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September 06, 2007
Iranian Central Bank: Most interesting views on banking, I would like to subscribe to their
Following this Financial Times arty regarding "a plan to eliminate interest rates on loans as a way to encourage "real and genuine" banking services" I am most keen on learning more and would like to subscribe to their economic commentary.
However, it is a bit obscure and I am not an Iran watcher by profession or inclination.
Never the less, the real and genuine banking summary says to me rather typical populist and cronyist capital wasting:
Mr Mazaheri is sympathetic to the populist policies of Mahmoud Ahmadi-Nejad, Iran's president, who has promised widely affordable "profit rates" - as interest rates are referred to in Iran's Islamic banking system.Former economic officials warned of the potentially disastrous consequences. "There is no doubt that the government won't be successful, but such a measure can disrupt the whole economy," said Mohammad Tabibian, a prominent reform-minded economist.
The government worried bankers and economists when it formed a committee last month to study "revision of banking regulations". The agenda of the 10-member committee, led by Parviz Davoudi, first vice-president, is unclear.
Mr Ahmadi-Nejad has urged banks to give cheap loans to those on low incomes. The president clashed with Ebrahim Sheibani, the last central bank governor, over rates. He said banks' profit on loans must be cut to less than the inflation rate - which officially stands at14 per cent and unofficially may exceed 20 per cent. In May, he imposed rate cuts, from 14 to 12 per cent at state-owned banks, and from 17 to 13 per cent at private-sector banks.
Why this would be a brilliant way to provoke capital flight to the profit of the other side of the Gulf, etc.
It does bring back fine memories of last fall listening in Dubai to Iranian bankers talk up investment in Iran to ... oh I would say the perpetually gullible.
Posted by The Lounsbury at September 6, 2007 11:30 PM
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Biz - Private in MENA
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Economics
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Comments
Why this would be a brilliant way to provoke capital flight to the profit of the other side of the Gulf, etc.
Not to mention jacking inflation through the roof. This is breathtakingly stupid -- positively Zimbabesque. I see new life for the carry trade, though. Any way we can get a hold of a bunch of these loans? ;)
Iran has been developing a sort of stench of death over the last year or so. For years, Iran played a weak hand with a certain panache. There were obviously some very wily and sophisticated people working to keep the country afloat. All these people seem to have either left or been forced out and, as a consequence, Iran is spiralling towards disaster.
If it hadn't been for the spike in oil prices, the Iranian political system would have already collapsed. Or perhaps it's the other way around. Maybe the increased oil revenues convinced the idiots they could go it alone while simultaneously encouraging all the clever people to cash in their chips and retire to private life . . . preferably in France or Switzerland.
Whatever it is, there's been a qualitative change in the Iranian regime and it hasn't been for the better. On current form, there's no need for the U.S. to attack as some sort of "regime change" is probably in the cards anyway. I think the next presidential election, in 2009, will produce big changes, one way or another.
Posted by: Anonymous at September 7, 2007 05:51 PM
Indeed, if the Americans attack, the mullahs will simply blame USA for all Iran's troubles, however self-inflicted they may otherwise be. Not that that's anything new, of course.
Posted by: Klaus ![[TypeKey Profile Page]](http://lounsbury.aqoul.com/nav-commenters.gif)
at September 7, 2007 07:02 PM
Apropos of pending regime change in Iran.
"Well, you have to appreciate we don't need a nuclear bomb. We don't need that. What need do we have for a bomb?" Ahmadinejad said in the "60 Minutes" interview taped in Iran on Thursday. "In political relations right now, the nuclear bomb is of no use. If it was useful it would have prevented the downfall of the Soviet Union."
By drawing a parallel with the Soviet Union, Ahmadinejad seems to be accidentally revealing that the biggest problem facing the regime is internal disfunction rather than external pressure.
Posted by: Anonymous at September 24, 2007 05:27 AM
