The Fruits of Nationalisation
In light of the recent decisions by Venezuela, Bolivia, and Ecuador to nationalise their oil industries and to move rather violently left-ward at the same time, we note the following comment sent to us by [an old friend] regarding Zimbabwe, inflation and the price of bread.National Public Radio just did a story about Zimbabwe's inflation which is running at 1000% per year. Currently you need about Z$120,000 to buy a loaf of bread. By the way the largest bill is Z$1,000 which is worth about USD$0.01. Walking around money is getting tough to carry.
Robert Mugable nationalised (stole) the white run farms and gave the land to the "people". Unfortunately, the white farmers ran very large and very efficient operations. The new farmers aren't do so well and not only aren't producing enough food, they are losing money. Zimbabweans are on the verge of starvation and the government needs to help them out. In order to keep the new farmers farming the government has been subsidising them with cash. To give them cash the government has been...TA DA...printing cash. Golly Gee, inflation. And this is an extremely serious variety, with prices doubling every six weeks...
We have written in the past of the evil that Robert Mugable has wrought upon the once wonderfully prosperous nation of Zimbabwe. This, however, makes it clear what he's done, and what nationalisation does to a nation. As has gone Zimbabwe, so too shall go Venezuela, Bolivia and Ecuador sooner rather than later. It is but a matter of time, and if it were not so sad it would be comical.
Thursday, May 18, 2006
Those of you in the financial markets will probably have heard of Dennis Gartman. The writer of a daily, eponymous financial newsletter, Dennis is a sharp analyst and a trenchant commenter on politics and economics. He had a nice blurb today (that I hope he won't mind me reproducing) on the bad habit of nationalisation.