CBI Boosting liquidty!!!

[rockfl9]

What this means. Going to allow banks to obtain foreign currency to make loans directly to investors to kick start the private sector. Also looks like they may denationalize some parts of the public sector to improve services ,like electric, water , refineries etc. Transfer some payrolls from govt to private.

Just my guess. But a good plan.

[Texstorm]

You're on a roll Rock ! Keep it going ! 

[zzztop]

I never thought you belonged in the tank Rock!  I would reach in and pluck you out if I could but Keepm would probably snap my fingers off.

[rockfl9]

I'm just trying to make business sense out of the announcements. 

Abadi owned an electrical contracting firm in england .. He knows how the capital system works. It is, I think, his version of a stimulus package.  

The budget wont support needed projects by itself. There would be increased unemployment resulting in increased welfare and poverty. 

Does this have anything to do with a bump in the exchange rate . I think not . BUT It could prevent things from getting worse.  at least would hold up the current exchange rate .

The problem I see is the skills are not there for any new industry. This may bring some in.

Note that the oil industry got kicked off with CPA/US help .  Few locals knew what to do. For the most part still run by foreigners.

Restoring the electrical system got started by the CPA, but when turned over to Iraqis it stalled.

Looking  for more details.

[dontlop]

"Central Banks Cannot Create Wealth, Only Liquidity"

Central banks cannot create wealth, only liquidity

Many observers assume that, once bad debt is purchased by the central bank, the debt crisis is solved for good. The implicit assumption is that central banks have unlimited wealth at their disposal, or can print unlimited wealth into existence. However, central banks can only create liquidity, not wealth. If printing money were equivalent to creating wealth, then mankind would not have to get up early on Monday morning. Quantitative easing just transfers losses from the previous holders of the assets purchased by the central bank to the central bank itself. Up to a certain amount, the central bank absorbs these losses by sacrificing its equity and accumulated profits. Losses exceeding the central bank's loss-absorption capacity necessarily lead to inflation.

http://www.zerohedge.com/news/2013-02-26/central-banks-cannot-create-wealth-only-liquidity

There's a lot more on the subject on the link provided

Gold - The Ultimate Balance Sheet Equalizer

In many Western industrialized nations, debt has overwhelmed or is about to overwhelm the economy's debt-servicing capacity. In principle, debt is not a negative if incurred to finance sustainable investment, the profits of which can then be used to extinguish the debt. However, borrowed money has increasingly been mal-invested or spent on consumption in recent decades. Mal-investment impairs the productive capital stock, and the growing debt burden strangles economic growth even more. When financial markets realize that the emperor has no clothes and interest rates rise, the economy is exposed as insolvent, and a debt crisis follows.

[rockfl9]

Increasing liquidity???

We may see more frequent auctions.

More banks and financial firms allowed to bid!

Rasheed and Rafidian allowed to Convert their reserves to bonds ( i.e. puts their value into circulation. )

 

Actions to reduce deficit means more unemployment unless they kick start the private sector.

[dontlop]

You don't remember everyone getting excited when the cbi was going to reduce liquidity last year about this time ?

They were going to sell gold to the citizens thru the cbi to remove liquidity

Oh it was a cheerful moment

Finally they were talking about removing some of the trillions of dinar

Now they are talking about printing up more to cover the debts of the budget as a tool and everyone is cheering as if this means it's going to rv

I saw one person say yesterday that he felt it would be this morning

That same person was cheering the reducing of liquidity was now cheering the increase of liquidity

I guess he's just a cheer leader that really doesn't understand what's going on . If one person is cheering he just runs and jumps in and cheers along

I think they will make it easier to sell off cbi assets to cover the absorption of govt debt

That's what they mean by making currency sales easier

[rockfl9]

"Central Banks Cannot Create Wealth, Only Liquidity"

 

Right!

The auctions are smaller because the GOI has frozen all but essential spending. Trying to live within its means (oil income). But that creates unemployment.

This ruling from the CBI allows banks to convert local reserves to loans. That will put money into the local economy to fund private or private-state projects to create jobs. 

At same time loosen up the process to convert these loan dinar to dollars in order to import the equipment these projects might need .

This the same process as  the US "shovel ready" grants of 2010!

The risk is that the loans will pay back in time.

[rockfl9]

Limiting the auctions is only temporary. banks will still be able to issue letters of credit to legitimate dealers/importers outside of the auctions. In fact it might improve smaller transactions.

 

I think it has always been illegal to take dinar out of the country.  But there was money to be made and corruption abounds. Now even to bring it back is illegal?

Think of the implications for banks/dealers if an RV/RD were to occur!  If they were to RV today it would be limited to dinar IN-country only...But if money could be made to smuggle it back would just be extra expense. But no legitimate bank would get involved.

 

Looking at the process and expense to visit Iraq I dont think it will become a tourism haven.

[dontlop]

Why would a bank accept iraqi dinar outside of iraq ?

165 out of 184 countrys have accepted imf article 8

Article 14 is the transitional phase meant for transitioning I to article 8

Iraq has been in transitional phase forever

So they are not at this time willing participants

I quite frankly didn't think they are intelligent enough to understand it

Once they accept article 8 they can never return to article 14

Iraq is like syria

Do ya think banks accept Syrian money ?

They are under IMF article 14 also

Edited February 5, 2015 by dontlop

[dontlop]

Where's the rv

I was told to shut up , to get out of Here , told no one wants to hear you

Told I don't know what I'm talking about

Those people know who they are , so what about you , jan1 st wrong

Jan7th , wrong

Jan, 15 wrong

Jan, 22nd. Wrong

Feb 1st wrong

And that's just last month

This crap has been going on for ten years like that

And we are there every time for every reason under the sun except for the monetary policy

Ignore monetary policy and the regulations involved in monetary policy

Is iraq close ?

I don't see it

Don't see it at all

I see them in worse condition than they have been in years

And it's all tied to the cbi and the goi it's not one person that you can blame or say one peticular person is holding up the great rv that's going to save the world but maliki is holding it up

Lies that's what that is just plain ole lies

Iraq needs to transition into imf particle 8 before their currency is excepted internationally

They got to maintain 2% in the exchange rate

Two percent of 1166 is 23 dinars

Monday it was 1260

That 94 dinars or around 8 percent

They can't transition into imf article 8

Once you accept article 8

You can never return to article 14 again

.

Edited February 5, 2015 by dontlop

[rockfl9]

Financially Iraq is not in a position to do anything. 

We will see what the new plan is in the next 10 days , maybe.

Then the site will take the next 30 days figuring out the Arabish!

[dontlop]

http://dinarvets.com/forums/index.php?/topic/196767-cbi-borrow-six-trillion-dinars-deposited-by-commercial-banks-have-reserves-to-finance-the-budget/

Looks like the cbi is borrowing money from the comercial banks now

This sounds like saddams regime

[rockfl9]

The local banks have their reserves on deposit with the CBI.

I think they are converting those to loans and now the local banks can convert then to commercial loans for projects.

If handled efficiently it will get them thru the next 2 years. 

[dontlop]

The CBI has decided to finance the state budget with a loan of six trillion dinars, through the operation of 50% of the deposited by commercial banks reserves has, and the repurchase of treasury bonds from the secondary market.

According to a statement of the bank it will buy about five trillion dinars, of which the first stage, and then to run 50% of reserves deposited by commercial banks has, and re-buy Treasury bonds from the secondary market, that these measures do not affect your Bantrza reserve in excess of $ 70 billion, the financial support of the budget and try to reduce the deficit. As well as enable them to provide housing and real estate loans for industrialists and farmers, support economic activity and job creation.

Read more: http://dinarvets.com/forums/index.php?/topic/196767-cbi-borrow-six-trillion-dinars-deposited-by-commercial-banks-have-reserves-to-finance-the-budget/#ixzz3ROZimBAs

Ok so the cbi is loaning the goi money to pay for the budget

It's borrowing some of the comercial bank deposits and selling bonds to raise the money to loan the govt

I read it wrong the first time

[dontlop]

No wrong again

The goi is selling bonds to the comercial banks so that the cbi can buy them from a secondary market because the cbi isn't allowed to loan the goi money directly

So the loop hole is applied

The comercial banks buy the bonds and then sell them to the cbi and whamo! See they didn't buy them from the goi

They must be learning from Wall Street

[rockfl9]

DL::: But very unusual. CBI must buy only very low risk securities .. So they are letting the small banks make the loans ( take the risk of loss ) . But if enough loans go sour they are bankrupt and the only CBI recourse is to be the top lien holder . If any money is left??? 

[dontlop]

Money can be created

It's whether or not they can capitalize on its use

Read up on the beginning of the green back in the usa

But we capitalized on it and built it up over a hundred and fifty years

Out labors made it strong and continue to do so

Gold has since become a commodity it's no longer money

We are educated from our fathers to get up in the morning and go to work

This is what makes america strong

We have the liberals who believe in environmental conservation so they fight for policy's to slow growth

Ie. ,,,, less trees cut down ,, less pollution Ect.

So our growth is regulated

We live on the edge because of it

They believe in spreading the wealth

So entire industries are relocated around the globe

They claimed steel mills were terrible places and sponcerred environmental groups to go out and protest

The steel mills didn't disapear

They are in other country's

Same with coal its filthy and causes global warming so we sell our coal over seas

It still burns over there

As long as it's hidden they were successful in wealth distributiin

So if iraq just creates money and uses it for consumption , eventually the money will be gone to exporters from around the globe

And all the dollars they get from oil sales will be shipped right back out of iraq