Lebanon's protests in online news & world news

Lebanese protest central bank chief as pound hits new low

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Lebanese protesters on Wednesday blocked roads and burnt tires near the central bank in Beirut as the weakened local currency plummeted to a new low against the dollar. online news

Since 2019, Lebanon has been in the throes of an economic crisis dubbed by the World Bank as one of the worst in recent global history, pushing much of the population into poverty.

Alaa Kharchib of the Depositors’ Outcry Association that had organised the demonstration warned of an impending “social explosion”.

“No one trusts our corrupt officials or the central bank governor,” Kharchib told AFP.

Lebanese banks have imposed draconian restrictions on withdrawals since the country’s economy collapsed three years ago, essentially cutting off people from their savings and prompting public anger.

Dozens of protesters gathered Wednesday near the central bank headquarters amid heavy deployment of security forces, AFP correspondents said.

Protesters chanted slogans lambasting long-time central bank governor Riad Salameh, one of several officials widely blame for Lebanon’s economic demise, and burnt images of him.

Salameh is under an international investigation in Europe on suspicions of financial misconduct including money laundering and embezzlement.

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Demonstrators held up posters calling Salameh “public enemy number one” and others saying: “We won’t go hungry, we’ll eat you,” taking a jab at the country’s ruling elite, the correspondents said.

The Lebanese pound, which had already lost more than 95 percent of its value since 2019, plunged to nearly 56,000 to the US dollar on the parallel market, dealers said.

The main official exchange rate still pegs the pound at 1,507 to the greenback — its value before the crisis.

“People are tired, hopeless and migrating,” said Kareem, a 38-year-old protester who only gave his first name.

“All we want is a solution, a dollar will soon be worth 60,000 pounds yet nothing is being done,” the telecoms employee told AFP.

As the local currency nosedived, fuel prices have soared, reaching about $19 for 20 litres of petrol.

Lebanon’s economic woes have been exacerbated by mounting political troubles.

The country has been effectively leaderless for months, without a president and ruled by a caretaker cabinet.

Lawmakers have failed to elect a president 11 times since Michel Aoun’s mandate expired last year, and politicians have yet to agree on the makeup of a new government.

Earlier this week, the judge investigating the deadly 2020 Beirut port blast resumed work after a 13-month hiatus, charging high-level officials.

The surprise move has sparked controversy, with Lebanon’s top judge rejecting judge Tarek Bitar’s return to the politically-charged case.

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Notes from APS Radio News

From the early part of March 2020 to April 15, 2022, the US Federal Reserve had been increasing its holdings by nearly $5 trillion dollars.

It did this each month of that period by buying billions of dollars of corporation and government bonds, in effect, infusing massive amounts of money into the economy.

And, as the FRED graph shows, it did so at rapid rate or at a high rate of velocity.

Economists say that when massive amoutns of fiat money are infused into the economy at high rates of velocity, the likelihood of noticeably higher rates of inflation is made greater.

A number of other central banks followed a similar policy.

For example, between late February 2020, even days before the media started fixating on the virus thingy, and March of last year, the European Central Bank embarked on its own version of monetary expansion.

During that period, the ECB increased its holdings by over 5 trillion euros.

The Bank of Japan also increased its holdings.

Between February of 2020 and the early part of 2022, it had increased its holding by a few hundred trillion Yen.

For a number of years, including the Bank of Japan, major central banks have kept their interest rates low.

For its part, the Bank of Japan kept its interest rates at negative rates, meaning that depositors had to pay banks to hold their money.

During and before the pandemic, major corporations had increased the number of mergers and acquisitions, as those entities were able to make their purchases using inexpensive money and higher stock valuations.

The other part of the equation was that of supply.

As a result of lockdowns, many small and medium-sized businesses were closed.

Shipping ports had lost workers, and truck drivers going to those ports had to wait in long lines, as a result.

In effect, well before Russia’s invasion of Ukraine, shortages of various goods and services developed.

The invasion and sanctions imposed have aggravated shortages of commodities like petroleum and grain.

And there have been instances of price gouging.

While, of course, restrictions and lockdowns affected developed countries substantially and negatively, in developing countries like Sri Lanka and in somewhat less developed countries like Lebanon, lockdowns and restrictions over a virus that in the US, before the introduction of the experimental mRNA vaccine, had an average mortality rate of .07%, according to Statista, had devastating effects.

The latter included food and fuel shortages in Sri Lanka, resulting in massive protests and riots, and, in Lebanon, shortages of vital pharmaceuticals and the decline in the worth of that country’s currency.

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