30.7.07

You cause it, you pay for it

When I first saw an apartment I liked it was priced at 120 thousand Jordanian Dinars, today I saw the same apartment sold for 320 thousand JD, which reminded of an incident a few summers ago when I went to buy Tomatoes, they were priced at 10p/Kg today the same store sells them for 50p/Kg. You could teach me about inflation all you want but the time frame I am talking about is not what you think it is, unless, of course, you do reside in Amman.

The time frame is two years and we are not located in 2003 Brazil, (although in certain sectors we beat the 77% rate as mentioned earlier) I remember reading somewhere that from 1964 through 1994, the accumulated inflation rate in Brazil fetched 1,000,000,000,000,000 % (that´s one quatrillion percent) !! This fantastic figure is not an estimate; it was calculated by Joelmir Beting, a well respected Brazilian journalist, based on the official inflation numbers.

As I said, we aren't Brazil, we are Jordan were the inflation rate is controlled through control of prices of commodities and especially necessities. Water, electricity, fuel and cement were until recently all controlled, all but cement still are.

This saved the government the effort of trying to control what i call the inverted up loop. Once they let the cement price go free, so, naturally due to inflation and commercially due to LaFarge's monopoly of the region's cement, the prices went nuts as they did worldwide, the prices increased steadily with demand.

Which brings me to my the real point, the demand increased because of the influx of Iraqis moving in to the country, the estimate in about a half a million Iraqis which means an average of 100,000 apartments, this is what is called unnatural growth. If prices of apartments and shops and land went up, followed by the price of fuel, which runs everything in this country, then we can guesstimate that if the Iraqis left the countries the demand will decrease and prices of apartments will go down. The government chose another route, to build subsidized housing for the lowest income in Jordan, this subsidy I believe should be paid by Iraq, whether in terms of oil or otherwise.

I therefore, agree that the Iraqis caused inflation and they should either pay for it or leave, two ways to deflate it. I think that our infrastructure is being stretched thin by this influx, and we should address it head on.
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