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While Zimbabweans waited on Friday to learn the results of the presidential election, word was emerging of yet another surge in the inflation rate to nearly 165,000%

The Financial Gazette, an independent weekly newspaper, said inflation in February soared to 164,900% following January’s rate of a touch over 100,000%.

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The dire situation in Zimbabwe is fascinating for economists, primarily as hyperinflation is such a rare event. But its truly amazing how fast hyperinflation grows once started - as recently as 2006 inflation in Zimbabwe just breached an alarming 1,000%.

Timely post, as a few of us in my research cluster at University were bouncing around an interesting paper [.pdf] published by the IMF. It discussed the causes and drivers of Zimbabwe’s problems, suggesting a four step solution.

The paper is accessible however if you’d rather not peruse the pdf, I’ll briefly summarise and comment each step as necessary:

1. Increasing transparency and accountability (The Reserve Bank of Zimbabwe has pulled all sorts of unethical tricks to keep the money flowing - for example, in June 2006 they retired the so-called “Special” two year debt and replaced it CDs earning ZERO interest)
2. Taking actual measures to reduce and eliminate QFAs (Quasi Financial Activities, or activities that Central Banks in some Developing Nations undertake which have economic effects similar to non Central Bank functions e.g., taxation)
3. Insuring that the RBZ (Reserve Bank of Zimbabwe) has a cash-flow to finance its legitimate functions (compare to Quasi Financial Activities in the previous points)
4. Recapitalizing the RBZ once macrostabilization has been achieved (once they get inflation under control, restructure the nations balance sheet so folks can live normally)

The balance sheet is of particular interest; Zimbabwe is effectively bankrupt as nonearning assets amounted to about 83 percent of total assets as of October 31, 2006, and foreign liabilities dwarf foreign assets by a ratio of about eight to one. This is by no means a strong balance sheet; indeed, at present foreigners own Zimbabwe outright. Given the RBZ’s history and lack of credibility, renegotiating that debt will be difficult at best.

Another curiosity - we’ve seen periods since 2003 of both negative and positive real interest rates in Zimbabwe. Sometimes the real rate has approached 150%. But until they stop issuing paper high rates will only punish folks living there as the underlying problems haven’t been solved.

I’ve seen another (don’t have citation with me at present) IMF paper which claimed Zimbabwe could sharply reduce hyperinflation in about one year, and bring it back into line with global norms in about three. A painful exercise to be sure, but it could be done and the global community would no doubt be eager to help these folks.

But, of course, someones gotta go before this good stuff can happen.

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Banks are so overwhelmed by the U.S. housing crisis they’ve started to look the other way when homeowners stop paying their mortgages.

The number of borrowers at least 90 days late on their home loans rose to 3.6 percent at the end of December, the highest in at least five years, according to the Mortgage Bankers Association in Washington. That figure, for the first time, is almost double the 2 percent who have been foreclosed on.

Lenders who allow owners to stay in their homes are distorting the record foreclosure rate and delaying the worst of the housing decline, said Mark Zandi, chief economist at Moody’s Economy.com, a unit of New York-based Moody’s Corp. These borrowers will eventually push the number of delinquencies even higher and send more homes onto an already glutted market.

“We don’t have a sense of the magnitude of what’s really going on because the whole process is being delayed,” Zandi said in an interview. “Looking at the data, we see the problems, but they are probably measurably greater than we think.”

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“If you are using a loop, you’re doing it wrong.”

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Web Advertising is at the root of a lot of the things that are wrong with the Web today. It’s a scammers game especially when you look at AdSense. On the one hand it’s enabled everyone to advertise in ways that wasn’t previously possible. But on the other you have this wild west mentality where the distributed publishing puts advertising in unexpected places where the value might be quite debatable. It’s a long way from targeted advertising if you compare it to more traditional means like magazine advertising. The fact that it’s so easy to be a publisher and that the electronic medium is so easy to spoof makes it a big fat target for scammers trying to make a buck off - well nothing in many cases. Case in point are link farms.

I’ve given up on all that is “Google Adsense” quite a while ago, and I’ve been advising people away from it as well. This article explains why..

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The banking industry has re-affirmed a policy that makes online banking customers responsible for losses if they have out of date anti-virus or anti-phishing protection. New Banking Codes for consumers and businesses took effect on Monday.

The Banking Code produced by the British Bankers’ Association (BBA), and followed by most banks, makes it clear that banks will not be responsible for losses on online bank accounts if consumers do not have up to date anti-virus, anti-spyware, and firewall software installed on their machines.

“If you act without reasonable care, and this causes losses, you may be responsible for them,” says the code. “This may apply, for example, if you do not follow section 12.5 or 12.9.”

Section 12.9 says: “Keep your PC secure. Use up-to-date anti-virus and spyware software and a personal firewall.”

This is just a way to weasel out of responsibilities. Let me quote two Slashdot comments:

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Let’s see, just exactly WHO should be responsible for the banks’ security? Some random customer who is using them, or a staff of professionals whose entire industry is founded on the protection of money belonging to random customers? Seriously, if the banks were to pull that stunt on me, I’d switch to cash as there’s absolutely no reason to use the banks if they’re not going to offer me basic safeguards.

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Suppose one is running a hardened version of OpenBSD on some PA-RISC machine. Suppose then that this person’s bank account is drained out and that said draining has NOTHING to do with their computer or OS. Suppose it’s drained by someone who prints checks with a random bank account number on them and it just so happens to be this OpenBSD user’s bank account. Again, the theft has NOTHING to do with their computer, OS, computing practices, or hair color. What will happen? Will the bank file a discovery motion to check if the person has anti-virus software on their hardened machine? What? No anti-virus software? Never mind that there is no virus to check for.

I’m not about to go and run Norton Antivirus on my Mac. Would that mean I’d be screwed if I use this bank? The only way to be sure: go to another bank.