"Open market operations" are monetary policy tools that affect directly the monetary base; the monetary base can be expanded or contracted using an expansionary policy or a contractionary policy, but not without risk.
The monetary base is typically controlled by the institution in a country that controls monetary policy. This is usually either the finance ministry or the central bank. These institutions print currency and release it into the economy, or withdraw it from the economy, through open market transactions (i.e., the buying and selling of government bonds). These institutions also typically have the ability to influence banking activities by manipulating interest rates and changing bank reserve requirements (how much money banks must keep on hand instead of loaning out to borrowers).
The monetary base is called high-powered because an increase in the monetary base (M0) can result in a much larger increase in the supply of bank money, an effect often referred to as the money multiplier. An increase of 1 billion currency units in the monetary base will allow (and often be correlated to) an increase of several billion units of "bank money". This is often discussed in conjunction with fractional-reserve banking banking systems.
So now we know there are monetary tools that affect directly the monetary base. Monetary Base are the notes & coins that are in circulation. The monetary base can be expanded or contracted using two different methods.
First Method: "Expansionary Policy" (Expanding / Printing More Money)
http://en.wikipedia....monetary_policy
"In economics, expansionary policies are fiscal policies, like higher spending and tax cuts, that encourage economic growth.[1] In turn, an expansionary monetary policy is monetary policy that seeks to increase the size of the money supply. In most nations, monetary policy is controlled by either a central bank or a finance ministry." We already know how a country can "expand" their monetary base / currency in circulation. They print more money. This is exactly what Iraq has done ever since 2003 when they released the new IQD's and put them into circulation. I believe they started with about 6 trillion Dinars back in 2003 but for arguments sake we will stick with the facts. In 2004 IndexMundi states that they had 10,244,220,000,000.00 Iraqi Dinars in circulation. That is a little over 10 trillion dinars.
http://www.indexmund...acts/iraq/money
Now we know that the CBI has the ability to "expand" and has in fact "expanded" their monetary base from 10 trillion Dinars to 30 trillion Dinars in a matter of 4 years! That is a lot of printing...
Second Method: "Contractionary Policy" (Contracting / Decreasing Money in Circulation)
http://en.wikipedia....monetary_policy
Monetary base
Contractionary policy can be implemented by reducing the size of the monetary base. This directly reduces the total amount of money circulating in the economy.
A central bank can use open market operations to reduce the monetary base. The central bank would typically sell bonds in exchange for hard currency. When the central bank collects this hard currency payment, it removes that amount of currency from the economy, thus contracting the monetary base.
Iraq's Currency Auctions They sell U.S. dollars to the banks and receive Iraqi Dinars. This happens ALL THE TIME. When the central bank collects this hard currency payment, it removes that amount of currency from the economy, thus contracting the monetary base. This is our key to a significant RV, PERIOD!
Effectively DESTROY BASE MONEY: Process
Since most money is now in the form of electronic records rather than cash, open market operations are conducted simply by electronically increasing or decreasing ('crediting' or 'debiting') the amount of base money that the bank has in its reserve account at the central bank. Thus, the process does not literally require new currency. (However, this will increase the central bank's requirement to print currency when the member bank demands banknotes, in exchange for a decrease in its electronic balance.)
When there is an increased demand for base money, action is taken in order to maintain the short term interest rate (that is, to increase the supply of base money). The central bank goes to the open market to buy a financial asset such as government bonds, foreign currency or gold. To pay for this, bank reserves in the form of new base money (for example newly printed cash) is transferred to the sellers bank, and the sellers account is credited. Thus, the total amount of base money in the economy has increased. Conversely, if the central bank sells these assets in the open market, the amount of base money that the buyer's bank holds decreases, effectively destroying base money.
I have provided tons of links and facts for the naysayers or for those who base their decisions off of logic and reasoning. I've provided this information as I believe it proves that a significant RV is probable. It proves all of the "naysayers / LOPsters" wrong. The biggest argument (which is valid and played a huge role in all of this) is the amount of currency in circulation. Well this thread proves that by using Contractionary Policy the CBI can decrease the Money Base (currency in circulation) through Open Market Operations which also can be referred to as Currency Auctions.
Thank you for taking the time to read through this.
Monday, May 21, 2012
Sunday, May 20, 2012
Iraq Halts Plans To Drop 3 Zeros From Dinar
Iraq Halts Plans to Drop 3 Zeros from Dinar
Posted on 20 May 2012.
Iraq has decided to hold off on a plan to knock three zeros off the nominal value of bank notes of its currency because it does not believe the economic climate is suitable, reports Reuters.The central bank said last August that it planned to redenominate the Iraqi dinar to simplify financial transactions in an economy that is still heavily centralised and dominated by oil, and where deals are often carried out in cash.
The proposal to restructure the dinar to bring more liquidity into the market has been awaiting parliamentary approval since last year.
On Thursday, a statement on the website of the cabinet secretary said the cabinet had decided to halt all procedures relating to the redenomination of the dinar “until further notice”.
“The economic committee discussed this issue and so did cabinet … There is a possibility that it could cause some problems in the economic situation. Besides that, this operation is so big that cabinet sees circumstances are not right to control this,” cabinet secretary Ali al-Alaq told Reuters.
“We have more than 30 trillion dinars in circulation. To withdraw this amount from the market and then to examine them and to dispose of them is a huge process. Even the technical and the monetary capabilities to control a process like this, we consider as insufficient and it is not seen as a priority currently,” Alaq said.
The central bank says Iraq’s large foreign reserves, which have risen to a record $60 billion on the back of high oil prices, will shield it from any damage to its financial system on the national level.
Wednesday, May 2, 2012
What You Should Know About Iraqi Dinar Speculation
What You Should Know About Iraqi Dinar Speculation
As Iraq continues to recover and experience tremendous growth, many individuals are beginning to wonder if speculating in Iraqi Dinar would be wise. At the present time, the dinar holds very little value, which means it can be purchased for very little money. It is indeed legal to purchase this currency, and sell it whenever you wish. If you decide to make a purchase, you will of course want to hold onto the currency until the value increases and you can make a profit.Are there any guarantees that the dinar will increase in value? No. As with any currency type, there are various conditions that will determine the eventual value outcome of the dinar. Those who follow the news out of Iraq will however be able to note the improvements that are taking place in Iraq right now. For many, these improvements alone are a strong indicator as to what the dinar may do next. You may think of it in the same manner as the US dollar, which has lost ground due to declined economic conditions.
Should you decide to purchase dinar, the amount you would like to purchase will be entirely up to you. There are fakes in existence, so it will be to your advantage to perform some research on the source you plan to purchase from. Once you have it, you may want to store it in a safe place, such as a bank deposit box, or other secure facility.
Iraqi Dinar Revaluation
Iraqi Dinar Revaluation 2012
In order to track the value of the dinar, log into www.loot4gold.blogspot.com. You will want to monitor value changes on a regular basis, as you will want want to miss the chance to sell your dinar should it spike in value.
If at any point you wish to sell your dinar, you will find that plenty of companies will purchase them from you.[HINT: Loot 4 Gold]. Again, you will want to select a reputable company to ensure a smooth transaction, and the best rate for your dinar. Both buying and selling are easy tasks, so long as you take the time to consider those you wish to conduct this business with.
Predicting the Future of the Iraqi Dinar
It may seem that predicting the future of the Iraqi dinar is impossible. While it is true that the value of this, and all types of currencies, are subject to change at any times based on specific events or conditions, there are ways to determine where the dinar may be headed. Knowing the facts will help you determine if you wish to purchase dinar, and if so, how much money you wish to speculate with..Consider following the most current Iraqi dinar news if you wish to make predictions about the future of this currency. New is the absolute best source, as it is based on fact and not speculation. The events that are going on inside Iraq at this moment do make a difference. Many of the predictions about the sharp rise in value of the dinar are based on the amazing growth that is taking place within Iraq at this time. The United States is playing a role in this, and there is no denying that when help is being received, more progress can be made.
Iraqi Dinar in 2012
Many feel that the dinar is currently undervalued by a substantial amount. The price to purchase dinar is indeed, quite low at this time. It will be up to you to determine the potential risk and reward ratios. However, the low price of dinar will allow many to take a chance without risking a great deal of funds. Some investors are purchasing millions of dinars, while others are taking a more cautious approach and purchasing smaller speculative amounts. There is no right or wrong here, only what you feel comfortable with.
There are no laws that state this currency can be purchased. Therefore, anyone who wishes to purchase dinar at this time may do so.
Dinar information is available from many sources online. Those who are considering this purchase will want to read as much information as possible in order to try to determine what the value of this currency will be in the future. As with any investment, there will be risks. Minimizing risks is simply a matter of being as educated as possible prior to risking your money. Once you sort the fact from fiction, you will be able to have a clearer picture of what to expect from the dinar in the near future.
Tuesday, April 10, 2012
Where We Are as of April 9th 2012
WHERE WE ARE AS OF APRIL 9, 2012 – THE POLITICAL CRISIS AND SHABIBI’S CHOICES
As many of you may be aware I gave an analysis of the situation on March 27 in which I speculated that Shabibi would be forced to pull the trigger on the RV by the end of April.
I wrote that before the most recent events occurred and would like to revise my feelings on the matter with this post.
There are two significant issues that have impacted my thinking since the last post. The first is the recent movement toward a “no confidence” vote against Maliki, with the attempt being to remove him from office.
The second is the dispute over the CBI and to whom it is supposed to report for approval on the RV.
I will address each of these matters in turn, after which I will give my current view on the RV in terms of potential timing.
It is now clear that there is a ground swell of concern about the increasing accumulation of power by Maliki. Most recently he has attempted to take over the CBI by having Shabibi fired.
This, added to the fact that he still is running the Defense, Security, Interior, and Intelligence Ministries by himself, has now brought several of the opposition groups to the point where they are now openly talking about attempting to remove Maliki from power.
From Maliki’s point of view, he has called all of this talk a “whirlwind”, apparently implying that it will all blow over and that he will survive whatever attempts may follow to remove him.
On the other hand, there is increasing pressure mounting from the opposition. In particular, Iraqiya has announced publicly that it is fervently attempting to come up with the 163 votes necessary to vote “no confidence” in Maliki which would remove him from his position as Prime Minister.
In addition, Mr. Barzani was bold enough to discuss the removal of Maliki openly to the press from Washington, D.C., where he was meeting with Vice President Biden. He was so bold that he claimed outright that Maliki was attempting to become a dictator just as Saddam Hussein had done in the last decade.
Added to this, however, is a statement from the National Alliance faction. This group, you may recall, had joined with the State of Law (Maliki’s party) to form a super alliance that gave him enough votes to win the election in March of 2010, even though he did not have even a plurality of votes (Allawi of the Iraqiya List actually had more votes than did Maliki).
The National Alliance has called for a change in the Prime Ministership but has not gone so far as to call for a new election. Presumably they would prefer Maliki to step down in favor of another Shiite from within the State of Law/National Alliance coalition.
In any case, it seems to me that these opposition groups are almost in a position to obtain the 163 votes necessary to oust Maliki. Iraqiya has 91 votes, the Kurds have about 43 votes, and the National Alliance has about 50 votes, as I recall If they all banded together, then Maliki would potentially be voted out of office.
I believe that Iraqiya and the Kurds are prepared to act on the “no confidence” vote, but I don’t think they will act until they are convinced that the National Alliance will go along with them. The last thing they would want is to call for a vote and have Maliki squeak out a victory!
Therefore, I suspect that it will be at least a week or two before this comes to a head. It will take this long for the various factions to discuss the matter privately among themselves and come to a consensus.
The main reason that the National Conference was not held was because they could not even agree on the agenda of the conference. In addition, even if they had agreed on the agenda (Allawi tried to set it at least once) there was no indication from Talibani’s point of view that the Conference would be successful.
Therefore it was postponed indefinitely. I also read that if it had been held there was a good chance that Maliki himself would have boycotted the Conference. Obviously that would not have been productive, to say the least.
My opinion is that the situation is therefore tenuous, at best.
Maliki is as intransigent as ever. In addition, he has a tremendous amount of power accumulated and will be difficult to remove, even if the “no confidence” vote is made and is successful.
I do not believe that this will lead to civil war, however, in spite of the fact that Barzani clearly made the statement that this is a crisis for the country. I say this because I believe that Maliki has deservedly earned the disgust of the majority of the people of the country.
I believe that he will not be able to retain the allegiance of the army, given the supposition that the opposition would be up to ¾ of the parliament. It seems to me, then, that when “push comes to shove” Maliki would be forced to step down. There is some evidence that he would be arrested for war crimes in that scenario.
However, it may be premature to talk about a “no confidence” vote. After all, this politician Maliki has been around for a long time, and there is no evidence whatsoever that he will just lie down and give up. This is the import of his words calling all of this brouhaha a “whirlwind,” in my opinion.
The question then is this: just how will he manage to defuse this political crisis? This question becomes all the more imposing when we recognize, again, the simple fact that Maliki does NOT compromise.
From an outsider’s point of view it would appear that this is a crisis that could collapse the democratic process in Iraq. It is my opinion, and I agree with Kaperoni on this, that both the United States administration and the UN (Ban Ki-Moon in particular) are deeply desirous that the “experiment” in democracy in Iraq be maintained, if even only as a shell of a real democracy.
Therefore, I believe that external pressure will increase on Maliki. Evidence of this seems clear in that Barzani was invited to visit with Biden and did not mince his words when the meeting was over.
In addition, Barzani is now in Europe having meetings with other leaders there as well. It seems obvious to me that he is attempting to build a ground swell of support from outside the country at the same time that Allawi and Talabani are working for a similar ground swell from within the country.
The outcome of this crisis is yet to be determined. I will speculate on some possible outcome scenarios after I discuss the issue of Shabibi.
Mr. Shabibi is a very talented and capable head of the CBI. He has attempted to walk a tightrope with the Maliki administration for nearly 2 years now. It seems clear to both Kaperoni and myself that he has been ready to revalue the dinar for several months now.
He has delayed doing so primarily, in my opinion, because of the crisis in the failure of the GOI to get finally formed. In other words, he has been waiting on Maliki, thereby giving Maliki the practical “keys” to the RV.
Maliki, as I have stated before, has his own agenda. I have always believed that he has withheld the RV as a “quid pro quo” for getting release from Chapter VII from the United Nations. I was quite honestly surprised that he did not accomplish this goal when he went to Kuwait.
He signed a number of documents that gave the appearance of a significant compromise. After thinking about this further, however, I’ve come to the conclusion that there was no significant compromise on his part.
Instead, he cut a deal with the Kuwaitis that had already been agreed to some months prior. In this case, they just decided to put it all on paper. You may recall that Kuwait has been in favor of getting Iraq out from Chapter VII for some time now, so the “show” that Maliki made by going to Kuwait was not groundbreaking.
It was just a formalizing of their own previously held positions, in my opinion. In other words, Maliki did not change.
We must now ask ourselves if Maliki was ever ready to allow the RV.
At this point I do not believe he ever gave Shabibi the authority to do so. Had he done so he would not be having to justify his current position and the Cabinet would not have sent him a letter stating that he needed their approval.
This situation is getting complex, just as the Maliki power grab is complex. We have Shabibi firmly convinced that he has the authority from within the CBI laws alone to act on matters of monetary policy.
Admittedly he believes that he is obligated to report to both Parliament and to the Government, but he does not believe that he has to have their approval, or he believes he already has it. For our concern it doesn’t matter which is correct; what matters is that Shabibi feels he is right.
The Parliament is on record stating two things: first, they claim that the CBI should correctly be reporting to THEM and not to the Government. That statement was made recently.
However, in addition to that statement a second statement was made by a key member of parliament. That statement quite clearly said that the Government should leave the CBI alone and allow it to continue to formulate and enact monetary policy.
Furthermore, the Parliament is on record now stating that it FAVORS the actions of the CBI during the last few years and is impressed at the consistency of the CBI in controlling inflation and handling monetary policy.
All of this sounds great, but unfortunately there is another shoe to fall.
On January 18 of this year the Supreme Court stepped into the fray and stated that the CBI reports to the Government. It was quite clear in its interpretation of Section IV, article 110, paragraph 3 of the Constitution. It specifically stated that the CBI was not autonomous.
Here is the statement:
“The Federal Supreme Court issued a decision in January 18 this provides a link independent bodies referred to in the Iraqi constitution, including the Central Bank under the chairmanship of Prime Minister directly, not under the chairmanship of the House of Representatives, and the decision came at the request to show a link bodies of Cabinet Office submitted to the Federal Court in second week of December last year. “
http://translate.googleusercontent.com/translate_c?hl=en&ie=UTF-8&sl=ar&tl=en&u=http://www.alsumarianews.com/ar/1/16445/news-details-.html&prev=_t&rurl=translate.google.com&usg=ALkJrhga9SQCMlQAADO_OutPAcnD6jWn7g
Furthermore, a federal judge reiterated that position in a letter sent directly to the CBI just last week.
We know from past experience that Maliki has the Supreme Court in his back pocket, so we shouldn’t be surprised at these statements made by this body. However, in my reading of the Constitution it seems to me that the Supreme Court is actually right on this matter, in spite of what the by-laws of the CBI state. In other words, according to the Constitution of Iraq the CBI is NOT like our Federal Reserve in this matter.
Whether my opinion is correct or not is not significant. What IS significant is how it is handled in Iraq. IF Mr. Shabibi acts on his belief that he is autonomous, he could be arrested or charged in some manner.
Assuming that he acted by revaluing the currency, it is possible that the Supreme Court could immediately vacate his decision, based upon their previous warning of January 18. Therefore, it is unlikely that Shabibi will act on his own, in my opinion.
It is possible that he could go to Parliament and obtain a resolution from that body that would authorize the RV. However, given the Supreme Court’s ruling, it is not clear to me that this would be sufficient to protect Shabibi, or the RV.
Therefore, it is my opinion that Shabibi will have to work with the Government in some manner to affect the RV. This means, ultimately, that he will have to obtain approval from Maliki.
Having said that, we are now back to Maliki alone. Given his current political crisis problems I suspect that the RV is NOT high on his list of priorities. Therefore I doubt that we will see any action on the RV unless and until the political crisis is resolved.
This brings me back to the crisis itself and the opposition’s attempt to vote Maliki out of office. I believe that our focus should be directed at this crisis from this point forward. If the vote is unsuccessful then we would look toward the release from Chapter VII as our next key date, after which we MIGHT see an RV.
If, on the other hand, the “no confidence” vote is successful, then we will have to see how the removal of Maliki is affected, and the timing of the same. Assuming the most positive scenario, Maliki would be forced from office in short order. In that case some form of political process would have to be implemented to replace him.
This would probably mean that new elections would be scheduled and that would mean at least a 4 to 6 week delay. In the interim, however, it is possible that a National Conference could be held in which Talabani could be named the interim leader of the country.
Given that scenario it is likely that Shabibi would attempt to work closely with Talabani to get the RV done. It is my opinion that Talabani would agree to the RV because of the positive affect that it would have on the economy and the good will of the people.
All of this speculation is based upon a series of assumptions, any one of which could derail the entire thing. Therefore, rather than speculating on a next possible date for the RV it is my opinion that we should concentrate our energy on seeing how the political crisis unfolds. I do NOT believe Shabibi will act prior to a resolution of this crisis.
As many of you may be aware I gave an analysis of the situation on March 27 in which I speculated that Shabibi would be forced to pull the trigger on the RV by the end of April.
I wrote that before the most recent events occurred and would like to revise my feelings on the matter with this post.
There are two significant issues that have impacted my thinking since the last post. The first is the recent movement toward a “no confidence” vote against Maliki, with the attempt being to remove him from office.
The second is the dispute over the CBI and to whom it is supposed to report for approval on the RV.
I will address each of these matters in turn, after which I will give my current view on the RV in terms of potential timing.
It is now clear that there is a ground swell of concern about the increasing accumulation of power by Maliki. Most recently he has attempted to take over the CBI by having Shabibi fired.
This, added to the fact that he still is running the Defense, Security, Interior, and Intelligence Ministries by himself, has now brought several of the opposition groups to the point where they are now openly talking about attempting to remove Maliki from power.
From Maliki’s point of view, he has called all of this talk a “whirlwind”, apparently implying that it will all blow over and that he will survive whatever attempts may follow to remove him.
On the other hand, there is increasing pressure mounting from the opposition. In particular, Iraqiya has announced publicly that it is fervently attempting to come up with the 163 votes necessary to vote “no confidence” in Maliki which would remove him from his position as Prime Minister.
In addition, Mr. Barzani was bold enough to discuss the removal of Maliki openly to the press from Washington, D.C., where he was meeting with Vice President Biden. He was so bold that he claimed outright that Maliki was attempting to become a dictator just as Saddam Hussein had done in the last decade.
Added to this, however, is a statement from the National Alliance faction. This group, you may recall, had joined with the State of Law (Maliki’s party) to form a super alliance that gave him enough votes to win the election in March of 2010, even though he did not have even a plurality of votes (Allawi of the Iraqiya List actually had more votes than did Maliki).
The National Alliance has called for a change in the Prime Ministership but has not gone so far as to call for a new election. Presumably they would prefer Maliki to step down in favor of another Shiite from within the State of Law/National Alliance coalition.
In any case, it seems to me that these opposition groups are almost in a position to obtain the 163 votes necessary to oust Maliki. Iraqiya has 91 votes, the Kurds have about 43 votes, and the National Alliance has about 50 votes, as I recall If they all banded together, then Maliki would potentially be voted out of office.
I believe that Iraqiya and the Kurds are prepared to act on the “no confidence” vote, but I don’t think they will act until they are convinced that the National Alliance will go along with them. The last thing they would want is to call for a vote and have Maliki squeak out a victory!
Therefore, I suspect that it will be at least a week or two before this comes to a head. It will take this long for the various factions to discuss the matter privately among themselves and come to a consensus.
The main reason that the National Conference was not held was because they could not even agree on the agenda of the conference. In addition, even if they had agreed on the agenda (Allawi tried to set it at least once) there was no indication from Talibani’s point of view that the Conference would be successful.
Therefore it was postponed indefinitely. I also read that if it had been held there was a good chance that Maliki himself would have boycotted the Conference. Obviously that would not have been productive, to say the least.
My opinion is that the situation is therefore tenuous, at best.
Maliki is as intransigent as ever. In addition, he has a tremendous amount of power accumulated and will be difficult to remove, even if the “no confidence” vote is made and is successful.
I do not believe that this will lead to civil war, however, in spite of the fact that Barzani clearly made the statement that this is a crisis for the country. I say this because I believe that Maliki has deservedly earned the disgust of the majority of the people of the country.
I believe that he will not be able to retain the allegiance of the army, given the supposition that the opposition would be up to ¾ of the parliament. It seems to me, then, that when “push comes to shove” Maliki would be forced to step down. There is some evidence that he would be arrested for war crimes in that scenario.
However, it may be premature to talk about a “no confidence” vote. After all, this politician Maliki has been around for a long time, and there is no evidence whatsoever that he will just lie down and give up. This is the import of his words calling all of this brouhaha a “whirlwind,” in my opinion.
The question then is this: just how will he manage to defuse this political crisis? This question becomes all the more imposing when we recognize, again, the simple fact that Maliki does NOT compromise.
From an outsider’s point of view it would appear that this is a crisis that could collapse the democratic process in Iraq. It is my opinion, and I agree with Kaperoni on this, that both the United States administration and the UN (Ban Ki-Moon in particular) are deeply desirous that the “experiment” in democracy in Iraq be maintained, if even only as a shell of a real democracy.
Therefore, I believe that external pressure will increase on Maliki. Evidence of this seems clear in that Barzani was invited to visit with Biden and did not mince his words when the meeting was over.
In addition, Barzani is now in Europe having meetings with other leaders there as well. It seems obvious to me that he is attempting to build a ground swell of support from outside the country at the same time that Allawi and Talabani are working for a similar ground swell from within the country.
The outcome of this crisis is yet to be determined. I will speculate on some possible outcome scenarios after I discuss the issue of Shabibi.
Mr. Shabibi is a very talented and capable head of the CBI. He has attempted to walk a tightrope with the Maliki administration for nearly 2 years now. It seems clear to both Kaperoni and myself that he has been ready to revalue the dinar for several months now.
He has delayed doing so primarily, in my opinion, because of the crisis in the failure of the GOI to get finally formed. In other words, he has been waiting on Maliki, thereby giving Maliki the practical “keys” to the RV.
Maliki, as I have stated before, has his own agenda. I have always believed that he has withheld the RV as a “quid pro quo” for getting release from Chapter VII from the United Nations. I was quite honestly surprised that he did not accomplish this goal when he went to Kuwait.
He signed a number of documents that gave the appearance of a significant compromise. After thinking about this further, however, I’ve come to the conclusion that there was no significant compromise on his part.
Instead, he cut a deal with the Kuwaitis that had already been agreed to some months prior. In this case, they just decided to put it all on paper. You may recall that Kuwait has been in favor of getting Iraq out from Chapter VII for some time now, so the “show” that Maliki made by going to Kuwait was not groundbreaking.
It was just a formalizing of their own previously held positions, in my opinion. In other words, Maliki did not change.
We must now ask ourselves if Maliki was ever ready to allow the RV.
At this point I do not believe he ever gave Shabibi the authority to do so. Had he done so he would not be having to justify his current position and the Cabinet would not have sent him a letter stating that he needed their approval.
This situation is getting complex, just as the Maliki power grab is complex. We have Shabibi firmly convinced that he has the authority from within the CBI laws alone to act on matters of monetary policy.
Admittedly he believes that he is obligated to report to both Parliament and to the Government, but he does not believe that he has to have their approval, or he believes he already has it. For our concern it doesn’t matter which is correct; what matters is that Shabibi feels he is right.
The Parliament is on record stating two things: first, they claim that the CBI should correctly be reporting to THEM and not to the Government. That statement was made recently.
However, in addition to that statement a second statement was made by a key member of parliament. That statement quite clearly said that the Government should leave the CBI alone and allow it to continue to formulate and enact monetary policy.
Furthermore, the Parliament is on record now stating that it FAVORS the actions of the CBI during the last few years and is impressed at the consistency of the CBI in controlling inflation and handling monetary policy.
All of this sounds great, but unfortunately there is another shoe to fall.
On January 18 of this year the Supreme Court stepped into the fray and stated that the CBI reports to the Government. It was quite clear in its interpretation of Section IV, article 110, paragraph 3 of the Constitution. It specifically stated that the CBI was not autonomous.
Here is the statement:
“The Federal Supreme Court issued a decision in January 18 this provides a link independent bodies referred to in the Iraqi constitution, including the Central Bank under the chairmanship of Prime Minister directly, not under the chairmanship of the House of Representatives, and the decision came at the request to show a link bodies of Cabinet Office submitted to the Federal Court in second week of December last year. “
http://translate.googleusercontent.com/translate_c?hl=en&ie=UTF-8&sl=ar&tl=en&u=http://www.alsumarianews.com/ar/1/16445/news-details-.html&prev=_t&rurl=translate.google.com&usg=ALkJrhga9SQCMlQAADO_OutPAcnD6jWn7g
Furthermore, a federal judge reiterated that position in a letter sent directly to the CBI just last week.
We know from past experience that Maliki has the Supreme Court in his back pocket, so we shouldn’t be surprised at these statements made by this body. However, in my reading of the Constitution it seems to me that the Supreme Court is actually right on this matter, in spite of what the by-laws of the CBI state. In other words, according to the Constitution of Iraq the CBI is NOT like our Federal Reserve in this matter.
Whether my opinion is correct or not is not significant. What IS significant is how it is handled in Iraq. IF Mr. Shabibi acts on his belief that he is autonomous, he could be arrested or charged in some manner.
Assuming that he acted by revaluing the currency, it is possible that the Supreme Court could immediately vacate his decision, based upon their previous warning of January 18. Therefore, it is unlikely that Shabibi will act on his own, in my opinion.
It is possible that he could go to Parliament and obtain a resolution from that body that would authorize the RV. However, given the Supreme Court’s ruling, it is not clear to me that this would be sufficient to protect Shabibi, or the RV.
Therefore, it is my opinion that Shabibi will have to work with the Government in some manner to affect the RV. This means, ultimately, that he will have to obtain approval from Maliki.
Having said that, we are now back to Maliki alone. Given his current political crisis problems I suspect that the RV is NOT high on his list of priorities. Therefore I doubt that we will see any action on the RV unless and until the political crisis is resolved.
This brings me back to the crisis itself and the opposition’s attempt to vote Maliki out of office. I believe that our focus should be directed at this crisis from this point forward. If the vote is unsuccessful then we would look toward the release from Chapter VII as our next key date, after which we MIGHT see an RV.
If, on the other hand, the “no confidence” vote is successful, then we will have to see how the removal of Maliki is affected, and the timing of the same. Assuming the most positive scenario, Maliki would be forced from office in short order. In that case some form of political process would have to be implemented to replace him.
This would probably mean that new elections would be scheduled and that would mean at least a 4 to 6 week delay. In the interim, however, it is possible that a National Conference could be held in which Talabani could be named the interim leader of the country.
Given that scenario it is likely that Shabibi would attempt to work closely with Talabani to get the RV done. It is my opinion that Talabani would agree to the RV because of the positive affect that it would have on the economy and the good will of the people.
All of this speculation is based upon a series of assumptions, any one of which could derail the entire thing. Therefore, rather than speculating on a next possible date for the RV it is my opinion that we should concentrate our energy on seeing how the political crisis unfolds. I do NOT believe Shabibi will act prior to a resolution of this crisis.
Tuesday, April 3, 2012
HISTORY OF IRAQI DINAR
Presidential Order 13303: Allows US Citizens to buy iraqi dinar and invest and buy in the New Iraq and Iraqi dinar . Under this Order and the Coalition Provisional Government Order 39, a US citizen has the same rights to investments as an Iraqi citizen.
(04-03-2012) Investors in Iraq can get ultra-high risk-reward bets
Are you a global investor looking for an ultra-high risk-reward option? Consider Iraq. The perils are well known — possible civil war at the top of the list — but the Baghdad main index is still up 32 per cent over two years, outperforming its Middle East rivals. This year has started less well — drops are hardly a surprise for a fractious country in a volatile region — but this frontier market has many of the ingredients of success.
The two-year performance is remarkable, well above the 6 per cent gain for the FTSE All World Middle East and Africa index. Within the region, only very peaceful Qatar has come close, returning 28 per cent. Saudi Arabia's index has risen 11 per cent. Investors in Egypt, Kuwait, and the UAE lost money. And unlike some peers, Iraq's bourse welcomes foreign investors and there are no capital controls.
Security has deteriorated within Iraq since US troops withdrew last year. Fears are mounting the country could split along provincial lines. Amid serious political infighting, oil majors ExxonMobil and France's Total are testing Baghdad's resolve in a bid to improve direct investment conditions in the oil sector. But Abu Dhabi's Invest AD Iraq-focused fund remains up almost 8 per cent since its inception in late 2010 around the same time the unity government was formed.
GDP growth forecasts
Despite violence and acrimony, reconstruction continues. The International Monetary Fund forecasts 12 per cent GDP growth for 2012. That is twice as fast as gas-rich Qatar, which is in a construction frenzy ahead of the 2022 soccer World Cup. The population is young — almost half under 14.
The bourse is small: the $4 billion (Dh14.7 billion) market capitalisation is less than 5 per cent of GDP. That ratio is 60 per cent in Saudi Arabia. But foreign investors may be attracted by the IPOs of Iraq's telecom operators if they happen later this year.
Iraq is a long-play, according to local-brokerage Rabee Securities. Small investments could reap strong returns. John Templeton had huge success investing in post-war Japan. The security and political risks are clearly greater in Iraq but oil, demographics and reconstruction are a powerful trio. (Source) GulfNews
CBI has promised to reduce the value of the dollar and the potential to modify the pension law
CBI has promised to reduce the value of the dollar and the potential to modify the pension law
Posted: April 3, 2012 in Iraqi Dinar/PoliticsTags: Central bank, Central Bank Iraq, Currency, exchange rate, Iraq, iraqi, Iraqi dinar, United States dollar
03/04/2012 BAGHDAD
A member of the parliamentary Finance Committee Faleh applicable, the registered companies in the Iraqi market for securities is the reason Riisa the high value of the U.S. dollar against the Iraqi dinar, indicating that the central bank has promised to reduce its value in the next few days.
He said in effect, in a press statement received by the Agency “Secrets News / We are not” on Monday that “the central bank is responsible for fiscal policy and therefore obligated to take measures and controls to preserve the value of Iraqi dinar,” adding that “measures the bank last did not work in raising the value of the dinar Iraqi and inquire about this thing called the Governor of the Central Bank and told me that the measures developed but not implemented by 100% and the promise of its application in the coming days which will then significantly decreased the value of U.S. dollar against the Iraqi dinar. “
continued http://thecurrencynewshound.com/2012/04/03/cbi-has-promised-to-reduce-the-value-of-the-dollar-and-the-potential-to-modify-the-pension-law/
A member of the parliamentary Finance Committee Faleh applicable, the registered companies in the Iraqi market for securities is the reason Riisa the high value of the U.S. dollar against the Iraqi dinar, indicating that the central bank has promised to reduce its value in the next few days.
He said in effect, in a press statement received by the Agency “Secrets News / We are not” on Monday that “the central bank is responsible for fiscal policy and therefore obligated to take measures and controls to preserve the value of Iraqi dinar,” adding that “measures the bank last did not work in raising the value of the dinar Iraqi and inquire about this thing called the Governor of the Central Bank and told me that the measures developed but not implemented by 100% and the promise of its application in the coming days which will then significantly decreased the value of U.S. dollar against the Iraqi dinar. “
continued http://thecurrencynewshound.com/2012/04/03/cbi-has-promised-to-reduce-the-value-of-the-dollar-and-the-potential-to-modify-the-pension-law/
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