| In September 2010 we were curious about what countries besides Greece and Ireland were in serious economic trouble. Even without the eruption of Eyjafjallajökull during April 2010 Iceland could be considered to have already collapsed. While the impact of economic tremors in Portugal and especially Spain were certainly of concern, we were more impressed with the dire situation in an eastern European country. Oddly, no known earthquakes there - ever. No tsunami danger either. Although Belarus is landlocked, chaos and decline there would have considerable impact, to varying degrees, on neighbors like Lithuania and Latvia, as well as Poland and Ukraine. Russia is just too big an economy to be influenced by events in Minsk. Among statisticians, currency exchange rates have their admirers as being pure numbers. One does have to be somewhat careful about intra-day trading, and the volumes being traded need to be included - much like stocks. There are two unique problems with currency rates: one is when the currency is pegged to another currency or is otherwise stabilized by government intervention. The second problem is when the currency is either attacked or re-valued. In a numerical sense, revaluation resembles stock splits. Our models were insistently predicting the following for Belarus: rising inflation, poverty and unemployment; declining foreign currency reserves; increases to a limit in external debt; drops in imports and a dramatic change in currency exchange rates. In question was the slope and "distance" of the change in currency rate. At the time, the Belarusan ruble was trading at around 3,000 rubles to the US dollar. Our models suggested a threshold of about 4200 rubles to the dollar: once this was passed it was not obvious how Belarus could maintain an economy. Worse, we could not see a strategy that prevented the decline. At the time, the United States had no ambassador in Minsk, and Belarus had no ambassador in Washington, so even if we had had a tactical suggestion, it was not obvious who to tell. If only there was Wiki run by Jedi Knights ... © 2018 Peter F. Zoll. All rights reserved. |
| Chronology Click here |
|