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Lebanese here. To answer some of the questions in this thread: - No, Lebanon does not follow Islamic Banking. - No, people can't make wire transfers anymore.
by usr001 4y ago
Lebanese here. To answer some of the questions in this thread:
- No, Lebanon does not follow Islamic Banking.
- No, people can't make wire transfers anymore. All bank accounts are frozen, you can't withdraw your own money. You have to beg and wait in line for weeks to be able to get a tiny amount of your account to be able to buy bread etc.
- The local currency collapsed, lost more than 90% of its value. If the bank decides to give you some change (from your own money), they play money conversion tricks so that e.g. your account is down $1,000 but you get $100 only.
- This person did not "rob" the bank. He tried asking the bank for money because his father (and some people said his child as well) were in the hospital, needed medical care, and for that the hospital needed money. He had $210K in his account, but the bank kept kicking him away in previous attempts to appeal to them. He came back with a gun, and held hostages. Negotiated until they give back $35K, to his brother who was waiting outside. Then he surrendered without hurting anyone.
- He is now in bad health because he's on a hunger strike after they arrested him. (In the negotiation they promised him not to arrest him, but of course they need to make an example out of him.)
- Why is this all happening? Bad economic and financial policies for 40 years, rampant corruption. The economy was unproductive, but they kept the local currency subsidized, as it turns out by just spending the money that people deposited in the banks. And it's all gone now.
- MitPitt 4y agoNot arguing whether what he did was morally correct, but holding hostages at gunpoint is something that you always get arrested for, independent of negotiations
- usr001 4y agoI don't disagree. After all, without such deterrent, the very next day all the banks in the country would be held at gunpoint. There are many, many people who feel just like he does and are already on the edge, after having been shit on by banks and bank employees for 2 years now. Bank employees humiliate people, as it became a kind of Stanford Experiment. There were even demonstrations outside in his support, during the hostage situation, the moment it hit the news! And this is why this story is making the rounds. Even from a legal perspective, the banks don't have the right to do what they're doing. But the government is enabling them to do so, while the parliament is "trying" to work on new laws to regulate this period of "capital control". But no one will come after the banks. The government(s) caused this situation in the first place by borrowing the money from the banks, so it's not like there is anyone on the side of the regular Joe in all of this. People are on edge, and desperate. Poverty and humiliation, after long hard working lives, to see all of their life savings disappear. This the kind of environment in which people stop believing that the rule of law is just or should continue.
- gruez 4y ago>There are many, many people who feel just like he does and are already on the edge, after having been shit on by banks and bank employees for 2 years now. Bank employees humiliate people, as it became a kind of Stanford Experiment. Are bank employees actually mistreating people, or are they simply refusing to help?
- usr001 4y agoA mix of both. Sometimes they tell people "we don't have cash anymore", they close the doors and don't let anyone in. Or just close the bank altogether for a long time (sometimes for fear of their lives). Other times they give the account holder only one option to take money (say to send to their child's to pay for college abroad). And that option always involves the holder losing 5X to 10X of the value of their money. Write a check for $1000, sell it for $100, to get a $100... At the end of the day, scarcity creates conflict. And with that conflict, some employees choose to keep treating people with dignity and politeness, but without helping them (because they're following their bosses' policies.) And some just don't give a shit, slide into their dark side, and enjoy the power trip...
- ithkuil 4y agoAre bank employees able to withdraw _their_ own money?
- deleted 4y ago[deleted]
- anigbrowl 4y agoWhat's the difference?
- MonkeyMalarky 4y agoDo the police and bank employees not also suffer under this system?
- metadat 4y agoIf I'd known the backstory and lived in the vicinity, I'd have freely volunteered to be one of his hostages. It's the right thing to do.
- yomkippur 4y agoReally? Why not leave him with your children and come back to pick them up after your shift is done?
- whimsicalism 4y agoIf everyone was as cavalier as they pretend to be on the internet, the US government would probably have been overthrown three times by now.
- erie 4y agoArticle 421 in the Lebanese law allows acquiring asset owned by one provided that he does not commit other crimes such as causing damage, or taking hostages. He or she is required to sign up with the bank that his current balance reflects the amount he/she has taken, otherwise that amount would be considered as theft. source: https://www.lebarmy.gov.lb/ https://www.lebarmy.gov.lb/
- raincom 4y agoYou are absolutely right. Yesterday I watched a documentary by DW on Lebanon: https://youtu.be/RZuKyIYMSEw https://youtu.be/RZuKyIYMSEw Since i watched it, I understand your comment far better.
- contingencies 4y agoGreat doco. TFS. Core point @ 26:51, alleges $100B stolen by politicians and bankers from the general public's USD-denominated bank accounts. Head of central bank has USD$300M unexplained wealth in Switzerland. 90% of majority shareholders in Lebanese banks are relatives of politicians.
- IG_Semmelweiss 4y agoThat's the logical reason the govt is not allowing banks to collapse, and float the currency - it would destroy banks overnight
- mongol 4y agoI saw that one too, just a few days before the event. Really eye opening. DW Documentary may be the best Youtube channel, bar none. Another on Chinese zero Covid was equally eye opening.
- ma2rten 4y agoYour description sounds like he robbed the bank to me.
- awb 4y agoI think the point you’re making is that he used violence to coerce the bank. To OP’s point, he was only asking for his own money back, whereas a robbery is trying to take someone else’s money. I guess it all depends on the bank agreement and procedures during a bank run or a default. Sure, you get a statement that says you’re credited with $210k, but you don’t actually own that much money anymore if the bank lost some of it and can’t pay everyone their full balance.
- ClumsyPilot 4y agorobbery means your are taking something that doesn't belong to you. So the bank has robbed him.
- mongol 4y agoRobbery also includes threat of violence, or actual violence.
- Broken_Hippo 4y agoIt doesn't Have to include threats of violence or acts of violence: It simply usually does. It does Always include theft of goods, though. This man wasn't stealing things, but rather trying to get his own cash. Despite the violence, this wasn't robbery.
- ClumsyPilot 4y agoso does assault and battery, but they are both separate and distinct offenses
- quickthrower2 4y agoCloser: The bank is insolvent.
- deleted 4y ago[deleted]
- gonehome 4y agoPeople mock the value of BTC a lot on HN, but it’s this exact kind of risk that it helps protect against (if you self custody).
- oarabbus_ 4y agoHow would self-custody of BTC allowed this man to pay for his father's medical bills? As far as I'm aware the hospital did not accept bitcoin payments. There have also been several instances in time where BTC has lost 80% of its value (and many more instances of 50%+), so it doesn't protect against the downside risk of needing money in an emergency.
- rubatuga 4y agoThey would certainly accept USD
- skybrian 4y agoYes, Lebanese people with foreign bank accounts were probably better off. But not all USD-denominated accounts are necessarily safe (it depends on the country), and sometimes it might be hard to open an account.
- gonehome 4y agoI’m not advocating for putting 100% of your money into BTC, but a chunk would help (especially in countries with less stable currencies). The hospital might not take it directly, but he’d still retain control of it and be able to find a way to exchange it for something the hospital does take.
- oarabbus_ 4y agoI do think allocating some percentage into BTC makes sense depending on an individual's risk tolerance. But only as a speculative investment and absolutely not for emergency funds, due to the volatility.
- bumbledraven 4y ago> … they kept the local currency subsidized … by just spending the money that people deposited in the banks. Daniel Amerman argues that something like this happened in the USA to fund the federal stimulus payments during the 2020 pandemic lockdowns. http://danielamerman.com/va/HollowOutOne.html http://danielamerman.com/va/HollowOutOne.html : > There are many people who are convinced that it was all "money printing". … there was indeed some money printing going on - but it accounted for less than 10% of the new money creation during the crisis. > The facts are that the overwhelming majority of the new money - came right out of our bank accounts. Using the Federal Reserve as its intermediary, the U.S. government reached into the bank accounts of the nation, took out trillions of dollars, and then sent those dollars back out to the nation in redistributed form.
- StopHammoTime 4y agoThat is the whole point of “printing money”. It takes value away from the money in bank accounts. It is used to forcibly redistribute money into the economy during a down turn when people would rather not spend it. If you have 100 “pie tokens” and then create an extra 900, there’s still only a single pie to go around. Of course this targets middle class and poor people because the rich don’t keep money in a bank, they keep it in assets. At least, not enough to materially affect them.
- imtringued 4y ago>Of course this targets middle class and poor people because the rich don’t keep money in a bank, they keep it in assets. This is a classic internet myth. The rich have more of everything. They have more houses, more cars, more yachts, more stocks, more bonds and obviously more money. The idea that the wealthy exclusively hold assets is such an obvious lie, first of all, the rich keep 10% of their wealth in liquid assets that means money as a general rule of thumb for the sake of speculation. Second, as interest rates go below liquidity preference but at least zero, people start holding a bigger and bigger portion of their wealth in liquid assets. During the pandemic 40% or more of the money held at banks was in demand deposits, aka checking accounts, hundreds of billions of liquidity, enough to basically make any bank insolvent with the snap of a finger, hence the need for excessive amounts of QE even though banks don't want to lend out any more money. For some strange reason people parrot this and then think that the poor have all the money despite the fact that most of them are in debt and most rich people have millions or hundreds of millions in their bank accounts and even more in assets. When you argue for a negative interest rate, people are going to shout how this ruins poor people because they don't have any stocks and most of their savings are held liquid when that is completely wrong, most poor people's wealth is their own body and the income it lets them derive from work, which is almost entirely illiquid. What poor people actually need is an opportunity to use their most prized asset and a negative interest rate doesn't harm them in any shape or form. It is only the rich that keep millions in checking accounts that really feel the pain.
- yomkippur 4y ago> This person did not "rob" the bank. He tried asking the bank for money Right so if I ask you nicely to donate with an AK-47 and I hold your family hostage, you are gonna make the same claim?
- PontifexMinimus 4y agoIf I was holding on to your property which belongs to you and refusing to give it to you, then I think you'd be entirely within your rights to use an AK-47 for persuasion.
- spywaregorilla 4y agoI wonder if your family feels similarly
- sneak 4y agoThe money you deposit into a bank is not yours, it’s the bank’s, and they have a corresponding liability to you.
- imtringued 4y agoThat completely violates the idea of demand deposits whose entire purpose is to be immediately available.
- dahfizz 4y agoHe withdrew money from his own account. In order to do so, he coerced the bank teller at gunpoint. It's some sort of violent crime, but not robbery.
- InCityDreams 4y ago
- dahfizz 4y ago
- hackerlight 4y ago> as it turns out by just spending the money that people deposited in the banks. And it's all gone now. Is it that or was it a run on the bank (catalyzed by a currency collapse) which wasn't sustainable because of fractional reserve banking?
- usr001 4y agoThe run on the banks was an effect, not the cause. So in the 1990s, after the country came out of a 2-decade civil war, the government adopted a policy of fixing the currency against the U.S. dollar. So regardless of the economic happenings, the conversion rate from LBP to USD was fixed. But the economy was not really producing enough. It was mainly focused on tourism, which kept taking hits due to political instability. Too much imports, very little exports, but the currency was kept fixed. This imbalance was sustained by the government borrowing from the central bank and the banks. They kept lending the government, even though it was clear that the money wasn't coming back. Some of the money was being spent to support imports and big projects. But most of it was being siphoned away by corrupt politicians; which was pretty much all politicians. After about 25 years, most of the money ran out. The depositors' money. So what did the banks do? They started offering higher interest rates to attract foreign deposits. We're talking 10% or 15% interest rates. And they used those new deposits to support the continuing needs to lend the government. Incurring more debt to pay the previous debt. That was essentially a Ponzi scheme, and the final tailspin began. Crash.
- imtringued 4y agoThis is a classic tale of imbalanced trade resulting in a debt trap, the moment debts become unpayable, the government has no choice but to borrow money for interest payment, which mean interest starts fueling inflation and since more inflation means higher interest rates, the government will have to borrow more and more, leading to hyperinflation. If the government cut interest payments to zero, it would actually stop the hyper inflation assuming that the government pursues austerity and tight monetary policy afterwards. Any negative effects of austerity can then be countered by lowering the interest rate below zero. What people don't seem to understand though is that it is easy for a developed country to refuse to import products from a developing country, which in turn makes this a structural problem in the global economy rather than a failing of any particular politician.
- onetimeusename 4y agocompletely unrelated here but is banking secrecy a thing in Lebanon? As in an anonymous numbered account.
- usr001 4y agoIt used to be a big thing; a major attraction for international depositors. But it's beginning to be removed under the current situation, because they want to disallow (criminalize) people from transferring their money out of the country (to protect it)
- onetimeusename 4y agowell that's unfortunate. I wish you the best with the present circumstances.
- IG_Semmelweiss 4y agoIt was, but 9-11 started a major reversal in that, which got worse as terrorism financing became a target for the us I think Lebanon now reports all transactions to the US so secrecy veil has been finished for some time.
- gwnywg 4y ago> of course they need to make an example out of him. The precedence was set, people who are on the edge and have nothing to lose now know, they themselves may land in jail but at least they can help their loved ones..
- liendolucas 4y agoI understand the sentiment. This has already happened in Argentina in 2000 (the infamous "corralito"). Many people lost the savings of their lives. After this a big distrust against banks was installed and people decided to put their money not in bank accounts but in bank safe boxes, which in theory can't be touched. At the time I was a teenager in school but after that experience I've learnt not leave a single dollar in Argentinian banks. There seems to be literally no difference to what's happening there than what happened to us 22 years ago. Edit: Some corrections and modifications.
- deleted 4y ago[deleted]
- danuker 4y agohttps://en.wikipedia.org/wiki/Economic_history_of_Argentina https://en.wikipedia.org/wiki/Economic_history_of_Argentina > Since independence from Spain in 1816, the country has defaulted on its debt nine times
- dotancohen 4y agoAmazing for a nation which is literally named for its reserves of precious metals.
- layer8overhere 4y agoI know the Chicago boys get some flak for what they didn't get right but it sounds like Argentina would have benefited greatly from a few of them... jeez
- vbezhenar 4y agoI don’t trust safes either. Buy gold and bury it. Other means are not solid.
- mFixman 4y agoThe amount of people keeping life savings outside banks after the 2001 crisis caused a huge increase in the amount of kidnappings and violent crimes. Those were difficult times.
- ur-whale 4y ago> Why is this all happening? It's happening because people use banks to store their wealth instead of doing self-custody. Cyprus, Argentina, various east block countries in the 80's, etc... How much more proof do you need? Storing your wealth in a Bank is a bad move, independently of the country you live in, and especially in 2022 where you earn exactly zero on interests in most places. Lebanon is just an extreme example of why it's a bad move.
- janandonly 4y agoSelf custody of precious metals is expensive. Self Custody of digital currencies is tricky in different ways. What if you forget your 12 words seed phrase? Then your life savings are gone as well.. For background on Lebanon: https://bitcoinmagazine.com/culture/bitcoin-should-be-the-saving-choice-of-lebanon https://bitcoinmagazine.com/culture/bitcoin-should-be-the-sa...
- gokhan 4y ago> Why is this all happening? Bad economic and financial policies for 40 years, rampant corruption. The economy was unproductive, but they kept the local currency subsidized, as it turns out by just spending the money that people deposited in the banks. And it's all gone now. I can see the future of Turkey right in this paragraph.
- _8j50 4y agoIf I may ask, did the tragic explosion in Beirut back in 2020 have a significant long lasting impact that contributed to the collapse or what it about this bad prior to that as well?
- IG_Semmelweiss 4y agoLebanon crisis started on late 2019. The explosion and COVID acted as a double tap kill shot One cannot imagine the level of misery created by both events. Its a country that went from Greek standards to scrapping by in true Somalia-level collapse
- usr001 4y agoThe crisis had already started. The explosion came in a really bad time, and made things quite worse. Other than the destruction of half the capital, it also closed the main port for trade. And the tragedy pushed more people to lose hope and leave. So did the pandemic. Salt to the wound, as people were unable to travel anymore (to get to their jobs, as most of the jobs are abroad). So did the Syrian refugee crisis due to Syria's war (right next to the border). Lebanon has about 30% of its current population made of Syrian refugees, so there is less resources to go around for everyone. No country in a perfect economy could support that much influx of refugees at once. When it rained, it poured!
- dotancohen 4y ago> He came back with a gun How easy is it for the common citizen to acquire a firearm in Lebanon? I believe that this man came back with a pistol, which ostensibly would be harder to come across than e.g. a hunting rifle, no?
- IG_Semmelweiss 4y agoVery easy.
- usr001 4y agoNowadays to buy one would be expensive, a black market. But there is a defensive gun in every house in Lebanon. Some regions more than others. It's part of the history and, in a way, the culture. There is no "random mass shootings" problem though. Innocent gun victims die in other ways, like stray bullets from celebrations in weddings and in speeches of political leaders, or the casual skirmish between the followers of two opposing political factions!
- kurupt213 4y ago‘Celebrations’ like New Years in Los Angeles have the same danger
- dotancohen 4y agoI see, thanks.
- IG_Semmelweiss 4y ago>> No, people can't make wire transfers anymore. All bank accounts are frozen This is only true for old funds (precrisis). However, you can wire any "fresh money", AKA funds put in a lebanese bank from a foreign bank >>The local currency collapsed, lost more than 90% of its value.... they play money conversion tricks 'Lost value' as measured in the black market float. The peg has been fixed for decades and its never floated freely. In fact, banks are giving you the official central bank conversion rate, which is awful and benefits banks (which is why it was never changed) >> because his father (and some people said his child as well) were in the hospital This is not true. >> Why is this all happening? Bad economic and financial policies for 40 years, rampant corruption No. This is happening because the federal govt issued sovereign debt that was primarily purchased by local lebanese banks, using depositors money. The government budget was chronically in deficit, with exoenses exceeding taxes for decades, so the govt resorted to pay its debt with more debt. Finally they run out of other people's money to keep buying debt, the govt couldnt raise taxes to pay (remember the laughable WhatsApp msg tax??), so govt could not pay banks, thus banks couldn't pay people, so people's cash was turned out to be fake numbers stuck in a bank screen. Banks have since refused to lose money (insolvency really) on their govt debt purchases, so the bank holiday ensued. Its important that we spell this out because to put a face to Lebanons predicament. There was no 'corruption' vodoo. Its just debt. The only differences between USA and Lebanon are Lebanon's gdp/debt ratio is higher , and USA quick ratio (interest expense/tax collection) is better vs Lebanon.
- simoom22 4y agoHaving the global reserve currency is a pretty big difference too. The base economy of the Lebanese government is Lebanon, the base economy of the US government is the world.
- usr001 4y agoIt was bad financial policy to peg the Lira to the Dollar. It should have been free so that the exchange rate reflect its true value. The lifestyle with all the things you could buy in the country since the 90s at the official 1,500 LBP rate was a big lie; things should have been more expensive. It was bad economic policy to ignore agriculture and industry, and make everything about tourism and services. So many imports could have been produced locally but weren't. E.g. as it became evidently clear when people couldn't find things like cheese and milk to buy anymore. > There was no 'corruption' vodoo. Its just debt. Debt that was spent to do nothing, to build nothing, but to fill the pockets of politicians and their cronies. Through 10 levels of contractors who fix nothing, to 100K new government jobs given in one year to people who don't even know where their offices are... There was about 80B dollars lost only in the Ministry of Energy, presumably spent to get electricity to people, all now unaccounted for and still no electricity.... Politicians are billionaires, and only their cronies can get the important jobs and the big projects. And on and on... Yes, there was rampant corruption. Still is. And it had a lot to do with the crisis.
- WebbWeaver 4y agoIn your view what forces are keeping the economic situation as is?
- anonu 4y agoRead the executive summary here: https://openknowledge.worldbank.org/handle/10986/37824 https://openknowledge.worldbank.org/handle/10986/37824 In short, a complex confessional system of government run by corrupt tribal leaders.
- usr001 4y agoWhat's keeping the economic situation from freefalling even deeper into the abyss, is the money of the diaspora. Expats send back money to support their families. That's the lifeline, without which there would be famine. What's keeping the economic situation from coming back up, is exactly what brought it down in the first place: It's the complete failure of the state, with a political system that is rotten with power-hungry warlords, old and new, who won't let go. A people who remains divided because every few decades a faction decides it's so powerful now that it's its prerogative to hijack the country's destiny by use of force... And some big countries with huge influences (follower factions), using Lebanon as a card on their negotiating tables - some even see the situation as "chemothraphy to remove a cancer", and don't mind it staying. (Pardon the vagueness; the politics is quite complicated and not possible to give a clearer picture than this in a brief comment). If with a magic wand all of those problems disappeared, and a new government materializes with full support from everyone to start fixes and reforms, it is estimated that it would take at least 10 years to bring the economy back to a healthy state. But 3 years into the crisis and the governments since then still have not provided a single plan to come out of it. Just grandstanding, mutual accusations, deadlocks, hindering investigations, etc. They always hope that some rich country would want to help and make big investments. But those countries, and world organizations, rightfully, do not trust the country's consecutive governments anymore because no reforms have been made and it's still the wild west of corruption. The biggest problem is that those 3 years have witnessed the largest brain drain in the history of the country. Most doctors and nurses left; engineers, technicians, scientists, students, you name it. Resilient people who had seen everything and stayed, but there's always an edge too far.