How to pimp a butterfly, black market edition
Opinion piece by Elie El Hajj, Contributor
October 31st, 2020
A sage man once said “I love it when money makes a difference but don’t make you different”. That sage man is none other than Drake.
The Lebanese black market is pretty much like Lebanon. You love it and hate it at the same time, you can never know what’s going to happen in it and even if or when you try to anticipate, it will come chase you at night asking for your dollars. So how can we know what to do with our money? And how can we know about the authenticity of these factors influencing our economy?
After over one year of suffering from this dollar crisis the citizens still seem to be led by emotions regarding the currency peg. More simply put, if a set of 100 individuals decide to spread informal rumors that the economy is doing better, the dollar to LBP ratio could be anticipated to naturally go down regardless if these rumors are true or not. If a set of 100 individuals decide to spread rumors about a meteor crash that is going to hit downtown in half an hour (even if there isn’t much left to be destroyed) the dollar to LBP ratio will go up for these 30 minutes regardless if the meteor is coming or not. This system implemented by us on ourselves is far from a new and up and coming phenomenon.
Effectively, a few years back when General Michel Aoun was elected President of the Lebanese Republic, Solidare stocks were witnessed to evidently jump and reach a historically new high. People believed that after all this time of governmental void, having a President would finally take the nation out of the hard circumstances that had plagued the country and that the economy would finally rise again.
Before explaining how to recognize a real factor from a faulty and corrupt one - we must understand how our economy went downhill. The Lebanese banking sector has been described as of the most perfect, most advanced, most powerful Ponzi schemes found on this planet and consequently with an economy completely tied with politics a domino effect struck all the current investors in the country. No more investors, means no more foreign productivity, no more foreign productivity means no more dollar inflow, and for a country that has its own sovereign national currency tied to the dollar (if you want to sound smart just call it currency peg) no more dollars means no more economy and well - boom here we are.
Now back to our main dish, the economic and non-economic factors influencing our black market. Let’s take 3 similar yet varying scenarios to understand this concept. Back when Hassan Diab was appointed as Prime Minister, and before performing an astonishing 98% of reparations and improvements in the country, the LBP increased by 15% in value to the USD. Consequently, people amazed by these news and it was not long before they went to their local exchange shop to offer their USDs to gain free money in LBP of course. Reasons to do so? I love money and I hope that PM Diab will be able to enhance the situation. Reasons not to do so? I still love money but I do acknowledge that PM Diab will never be able to fix the situation and so if I sell my dollars now I might not be able to buy them back later.
Now another timeline trip taking us a few days after the catastrophic port explosion. The dollar went down mysteriously compared to the LBP, yet this decrease was arguably a total scam. Why? Well, simply because it was only virtual.
Not convinced yet? Let me go straight to the point, it was fake. The rate did drop but only virtually because if you took your LBP and went to the exchange shop asking for dollars at this specific X rate. All exchangers were programmed to answer with this same exact sentence the conversion rate X is true however I don’t have any more dollars to sell so comeback later.
In brief, the rate was low but the dollar behind it was inaccessible. This was done to let the people feel like the situation was getting a bit better after all the international help received but it really didn’t because all major repairs happening to the buildings were paid in dollar.
A few months later, our political elite has pulled the Hariri card.
A movement Z wanted to portray Hariri as a super hero and decided to inject ridiculous amounts of dollars in the market making it a symbolic event. More simply put they wanted you to think that “Oh my God, Hariri returned as PM and the second day the black market rate dropped from 9000 to 6400”. First of all, Hariri’s return could have never done this or have been the responsible for the immediate dollar response. Second of all, even if it did it would not be because of him since as I mentioned earlier, dollars were injected meaning that this drop is purely artificial and won’t last long. So please, if you are reading this before it’s too late, don’t convert your dollars to LBP. You will not be able to buy them back later.
On the bright side and in contrast to scenario 2, this time you are actually able to buy these dollars at that specific rate but remember, you are happy because you are buying dollars at 6400 LBP per dollar, the same dollar that was valued one year ago at 1500 LBP.
Factors are an important component to keep in mind because once decrypted they can make a significantly critical difference and determine if the amount of money in your wallet will increase or decrease. Faulty factors are another important component that once decrypted will not only win you money but also IQ points.
So to conclude, keep your dollars with you, don’t trust the black market because the black market only loves itself and will sell you and all of your LBPs at any given opportunistic moment. Stay sharp, ask around and only sell dollars when you absolutely need to or if the peg is above 8600. Congratulations that’s how you pimp a butterfly in the Lebanese hood.