Posted on 06/10/2016 3:12:01 PM PDT by Lorianne
Guess what Zimbabwe’s most important import is: Guns? Food? Medicines? Fuel?
It’s US dollars. The Reserve Bank of Zimbabwe’s lists it as the country’s number one import priority. There are no details of how much, how it is brought into the country, or how much it costs (or what the sense would be in paying for them, presumably in US dollars which will have to be sent back to the source of the consignment of banknotes).
Zimbabwe has experienced every manner of national crisis in the 36 years of its existence, all under President Robert Mugabe, but none as bizarre or damaging as the present case – running out of money.
About a month ago queues began stretch outside ATMs. Most people put it down to usual payday business, but then reports came in that the machines were running out of money, well after payday. The queues doubled in size and people were having to wait up to three hours to be able to draw cash. Surprisingly, reports of unruly shoving and pushing have been few - so far - even when the cash ran out and the banks would not tell if they were refilling the machines.
Now the better-off foreign-based banks allow withdrawals of US$300 per day, the local banks around US$150. It means that every day companies have to send someone to queue to collect enough for weekly wages and other expenses. It’s not clear how large companies manage, or for how long they can manage paying out that much.
“On Monday I queued for two hours inside the bank, I needed US$6,000 to pay wages,” said a publishing executive with 30 employees. “I asked the teller how much they were letting corporate customers have. A hundred dollars, he said. I’m panicking now. I can’t pay my workers, and they aren’t going to work without pay.”
The disruption is causing serious stress, anxiety, confusion and anger. Security guards struggling to keep order in the queues – they now have been instructed to demand ID from people wanting to draw from ATMs – and bank tellers being verbally abused when they can issue only US$35 at a time; truckers who have to park their trucks because they can’t get cash to pay for border fees and fuel, and tenants under threat of eviction for not paying their rent in time.
And probably worst of all, Zimbabwe’s voracious police, most of whom seem to spend their duties in roadblocks all over cities and towns and on the open road – 16 counted last week on the 440 km road between Bulawayo and Victoria Falls – taking cash off motorists in fines because their fire extinguisher may not have been recently serviced or whose vehicle licence disk may be partly obscured by the darkened edge of the windscreen.
Some cash is being imported. Much of the money being issued by the banks is in crisp new notes, instead of the old, grimy, sweat-softened notes that have been kept next to people’s skin (usually in bras or socks) and which form a large proportion of the cash in circulation. But it’s not enough.
Zimbabwe underwent the world’s second worst inflation – 500 billion percent – in 2008 and 2009, after Mugabe ordered mass printing of the country’s enfeebled currency, the Zimbabwe dollar. It eventually disappeared in a vortex of digits and the US dollar, up until then the black market currency of choice, was made the national currency, without a hint of embarrassment from the America-loathing president.
Several countries, led by Sweden, are virtually cashless and rely on “plastic” bank cards but the process was carefully managed. In the case of Zimbabwe, cash is disappearing because export production has foundered under misrule and Zimbabweans imported their needs and wants instead. As of now, Zimbabwe imports US$3 billion more than it exports, and the nation’s pool of hard currency has all but disappeared.
The banks are going all out to achieve a mass conversion to plastic. Geoff, who runs a garage workshop, realised he would quickly find himself in trouble if he insisted on the Zimbabwean habit of paying for everything in cash. He went to a local bank and asked for a card. Fill in a form, he was told, and asked the bank official when he would be able to collect it. She reached into a deep drawer stuffed with boxes of debit cards and gave him one on the spot – a dramatic change for a banking sector that has been stuck in the sixties.
However, the cards are useless without swipe machines. Business applying for them have been told of waiting lists of up to six months.
There are also cultural reason preventing the banks from achieving the large-scale switch to electronic banking. Ordinary working Zimbabweans hold fiercely to the “cash under the mattress” tradition. It is strengthened after the repeated Mugabe-induced money crises that have swallowed people’s savings in the custody of the banks.
The World Bank says that only 17 percent of Zimbabwean adults use banks, and of the poorest 40 percent of adults – most of whom are in the “informal” group of street traders – only seven percent are banked.
What really got up the noses of ordinary people, however, was the announcement by central bank government John Mangudya that he was going to introduce US$200 million “bond notes” at the value of the US$, which would be used to pay companies an export incentive of five percent as a way of boosting fresh inflows of hard currency. The “bond notes” would then circulate into the general market.
The amount is an almost insignificant sum compared with the rest of cash in circulation and Mangudya is seen as a regular banker and a decent man, compared with his predecessor, the hated Gideon Gono who brought desperation to millions of people as he smilingly carried out Mugabe’s instructions to print money at will in 2008-9.
But Mangudya’s proposal has been met with extraordinary hostility, and it is seen almost unanimously by Zimbabweans as a ruse bring back the”Zimkwacha,” as it is derisorily known. The governor initially set production of the bond notes for August, but last week deferred it to October, apparently in the realisation that it would take longer for the idea to be swallowed.
snip (there's more)
So whats the problem? Just but more money.
Did they let the ink dry first?
They did that until they ran out of zeros. That's when they had to switch from their own currency to the U.S. Dollar.
The article speaks as though the citizenry there walk around with the same greenbacks we have.
They print this monopoly money thing based on their closet full of US cash.
So basically, they write money based on our performance in the IMF basket - How good our money is sees how good their money is.
The nicest thing is that technically a movie should cost a nickel.
Yet another country that emerged from “colonialism” to prove that these ferals can’t run themselves. I laugh at their predicament.
Another Marxist shithole proves that Hillary and Bernie are ideological fools and pinkos.
A good PhD project for some enterprising young graduate student, would be to go back to the 70’s and 80’s and see who in U.S. politics and the media told us how great a free-from-white-rule Rhodesia would be.
Start with Sen. Ted Kennedy (D-Mass) and work your way down the food chain of the left.
The history of Zimbabwe is one of Marxist iron-fisted rule, genocide against the white farmers who were the economic backbone of Rhodesia, massive rape against white women, intertribal fighting, No. Korean troops putting down revolts, and a nearly total failure of the Marxist economic system.
After all this time, what do you have? It is not a “failed state” as John Batchelor would call it. It is a “successful Marxist state” in every sense of the word “Marxism”. No. Korea is a “successful” “Communist state” too. So is Red China, the old Soviet Union, Communist Vietnam, Laos, and semi-Marxist Cambodia, among others.
Al Qaeda, ISIS, Hamas, Hezbollah, Fatah, Boko Harum, the Taliban etc. are all successful Islamic extremist movements, not JV operations. A couple of them will be smashed and reduced to nuisances but the fact that we did not crush them when we had the opportunity due to Obama’s cowardice and treason, means that their survival was assured for the foreseeable future.
Unless we get a “mindset” change in the US leadership and academia/media, we will still get the leftist anti-American Obama view thru Hillary, Elizabeth Warren, the Democrat Party and the Bernie Sander’s Marxist/stupid “Childrens’ Crusade”.
In other words, America is screwed until we stand up now and tell the truth about our country’s Marxist domination, their destruction of our basic republican/democracy system, the destruction of the free enterprise system, and how the Democrats are deliberately surrendering to our enemies - Marxist, Islamist, Uber Alles sexual minorities, and anti-American Hispanics mainly from Central America/Mexico.
You know, I’ve never really looked at it that way.
Thanks for the eye-opener. (I’m NOT being snarky!) :)
They do. It was that or the South African Rand. But the kleptocrats in South Africa are developing a similar problem.
Zimbabwe ditches ‘worthless’ currency for the US dollar (2015)
http://www.ft.com/cms/s/0/34d75e42-10e8-11e5-8413-00144feabdc0.html
You can also use Chinese or Japanese currency, and perhaps the Rupee. But the U.S. Dollar is the standard.
So basically, they write money based on our performance in the IMF basket
Wrong, and wrong again.
Bookmark
Reminds me of Noah Berry in PANCHO VILLA. He had lots of money printed, tried to pay the printers with the printed money, but the printers wanted pay in Silver!
“Doves! I hate doves!”
So Please! I ask again where in the world with a BLACK government (like ours) doesn’t spend money like a crackhead with a stolen credit card?......Negroe please enlighten me.
“Wrong, and wrong again.”
(Also the link you posted requires a membership to read, and I would appreciate a kind, sort of “in person” style of response instead of the online anonymity sort of response that runs rampant in these parts.
The US dollar that the Zimbabwean banks are pushing take a single amount of US holdings - US Dollars. So lets say, for argument sake that this amount is $1000.
So among that $1000 it gets divided up into enough paper to serve the whole country. Since this is the basket that they are deriving from, and 10000 citizens hold an equal share of the US $1000 basket that means each person (Again, in equal holding) is holding a dime. If the countrys native currency is totally dead then everything in that country is now measured against the $1000 in US Dollar holdings.
This means that these dimes that people have are worth a few million dollars in their market.
That said, they do NOT walk around with green slips of papers with president faces on them. They have a new paper design that has the faces of Zimbabwean people, in a classic blue bank color and banking script. But the writing on it says “US Dollar Certificate” or something similar (I’ve seen two designs)
Obviously the amounts are not $1000 for the whole country. It may be something like $1,000,000,000. Seeing a “1 US Dollar” may not be unusual.
So like the US used to work in gold and silver certificates, Zimbabwe is now going to start working in US Dollar certificates.
My name isn’t important because this is online and “loose lips sink ships” but I’ll tell you more about me in private message if you need. I made a living for over 8 years in high finance data and system analysis where I worked with Fortune 50 companies, accounting firms, major government think tanks and even for the Canadian Government to build and test systems that could process monetary trade. My resume includes Checkfree, ADS, Dun&Bradstreet, META Group, United Technologies, Arthur Andersen and Deloitte and Touche. I have worked in physical asset trading for Asbury Automotive, Penske and Chevron.
I know many of you are used to dealing with people on the internet who have no clue of what they are talking about, but some of us DO have a clue what we are talking about.
Weren’t they the ones printing counterfeit US dollars?
I found one of those in a Geocache. It was worth less than a little plastic monkey in the box. I took the monkey.
Why should they change? They know they are correct.
time to consider the wife ....
= = =
And can’t afford to fatten her up first ....
The link works for me without a subscription.
Here’s an excerpt from the June 12, 2015 article:
“The Reserve Bank of Zimbabwe said that it will begin a process to “demonetise” its all-but-worthless currency on June 15. The move was planned by the minister of finance and economic development last year and the process is expected to be complete by September 30.
“Within that window, the notes can be exchanged for US dollars. After that they will be worthless — which is not so different from their value now: the RBZ said that accounts “with balances of zero to Z$175 quadrillion will be paid a flat US$5”.”
Since they are running out of dollars/rand/euros/etc, they are planning to start printing their own ‘U.S. Dollars’, allegedly backed by $200 million from the African Export-Import Bank. (Exporters can, for now, get a portion of their money in real hard currency - 40% of their export money in Rand, and 10% in Euros.
You posted:
“This means that these dimes that people have are worth a few million dollars in their market.”
and I’ll say wrong, again. The old millions/billions/trillions have be demonetized, and are now worthless. The newly minted local ‘U.S.Dollars’ are just hitting the market, and while we all should anticipate that they will join the previous output when the government blows through the first $200 million, they haven’t gotten there yet.
M4L Zimbab finance
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