Zimbabwe, Is there anything we can learn?

wayne

Member
Nov 4, 2006
161
9
16
Don't screw with the economy, I think is the lesson to be learned.

Unity agreement doesn't slow exodus of Zimbabweans - Yahoo! News

Zimbabweans Unity agreement doesn't slow exodus
By DONNA BRYSON, Associated Press Writer Tue Sep 16, 1:44 PM ET
MUSINA, South Africa - A power-sharing deal has not stopped the flow of Zimbabweans streaming into South Africa to escape the hunger of and poverty wrought by runaway inflation in their homeland.

About 1,000 Zimbabweans seeking asylum formed a line that snaked across a packed-dirt parking lot in this South African border town Tuesday. Many had been waiting for days to file their applications.
Some said they feared President Robert Mugabe was still in a position to unleash violence on his enemies. Others said that while they found hope in the agreement signed Monday, they did not expect Zimbabwe's economic crisis to be quickly resolved.
Under the pact, Mugabe remains president and head of government. Morgan Tsvangirai is prime minister-designate and will head a new Council of Ministers responsible for forming government policies.
Observers worry that rather than resolution, the agreement heralds government paralysis.
In Musina, asylum seekers waited restlessly in a lot dotted with ash left over from the previous night's fires and lengths of cardboard used as mattresses. Children gathered around a blackened paint pot balanced over a fire to await a breakfast of corn meal porridge and milk.
Robin Mucheana reached South Africa on Saturday and was still waiting Tuesday to have his application processed.
For 15 years, Mucheana grew oranges, guavas, avocados and vegetables on a small farm in Chitungwiza, south of Harare. This year, with official inflation the highest in the world at 11 million percent, he could not afford seedlings, seeds or fertilizer. He and his wife resorted to selling vegetables on the streets, but were barely making enough to feed themselves and their three children.
"In the morning, you wake up with bread selling at 8 trillion (Zimbabwe dollars), at 5 in the evening you get it at 10 trillion. And tomorrow, again, new prices," he said. "The hunger is the main issue. Some people are even dying."
The International Red Cross estimates more than 2 million people are hungry in Zimbabwe, and that the number is going to rise to 5 million, about half the country's population, by year's end.
Some aid groups estimate that in recent weeks as many as 6,000 Zimbabweans have been crossing into South Africa every day. Many go back within a few days carrying groceries and other essentials that are scarce at home.
But there has also been a spike in those seeking refugee status.
While most are men, more and more women and children were coming, said Alexis Moens, an official with Medecins Sans Frontieres, which has been providing medical care for Zimbabweans and other immigrants in Musina.
"My feeling is that now more women and children are coming than before (because) the situation is getting a bit more desperate," she said.
High prices aren't the only reason Zimbabweans are struggling. The last harvest was poor, and Mugabe's government restricted the work of aid agencies in June, accusing them of siding with the opposition before a presidential runoff. The ban was lifted last month, but aid agencies say it takes time to gear up.
"People are eating berries, people are eating roots, people are eating anything they can get their hands on," said James McGee, the U.S. ambassador to Zimbabwe. "We're seeing it all over the country."
McGee added the political violence that followed elections in March and sent many Zimbabweans fleeing across the border has subsided, but not completely disappeared. He said there were signs of tension in areas where the deaths of parliamentary candidates or other issues meant new votes would have to be held.
Tsvangirai defeated Mugabe in March presidential elections and his party also out-polled Mugabe's in parliamentary voting. But Tsvangirai did not win the simple majority needed to avoid a runoff. An onslaught of state-sponsored violence forced Tsvangirai to withdraw from the second election, and Mugabe was declared the winner in a vote widely denounced as a sham.
More than 100 Tsvangirai supporters were killed, thousands were beaten, and tens of thousands were forced from their homes.
Richard Zuza, a pastor in Zimbabwe's capital of Harare, said the agreement was a start. But he was also in line for asylum Tuesday, as he had been for four days. He was fearful of returning because he said new elections were being held in his area and he had been counseling his congregation not to vote for Mugabe's party.
He said he wanted details on the agreement, such as whether Tsvangirai's party or Mugabe's would get the ministries overseeing police and the army, two institutions accused of fomenting violence against Mugabe's opponents.
"If they don't give Mr. Tsvangirai those soldiers, I don't think anything can change," he said. "Mugabe must resign. Then everything will be all right."
 
To me messing with the economy means interfering with a productive sector that is making money and contributing to prosperity of the nation. On the other hand when things are not doing well it may be necessary for the government to attempt to make repairs.

In order to save our economy I don’t mind our government buying up industries, but if we are going take financial risk I demand a reasonable profit for the treasure. I know I am dreaming, we will fortunate to get the money back.

Mugaby, very well could continue to be a corrupt dictator if he had just left economic golden goose that was the white industrial farmers alone, Zimbabwe would not be anywhere near as bad off as it is now.

official inflation the highest in the world at 11 million percent: Is that some kind record?
 
To me messing with the economy means interfering with a productive sector that is making money and contributing to prosperity of the nation. On the other hand when things are not doing well it may be necessary for the government to attempt to make repairs.

In order to save our economy I don’t mind our government buying up industries, but if we are going take financial risk I demand a reasonable profit for the treasure. I know I am dreaming, we will fortunate to get the money back.

Mugaby, very well could continue to be a corrupt dictator if he had just left economic golden goose that was the white industrial farmers alone, Zimbabwe would not be anywhere near as bad off as it is now.

official inflation the highest in the world at 11 million percent: Is that some kind record?

Buying up industries is not saving the economy. It's saving share holders. It's buying time so that the burden can be passed on to the next generation, while the ones RESPONSIBLE get to live blame-free, and loss-free.

I'd say Americans are probably the easiest in the world to trick into thinking it's "saving" the economy. It's saving YOU, for now. It's certainly not saving our CHILDREN'S future economy.
 
Buying up industries is not saving the economy. It's saving share holders. It's buying time so that the burden can be passed on to the next generation, while the ones RESPONSIBLE get to live blame-free, and loss-free.

I'd say Americans are probably the easiest in the world to trick into thinking it's "saving" the economy. It's saving YOU, for now. It's certainly not saving our CHILDREN'S future economy.

We remember from history the Great Depression and are determined to never see it again.
 
We remember from history the Great Depression and are determined to never see it again.
What you will eventually see if this nonsense continues (meaning the excesses are not properly allowed to correct and the capital structure is not allowed to heal) is a hyperinflation followed by a depression (hyperinflationary depression) like no leader nation has ever experienced. This hyperinflation will be triggered when the US Dollar loses reserve currency status. And when it comes, it will come suddenly.

Brian
 
Don't put empty suits with anger issues and no real respect for the democratic process in positions of power.

Amazing how fast that place has sunk, and how much. It used to be very wealthy.
 
Buying up industries is not saving the economy. It's saving share holders. It's buying time so that the burden can be passed on to the next generation, while the ones RESPONSIBLE get to live blame-free, and loss-free.

I'd say Americans are probably the easiest in the world to trick into thinking it's "saving" the economy. It's saving YOU, for now. It's certainly not saving our CHILDREN'S future economy.


I keep saying this, and people like RAVI keep telling me I don't know what I am talking about.

They will see.
 
What you will eventually see if this nonsense continues (meaning the excesses are not properly allowed to correct and the capital structure is not allowed to heal) is a hyperinflation followed by a depression (hyperinflationary depression) like no leader nation has ever experienced. This hyperinflation will be triggered when the US Dollar loses reserve currency status. And when it comes, it will come suddenly.

Brian

Remember only a few months ago when I was concerned about possible hyperinflation coming? Even you said it was doubtful.

There's only 3 people I listen to when it comes to economics. Peter Schiff, Jim Rogers, and Ron Paul. They've been saying it for YEARS.

Doesn't look quite as doubtful these days.
 
Remember only a few months ago when I was concerned about possible hyperinflation coming? Even you said it was doubtful.
No, that is not what I said. I was informing you of the variety of things that could happen. So many folks, Peter Schiff among them, believe that hyperinflation is the only possible outcome. It is not and is still not (although I continue to think it is more likely than deflation without hyperinflation). But the chances are increasing. And again, I shall remind you that I have stated in the past that the majority of my assets are positioned for hyperinflation. But that I keep about 25% in cash to prevent a possible deflation. Which is still possible. It depends on what actions are taken by our government and also what happens in the derivative and bond markets. Just to be clear with that prior statement, the proposed inflationary bailout will not trigger hyperinflation by itself. Other things need to happen. Deflation is still a very real risk (without hyperinflation first). But I can guarantee you one thing, the measures being suggested by the government now will make things much worse and lead to the ultimate deflation (and depression) (whether it is after a hyperinflation or not). I should say much worse for the average citizen, but not much worse for the banking elite.

Here are some of my quotes ...

1)
"See above and my earlier post for an explanation as to why we might not see hyperinflation. My most likely outcome is a prolonged period of net no growth (or modest negative growth) with inflation (not hyperinflation). This would include a period of hard recession during this larger period of what some call stagflation. I think it will be painful as a lot of excesses need to be worked from the system. I think that for hyperinflation to happen, we would need to see a lot of nationalization moves by the Fed. For example, the nationalization of ...

- more than one major bank (maybe several)
- Fannie Mae, Freddie Mac, and Sallie Mae (which I think will happen)
- the mortgage market (the Fed rescues the housing market and lending industry by buying a significant number of worthless or near worthless MBSs)


A hyperinflation would require a significant number of Dollars being repatriated to our shores. I think you would need at minimum all of the above for that to happen. Thus far, foreign held US Dollars have helped in that they have been propping up the banks by providing them much needed cash (the result of this is another type of problem), reducing the amount of dollars being held in sovereign wealth funds."

2)
"So, while I see inflation as the most likely outcome. I do chuckle a bit at the sound money advocates (of which I am one) that also feel that inflation is the only possible outcome. They do not understand the massive contraction of the money supply that *could* take place if the event I described above took place. I place my investment bets accordingly with most of my assets in gold, silver, foreign money markets in currencies that will continue to appreciate against the Dollar, and foreign energy/agriculture/mining/utilities/infrastructure equities in currencies that will also continue to appreciate against the Dollar. But I also keep a percentage of my portfolio in US Treasuries to guard/hedge against a systemic meltdown and sudden deflation. Knowing full well that if the inflationary scenario continues to play out, I will do quite well (so well that I do not care so much about my US Treasuries now being worthless). But if the deflation scenario takes place (without hyperinflation first), I will not be obliterated. You can think of it as a well out-of-the money put option being placed on a large long position that you are holding."

3)
"Yes, I see long term inflation as the most likely outcome due to the policy currently being implemented by the Fed. But this outcome is certainly not absolute. The Fed is not in complete control all of this."

4)
"If we do not get a Fed that makes the tough choices to cleanse the problems, I expect that an attempt is made to inflate away problems while attempting to manage the currency (with the help of the world's central banks) and Gold. This will only punt the problem down then road and make the correction worse when it eventually comes. I do not worry about so much as when. I just simply follow the data and try to stay ahead of the market with my investment decisions. When the fundamentals changes, so will my investment strategy."

5)
"These measures would strengthen the Dollar. Of course they would also throw the economy into a massive cleansing (depression). This is not politically palatable, so I do not expect this choice to be made explicitly. But the cleansing could still come despite their best efforts to prevent it."

6)
"I cannot say where I think the Dollar will be three years from now. While my guess is that it will be lower (maybe significantly so), I do think that we run the real risk of a massive deflation (without hyperinflation). Here, asset classes would collapse, a depression would ensue, and the Dollar would actually strengthen (money supply would contract). But most of my assets are still in the inflation (and dollar devaluation) camp."

7)
"Now, am I convinced that quantitative easing is not in the future of the Fed and other World Central Banks? Absolutely not. The balance sheet of the Fed is beginning to look quite rough and eventually they will run out of treasuries. But I suspect that they will enact additional measures to help spread all of this credit risk before engaging in quantitative easing."

8)
"There are definite signs that the money supply could contract (I explained this earlier in the thread). This could happen despite the will of the Fed and the other Central Banks. The reasons why this could take place are at the heart of the Bear Stearns crisis (or LTCM for that matter). One thing that is interesting (and at the same time frightening) is that while a hyperinflation is a possibility, so is a massive deflation. This is due to the potentially toxic mixture of central banking, fiat currencies, and complex derivatives."

There's only 3 people I listen to when it comes to economics. Peter Schiff, Jim Rogers, and Ron Paul. They've been saying it for YEARS.

Doesn't look quite as doubtful these days.
Again, look at what I have been saying. I have been consistent. And nothing has been decided. Do not take the dangerous step in thinking that it has.

A little bit on Schiff ... be careful how much stock you put into his thoughts and opinions. I agree with a lot of what he has to say and I have followed him for years. But he still does not understand how the Fed and Treasury work. I have had to correct him numerous times in faulty statements he has issued concerning actions of the Fed and the result on our money supply. He is beginning to come around, but still does not understand the complete picture when it comes to the Fed.

Also, Schiff has actually been very wrong on foreign equities over the last few years, especially in the last year. He has continually maintained that foreign equities and foreign currencies would be isolated from our problems. He has been dead wrong on this. His investments here have been getting killed. I know because I have some investments with his firm.

Finally, Schiff is dead wrong about the Perth Mint being a legitimate operation for Gold and Silver investors (pooled accounts). They do not have full metal backing in their pooled accounts and have continually rebuffed investor attempts to take their metal in physical form. Schiff is blind to these types of shenanigans and still leads his investors toward this program. Do not follow EuroPac's advice here.

Brian
 
No, that is not what I said. I was informing you of the variety of things that could happen. So many folks, Peter Schiff among them, believe that hyperinflation is the only possible outcome. It is not and is still not (although I continue to think it is more likely than deflation without hyperinflation). But the chances are increasing. And again, I shall remind you that I have stated in the past that the majority of my assets are positioned for hyperinflation. But that I keep about 25% in cash to prevent a possible deflation. Which is still possible. It depends on what actions are taken by our government and also what happens in the derivative and bond markets. Just to be clear with that prior statement, the proposed inflationary bailout will not trigger hyperinflation by itself. Other things need to happen. Deflation is still a very real risk (without hyperinflation first). But I can guarantee you one thing, the measures being suggested by the government now will make things much worse and lead to the ultimate deflation (and depression) (whether it is after a hyperinflation or not). I should say much worse for the average citizen, but not much worse for the banking elite.

Here are some of my quotes ...

1)
"See above and my earlier post for an explanation as to why we might not see hyperinflation. My most likely outcome is a prolonged period of net no growth (or modest negative growth) with inflation (not hyperinflation). This would include a period of hard recession during this larger period of what some call stagflation. I think it will be painful as a lot of excesses need to be worked from the system. I think that for hyperinflation to happen, we would need to see a lot of nationalization moves by the Fed. For example, the nationalization of ...

- more than one major bank (maybe several)
- Fannie Mae, Freddie Mac, and Sallie Mae (which I think will happen)
- the mortgage market (the Fed rescues the housing market and lending industry by buying a significant number of worthless or near worthless MBSs)


A hyperinflation would require a significant number of Dollars being repatriated to our shores. I think you would need at minimum all of the above for that to happen. Thus far, foreign held US Dollars have helped in that they have been propping up the banks by providing them much needed cash (the result of this is another type of problem), reducing the amount of dollars being held in sovereign wealth funds."

2)
"So, while I see inflation as the most likely outcome. I do chuckle a bit at the sound money advocates (of which I am one) that also feel that inflation is the only possible outcome. They do not understand the massive contraction of the money supply that *could* take place if the event I described above took place. I place my investment bets accordingly with most of my assets in gold, silver, foreign money markets in currencies that will continue to appreciate against the Dollar, and foreign energy/agriculture/mining/utilities/infrastructure equities in currencies that will also continue to appreciate against the Dollar. But I also keep a percentage of my portfolio in US Treasuries to guard/hedge against a systemic meltdown and sudden deflation. Knowing full well that if the inflationary scenario continues to play out, I will do quite well (so well that I do not care so much about my US Treasuries now being worthless). But if the deflation scenario takes place (without hyperinflation first), I will not be obliterated. You can think of it as a well out-of-the money put option being placed on a large long position that you are holding."

3)
"Yes, I see long term inflation as the most likely outcome due to the policy currently being implemented by the Fed. But this outcome is certainly not absolute. The Fed is not in complete control all of this."

4)
"If we do not get a Fed that makes the tough choices to cleanse the problems, I expect that an attempt is made to inflate away problems while attempting to manage the currency (with the help of the world's central banks) and Gold. This will only punt the problem down then road and make the correction worse when it eventually comes. I do not worry about so much as when. I just simply follow the data and try to stay ahead of the market with my investment decisions. When the fundamentals changes, so will my investment strategy."

5)
"These measures would strengthen the Dollar. Of course they would also throw the economy into a massive cleansing (depression). This is not politically palatable, so I do not expect this choice to be made explicitly. But the cleansing could still come despite their best efforts to prevent it."

6)
"I cannot say where I think the Dollar will be three years from now. While my guess is that it will be lower (maybe significantly so), I do think that we run the real risk of a massive deflation (without hyperinflation). Here, asset classes would collapse, a depression would ensue, and the Dollar would actually strengthen (money supply would contract). But most of my assets are still in the inflation (and dollar devaluation) camp."

7)
"Now, am I convinced that quantitative easing is not in the future of the Fed and other World Central Banks? Absolutely not. The balance sheet of the Fed is beginning to look quite rough and eventually they will run out of treasuries. But I suspect that they will enact additional measures to help spread all of this credit risk before engaging in quantitative easing."

8)
"There are definite signs that the money supply could contract (I explained this earlier in the thread). This could happen despite the will of the Fed and the other Central Banks. The reasons why this could take place are at the heart of the Bear Stearns crisis (or LTCM for that matter). One thing that is interesting (and at the same time frightening) is that while a hyperinflation is a possibility, so is a massive deflation. This is due to the potentially toxic mixture of central banking, fiat currencies, and complex derivatives."


Again, look at what I have been saying. I have been consistent. And nothing has been decided. Do not take the dangerous step in thinking that it has.

A little bit on Schiff ... be careful how much stock you put into his thoughts and opinions. I agree with a lot of what he has to say and I have followed him for years. But he still does not understand how the Fed and Treasury work. I have had to correct him numerous times in faulty statements he has issued concerning actions of the Fed and the result on our money supply. He is beginning to come around, but still does not understand the complete picture when it comes to the Fed.

Also, Schiff has actually been very wrong on foreign equities over the last few years, especially in the last year. He has continually maintained that foreign equities and foreign currencies would be isolated from our problems. He has been dead wrong on this. His investments here have been getting killed. I know because I have some investments with his firm.

Finally, Schiff is dead wrong about the Perth Mint being a legitimate operation for Gold and Silver investors (pooled accounts). They do not have full metal backing in their pooled accounts and have continually rebuffed investor attempts to take their metal in physical form. Schiff is blind to these types of shenanigans and still leads his investors toward this program. Do not follow EuroPac's advice here.

Brian

Brian I hope you didn't take that statement as a shot at you, because it wasn't. I value your opinion around here more than most. I just hadn't seen you mention hyperinflation in this way before. Seemed as though you were contemplating it more seriously now.

I understand that Dollars would have to come back here from overseas. How much more of this can foreign governments take before they dump? I'm quite surprised actually, that they haven't yet. It seems a lot more likely after this rescue plan.

Schiff has admitted recently that he wasn't completely right about foreign equities and currencies. I suppose he didn't forsee the foreign central banks debasing their currencies as much as they have. He does however recommend that his clients stay their course, which I agree with. I still think precious metals are the only true way to protect your wealth, though. Every currency in the world could tank and gold and silver would still be money.
 
Brian I hope you didn't take that statement as a shot at you, because it wasn't. I value your opinion around here more than most. I just hadn't seen you mention hyperinflation in this way before. Seemed as though you were contemplating it more seriously now.
No, I did not take it as a shot. I was simply correcting your mis-characterization of what I was saying. And as I explicitly stated in the first quote (from several months ago), if the things that I stated come to pass, we would see hyperinflation. Many of them have, but not all of them. It is wide open at this point with respect to what will happen. BTW, I have been talking about hyperinflation several years before you made it to this board.

I understand that Dollars would have to come back here from overseas. How much more of this can foreign governments take before they dump? I'm quite surprised actually, that they haven't yet. It seems a lot more likely after this rescue plan.
Watch the bond market and not the sensationalists (which Schiff is one). Facts and figures are paramount here.


Schiff has admitted recently that he wasn't completely right about foreign equities and currencies. I suppose he didn't forsee the foreign central banks debasing their currencies as much as they have. He does however recommend that his clients stay their course, which I agree with. I still think precious metals are the only true way to protect your wealth, though. Every currency in the world could tank and gold and silver would still be money.
"Not completely right" is not accurate. He has been dead wrong. His foreign equity investments have performed much worse than that of the US markets. I am not selling my foreign investments. But he has been advocating much more than just staying the course. He has been consistently encouraging people to dump more money in these investments. This has not waned.

I also believe in the metals at this point and is why more than half of my portfolio is in metals (real metals. not paper). Schiff is wrong about his allocations in these times. Schiff advocates 90% of your portfolio in foreign stocks. Sorry Peter, you are wrong on this one.

Brian
 
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No, I did not take it as a shot. I was simply correcting your mis-characterization of what I was saying. And as I explicitly stated in the first quote (from several months ago), if the things that I stated come to pass, we would see hyperinflation. Many of them have, but not all of them. It is wide open at this point with respect to what will happen. BTW, I have been talking about hyperinflation several years before you made it to this board.


Watch the bond market and not the sensationalists (which Schiff is one). Facts and figures are paramount here.



"Not completely right" is not accurate. He has been dead wrong. His foreign equity investments have performed much worse than that of the US markets. I am not selling my foreign investments. But he has been advocating much more than just staying the course. He has been consistently encouraging people to dump more money in these investments. This has not waned.

I also believe in the metals at this point and is why more than half of my portfolio is in metals (real metals. not paper). Schiff is wrong about his allocations in these times. Schiff advocates 90% of your portfolio in foreign stocks. Sorry Peter, you are wrong on this one.

Brian

I wasn't aware of the 90% part. I've talked to one of his brokers on several occasions, but haven't yet set up an account. I manage my own portfolio and don't like to be charged for it beyond typical trade commission, which hasn't applied to me yet since I haven't traded past E-trade's commission-free introductory offer. Most of my very limited portfolio is physical metals also. We've talked before via PM about it. I actually moved a position I had in a US stock into a foreign one on your advice. You had also suggested foreign equities at that time, although certainly not 90%. You broke down the percentages you recommended in each allocation, and if I recall, foreign equities was somewhere in the neighborhood of 10-15%. You definitely didn't say 50% for metals though, although I'd still have allocated about that regardless. It's pretty much where I'm at percentage wise, and it's about to go even a little higher real soon. I can't really afford to put cash in Treasuries at this moment, but sometime early next year I'll probably be able to complete my portfolio the way I'd like it to be, with only balanced additions from there on.
 
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