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Smell the Fear

Iran Cuts Interest Rates

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Guardian

ran'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.

The interest rate move theoretically helps the less-well-off, for whom Mr Ahmadinejad has pledged support with cheaper loans. But economists say cutting rates below inflation will scare investors into withdrawing their savings, thereby creating a black market in high interest loans. They also warn of higher inflation as investors redirect their money into property and push up house prices.

"Mr Ahmadinejad's argument is that the lower the interest rate, the more access people will have to money," said one analyst. "But you can't command interest rates down. They have to match inflation. To cut rates, the government has to balance its budget better."

Sounds a bit like the UK circa August 2005, but without the smoke and mirrors, eh? :lol:

Edited by Smell the Fear

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:lol:

Hey, don't knock it! They're only embracing the 'American Dream'. Anyway, what's so scary about hyperinflation, when you're loaded with gold and uranium as the Iranians are? :D

Scuse my ignorance, but I thought muslims were against charging interest, you know, shariah mortgages and all that?

Reckon they will find a place fo him next to Blanchflower on the MPC ?

Edited by Flick

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Scuse my ignorance, but I thought muslims were against charging interest, you know, shariah mortgages and all that?

Bang on - I never would have picked up on that!

I think they work round it by getting the bank to buy the house, then you pay the bank extra for their "service".

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ABC News recently said the US were trying to sabotage Iran's currency because of their nuclear activity. Maybe Iran are responding to it : -

The CIA has received secret Presidential approval to launch a campaign for regime change in Iran.

The approval comes in the form of a signed "non-lethal" Presidential finding which would launch a plan that reportedly includes a coordinated campaign of propaganda, disinformation, and manipulation of Iran's currency and international financial transactions, ABCNews.com reported May 22.

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