."
Yeah, that'll help the hyperinflation: ignore the people creating it and have a show trial for the enforcers. Scratch that "enforcers." These were soldiers who haven't been paid lately, hence they may fall into the "victim" category, at least momentarily. (Hint to President Mugabe: It's a really bad idea not to pay large numbers of heavily armed people.)
After spending several days waiting in bank lines, soldiers rampaged through downtown Harare, destroying shops and attacking riot police sent to disperse the protesters.
Several days in line? Americans riot after a dozen hours on an airliner. Good thing they don't carry guns.
Cash shortages are not the only crisis plaguing Zimbabwe.
I'm convinced of that already, CNN.
The United Nations has said that more than half of Zimbabwe's population is in dire need of food and clean water.

Acute shortages of essentials such as fuel, electricity, medicines and food are key indicators of a failed economy, according to economic observers.
I blame the cash shortage. And George Bush, of course.
"The [Reserve Bank of Zimbabwe] is failing to deliver the demands of market, prices are doubling daily, and that demands more cash," Zimbabwean economist John Robertson said. "The huge price increases are resulting from severe shortages of most goods."
I bet Mr. Robinson went to school in formerly great Britain. Or maybe Harvard. Maybe not University of Chicago.
The once-prosperous African nation is facing its worst economic and humanitarian crisis since attaining independence from Great Britain in 1980.
There is an upside to that: At least Zimbabwe used to be prosperous. Sort of sad to think that blacks were better off under a visciously racist white government, tho. I wonder how all the people who helped change that feel today. They probably blame Dubya, too.
Zimbabwe's official rate of inflation is 231 million percent, the world's highest.
Well, what's a little inflation among friends? Especially if those dratted politicians would just print enough cash for the cash-strapped?
Critics of Zimbabwean President Robert Mugabe link hyperinflation to his policies on land distribution and unbudgeted payments to war veterans.
His land "distribution" hasn't been a big economic success, either, but I doubt it had much to do with hyperinflation. "Unbudgeted payments" may be closer to target.
Zimbabwe has had no Cabinet since the March presidential election.
I guess they are too cash-strapped.
Its political troubles have aggravated its humanitarian and economic crisis, including a cholera outbreak that has killed close to 600 people since August.
Do tell.
A CNN journalist in Harare contributed to this report.
Thanks. I sure am glad this wasn't written by some ignorant, opinionated, unedited, un-fact-checked, untrained blogger lounging around in his pajamas. I want to rely on the news I get. Like from the trained professionals at CNN.

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