The full translation of the Lollar section in this German article:
The "Lollar"
The lynchpin of the financial crisis is the Lebanese National Bank (Central Bank of Lebanon, Banque du Liban, BDL), whose activities have led to a huge mountain of debt hidden behind investments ...
The "Lollar"
The lynchpin of the financial crisis is the Lebanese National Bank (Central Bank of Lebanon, Banque du Liban, BDL), whose activities have led to a huge mountain of debt hidden behind investments ...
... that are not backed by "real dollars", but not really covered book money. This cannot be quantified precisely because the Bank has kept a large part of its operations hidden from the public and has strictly adhered to the minimum transparency. It is estimated that over ...
120 billion US dollars of untrustworthy bank deposits are involved.
At the origin of the enormous debt is the fixing of the exchange rate of the Lebanese currency against the dollar in 1997 (this is explained concisely and clearly here).
At the origin of the enormous debt is the fixing of the exchange rate of the Lebanese currency against the dollar in 1997 (this is explained concisely and clearly here).
That could have been a good idea, economic experts now scoff. If this had not meant that the Lebanese central bank had to raise constantly growing sums of money over the years in order to meet the resulting additional payments. Lebanon does not export much, but imports a lot.
The imports were paid for with dollars. In the last few years, which until recently were called years of prosperity, many luxury goods from the West were also.
Expensive premium class cars, as they are popular in Lebanon's golden layer, but also fuel and medicines, are paid for..
Expensive premium class cars, as they are popular in Lebanon's golden layer, but also fuel and medicines, are paid for..
with dollars, not Lebanese pounds. This resulted in a large demand for foreign currency, which the Lebanese banks financed through a system known as the Ponzi scheme. Conversely, as is usually the case, the central bank borrowed dollars from the banks into which Lebanese expats..
paid their dollars. In return, the central bank promised high interest rates and the banks promised expats higher interest rates than they received from the banks in their countries of residence.
With this system of credit and risky promises, the central bank financed the ...
With this system of credit and risky promises, the central bank financed the ...
additional payments resulting from the fixing of the exchange rate, the de facto imbalance of currencies and the excess of imports.
As it now turns out, the dollar reserves that the central bank boasted of in order to appease critics of its financing system consist mainly of book
As it now turns out, the dollar reserves that the central bank boasted of in order to appease critics of its financing system consist mainly of book
money. The inlays are "simply computer entrys" without anything behind them, says sharp-tongued Dan Azi. He calls this virtual money "Lollar", a mixture of dollar and lira, because it is not actually secured by any countervalue...
There are now attempts among larger investors to invest at least part of this book credit in real estate purchases, taking advantage of the debt woes of others. One can well imagine that this is not exactly putty for a society that has several fault lines.
