Finance and Economics > The Money Board

Angola just implement overt Capital Controls - or how I am screwed.

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sams:
With OIL prices falling down to 35%, Angola is plunged into an economic recession, boom in unemployment and inflation crisis triggered by lack of USD liquidity.

http://fx-rate.net/USD/AOA/


This is a case of me being so busy with my work, that I missed the warning signs last year and only woke up about the problem when inflation of AOA against USD jumped 25%. Yes I listened to all the money podcast but was complacent and it is so much easier to talk about things than do it.

Anyway, now real street rate jumped 60%, from 120AOA for 1$ to 270AOA to 1$, official rate is 135AOA per 1$ ... but good luck getting any USD out of the bank, even from your own account.

So action plan now of course is asset diversification of course, but always with the question: What is the end game ?

1- Already USD are hard to get already, and the places selling them are being targeted by criminals. So I might need to get more careful about that.
2- Cars are being targeted for carjacking and violent stealing, because it is an Angolan sport for love birds to talk inside cars ... I also did it sometimes but no more. Also need to improve home safety.
3- Jobs are hard to get by, I already got a 25% pay cut from work, so now I need to focus my existing cashflow to get hard assets: USD, Land, and real estate. The last two since people are so cash hungry now prices are actually crashing despite inflation forcing people to adjust for inflation.
4- Gold: Already got some ... more is out of question: simply I need to travel out of the country to sell it at any good price, so it is so unliquide it ain't worth it. Besides got some short term priorities.
5- Need to maintain my job not for the cash flow, but more for the skills it will give me and the notoriety if things turn around I will be one of the few persons with a good background in a upmarket. (My job requires extensive training and field exposure).

Anyway it was funny to see all the news of the last months and more so last week DENYING the dollar crisis, saying everything is ok.

Also it was frustrating to talk with my siblings to get some preparation done, but nobody taking me seriously. "why buy dollars ? it is so expensive" "the rate is going down"  ::)

Any advice ?

One last thing: cheap oil prices is killing me  :'(

Morning Sunshine:
wow, Sams, I just went back and read your posts.  Sounds like you have been prepping for this (and the rest of life) for a while.  Would love to hear a more detailed account of how this went down.  What warning signs, what the talking heads reported on tv, what you saw actually happening, how this has effected your neighbors and family, etc.

ps - one man's junk is another man's treasure - I love the cheap oil :-\

sams:
What warning signs: Basically a break in Commodity prices (in this case oil) which followed a massive borrowing drive for big time projects (in this a series of sports events, and building real estates/new towns). the first warning sign was inability of people to get their own hard currency (USD and EURO) from their own bank accounts, then people travelling had their allowance progressively reduced from 10000$ to 5000$, then any sort of business allowing particulars to import mechandise from abroad was drastically reduced: from unlimited number of cars per per person to 2 cars per person per year.

what the talking heads reported on tv: from the point of view of a normal person (ie someone paying moderate attention and not actively researching about it), , the talking heads on TV justified the whole thing in the beginning by saying that denying access to USD was because the AOA was becoming a hard currency so you didn't need USD anymore: " You can just travel with AOA and exchange on arrival!". then saying that we have a terrorism problem: "Lebanese merchants are recycling Hezbollah money to finance terrorism."

Then when lack of USD became ever more pressing, they just started to deny any news relating to the matter, going as far as enlisting the US Embassy in denying any restriction on American sales of USD to Angola, Banks ensuing denial after denial.

how this has effected your neighbors and family: Because so many things are imported people just started spending a LOT less of everything (food, cars, fuel). All the service industry and commercial areas have taken a bit hit and are laying off people, for example Toyota laid off half its workforce due to poor sales (from 50 cars per month in their lead shop to 3 cars per month) and are now accepting to do maintenance on cars they have sold(meaning lots of people are forgoing car maintenance).

I took a pay cut, most of my family and friends is suffering stress from job threats of lay off.

Crime is getting worse these days as said earlier, USD exchange points are targeted by armed criminals, banks are targeted and Chinese construction workers are also being targeted since the like to keep liquid USD on them to do remittance.

Real prices of land is cheaper now because people are taking pay cuts at work and are conservative with their cash reserves, Houses are still a bit expensive. So this is a good moment to buy.

One thing I am looking into, is to diversify my assets, since I managed to get some assets out of country to some places (can't say because of OPSEC), both in USD in accounts and Gold in storage at dealer, but I am looking for maybe putting some in the Permanent Portofolio or similar product to reduce exposure to the banks holding my funds.

One advice: There is always some ways to circumvent the capital controls at a cost(monetary, convenience, safety), but the window of opportunity might be limited.

For example we had a 8 month period in which we could exchange AOA for Namibian Rands, which allowed me to buy Kruggerands coins at but now no longer possible. Also beware of the asset you are buying, because now the Namibian Rand/SA Rand is collapsing against the dollar.

My idea is to diversify from the weak asset(AOA) to hard assets : USD(liquid), Physical Gold(iliquid), Land(Semi-liquid), House for Rental(cash flow source), and Paper gold (liquid/use as bank account)

Namibian rands just allowed me to convert from AOA to Gold, since buying gold with USD was a hard to hard conversion.


--- Quote from: Morning Sunshine on December 17, 2015, 06:43:47 AM ---wow, Sams, I just went back and read your posts.  Sounds like you have been prepping for this (and the rest of life) for a while.  Would love to hear a more detailed account of how this went down.  What warning signs, what the talking heads reported on tv, what you saw actually happening, how this has effected your neighbors and family, etc.

ps - one man's junk is another man's treasure - I love the cheap oil :-\

--- End quote ---

Oil Lady:
Oil.

Important stuff.

--Oil Lady

sams:

--- Quote from: Oil Lady on December 17, 2015, 09:02:23 AM ---Oil.

Important stuff.

--Oil Lady

--- End quote ---

yep it is important ... but I am happy to be in oil industry, construction is taking an even worse beating: 20% personnel cut and 3 months salary not paid

http://www.redeangola.info/soares-da-costa-vai-despedir-20-dos-trabalhadores/

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