Enoch8 post...Dedt forgiveness & credit rating

[lgraham]

This is the kind of analysis that makes the most sense to me. If everyone is looking for the 2011 budget to be read three times and the WHAM! the RV happens, well you can forget about that. If everyone is looking for the same thing, we will all be disappointed. I believe we should be looking for the ratification of the lifting of the chapter 7 sanctions by the Iraqi parliment and then the 2011 budget followed by the international change of Iraq's credit rating. All of which should happen by the end of this month.

All the best,

Lgraham

Having read the Paris Club pdf, forwards and backwards….. I can shed a bit of light on this.

It is important to understand 1st, why this is important.

Iraq has been under a Grade C Credit Rating, which is why the money has not been recognized, as of yet. In order to be recognized, that rating must be increased. That is what I believe is happening now, and why it is critical, that Chap 7 Economic Sanctions per UNSC Resolutions, 687, 661 and 707 were lifted, as of Dec. 15, 2010.

OK, so why didn’t it RV, yet?

The Credit Rating with World Bank, IMF, BIS and the US. It is as simple as that.

Understand, that the Paris Club is a 19 member group of Official Creditors, who are also members of WB and the IMF.

Look at the Paris Club agreements like this…… It works similar to a Chapter 11 Bankruptcy .

The Paris Club Debt Total was about $42 Billion US.

Total outstanding debts (including Paris Club) was about $132 Billion.

There were 3 stages of debt reduction, from 2003 – 2005, 2006 and 2008.

During that time, additional reductions have been ongoing, for Non-Members and corporations, that amounted to about $90 Billion (est.)

Much of that has been forgiven.

The $7.8 Billion just forgiven, was most of the remaining of the 19 Official Creditors, of Paris Club, but does not include the Non Paris Club debt.

It has been 7 years, and this is a form of Jubilee, with the Official 19, meaning the 7 year Statute of Limitations, recognized in many nations, including US and many world courts.

What that means, in legal terms, is the Statute has run, as of the end of the year, 2010.

{Now….. this is some theory on my part, but based on looking at the documents, I think it is at least partly correct, in principal. The point being, this has more to do with credit rating, than anything else.}

There is a payment and debt servicing plan, that is set up, with a 1 year, grace period, that begins, July 2011, with annual installments, at adjustable interest rates, factored with the prices of oil, against the US Dollar, and final payment, in the year 2037, ending 3038.

The remaining balance, as of the year 2011, was estimated at $92 Billion, but it is already known, that negotiations, with Non Members, such as Saudi Arabia, Kuwait and others, has also been reduced, by negotiations. The actual amounts remaining, are in question, because Russia, Romania and others, are not factored into the model….. only estimates…. and much of that money is still in negotiation.

Now…. I come back to 2 main questions.

1. How does this affect the International Credit Rating of Iraq?

2. How would it affect the RV?

Answers:

1. The Credit Rating of Iraq, should be upgraded, as of this year, just as yours or mine would after 7 years, in Chap 13 or 7 Bankruptcy.

2. The affect on the RV would be in 2 parts, to this question:

Part 1: The outstanding Balances of the plan, is less than the last year’s GDP, and the projections of the GDP are expected to increase, dramatically, so the debt to ratio, for Iraq, should have a very positive effect, on the actual World Credit Rating.

Part 2: The ability of Iraq to repay the remaining negotiated balances, should be a no brainer…. because the vast oil reserves, projected Foreign Reserves and account balances, huge sums of wealth, withheld in trust accounts, projected non liquid assets, non convertible currencies, non mint precious metals, previously blocked accounts and frozen assets, etc. etc., ( These amounts are vast, in comparison to the remaining outstanding debts.)

So….. my final estimation is simple. Iraq is simply waiting for a 2011 Budget and the final reports from 2010, before the Official Creditors and World Banks, upgrade the credit rating and IMF upgrades the Article XIV status, to Article VIII compliance.

The RV is 100% dependent on the World Recognition and Credit Rating.

That is what we are waiting for.

So…. there ya have it.

Now I ask….. is it done?

Not until the Budget is final and the 2010 reports are submitted to the IMF, per the SBA and Article XIV provisions.

How long does that take?

I think, with this new government, it will happen really, really, fast….. by comparison to the last, do nothing Parliament …… especially, I am hopeful with the replacement of certain Ministry positions.

This is why I personally choose not to get wrapped up in all the hoopla, with rumors and so called intel.

I seek truth.

If I were to give an ETA……. I would say….. give it a week or 2 and let’s see how the Parliament does, getting the Budget together.

It is not that the RV is in the Budget…… but that the Credit Rating depends on the passage of it and those end of year accounting audits and 2010 Statements.

Want RV????????? Think Credit Rating. The RV is 100% dependent on that rating.

Credit does not change, just because a country decides to set a new value on currency…. it does not work that way.

In order to increase the value….. it must first HAVE VALUE.

Without the Credit Rating to be recognized….. it basically has NO VALUE, as far as being convertible, by world banking standards.

That rating cannot be changed , just by revaluing. The reverse is true. The Revaluation comes from the Rating First….. then the Value will be adjusted.

I know…. that is not what many wanted to hear, but I am interested in the truth…. not hoopla….. as much as I would love to see an RV at $3.42, today……. It will happen, in divine order. I would not be invested, if I did not believe that is true. It WILL HAPPEN…. and in my estimation, very soon.

[Darin]

Great post, so what is your guess / estimation of what the value will become? Over $3 to the $1USD? Or smaller and gradually increase over time?

[Vegas75]

I think this is almost the best info related deduction of the situation regarding the RV I have yet to read. A tip of my hat to you sir.

[Darin]

I think this is almost the best info related deduction of the situation regarding the RV I have yet to read. A tip of my hat to you sir.

I know.. I like reading it, because it puts all the pumpers w/ not much to say...

Ya know? I'd rather wait it out to the time frame posted above to see what flows.

[ktlamm]

Thanks Lgraham this is a very interesting thought that seems to make sense. Thanks alot.Great work

[cgbrown]

Now, that's worth talking about.

[Moe485]

Thank you so much for this post and your opinions about what is happening now. This is the the kind of posts we need more of. People who the time to research things and come up with educated opinions based on what they researched. once again thank you.

Edited January 4, 2011 by Moe485

[slatesrh]

Great info Thanks for the post!!!!!

[razorguy11]

Thanks for the post!

[terr]

Interesting post, thank you, does make sense. Hope this ride is over real soon. What does the credit rating need to be? to RVVVVVVV?

[kjwayne]

Great post! You nailed it ! Enuff Said!

[Econman33]

Great post.

[lechesuerte]

Thanks to lgraham for the informative and thought provoking post! And a special thanks to Enoch8 for the research and educated theory & conjecture. I like the path we (Iraq) are on even if it is not happening as quickly as we all would like. GO RV !!!

[Bull Dog]

Thank you for the post but can we put the word SOON away for awhile and attach something a little more concrete to it! That word has been beat around so much it's taking me downnnnnnnnn.

[Doc31]

Thanks for the post my friend!

[tjmac]

Thanks....Great Post....

[Jim1cor13]

Thank you lgraham for the quality of the information .

It is much appreciated my friend.

All my best!

Jim

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[cgbrown]

Adding my thanks for the post too.