Wealth storage is not wealth creation
We can be so much happier and richer as a nation than we are or have ever been in our history if we just focus our financial muscle on productive areas, encouraging young innovators, entrepreneurs, the real wealth and value creators, and not just the wealth preservers.
It took talking to an Islamic banker for me to understand the simple concept that a wad of cash in a vault creates no value whatsoever, it only creates value if the bank turns around and takes a few risks with the money. Conventional banks don’t like risks; more to the point they don’t work hard enough on finding suitable risks to take that could yield good returns.
Our banks are like old women, they wear too many protective layers to keep out the cold, but in the process they keep out the young, gifted entrepreneur who has more great ideas than collateral, more courage than sense, and no fear of tomorrow because he has many productive years still ahead of him. Simply put, old women like old, silver-haired men. As a result we all miss out on innumerable great opportunities.
We are a poor country with a young population; our government is poor, our public debt is a serious burden, these are facts and they are undeniable. So, we are taxed to within an inch of our lives all to help pay the interest on this huge debt. Ironically, most of the money is owed to local banks, so we are all literally mortgaged up to the hilt to our friendly neighborhood banker. Our balls belong to them, our soul, property of the company store… which too is mortgaged to the bank.
The tax on fuel is a prime example of unreasonable taxation imposed on us to help pay for the enormous public debt. A third of the price we pay for petrol at the pump goes to the government. If we had public transport alternatives that would be alright, let the rich pay to drive their cars, but that is not the case. As a result we are all forced to drive, like it or not, just to get to work every day, to earn enough money, to pay the tax, to pay off the interest on the public debt. The mobile phone rates are the most expensive in the region because it too is a vital source of revenue for the state. A service that should be dirt cheap, since it is a vital economic lubricant, is beyond the reach of most Lebanese who resort to sending SMSs and making missed calls rather than risk wasting precious units talking on the phone. Even imported goods, business tools with no locally manufactured alternatives are twice as expensive as they are in other countries in the region because of excessive taxation.
Then there are the poor masses that are so poor they are off the poverty scale; in fact most reside permanently below the indicator needle. But at least our banks are healthy and flush with cash, you say, well, that is small consolation indeed. Money is like blood to a body; its primary purpose is to circulate as efficiently as possible to supply all parts of the national body with life giving resources in order to grow and survive. Lebanon’s wealth does not circulate as efficiently as it could; in fact our circulatory health is in critical condition which does not bode well for the future at all.
Banks, especially investment banks, lament the lack of investment opportunities, what they really mean is they lament the dearth of safe and dependable investment opportunities in which they take few to no risks at all. The net result is a very safe banking system insulated from the global financial crisis, which has made it an attractive place for the wealthy Lebanese of the Diaspora to put their money. But the system’s Achilles heel is its conservative approach to lending. The banks are literally choking with deposits and with having to pay relatively high rates on deposits while frantically looking for safe investment options.
The Central Banker does his best to goad the banks along, especially those with investment banking arms, but the Lebanese seem to have a love affair with cash as wall paper and matress stuffing. This is evident from our artistically grandiose designs for paper money, not least the design for the 1945 one hundred Lira note which looks more like a Persian carpet than currency!
We also really dislike one another and hate to do anything that will benefit other Lebanese even though we also benefit. It’s like we imagine that by helping someone improve their financial prospects we are somehow diminished in some way. We definitly do not like to spread the wealth around.
It took talking to an Islamic banker for me to understand the simple concept that a wad of cash in a vault creates no value whatsoever, it only creates value if the bank turns around and takes a few risks with the money. Conventional banks don’t like risks; more to the point they don’t work hard enough on finding suitable risks to take that could yield good returns.
Our banks are like old women, they wear too many protective layers to keep out the cold, but in the process they keep out the young, gifted entrepreneur who has more great ideas than collateral, more courage than sense, and no fear of tomorrow because he has many productive years still ahead of him. Simply put, old women like old, silver-haired men. As a result we all miss out on innumerable great opportunities.
We are a poor country with a young population; our government is poor, our public debt is a serious burden, these are facts and they are undeniable. So, we are taxed to within an inch of our lives all to help pay the interest on this huge debt. Ironically, most of the money is owed to local banks, so we are all literally mortgaged up to the hilt to our friendly neighborhood banker. Our balls belong to them, our soul, property of the company store… which too is mortgaged to the bank.
The tax on fuel is a prime example of unreasonable taxation imposed on us to help pay for the enormous public debt. A third of the price we pay for petrol at the pump goes to the government. If we had public transport alternatives that would be alright, let the rich pay to drive their cars, but that is not the case. As a result we are all forced to drive, like it or not, just to get to work every day, to earn enough money, to pay the tax, to pay off the interest on the public debt. The mobile phone rates are the most expensive in the region because it too is a vital source of revenue for the state. A service that should be dirt cheap, since it is a vital economic lubricant, is beyond the reach of most Lebanese who resort to sending SMSs and making missed calls rather than risk wasting precious units talking on the phone. Even imported goods, business tools with no locally manufactured alternatives are twice as expensive as they are in other countries in the region because of excessive taxation.
Then there are the poor masses that are so poor they are off the poverty scale; in fact most reside permanently below the indicator needle. But at least our banks are healthy and flush with cash, you say, well, that is small consolation indeed. Money is like blood to a body; its primary purpose is to circulate as efficiently as possible to supply all parts of the national body with life giving resources in order to grow and survive. Lebanon’s wealth does not circulate as efficiently as it could; in fact our circulatory health is in critical condition which does not bode well for the future at all.
Banks, especially investment banks, lament the lack of investment opportunities, what they really mean is they lament the dearth of safe and dependable investment opportunities in which they take few to no risks at all. The net result is a very safe banking system insulated from the global financial crisis, which has made it an attractive place for the wealthy Lebanese of the Diaspora to put their money. But the system’s Achilles heel is its conservative approach to lending. The banks are literally choking with deposits and with having to pay relatively high rates on deposits while frantically looking for safe investment options.
The Central Banker does his best to goad the banks along, especially those with investment banking arms, but the Lebanese seem to have a love affair with cash as wall paper and matress stuffing. This is evident from our artistically grandiose designs for paper money, not least the design for the 1945 one hundred Lira note which looks more like a Persian carpet than currency!
We also really dislike one another and hate to do anything that will benefit other Lebanese even though we also benefit. It’s like we imagine that by helping someone improve their financial prospects we are somehow diminished in some way. We definitly do not like to spread the wealth around.
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