Author: cedarsphilosophy

18 Tribes, One Civilization

Higher dimension view of the crisis

Motivational author and speaker Tony Robbins is well-known for his philosophy that “20% of success comes from mechanics, 80% comes from psychology”. Perceptions induce thoughts and states of mind, driving the repetition of behaviors that ultimately impact material events. The same exact phenomenon at the individual level replicates itself at the aggregate level, with collective consciousness affecting aggregate outcomes. Humans are faced on a daily … Continue reading Higher dimension view of the crisis

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Politics

Structural dimension of the crisis

As a society, all behaviors are an expression of one’s values. These values lead to certain predictable behaviors, which in turn become norms, and these norms become codified as law. These laws act as the social contract between all of the different groups of societies. Networks of political patronage, business relationships, family and friend connections act as complex webs of information and value exchange. This … Continue reading Structural dimension of the crisis

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Sovereignty & Diplomacy

Geopolitical dimension of the crisis

Centuries of conflict between Germanic tribes and the Roman Empire are widely considered to have played a key role in the gradual demise of the empire. The Soviet Union collapsed a couple of years after the end of the Afghan War. Being in a theater of war extracts its toll on any society. When a state is occupied, rather than waging war in another land, … Continue reading Geopolitical dimension of the crisis

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The Great Collapse

Fundamentals of the Crisis 5) BDL

As the Central Bank of Lebanon, BdL has been a key actor in the unfolding of the crisis, by funding an insolvent state, trapping depositor reserves and enabling an unsustainable Ponzi scheme. While the Parliament is empowered to determine the official Lira rate (Code of Money and Credit (CMC) Articles 2 & 9), the BdL is entrusted to ensure monetary stability and has the right … Continue reading Fundamentals of the Crisis 5) BDL

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The Great Collapse

Fundamentals of the Crisis 4) The Banking Sector

Lebanon’s economy was a Ponzi scheme. Such schemes can last a long time and even be made to appear legal when state-sponsored, like in Lebanon’s case. These are based on their participants’ confidence in the solvency and liquidity of the scheme. Inevitably, when one of those pillars breaks down, the system collapses. Behind the Lebanese Ponzi scheme, commercial banks played a key role. From lending … Continue reading Fundamentals of the Crisis 4) The Banking Sector

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The Great Collapse

Bank Withdrawals

Banks have announced they will be allowing depositors with accounts less than 50k, to withdraw half their savings in dollars, and half in liras at the market rate. This operation is expected to help reimburse about 1 million Lebanese, and cost about $13bn. It remains unclear how the operation will be funded. BdL recently insisted that banks had successfully complied with Circular 154, launched last … Continue reading Bank Withdrawals

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The Great Collapse

Dollar Rationing

After over a year and a half of subsiding goods (Circulars 530 and 535) to fight inflation after the Lira rate fell, the BdL has changed course on its approach to subsidies by introducing ration cards. The caretaker cabinet has submitted a law that will open the door for ration cards to the poor, providing $137 per household, by targeting 750,000 to 800,000 individuals within … Continue reading Dollar Rationing

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The Great Collapse

A Failed State, Not a Bankrupt One

There is nothing more symbolic about Lebanon than its predicament in the energy industry. The country possesses great amounts of estimated offshore reserves of natural gas. It will not be the savior-for-all, but by 2028, Lebanon could start generating an estimated $1.5-2bn in revenues per year to the state’s coffers. The government’s lack of responsibility and sovereignty means Lebanon is behind in development and unable … Continue reading A Failed State, Not a Bankrupt One

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The Great Collapse

Fundamentals of the Crisis 3) The Rentier Economy

Rentier economic value describes value derived from the scarcity, rather than innovation, of supply. This scarcity is also often called “rent”, and is the product of monopolistic behaviors or the inherent nature of certain commodities and services. Nicknamed “the Merchant Republic”, Lebanon has enjoyed a services-oriented economy since its earliest days, reliant on finance, trade, real estate and tourism. The dominance of these industries often … Continue reading Fundamentals of the Crisis 3) The Rentier Economy

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The Great Collapse

Fundamentals of the Crisis 2) The Lira Rate

The Lira exchange rate has been fixed since 1997, when BDL decided to adopt an official fixed rate of LL1507/dollar. The goal was to stabilize the currency after periods of heavy Lira depreciations and inflation suffered from the second half of the mid 80s until 1992. The policy has been criticized for keeping the same rate to the dollar for so long, given that it … Continue reading Fundamentals of the Crisis 2) The Lira Rate

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