ENORRSTE: How Iraq has exposed its plans from the beginning

[ronscarpa]

ENORRSTE: How Iraq has exposed its plans from the beginning

Get Site - Monday, 30 August 2010 at 12:02:55 AM

Once again I am reprinting some information that I posted elsewhere some time ago. I hope that it is helpful to all of you, including especially those who are new to this investment. Once you read this, even if in review, you will be convinced, as I am, that this is NOT a pipedream.

Here is the post I made several months ago:

How Iraq has exposed its plans from the beginning

Our friend hiltonhead05 has a thread in which he says categorically that what we are reading in the media regarding Iraq’s plans does not make sense. He further states that they just wouldn’t lay out the plan. It does not “compute”, as far as hiltonhead05 is concerned.

I would like to take you on a journey that will show just how the plan has not only been created and laid out publicly for 5 years, but also that it has become more and more specific every year. Finally, when the “chaff” is removed from the “wheat” by poor reporting or outright falsehoods, the picture we see is very consistent and should give you all a great sense of relief that this ride is nearly over.

We start our journey back in September of 2005 when an official statement was released to the media in which it was announced that Al Zubaidi, the head of the Ministry of Finance, had recommended to Shabibi, the head of the CBI, “Shabibi needs to raise the value of the Iraqi dinar and return to normal through the lifting of three zeroes.” In addition the article showed that the CBI, the Ministry of Finance, and the Central Bank would bring experts together and that “the proposals to get the value of the Iraqi dinar equivalent of [to] the American dollar, this goal we will strive to achieve.”

http://www.talkgold.com/forum/showthread.php?t=28719&page=44

In June of 2006, just eight months later, the original proposal was expanded upon just slightly by the Ministry of Finance and the CBI in a joint statement: “The Ministry of Finance together with the Central Bank are studying a proposal to raise the value of the Iraqi dinar in order to return it to previous levels where one Iraqi dinar was valued at 3.33 US dollars.” Further elaboration on the plan that was being worked on was also given in the same article: “A statement by B.J. AL Zubaidi, the Minister of Finance, in which he said that he had suggested to the Chairman of the Central Bank, Dr. Sinan AL Shibibi, that three zeros be taken from the Iraqi Dinar in order to raise its value so that one Dinar be equal to a Dollar.”

http://www.iraqdirectory.com/DisplayNews.aspx?id=1593

Then in January of 2007 Al Zubaidi, the head of the Ministry of Finance, in an article on the raising of salaries made this addition statement regarding the dinar: “Al Zubaidi emphasized that the Ministry of Finance and in consultation with the Central Bank seeks to identify the exchange rate of the dollar at 1260 dinar during this year. It also laid down a plan to restore the Iraqi dinar to its former era during the coming three years expressing his hope to stabilize its exchange rate at 1000 dinar for the dollar during the coming period.”

http://www.iraqdirectory.com/DisplayNews.aspx?id=2994

Here, interestingly, for the first time Al Zubaidi has given us a future time table for the RV of the dinar. He states clearly that the plan would come to fulfillment “during the coming 3 years”. Since he was quoted in January of 2007 we can now see, 3 years later, that the time of fulfillment is upon us. This is HIS words, and not mine.

Then in August of 2008 another statement was issued: ”Finance Ministry has prepared a plan to increase the value of the dinar against the dollar and then delete the three zeroes from the dinar's value to contribute to the advancement of the Iraqi economy during the coming period.” Here we now were able to see that there is an order of events that will occur, with the raising of the value of the dinar coming first, and then the “delete the three zeros” afterwards. At the time I’m sure that everyone invested in dinars wondered what “delete the three zeros” could possibly mean.

http://translate.google.com/translate?hl=en&ie=UTF-8&sl=ar&tl=en&u=http://www.foratnews.com/paper.asp%3FID%3D8383&prev=_t&rurl=translate.google.com&twu=1

The answers started flooding in finally just this last month. In early February of 2010 the following statement was made: “The Iraqi Central Bank is planning to redenominate the national currency in an effort to ease transactions and allow people to carry less paper money….. that a plan has been made to remove three zeros from the currency and phase out the current banknotes late this year….Salih said by the end of 2010 the new banknotes will be fully introduced while the old banknotes will be gradually removed from circulation…..Both will be legal tender in Iraq until the old notes are completely withdrawn….. but by dropping the zeros it will make it easier for both the banks to deal with their customers and for the general public to carry money.”

We were being given a hint as to the meaning of “delete the three zeros” in this statement. Yet it was still not quite clear to all.

http://www.rferl.org/content/Iraq_Pl...n/1950504.html

On the 10th of last month a further clarification of this long process was revealed: “The CBI begins the end of the year and gradually replace the currency now in circulation a new currency which zeroes deleted within the strategy to reform the monetary system started in 2005.” We finally got a clarification of the “delete the three zeros” meaning: it refers to the removal of banks noted with 3 zeros on them from circulation over the remainder of this year. Furthermore, the CBI was nice enough to refer back to the beginning of this long planned process, which it said was begun in 2005 and which we have now documented to be the case.

http://articlesofinterest-kelley.blogspot.com/2010/02/two-currencies-coexist-together-and.html

Remarkably another statement was issued on the same day, February 10:

“CBI begins the end of the year and gradually replace the currency now in circulation a new currency which zeroes deleted within the strategy to reform the monetary system started in 2005.”

http://www.azzaman.com/index.asp?fna…htm&storytitle

The very next day, on the 11th of February, Al Zubaidi backed up the statement from the CBI as follows: “this proposal by the Ministry of Finance to the Central Bank of Iraq was not affected increase or decrease but it is just delete the zeros vocation not only the case in many countries Noting that the Iraqi dinar would be offset dollar or slightly more than after the application of this proposal…. The proposal to raise three zeroes from the currency will be in accordance with the right monetary policy [and] is not gradual, as happened in Turkey and this policy will raise the monetary value of the Iraqi currency and will of the Iraqi dinar Strength of cash against all currencies.” Here we received another inkling of the rate for the RV. Whereas before we had two documents from previous years that indicated a proposed rate of over $3 for the dinar, this proposal is now stated to be at or above $1 for the dinar. From Al-Iraq News.com

Then on February 23 we received a great find from John1025:

“Finance Minister Baqir Jabr Al-Zubaidi: At the end of this year will see the current Iraqi dinar currency pair and the new Iraqi dinar, which is no different for the same amount, noting that the employee's salary is not affected by the standard of living….. This is not like the ministry, but the jurisdiction of the Central Bank independent of the ministry's proposal but it is the proposal I submitted to me three years ago, by deleting three zeros and the Central Bank studied this proposal and the bank's board finally approved by the end of this year we will see Ammeltian the current Iraqi dinar and the new Iraqi dinar, which is no different for The same amount will not be affected employee's salary and standard of living of the citizen with the survival of the dinar in the same Altdlol .”

http://translate.google.com/translat...%26tbs%3Dqdr:d

Not coincidentally, in my view, Al-Zubaidi refers back to the process that he mentioned 3 years ago, when he said that the plan would come to fulfillment in 3 years. He is fulfilling his own statement and stating without equivocation that the plan is right on schedule.

On February 28 we received the most detailed discussion of the “action plan” yet:

The Iraqi Central Bank defended its policy to withdraw by the deletion of zeros from the cash currency in order to reduce inflation, againt its critics [who say that it is] a policy that is "progressive" and long-term, although most critics regarded the policy as a unit, which the Economic Adviser to the Prime Minister called "in vain" and that it would cost the budget a lot but come to no real avail.

Central Bank adviser Muhammed Al Salih appeared to discuss the economic policy of the central bank for withdrawing cash from the local market due to the "inflation suffered by the money supply, which rose from 25 billion dinars in 1980 to 23 trillion dinars now. He said “it is important to reduce [the money supply]," noting that the process of lifting the zeroes is a "long-term policy adopted by the Iraqi government and the central bank, which will direct the project as soon as the development of the Iraqi economy warrants it, and that this may be this year or next and will probably require a longer time, depending mainly on the stability [of the economy] for the operation."

Saleh told (Voices of Iraq) that "there is no need to rush the process at the moment but at the same time it is required because the subject of reform will not change the value of the currency, except to make the bills smaller." He stressed that Iraq "During the next few years, according to the new development plan, will raise its oil production, and resources will increase significantly.” He added, “and we therefore need a strong currency and low [denomintated notes] at the same time, [thereby making them] easy to handle. "

http://ar.aswataliraq.info/?p=202726

Later that same day Dr. Saad Al-Hassoun Hayali, a spokesman for the CBI, gave this statement:

“[He added] that the policy of the Iraqi Central Bank [is] to raise and support the Iraqi dinar; [it] is very important in increasing customer confidence in Iraqi dinars, which contribute to increase the volume of foreign investment and local levels in Iraq, and [this is] the axiom of the theory of money, banking, currency and prestige of the state: [namely] when the currency weakens [there is] less prestige of the state.”

http://articlesofinterest-kelley.blo...l/Iraq%20Banks

And also on the 28th of February we received a statement from none other than Prime Minister Nuri Al-Maliki himself:

“Iraqi Prime Minister Nouri al-Maliki said on Sunday that the process to re-evaluate the Iraqi dinar has to do with economic conditions that have to be strengthened.

"’The Iraqi dinar has all the reasons to grow stronger thanks to an increase in revenues and development of the economy,’ Maliki said in response to some questions through the National Information Center.

"’The government would not rush matters but would rather work on finding all the guarantees to render this measure a success. The Central Bank of Iraq (CBI)Central Bank of Iraq (CBI) is currently entrusted with drawing up a study on the whole issue and would give its decision soon,’ said the Iraqi premier.

“The Iraqi dinar's exchange rate is suffering from low value against foreign currencies as a result of decades of wars and economic embargo that brought the local currency's exchange rate to the rock bottom from three dinars per dollar in the late 1970s and 1980s to 3,000 dinars per dollar after the 1990 invasion of Kuwait, followed by a 13-year crippling sanctions regime.”

http://www.zawya.com/story.cfm/sidZA...01/?query=iraq

On the following day, March 1, Shabibi gave a further clarification of the action plan:

“The governor of the Central Bank of Iraq (CBI) on Monday said that the current exchange rate (1,170 Iraqi dinars per dollar) is reasonable, adding that the bank has enough foreign reserves to defend the exchange rate.

“ ‘The CBI is adopting a managed floating policy of exchange rate, through which a reasonable exchange rate is fixed,’ Sinan Al-Shabibi told Aswat al-Iraq news agency.

“’The current exchange rate is reasonable and stable and can be defended by our vast foreign reserves, totaling $43 billion U.S. dollars at the moment,’ Shabibi explained.”

I have already explained elsewhere how I believe that this article has inaccurately stated the intentions of Shabibi. The phrase in parentheses was interjected into the article by a reporter, and was not stated by Shabibi himself. With its removal the intent of Shabibi is more clear. In addition, as I have argued, the word “current” is also incorrectly translated into English from Arabic and it should read “new” instead.

Therefore, I have argued that Shabibi has announced the final fulfillment of the 5 year “action plan” begun in 2005 and he is right on the schedule laid out 3 years ago by Al-Zubaidi in which he indicated in 2007 that the plan would require another 3 years to complete. Therefore Shabibi’s statement should correctly be understood as the announcement of the adoption of a new exchange rate for the dinar. As I have stated before, the only way in which the last sentence can have proper meaning is for it to refer to a new rate rather than the old (current) rate. Unless a new rate is being discussed the statement that it is “reasonable and stable and can be defended” has no bearing on the old rate whatsoever. The old rate is not only not reasonable, as stated by Maliki the day before as being “too low”; but it also does not need to be “defended” by huge reserves. The reserves of Iraq were only $11 billion just 3 years ago, and the rate was the same then as it is now (.00086). The increase in reserves therefore MUST refer to a new rate that is defensible by these reserves being in place.

Finally, today we received two articles that had to be quickly dismissed by the CBI. The first referred to a new rate coming out at 1000 dinars to 1 dollar in June of this year. The CBI flatly denied that this is in their plan and went further to state that “Iraq’s currency policies are far from such decisions.” By using the word “far” I can only assume that he is stating that the imminent RV will be much higher than 1000 to 1.

Steve

[Flamtap]

Thanks for the post.

[ha ha]

Thanks Prof, for the post

[Uncle Barkie]

An interesting read... thanks for the post !

[Dogmatic1]

The problem with Enorrste - HE LOVES TO HEAR HIMSELF, TALK! It doesn't matter that he's right or wrong, just that he's heard. After a while, it's like BLAH, BLAH, BLAH, BLAH!

Thanks for the post, anyways!

[truthseeker]

HOW DOES THE FOLLOWING CONTRADICT WHAT THY ARE SAYING

Currency redenomination is not a new phenomenon. It dates back to the 19th century but the most spectacular one was that of the German currency in the 1920s. According to Layna Mosley, “Among developing and transition nations, currency redenomination was employed on 60 occasions during the 1960-2003 period. These redenominations varied in size, from removing one zero from the currency (14 instances) to removing six zeros (9 instances); the median redenomination was three zeros, dividing the currency by 1000. Nineteen countries have used redenomination on one occasion, while ten countries have redenominated twice (sometimes, with many years in between, as in Bolivia, in 1963 and 1987; in other cases, redenominations follow rather quickly, as in Peru in 1985 and 1991). Argentina (4), the former Yugoslavia/Serbia (5), and Brazil (6) are the most frequent users of redenomination”.

In the ongoing debate about the redenomination of the Nigerian currency, some commentators have been using the terms redenomination and revaluation interchangeably, i.e. to mean the same thing. Technically, this is wrong. Currency redenomination is different from both currency revaluation and currency appreciation. In strict terms, redenomination does not increase the “value” (or strength) of a currency in relation to other currencies per se. What happens when a currency is redenominated is that some zeros are dropped in the official exchange rate at “conversion” date, e.g. one US dollar = 1.25 new Naira (NN) = 125 “old naira” (N) on August 1, 2008 (i.e. NN1.0 = N100.00). On the other hand, currency revaluation is an increase in the value of a currency vis-à-vis other currencies under a fixed exchange rate system, i.e. when the government or monetary authorities arbitrarily fix the exchange rate. For instance, the naira is revalued when the exchange rate is changed from IUS$ =N130 to 1US$ = N125, i.e. increase in the value or strength of the naira because you now need fewer naira to buy a dollar. Devaluation is the opposite of revaluation, i.e. a decrease in the value of a currency via-a-vis other currencies under a fixed exchange rate system, e.g. change from 1US$=N125 to 1US$ to N130, meaning a decrease or fall in the strength or value of the naira because you will need more naira to buy a dollar. The terms currency appreciation and depreciation are used to describe a decrease and increase, respectively, in the value or strength of a currency vis-à-vis other currencies under a floating exchange rate system, i.e. when market forces generate changes in the value of the currency. However, it is possible for currency redenomination to occur (pari passu) with revaluation or appreciation, for instance, if on the day of redenomination in August 2008, the new exchange rate is fixed 1US$=NN1.25 when the exchange rate just before the redenomination was 1US$=N128 (with NN1.0 = N100). Similarly, redenomination can occur with devaluation or depreciation if the exchange rate is fixed at 1US$=NN1.25 when the exchange rate just before the redenomination was 1US$=N123.

[truckerron49]

I am sorry Truthseeker, but your post totally confused me. Are you trying to discredit what Ennorste had to say?? Are you trying to educate us in Nigerian finance? Is this suppose to equate somehow to the Iraqi Dinar?? I know I have had less than one cup of coffee this morning, but I really just can't seem to wrap my mind around what ever it is that you are putting on the table here. Please elaborate if you will....Once again I apologize if I am just extra thick headed.....

[truthseeker]

truckerron49

Sorry dont mean to confuse. I try to get my information from other places than forums. That seems to explain what i feel is a valid point and when that point is posted it gets cut down as impossib le.

I says basically that if a currencey re-denominates and RVs on the same day it would not be the huge windfall that we all want. Only time wil tel but i am hoping for the best but planning for the following.

Lets say it redenominates on Friday and they pull 3 zeros and lets say you have 25000 dinars. Now the 25000 dinars is worth $21.36 usd. Now you have 25 dinar worth $21.36. Then they RV/RI to $3.22. Now you have $80.50 USD. You made a decent return but seems to me more plausable that that 25,000 worth $80,000 usd and that which i posted explains how this has happened in other countries. JMHO

[Trimark]

Why would the CBI be spending billions of dollars buying up the money supply if they were just going to reduce the value of the dinars in the end? That doesn't make sense to me.

[Doc31]

Why would the CBI be spending billions of dollars buying up the money supply if they were just going to reduce the value of the dinars in the end? That doesn't make sense to me.

Exactly ... and the math offered by truthseeker is backwards according to the post

Then in August of 2008 another statement was issued: ”Finance Ministry has prepared a plan to increase the value of the dinar against the dollar and then delete the three zeroes from the dinar's value to contribute to the advancement of the Iraqi economy during the coming period.” Here we now were able to see that there is an order of events that will occur, with the raising of the value of the dinar coming first, and then the “delete the three zeros” afterwards

Make the math match the statement ... the three zeros deleted AFTER the increase of the value. That indisputably puts you back in the relatively high RV area.

It's a solid explanation ... I wish the mods would pin it in the lop section so that we can refer Newbies to it each time they freak out over a LOP article. I get tired of explaining the concept and why it isn't pertinent. Additionally, we seem to always be fighting with the lopsters ... I have no desire to fight at all. It's just a review of the statements made by Shabibi et al

Truthseeker maintains that we aren't going to get $80,000/25,000 IQD ... okay ... that's one person's opinion ... but the statements made by Shabs and the gang refutes the $80.50/25,000 IQD note theory as well.

In most lop articles the person saying that it will lop ... simply doesn't have the juice to pull it off. Then one of these guys (in the article) comes out and says 1-24 hrs later ... "of course not".

Always look at the author of the article it is the largest indicator of what is real and what is not.

If you want to live in fear of the lop ... that is certainly your right to do so as an IQD owner. And won't lopsters be pleasantly surprised when it's waaaaaaaaaaaaaaaaaaaaaaaaaaaay better than $80.50!!!

Peace

Doc31

Thanks for the post!

Edited August 30, 2010 by Doc31

[lvbodyworker]

thanks

[quadraph0nic]

Thanks Ron. That was a nice read from E.

Truthseeker, u should research why countries redenominate and then ask yourself does that apply to Iraq. Also please make time and review scooter's analysis. Remember the investment takes patience and faith at the same u need to be good with the possibility of losing it all.