Gideon Gono is Not Disappointing Me

I have just started reading former Zimbabwe central banker Gideon Gordon's book, Zimababwe's Casino Economy. It is meeting my expectations.

So far I have learned, he has four children, Passion, Prince, Pride and Praise.

He has an undergraduate correspondence degree from Rapid Results College and in the book, he slams critics of his honorary PhD degree from the University of Zimbabwe:

Is NYT Planting Seeds for U.S. Involvement in Zimbabwe?

When NYT runs a front page story about the evils of a dictator in a far away country, I always get nervous that it is the first step in softening public opinion in favor of some type U.S. intervention.

The NYT has such a story out today on Robert Mugabe in Zimbabwe:

Tens of millions of dollars in diamond profits — perhaps more — are being secretly extracted from state-owned mines in eastern Zimbabwe, bypassing the nation’s treasury and raising fears that President Robert Mugabe is amassing wealth to help extend his 31-year reign, according to monitoring groups, diplomats, lawmakers and analysts.

Even if Mr. Mugabe’s allies in the mining ministry are telling the truth about the number of diamonds produced, the treasury was still shortchanged by at least $60 million last year, according to a budget report by the finance minister, one of the president’s chief opponents.

But the amount of money being withheld from the nation’s coffers may be much larger than that. Experts, and even some members of Mr. Mugabe’s own party, say the president’s allies are lowballing the nation’s diamond figures by millions of dollars, hoping to hide the fact that profits are being diverted for personal and political ends...

Now that Mr. Mugabe no longer controls the Finance Ministry — the result of a tenuous power-sharing arrangement to end the rampant state-sponsored violence during the 2008 presidential election — analysts say he needs outside income to finance his political operations. Diamonds offer him a rare opportunity to do that, especially now that international monitors have agreed to let Zimbabwe sell vast quantities of them, despite repeated warnings that it would enable Mr. Mugabe to tighten his grip on the nation...

The country’s defense forces, which answer to Mr. Mugabe and helped secure his victory in the last election by force, recently bought a large shipment of weapons and equipment from China, local news media reported. The mining ministry has paid millions of dollars in salary increases for civil servants outside its ranks, a form of patronage intended to win votes, according to some lawmakers and watchdog groups. And Anjin — a Chinese mining company in Marange that local and Western officials say the Zimbabwean military has a direct ownership stake in — is financing a new military academy...

The diamonds have become a vivid symbol of Zimbabwe’s conflicts. International monitors and human rights groups say the army seized the Marange fields in 2008, using “horrific violence against civilians.” The Kimberley Process, an international coalition trying to prevent the trade of diamonds that fuel conflict, initially suspended trading from Marange. But in 2010, under pressure from some of Zimbabwe’s neighbors, it authorized two sales over objections from Western powers like the United States...

The political consequences [of the diamond sales] could be stark. A military operation known as Operation Zhunde Ra Mambo, or “blessings of the chief,” financed by the ZANU-PF member who oversees the state’s interests at Marange, has deployed troops to rural areas to intimidate political opponents, according to one former opposition intelligence operative.

It's difficult to understand how the taking of diamonds by Mugabe is much different than government taxes in the U.S. Perhaps Mugabe is a little more crude in his operation, but the result is the same, the money ends up under the control of political leaders. And it is also difficult to see that how patronage jobs in Zimbabwe are different from patronage jobs in the U.S.

Yet, the uproar continues. I wonder if the ruckus has anything to do with the fact that the Zimbabwe sales are creating competition for the huge diamond dealer DeBeers, which is owned by the Rothschilds?

Zimbabwe Abandons Its Currency

Zimbabweans will be allowed to conduct business in other currencies, alongside the Zimbabwe dollar, in an effort to stem the country's runaway inflation. For all practical purposes this is the end of the Zimbabwean dollar.

The announcement was made by acting Finance Minister Patrick Chinamasa.

Until now only licensed businesses could accept foreign currencies, although it was common practice.

This is a big break for the average impoverished Zimbabwean.

Now I'm wondering, does this make Ben Bernanke the world's top active inflationist?

There's Always a Reason for Mad Economic Policies

...and deep in the background it's often the Missus. Sometimes she just needs to go shopping---even in the very mad land of the z100 trillion dollar note, Zimbabwe.

UK's Times online reports:

Grace Mugabe, 43, known as the First Shopper of Zimbabwe, flew into a rage when she was spotted [by a photographer] last week leaving the exclusive Shangri-La hotel in Hong Kong. She has been staying there with her entourage at a cost of 2,000 a day...

Holding a Jimmy Choo-style bag estimated to be worth at least 2,000, and hiding behind Cavalli rhine-stone-framed glasses with a red cashmere shawl over her head, she ordered her bodyguard to attack the photographer...

While the guard tried to wrestle away Jones’s camera, she joined in the assault.

“The man held him while she hit him again and again in the face with her fists. She was screaming, completely crazy,” said Werner Zapletal, a tourist from Austria who witnessed the incident.

Jones, 42, suffered nine cuts, abrasions and bruises to the face and head caused by the heavy, diamond-encrusted rings Mugabe was wearing...

Mugabe and her female companion fled around a corner seeking to hide their faces, only to run straight into a second photographer, Tim O’Rourke. He snapped a few pictures before she flew at him with her fists flying, pulled his hair and tried to smash his camera...

Before she embarked on her Far East holiday at the beginning of January, Mugabe withdrew US$92,000 from the central bank in Harare, Zimbabwean sources said. Accompanied by her children, she stayed first at the Malaysian island resort of Langkawi. She then moved on to Singapore where she was joined by her husband for a few days...

Grace Mugabe is more than 40 years younger than her 84-year-old husband. Formerly his secretary and mistress, she finally married him in 1996 after the death of his wife of 30 years.

Holy sh#$%t. I think I would print z100 trillion dollar notes to keep this one calm.

At last report, z100 trillion is worth $US33, so to pull $US92,000 out of the Zimbabwe bank, for this shopping excursion, Robert Mugabe would have had to order up the printing of roughly 2,788 z100 trillion banknotes and have them converted to US dollars.

Mugabe Jumps to Lead Over Bernanke in Money Printing Race

Zimbabwe's central bank will issue a 100 trillion Zimbabwe dollar banknote. At current black market rates, it will be worth about $33.

In addition to the Z$100 trillion dollar note, the Reserve Bank of Zimbabwe plans to launch Z$10 trillion, Z$20 trillion and Z$50 trillion notes, the Herald newspaper reported.

Prices are doubling every day.

Zimbabwe Inflaton: 50 Million% for the Current Month

Angus Shaw for AP reports:

Embattled restaurants ...added a penalty fee of up to 80 percent on top of the bill for those who paid by check, estimating price rises in the five days it takes a check to clear.

On Aug. 1, the central bank slashed 10 zeros from the plummeting local currency, and Reserve Bank Governor Gideon Gono warned companies against doing business in U.S. dollars. He said such transactions were still illegal and should be reported to police....

...barred by the government from using U.S. dollars for purchases, Zimbabweans turned to a new money source Wednesday: gasoline coupons.

I suspect there is a lot of underground US dollar transactions, otherwise the economy would be in even worse shape than it is now.

Zimbabwe Drops Tweleve Zeros From ts Currency

Zimbabwe will drop 10 zeros from its hyper-inflated currency _ turning 10 billion dollars into one _ the country's reserve bank said Wednesday. President Robert Mugabe threatened a state of emergency if businesses profiteer from the country's economic and political unraveling.

Note to Mugabe: Business "profiteers" aren't printing the money causing the inflation. The inflation is caused by the central bank printing money to pay for expenses of the Mugabe government.

Aggravating the problem are price controls which are resulting in shop shelves that are empty and there are chronic shortages of everything including medication, food, fuel, power and water. Eighty percent of the work force is unemployed and many who do have jobs don't earn enough to pay for bus fare.

Wednesday's announcement by central bank governor Gideon Gono that he was dropping 10 zeros from the currency, effective Friday, comes a week after he introduced a 100 billion-dollar note which was not enough to buy a loaf of bread.

Mugabe went on television immediately after Gono's announcement to warn against illegal money dealings and profiteering.

"Entrepreneurs across the board: Don't drive us further," he warned. "If you drive us even more we will impose emergency measures."

Gono said new money would be launched Friday with 500-dollar bills. He also said he was reintroducing coins, which have been obsolete for years. Bills will be back in the millions in record time if the central bank continues to print currency.

Gono said the high rate of inflation was hampering the country's computer systems. Inflation is officially running at 2.2 million percent in Zimbabwe but independent economists say it's closer to 12.5 million percent.

Computers, electronic calculators and automated teller machines at Zimbabwe's banks cannot handle basic transactions in billions and trillions of dollars.

Zimbabwe Introduces $100 Billion Banknotes

The bills officially come into circulation Monday, although they were on the foreign currency dealers market Saturday.

As high as they are, though, the bills still aren't enough to buy a loaf of bread. They can buy only four oranges.

The new note is equal to just one U.S. dollar

The official inflation rate now at 2.2 million%.

Zimbabwe started issuing large bank notes in December, starting with denominations of $250,000.

In January, the government issued bills in denominations of $1 million, $5 million, and $10 million -- and in May, it issued bills from $25 million and $50 million up to $25 billion and $50 billion.

Watching Zimbawe Hyper-Inflation

WSJ carries an Op-Ed this morning from Roger Bates, who speculates that runaway inflation may put an end to Robert Mugabe rule in Zimbabwe. Here are some of the latest reports out of Zimbabwe via Bates:

Consumer prices have more than doubled every month this year, in some cases doubling every week. A conservative estimate provided by Robertson Economic Information Services, a Southern African consultancy, says that prices are now three billion fold greater than seven years ago. That's right, billion. The exchange rate is currently an astronomical 90 billion Zimbabwe dollars to one U.S. dollar.

When I first went to Zimbabwe in 1996, $1 would buy you eight Zimbabwe dollars – a depreciation in exchange rate of perhaps 10 billion fold in 12 years. A decade ago, 500,000 Zimbabwe dollars would have bought you a house; today it can't buy you anything...

Mr. Kipuru bought groceries with his debit card, which remarkably still works. The card, he explained, maxes out at just under 10 billion Zimbabwe dollars. So he had to run it 74 times, given that his food bill was nearly 730 billion Zimbabwe dollars.

Buying anything is a "bizarre experience," said Lucy Chimtengwende from Bulawayo, who spent $12 U.S. on lunch recently, with the bill in local currency being an astonishing 1.1 trillion Zimbabwe dollars. The menu had no prices on it, she told me by phone, prices are quoted to you and are constantly changing.

And here's how the economy is really able to function under these conditions, "greens":

Ms. Chimtengwende was breaking the law by paying for her meal in U.S. currency (or "greens" as they're known locally), as was the owner of the restaurant accepting it. But the economy is dollarizing as the local currency literally becomes worthless.

This underground dollar economy is actually helping Mugabe, as it is keeeping the economy from entire collapse.

Mugabe's Currency Paper Supply Is Cut Off

Zimbabwe's official inflation rate was put at 165,000 percent by the government in February, but independent estimates put the real figure closer to 4 million percent.

Zimbabwe is believed to be the only country in the world that now carries out routine financial transactions in quadrillions — one quadrillion is a 1 with 15 zeroes behind it, or 1,000,000,000,000,000.

The exchange rate between the US dollar and the Zimbabwe dollar is now US$1.00 to ten billion Zimbabwe dollars.

The government continues to print Zimbabwe dollars to support purchases by President Robert Mugabe and his government. Almost all governments print money to support their regimes. Mugabe is just doing it more aggressively. In the United States, the Federal Reserve is growing the money supply at around 8%.

Now, the German government is getting into the act to try and stop the Zimbabwe inflation.

WSJ reports:

The Munich-based company that has supplied Zimbabwe with the special blank sheets to print its increasingly worthless dollar caved in to pressure on Tuesday from the German government for it to stop doing business with the African ruler.

Mr. Mugabe's regime relies on a steady supply of the paper -- fortified with watermarks and other antiforgery features -- to print the bank notes that allow it to pay the soldiers and other loyalists ...

Tyler Cowen points out that the paper supplier, Giesecke & Devrient, is the same firm that printed up the bills for the famous Weimar hyperinflation of the 1920s.

Prediction: Mugabe will continue printing money, even if he has to use toilet paper. (This, of course, would actually add some value to his currency).