Real Estate, Rise up! Disaster on its way

In addition to the events that have been happening in Lebanon recently, the shootings, the riots, the electricity issue, the no president, etc... Average Lebanese couple also worry about their future. That is one problem (the future in Lebanon has the form of a problem) that many have faced, are now facing and will continue to face whereas the country's situation is not getting better.

One of the major set backs and obstacles couples, who are on the doors of marriage, confront is buying a house. Real estate has gone madly expensive in Lebanon that people are rushing faster and faster into finding a house and buying it before it gets even more expensive.

"Worldwide energy prices are being driven up as China's industrialization hits full speed." The steel demands of China, in the past two years, have grown very fast, making China become the net importer of steel, causing the raw materials to become rare thus expensive. Consequently, and on a local basis, new buildings are becoming more pricy. But this is not the whole story, even buildings that are more than 2 years old, which have not cost as much as building would do now, have also gone up in prices.

Therefore, a normal 3 bedroom apartment, ranging between 140 sqm and 170 sqm, in Beirut Suburbs for example, is now being sold for more than 100k*, while it was 75k* a couple of years ago.
In north metn (North Beirut suburbs and part of mountain Lebanon), the closer to the capital the more expensive evidently, the prices have risen up as well, by an average of 15 to 30k*.

The housing bank and the housing coop, give special loans up to 80k, that should be paid in 10 or 15 years, followed by the same number of years (total of 20 or 30 years), to pay up the interest which differs depending on the bank in question.

A small reminder, that the minimum wage in Lebanon is 200$* still. Dairy consumption: a small example, a medium milk box (powder) costs more than 7$, while it was a little bit more than 4$* a year ago. Fuel costs between 16 and 18$ for 20 liters (depending on the type).

The average household pays electricity, and also what we Lebanese refer to as "moteur", which is a private electricity provider, in addition there is the water, the phone bill, and the cellphone (god forbids we live without a cellphone in Lebanon), and the luxurious stuff, such as the TV cable, and Internet connection, and insurance for ourselves (few do, and only thanks to their workplaces), and the cars.
A movie theater ticket, is 6,7$.
A Burger King meal is 7$.
A drink is 8$.
A beer is 3$.
A normal restaurant, would cost you a 15$, you need a soda to wash it all down.
A 1kg of yellow cheese costs 7$, you can always buy the cheap kind anyway.
Vegetables, cereals, fruits, dairy, etc... now cost more!

I am stating these numbers in order for people abroad be able to make comparison with their own local prices. In order for them to see and imagine how father with a 350$ salary, can actually pay for a house rent (or not, if he's lucky to have owned it), house bills, kids school tuition, food, transportation, and not to forget, health hazards (municipality fees, taxes and such are not even mentioned here).

A couple, a lucky one, makes 1600$ together. Let's say, they both hold degrees, but nothing fancy. How could they buy a 100k house? How many years do they need to save up in order to pay the first payment, be it 10, 20 or 30% (depends on the bak)? Do they need to stop going out for 5 years? Stop living any sort of life? Just sit at home, make a cheese sandwich, and watch a movie on a local TV channel? And that is all to afford buying a house with a loan. What about the next steps? Such as the furniture? The wedding? Bills? Kids? How will they afford to raise children and send them to schools?

Life in Lebanon is getting ridiculously expensive, all prices are rising up, except for our salaries. Minimum wage remains 200$, and there is no talk about any increase at all, except for our taxes (Check Lebanon reform plan).

God Bless Lebanon, and our procrastination. I believe the above is a GOOD reason to demonstrate! or Not? Should we wait to starve to death?

* k = 1000 USD
* $ = USD

Fuel prices increase

The 20 liters price has risen by 500LL (equivalent to 0.33USD) today, it will continue to rise increasingly until it reach a total of 6,000LL (equivalent to 4USD), making the 20 liters final price of 32,000LL (equivalent to 21.6USD).

So, with this event I advice you to read the following article: Top 10 fuel-saving tips.

Question: Is the daily rate of transporation (which is 4USD) that the company pays the employee going to increase as well?

U.S. to more than triple aid to Lebanon

As Paris III started, and the Lebanese Government led by Prime Minister Fouad Saniora had presented the reform plan in order to receive aid from several countries and contributors to the conference, U.S. is to triple aid to Lebanon:

Secretary of State Condoleezza Rice said the Bush administration is seeking $770 million in new aid for Lebanon. The money, which must be approved by Congress, would fund long-term redevelopment and immediate rebuilding from the devastating summer war between Hezbollah militants and Israel. [1]

Paris III took place the next day of the General Strike led by the opposition on Monday 23rd of January which have turned into riots, fist-fights, deaths, injuries, blockade on the Airport and polluted skies.

Top American business executives are also detailing private investment in Lebanon as part of the Paris session. As one example, Citicorp has pledged $120 million to underwrite mortgage and commercial lending by three Lebanese banks, Assistant Secretary of State Dina H. Powell said.

Chambers has already pledged $10 million to expand computer training in Lebanon and there are other plans to vastly improve national Internet capability, place 500 Lebanese interns in U.S. companies and generate up to 3,000 new jobs in Lebanon over the next few years. [1]

More aids from France and Europe will amount to 900 Million Euro.

French President Jacques Chirac announced a 500-million-euro (650 million dollars) loan as part of the aid package while the European Commission for its part pledged 400 million euros (519 million dollars). [2]

The aids that Lebanese will most probably be receiving, are to help Lebanese Economy and find ways to reduce the debt that has become more than $41 Billions.

Its public debt has reached 41 billion dollars (32 billion euros), more than 180 percent of gross domestic product. [2]

The Saniora government has made a study on how to solve the debt problem in Lebanon which can be found in the reform plan.

Reactions and opinions to this plan and to Paris III in Lebanon are mixed, which some people agree to and support the government in any of its moves, and others believe that this step is going to plunge Lebanon into more debt.

Please click here to read full article [1] and here to read article [2].

[1] AP
[2] AFP

Lebanon`s economy messed up again

Since the assassination of Pierre Gemayel, around 45% of hotel reservations for the Christmas holidays have been cancelled. The tourism in Lebanon have been influenced negatively, and there is no gain to no Lebanese but as a matter of fact only losses. We have already lost our summer season, and now we are losing Christmas and Snow holidays.

Tourism is the major contributor in the Lebanese economy, and it has been extremely messed up for the past 2 years. The debt on Lebanon is rising and so is the martyrs numbers.

I really hope that something good will come out of this before I am 90 years old.

Lebanon businesses try to bounce back

The following article by Alex Klaushofer from BBC News UK describe how Lebanese business is trying to get back on its feet and the problems that it is facing, in major the lack of tourists due to the most recent war in Lebanon between Israel and Hezbollah in July 2006. I discusses 4 points, tourism (or the lack of it), the government support, new customers and Southern optimism.

In normal times, business on Beirut's busy seafront would be brisk. But, in the aftermath of the recent conflict, the Beirut Cafe on the Corniche is struggling to get back on its feet.

"This place is for tourists," says cafe manager Raydan Diab. "There is nobody. Everybody left."

This would usually be the busiest time of year for him and his staff, he adds: "We don't sit as you see now. We are always working."

To read more, please click here.

It’s a loss-loss scenario

Here we are on the 25th of July, the 13th day of aggression against Lebanon. The clock is reset on every midnight but the number of civilians killed is still rocketing, leaving the already moaning country in a deep bloodshed that would affect the whole society for months and maybe years to come. It’s conspicuous that the whole world endorsed a punishment for Hezbollah (with the exception of Iran and Syria for sure) in a way or another. What they are betting on is that Hezbollah will go for some compromises after some Israeli incursions inside the Lebanese territory, at least to accept a buffer zone in the South that couldn’t halt the attacks on Northern Israel theoretically, but could practically. Why am I saying that? The deployment of a special force in the South can’t be used as a shield for future attacks on Israel on both military and legal point of view. Such deployment will follow a mutual treaty forcing both sides not to use military means using any territorial or aerial space of the buffer zone. By that, both sides will declare, at least not a short-lived cease-fire under the UN and the International Community supervision. Until such agreement, the bloodshed and destruction will continue unfortunately for further “clean-up” of Hezbollah fortified posts in the Southern region of Litany. This should come at a cost for the IDF (ironically, it calls itself “defense” forces but most of its campaigns have been offensive) that makes the Hezbollah leadership more comfortable in its defense strategy by increasing the casualties in the Israeli side in a hope for fewer compromises. It is time for the Lebanese government officials to scratch their heads for a feasible solution with adequate procedures that satisfies the International Community as well as Hezbollah. Time is running out, we are losing civilians, time and money.

The civilian casualties have been frightening. As for material losses, the costs are compounding with every minute and every raid. Some people say that Israel is hit as well, but the casualties have been much less in a country that can secure tons of free money from abroad , either from its Diaspora or through governmental grants from the US and EU mainly. The Israeli economy is not paralyzed except in the upper north at the time the Lebanese economy is utterly paralyzed with the destruction of some infrastructure, the closure of the seaports and airports which provide the necessary cash flows to the treasury to keep up with its due payments, let alone the siege imposed since the beginning of the war. The private sector is obviously hit as well due either by direct damages by air raids or by shrinking consumer spending or a bit of both. Even if Hezbollah thinks that it has enough rockets to pound Israel for months, the economy doesn’t have enough oil to lubricate its wheels for that long. The opportunity cost has been already high, but any procrastination in a cease-fire process is going to lead to a lethal financial distress. The tax revenues almost dried up, with huge due payments for debt services coming up, along with the wages for the public sector employees.

The opportunity cost encompasses all missed revenues due to the war. This cost should be capped accompanied by a post-war sagacious plan leading to a fully-efficient reconstruction of the infrastructure and the build-up of the consumer confidence again. The ministry of tourism staff is supposed to go for a blueprint concerning the winter vacations and go ahead with their marketing plans with the help of the Lebanese embassies over the world. No time to moan the missed opportunity!

The ministry of finance is strongly responsible for an enhanced lucrative plan to borrow at reasonable cost to assist with the post-war rebuilding. I say “reasonable” cost because as long as the situation is getting worse, the probability of a hike in interest rates will increase which could widen the already ailing budget deficit. The taxpayers aren’t supposed to get taxed twice, one through paying for the damages and one by paying direct and indirect huge tax bills. I am not going to go into details concerning this plan but I should outline the most cutting-edge ideas; tax incentives (and breaks) for the damaged industries by the raids, significant reductions on some of the import products used for the reconstruction.

A for the service sector, mainly the banking sector, is responsible to proceed with soft (low-interest) loans helping to get reconstruction in place for the public and private sector. In addition, the consumer confidence should be restored as soon as possible, so the economy gets back on track (or close to it, to say the least). Our biggest problem in this war lies in being a service-oriented economy, depending on the tourism and the foreign capital wired from the Diaspora. This helped much in the vulnerability of the economy since our industrial capacity is very limited to some humble local industries. Remember! The wired capital could leave our border overnight and we could end up busted.

The biggest question is: is it going to be the last war? Well, the elected officials are supposed to come up with a final solution that protects us from future risks due to any geopolitical problems before it is too late.

Bachir Nasr