Sri Lanka is having a textbook currency crisis, triggered by policy mistakes • Hacker News Board

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#101

Post by robbiep » Wed, Jul 13, 2022, 3:41 AM UTC

ktaylora wrote: post #39

kumarvvr wrote: post #15

The drastic move to organic farming is puzzling. Any level headed person , forget a politician , would want to experiment first, see the results, gauge and then expand selectively. That is common sense . I guess when you are a dictator ish government and you rule the country with an iron first, the institutions of the state stop being anything and simply become rubber stamps. This also underlines the importance of se…

There's a premium that can be exacted from switching to organic agriculture that isn't be discussed in this article. Sri Lanka has a limited land mass available for food production and they mostly export commodities to other countries. We're talking ~25,000 sq-mi. For context, the US state of Kansas is ~82,000 sq-mi. If you cannot physically expand the footprint of agriculture in Sri Lanka to boost revenues, the thin…

Not to be rude but did you bother to think before writing that post? Sri Lanka is a net importer of food. It is not self sufficient. You can’t get a organic premium if you can’t feed your own people, and organic food has a well known yield reduction.

It was abundantly transparent to all commentators at the time that this was purely to try and reduce capital outflows.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#102

Post by yunohn » Wed, Jul 13, 2022, 3:45 AM UTC

lanstin wrote: post #14

asciiresort wrote: post #8

> Without imports, many Sri Lankans will quickly find themselves hungry, stranded How did these island nations sustain themselves before ? In other words, what has changed that they can’t live off the land anymore? And by that, I mean the sea. Has Sri Lanka’s fish been pillaged? Is it being exported to wealthier nations that command higher prices, even as there is a domestic food crisis? How much of this is because o…

As the article notes the government forced the food production to go all organic in one year with no plan, yields crashed, and now they have to import even rice. It sustained itself thru tourism and local food production. They have sold tea overseas since being a British colony. Also, another factor is they have to import all their medicines and oil, which is also dependent on foreign reserves. So now not enough food…

> Dilmah tea to help, Hand made Batik shirts

In my experience, exported goods provide very little profit to the original manufacturer. The middle layers greedily absorb all the profit. In fact, in the west, labor costs to stock/sell it in the supermarket are significantly higher than what the manufacturer made for their effort.

Instead, I’d really recommend donating the money to an action group or trusted charity, ideally if you can also verify they are doing actual things on the ground.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#103

Post by yunohn » Wed, Jul 13, 2022, 3:47 AM UTC

asciiresort wrote: post #38

walrus01 wrote: post #27

Earlier quoted context omitted.

> Has Sri Lanka’s fish been pillaged The fishermen can no longer afford or acquire fuel for their boats to go out and catch the fish. Due to the non fish related economic disaster outlined in the article.

They need fuel because they need boats that go far. They need to go far because the supply of fish has decreased. Fishing is not a modern activity. Rafts existed long before people rode horses.

You also don’t need fuel to go to work, commuting is a modern activity. With COVID and the increase in fuel prices, we should /all/ work from home and let civilisation crumble.

/s

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#104

Post by MattGaiser » Wed, Jul 13, 2022, 3:54 AM UTC

HyperSane wrote: post #93

soldehierro wrote: post #22

Earlier quoted context omitted.

Believe me, the organic transition had nothing to do with agricultural practices and all to do with economics, with the logic being that fertilizer was an expensive import, and by banning fertilizer they could hemorrhage foreign exchange reserves a little less. Of course, they also earned a lot less because the bone-headed transition lead to a marked reduction in yield, only worsening the forex problem the ban of agr…

A smarter person would have understood that there is a return on investment for fertilizer.

Doesn’t matter if you don’t have cash.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#105

Post by ampdepolymerase » Wed, Jul 13, 2022, 3:54 AM UTC

MonkeyMalarky wrote: post #85

epistasis wrote: post #53

Earlier quoted context omitted.

I've been reading a lot of Soviet history lately and it provides a source of a huge number of similar agricultural disasters. Both Russian and Chinese attitudes towards agricultural peasants has been that they are dispensable humans, and it shows in how these countries have had disasters: * collectivitzation leading to the Holodomor in Ukraine, mass famine in Kazakhstan, and hunger throughout the USSR, killing millio…

Lysenkoism should be taught in schools as an example of how extremely dangerous pseudo science can be.

More specifically pseudo science not guided by empiricism. The line between science and pseudo science is very thin. Scientific theories are often incorrect, especially in life science, but we refine upon them based in empirical and observed data.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#106

Post by barry-cotter » Wed, Jul 13, 2022, 3:56 AM UTC

UkrainianJew wrote: post #79

ip26 wrote: post #74

Earlier quoted context omitted.

That’s when it goes bad, but borrowing against the future to kickstart today is also the principal behind innumerable success stories.

May I humbly ask for an example? In my personal experience, trying to rush a short-term solution while ignoring the long-term implications always makes situation worse. Like eating planting stock to address immediate hunger would cause a devastating famine next season.

Japan, Taiwan and South Korea all taxed the crap out of their people while poor to subsidise industry by controlling foreign exchange. It still would have been impossible without massive amounts of foreign investment. They had to borrow the money abroad to invest in industrial infrastructure. Same for the US in the 1800s. Britain had the capital. The US had the exciting investment opportunities.

The UK took so long to get to the Industrial Revolution because it had to save the money itself. Everyone since then has been able to rely on capital other people in order countries have saved to jumpstart their economic growth.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#107

Post by blackoil » Wed, Jul 13, 2022, 3:57 AM UTC

itsbits wrote: post #49

blackoil wrote: post #3

Because of Islamophobia people elected known corrupt leaders, who made all the bad decisions possible. The pandemic and Ukraine war unraveled it all.

Lol.. Islamophobia started after bombings. These leaders were there way before. Don't just link all political issues to Islamophobia.

2019 elections are won post Easter bombings. They were there before but the super majority they were able to get is because of Islamophobia.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#108

Post by no_butterscotch » Wed, Jul 13, 2022, 4:03 AM UTC

IG_Semmelweiss wrote: post #66

I would love to go deeper into the rabbit hole here. What is MIA in the Sri Lanka discussion is the underlying reasons for the situation. It seems one of them was misguided govt policy, in that they banned common fertilizers in favor of ESG-friendly fertilizer. It seems said fertilizer collapsed output, which meant less exports, less hard currency to import (late on the game) regular fertilizer. I still sont know why…

Right! And Sri Lanka was one of the top ranked countries in the world according to ESG score.

They wanted to appeal to Blackrock and their insane ESG rating.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#109

Post by rlt » Wed, Jul 13, 2022, 4:07 AM UTC

mpyne wrote: post #63

rlt wrote: post #55

Perhaps a dumb question: why does every little country need its own currency? Are they all just addicted to printing money? Ignoring the volatility and environmental concerns, why shouldn’t all these small to medium-sized countries standardize on a cryptocurrency?

> why does every little country need its own currency? Are they all just addicted to printing money? Controlling your money supply can be needed to improve your country's position with regard to foreign trade. Greece would probably have been better able to manage its recent debt crisis had it controlled its own currency rather than being tied to the Euro, for example. > Ignoring the volatility and environmental conce…

> Because people still need to be able to transact with something, which is not a function well-served by cryptocurrencies, most of which have the bulk of trade in them carried on off-chain or via stablecoins that track a fiat currency.

That’s a bit like saying the dollar isn’t a suitable currency because most transactions don’t happen directly through the Federal Reserve. Most people would transact through “layer 2” systems like Lightning, or even paper currency issued by one or more countries but backed by cryptocurrency reserves.

The cryptocurrency bit is to allow mutually distrusting countries to standardize on a single currency, if that’s something that might be valuable.

Re: Sri Lanka is having a textbook currency crisis, triggered by policy mistakes

#110

Post by strix_varius » Wed, Jul 13, 2022, 4:08 AM UTC

belltaco wrote: post #95

thematrixturtle wrote: post #64

Earlier quoted context omitted.

It's mentioned later in the article, and while it's certainly a factor, there are a lot of other countries with an even larger dependence on tourism (Maldives, Fiji, Thailand, etc) that did not suffer a full blown economic crisis as a result.

The big reason why is this https://en.wikipedia.org/wiki/2019_Sri_Lanka_Easter_bombings https://en.wikipedia.org/wiki/2019_Sri_Lanka_Easter_bombings...

This was also discussed in the article.