Iranian Capital Markets Under Pressure

Iranian President Ahmadinejad continues to threaten the world while all the while his own citizens keep on footing the bill. This from the Guardian

Iran'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 spiraling corruption amid fears of a capital flight from the country's lending institutions.

Mr Ahmadinejad's decree forced all state-owned and private banks to slash borrowing rates to 12%. Inflation is officially 15% but is generally believed to be much higher. State banks had been offering rates of 14%, while those in the private sector ranged from 17% to 28%.

The decision caused panic in the Tehran stock exchange, with private banks losing much of their share value overnight.

Economist, Saeed Leylaz, claimed the move was a reward to powerful groups who had supported Mr Ahmadinejad. "I believe the president knows the consequence of this decision but he doesn't care about the future."

Dinny is no Alan Greenspan. At this rate, the Iranian economy will collapse. If the European countries who continue to support the dictatorial regime through friendly trade agreements (namely Germany, France and Russia) would tighten the noose just a little bit, the average Iranian would have that much more of a tough time making ends meet.

Many smarter than me have said that the way to effect change in Iran is from within. This is a golden opportunity.

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