Scooter Chat from Stardogger 07-05-10

[gina1exp]

[scooter] Good Evening Folks,

[scooter] I hope all had a wonderful and safe July 4th!

[scooter] There’s a couple of announcements I would like to make before beginning tonights dialog

[scooter] One, I wish to congratulate DBCooper, VoodooWar, and Tenmillion on the acquisition of the site!! They are tremendous people and I’m honored to call them friends!!! I suspect we’ll see great things from the site moving forward! Congrats again!!

[scooter] Two – I am undergoing an acquisition of my own this week so I will be in the midst of that transition . As a result, I won’t be here too much this next week but will resume full throttle the following week. I’ll be in the room, but they’ll be Drive-By’s and very short

[scooter] Now, to the topics for tonight – “What Exactly Happened on June 30th, 2010?

[scooter] 1. World Bank Activities

[scooter] 2. IMF Activities

[scooter] 3. Minister of Finance Activities

[scooter] 4. US Treasury Activities

[scooter] Here we go --

[scooter] World Bank DPL --- Page 111

[scooter] http://www-wds.worldbank.org/externa ... 0Use0Only1.pdf

[scooter] Iii. Financing and accounting

[scooter] A. Restructuring the balance sheets (including inherited debts and losses) On-going process

[scooter] Note the words On-going process

[scooter] Remember this plan has been

[scooter] evolving for close to 7 years

[scooter] evolving for close to 7 years

[scooter] The latest DPL was released

[scooter] in March

[scooter] with the following dates

[scooter] That's why you'll see the On-Going Process statements

[scooter] Nevertheless -- to the good stuff

[scooter] here's what they did

[scooter]  Define foreign debts of banks in accordance with the aim of reflecting the foreign debt settled in the banks’ financial statements

[scooter]  Transfer to the Ministry of Finance or establish contra-accounts

[scooter]  Ministry of Finance would take responsibility of part of the external debt

[scooter]  Ministry of Finance will negotiate for the remaining portion of the external debt with relevant parties

[scooter]  Define other debt and losses for making related decisions by authorized parties

[scooter]  Identify and agree on discrepancies and ways to eliminate undercapitalization of banks

[scooter]  Monitoring of banks’ foreign assets in foreign banks and foreign correspondents

[scooter] That's a whole lot of bullets huh?

[scooter] But they were absolutely necessary considering the massive disarray

[scooter] they were in

[scooter] In fact -- The regional

[scooter] reports give Iraq a D

[scooter] for their reporting --- That one

[scooter] needs to be improved

[scooter] and quickly

[scooter] here's some others related to capitol

[scooter] B. Capital Adequacy On-going process

[scooter] 1. Classification of assets and provision policy

[scooter]  Increase the amount of provisions in the profit and loss (P&L) in compliance with the audit results

[scooter]  Provide additional resources by the Ministry of Finance to the banks to be used for provisioning for NPLs

[scooter]  Account for NPLs that are not recognized in the current accounts

[scooter] This is the one I like the most however

[scooter] 2. Capital base On-going process

[scooter] Look at the word

[scooter] carefully

[scooter]  Reevaluation of the banks’ assets and take decision regarding non-strategic investments, rationalizing real estate properties of the bank in order to reduce the risk-weighted assets base

[scooter] See -- The IMF or World Banks

[scooter] Don't use that word EVER!!!!

[scooter] The speculators would kill the currency before it ever

[scooter] got started

[scooter] Another note from page 99 of this document that I wanted to share

[scooter] H. Credit Analysis and Portfolio Management

[scooter] The Ernst & Young asset quality reports show that loan loss reserves are largely underestimated (239 billion IQD for Rafidain Bank and 138 billion IQD for Rasheed Bank).57 In terms of capital adequacy, regulatory capital shortfalls –based on Basel II requirements and worldwide practices in terms of classification and provisioning of bad assets- may vary between 359 billion IQD for Rasheed Bank and 15.3 trillion IQD for Rafidain Bank). 58

[scooter] Now -- This looks like a bunch non related nonsense

[scooter] but look at the following footnotes

[scooter] 57 Amounting to US$ 204 million and US$ 117 million (IQD 1,000 = US$ 0.8521)

[scooter] Now please realize two things when you view this : One

[scooter] That’s the existing rate that we have now but it’s the first time they are showing it in this regard.

[scooter] And two

[scooter] This is a basis number: In English, it’s missing the major variables to calculate the REAL rate. For example the fundamentals and Geopolitical variables are huge!!!

[scooter] The IMF and CBI have chosen the 1993 SNA tools to determine the REAL rate for Iraq

[scooter] This is similar to what the MofP

[scooter] is using on their website

[scooter] at 1.13

[scooter] So don’t get yourself stressed out over that --- just noteworthy that’s all.

[scooter] Next

[scooter] 58 Amounting to IQD 306 million and US$ 13.1 billion (18.4 % of GDP—the 2008 GDP would reach IQD 83.6 trillions, ie. US$ 71.2 billion). The capital shortfall of US$ 13.1 billion (Rafidain Bank) is based on a number of adjustments which are likely to be required. Chief among these

[scooter] Here's another noteworthy item

[scooter] Chief among these is difference arising from the reevaluation of assets and liabilities denominated in foreign currencies.

[scooter] Again,

[scooter] That’s a very rare statement for any this institution --- The use of “Reevaluation” in any document is against major rules of engagement! Just noteworthy…

[scooter] Next, The IMF and their CR10/72 Document

[scooter] B. Monetary and Exchange Rate Policies and Financial Sector Reform

[scooter] Page 46

[scooter] This one is critical to understand: remember CPI – Consumer Price Index

[scooter] 21. The CBI will continue to be independent in the pursuit of its policy objectives. The CBI’s monetary and exchange rate policies will continue to be aimed at keeping inflation under control and safeguarding international reserves. The subdued inflationary pressures thus far in 2009 have helped to maintain the nominal exchange rate stable since the beginning of the year and to reduce the policy interest rate to 7 percent. The policy interest rate will be kept positive in real terms (measured against core inflation) to signal the CBI’s firm commitment to maintain a low rate of inflation. We are accelerating plans to roll out a new CPI based on more recent household expenditure data, which will help us better monitor underlying inflationary dynamics.

[scooter] Why is that important --- A new Consumer Price Basis is a HUGE component that will determine the rate --- It’s the variable that will help the IMF and World Bank solve Iraq’s poverty problem.

[scooter] Which is one of the five major Pillars of the DPL

[scooter] Now we’ve seen this before but needs to be shown again from the IMF’s stand point.

[scooter] The first important step will be to finalize the restructuring of Rafidain and Rasheed banks, based on their completed financial and operational audits. In this regard, the foreign liabilities incurred by Rafidain and Rasheed on behalf of the previous regime and the large suspense accounts will need be removed from these banks’ balance sheets. We aim to complete the restructuring of the balance sheets of Rafidain and Rasheed by June 30, 2010. Once their balance sheets are cleaned up and restructured, based on the decision already made by the Economic Committee, the capital of Rafidain and Rasheed will be raised to ID500 billion and ID400 billion, respectively

[scooter] First

[scooter] We aim to complete the restructuring of the balance sheets of Rafidain and Rasheed by June 30, 2010.

[scooter] That was the other day.

[scooter] Second and unknown just yet is this

[scooter] Once their balance sheets are cleaned up and restructured, based on the decision already made by the Economic Committee, the capital of Rafidain and Rasheed will be raised to ID500 billion and ID400 billion, respectively

[scooter] What rate is that 500 ID and 400 ID be at ? The new or old – We’ll find out.

[scooter] Here’s some other notes from Page 21 “Financial Sector Reform”

[scooter] The banking system is dominated by two state-owned banks, Rafidain and Rasheed, which account for 90 percent of total assets. Besides four other small state-owned banks, there are 23 small private banks that service only a small number of trusted clients. Capital markets, besides government securities, are almost nonexistent.

[scooter] Why is this important?

[scooter] Because 90% of Iraq’s banking system is being “ReFormatted” to meet International standards -- once they meet the standards --- then they can move forward with RV.

[scooter] Here’s another one

[scooter] The financial restructuring will first involve cleaning up the banks’ balance sheets and removing the legacy of bad debts and suspense accounts and working out the fiscal implications. During a second phase, the banks’ capital will be brought up to the required levels.

[scooter] I brought this up because I don’t want any confusion between the IMF phases and the World Bank Phases. We are now entering into the second phase for the IMF. Remember --- Currency gets recognized and sized up (RV) first then the stocks, bonds, equities at the ISX.

[scooter] Now to the Ministry of Finance and his comments in the news.

[scooter] Friday, July 2, 2010

[scooter] Iraq Baqir al-Zubaidi: economic successes in Iraq, the economic successes achieved ~ the Ministry of Finance ...

[scooter] Baqir al-Zubaidi: economic successes in Iraq, the fruit of the efforts of the Ministry of Finance

[scooter] Here's some noteworthy points in the article

[scooter] Al-Zubaidi and reviewed during Astkabbah to the American delegation led by Assistant U.S. Treasury Secretary Charles Colin economic relations between Iraq and the United States of America.

[scooter] You have to remember

[scooter] The US Treasury

[scooter] is the Government Organization

[scooter] that's been holding all those assets

[scooter] that are now being returned

[scooter] if all goes well

[scooter] On top of that

[scooter] Iraq wants a 400 million loan to help offset the crisis from 2009 budget

[scooter] here's another

[scooter] He referred to the cooperation with the World Bank through a program of economic reforms the Iraqi who arranged the standards related to the first review of the arrangements for retaining the International Monetary Fund, which will help pave the way for a study loan, the second development policy amount (250) million dollars of the amount of up to (500) million be submitted by the World Bank for Iraq.

[scooter] They also discussed support for the private banking sector to grow to ensure equal access to all the work and letters of credit with the government as the Ministry of Finance has achieved a growth in support of the private banking sector, where many credit the one that opens in private banks to four million dollars, that's a great achievement in support of private banks.

[scooter] First

[scooter] That 250 million

[scooter] is the first phase of the World Bank Tranche

[scooter] Second

[scooter] Their talking about the DPL and Private Sector Reform ----- Capitol and credit

[scooter] Here's another

[scooter] Also discussed the issue of advancement of the State banks by re-structuring and the introduction of mechanization in the modern work, especially the banking system overall to reach the ranks of international banks.

[scooter] We just talked about that

[scooter] Now were triangulating the information

[scooter] Here's the statement for the Strategic Five Year Plan

[scooter] Reviewed Zubaidi strategy budget for the year (2011 / 2012 / 2013), which demarcates the first time in Iraq to develop strategy and clear for the phased reduction of the deficit in the budget of Iraq Federal these years and limiting the benefits of highest production of oil to keep the security gains and economic gains made in Iraq.

[scooter] Last one

[scooter] He called for the importance of opening a branch of the World Bank in Iraq in order to promote confidence and the relationship between the World Bank, Iraq and create a predictable environment to support investment and entry of firms into Iraq.

[scooter] The Technical assistance to help follow through during the RV

[scooter] If they have received a D Grade

[scooter] compared to the region

[scooter] It won't be a request

[scooter] but mandated!!!

[scooter] Just imagine

[scooter] if you set a budget up

[scooter] and you were only 37% accurate in that budget

[scooter] You would be hung and fired instantly

[scooter] With that said --- I'm done for the evening

[Scooter]

Thank you for posting!!!

I can't believe how fast you got that over here ---- GREAT WORK AND THANK YOU!

Best,

Scooter

[hfdmedic]

Good stuff, Thanks Scooter for the info and thanks gina for posting.

[kox]

You guys are GREAT...Thanks for all you do.

[Traconesu02]

Thanks for posting gina1exp

[Trimark]

That's great info Scooter! Thanks for all the work you do and share with us.

[tenmillion]

The original link, ************, was removed from this post as soon as it was posted last night. Please give credit to the website where the chat originated.

http://dinarvets.com...on-other-sites/

This is a link to Adam's chat regarding posting.

Edited July 11, 2010 by k98nights
Link to outside dinar site removed

[pitboss]

Thanks for the post gina1 And Scooter thanks again for your insight.

[k98nights]

The original link, ***********, was removed from this post as soon as it was posted last night. Please give credit to the website where the chat originated.

http://dinarvets.com...on-other-sites/

This is a link to Adam's chat regarding posting.

It is our policy to remove linkage to outside dinar sites. Get over it or go away.