MEK Iran: The Iranian Regime Will Bankrupt the Country With a Stock Market Bubble
The Tehran Stock Exchange has inexplicably risen by 80% and the Iranian regime’s President, Hassan Rouhani, is claiming this as a success. Further inspection of this supposed success reveals it to be a bubble, inconsistent with the dire economic situation the country finds itself in.
The Coronavirus outbreak in Iran is just the latest in a long list of crises that the Iranian regime has been battling against. More than 42,600 people have died according to the latest figures announced by the People’s Mojahedin Organization of Iran (PMOI / MEK Iran).
Everyone knows what happens to bubbles when they are blown up past a certain size. They burst.
All the economic indicators in Iran point to a very negative situation. Inflation is anywhere between 45 and 50 percent. 3 million Iranians have lost their jobs, a number that, according to the Parliamentary Research Center, is likely to grow to 6.4 million. There is no significant foreign investment and no oil revenue. There is a continuing flight of capital out of Iran. All of these negative indicators would normally point to a stock market crash, not a rise, so what is going on?
Political & economic experts of the regime in #Iran are constantly asking the question: To what extent the Iranian society can tolerate this? Many warn an uprising at the scale of the Dec 2017 & Nov 2019 unrests—or maybe bigger—is looming on the horizon.https://t.co/xtAAYEVXt9
— People's Mojahedin Organization of Iran (PMOI/MEK) (@Mojahedineng) May 18, 2020
It seems that the answer lies in the fact that the government is selling public assets and shares in state-owned companies on the stock market, partly to raise money to balance its terrible budget deficit of around 1,500 trillion tomans. It is doing that by selling 50 trillion tomans in stock and 800 trillion tomans in government bonds.
The Jahan Sanat Daily, state-owned, says that “the government is in a dire financial situation … it has lost hope in the revenue from crude oil sales and is not resorting to selling futures.” It is “privatization in new clothes.”
The state-run Daily Javan says “the government has a big plan for selling the assets.” “Public institutions, pension funds, and the Execution of Imam Khomeini’s Order also have plans to sell their companies, and so the first financial intermediation fund will be provided to the people.”
The budget deficit at around 1,500 trillion tomans is just over 20% of the total assets held by the government. According to the Minister of Economic Affairs and Finance, Farhad Dejpasand, transferring that 20% of the total assets into the stock market would help to balance the deficit.
With the health crisis, the economic crisis, and the unemployment crisis worsening with every day that passes, the regime is digging its own grave.https://t.co/qdqkL6wwsC#Iran #MEK #coronavirus @USAdarFarsi
— MEK Iran (Mujahedin-e Khalq) (@MEK_Iran) May 18, 2020
Opposition to the sell-off comes from Ahmad Tavakoli, a member of the Expediency Council. He wrote the following in an open letter about the move: “After the looting of the nation’s property in the name of privatization, now they want to use the public-private partnership to plunder all the assets of the nation, including schools, hospitals, stadiums, universities, etc., whether they have been completed or under construction.”
Tavakoli explains just how the theft of publically owned assets works: “The Minister or Director-General can offer an 80-percent discount to deprived sectors and 50 percent to other areas. But these major buyers are the same gangs affiliated with power centers, which have already become owners of large industries and complexes at very low prices. In one example, the Haft Tappeh Sugarcane Company with 24,000 hectares of agricultural land and more than 5,000 personnel was sold with a down payment of 60 billion rials in February 2016.”
To clarify how the looting works, Tavakoli adds: “The Minister or Director-General can offer an 80-percent discount to deprived sectors and 50 percent to other areas. But these major buyers are the same gangs affiliated with power centers, which have already become owners of large industries and complexes at very low prices. In one example, the Haft Tappeh Sugarcane Company with 24,000 hectares of agricultural land and more than 5,000 personnel was sold with a down payment of 60 billion rials in February 2016,”
It is an ordinary Iranians who will become the victims of this fraudulent scheme
The real victims of the sell-off will be ordinary Iranians and small businesses. Because of the high inflation rate of around 40% and the cut in interest rates from 25% to 12%, small business owners are forced to look for other ways of investing their capital. The usual safe markets of gold, currency, and housing have all but disappeared because of the recession, which means that investors are looking at the stock market and the dumping of public assets on it at potentially attractive profit rates of up to 30% for buyers. This has all happened before when credit institutions took money from hopeful buyers, then filed for bankruptcy, taking the loot with them.
A 12-year-old girl committed suicide in Ilam and sat her torn clothes on fire so that no one can see the depth of poverty in her family.https://t.co/DppzdQie7S#Iran #MEK #coronavirus @USAdarFarsi pic.twitter.com/LFfLby7suP
— MEK Iran (Mujahedin-e Khalq) (@MEK_Iran) May 10, 2020
For the government to solve its financial woes, it has set up the stock market to fail when the bubble grows then bursts in the face of buyers who will end up with useless bits of paper, making them poorer than before.
The only beneficiaries will be the major buyers who will end up owning the assets that were offered upon the stock market. These include all the usual suspects including mafia gangs led by the Revolutionary Guards (IRGC) and the regime’s Supreme Leader, Ali Khamenei.
The Parliamentary Research Center says that “although this mechanism will solve the short-term problem of the government easily, it will create bigger problems for the country in the future.”
The major problem looming for the regime will be the likelihood that all those people and small business owners who will lose assets in the stock market bubble burst together with the army of the poor will take to the streets in rightful protest and rebellion. When this happens, the regime won’t be able to solve the problem it will face by simply printing banknotes.