Zimbabwe’s Inflation Hits a New High

Zimbabwe’s inflation hit a chart topping 4,530% in May, meaning for all practical purposes it is incalculable as the currency no longer has value even on the black market.

Bloomberg is reporting the black market exchange rate becuase there is no other rate… the London exchange houses don’t even have a buy rate for the currency, rated as worst in the world along with Somalia, Venezuela, Iraq, and North Korea. What a club to belong to, wonder who pays the restaurant bill when they get together?

The reason I’ve been writing about Zimbabwe is that it’s a classic example of an 8 year long train wreck that will inevitably only be "discovered" by western media when more people die and guns erupt in Harare. Maybe Bob Geldof and Bono will hold a concert.

In the interim, we can watch another African refugee crisis unfold as tens of thousands of people flee Zimbabwe into South Africa, prompting a crisis in that country as illegal immigrants prompt government (in)action. Maybe they could build a fence or something…

It’s somewhat cruelly ironic that South Africa is now suffering the consequences of Zimbabwe’s collapse given that SA President Thabo Mbeki has defended and propped up Mugabe for years.

The next time someone parrots "Bush lied" or something to that effect, ask s/he what their thoughts are on Zimbabwe… or Angola… or FARC in Colombia… or Burundi… or West New Guinea… or Abu Sayyaf (Phillipines)… or Kashmir… Sudan (Darfur)… independence for Kosovo (yeah, we’re still there)… Nigeria… Uganda…

More on this topic (What's this?)
Inflation, Zimbabwe Style
Scrambling Up Everest
Moral Equivalence? Dead Lion vs. Dead Humans vs. Dead World!
Read more on Investing in Zimbabwe, Inflation at Wikinvest

Taxing Growth

"Top House Democrats today introduced wide-ranging legislation that would more than double the tax rate that private equity firms, venture capital funds and many hedge funds pay on their gains."

Increase taxes on an engine of economic growth. Shrewd.

In reality this affects a very small class of people, the few thousand that benefit from carried interest compensation models. However, this small class of people is also able to legally avoid paying taxes because of the mobility of the partnerships that Democrats want to tax more heavily.

In other words, Congress’ attempt to increase taxes through increasing tax rates, which btw is disproven by history time and time again, will result in a decrease of tax receipts. Venture partnerships will move offshore and the use of legal tax shelters will increase. Imposing the corporate tax rate, already onerous, on private equity firms that go public will do again what SOX has done to the public markets, provide one more disincentive to going public.

Burnham is right, Congress is looking for an easy target to shake down, in this case a target that has little public sympathy and not enough mass to affect Democrats in any election.