Poor Billionaires

[Nutmegger]

Zimbabwe's new 10 million dollar bill is red. One side has the official stamps of the Reserve Bank of Zimbabwe and some meaningless serial numbers. The other is a pastiche of a fish jumping out of a lake and a giant dam in the background. The bill, released for the first time last month, is actually not a proper currency note at all but rather a "bearer check." Zimbabwe stopped printing real money long ago, when its inflation rate was still at a manageable level. Today these bearer checks are the only currency remaining. Last week in Zimbabwe 10 million dollars could buy exactly two rolls of toilet paper. By now it probably won't get quite that much.

Such is the state of the world's most bankrupt and fiscally untenable economy. Zimbabwe's 100,000 percent inflation rate is the world's highest—a runaway train with no driver, no brakes and no limits to the train's top speed. Perhaps it's not surprising, then, that Zimbabweans have learned to cope by developing one of the world's most sophisticated black markets. If the local merchants didn't keep this economy afloat with fuel, oil, corn and the cash to fund it all, the already unstable southern African nation could slip into civil war.

Nor is the country's March 29 presidential election likely to bring any relief from the scourge of hyperinflation. Robert Mugabe, the autocratic president whose 28-year rule is blamed for Zimbabwe's economic mess, blames the problem on the legacy of sanctions and British imperialism. None of his rivals has offered up concrete proposals to fix the problem. His main challenger, Simba Makoni, says that simply removing Mugabe will do wonders for the economy by restoring a modicum of confidence in the markets. But the fact is that no one really knows where to start. "We just don't have people here who have dealt with this kind of hyperinflation," says David Coltart, an opposition parliamentarian.

Officially, one U.S dollar is worth about 30,000 Zimbabwean dollars. As of last week the real price on the black market was about 35 million dollars, or 1,166 times the official rate. The bill for a simple meal I shared with five other people at an unassuming cafe in Zimbabwe last week came to 581 million Zimbabwean dollars. The black market value: US$21. If I had paid according to the bank's rate? US$19,366.

Full article: http://www.newsweek.com/id/129010

[Zynx]

1. I have to admit, in academic economics we rarely deal with problems such as this.

Zimbabwe is beyond all repair. A complete overhaul is needed at this point.

Specifically speaking:
1. Out with Mugabe, the corrupt, incompetent thug that he is.
2. Scrap the current currency and make a new one.
3. Put in place stringent wage and price controls.
4. Control government spending so as to assure foreigners of the soundness of the new government.
5. Scrap the agricultural policies that have helped to lead to this mess.

[ColbertWatcher]

2. And one more thing...

...don't let any Republican near the place!

http://search.barnesandnoble.com/Shock-Doctrine/Naomi-Klein/e/9780805079838/?itm=1">Naomi Klein's book explains what the GOP did to Chile, and what they might be doing in Iraq.

Sickening.

[Zynx]

3. I studied what happened in Chile extensively. I will never view the University of Chicago

the same way again.

[ProfessorGAC]

6. Why? Did You Ever Respect The Lockstep Mentality There

I've known plenty of UofC econ guys. Drones, the lot of them. I don't care how many awards they've won. That just tells me the standard for some of these awards is too low.
The Professor

[Zynx]

7. Well, growing up I knew it was a right-wing idea factory, but I still had respect

for its academics at one point. Then I studied what happened in Chile when I was 14-15 and I've never had any respect for University of Chicago, at least their economists, since.

[ProfessorGAC]

8. I Know What You Mean

I was being a little snarky, toward them, not you. I can say the same. I considered going there for undergrad, but couldn't cover the difference between the scholarships and tuition, like i could at a smaller private uni, with a better science department.

But, since i got into the math modeling thing in the late 70's and started to apply it to econ in the mid-80's, i've met tons(!) of economists, many from UofC. I think they have a Borg implant or something when they get tenured. It's a condition of tenure. They are all radical libertarian drones. They all say the same things, think the same things, believe the same things. It's kind of depressing.
The Professor

[Zynx]

4. kick

[Zynx]

5. kick

[Nutmegger]

9. k