March 19, 2007
Mugabe Orders More Zeros Chopped Off
I happened to be looking at some African stock index charts today and thought the Zimbabwean indexes looked a bit odd. Then I called up the Zimbabwe dollar chart. I don’t keep up with events in Africa (few do), but yowza, that’s some serious currency devaluation.
The Reserve Bank of Zimbabwe has a pretty nice website where I learned this:
Our Vision
To become the financial cornerstone around which Zimbabwe’s economic fortunes and developmental aspirations are anchored.
Our Mission
The pursuit of the Bank’s vision will express itself through leadership in the formulation, implementation and monitoring of policies and action plans for fighting inflation, stabilisation of the internal and external value of Zimbabwe’s currency and of the financial system in a manner that gives pride of achievement to Zimbabweans across the board.
Our Values
1. Fairness and equality in employment opportunities;
2. Openness without offence;
3. Honesty, integrity and uprightness;
4. Transparency in whatever we do in the name of the Bank;
5. Commitment to teamwork and cooperation;yada yada
16. Respect for the environment.
I guess their last value, respect for the environment, includes littering the countryside with little bits of colored paper. ;-)
I’ve gotta read up on what happened down there these last several years — bound to be interesting. I’ll update this post with links to good articles I find.
How the Loss of Property Rights Caused Zimbabwe’s Collapse, by Craig J. Richardson (CATO Institute)
March 19th, 2007 at 9:29 pm
just a couple reverse splits and a standard splits.
:)
March 19th, 2007 at 9:29 pm
Hey, it *is* a rather nice web site. Very slow, though. The server must be linked to the ‘net via dial-up.
March 19th, 2007 at 9:55 pm
Dan: That’s exactly what the management at Broadvision told me. ;-)
steve: They forgot to pay their monthly hosting bill for 1,209,438,947,385 zimbabwe dollars.
March 19th, 2007 at 11:19 pm
They must’ve removed 3 zeroes from the currency so it’s actually at 260,000.
March 20th, 2007 at 3:01 am
CM-
Speaking of Broadvision, at my previous employer we had some reps from Broadvision come out to demo a product they wanted to sell us. I still can’t forget their sales engineer and their quote they gave us. About an order of magnitude higher then everyone else. I was laughing inside the whole time.
I just checked out their chart. Nice run up it’s had in the last quarter. Are you holding this in your portfolio?
March 20th, 2007 at 4:18 am
IMO blame for this rests squarely on the French for their unflagging support of the thugish Mugabe.
Economist article:
http://www.economist.com/displayStory.cfm?story_id=8840407&fsrc=RSS
March 20th, 2007 at 4:28 am
Amir,CM
heh, I also looked up the chart and was thinking it has had a nice run, looks a bit over extended now after some big volume from some crap press release, volume is up this quarter tho.
March 20th, 2007 at 5:00 am
I loaded up at 57, luckily sold half at 100,000.
March 20th, 2007 at 8:17 am
Amir: I bought $5,000 of BVSN pre-bubble, rode it up for a 20-bagger (wife told me to sell it, I told her to jump in a lake), rode it all the way back back down and then some, sold it for a 99%+ loss (~$20 after commission).
Ain’t I smart?
Babak: Thanks for the article.
Ugly: Maybe I should’ve inverted the chart. ;-)
March 20th, 2007 at 8:25 am
CM-
Magic 8-ball says:
Foresight blurry. Hindsight 20/20 :>)
March 20th, 2007 at 8:46 am
Amir: Well, I was a foolish lad learning my way (but I still don’t listen to the wife).
March 20th, 2007 at 10:15 am
The government is printing money so fast (to save its ass from problems it created) that the currency is approaching worthlessness. The only place people can hide wealth is in the stock market, thus the huge rise. Very sad situation.
March 20th, 2007 at 10:22 am
jp: I get the bit about the money printing… what I’m interested to learn about are the root causes of the economy’s collapse.
March 20th, 2007 at 11:04 am
13.
Well you could go back pretty far back for that - starting with the way Africa’s borders were decided upon by the European nations.
But most people say it started with President Robert Mugabe’s confiscation of farm land, most of which was owned by whites. By confiscating and dividing it among powerful groups like the War Veterans Association he could ensure their support and continue to control the government.
Unfortunately these groups didn’t have farming experience, from there food production started to decline. Food exports, once Zimbabwe’s major source of foreign exchange, shrunk. Tourism started to collapse around then too, another major source of foreign exchange. No one wants to visit a collapsing country. Property right issues have prevented foreign investment in the gold industry, production has been halved. That’s three pillars of the economy, gone.
The only thing left for the government is to print - they can’t get tax revenues since the economy has collapsed and no foreigner will lend to them. It’s so odd to see a collapsing economy and a stock market racing to new heights every day. It explodes the myth that a strong economy and strong stock market go hand in hand. In this case the stock market is the only place Zimbabweans have to hide wealth from government excess. When they take that option away, the stock market will collapse too.
I’m sure there’s a lot more to it than that, but that’s what I’ve read about the whole issue. Pardon the essay ;)
March 20th, 2007 at 11:11 am
jp: That’s a nice summing up, and that guy at CATO also said it started with the land seizures … of course CATO believes that property right issues are the key to understanding the Red Sox 2004 World Series win, among other things.
March 20th, 2007 at 7:40 pm
[…] I got some more data on the Zimbabwean dollar going back to 1986 when it was around 1.70. This monthly chart puts things in a little better perspective than the one I posted earlier. You can see the long terrible slide through the 1990’s … scary stuff. […]
April 23rd, 2007 at 10:09 pm
[…] Looking at a chart of the Istanbul Stock Exchange National 100 Index today reminded me of my old Mugabe posts. […]