Why the Loss and Debt numbers are conflicting between different sides.

[oldschool]

This is a thread to explain or discuss why the numbers between the government plan and the others are different, since its causing confusion. Im not an economist but this is what i understood.

Basically they all have the same numbers of who owes what to whom and when.

BUT:

In the government plan, debts that are due after many years are considered to be defaulted. The others are saying, wait, from now until then, we can redress and repay those debts.

Also, in the government plan, some bank loans that have guarantees are considered to be defaulted and so the banks are saying our losses arent that much because we have guarantees for them.

So people might look at this logically and say, so the government is really overestimating the losses and we should reduce those numbers.



BUT,

The standard IMF and many accounting approaches is to treat these as losses now and consider them defaulted. Why? Because they consider that they are giving you now a new loan, and if youre burdened with other loans that you have to repay, then that makes you a less desirable candidate for new loans.

As for the guarantees that the banks have, i understood again that its standard for many to also require provisions against these loans.




So basically, they all have the same numbers. How you interpret them can be different. Ultimately, its the people giving you money who will decide, and usually the IMF takes the government approach (which is why the government took it).

If you wanna take a different approach, then you have to find someone who accepts it. and would accept to give you money for it.




Now the disadvantage of the government plan is it absolves the state from its debt to the banks and therefore where are you gonna get the deposits back from? The sandou2 siyede which is very vague.

But the Kanaan approach, while it stays that the state should still be liable for these, also doesnt specify where it would get them from, but supposes an economic recovery which would be hard without people loaning you money in the first place.


I probably did a shit job understanding and explaining things but people think that each side is making errors in calculations which isnt true. Its simply a question of policy and of being able to find someone who loans based on each approach.

 

[mariob2]

Dr. Henri Chaoul, the expert consultant in the Lebanese delegation with the IMF, resigned a couple of days ago, citing unwillingness from the political parties to enact reforms contingent upon the IMF loan.

He also indicated the lack of incentive from many MPs because they own stakes and assets in banks, which explains why there was constant division and supposed overestimation/underestimation of the losses.

According to his resignstion letter, (as well as cited articles and sources : they're online and known), the stratagem was to disrupt the Government numbers, estimated at LL 240 trillion (or $80 billion [though why 80 x 3 = 240 i.e 1$ = 3000 LL I have no idea but 240 trillion is the official number), and arguing that the real numbers were much, much lower, estimated at $40 billion.
By reducing estimated losses, that would, according to ABL and BDL (the ponzi scheme masterminds), save the banking sector and the deposits.

When in reality the banks would actually be saving themselves a lot of the losses, trying not to bear any form of responsibility, thereby saving the stakes and hard-earned assets our wise and glorious MPs.

These reasons led Chaoul to resign from his role. A bit of political context to the accounting approach that OP explained casts a better light on the grim picture unfolding around us.

I almost forgot to mention that with the estimated losses of $40 billion, the bank's argument further continues by stating that the State could therefore cut its losses by selling assets...

If nobody reads between the lines = selling assets back to those same thieves that caused the economic apocalypse and not bearing any losses, obtaining some form of guarantee through State assets

TL;DR : banks supported by MPs underestimate the losses so as not to bear greater responsibility in the restructuring of the debt, under the guise of ssving the sector and helping depositors, when in truth they are saving their skin

 

[mariob2]

Dr. Henri Chaoul, the expert consultant in the Lebanese delegation with the IMF, resigned a couple of days ago, citing unwillingness from the political parties to enact reforms contingent upon the IMF loan.

He also indicated the lack of incentive from many MPs because they own stakes and assets in banks, which explains why there was constant division and supposed overestimation/underestimation of the losses.

According to his resignstion letter, (as well as cited articles and sources : they're online and known), the stratagem was to disrupt the Government numbers, estimated at LL 240 trillion (or $80 billion [though why 80 x 3 = 240 i.e 1$ = 3000 LL I have no idea but 240 trillion is the official number), and arguing that the real numbers were much, much lower, estimated at $40 billion.
By reducing estimated losses, that would, according to ABL and BDL (the ponzi scheme masterminds), save the banking sector and the deposits.

When in reality the banks would actually be saving themselves a lot of the losses, trying not to bear any form of responsibility, thereby saving the stakes and hard-earned assets our wise and glorious MPs.

These reasons led Chaoul to resign from his role. A bit of political context to the accounting approach that OP explained casts a better light on the grim picture unfolding around us.

I almost forgot to mention that with the estimated losses of $40 billion, the bank's argument further continues by stating that the State could therefore cut its losses by selling assets...

If nobody reads between the lines = selling assets back to those same thieves that caused the economic apocalypse and not bearing any losses, obtaining some form of guarantee through State assets

TL;DR : banks supported by MPs underestimate the losses so as not to bear greater responsibility in the restructuring of the debt, under the guise of ssving the sector and helping depositors, when in truth they are saving their skin

I forgot to add that a solution was that the big depositors and those who profited enormously from the exorbitant interest rates provided by BDL/the State through the Ponzi scheme be relinquished, at least some of them. That way, depositors wouldn't be touched in any way, only using the interest money/profits (which indirectly targets those who profited from the scheme = the said MPs and others ofc...)

 

[Walidos]

Dr. Henri Chaoul, the expert consultant in the Lebanese delegation with the IMF, resigned a couple of days ago, citing unwillingness from the political parties to enact reforms contingent upon the IMF loan.

He also indicated the lack of incentive from many MPs because they own stakes and assets in banks, which explains why there was constant division and supposed overestimation/underestimation of the losses.

According to his resignstion letter, (as well as cited articles and sources : they're online and known), the stratagem was to disrupt the Government numbers, estimated at LL 240 trillion (or $80 billion [though why 80 x 3 = 240 i.e 1$ = 3000 LL I have no idea but 240 trillion is the official number), and arguing that the real numbers were much, much lower, estimated at $40 billion.
By reducing estimated losses, that would, according to ABL and BDL (the ponzi scheme masterminds), save the banking sector and the deposits.

When in reality the banks would actually be saving themselves a lot of the losses, trying not to bear any form of responsibility, thereby saving the stakes and hard-earned assets our wise and glorious MPs.

These reasons led Chaoul to resign from his role. A bit of political context to the accounting approach that OP explained casts a better light on the grim picture unfolding around us.

I almost forgot to mention that with the estimated losses of $40 billion, the bank's argument further continues by stating that the State could therefore cut its losses by selling assets...

If nobody reads between the lines = selling assets back to those same thieves that caused the economic apocalypse and not bearing any losses, obtaining some form of guarantee through State assets

TL;DR : banks supported by MPs underestimate the losses so as not to bear greater responsibility in the restructuring of the debt, under the guise of ssving the sector and helping depositors, when in truth they are saving their skin

I didn’t get all of this from everything I have read so far....
I think there is a dose of politics in this rhetoric...

From what I gathered, there are 2 issues, the one described in @oldschool ’s post, but also the FX rate of LBP to the dollar.

Now on the first issue of defaulting long term loans, If the government defaults on all the loans now, even the ones that are due in the future, the banks take a big hit and yes, the depositors money is at risk, and to be clear, all depositors both rich and poorer. But if the government doesn’t default now on all the loans, it will likely have less support from the IMF if any, since whatever it gets will likely be used to pay the banks... the main issue is that our economy doesn’t generate value: we are in constant deficit, and it’s a massive deficit, even before we go into any form of corruption or theft.
What the government needs to balance is getting the support of the IMF as if they are defaulting on all loans, and maintain support to the banks so they don’t go bankrupt and hurt depositors... we need an economy that generates GDP and we, as government, need to spend what we can afford.
I am with government in this one, Parliament is trying to play the popular card, not the card that gets us on the right path for the longer term.

 

[Walidos]

I forgot to add that a solution was that the big depositors and those who profited enormously from the exorbitant interest rates provided by BDL/the State through the Ponzi scheme be relinquished, at least some of them. That way, depositors wouldn't be touched in any way, only using the interest money/profits (which indirectly targets those who profited from the scheme = the said MPs and others ofc...)

I don’t know what mechanism can be implemented to do this... imagine you had a contract with a bank, and based on it got 10% interest on bonds you bought. Can the government come to you and say now you lose all the interest you made since you started this deal? Not to my knowledge. This is again rubbish for local consumption... tare2 7akeh

 

[dyyyy]

I don’t know what mechanism can be implemented to do this... imagine you had a contract with a bank, and based on it got 10% interest on bonds you bought. Can the government come to you and say now you lose all the interest you made since you started this deal? Not to my knowledge. This is again rubbish for local consumption... tare2 7akeh

Yes of course you can, there's no such thing as free money, why do you give 10% interest when others give 1%? this difference is the profit you're making from taking a bigger risk.

What is completely illegal is someone who didn't freeze his money and decided not to take any risk finds his money devaluated. now our dollar accounts in the bank lost mote than 50% of their value without signing any paper and deciding anything.

So yes the first option is much more fair and is actually legal as opposed to what us happening now.

Just a reminder (because they're trying to make us get used to it):
It is completely illegal for a bank to bot let you withdraw your money in the currency you put it in. So alrady the law is being broken

 

[Walidos]

Yes of course you can, there's no such thing as free money, why do you give 10% interest when others give 1%? this difference is the profit you're making from taking a bigger risk.

What is completely illegal is someone who didn't freeze his money and decided not to take any risk finds his money devaluated. now our dollar accounts in the bank lost mote than 50% of their value without signing any paper and deciding anything.

So yes the first option is much more fair and is actually legal as opposed to what us happening now.

Just a reminder (because they're trying to make us get used to it):
It is completely illegal for a bank to bot let you withdraw your money in the currency you put it in. So alrady the law is being broken

No you are mixing things up:
1- you buy an asset (like foreign currency) you implicitly take the risk of its value evaluating or devaluating... it is not a contract, it’s like buying a car or a painting...
2- you make a deal with a bank to give them money against a bond with high yield return, and you get paid, no one can take that money ways from you. You do however take a risk: if the value of the bond devaluate a you lose all your money
3- this is what the government is proposing, to default on the longer term loans meaning the screw the banks... in return the banks are saying they will screw the depositors and this is what the government is trying to avoid...

If a bank goes bankrupt, all its assets are sold to recover as much as possible of the depositors’ money. Whatever is recovered is then redistributed fair share to all depositors, if you own 10% of the bank deposits you get 10% of recovered money...

Net, it’s not as easy and simply saying they are robbing us doesn’t solve any issue. The issue is the pound is devaluating, the economy is at a standstill because of COVID and all the protests since October and there is no value generation.... the people will beat the grunting the suffering, like it or not

 

[NAFAR]

As I see it the political class is engineering a plan to wave the IMF and sell all state assets which account for almost 100 billion USD to close the debt completely and save the deposits and get a fresh breath of life for the next 30 yrs...........business as usal.
Jumblat admit it publicly in his last debate with Dima sadek

 

[illusion84]

Let us keep things simple.

If you go to the bank and ask for 1000$; they'll give you 3,000,000 L.L. which is , more than 40% haircut as the 1000$ worth more than 5,000,000L.L. according to the real market value.

Now if you ask for 10,000$ you'll get 15,000,000 (they apply the official exchange rate in this chase). which is 70% haircut!

So what are the banks suggesting? Nothing! They simply want things to continue as they are! Today it is 70% haircut; tomorrow 80% the day after tomorrow who knows! As long as Riad Salameh is printing L.L. and no real dollars are entering the country there is no ceil for the dollars exchange rate.

The bank owners do not really care about the devaluation of the lollar as they transferred already most of their money abroad.

As for the difference between Kanaan's numbers and those of the gov; no one knows the parliament paper yet so we can not actually discuss it.

But as the figures are close to the banks figure; there is something fishy about it...

 

[oldschool]

When i wrote the thread their plan wasnt published and i was going off by what Kanaan and others were saying on OTV and to some people.

However it seems those who recently read the plan found some confusion in the exchange rates used which accounts for most of the difference as well as some of the other issues.

So my OP explanation is inaccurate.

 

[Dark Angel]

a few days ago one of the minister of fianance's consultants presented his resignation, probably that was related to messing up somewhere in compiling the numbers, it could also be because he opted to step out before losing what little sanity he has left.

our main problem in Lebanon is that we are a pretentious people, we easily claim and market ourselves as experts in a given field without it being the case. it thus follows that more often than not, positions are granted based on pea-cocking skills rather than on real merit, and this comes us to byte us pretty much always, because the above is only one piece of the puzzle, the second piece is that we are actually susceptible to pea-cocking, these two ingredients together lead to a rather chaotic environment where people parade as anything they want, under so many misleading titles. it follows that the job performed is half batched at best.

but did we not hire foreign agencies to sort out these numbers out? so at the moment it from what i heard we have four different sets of numbers. one presented by BDL, one by the government, one by the bankers association (about the parts that concern them) and one by the foreign consultants, and none of these numbers presented matches another.

it is obvious they can't be all right, but there is a good possibility they are all wrong.

unless many transactions have no records or trace, how hard can it be to compile?

 

[Dark Angel]

When i wrote the thread their plan wasnt published and i was going off by what Kanaan and others were saying on OTV and to some people.

However it seems those who recently read the plan found some confusion in the exchange rates used which accounts for most of the difference as well as some of the other issues.

So my OP explanation is inaccurate.

it is not true that the differences are attributed only to the exchange rates between BDL and the government, taking these into consideration does not completely close the gap and still leaves a divergence estimated in several billions dollars. the different exchange rates is simply a theory forwarded by "good semeritans" trying to consolidated the numbers in front of the IMF team. the reason for the divergence is not simply about whether the loans that have not matured should be counted towards the deficit or not, it is rather within saleme's acrobatics where apparently some of the losses are rehashed or covered by some "handaset" involving some of the leading banks, so that they could reappear in the books, hoodini style.

it is still unclear how they will wrap up this fiasco, every discrepancy in these numbers will fall back on the citizens directly and/or indirectly. not sure if we have a clause in the Lebanese law that addresses what is referred to as "criminal negligence" in the USA, for even in the best case scenario assuming there was no foul play, this obscene negligence would still fall upon riad saleme/ministry of finance/previous governments.

 

[Nonan]

I don’t know what mechanism can be implemented to do this... imagine you had a contract with a bank, and based on it got 10% interest on bonds you bought. Can the government come to you and say now you lose all the interest you made since you started this deal? Not to my knowledge. This is again rubbish for local consumption... tare2 7akeh

The banks need to default. They are zombie banks anyway and they have milked the Lebanese government through inflated government bonds. The government should default on the bonds, take possession of the banks, using the remaining money to pay the small depositors and impose an escalating haircut on the others.
Then banks can be merged, restructured (we don’t need 50 banks) and a smaller number can be put out to sale with a significant capital buffer requirement. That is the ONLY solution. But it goes against all the powerful people and hence it will never be implemented.
Let people keep clapping for their زعيم and hope for Chinese or whatever money that will never come

 

[Walidos]

The banks need to default. They are zombie banks anyway and they have milked the Lebanese government through inflated government bonds. The government should default on the bonds, take possession of the banks, using the remaining money to pay the small depositors and impose an escalating haircut on the others.
Then banks can be merged, restructured (we don’t need 50 banks) and a smaller number can be put out to sale with a significant capital buffer requirement. That is the ONLY solution. But it goes against all the powerful people and hence it will never be implemented.
Let people keep clapping for their زعيم and hope for Chinese or whatever money that will never come

This scenario is possible, works for the government and the poorer people, screws the banks and the well off people. Importantly, also screws prospects of investments in lebanon... so short term great, long term does not address the problem: our economy does not create value.
They can do this, but it is not sufficient, they need to address the root cause

 

[Nonan]

This scenario is possible, works for the government and the poorer people, screws the banks and the well off people. Importantly, also screws prospects of investments in lebanon... so short term great, long term does not address the problem: our economy does not create value.
They can do this, but it is not sufficient, they need to address the root cause

I never pretended that this was the solution to everything. For investors to come back and people to be willing to trust Lebanon, you need rule of law. Without it, nothing can work in the “right” way. And unfortunately I don’t see us heading towards that in any shape or form

 

[mariob2]

it is not true that the differences are attributed only to the exchange rates between BDL and the government, taking these into consideration does not completely close the gap and still leaves a divergence estimated in several billions dollars. the different exchange rates is simply a theory forwarded by "good semeritans" trying to consolidated the numbers in front of the IMF team. the reason for the divergence is not simply about whether the loans that have not matured should be counted towards the deficit or not, it is rather within saleme's acrobatics where apparently some of the losses are rehashed or covered by some "handaset" involving some of the leading banks, so that they could reappear in the books, hoodini style.

it is still unclear how they will wrap up this fiasco, every discrepancy in these numbers will fall back on the citizens directly and/or indirectly. not sure if we have a clause in the Lebanese law that addresses what is referred to as "criminal negligence" in the USA, for even in the best case scenario assuming there was no foul play, this obscene negligence would still fall upon riad saleme/ministry of finance/previous governments.

The negligence you talk about exists in many forms. First and foremost, you have the Government Commissioner at BDL. He supervises everything there (think of him as the trusted liason of the Government). Second, you have the ministry of Finance, to which said Commissioner answers to. Finally, you have the notion of "i7tiyel (escrow), ta5ali 3an l wajibat (abandoning duties), khata2 jasim (gross negligence)". All of these can form the basis of a lawsuit to prosecute the bastards.

But when the Commissioner answers only to the Ministry of Finance, and that undeniably the Governor of BDL was complacent in every financial aspect of all the previous Governments and facilitated credits ti politicians, and when no wire transfer from Banks to outside Lebanon can have the blessing to proceed without him knowing (BDL is the Bank of the Banks), and when the head of ABL is present in nesrly every organ that supervises and sanctions banks....

All gears of the system are rotten to its core. We had a huge conflict of interest right under our own noses for the past 30 years.