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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

#251

Post by Aune »

barry-cotter wrote: post #106
UkrainianJew wrote: post #79

Earlier quoted context omitted.

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 t…

Yes. But his point is that what we have been doing is more like taking on credit card debt to spend on booze than taking a bank loan to buy machinery. And assuming that being the case, your statement completely misses the mark.

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

#252

Post by worik »

thematrixturtle wrote: post #64
walrus01 wrote: post #21

The first part of the article about how Sri Lanka would get foreign currency (swap, export or borrow) almost completely ignores the well documented devastation of the tourist industry, where people bring euros or dollars, due to covid19 and shutdowns of travel. Yes I suppose it falls into the category of swap, because people bring euros and exchange them for local currency to buy local goods and services. But it was…

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.

I do not know about Maldives, but Fiji and Thailand still have their community connections. Family ties going back a long way. I think that helps a lot.

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

#254

Post by guerrilla »

mannerheim wrote: post #231
guerrilla wrote: post #206

Earlier quoted context omitted.

There's nothing "conspiratorial" about assuming fundamental principles of human behavior, even baked into neoclassical economics (which you might also subscribe to) and any realist political theory. Not only that but real conspiracies at this level happen almost constantly[1], John Bolton just admitted being involved in some yesterday on CNN[2]. Don't be dismissive and condescending, especially when it's quite possib…

The organic movement that led to a nationwide chemical fertiliser ban is in fact part of a CIA operation to destabilise food-insecure nations.

I wouldn't know but it wouldn't be the weirdest thing they've done.

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

#255

Post by makomk »

xorcist wrote: post #214
drited wrote: post #195

Earlier quoted context omitted.

Not just a dictatorship problem. Look at the halting of nuclear in Germany - a decision made by Angela Merkel after a bottle of wine with her husband according to The Atlantic. I would argue that the current energy crisis was also partly caused by the ESG drive which while laudable in aspiration got ahead of physical practical implementation capacity.

Large scale buildouts of natural gas infrastructure is not ESG. I know it is tempting to pin this one on the environmentalists, but this is on the establishment. Starting with Schröder who realized he could find an easy way to keep German industry competitive and line his pockets and live a comfortable life forever. This is similar to the Sri Lankan situation. It does not matter how you label it. The lack of fertiliz…

Devemoped countries have underinvested in natural gas infrastructure compared to its importance in keeping their shiny new renewable-heavy grids actually operating though - and in particular ESG campaigners have been very successful at blocking investment in natural gas production in most of the Western democratic world. Which has just resulted in heavy dependencies on imports from unstable dictatorships since there's no real alternative to fossil fuels yet. I know the Guardian here in the UK has been pushing for a continued block on new natural gas production that they admit will only stop it being produced in stable democratic countries, even well after Russia's invasion of Ukraine demonstrated the actual consequences of this.

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

#256

Post by pjc50 »

londons_explore wrote: post #228
noja wrote: post #219

Earlier quoted context omitted.

> The UK hasn't been able to feed its population from native production only since before WW2. What does this mean though? That the UK does not generate enough calories to meet a certain minimum baseline? That the UK does not generate enough calories to meet the current consumption? That the UK eats things that they do not grow?

The UK has a whole government department to answer your questions: https://www.gov.uk/government/statistics/united-kingdom-food... Result: The UK grows enough wheat alone to give enough calories to support its population, with plenty to spare. It also produces all the major food groups in quite large quantities. If cut off from the world, the UK people wouldn't starve, but they might have to switch out their caviar f…

That's quite an impressive report and it's good to see someone's taking this seriously, even if they might end up ignored by whoever the agriculture secretary of the day is.

> but they might have to switch out their caviar for something else

That's frivolous: the report talks about meeting 100% of caloric requirements from grain in an emergency scenario. The mostly-bread diet would be comparable or worse than WW2 rationing, it's not just luxuries that would be impacted.

For purposes of comparison with Sri Lanka, I also note: "The UK imports roughly 50% of its ammonium nitrate, with 75% of imports for fertiliser use coming from the EU (primarily from Lithuania, Poland, and the Netherlands) and the remaining 25% from Georgia and Russia."

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

#257

Post by vbezhenar »

drited wrote: post #195
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…

Not just a dictatorship problem. Look at the halting of nuclear in Germany - a decision made by Angela Merkel after a bottle of wine with her husband according to The Atlantic. I would argue that the current energy crisis was also partly caused by the ESG drive which while laudable in aspiration got ahead of physical practical implementation capacity.

Angela Merkel was in power for 16 years. How is she not a dictator. She usurped power.

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

#258

Post by cm2187 »

nibbleshifter wrote: post #234
cm2187 wrote: post #81

Earlier quoted context omitted.

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

There is virtually no need to drive a private automobile in Paris if you are able bodied. The same applies to Berlin, London, and many other places.

...and have a taste for tunnels stinking piss, overcrowded trains, very long and sordid corridors (Chatelet).

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

#259

Post by [deleted] »

noja wrote: post #219
pjc50 wrote: post #194

Earlier quoted context omitted.

(The original article is very good at providing a beginner's explanation of forex crises, and should be bookmarked for every time someone wants to talk about inflation) > A country ought to feed its people This is much harder than it sounds, not just for dense tiny countries like Singapore but for much of Western Europe. The UK hasn't been able to feed its population from native production only since before WW2. I se…

> The UK hasn't been able to feed its population from native production only since before WW2. What does this mean though? That the UK does not generate enough calories to meet a certain minimum baseline? That the UK does not generate enough calories to meet the current consumption? That the UK eats things that they do not grow?

[deleted]

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

#260

Post by freemint »

anu7df wrote: post #128
lkrubner wrote: post #87

Earlier quoted context omitted.

The current spike in inflation is a world-wide phenomena, effecting every country on Earth, and therefore it seems unlikely to have much to do with the USA's creation of new money. The USA printed trillions of dollars of new money after 2008 and yet inflation remained very low for the next decade. If, now, the USA's printing of money is having some new effect, you have to explain why Argentina, South Africa, India, V…

The current spike did not happen by chance or out of the blue. This is the result of worldwide efforts to limit the fallout of the 2008 financial crisis. To the extent that it was possible a lot of the countries followed the US in enacting liberal low cost lending. US of course with the mighty dollar was able to print a far more and pump far more into their economy than other countries. But many other countries follo…

> This is the result of worldwide efforts to limit the fallout of the 2008 financial crisis.

> overheating of the market.

Citations needed.

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