The barber, the Beirut Stock Exchange, and the haircut


A couple of friends of mine lost their savings on a foreign exchange misadventure.

My barber calls me up in a panic yesterday, waking me up. He’s all stressed out about the suspension of trading on the Beirut Stock Exchange. It didn’t surprise me too much. After all, many of my friends got sucked into the latest get-rich-quick scheme.

A couple of friends of mine lost their savings on a foreign exchange misadventure. They attended a conference in which they would teach them how to day-trade currencies from the ”comfort of their own home” and they’d never have to clock in another nine-to-five day in their lives. $100,000 later, they went back to a regular job.

Last year, another group of my friends got richer and richer and richer and then poorer and poorer and poorer, losing most of their money on their favorite cryptocurrency. And, of course, my favorite racket, real estate. Who doesn’t know an amateur who became a developer or real estate tycoon and lost money on this uniquely Lebanese racket?

All of these things happen because we don’t have any regulation or consumer protection in the country; a very dog-eat-dog culture. People will take it, dust themselves off, and move on to the next thing, without another thought.

Anyway, my conversation with my barber went something like this:

“Wassup! I was sleeping!”


“I didn’t know you traded stocks on the Beirut Stock Exchange.”

“I don’t trade.”

“Oh. So you’re a ‘buy and hold’ investor and have your retirement savings in a highly diversified portfolio?”

“No. No. No. I never heard of it until they announced its closure.”

“So? How does that concern you?”

“Shouldn’t I pull my money out of the bank?!”

“Ummm. Because the stock exchange is closed? No. I don’t think so. Since I’m now awake, can I come over for a haircut and we can discuss it then? I’ll pay you cash.”

“Yes! Come on over.”

I explained to him that the BSE has 10 stocks listed, basically Solidere, the cement company, and some banks, and not to worry about it — after all, I wanted him to focus on giving me a good haircut — I couldn’t have my hair looking all disheveled.

This got me thinking about the last few days. When I wrote my article on Sunday, analyzing the scenarios of possibilities, I didn’t expect to be this right, because I had assumed they’d prepared a contingency plan to preempt it. As news trickled in, I realized that the political leadership didn’t have an emergency meeting on the weekend to review the Business Continuity Plan and prepare for Monday.

Apparently, some of them were indisposed, perhaps not wanting to cancel their reservation at Balthus last minute because ‘3eib’. Senior bank leaders also didn’t meet to review their Business Continuity Plan dealing with a contingency like a strike of BDL employees and come up with a coordinated response. Instead, the next day they were running around like a chicken with its head cut off.

What was even more shocking is that there’s no BCP plan that envisions a strike. Their BCP plan, which lacks imagination, assumes something like a car bomb (or war-like event) incapacitating their headquarters, and simply calls for operating from another location. How original.

Apparently, here we are living in the strike capital of the world, and nobody had made a plan for how to deal with the problem of employees going on strike. So now we’re dealing with the repercussions of the prolonged strike, which go something like this unless they end it immediately.

First, the average Lebanese Youssef ignores the news of the strike. No clearing or settlement of transactions? He doesn’t know what this mumbo jumbo means, but he suspects that the Beirut Stock Exchange closing is serious, albeit he doesn’t know why. Then Youssef instinctively starts to realize the repercussions, so he panics, and runs to his bank ATM and withdraws some cash. Then to the teller and takes out more cash — you can never be too careful — it took him a long time to save his $10,000.

Then, there’s the sophisticated gentilhomme, Jean-Jacques. He’s much smarter than Youssef and has way more money. He really understands banking. He’s seen the country survive the 1975 war, the 2005 Harriri assassination, the 2006 Israeli invasion, and the 2008 “action” in West Beirut. He deeply believes in the resilience of Lebanon, like a religious conviction.

But, he needs some cash next week. Why not take it early, today? He knows there’s no problem, but he has that tiny nagging feeling, so he goes to the ATM and pulls some money out, increasing the pressure. Then some ATMs run out, and people hear about that, so more people run to the ATMs and banks, and the more they run there, the more ATMs and banks run out, until it becomes a self-fulfilling prophecy. In conjunction, people start converting to dollars, a flight to quality thing.

And that’s when Jean-Jacques, who’s always been confident, but this time, if you look carefully deep into his eyes, you can see the alarm, the fear, the panic.

“What if I’m wrong?” He asks himself.


Dan Azzi is a regular contributor to Annahar. He 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.



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