Zimbabwe Inflation Tops 1,000 Percent

[David S]

Zimbabwe Inflation Tops 1,000 Percent
Saturday, May 13, 2006 5:04 AM EDT
The Associated Press
By MICHAEL HARTNACK

HARARE, Zimbabwe (AP) — Zimbabwe's annual inflation rate has topped 1,000 percent for the first time, state radio reported Saturday.

The official figure for the 12 months to April 2006 was 1,042.9 percent, Moffat Nyoni, director of the Government's Central Statistical Office, was quoted as announcing.

In March the figure was 913 percent. Figures released by Nyoni's office showed 21.1 percent inflation for the month of April alone, fueled by a 27 percent increase in the cost of basic foodstuffs, 24.8 percent in rents, 35.1 percent in fuels such as gasoline and kerosene and 48.1 percent in motor vehicle and health insurance.

The economy has been in free fall since President Robert Mugabe's seizure of 5,000 former white-owned commercial farms in February 2000.

The radio broadcast said the poverty datum line — absolute minimum consumption needs — for an average family of five reached 37 million Zimbabwean dollars ($366) at the Government's rate of exchange but only $148 on the more realistic and flourishing black market.

The lowest-paid workers in formal employment — domestic gardeners — earn 2.5 million Zimbabwean dollars a month, but 70 percent of the work force lack regular jobs due to waves of bankruptcies.

"We are living with the consequences of (the government's) destructive policies of the past," said economist John Robertson. "They cannot raise the necessary taxes from our shrinking economy."

He said the point of "meltdown" had already been reached for pensioners and others living on small fixed incomes.

An entire life's savings, invested before the 1998 start of the Zimbabwean economy's collapse, is now needed to meet a month's living expenses.

Money from charities or from relatives living abroad is the only means of survival for many elderly, while the urban poor rely on odd jobs and growing vegetables on empty lots or roadsides.

Mugabe last week announced increases of up to 300 percent for more than 120,000 government employees including soldiers and police.

Robertson said there was "not a hope in hell" of reaching the government's target to reduce inflation to double figures by the year end and it would take five to 10 years to restore production on farms, in mining and industry, even if Mugabe reversed current policies.

Robertson predicted shortage-driven inflation might soon reach 2,000 percent as state employees rushed to spend their pay rises while goods were still in stores. There is currently a nationwide shortage of sugar, while supplies of cooking oil, maize meal and bread are erratic.

"People should get angry and start demanding things happen," said Robertson.

[John Dibble]

"People should get angry and start demanding things happen," said Robertson.

I think people getting angry and demanding things happen is pretty much what puts people like Mugabe in power in the first place. People need to think rationally and demand things happen, not get emotional.

[David S]

I'm just guessing, but this looks like classic socialism in action, nationalize the farms and you get shortages and starvation. In this case the economy starts to collapse, government can't get enough money from taxes so they just print more resulting in hyper-inflation. Its doubtful that the people of Zimbabwe can understand the source of their problems so they probably won't be able to solve them even if they can throw out the current regime.

[afleitch]

Its racism and despotism in action more than socialism.

[Filuwaúrdjan]

I'm just guessing, but this looks like classic socialism in action, nationalize the farms and you get shortages and starvation. In this case the economy starts to collapse, government can't get enough money from taxes so they just print more resulting in hyper-inflation.

That's not what's happend at all... to be very brief, in the '20's (or was it '30's? Earlier? Can't recall exactly, but it was around then) the land in Zimbabwe (then South Rhodesia o/c) was carved up, with all the best land and pretty much all the semi-decent land going to a small group of white settlers. South Rhodesia was ruled by a white racist government from then until the '60's, when mere racism was replaced by something that made the developing apartheid system in South Africa seem liberal by comparision. The Smith regime eventually went belly-up and Mugabe suprised everyone by winning Zimbabwe's first real elections (and proceeded to launch some rather nasty pogroms against the Ndebeles). Despite those pogroms, in his early years he wasn't quite the monster he's since become, and I think some genuine (or more genuine than the sham that was to follow) land reform (which, and this point should not even be debatable, was very clearly needed) went on.
As you all know Mugabe because worse and worse as time went on, and more significantly his popularity started to slip for several reasons.
Which is the main reason for the shame land "reform" of a few years ago; as known by everyone and their cat, groups of ZANU-PF thugs drove out almost all of the few remaining white farmers. What is not so widely known is that (with a few tragic exceptions) the white farmers were (loss of their farms nowithstanding) not greatly effected by what happend and they have largely done alright for themselves.
The real victims were initially the black (and often Ndebele) agricultural workers, who were also driven from the farms and who (almost to a man) lost everything. No homes, no work and no prospect of work and usually driven into shanty towns or utter rural poverty.
Agriculture in Zimbabwe was labour intensive and it didn't actually matter who owned the land (in Zimbabwe "farmer" meant what it used to mean everywhere; an agricultural landowner, rather than what it has come to mean in the U.S). Most farms would have been able to work as normal even if their was no farmer. But you can't run a farm without workers (driven away) or equipment (smashed up for the sheer hell of it). Because of that, agriculture collapsed. Zimbabwe has an economy based on agriculture. It's possible to join the dots from that point...

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Don't be so patronising. They even have a name for the source of their problems. He's called Robert.

[opebo]

What does inflation have to do with 'socialism'?  I thought you rightists were always claiming Sweden was socialist - direct from the Riksbank, Swedish inflation:


From CIA Word Factbook:
Inflation (2005)
Sweden:  0.5%
Norway:   2.1%
Finland:    1.2%

[Max Power]

Mugabe is a worthless shithead.

[Undisguised Sockpuppet]

Hahahahaha

[David S]

The Zimbabwe situation is reminiscent of the Soviet Union under Lenin.

http://www.gmu.edu/departments/economics/bcaplan/museum/his1e.htm
"It was also quite easy for Lenin to deliver land to the peasants. They had been seizing and dividing up large estates for almost a year before Lenin legally recognized this accomplished fact. What the peasants did not realize was that just as Lenin planned to dispose of Brest-Litovsk at the first opportunity, so too did he plan to nationalize the peasants' land as soon as he could get away with it.

Lenin's last promise of bread was the hardest to deliver. The Provisional Government, barely more literate in economics than Lenin, had imposed a price ceiling on food, resulting, as any "bourgeois" economist could have told them, in severe shortages of food in the cities. Arguably this hurt the Provisional Government as much as its failure to sign a separate peace with the Germans; for the price ceiling angered both peasants, forced to sell their grain for a pittance, and workers, unable to obtain food at any price. Lenin merely intensified the brutality of enforcement of the price controls on food; rather than starve in the cities, large percentages of the urban population returned to their family farms in the country. (In the end, even this desperate move would not save many of them from starvation)."

[David S]

What does inflation have to do with 'socialism'?  I thought you rightists were always claiming Sweden was socialist - direct from the Riksbank, Swedish inflation:


From CIA Word Factbook:
Inflation (2005)
Sweden:  0.5%
Norway:   2.1%
Finland:    1.2%

Inflation is not necessarily a characteristic of socialism, but in this case nationalizing the farms destroyed the economy. That left the government with no income, so I'm guessing they did what many governments do when they have no dough, they printed it. That does cause inflation.

[Bacon King]

Ironically enough, I've heard that many of Mugabe's tactics were actually attempts to reduce inflation.

[Frodo]

Realizing how badly they fu**ed things up, the Zimbabwean government is now trying to lure white farmers back.  Here is the link to the story.

[Filuwaúrdjan]

Realizing how badly they fu**ed things up, the Zimbabwean government is now trying to lure white farmers back.  Here is the link to the story.

Old news. And even if they come back it'll make no difference.

[MODU]

Ouch, now that sucks.  What's the current currency exchange rate? 

[Colin]

Ouch, now that sucks.  What's the current currency exchange rate? 

1 USD = 101,195 ZWD

[DanielX]

Ouch, now that sucks.  What's the current currency exchange rate? 

1 USD = 101,195 ZWD

Not quite at Turkish Lira values (the trade was at 1,350,000 TL per dollar in 2004 before Turkey issued a new lira worth 1,000,000 of the old one), but getting there.

Factoid: in 1983, the Zimbabwe dollar was roughly equal to the US dollar. In 2002, it was at 100 to the US dollar. In the past 4 years, the Zimbabwe dollar has inflated, relative to the US dollar, as much as it did in the previous twenty. Their economy has long since dropped below US-in-great-depression levels and is rapidly approaching Gaza Strip levels.

[David S]

Ouch, now that sucks.  What's the current currency exchange rate? 

1 USD = 101,195 ZWD

Not quite at Turkish Lira values (the trade was at 1,350,000 TL per dollar in 2004 before Turkey issued a new lira worth 1,000,000 of the old one), but getting there.

Factoid: in 1983, the Zimbabwe dollar was roughly equal to the US dollar. In 2002, it was at 100 to the US dollar. In the past 4 years, the Zimbabwe dollar has inflated, relative to the US dollar, as much as it did in the previous twenty. Their economy has long since dropped below US-in-great-depression levels and is rapidly approaching Gaza Strip levels.

That is interesting info. It would also be interesting to know how much money the Zimbabwe government created out of thin air, but I suspect that's info their government would rather keep quiet.