Investing in the Iraqi Dinar: What do we really know?

[Enorrste]

Due to the large size of this site I have elected to take the advice of some people from last night to post on the forum the information that I wish to impart.

I have written a book on the topic above. I will post the introduction and then post each chapter in succession until I have posted the entire book here. There are 14 chapters to this book. Some posts may be broken into several parts due to length.

I hope that my effort will stimulate discussion in chat. If it does I will gladly participate. If, on the other hand, it doesn't then at least you will have the benefit of my research here.

The first post will be the Table of Contents and Introduction, which follows just below. Then I will post tonight the part that I dealt with in chat a few days ago. Finally in a third post tonight I will post what I wanted to present last night but was not able to do. Hopefully it will lead to a spirited discussion.

Table of Contents

1. Introduction

2. A Fresh Beginning

Finding Ground Level, once and for all!

3. The Next Step to Truth

What is

[Enorrste]

2. A Fresh Beginning

We start with the post I made one day after the “award winning” summary post:

Finding Ground Level, once and for all!

I have decided to indulge myself to try to present a unified statement the current situation and where the pieces are starting to fit together.

[Analysis]

It is now evident to me that the RV is part of a large political process for the people in control in Iraq. At the same time it is also a part of a very important process in the goings on within the UN. And, finally, I have come to believe that it is going to turn out to be a seminal portion of the US government strategy, inherited from the Bush administration but delightfully now obtained by the Obama administration.

Shall we begin?

The RV event, as I will call it, has had a number of pieces to it that have come to light in the recent past. We can easily recall them: Chapter VII, GCC membership, IMF goals, US Govt involvement due to the war, China as a quickly rising world power; the upcoming Iraqi elections; the Exchange Rate Mechanism (ERM); the new IMF loan.

Now all of us are familiar with these concepts and have heard innumerable explanations as to how they fit into the big RV picture. And with the same familiarity we have seen these scenarios fall by the wayside, one by one. The reason is simple in hindsight: most of these scenarios don’t have enough fact in them to support themselves; so they collapse under their own weight.

What I want to accomplish for us all in this post is to build the grounded base that we have all chatted about on a very solid footing so that we won’t have to cover the same ground again. But more than that I want us all on the same page so that as new information that is backed by a document becomes available we can place it onto our foundation of truth and be able to be confident in it. This would place us uniquely above the blogs and position us to possibly actually know what is going on, if not what is going to go on.

So the goal here is to begin by building blocks of truth, a foundation of knowledge that is irrefutable on which we can add layers as events continue.

Of course the problem arises that we are dealing with Arabs and we have all come to learn that their reasoning doesn’t follow our own. So we have to proceed with caution, knowing that no matter how logical WE are, they may have a different logic that could throw us off track. Clearly that is what has happened over the last 2 years as we have expected at every turn that any single item was the last one needed before our coveted prize presented itself.

So let’s begin to build our foundation of knowledge. What do we really know?

Fortunately we know that the Iraqi government and the UN have stated that there is a clear intention to revalue the dinar in the foreseeable future.

We know this from two documents from legitimate sources. This is our starting point.

[Fact]

The first document comes from the United Nations itself. I intend this to be the “ground level,” so to speak, and a reference document that will be the “source” document for what we know to be the case.

Here is the link:

http://www.un.org/News/Press/docs/2009/gaab3917.doc.htm

This link is the actual UN document that says that the UN intends to increase the value of the dinar.

I presented my “brief” on this in the post at this link, which you have all probably read:

http://ragtime2bigtime.com/showthread.php?t=1161

I will attach my summary of that so we are all together:

[Analysis]

What does this mean? Here it is: the UN is trying to more equitably assess dues to its members. It wants to base those dues on the most recent gross national income available and use market exchange rates wherever possible. In the case of Iraq, however, a decision was added to “adjust the market exchange rate for Iraq” in order to get their dues level commensurate with their income.

Now this is the significant point: the UN is clearly deciding in this document that the dinar has to be revalued in order for Iraq to pay its fair share of UN dues. I see no other explanation possible for this statement on Iraq.

We now can establish that the UN is “on board” with the revaluation of the dinar. Admittedly it is for reasons of its own; yet the fact remains that it has “decided”, in its own words, to do it. This is key, since when this was written last summer the UN was in control of Iraq. What is said then will indeed happen. After all the UN still controls Iraq.

[Fact]

Fortunately we also have internal Iraqi documentation that backs up this statement from none other than Nuri al Maliki himself, the head of the government of Iraq.

The link is as follows:

http://www.dinarrumor.com/showthread.php?t=10647 (This is copied from the actual resolution into DinarRumor)

The key statement from Maliki is here, dated 13 December 2009, only 30 days ago :

During the remainder of 2009 and in 2010, we will take action to recover the international financial standing of Iraq while at the same time managing oil and gas revenues in order to benefit the people of Iraq.

[Analysis]

Recovering the international financial standing can mean nothing other than revaluing the currency to its former level prior to the Hussein regime.

We are now in a position to state without hesitation that the RV will occur and that it is in the interest of the UN and Iraq that it occur. In addition, since the UN document refers to dues coming up in 2010 we know that the RV will occur before the dues are paid. And finally we know from Maliki himself that his intention is for this to happen either at the end of 2009 or in 2010.

The fact that Maliki mentioned 2009 or 2010 only 17 days before the end of the year is a clear indication that the RV is imminent. If it were not he would have said “in 2010” instead of what he said.

We are firmly planted now on solid ground. From clear documentation from the international organization as well as the in-country head we know that the RV will occur in 2010 and most like early in this year.

But more than that, Maliki was prepared to do the RV as early as the end of 2009, so we can say with confidence that the RV is “at the door”.

This comes from no rumors or “higher ups” or blogs. It comes from two documents only, both of significant authority. We are on solid ground.

Having established, therefore, that it is the intention to RV the dinar and that it is the intention of the head of Iraq to do so in the very near future we need to see how he might accomplish this from documents, to ensure that his statement to the UN comes to pass.

We can do this quite simply and without having to resort to loans from the IMF or expiration dates of a programmed rate or even loan payment deadlines. All we have to do is look at the documents and figure out what they mean and how they apply.

[Enorrste]

[Fact]

The following post helps us to understand what they mean and how they apply:

Conscious / MP Sabah al-Saadi: In the Absence of Approving the Budget, the Government Would Resort to Exchange Rate Mechanism in the Next Week

Conscious / Baghdad / p. X

5/1/2010 6:50 pm

The Attorney-Sabah al-Saadi on the mass of virtue that not approving the budget means to give the opportunity for the Government to find the exchange rate mechanism, especially in the twelfth of this month for the maintenance work of the ministries and government institutions.

Saadi said in a telephone conversation with (the Iraqi Media News Agency / conscious) that "the linkage between the law of the Federal budget for 2010 and the Electoral Code of Conduct is not just for the fact that the financial budget Aims to support the wheel of the state of Iraq in building, construction, investment, either the Electoral Code of Conduct which regulates the work of actors in the political, governmental mechanisms for the disbursement of state funds in order not to allow them to exploit the money for their campaigns. "

He added that "the Iraqi parliament work of great importance, namely the ratification of the federal budget for the continuity of work in government ministries, as we reflect on the end of the legislative term of life of the parliament completed the budget law and to ratify it." As well as "completion of the electoral code of conduct because this law will determine the exchange rate mechanism, political entities so that there is not financial corruption by the state to finance election campaigns and also to stop Power of some parties at the expense of some of the entities participating in the upcoming parliamentary elections "

Adding "in the absence of ratification of the budget during these days Vstljo government to exchange rate mechanism, legal The effect on 12 /1 1-12 With a view to continuing the performance of ministries and government institutions and service productivity. "

Clearly the translation of this document is difficult but what is easy to understand is hi-lighted in bold red.

[Analysis]

We now know what it means. I will explain why I believe I am right.

The second piece of he puzzle is now before us. We know that the RV will take place, and soon, from the first two documents. This document adds information that at first appears to muddy the waters but will be shown to actually clarify the issue for us.

The statement is simple: passing of the ECC will “determine” the ERM. As I stated in my post this makes no sense whatsoever in English. But if we understand that it is a translation from Arabic to English we can obtain the meaning.

The word “determine” has many meanings in English. The most used is to “make happen”. For this reason it doesn’t make sense that the ECC would “make happen” the ERM. They aren’t really related to each other. The first deals with election fraud and the second with currency fluctuations.

However if we use a less known meaning of the word “determine” in this document it all becomes more clear. That meaning is to “render” or “allow to occur”. It softens the determinative nature of the word that first comes to mind.

This is what occurred to me this evening and when it did it all made sense. The ECC and the ERM are not directly related, obviously. They refer to two different functions completely. But if the creation of one leads to the enactment of the other then we have not only a relationship but we can also say that the first “determined” the second. Or, to soften it, the first “rendered or allowed” the second to occur.

Let’s put this into simple English. What the document states is this: “Unless and until the ECC is passed the ERM can’t come into play.” In other words the passage of the ECC is necessary (determines) for the ERM to take affect.

Let’s summarize where we are, at ground level. We now know from documentation that the RV will take place, that it will take place soon, and that the passage of the Electoral Code of Conduct is necessary to be in place prior to the Exchange Rate Mechanism becoming affective.

The passage of the ECC is a necessary precursor (determines) as to whether the ERM will come into play. While it doesn’t literally give birth to the ERM, the ERM will not be in play without it.

Events are enfolding quickly since both the ECC and the ERM are already in place!

[Fact]

Among the many news links that show the ECC passed is this one:

http://www.paltelegraph.com/world/mi...-electoral-law

The law was passed on December 7, 2009, less than 35 days ago, and even then only with the concerted 11th hour phone call from President Obama. This is from the news directly.

[Analysis]

We now move into the realm of logic and reasoning The logic and reasoning will be based upon sound documentation.

We have Maliki deeply involved in this, clearly. He has stated his intentions to the UN that he intends to RV the dinar and bring Iraq into the “international financial community” from our second document. He clearly has the backing of the UN from the first document.

So what is relevant?

Only two things are relevant. They are the ECC and the ERM. Let’s figure out why.

We now know that the relationship between the ECC and the ERM is that the first must precede the second. Yet the word “determines” hangs in the balance between them for an additional reason which we now need to explore.

The ECC, the Electoral Code of Conduct, is a law that lays out for the Iraqi people what can and cannot occur prior to this important election. It is a standard, if you will, placed right before the election to allow for a clean and fair fight.

President Obama would use the word “transparency” to describe the purpose of this law.

Wait, President Obama was the arbiter at the 11th hour to ensure that this law was passed. Is the “transparency” president injecting himself into this? No doubt about it, folks.

It is logical and reasonable that the Iraqi people would want a transparent election. But the need for a special “transparency” law just prior to the election seems a bit contrived, don’t you think?

I mean aren’t there already election laws? Iraq didn’t form out of a bubble. They’ve actually had a couple elections already, and successfully. So what’s the big deal? And why is Obama involved?

Yet the law passes and no one is the wiser. We now have “transparency” in Iraq just prior to the election, thanks to President Obama and Mr. Maliki.

However, it apparently occurred to Mr. Maliki that this was not enough to ensure his election without question. And at this point we aren’t even sure he has a very good chance to be elected, but he seems to have a plan, and the plan involves the ECC. The plan allows him to have “transparency” through the passage of this law. He’s clean!

But it isn’t enough. He needs more protection, even more transparency. He decides that he has to do just one more thing to guarantee this transparency. He passes the authority for revaluing the IQD directly to Shabbibi, the head of the CBI.

Now this is interesting. That would be like Obama giving Bernanke the authority to revalue the dollar. Is that logical, or reasonable? I don’t think so. I’m sure Timothy Geitner wouldn’t think so either.

When in the history of the world has a government given such great authority to a non-governmental entity?

Oops. You got it. We did. Remember? 1933. Creation of the Federal Reserve?

Now you will say, “Steve, you are getting into conspiracy theory now!”

And I answer this question with a question: What is a conspiracy?

A conspiracy is when a group of men (the big boys) get together and make a decision that affects the little guys, good or bad.

So yes, I’m into conspiracy theory now.

[Enorrste]

I submit that Maliki is following the direction that the US followed to the letter, and that in giving Shabbibi the keys to the RV he was doing exactly what Roosevelt did when he created the Federal Reserve. Of course in the case of Iraq the CBI came first, but without the keys what does it mean? Not much.

Now, we have reasoned that Maliki has transferred the keys to Shabbibi in order to add to the “transparency” that will lead to his election. He has created a Code of Conduct law to present himself as above reproach. He has also given the authority to revalue the currency to the head of the CBI. He is clean!

But wait, he still needs to get re-elected. And his prospects aren’t great given the current state of the economy and the depressed conditions of the people.

He must have a solution. And he does have one. The solution is the RV itself.

Based on this logic and reasoning we now can understand why he stated on December 13 of last year that he intended to RV the currency (“bring Iraq into the international financial community”) either late in 2009 or in 2010. We can also now see that it must occur before the election for it to have any affect on his election.

So, whether there is a condition in the ECC to prohibit certain financial acts of corruption 30 days before the election or not we need not worry ourselves, yet.

The only thing we need to ask ourselves is this: when does he have to do it, and what are the implications if he waits?

This brings us to this simple conclusion. The RV is the key to Maliki’s re-election effort. It has always been the key. It was designed to be the key, probably in concert with the Obama administration and possibly with the connivance of the UN and IMF, who see their own goals also being met through the RV.

Hillarious Clinton came so close to letting the cat out of the bag this week when she gave a speech to potential investors in Iraq at Washington DC. She said the opportunity was so ripe that it is now “palpable”.

That word means “so close you could touch it”.

I submit to you all this final statement:

“The RV is the key to Maliki’s re-election. It will occur in the immediate future and ensure that election. Obama has played a key role in making this happen as have the IMF and the UN, and because of that we can be assured that it will happen. It will happen before the election in order to make the election of Maliki assured.”

[smilin4dinar]

Interesting..... very interesting...

[zeeke]

This is some of the best Intel in sometime . Wish there were more of this type of Intel as they are release as to how they might effect the RV vs the trash we get that someone know someone in high places with no back up for the intel .

Great Post

ZEEKE

[fallen]

Great analysis. Thank you.

[super]

Very good post, Enorrste, I can see your on top of your game. I think you have the right idea when it comes to trouble shooting all of the dinar rumors. Good job Enorrste, thanks, buddy, you deserve an A+ on this subject!

[1palmetto]

Thank you so much, I cannot imagine how long it took to write all this down, but what a blessing for the rest of us that you did!

[Captjohn]

Well-researched, reasoned, and accutely intuitive. Thanks for the good work. Puts most others to shame.

[armondtoth]

The only problem I see, is even the U.S doesn't want M in office.

[mrref]

Thanks, I can tell you are a very well educated man. The best post by far..................

[gottarock]

Well done....keep it comming. We can sure use your input.

[mervin]

First let me say I like your approach and I hope it initiates good debate regarding your points without name calling and the like.

Now, I find your 2 ground level foundation documents suspect. Not the documents themselves but your interpretation of their meaning. And this is the point, it is "your" interpretation. They do not clearly say anything about a revalue and the words used can have different meanings.

All the points you make in this post are your determination of their intent. Nowhere are you showing any language that says we will revalue the dinar up. Revalue is not used. There is NOTHING I would say is undisputed FACT in what you have provided.

Now, I do agree that the IMF, UN and US want this to happen and they will all benefit. I also agree that M will find it hard to win the election without an RV. I agree that "transparency is needed so it does not appear that he is manipulating the election with this action.

While I do agree with most of your interpretations it is due to speculative logic not hard facts. With that said, I look forward to reading all your future posts to see how all of this comes together and I hope that you are right

[tzsbwn]

Haha Adam Jr.

[utahdinar]

I wish their were more people that could present info on the rv in this manner STRAIT UP AND ON POINT!! well done

[tzsbwn]

and for free

[dpa820]

ennorste, thanks and God Bless You!

[jbharley]

Thanks for your time .......

[moneygirl]

thanks for one of the best reads and written in a language we can all understand. Thanks and I look forward to reading you future posts. Good Job!!!

[gscottorgano]

Streamline info,to the point and great peice. Looking foward to more very soon . THANKS !

[Tommy]

yeah. good job buddy. strong logic with support. i am secretly enthusiastic about your conclusions while outwardly suppressing any indication of joy, cheer, or lightheartedness. thank you for an outstanding read.

[Quart]

I'd like to ask you to deal with the following observations regarding your conclusion. (This was previously posted in response to your first post.)

I am fairly certain that the UN says of the financial assessments it makes of their member countries that they are based on a currency valuation that is used for assessment purposes only and not necessarily the stated or traded value of the currencies. The UN document cited above is the record of a debate and not a conclusive resolution or recommendation. I have pulled some quotes from statements by the representatives of the member states. I believe the first statement is by the chairman of the committee. It should not be construed as a revaluation of the currency of Iraq but a reassessment of their dues and ability to pay. (Note quote #5 that says "such a recalculation was considered a purely technical process." Though this statement is not specifically applied to Iraq, it seems to reflect the underlying methodology of the UN assessments.

#1

"In connection with conversion rates, he said that for 11 countries, a country-by-country assessment of possible exchange rate overvaluation or undervaluation had been conducted, including the examination of information about the economic and financial situation. *Based on the review, the Committee had decided to adjust the conversion rate of Iraq. *Some members considered that the rate of the other 10 countries should also be adjusted. *However, in line with the past practice and its recommendation on the scale methodology, the Committee had decided to use market exchange rates for the other Member States."

#2

"He said that the scale needed to better take into account the changing economic weight in the global economy. States’ contributions must reflect their real capacity to pay, as closely as possible. "

#3

"She further supported the Committee on Contributions recommendation to retain the use of market exchange rates in reviewing the scale of assessments for the period, and agreed with the Committee that market exchange rates should be replaced by price-adjusted rates of exchange or other appropriate conversion rates in instances where the use of market exchange rates would cause excessive fluctuations and distortions in the income of some Member States."

#4

"He shared the opinion of the Committee on Contributions that it was inappropriate to use purchasing power parity to determine assessments, since the purchasing power parity reflected power to consume, rather than to pay.* Further, the use of purchasing power parity as a conversion rate was not in accordance with rule 160 of the General Assembly’s rules of procedure.* Purchasing power was based on hypothetical, non-existent currency conversion rates, and so was unsuitable for assessing Member States’ capacity to pay."

#5

*"Other options included a reduction of the length of the base period, as well as a yearly recalculation of rates, provided such a recalculation was considered a purely technical process."

My conclusion is that, while a revaluation of Iraq's currency may be imminent, it is not well supported by this document. To draw any conclusions from the record of a United Nations debate is precipitous.

[ds2]

and for free

from what i have heard AM approached enorsste and offered to pay him to post his take on the rv on DV. imo when enorsste's post (from rt2bt) started showing up here a few weeks back, they were so popular with the members and got such high praises, AM saw an opportunity to keep his members coming back and he grabbed it. you know the old saying....money talks and bulls**t walks! jmo of course.

[Enorrste]

Quart, I’d like to thank you for taking the time to present a well thought out objection. I certainly have no fear of dealing with people such as yourself. If you are right and I am wrong then I will be among the first to admit it.

Next, the thesis of my book does not rest on one document as you have come to see by now. This is, in my opinion, an important document if what I believe it says is actually the case. However, it is not essential to the argument.

Next, the fact that Maliki states clearly that he intends to “enter the international financial community” and that he tells that to the UN as well, is an indication, to me, that they are “on the same page.”

Now I’d like to deal with your objections specifically.

With regard to Point #1: It should first be noted that the statement in that quote is as follows: “Based on the review, the Committee had decided to adjust the conversion rate of Iraq.”

The phrase “had decided” is in what is called the past perfect tense. The meaning of past perfect tense is that it is a “completed act”. Therefore, taking this on its own words, the decision was completed and made as stated. Had they said “was deciding” which is the imperfect past tense, then your argument would be correct.

This also affects your statement that the document is not a “resolution” of the UN. My response to that is that it need not have to be a resolution to the UN to be true.

Next, in the same point we see this quote: Some members considered that the rate of the other 10 countries should also be adjusted. *However, in line with the past practice and its recommendation on the scale methodology, the Committee had decided to use market exchange rates for the other Member States."

Here we see two things: first, that the end statement is “in line with past practice.” This means that what they have done or will do is consistent with their normal procedures.

Second, we see that while it was considered that they would change rates for 11 countries, instead they decided to use “market exchange rates” for the other Member States. What this tells us is that “market exchange rates” are the “norm”, as it were, for determining dues. In the case of Iraq, as I said in my book, the current “market exchange rate” is too low to properly reflect the “ability to pay” of that country.

Point 3 appears at first to support your argument. The chair of the committee said that she: "agreed with the Committee that market exchange rates should be replaced by price-adjusted rates of exchange or other appropriate conversion rates in instances where the use of market exchange rates would cause excessive fluctuations and distortions in the income of some Member States."

To date I cannot find that this statement refers to Iraq. In fact we see in the case of Iraq exactly the opposite. The exchange rate in Iraq has remained stable for over a year now. Therefore, short of proof linking this point to Iraq I would see it as not applicable.

Point 4 clearly is also not applicable to this discussion, as the following quote from that point makes clear: "Purchasing power was based on hypothetical, non-existent currency conversion rates, and so was unsuitable for assessing Member States’ capacity to pay."

This statement says directly that the “hypothetical non-existent currency conversion rates” are not suitable, at least with reference to ability to pay. However, the first point above has as its “context” this very issue: namely Iraq’s ability to pay. Therefore it would appear to me that point 4 specifically excludes the hypothetical rate from the discussion.

Finally, point 5 above is not applicable to the Iraqi situation because it talks about a reduction of the length of the base period, as well as a yearly recalculation of rates, neither of which has been shown to apply to Iraq.

In conclusion I am left with my original viewpoint, that the UN has decided to change the exchange rate of Iraq. Furthermore, they will do it, or see that it is done, before the next dues are scheduled to be paid by Iraq.

I welcome further discussion on this matter if you deem it necessary.

Steve