Zimbabwe could look back on 2008 with fond memories with what 2018 has the potential to unleash!
A return to the 2008 scenario is not possible, it can only be a lot worse but for very different reasons.
In 2008 inflation far outstripped Brazil when it shut down and a solution was found.
Zimbabwe needed to shut down but didn’t.
Brazil shut down when the prices of goods doubled every two days and the supermarkets gave up and closed their doors. Zimbabwe didn’t.
I remember a scenario before inflation really stepped up the pace when the pub I owned at the time needed to sell a beer get it paid for, replaced and resold in 7 seconds just to break even.
This was using the local currency.
It got worse, so why did the country not shut down?
The country then had two economies, the one the Government did not believe in but expected everyone else to, and the second illegal economy that everyone used except the parastatals, notably Air Zimbabwe whose official policy, if timed right, could get you a return ticket to London for less than the train fare from Gatwick to Kings Cross.
Of more importance at the time, and a step towards the current infrastructure collapse was the ability to pay all taxes including VAT, council bill and utilities in worthless local currency.
This should have had a positive effect on inflation however when paying by cheque you merely kept adding zeros to the amount payable until you ran out of space, the amount owed was immaterial.
The supermarkets still did not close their doors. Though not well stocked.
But there was no shortages if you operated within the illegal secondary economy.
No-one shopped in recognised supermarkets but instead utilised the many foreign currency shops opening privately throughout the country.
Border running was the order of the day.
There was no shortage of foreign currency if you could afford it, or traded in it.
So nothing shut down, the country stayed open despite the Government.
The long term solution to a normalise economy was simple and two fold.
Drop the legal worthless currency and get rid of chronic stupidity and greed and give control of the economy to someone a little more competent.
This was made possible by yet another lost but won election.
A viable plan was introduced broadly based on the Brazilian plan that revived their economy, which interestingly is agricultural based and now has the World’s 9th largest economy and free market based.This happy situation could have lasted indefinitely except 4 years later they brought back stupid and continued to slaughter the geese that were laying the golden eggs in ever decreasing quantities.
During this “happy period” money appeared to be no object and you could move virtually any amount of foreign currency out as and when you wanted.
This meant that the few “golden eggs” still being laid were leaving the country and the Incompetents forgot the two golden rules..
You can not spend more than your earn.
You can not tax an economy into prosperity!
Fast forward 6 years.
Why are the supermarkets, and other retailers, now shutting down when they did not in 2008?
I’m sure an economist will have a valid reason based on a multitude of different parameters and scenarios but the bottom line is that there is no longer a plan B!
You can not
- Dollarise an already dollarised economy.
- You can’t keep pretending that fictional money will buy real product.
- You can’t put up an Open for Business sign and then immediately turn the investors real money into fictional money and still expect them to carry on investing.
- You can’t use “Crowdfunding” as an economic policy.
- You can’t use what should in effect be bank charges as a economic recovery program.
- You can’t taxing people who have been forced to leave and also have no right to vote.
- You can’t play with data like inflation rates and expect all of the people to believe it.
- You can’t just decide on an exchange rate with nothing to back it up.
- You can not keep issuing stupid statements and expect it to resolve real problems.
Unbelievably the powers that be can and do.
Continued falsification of facts and apportioning of blame has, this time around, not stopped the shutting down of supermarkets, the only source of food and water in a country where drinking water from a tap could probably kill you.
This would normally indicate a major change has to happen.
Its anybody’s guess but what is obvious from the outside looking in is that until the police and military stop siding with the cause of the problem the symptoms will not go away.
So what is the difference between 2008 and 2018?
This time, without a major paradigm shift, there is no alternative nor solution on this current highway to hell.