Estimated net losses of Lebanon’s financial system following a Ponzi business model (1993-2019) according to:
- The Parliament’s Finance and Budget Committee: – LBP 81 trillion
- The Government: – LBP 154 trillion
- The International Monetary Fund (IMF) quoted by the Financial Times: – LBP 170 trillion
Subject to reforms, Lebanon aims to get in total up to $21 billion: $5 billion to $10 billion from the IMF plus $11 billion from the CEDRE (Conférence économique pour le développement du Liban par les réformes et avec les entreprises).
In 2020, Lebanon’s financial system still had $20 billion in actual dollars (not lollars) in its hands. The Central Bank (Banque du Liban or BdL) being independent and the Banks being non-State-owned, they could have invested a total of $15 billion as follows: $5 billion in gold, $5 billion in bitcoin and $5 billion Amazon stocks.
No need to be an expert to know that gold and bitcoin attract investors during the crises (we can also read expert analysis such as Bloomberg[1]’s one published in January 2020) and that Amazon benefits from lockdowns and from retail sales bans imposed by the European governments (on shops and stores).
Bitcoin:
- In March 2020, bitcoin could be bought at $5,000. It is now traded at $28,000.
- A $5 billion investment in bitcoin would then be valued now at $28 billion.
Gold ounce:
- In January 2020, gold ounce could be bought at $1,500. It is now sold at $1,880 but it was traded during the year at $2,070.
- A $5 billion investment in gold ounce would then be valued now above $6 billion.
Amazon:
- In January 2020, an Amazon share could be bought at $1,700. It is now sold at $3,300 but it was traded during the year at $3,500.
- A $5 billion investment in Amazon stock would then be valued now at about $10 billion.
These investments could be now valued at almost $44 billion in total while Lebanon’s GBP is about $34 billion according to Bank of America. Lebanon could have then earned in 2020 in total almost $29 billion profit in real dollars without even the support (debt financing!) of the IMF and the CEDRE, just by investing $15 billion out of the $20 billion which remained at that time in the system in actual dollars, not in “lollars”.
Some may argue that Lebanon needed part or all of these $15 billion but still, BDL and/or the banks could have been more inventive (and do things like above) instead of dreaming about fresh money from abroad while the trust in the Lebanese banking system is broken and restructuring is mandatory.
[1] https://data.bloomberglp.com/professional/sites/10/Bloomberg-Crypto-Outlook-January-2020-edition.pdf.