What happens to a country when its money dies?

The road from Beirut to the Roman ruins at Baalbek takes you on the main highway to Damascus, the same route the occupying Syrian army rumbled along, east to west, throughout their 20-year occupation during Lebanon’s civil war.

With a certain cruel symmetry, it is the same road trodden west to east by the desperate refugees escaping the horror of Syria’s own civil war. Lebanon, a country of around 6.8 million, has absorbed about 1.8 million Syrian refugees.

Passing over the Green Line that separated Beirut’s Christians from its Muslims, passing by the brutalist “egg-cinema”, testimony to a time when this city of the early 1970s played host to all sorts of confident experimental architecture, you can travel down to the port, where the world’s largest non-nuclear explosion ever detonated in August 2020, destroying huge swathes of an already pock-marked city.

Black market traders exchange dollars at the crossroads. A little over a year ago, the Lebanese pound traded at 1,500 to the dollar. Last night it was 21,000. People’s salaries have fallen in real terms by over 90 per cent. Most places would throw in the towel. Not here. Not yet anyway.

The road that leads up and over Mount Lebanon travels through a patchwork of different ethnic regions. Christian areas, populated by Greeks and Maronites, are followed by a Druze area towards the top of the mountain, before sweeping down to the Sunni of the Bekaa Valley, the Roman Catholics at Zahle (with more shrines to the Virgin Mary than Knock), and on to Shia territory, past the Palestinians, back to the Sunnis and on again to the Shia, Hezbollah-supporting town of Baalbek and its glorious Roman ruins.

Like Belfast, each area, each sectarian zone is distinctly marked by its own flags and posters just in case you need reminding. In Shia areas, Hezbollah’s stronghold, giant posters of Iranian military commander Qasem Soleimani, assassinated by the US last year, beam down at you. Yasser Arafat still adorns Palestinian streets, while the head of the Lebanese army, Joseph Aoun, watches over Maronite villages and Sunni regions boast images of MBS of Saudi Arabia. With friends like that, who needs enemies?

Criss-crossing this tiny country involves a crash-course in national, regional and international politics, interests and alliances.

For the past 50 years, Lebanon has been the fulcrum for proxy wars as the main players cynically move their chess pieces about the assorted ethnic board that is this state.

Against this background, the intermittent cedar-adorned flags of the Republic of Lebanon appear more of a vague aspiration than representing any reality. However, the one place where all the Lebanese converge is in the economy, where the plunging currency tells its own story. They share a currency, an inflation rate and economic fate.

The question is, what happens to a country when money dies?

In the mandarin v merchant debate, my money is on the merchants

One of the great mysteries in economic history is why large parts of Africa and Latin America do not speak Chinese but rather English, Spanish, Portuguese or French.

In 1492, when three rudimentary Spanish vessels alighted in what is now the Dominican Republic, the Chinese navy dwarfed the combined sailing infrastructure of competing European kingdoms. Technologically, China was miles ahead of Europe, with gunpowder, watches, paper money and a whole host of other innovations, created and honed over centuries. These innovations beguiled Marco Polo.

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Germany under pressure to reinvent itself for a post-carbon world

When it comes to foreign politics, we tend to get hot under the collar about events in the UK and the US. Yet in terms of the impact on Ireland and Irish policy, events in Germany are more material. We are on the path to closer EU integration, and Germany is the dominant country, so Germany counts now more than ever.

The Merkel era is over – a new Germany is recalibrating. What sort of Germany will we get?

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Tax unused land and the housing market will be sorted

Economics is counterintuitive – and maybe this is the most important lesson in macroeconomics. Here’s a good example. A responsible household will try to save but the economy is not a household. When everyone in the economy saves at the same time, it may look good and responsible from an individual perspective but, if everyone is saving, who is spending? Since your spending is my income, if you are not spending, where is my income going to come from? And as savings flow from income, if my income is falling so too are my savings, thus everyone saving at the same time leads to a fall rather than an increase in savings.

When so-called “serious” people call for general belt-tightening, urging people to save and not spend, it sounds parsimonious – and in modern economics we’ve fetishised parsimoniousness – but it’s actually silly. What seems like common sense isn’t sensible at all.

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Ireland must escape the clutches of old economic ideas

The difficulty lies not so much in developing new ideas as in escaping from old ones — John Maynard Keynes.

This week, the Irish Fiscal Advisory Council has shown it is wedded to old ideas by trying to bully the State into cutting spending and raising taxes. Meanwhile, the world is moving into an era of greater government spending, backed to the hilt by new central bank financing, in order to fix infrastructure.

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Tyranny of short-termism contributing to housing crisis

Our world is terrorised by short-term thinking. We are living longer but thinking shorter. So many aspects of our lives are now governed by instant gratification from Insta likes to Twitter notification on our mobile devices. TikTok thinks YouTube isn’t short enough.

In our working world, people expect emails will be answered immediately. WhatsApp groups bark for attention. Amazon urges us to “Buy now”. Netflix tracks our habits, reminding us of the next “must watch” mini-series. We are increasingly out of breath. In business, chief executives are obsessed by quarterly results. Shareholder value demands immediate profit. In the financial markets, Bitcoin surges and then collapses, driven in part by the oppressiveness of nanosecond algorithm trading.

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A city must not be just an amusement park for the well-off

The other night I was watching an episode of Parts Unknown in which Debbie Harry is chatting to Anthony Bourdain. Although they didn’t address it directly, they alluded to the long term cultural consequences of the unaffordability of housing in New York.

It reminded me of Bourdain’s descriptions in his memoir Kitchen Confidential of the people who work in the heat, sweat and electrifying atmosphere of a busy kitchen:

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We are at the end of a slow-moving housing Ponzi scheme

After years of hard slog, failed experiments, dry runs, tinkering around and enormous effort, an American medical researcher, Jonas Salk, developed the first safe vaccine for polio in 1955. A brutal, highly contagious disease, polio attacks the central nervous system and can cause deformity, particularly to the legs. It was a common killer in Ireland and around the world.

Salk, a fascinating character who married Françoise Gilot, a muse and mistress of Picasso, could have been made fantastically wealthy by his discovery, but he chose to give away the patent rather than cash in. The polio vaccine was given out for free to millions, saving countless people. In later life, Salk was asked why he chose not to profit from his breakthrough. He responded that his philosophy in life was to be “a good ancestor”.

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Serial objectors are colonising future through Nimbyism

We are in the middle of an epidemic of the “serial objector” virus; the system is on the verge of collapse, with serious – almost unquantifiable – long-term consequences for the future economic health of the nation. Every time there is an objection to a housing development, the cost of housing rises, the housing crisis deepens, and one more young person’s life is blighted by the entitlement of someone else, usually an older person.

Although a worldwide condition, the Irish variant of the “serial objector” virus is particularly virulent. A recent report suggested that the number of housing units in Strategic Housing Developments that have been stalled or blocked by judicial reviews in Dublin last year jumped by more than 1,000 per cent.

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David has been writing for almost 20 years and there are plenty of articles covering some of the most turbulent times in the world economy.

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