Archive for March, 2008

Abdulla Mohsen

March 27, 2008

Abdulla Mohsen has been in prison now more than four months. What is he accused of? Well apparently he and more than thirty others are accused of being involved in the theft of a weapon and in burning a police jeep. This, if you wll remember, happened way back in December after the protest that accompanied the funeral of Ali Jassem, who died in as yet unclear circumstances after participating in a demonstration on December 17. Dozens of people were arrested, including Abdulla.

According to Abdulla, he is innocent since he wasn’t even present at the scene when the events occured, and he was arrested four days later in his house. Now I know Abdulla personally, and I find it hard to believe that he would even hurt a fly, let alone steal a gun and burn down a jeep. He is however an activist. Given the amount of activists that have been rounded up under the pretext of the theft of the weapon, it is not completely surprising that he was arrested under the same pretext as well . He also ran a blog under the name of Bahrain Eyes.

In any case, several sources indicated that Abdulla’s health situation is a constant worry. Apparently he is suffering from severe kidney problems, and his family are very worried about his situation. At one point he even had to be moved to the hospital due to his deteriorating health. His family have been kept in the dark with minimal information about his status or whereabouts.

The situation is very depressing. There are several reports of torture and beatings of the detainees. There isn’t much that we can do except bring attention to Abdulla’s and the rest of the detainees’ plight. Other than the Arabic forums, there has been very little coverage or discussion online about their situation, unlike previous cases of bloggers being arrested or brought to prosecution. If you have a blog or a forum or even a contact somewhere, I ask you that you please write about them, put a post up, or at least raise their issue. This is the least we can do, as one can only imagine what they are going through.

Marriage

March 9, 2008

So a friend of mine decides to get married. So another friend, fascinated by the whole process and expecting to eventually go through it as well ventures to ask him: If you don’t already have someone, how does the process work in Bahrain? how do you go about finding the right person? How do you meet them to begin with? Sounds like a serious headache and a complete mystery!

So the first friend replies back, “Man you are making too much of a meal out of it! Actually in bahrain it’s not that hard at all! It’s much harder if you’re a girl. The odds in terms of finding someone for marriage are heavily skewed towards men in Bahrain. You won’t believe how many twenty and thirty year old women there are whose main goal is to get married as soon as possible. It’s a simple matter of supply and demand. The demand is high for eligible men and the supply is high of eligible women. There is a shortage of decent bachelors and an oversupply of wannabe fiances. You’re a decent looking nidoer with a decent job who’s not too boring. Trust me man you’ll have no problem. If worse comes to worst ask your mom. She’ll put something together in no time.”

Now this sounded extremely far fetched to me. The number of Bahraini guys and girls are pretty much equal, so it doesn’t make sense for this to happen. However immediately all the rest of the group rushed to reaffirm to me that although he was exaggerating he was right and I was wrong.

Me: Alright, well if this is true why is that?

Friend A: Nowadays everything happens at a later age. You have to go university, get a decent job, and then gather enough money to get married. Same for girls. They go to uni, get a couple of years of experience and before you know it they’re 25 or older. It’s pretty much impossible to get married before that.

Me: So? How does that make it much harder for women than guys?

Friend B: Well first you have nature. Women feel the biological clock ticking by the time they’re in their late twenties/ early thirties. And then there is social and family pressure. Everyone is expecting them to get married or they keep getting looks and questions. The time window is small and the pressure is huge. Not so for guys.

Friend C: No man, it’s because more and more guys are getting married to foreigners.

The Cynic: Who can blame them? Bahraini women demand too much and nag too much. Multi-thousand dinar weddings, brand spanking new car, honeymoon in the Bahamas. And then you have to deal with her long tongue and her mother’s and Dad as well. And she can’t even cook or clean or help in anyway. All they do is sit around nagging and putting on weight. I swear I don’t know a single nidoer at our age who can cook a machboos. Better get a foreigner. Less expenses, less maintenance, less headache.

Friend D: It’s because meeting possible partners is done in an outdated way. You can’t meet or get to know someone properly before marriage. There is no clear and practical way of doing this. And it’s such a big once in a life time decision with so much risk involved in the choice. Just look at the divorce rate.

The Cynic: You’re all off target. It’s because of this silly idea girls create in their head of meeting the perfect guy who’ll sweep them of their feet to live happily ever after in Neverland. They’re yet to realize that he doesn’t exist. This coupled with this crazy idea of being a virgin until marriage. This makes for a lethal cocktail. Sexual frustration combined with impossible dreams. Too much pressure in the end. I suggest they bring their dreams back to reality and get laid. Will solve a few mental cases and relieve us of this societal marriage hysteria.The ministry of health should organize an annual “get real and get laid” day. It will really benefit the country.

The rest: Man just shut up.

Now it goes without saying that all of the friends were guys, so please excuse the chauvinism as well as the fact that we really don’t know what we are talking about. I was wondering what do you think? Do you think this phenomenon exists? And if so why?

Choices of the day:

Random

March 7, 2008

A bit dry. You have been warned.

So the other day I wanted to change some Dinars into euros. I nearly got a heart attack.

Seriously, can anyone familiar with economics give me one good reason why the Dinar is yet to be revaluated against the dollar? Why don’t they up that damned fixed exchange rate?

We are in an unprecedented boom. The economy is flush with oil money going crazy bouncing up and down not knowing where to put itself. The economy is overheating. Prices have reached ridiculous proportions.

Now basic first year undergraduate economics would tell you that when your economy is overheating you as a government want to put up your interest rates. Make money and loans dearer and scarcer. That way some of that money flying around like a madman gets put and saved away while people stop taking out loans at ridiculously low rates.

Now because of that damned fixed exchange rate we basically have no control over interest rates. We have to take whatever is set in the U.S. But guess what? The U.S. has its own problems to deal with that are completely different than ours. The economy there is coughing and teetering on recession because of the credit (subprime) crisis. Defaults on mortgages are soaring, banks no longer want to give loans, new houses being built have dried up and people are poorer since house prices are not as valuable as before. For them (or so the Fed thinks), the best thing is to keep cutting interest rates so that credit doesn’t dry up and hence the economy is reinvigorated. They couldn’t give a damn that Bahrain would rather have higher interest rates.

At the same time the bloody dollar keeps sliding against every currency worth noting (except the yen). The bloody American trade deficit keeps widening and the dollar keeps sliding. What does this mean? Basically Americans are consuming way more than what they are producing. All those cheap chinese imports (among others) being gobbled up are way more than what America is selling to the rest of the world. So what can America do? It basically has to borrow to finance this over-consuming. How? By issueing government bonds with low interest rates that basically get bought up by China, Japan, the Far East and us gulf countries. Basically, we are financing the out of proportion consumerism of America by lending to them at ridiculously low interest rates.

And the dollar keeps sliding. Because interest rates are so low putting your money in America is not as attractive as it used to be. Why put your money in America and get 3% while you could put it in the UK and get 5.5%? This with the large trade deficit, which means America is borrowing more and more, makes the dollar unattractive and it keeps sliding.

But why should America care about the low dollar? Short of a massive run on the dollar (i.e. a crash in its value, which is probably unlikely), lower exchange rate makes American goods cheaper and increases their exports to the world. It helps offset that massive trade deficit. I remember when I was in the States I could not believe how cheap things were compared to Europe. It was ridiculous. Food was less than half price. This makes American goods attractive and more of them get sold abroad. That trade deficit would be much worse if the dollar was not so low.

And we in Bahrain get shafted in the process. No one needs to be told that Bahrain is completely dependent on imports. From our cars to our ACs to our labour (more on that in a bit), we import everything. Now given the Dinar is tied to the dollar, we cannot benefit from cheaper American imports due to the lower dollar as other countries do. We are fixed against it! No lower dollar for us! We cannot benefit from our exports increasing either due to the cheaper dollar (and by default the cheaper dinar), since we do not really have exports to speak off except oil and aluminum. Both of those are commodities controlled by world market prices. We do not make any cars or fridges to speak off so that we can export them.

At the same time, we keep suffering from more expensive imports from other countries. As the dollar falls agains the euro and the pounds, everything coming from Europe becomes more expensive. Just compare the price of an BMW M3 back when the euro was first launched and its price now.

Then we come to the most important import to Bahrain: Labour. We are completely dependant on expat Labour, particularly from the Indian subcontinent. They make 2/3 of our labour force. Now the Indian rupee has appreciated against the dollar by more than 20% this year alone. Guess what? That makes labour from abroad more expensive. When an expat last year could send 100 rupees back home, the same amount of dinars nowadays only lets him send 80 rupees. What they send back home have basically been cut by 20% in one year. Who wouldn’t get pissed off if their salary was cut by 20%, especially if you’ve been paid peanuts already and live in a country with rising prices? This is the immediate cause of the expat labour revolts that have happened recently (more on that later).

So imports have become more expensive due to the damned dollar falling. So has labour. Prices have soared. But this is not the whole story about prices.

Before we go into this prices story, let’s get one thing clear. This whole talk about how inflation in Bahrain is 4% is rubbish. It is a mistake at best, or a lie at worst. Only someone as naive, or beink bankrolled as Oxford Business Group (I’m not sure which one of the previous it is) would dare boast about how low inflation is in Bahrain. Every single evidence points otherwise. Use your informal judgement to begin with. House prices have sky rocketed over the last few years. So has food prices. In a country where food and accommodation spending make up so much how can we have 4% inflation? Add to this the rise in wages of both the locals in government jobs and the expat sector, and then as Ibrahim Sharif has rightly pointed out the increase in Broad Money (M2 and above) and there is no way in hell that the inflation is 4%. The fact that the government is fretting and has allocated 80 million dinars for spending on goods whose prices have soared just shows how ridiculous this number is.

So what caused these massive price hikes witnessed right throughout the gulf? Well, as we mentioned there is the lower exchange rates which made imports and expat labour more expensive. This is not all. There are some global causes which we cannot do much about. Import prices, particularly of food, have jumped up significantly due to higher fuel prices, the switch to biofuels and countries like India and China consuming more meat. What does this mean? Let’s start with biofuels. They are made out of maize (corn), so maize that was before used for food is now spent on biofuels. Less food is around so the prices go up. Then there is the fact that China and India have become richer, and hence eat more meat. Meat needs more input to produce (think of grass, water etc to feed the chicken and cows) and hence because of the extra resources going into this the price of the rest of food go up. So we end up with more expensive food.

Then there is the fact that our economy is booming and heating up. Demand and wages are pushed up and hence prices go up as well.

So there you have it, lower exchange rate, more expensive imports, pricier labour, food price jumps and an economy going overboard because of an oil boom has pushed our prices up.

Now in a modern capitalist society, what can you as a policy maker do to help control this price spike? Well, the obvious candidate is monetary policy. i.e. as we said before, increase the bloody interest rate. Now in Bahrain we can’t do that since we are tied to the dollar and we basically have to take American monetary policy. This, as we said, is doing the exact opposite and cutting interest rates. Crap.

Alright, well another indirect way is to increase our exchange rate against the U.S. dollar. Put the dinar up! This makes imports from the U.S. and also from other countries much cheaper, and so should help keep inflation down. No one is asking here that you completely break the link with the dollar, that is crazy talk of course. Just put the bloody exchange rate up! Instead we have our Central Bank Governor complaining that foreign exchange dealers are doing what any sane person does, which is buy dinars since they know at one point or another they will have to revalue the dinar (buy dinar is their message, you may stand to make a nice profit if it’s revalued against the dollar).

One of the last thing you want to do is throw even more money at the economy. This is unfortunately what the government is doing. It’s solution is to increase expenditure, commiting itself to more and more spending. More money gets spent, there is more money circulating in the economy, and guess what, that causes prices to soar. Other than the price hike, it also commits the government to the same level of spending in the future. It’ll be very hard politically to then cut down the spending. What will they do if the oil prices drop and they don’t have the revenues anymore to sustain their current expenditure?

This is all the more stark given that these price hikes bite the poor and middle class much more than the upper class. Most of the benefits of growth in the economy has been confined to the rich. The poor and the middle class, with their wages no where increasing as much as prices, have seen their purchasing power steadily get eroded. The basked they could buy 5 years ago is no longer affordable at current prices (just think of how pricy it’s now to buy a house).

So the economy is expanding, but most of this is confined to a small elite. At the same time prices have shot up. People can no longer afford stuff they used to buy. The government would ideally raise interest rates but it can’t since it’s tied to America, where the government has actually been cutting interest rates. At the same time it stubbornly refuses to revalue the exchange rate. Can someone tell me, for the sake and health of my accounts, why is this so?

……..

Talking about subprime crises, here is some comedy from the brilliant bird and fortune:

and how brilliant is this (but that is not how the arab mind works!):