A central bank that looks forward to high inflation?

I should thank Mustapha at BeirutSpring.com for drawing attention to an article published by the Ludwig von Mises Institute that praises Riad Salameh's skills as Lebanon's central banker.  Mises was the professor and mentor of my all-time hero: Friedrich von Hayek. You can imagine my excitement as I clicked on the link.  

Mustapha is a polite, glass-is-half-full kind of guy. For the positive interpretation, read his blog. I'm not an optimist (and only occasionally polite):

There is a sophomoric analysis of the Lebanese banking system that puzzlingly talks about banks reserve ratios, lending practices, as well as the debt, but where the author seems totally oblivious to the fact that much of the debt is owned by the banks!  He also seems oblivious to the fact that banks were effectively forced to buy the debt on more than one occasion at below-market rates.  

These glaring oversights aside, the author presents a startling quote from the Governor, which he suggests is prescient, though "unconventional":

"The future expectations of inflation are going to diminish the real value of [the public] debt, which is stated today at around $48 billion. And the present value or the real value of that debt will look less important in the next four or five years, as the purchasing power of currency is going to be depleted worldwide."

!!!!!!!

Is the Governor looking forward to high inflation as an exit from Lebanon's debt burden?  This is a very very strong statement. A look at the original interview in Executive Magazine shows that the quote is taken out of context.

The real revelation in all of this is that the Mises Institute, which purports to be "the world center of the ... libertarian political and social theory" has become a source of complete piffle.  I'll stick to readings from the Hayek Institute.  

There is no reason to celebrate Palestinian rights

There is an Arabic expression that I sometimes find useful:

"خذ الحكمة من أفواه المجانين" 

Loosely translated, it means: "seek wisdom from the mouth of the insane."  In this spirit, I would like to recall something that the mad messianic Generalissimo in Rabiyeh said a month ago:

"We can't issue a law that gives the Palestinians the right to own property.....we can issue a law to reclaim properties owned by foreigners"

He is of course dead wrong to suggest that we can - or should - seek to reclaim property sold to foreigners, but he is right make a link between the two. How can Lebanon bar Palestinians from owning property, but allow other foreigners to do so?

There is something fundamentally flawed with the law that Parliament passed today, granting Palestinians the right to work in Lebanon.  It stinks of continuing discrimination against one particular nationality. It is also absolutely the wrong move for two reasons:

• It continues to bar Palestinians from jobs that require membership in a syndicate, a medieval guild-like system that should be abolished for everyone. 
• It continues to bar Palestinians from owning property.

What is the law doing exactly? It is allowing Palestinians to take basic jobs, but bars them from more professional jobs, such as doctors or lawyers.  Basically, the law is telling skilled, potentially successful professionals that they are encouraged to move to another country.

Furthermore, by denying Palestinians the right to own property, we are telling every entrepreneurial Palestinian that even if you are successful, you can't buy a house. What sort of incentive is that? Why should this person bother being entrepreneurial at all? Property rights underpin the most essential incentives for an economy to work.

The problem with the law originates in the way the debate was framed in the first place, by the reliably schizophrenic Walid Jumblatt.  This law should not have been presented to parliament as a call for Palestinian "rights" - as though it was a charity endeavour - when knows that there continues to be underlying resentment towards them among a large part of the population. Rather, Parliament should be discussing "Lebanon's" interests.  It is in our interest that the Palestinians are economically successful because that will only strengthen our economy.  It should also be the right of any Lebanese business to employ the best person for a particular job - be they Palestinian, French or Indian. We should also have the right to sell property to whoever is willing to pay the highest price, be they Palestinian, Saudi or Extraterrestrial.  We would be doing ourselves a disservice by not welcoming Palestinian investment in our country with a red carpet.

It is true that Palestinian groups routinely violate Lebanese laws, and have yet to accept to disarm. But holding an entire population of 400,000 hostage for the actions of a few thousand thugs is the sort of collective punishment one would expect from Saddam or Stalin. This is not acceptable behaviour by the sort of democracy Lebanon aspires to be.

The listener's best friend

Every event needs a Miss Sweetie Poo.

Une bonne occasion de se taire

It is unfortunate that there wasn't a Jacques Chirac in Koraytem yesterday to tell Hariri that he missed a good opportunity to remain silent.  Everyone was expecting him to say something regarding the outrageous claims of Hassan Nasrallah.  Instead, he decided to use the opportunity to explain why he chooses to remain silent:


The premier highlighted the fact that he had abstained from making statements "throughout the last period." 
"I will continue like that because I want calm, because through calm we can talk to and hear each other, but through screaming, no one would be able to hear the other. We want to calmly discuss everything we approach in this country," Hariri added.


Run that by me again? Are you saying we can talk by saying nothing? Or are you saying that the only things you have to say are inflammatory? Can't you reply to screams calmly? More importantly, are you distancing yourself from the few reasonable replies to Nasrallah by your supporters?

The attempt to sabotage the work of the Special Tribunal is a bigger threat to the rule of law than the actual assassination of Rafik Hariri, Basil Fuleihan, Gebran Tueni, Samir Kassir et al.  It is also part of a transparent but insidious attempt to break the country's engagement with international efforts created specifically to help Lebanon (such as UNIFIL).  If Nasrallah was simply concerned about getting off the hook, he can easily do what Qaddafi/Kadhafi did with Lockerbie and blame it on a few rogue operatives.  I am sure there is no shortage of patsies in his "martyr"-generating death machine.  


Hariri got it all wrong when he said “I am concerned .... because I am Rafik Hariri’s son."  March 14 was triggered by Rafik Hariri's assassination, but was not just about mourning his death. It was about a much bigger issue: establishing a democratic, independent country. Enforcing the rule of law and bringing terrorists to justice is a most critical part of this process.  There is no room for silence.


I miss Jacques Chirac.  

Pan-handling to waste money

Defence Minister Murr announced the creation of a special account  at the Central Bank to raise funds for the Lebanese Army.  The account will be used to collect voluntary donations from the Lebanese, and he even seeded the account with a donation of his own.  A fine patriotic gesture....but wait a minute, what will the funds be actually used for?

While the Lebanese armed forces were amidst the Great Landscaping Battle, a good (and perplexingly wannabe-Lebanese American) friend of mine asked me a simple question: Why does Lebanon actually need an Army?  Why not have a Costa Rica-like state, with no army at all?

The truth is that we need an army to feed our delusions.

The Lebanese government never deployed the army at moments of serious need, and the Army is almost always a spectator during any real battles in the country.  The army was able to deploy in South Lebanon only after the area was completely devastated by the 2006 Hizbollah-Israel war.  The army failed to protect civilians of Beirut in May 2008, and was not deployed until five days after a gang of militias had overrun the city.  Having a large army barrack in Baalback did not stop two narcotic-smuggling clans from lobbing rocket propelled grenades  at each other in the town yesterday.

To be fair, the army has been effective in dealing with one terrorist organisation, Fatah al-Islam.  What is not clear is whether this matter could have been handled more effectively - at a lower cost in terms of human lives - by the Internal Security Forces.

It would be a monumental stretch to imagine that the Lebanese Army will be able to stop any Israeli invasion, or even Syrian tanks from rolling across the border.  Would it not be better to be pragmatic and just rely on the ISF? Why not use our scarce resources for far more achievable and basic goals, such as a reliable supply of electricity and water?

Does Lebanon really need to pay the cost of training soldiers to shoot and ski simultaneously? Or spend on maintaining a prime real estate beach club for officers, even if some of them are cute?

Stifling Barnabas

I have to admit that I never thought of Lebanese churches as "fandamentalist" until The DaVinci Code was banned 2004. It did not portray the Vatican favourably, but that did not  mean that Italy should ban it. Freedom of speech, after all, should at a minimum protect fiction! Not in Lebanon, alas, which enjoys the dubious honour of being, along with Sri Lanka and the Solomon Islands, one of the handful of countries to ban the movie and book.

A new twist in Lebanon's church-friendly censorship  has emerged.  Two TV stations with overwhelmingly Moslem audiences decided to stop airing a series depicting the life of Christ that was made in Iran.  There can be no doubt that the series is nothing more or less than the "approved" story of Christ as told by Iran's ayatollahs. After all, how many film directors in Iran would dare do otherwise? Notwithstanding this, the series has been yanked off the air after the Catholic Pastor of the Church of Byblos announced that it is offensive and it is based on the Gospel of Barnabas which is "not at all recognised by our Church."

He did not stop to think for a minute that Barnabas happens to coincide with the Koran. But that does not matter because Moslems would happily oblige. After all, they need "Christian" support the next time they are offended by an episode of South Park.

The only victim of this mutual masturbation is Lebanon's freedom of expression, or whatever is left of it.

Don't get me wrong: I have no interest in watching the series (though I probably would if I am paid enough to sit through it).  This said, we all should have the right to choose not to watch.