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rockfl9

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About rockfl9

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  1. The only real income Iraq gets is USD.. It can use USD to import things needed for the military or ration card items BUT it must pay salaries in dinar and to do that it must go to the banks and exchange dollars for dinar . That has been called an AUCTION in the past and it will continue in the future no matter what it is called. Right now things are closed up. But soon the people will need other items and will need dollars. I haven't seen what the latest HCL law looks like BUT the original law said that ALL crude production must be controlled by the central . That means the Kurds would have to surrender control of their oil fields ---- That was the sticking point. I DO NOT believe the Kurds would ever agree to that condition. Agreed they would Deliver a portion of the product But not control of the fields.
  2. I dont think the auctions will stop. The proposal is that control of the auctions move from the CBI to the MOF... Be careful here . The CBI was doing a good job keeping the rate stable which made it's major customers ( the importers) happy and rich. If the MOF takes over it will concentrate on meeting the budget for salaries etc. and DAMN the importers !! Also the MOF does not have the experience to run the auctions and we should expect some foul ups during the learning period.. Expect shortages of goods and unstable prices. Certainly the importers were cheating and the CBI probably know that .. But was aware that if they reported them shutting any importer down would not solve the problem and possibly their own employees were complicit. If this goes thru expect some interesting events .
  3. Continued. IF the bonds go into DEFAULT the CBI is BANKRUPT and thus would have no standing as an International institution. That is only a logical conclusion .. But in todays world some thing would have to serve as an exchange agent for the GOI at least on a cash in/out basis. Iraq's oil dollars would be collected and paid out thru Banks in other countries. I know I am painting a bleak picture for Dinarians to expect an RV of any size that would be profitable . But it is a cruel world .
  4. Iraq cannot create USD !!!! The CBI/MOF exchange rate is a MANAGED RATE. It really is NOT a true Pegged rate. If you opened eyes you would have noticed that the shortfalls in the last 2 budgets were covered by borrowing from the CBI reserves using dollar denominated IOU's … The hard currency is GONE $40 Bn worth. NOW the new government has used what was left to pay April and May salaries AND that wasn't enough so they used the reserves of the other two government banks as well. So in reality the dinar is now backed by $60Bn in GOI bonds that we know they in all probability will NEVER be able to pay off. However it is a legal move of sorts at this time . The situation will change if/when the GOI DEFAULTS and its credit status is JUNK. A managed rate can be anything the government needs to keep commerce moving INSIDE of the country. Outside the country the rate is set by the currency market on a supply/demand basis. Iraq is in a unique position in that it has never officially exchanged their currency outside of the country. So no one outside can demand an exchange of dinar for any other currency. This is the reason it is not on FOREX. AND may never be!!!
  5. I mean the bank reserves ARE ALL GONE. IF you read the fine print they were used to pay the May salaries. If you divide ZERO reserves by 88 Trillion dina the NEW rate is . followed by a LOT of ZEROS. When the dealers find that out it will be a fire sale.IF they have any to sell that is. What is worse is that the oil companies have not been paid so shipments will be constrained.
  6. I have to ask that question again. If the CBI wont buy back dinar from non-Iraqi's WHO will ????? WE get mixed reports of the status of the reserves . I have not seen a CBI annual report for the last 4 years , why not ???? Are they hiding something ?? We have seen articles but only vague statements by MOF that the amount is ADEQUATE .. I am not sure what that means in financial terms. The CASH window has been closed for several months now which means that Iraqi's out of the country for business or medical reasons probably aren't getting any dollars to live on. Those that were in school abroad probably were required to return home. The new budget will most likely be month to month.
  7. Not the reset the GURus were looking for. Instead of an asset based economy we have hell bent wide open credit bulge. The USA and EEC can do it because their bonds can sell. To combat CV governments are giving out money to keep people fed and housed while they self quarantine. This is a world wide economic bomb no one will escape. Iraq is broke and it's credit stinks. There is little help in sight. The best they have to offer is a measly 25,000 emergency hand out. THey don't have enough reserves to pay May salaries at the present rate. They could FLOAT but Abadi is right it would be a bad deal for poor Iraqi's . THe only option is to issue more dinar and forget about growing the reserves. YES it means devaluation in banking terms but for Iraqi's a reasonable solution for the short term. The first order is to save the country at any cost.
  8. The MOF will not have enough cash to fund the June salaries.. They will need at least 3 Trillion dinar. One option is to just create more dinar WITHOUT putting any hard currency in the reserves. A partial FLOAT. i.e. A DILUTION. Now they really don't have to create a lot more notes, since many Iraqis are on cards they can just post the amount on the cards and put off the pain for another month. Will that change the exchange rate ? Technically YES BUT they really don't have the reserves to cover the present rate they have been playing that game for a long time just have not admitted it. This will be the real test for the new PM and new finance minister. I wonder if they really knew what they were getting into.. This WILL put an end to the corruption because there is nothing left to steal.
  9. Think about this !!! Some people may prove to be carriers of COVID19 or some worse bug and never have any symptoms. note there are known to be hundreds of viruses present in animals but their systems simply ignore them. as long as they stay in the animal they can continue to reproduce . What if we find some humans that acquire a virus and continue to harbor it and spread it to others who can get sick. Can we quarantine such people forever ? How would we detect it should they violate the quarantine ??? Could we legally tag and isolate them ?
  10. Hi EV, Dinarians do have a problem using numbers. Worse with facts behind the numbers. This whole RV thing is the original conspiracy .... The more unknowns there are in a situation the easier to promote a conspiracy. But using Occam's Razor you can boil the RV to just one question that is " to support a one cent RV a multitude of people would have to surrender $10,000 to buy a MIL IQD!!!! I don't see a single one. THEE Conspiracy theory here is that they will simply go to a bank and the bank will be the buyer for some unknown reason. If there are not private buyers the bank is not interested.
  11. Written like a true engineer/problem solver this article gets it almost right. It is true that by artificially keeping the exchange rate high the MOF/CBI has held commodity prices low and held inflation down. Looks good on paper but as we see now has long term consequences. But this has resulted in almost total dependence on imports stifling the Iraqi private sector. If they let the exchange rate decline imports prices will rise and some Iraqi's may produce items locally, resulting in gradual self sufficiency. BUT the real ruling class in the country are the rich importers . They use dollars to import, resell at a profit , take the dinar to the CBI for dollars and do it over again. The overhead is low margins are good . Generally they do not want to compete with locally created products. Also they are skimming off dollars in the process. The problem must be solved thru education and training. but that would take government foresight like our STEM program. Today the typical Iraqi trains for a government position which usually doesn't have a private counterpart. As the engineer in the article says it is a chicken and egg problem. The GOI must kick things off by finding products that will solve the problem and make that a national priority. To do that they will have to attract outside talent and pay them to provide the necessary expertise . SA, UAE and Kuwait did that 20-30 years ago and now they have flourishing private industries.
  12. THINK ! The GOIs problem is that it is not getting enough dollars to convert to dinar .... Their payroll is not getting smaller. . SO Reducing the exchange rate to less than the current 1190 will NOT solve that problem.. They need to increase the rate to say 2500:1 or Cut the payroll in half. Can they just lay off half the people ? I dont think they have unemployment so they would have increase in welfare. OR actually cut salaries in half. Both would cause more civil strife. They already have cancelled all public projects , so that means most contractors are out of work. .
  13. Iraqs goose (oil income) is cooked. CBI/MOF policy has been to stabilize the exchange rate using CBI reserves. A ploy to keep the citizens happy and the elite business men rich was wasteful. i.e. corrupt. It should have been stopped years ago . Now the fix , if possible , will be painful. Cutting salaries and removing subsidies Is essential. I can suggest one quick solution . Simply double the exchange rate to 2400:1 and release more dinar. Prices of everything imported will gradually double but will give the GOI some time to work on the solution. I am surprised to not see any reports of the death rate in Iraq !!! I dont know if it is censorship or they dont have an organized system to report the dead.
  14. Wonder why they put this out now ????? Note they dont give numbers. Didn't give anything of performance during Sadam years or that Sadam Jr. made off with a couple billion USD just before the war ! I have a suspicion that the CBI knows that a lot of dinar is being leaked out to the world. They may be doing it . Why not ,they can always print more at 6 cents per note ! They say the reserves are ADEQUATE ! What does that mean?? I think they are raiding the reserves to keep the country afloat ... Has anyone seen any recent numbers on virus deaths ? the last I saw was 100 back in February... I smell heavy censorship..
  15. A line item for what ? INCOME from a resource ( oil, gold or iron ore ) is money in the bank . In the ground only future income recognized when sold. As a currency investor it would be the gamble that it will eventually become income and reflect some future profit. What is that risk? Will the country be able to capitalize on that resource ? Will it expand the production ? How long will it take ? Iraq is on the brink. Government is not functioning. Income has fallen to just enough to pay salaries , nothing left to fight Coronavirus.. There have been no regular auctions because at least the MOF knows it needs to stockup on dollars . There must already be food and medicine shortages prices are rising (inflation). If they stop paying their first-responders will they take the risk and continue to serve? We may be looking at a different Iraq next year.
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