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.

 

 

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/Politics
Tags: 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/

10 Reasons The Reign Of The Dollar As The World Reserve Currency Is About To End

The U.S. dollar has probably been the closest thing to a true global currency that the world has ever seen. For decades, the use of the U.S. dollar has been absolutely dominant in international trade. This has had tremendous benefits for the U.S.
financial system and for U.S. consumers, and it has given the U.S. government tremendous power and influence around the globe.
Today, more than 60 percent of all foreign currency reserves in the world are in U.S. dollars. But there are big changes on the horizon. The mainstream media in the United States has been strangely silent about this, but some of the biggest economies on earth have been making agreements with each other to move away from using the U.S. dollar in international trade.
There are also some oil-producing nations which have begun selling oil in currencies other than the U.S. dollar, which is a major threat to the petrodollar system which has been in place for nearly four decades. And big international institutions such as the UN and the IMF have even been issuing official reports about the need to move away form the U.S. dollar and toward a new global reserve currency.
So the reign of the U.S. dollar as the world reserve currency is definitely being threatened, and the coming shift in international trade is going to have massive implications for the U.S. economy.

More: http://feedproxy.google.com/~r/115/BKGb/~3/HDsH6ZQkoVs/

(Just Da Truth): 3/26/12

(Just Da Truth): OOM 3/26/12

March 29, 2012

Source:
URL: http://feedproxy.google.com/~r/115/BKGb/~3/wWmk9KmkAQU/

In researching Petrodollars on the internet I came across what I thought very interesting and decided to share. This is one person’s view, he may be right or he may be wrong. You decide. The post was from the middle of March 2011.First off; I’ll use the exchange of a 10,000 IQD (Iraqi Dinar) note as my example. To help explain the economics of this cash-in example, I will use a 1:1 cash-in ratio between the USD (US Dollar) and IQD (Iraqi Dinar) that is given a two-tier payout, and a 2% bank spread.

What You Will Receive: If you were to cash in your 10,000 IQD note with a bank that charges you a 2% spread, you would personally receive a net take-home of $ 9,800 credited to your bank account.

What Your Bank Will Receive: Your Bank will receive a $ 10,000 credit to its Federal Reserve Account. They will also be able to add the $ 200 profit to their “capital account”.

If you don’t understand the “Fractional Banking“ concept that runs our country, you may want to, as that is what this is based on, and is what is behind this entire concept and plan.

Ultimately, the bank wins because they are able to gain $ 2,000 in lending power under the 10% “Fractional Banking“ model.

What the US Treasury Will Receive: First off, the US Treasury will receive $ 3,500 in estimated taxes in the quarter after the exchange, because you are now in the “rich” category and get to enjoy the 35% tax bracket. This lowers the “net cost” of the IQD exchange to the US financial system to $ 6,500 USD (i.e. $ 10,000 out – $ 3,500 in). Furthermore, the US Treasury’s rate is higher than the banking rate (we will use in this example 1.25), thereby further reducing their “net cost” from $ 6,500 to $ 4,000.

Oil Now Enters the Picture: At some point, a Fed-appointed agent orders $ 12,500 worth of oil from Iraq. Payment will consist of a $ 12,500 transfer from the Fed’s foreign currency reserve IQD account to the IRAQ Oil payment account at the CBI (Central Bank of Iraq) in a form otherwise known as Petrodollars/PetroDinar. Even though the world spot price of oil is defined in terms of USD, the actual transaction may take place in any internationally recognized currency agreed to by the parties. For example, Iran only accepts Yen from Japan for their oil orders, because they don’t want USD in their foreign currency reserves.

How the CBI “RECAPTURES” the Money: The $ 12,500 order is filled with 250 barrels of oil based on the spot price on the date of the sale (for this example we used a $ 50 USD spot price). What does it cost Iraq to produce the oil to fill this order? Well they have negotiated productions agreements for approximately $ 1.50 USD/barrel. From that price $ .50 USD goes to the national Iraqi oil company who is the partner in the field the oil came from. Out of the remaining $ 1.00 the other oil field partners have to pay the Iraq government a profit tax of $ .35 USD (35%). The net cost to Iraq to produce a barrel of oil used in this scenario is $ .65 USD. (i.e. $ 1.50 – .50 – .35)

What does all that mean? It cost Iraq $ 162.50 to bring back a 10,000 IQD note! Can they afford that? I think so! So, instead of paying out $ 12,500 for a 10,000 IQD note, they only pay $ 162.50! That doesn’t add to the money supply much at all does it! They receive their IQD back and place it in the CBI, or destroy it.

The transaction is completed with the Federal Reserve exchanging foreign reserve credits which are equal to $ 12,500 USD (which had a net acquisition cost of $ 4,000 USD for the US) for 250 barrels of oil (which has a TOTAL COST to produce of $ 162.50 USD for Iraq.

More completely explained, and simply put, it cost Iraq $ 162.50 USD from their foreign currency reserve accounts to redeem the value of 10,000 IQD, which goes into their operating accounts. At the same time the US got $ 12,500 worth of oil for a net cost of $ 4,000. That’s how it was originally planned for Iraq to RV at 1 IQD = 1 USD, with the variable being the political element (i.e. UN Sanctions, GOI (Government of Iraq) actions, IMF actions, World Bank actions etc.

Other Factors that Strengthen Iraq’s Position and Ability to RV: ■DFI (Development Fund for Iraq) Funds Returned & Other Assets: $280+ Billion USD, plus other frozen assets (estimated at $100 billion) will be returned back to Iraq and added to their foreign currency reserve, bringing it up to $430+ billion USD. ■CBI IQD Reserve Requirement Adjustment: The CBI will change the current fractional IQD reserve requirements from 100% to 15% at the appropriate time. As a result, the the total potential money supply will be raised in value to $2.8 Trillion (430 billion/15), while at the same time, the total physical IQD in circulation will be reduced by removing the large bills with the 3 zeros over a period of 2 years, as they have indicated. ■Oil Production Increased: Iraq will also execute the plan they announced to increase oil production from 2+ million barrels/day to 10 million barrels/day with the resulting revenues flowing directly to the Iraq treasury. ■Oil Futures & Forex Contracts Added: To further stir the pot, the CBI will continue to use it’s sales window to market oil futures and forex contracts. They have shown they can generate significant cash flow in the private market. Think of their impact in public markets. There, my friends, is how this plan will be enacted and made possible. Taking NOTHING, and turning it into SOMETHING, then bringing it back to a “manageable and reasonable something” that is accepted and supported by seeming endless supplies of oil. This is how the world’s ENTIRE NEW MONETARY SYSTEM will be regenerated and supported and backed, given, in essence, a re-birth and renewed for most governments and economic regions… even by “Black Gold”.
So, here’s the summary for all the “players” involved, giving ballpark numbers, and not taking into account superfluous costs, fees, and other small details that don’t really affect the larger picture:
■Investor’s Net Gain: $10,000 – $200 = $9,800 x .65 = 6,370 for an investment that cost $10
■Bank’s Net Gain: $200 added to “capital account”, plus $2,000 they can use to loan out.
■US Treasury Net Gain: $2,500 from the .25 spread on top + $3,500 in quarterly taxes = $6,000
■CBI/GOI/Iraqi People Net Gain: $12,500 – $162.50 = $12,337.50 + Profits from “Other Factors”
■Overall Net Gain for All Involved: $6,370+$200+$6,000+12,337.20 = $24,907.20
This is the wealth that was generated from a single 10,000 IQD note that was given an original value of approximately $10! Is that amazing or what?! You tell me… can Iraq afford NOT to RV?!!! Will the IMF allow them to NOT RV their currency, but simply replace their large denoms for smaller ones?!!!

Iraqi Dinar Currency

The New Iraqi Dinar does not have Saddam Hussein’s face on it. The old Dinar Currency carried the image of the now dead former leader of Iraq, Saddam Hussein. In 2003 the former dictator was put out of our misery and Iraq began to establish the country and government they now have. To learn more about the current situation in Iraq, and the current speculation regarding their Dinar, I encourage you to log onto www.loot4gold.blogspot.com daily for new information.

Loot 4 Gold's Iraqi Dinar Update

Welcome!
We are here to provide information and news on the explosive potential of the IQD!