Kaperoni chat 04-26-10 part 2

[aszone]

[kaperoni] "The Fair will promote for the latest construction equipment in the world through the participation of 100 international companies from different Arab and European countries in addition to the participation of 50 specailized Iraqi companies inside and outside Iraq."

[kaperoni] again more great news

[kaperoni] there is another article that came out today about tariffs

[kaperoni] Tariff's usc73man/ Ministry of Finance: a new tariff will be applied next month and will raise the revenues ten-fold AlSumarianNews - 4/26/2010

[kaperoni] which will raise money for Iraq, but it is essence a tax on the merchandise

[kaperoni] and if it is taxed the price will go up IMO

[kaperoni] and if your poor, well, u get the picture

[kaperoni] this will be interesting to say the least, how they can tax merchandise coming into the country

[kaperoni] moving on..

[kaperoni] 2010 budget ARBIL / Aswat al-Iraq: Prime Minister of Iraq’s Kurdistan region, Barham Saleh, instructed all ministries to implement the 2010 budget in accordance with the instructions issued from the planning and finance ministries, according to a statement of his office.

[kaperoni] we got a article stating clear as day...2010 budget projects are going forward

[kaperoni] but how can they do this if the budget is based on a new rate of there currency?

[kaperoni] Again, I am not the expert on that budget, that is the gurus who have looked it over and said that it is in fact in the budget.

[kaperoni] but he makes it clear as day...

[kaperoni] another quote..

[kaperoni] “The region’s Council of Ministers held a meeting under Prime Minister Barham Saleh with the participation of his deputy Azad Barwari to discuss ways of implementing the recently approved 2010 budget and to approve special instructions in this regard,” said the statement received by Aswat al-Iraq news agency.

[kaperoni] Saleh asserted that the approval of the 2010 budget is a start of a new stage in the government’s work and a start of a wide-scale activity to implement projects and provide services to citizens.

[kaperoni] well...if the budget is based on a new dinar rate, IMO they must rv before they can use this budget.

[kaperoni] I got about 10 minutes more

[kaperoni] sorry

[kaperoni]

[dbcooper] kaperoni thanks Kap!! Great news!!!!

[kaperoni] i posted an article today again about the 3 zeros

[kaperoni] many of you read this as a LOP

[kaperoni] but you read it as if your in the USA and not as if your a Iraqi in Iraq

[kaperoni] Article 3-zeros...

[kaperoni] Project is to drop three zeroes from the Iraqi dinar Formality crowned the efforts of fiscal and monetary policies must be to reduce inflation

[kaperoni] Lets cover some stuff about Iraq

[kaperoni] First I think this article is meant to be a bit confusing...it is not a LOP...there is less that 3.35% right now. That is not a LOP situation as the article states with Germany etc.

[kaperoni] 3.35% inflation!

[kaperoni] that is nuts

[kaperoni] very low

[kaperoni] But also they state that they must move forward with the project with clearly is the introduction of new notes.. and the a statement regarding how this will play out for Iraqis.

[kaperoni] Here is the confusing part...

[kaperoni] " If a financial institution has granted a loan of ten million dinars When deleting zeros will recovered ten thousand dinars, which means the language of accounting loss for the lending institution the amount of nine hundred and ninety-nine thousand dinars. "

[kaperoni] This is correct, it is in the electronic form, not physical notes. If you bought a car for 1 mil dinars, post rv and the rv was 1 to 1, your balance on the car would be 1000 dinars.

[kaperoni] To an Iraqi, it is a LOP in essence, but the dinar they hold will retain it's value...ie 25k note is 25k

[kaperoni] but once in the electronic form, such as banking, loans etc. much change acordingly

[kaperoni] like i said above, it has to change or you would still have to pay a mil when the rate has changed

[kaperoni] There are many articles including Enorrstes who explain this better than i can

[kaperoni] lastly

[kaperoni] I will talk about the exchange rate

[kaperoni] lots of talk today about .26 cents etc.

[kaperoni] no way!

[kaperoni] and I can prove it

[kaperoni] I did not have time to get all the proof, but enough to show you

[kaperoni] What about the exchange rate? The Central Bank’s senior advisor Mudher Qasim also told Dow Jones newswires that taking three zeros off of the dinar would improve its value. If the currency is rebased and the zeros knocked off, one US dollar will be equivalent to 1.17 dinars.

[kaperoni] The WTO said, Iraq is joining the WTO (World Trade Organization) Article VI of the conditions for joining the WTO is that the country must have a fully convertible currency.

[kaperoni] The WTO has stated they need to bring the dinar more in line with the USD

[kaperoni] .26 is not in line with the USD

[kaperoni] The IMF have told the Iraqis to de-dollarize the economy.

[kaperoni] how does that happen?

[kaperoni] the dinar must be valued higher than the dollar to remove it

[kaperoni] Shabibi said they dinar will go on the forward market in the near future....low exchange rate would create rapid investment, and an unstable currency. Iraq will not position themselves for an unmanagable sitiatuion.

[kaperoni] I have brokers who trade currency and stocks..they are some of the brightest in the country...they said no way will this be less than 1 to 1.

[kaperoni] and lastly, we know for a fact what small denoms were printed

[kaperoni] We also know the small notes that were printed..... .25 .50 1, 5, 10, 50 dinars

[kaperoni] if they are not going to rv to 1 to 1 or higher, these make no sense.

[kaperoni] done

[Teresa82]

[kaperoni] "The Fair will promote for the latest construction equipment in the world through the participation of 100 international companies from different Arab and European countries in addition to the participation of 50 specailized Iraqi companies inside and outside Iraq."

[kaperoni] again more great news

[kaperoni] there is another article that came out today about tariffs

[kaperoni] Tariff's usc73man/ Ministry of Finance: a new tariff will be applied next month and will raise the revenues ten-fold AlSumarianNews - 4/26/2010

[kaperoni] which will raise money for Iraq, but it is essence a tax on the merchandise

[kaperoni] and if it is taxed the price will go up IMO

[kaperoni] and if your poor, well, u get the picture

great post thanks!!!

[SuperFlyJr]

I still don't see how going from 1,170 to 1.17 isn't a LOP, and one that brings it in line with the USD per the WTO's request?? I mean, I hope it doesn't LOP, but perhaps someone can explain more clearly how dropping 3 zeroes and going from 1,170 to 1.17 can be anything else? I want to understand.

[eastcreek]

I still don't see how going from 1,170 to 1.17 isn't a LOP, and one that brings it in line with the USD per the WTO's request?? I mean, I hope it doesn't LOP, but perhaps someone can explain more clearly how dropping 3 zeroes and going from 1,170 to 1.17 can be anything else? I want to understand.

SuperFly, currently 1170 IQD = 1 USD. If one were to RV/RI so that 1 IQD = 1 USD, then your 1170 IQD's become 1170 USD's.

Conversely, 1 USD = .00086 IQD. Now, drop the three zeros (this is where some are confusing the "lop" conversation) from the IQD rate, and you're left with 1 USD = .86 IQD. Those of us who've bought within the last year paid approximately that rate; approximately 1000 USD's got us 860,000 IQD. When RV/RI happens, that 1000 USD becomes 860,000 IQD.

[SuperFlyJr]

SuperFly, currently 1170 IQD = 1 USD. If one were to RV/RI so that 1 IQD = 1 USD, then your 1170 IQD's become 1170 USD's.

Conversely, 1 USD = .00086 IQD. Now, drop the three zeros (this is where some are confusing the "lop" conversation) from the IQD rate, and you're left with 1 USD = .86 IQD. Those of us who've bought within the last year paid approximately that rate; approximately 1000 USD's got us 860,000 IQD. When RV/RI happens, that 1000 USD becomes 860,000 IQD.

Thanks. I understand what you are saying and it makes sense mathematically, but that is not in-line with the context of the article Kaperoni was quoting. Here's the relevant section.

If the rebase decision is taken it means a current 25,000 Iraqi dinar banknote will become IQD25, and a dollar will equal only 1.17 dinars.

The bank said that knocking off three zeroes from the dinar would "improve management of the currency and facilitate cash dealing." The decision was the result of debate with the economic commission at the Iraqi cabinet, it added.

Currency rebasings are usually monetarily neutral and are introduced to make commercial calculations easier and cheaper. Turkey, for example, knocked six zeroes off its lira currency in 2005. Russia did the same for its currency.

Monetarily neutral is the part that concerns me. Perhaps the author was confused on the math, but they are clearly referencing a rebasing that is neutral and does not benefit the dinar (or us!). It might be a misunderstanding and the CBI meant removing three zeroes from the 0.00086 to become 0.86 but that is not how it was reported and/or interpreted by the Dow Jones author.

Yes, I know this horse has been beaten before considering the original article is almost two years old now, but if it continues to be brought up in chats I'd like to understand it and not let someone blow smoke up our butts! Of course, it might be (and probably is) that no one really knows for sure what is truth and what is fiction, but I'm all ears if anyone would care to take a crack at deciphering such seemingly straightforward statements!

[racbluto]

To turn a 25000 dinar note into a 25 dinar note would be a devaluation of the dinar. As well as suicide for there economy. So I believe any talk about a lop of 3 zeros would have to be after a RV/RI

and only meaning to pull those large notes out of circulation. JMO~~~~Bluto