At some point, your friendly banker will offer you exorbitant interest rates in return for “fresh” dollars converted into Lira.
- by Dan Azzi
BEIRUT: Most people don’t know that a tomato is actually a fruit, not a vegetable. It took me attending a Botany course at AUB to learn this very useful tidbit of information, which comes in handy when I’m short on cash and need to make a quick buck betting with someone. If you think that’s surprising, get a load of this; did you know that U.S dollars are also vegetables?
If you deal at all with any bank, you’ve probably come across the latest concoction in banking terminology, albeit this revolutionary concept hasn’t spread to the rest of the world. At some point, your friendly banker will offer you exorbitant interest rates in return for “fresh” dollars converted into Lira. If this is your first exposure to this concept, you probably drew on your life experiences to figure out what they mean. So you might have thought back to what a fresh tomato or banana looks like, to extrapolate from that frame of reference. So if the banana is brown and wilted, you infer that it’s not fresh.
But how do you inductively apply this to a currency? You certainly can’t ask your banker, because you don’t want to look like a buffoon in front of this financial genius who’s able to dwarf Warren Buffet or Carl Icahn, by generating a 17 percent fixed rate of interest for you, with no volatility and no risk, while you catch some rays in the VIP section at Eddeh Sands. So you need to figure it out on your own, by collecting a fact here, a snippet there, maybe at a poker game on Monday night or at your favorite arghile joint.
What on earth is a fresh a dollar? This needs a forensic investigation. You put on your white lab coat and latex gloves. Using tweezers, you hold out a crisp $100 bill and examine it. You feel it. You read it. You even smell it. This one is a 2009 issue, with serial number LB41617885P. It’s signed by former US Secretary of the Treasury, Timothy Geithner. Slightly used, but looks fresh. Is this what the banker wants? You have no clue why the dollars need to be fresh. Is he gonna eat them or make sushi rolls with them? Maybe seaweed from Japan is so expensive that they’re now using dollar bills in Japanese restaurants? It’s a plausible hypothesis — after all, they’re both green, so some customers may not notice the difference.
Aha! Eureka! So a fresh dollar is a dollar that you transfer from another bank. But this ain’t the freshest dollar, because although it may help your specific bank, it doesn’t help the country, as a whole, maintain its addiction to overseas dollars. The freshest dollar is one you transfer from an overseas bank. You must then convert it to Lira, “freeze it” for five years, and presto, every dollar invested doubles in 4.4 years. In fact, $100,000 at that rate would turn you into a millionaire in less than fifteen years. Beat that you amateur, George Soros.
I just thought of something. Why doesn’t our government borrow $100 billion from overseas at 10%, deposit them in our banks at 17%, and earn the spread of $7 billion per year, plugging their budget deficit? Note to self: call someone important tomorrow and present the idea.
This got me wondering what people who are in this racket are thinking, so I took a poll among some of my Bourgeois friends, and they were basically split into the following groups:
Group A: These guys believe they are connected, so they’d receive a call from their branch manager (or maybe a minister), weeks before any cataclysmic event takes place, prior to the common folk finding out the hard way. This gives them ample time to convert their deposit back into dollars and get it the hell out of Dodge.
Group B: These guys believe they are safe because the political elite have their money in the banks, so they wouldn’t allow anything to happen to the system.
Group C: These guys are smarter than the others and can detect that something is wrong, but they’re convinced that they have at least a year, and since they like to live on the edge, they’ll “freeze” their money for shorter periods, say annual or monthly, and forego a couple of points on the interest rate in return for peace of mind. That way, when they get the memo which gives them one month’s notice, they can hightail it out of Dodge.
Group D: These guys believe that as long as Superman is in charge, nothing can happen, but they regularly pray that Allah protects him from Kryptonite.
Group E: These guys believe that Lebanon is so vital to the Global World Order that President Trump himself will write us a check to save the system and thus their deposits are safe to keep earning 17% ad infinitum.
Of course, there’s one thing I haven’t figured out yet. If this is what a fresh dollar is, then does that mean that the other dollars are rotten?
Dan Azzi has recently been invited to be an Advanced Leadership Initiative Fellow at Harvard University, a program for senior executives to leverage their experience and apply it to a problem with social impact. Dan’s research focus at Harvard will be economic and political reform in a hypothetical small country riddled with corruption and negligence. Previously, he was the Chairman and CEO of Standard Chartered Bank Lebanon.