Now that the mechanism of sanction has actually began, I've lost the last shred of optimism for a prompt resolution...
"The UK has also stopped the export of about £900m worth of new Libyan dinars ordered by state authorities"
If you thought that the past two weeks were painful, the future does not look less tragic, because with this mass freezing of Libyan assets, I'm afraid that the Central Bank will not be able to cover any withdrawing of funds from Libyan citizens, which would result in an economic crisis in the power of purchase. Salaries may not be accessible if there is no liquidity and that would create mass fear.
As I said before, sanctions are inefficient and no one wants foreign intervention.
What is worrying is that Fitch have downgraded us as well. What does that mean? I really don't know, I now wish I'd studied economy or business management or banking, just to understand all this information.
My mind is crowded with frantic thoughts. If someone knows please explain to me the possible economic scenarios that could await us. I understand we have no external debt so why is Fitch downgrading even if our oil production has been halved. Does this mean that we are expected to become another indebted state or any of the countries that receive aid from the IMF? That is more frightening and painful than potential death.
Why? you ask because we cannot run away from death but everything else is possible.
If there is anyone listening please unfreeze those assets!
If there is anyone listening please unfreeze those assets!
10 comments:
When I first read the article about freezing the assets of the bossman's family it sounded like a good idea. But then I saw the number which was many billions of dollars in one bank alone, and then I continued reading and discovered that they didn't actually know who the money belonged too so they just froze ALL OF IT and planned to sort out the details later...
Not a good idea, after all. But this is what happens when do-gooders start tripping over eachother in their rush to show the world that they are the ones who are doing the most.
Hoping everything turns out well for all of you over there.
Soros is trying to buy your oil fields for a nickel
The "sovereign credit ratings" issued by Fitch, S&P, etc. are judgements about how likely a country is to repay a loan, *if* it borrows. So every country gets a rating, even if it's not borrowing right now.
Ratings like these go up and down with events. Libya's situation is "down" now for the obvious reasons, but when there is political stability again, the rating will go back up.
These ratings mostly matter for international investment. The Libyan government might issue bonds, a western investment bank would try to sell them to buyers (which might be anyone - China, other banks, a pension fund), and the ratings made by independent agencies like Fitch (if they were good ratings) would be part of the sales pitch.
It looks like Libya does have some debts, but it has more credit than debt, so its total balance is positive.
Got to agree with craig on this. Especially the second paragraph.
As far as I know, rating of countries by credit rating agancies is a guide for potential investors. I don't think Libya has anything to lose by being downgraded - as long as current situation continues, they will stay out anyway.
I like the IMF. They are a first line rescue team. They not only provide funds when you have bankrupted yourself, but they impose on you discipline. This is especially important in emerging democracies where the heads of citizens are murky in economic matters. We have called IMF more than once after 1989, and I fear to think what would have happened without them.
To be honest, I do not see any way for Libya to avoid economic crisis - even if the assets are allowed to flow, what about salaries if people are actually not going to work? Not to mention the flight of guest workers and the difficulties in transportation inside the country. However, once the political situation is fixed, I believe economy will recover also.
I have exposed your questionment to a American friend that knows a bit of financial systems:
his thought:
"The West has Havana’d Tripoli; that’s all.
Functionally most trade will now be restricted. Even medicine and food may get problematic.
Clinton is using soft power — which lands with a hard impact.
The rating downgrade has an immediate impact on bank mediated trade. Even nations with positive cash flow still use trade credit and Letters of Credit to access this and that. Think repair parts.
Now the cost of securing Commercial Letters of Credit are going to explode. The question being: will Tripoli pay on commercial accounts when the Duck of Death is cleaning out the currency to buy time at the wheel?
—-
The Duck of Death is at the edge of his cliff. Plainly his mercs can’t roll back the revolution.
In which case his money tap is dry, which is what the banking community is trying to get across. He’s lost all his money power. Eventually the mercs will get the picture.
The British were printing his currency for him. That’s shut off, too.
( Germany, Britain and France famously print currency for most of the third world. )
In short, in the world of banking, he’s overdrawn — a target — not a client.
A quick fall it was.
Now that the mechanism of sanction has actually began, I've lost the last shred of optimism for a prompt resolution...
"The UK has also stopped the export of about £900m worth of new Libyan dinars ordered by state authorities"
Hope you are in a safe place.
It is a painful situation in Libya that innocent people are being tatgeted. Similar latest update is also seen on following link. Please go through it.
http://bloggerstown.com/2011/03/26/libyan-leader-moammar-kadafis-troops-flee-the-city-of-ajdabiya/
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