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

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

#171
post #14

> 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…

> As the article notes the government forced the food production to go all organic in one year with no plan, [...]

Because spending on fertilizer was a lot of their foreign currency spending, and the government thought "We'll just force 'organic farming' so our spending will look better!".

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

#172

Earlier quoted context omitted.

> In other words, what has changed It's often a series of mis-steps that lead to catastrophic failures such as being suffered by Srilanka. Here are a few that come to my mind, in no particular order. 1. Tourism took a big hit due to COVID lockdowns. 2. They took on huge debt from China to fund their massive infrastructure developments with close to zero plan as to how to reap the benefit of that infrastructure. For i…

#2 is actually false. Only ~10% of Sri Lanka's debt is Chinese. The majority is from western private market lenders. Chinese debt also have lower interest than western ones. See this detailed report by The Atlantic: The Chinese ‘Debt Trap’ Is a Myth https://www.theatlantic.com/international/archive/2021/02/ch... And this study by British campaign charity Debt Justice, which found that the situation in Africa is simil…

> Only ~10% of Sri Lanka's debt is Chinese. The majority is from western private market lenders. Chinese debt also have lower interest than western ones

My understanding is more of the Chinese debt is unproductive. 5% borrowed to build a useless port saps FX in a way 20% borrowed to buy yield-boosting agricultural inputs does not.

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

#173
post #167

When an entity fails this hard and the internet I consume is suddenly flooded with articles about it, I can't help but think: ok, who fucked them over? Who are the biggest "friends" of Sri Lanka? The US, China? Who profits from a weaker Sri Lanka. That's the real question. I know this site has people from all over, so I'd love to read more from the people who are NOT on the other side of the world.

Notionally Pakistan is their friend too but they are in no shape to be bailing out anyone.

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

#174

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…

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…

In the end if 70-ies and beginning of 80-ies agruculture was booming in USSR. Read your book until the end.

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

#175
post #167

When an entity fails this hard and the internet I consume is suddenly flooded with articles about it, I can't help but think: ok, who fucked them over? Who are the biggest "friends" of Sri Lanka? The US, China? Who profits from a weaker Sri Lanka. That's the real question. I know this site has people from all over, so I'd love to read more from the people who are NOT on the other side of the world.

Everyone really. Sri Lanka sold a naval base and large part of Colombo harbor to China plus the massive debts, refineries and power plants to India (who have a monopoly on gasoline) and LNG storage and power plants to the US.

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

#176
post #81
post #48

Earlier quoted context omitted.

In my experience, the number one thing that makes driving harder is other drivers, not the government. Drivers full roads to over-capacity and then I sit in gridlock.

In Paris it is a deliberate attempt to create traffic jam to force people to stop driving. They only succeeded on the first part.

Nah, i really dislike Paris and wouldn't come back ever, but in fairness, those measure really had an impact on the pollution and the public transportation useage.

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

#177

Earlier quoted context omitted.

#2 is actually false. Only ~10% of Sri Lanka's debt is Chinese. The majority is from western private market lenders. Chinese debt also have lower interest than western ones. See this detailed report by The Atlantic: The Chinese ‘Debt Trap’ Is a Myth https://www.theatlantic.com/international/archive/2021/02/ch... And this study by British campaign charity Debt Justice, which found that the situation in Africa is simil…

> Only ~10% of Sri Lanka's debt is Chinese. The majority is from western private market lenders. Chinese debt also have lower interest than western ones My understanding is more of the Chinese debt is unproductive. 5% borrowed to build a useless port saps FX in a way 20% borrowed to buy yield-boosting agricultural inputs does not.

Also there were conditions linked to the debt. Here is the money but you have to use it to build a highway using Chinese companies. Pure neocolonialism

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

#178

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…

This is a common feature of dictatorships: a boneheaded decision from a central government wreaks havoc on the people in the field that would know better. It reminds me of Mao ordering all sparrows be killed because they eat agriculture seeds. This of course caused a much bigger crisis with insects destroying crops - because everyone knows sparrows also eat lots of insects.

I'm not sure that "people in the field" would have predicted that killing all sparrows will lead to a surge of insects.

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

#179

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…

As I understand it, it was to improve their ESG score (they got up to 98) in order to spur up foreign investments. It did not quite work out as expected...

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

#180
post #97

Earlier quoted context omitted.

The sparrows in my yard have been exploiting and oppressing the wrens for years.

The wrens are stuck back in the middle ages. They keep having faires about it.

That's a golf clap worthy pun.
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