Zimbabwe Goes Broke

by 1389 on January 30, 2013

in Blogmocracy (colleagues), government spending, inflation, sovereign debt, Zimbabwe

Reprinted with permission from 2.0: The Blogmocracy

ZIMBABWE NEW NOTE

(Picture Hat Tip: Macduff)

Follow the details, seize property and steal wealth created by others then make huge political payoffs to supporters, rinse and repeat.Sound familiar? Obama is cut from the same cloth as Mugabe. Both are strict doctrinaire Third World Liberationists (From 2010: Obama Liberation Movement)

When Zimbabwe was run by Ian Smith there was never any trouble like this. Somehow Mugabe will try to blame the Whites yet again. But there aren’t any left to take the blame. Zim has huge diamond and uranium mines and the best farm land in Africa. There is no excuse for them to be broke, none.You will see that recurrent theme in many countries in Africa. 50 years of Black rule and they are still a mess, broke unstable and crime ridden. The Black leaders blame Whitey over and over again but never fix the underlying problems.

Zimbabwe Is Down to Its Last $217

There are cash-strapped governments and there are broke governments. And then there’s Zimbabwe, which, after paying last week’s government salaries, has just $217 left in the bank. No, we didn’t forget any zeroes to the end of that figure. Zimbabwe, the country that’s home to some of the world’s largest plutonium and diamond reserves, literally has the same financial standing as a 14-year-old girl after a really good birthday party. The country’s finance minister admitted as much in a press conference on Tuesday. “Last week when we paid civil servants there was $217 [left] in government coffers,” Tendai Biti told reporters. “The government finances are in paralysis state at the present moment. We are failing to meet our targets.”

So it seems. However, Zimbabwe is hardly a stranger to financial hyperbole. The economy started to come apart at the seams in 2000, when President Robert Mugabe seized the land of over 4,000 white-owned farmers, effectively dismantling the country’s agriculture industry. Over the course of the next decade, the country spiraled into an extended period of hyperinflation, the likes of which the world almost never sees. It peaked in August 2008, when inflation reached 11,200,000 percent and economists around the world started to say that the country’s situation was hopeless. Prices were doubling by the day, and the government had to print Z$100 billion notes. The following year, they went ahead and printed Z$100 trillion notes, just before deciding to chop 12 zeroes off of the currency. A new coalition government formed that year and started on the long process of financial recovery, a process that is clearly going to take a little longer.

It’s unclear how the Zimbabwean government is going to get itself out this fiscal mess, but whatever it does, it needs to do it quickly. As Quartz’s Tim Fernholz points out, Zimbabwe is looking at a $104 million bill for its upcoming election. Its government is also dealing with brand new allegations that government officials have been running a corruption ring around the country’s diamond mines. The country obviously desperately needs a major change. “But action against corruption probably won’t come until the end of Mugabe’s reign, and a new constitution coming up for a referendum this spring — presuming the funds can be found — might set up the aging autocrat for another term in power,” writes Fernholz.

Until then, looking for quarters under the couch isn’t going to cut it, so Zimbabwe is doing the only thing it can do. “We will be approaching the international community,” Biti said. You’ll never guess who’s most likely to come to the rescue. Hint: They’re big fans of rare minerals.

More coverage from the African papers:

From 2 000 the seizure of white-owned farms led to chaos in the agriculture sector and the economy shrank by half. In 2008 hyperinflation of 231 000 000% broke the national currency and left millions of people hungry…

…The Movement for Democratic Change (MDC) claims that income from lucrative diamond sales is being expropriated by 88-year-old Mugabe’s Zanu-PF party to boost its campaign for votes. Biti, who is also MDC secretary general, has claimed the treasury received only $40-million from diamonds last year.

The MDC spokesperson Douglas Mwonzora said: “The government has no money. The most important thing is that money from diamonds is not being remitted to government coffers. As a result, after payments were made last week, there was only $217 left.”

He added: “The diamond wealth is going to Zanu-PF machinery and its war chest. There is likely to be an economic crash because of the uncertainty of the elections and the possibility of a Zanu-PF victory. Investors really have to pray for an MDC victory.”

Like they say above, look for the Chinese to move right in on this. They will bail out Mugabe with the money that we pay to them to finance OUR debts and gain all of the resources.

FOREIGN HELD DEBT IS A NATIONAL SECURITY ISSUE.

Required reading: Saturday Lecture Series: From Rhodesia to Zimbabwe
 


 
We knew this collapse was coming.


Leave a Comment

{ 1 trackback }

Previous post:

Next post: