May 25, 2007
Economic Idiot Award X
Step forward President Ahmadinejad please, to collect your prestigious Economic Idiot Award:
Iran's financial system suffered a fresh jolt yesterday with panic selling on the stock market after the president, Mahmoud Ahmadinejad, abruptly ordered banks to cut interest rates sharply, despite surging inflation.
The order, which Mr Ahmadinejad issued by telephone during a visit to Belarus and which flew in the face of expert advice - has triggered warnings of a financial crisis and spiralling corruption amid fears of a capital flight from the country's lending institutions.
So, we've got spiralling inflation, the usual cure for which is a rise in interest rates. What does our man do?
Mr Ahmadinejad's decree forced all state-owned and private banks to slash borrowing rates to 12%. Inflation is officially 15% but is generally believed to be much higher.
Right, interest rates are now below the inflation rate, meaning that the bank is paying you to borrow money. That'll sure curb inflation, eh?
You know, this man might actually be stupid enough to really be trying to build an atomic bomb, a rather worrying device to have in the hands of one so ignorant, don't you think?
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Allah told him to do it.
Posted by: Martin | May 25, 2007 8:14:04 PM