SWFloridaGuy's Thoughts
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  1. #1

    SWFloridaGuy's Thoughts

    7-9-2012 SWFloridaGuy: I believe a RV is coming but not due to numbers referenced in their budget. Iraq does not need to RV to open the budget as some claim. Budget increases are partially due to Increased oil revenues that have allowed Iraq to add around $9 billion to its 2012 budget. Power projects, ration baskets, defense spending and compensation to Kuwait are all major contributors to spending. Iraq has earned $45.3 billion from oil sales and the 2012 oil revenues are expected to exceed last year's which were $82.9 billion. None of this points to a definitive or required, new IQD rate. In fact, they don't have to meet their budget at all and have survived for 9 years with the IQD at a tenth of a cent, using the USD as their primary currency (although that will change and a convertible currency is necessary for Iraq to join the WTO). Certain countries who are WTO members do use the USD but Iraq's goal is for their primary currency to be the IQD and eventually dedollarize. We also believe this is an obligatory stipulation for accession where they are concerned. When the time comes, Iraq will lay out all their economic and trade policies that relate to WTO agreements, submit a memorandum and a panel will consider the application. When the principles and policies are in place, additional negotiations will commence between Iraq and member countries. The terms will be finalized and submitted to the General Council. If 2/3 of the members vote in favor, than Iraq may accede to the WTO. I'm not saying Iraq is about to RV for that reason, I'm simply laying out the process.


    Now every year we hear that the RV is in the budget, a rate of 3+ is required and it must be a revaluation. I only see 2 ways Iraq could get to a rate higher than the USD. Multiple revaluations, with incremental adjustments as a managed float in compliance with IMF oversight or a RD (which of course I don't believe will be the case). In my opinion Iraq will RV just less than the USD (as referenced by the SIGR report and countless 1 to 1 articles from the CBI and Finance Committee) or just slightly over, at the most. When I say "referenced" by the formerly mentioned, I am of course only pointing to a rate, as those sources do not mention the mechanisms that will get us to it. (No RV mentioned for obvious reasons). Lets put this in perspective, China was the largest RV in history at 30%. For Iraq to RV on par with the USD would be a 1,000% increase. That presents a ton of problems logistically. Even though much of it will be electronic, it still has to have a large part backed by hard currency and will have to be widely accepted around the world as a form of payment for goods and services. The IQD will have to remain relatively stable, be introduced into and remain highly liquid in the forex market and the country itself will have remains politically and economically stable. The other option would of course be a RD where they remove 3 zeros and change the rate from 1 IQD = US$0.00086 to 1 IQD = US$0.86. From there it could revalue from 86 cents to 1 Dollar, a 16% increase and more comparable to China and other RV's. That is NOT what I believe will happen, nor would it be the historic change we all signed up for. Many will say, "what about Kuwait, they RVd just like we want the IQD to." That's just not true. Kuwait never revalued their currency. The central bank did not change the rate. Saddam outlawed the Kuwaiti dinar and it fell in value. He told people to trade in their Kuwaiti dinar for Iraqi dinar before Oct. 6, 1990. When the U.S. stepped in, the value did again rise. This was not due to the bank changing the rate but rather the black market, similar to what Saddam did with the dinar in the late 80s. The Kuwait Central Bank never adjusted the rate below 3 dollars. They were occupied by Iraq and business was halted. Seven months later when Kuwait was back on their feet, they redenominated with the previous exchange rate. Actually, this was neither a RI or RD, by the true definition. This was a unique circumstance due to the invasion. Their currency was not adjusted due to sanctions like Iraq.



    Having said that, I do believe that Iraq will revalue. Will I ever be able to prove this? Of course not. If I was able to provide such luminous evidence of a RV that would eliminate all other possibilities, there would be a serious glitch in the process. I DO NOT believe in this constant barrage of "second to second" hype with ridiculously high rates, but if Shabibi's goal is to establish credibility, eventually be respected as a borrower and prime location for private investment in the eyes of global capital markets, then I would expect a RV at some level. The powerful governments, corporations and central banks that have invested so heavily in Iraq's reconstruction, debt forgiveness, technology sharing and bank revitalization, would have never done this unless they planned on being heavily compensated. We all know the value in the IQD is still there. Iraq's wealth has only increased with the discovery of large amounts of gold and oil & mineral deposits since their currency was devalued due to a war strategy. We will never have a complete understanding of the plan but we do think political stability and inflation are key factors. The IMF and World Bank has continued to instruct the CBI on how to improve economic efficiency, correct abuses, implement policies and enter the next phase of their currency reform project. (Which we also hope to profit from). Although there are still many areas in need of improvement, Iraq has come a long way. When we have announcements of the Strategic Council, HCL and full Erbil implementation, the political environment may be stable enough to ensure the success of the project and the CBI will make their move. These of course are no more than my opinions, which may or may not be correct.



  2. #2
    I disagree with SWFloridaGuy for two reasons: 1. If they only come out at about the dollar rate, that isn't much of an incentive for the Iraqi people to relinquish the U.S. dollar that they have gotten used to, and has served them well these past nine years. To make a switch to the dinar enticing, the dinar must be worth much more than the dollar. 2. Shabibi has said that the dinar will be the strongest currency in the region. This seems to mean that it will even be a little higher than the Kuwaiti Dinar, which is currently around $3.60 so I am expecting a rate a few cents higher than that. But also remember that the dinar had always been much higher than the U.S. dollar before it was devalued during the war. This shows that Iraq has the resources to support a $3 plus rate, and their national pride will want them to return to where they were before, and maybe a little higher due to inflation since then. SWFloridaGuy is making the same mistake (in my opinion) that many are making regarding the "1 to 1" articles. Remember that they are intended for the average Iraqi, for their education and not meant to be a primer for the average American investor. A 1 to 1 is an oversimplification on the part of the CBI to make the Iraqi public more confortable with what they are about to do. The last time the Iraqis had to deal with a "different" currency, it was when Saddam Hussein was playing his games with the dinar, and they lost confidence in it. Shabs wants to restore that confidence just before a revalue and introduction of new, lower denoms.

  3. #3
    Quote Originally Posted by DinarGroupie View Post
    I disagree with SWFloridaGuy for two reasons: 1. If they only come out at about the dollar rate, that isn't much of an incentive for the Iraqi people to relinquish the U.S. dollar that they have gotten used to, and has served them well these past nine years. To make a switch to the dinar enticing, the dinar must be worth much more than the dollar. 2. Shabibi has said that the dinar will be the strongest currency in the region. This seems to mean that it will even be a little higher than the Kuwaiti Dinar, which is currently around $3.60 so I am expecting a rate a few cents higher than that. But also remember that the dinar had always been much higher than the U.S. dollar before it was devalued during the war. This shows that Iraq has the resources to support a $3 plus rate, and their national pride will want them to return to where they were before, and maybe a little higher due to inflation since then. SWFloridaGuy is making the same mistake (in my opinion) that many are making regarding the "1 to 1" articles. Remember that they are intended for the average Iraqi, for their education and not meant to be a primer for the average American investor. A 1 to 1 is an oversimplification on the part of the CBI to make the Iraqi public more confortable with what they are about to do. The last time the Iraqis had to deal with a "different" currency, it was when Saddam Hussein was playing his games with the dinar, and they lost confidence in it. Shabs wants to restore that confidence just before a revalue and introduction of new, lower denoms.
    I agree with the both of you but more on yourside when it comes to the exchange rate of the Dinar. I would add a 3rd reason as to why I would agree more with you. That would be because of the interests of outside investors for real-estate and also GE (General Electric) is waiting to do the work there as well but according to a close friend who will be working in Iraq for GE stated, they will not do any work there until the Currency revalue at a good rate especially with the new currency set to circulate in 2013. GE do not want to get paid in a currency with little to no value or they'll just pack up and head back to the US. So Revaluing the currency low or around the dollar would be a waste of time as GE would might as well get paid in the dollar for that matter.

    Also, there's a company called Asiacell, who is the largest Telecommunications company in Iraq and I remember seeing an article a couple of years ago stating that they are to start doing transactions with the dinar instead of the dollar http://articlesofinterest-kelley.blo...ency-used.html, so all of this cannot happen with a low valued currency. If anyone has an objection to this, please educate me as I'm always eager to learn as I also have a group that I feed information to.
    Last edited by JayLee202; 07-10-2012 at 03:17 PM.

  4. #4
    Jaylee202,
    I hope your right, but I will be happy with a 1-1 , just do the___ thing...! lol
    quite a few other sites like dinar alert and bondy ladyscorner have many articles and people believing the dinar will come out around .86 to .90 as a managed float , then go up to just over a dollar and let market drive rate up over the next few years. so many different opin before ramadon after sept 1st endions out there. of DEC. I just want to see the ride end for all soon....
    good luck to us all!

  5. #5
    I am actually a little surprised at SWFloridaGuy jumping on the $1 bandwagon. Before now he impressed me as someone who knew better, like BGG and Poppy. There are too many reasons why a dollar dinar rate won't cut it, and I don't even mean the budget. But like you guys, I wish they would just get it done already. But for that to happen, Maliki has to be limited before he can turn into a full-fledged dictator, which no one wants. If an article I read today is true, we can blame our own government for the fact that the Iraqi leaders have suddenly started dragging their feet in getting rid of Maliki. This is, after all, an election year for us. Appearances must be maintained! Hopefully our govt interference won't drag this out much longer.

  6. #6
    Quote Originally Posted by dezertheat View Post
    Jaylee202,
    I hope your right, but I will be happy with a 1-1 , just do the___ thing...! lol
    quite a few other sites like dinar alert and bondy ladyscorner have many articles and people believing the dinar will come out around .86 to .90 as a managed float , then go up to just over a dollar and let market drive rate up over the next few years. so many different opin before ramadon after sept 1st endions out there. of DEC. I just want to see the ride end for all soon....
    good luck to us all!
    Yes I hope I'm right too lol. But they are trying to relate to deleting the zeros to the exchange rate instead but deleting the zeros is related to the currency.

  7. #7
    Keep in mind my fellow investors, many of these articles will be discouraging articles by design. The last time IQD did this was during the Desert Storm and many of us were not on that train. Now there are so many Dinarians out here now (Still 1% of the Population) there will be so many low to middle class people getting rich it's a shame. Remember, in politricks, people get richer as the poor gets poorer but not this time. This time, the little people will be able to have the wealth as those who are already rich. Other than Energy, this will be the largest transfer of wealth in man's history just like when the stock market boomed in the 70s when the ERISA Act was introduced in 1974. Businesses will be established, more people will be hired to work, homes will be bought, boats, private jet hours, you name it. The most important thing in all of this is to attend seminars on asset protection, taxes and offshore banking. In order to maintain wealth, you have to have the mindset of those who are wealthy because your income will rise or shrink to the level of your thinking. Your thinking will determine your money blueprint. So yes, articles are nice and they do hold more credibility than those who are just speculating but also look between the lines of these articles and use common sense with it and you'll see what really makes sense. A mutli-Billion dollar company like GE doing labor in Iraq for a currency worth. .86 to $1.00? Would you? And if you were a citizen of Iraq, would you turn in your Dollar for Dinar that's worth less? Remember, Goldman Sachs is involved in this too and Goldman Sachs pretty much runs this country (I know someone may debate this) but it's true and they don't play with pennies.
    Last edited by JayLee202; 07-10-2012 at 05:40 PM.

  8. #8
    What you're not taking into consideration is that where it comes out initially is not where it has to end up is it? You're not disagreeing with me anyway, you're disagreeing with the SIGR report and countless statements from the CBI and Finance Committee. I'm talking about the initial rate, that is all.

  9. #9
    100,000% increase (which it would be) which is also 1,000x the rate it is now, is NOT SMALL. We are talking about the initial change and not where it will end up eventually. Read Kaperoni's post today. He lays out a great explanation that I completely agree with.

  10. #10
    And what, after the initial rate? If they do a managed float as Shabs has said he'll do, it would take YEARS to get to their $3.22 or higher! Remember that at a managed float they can only change the rate 2% up or down, every 90 days. But you are also disagreeing, in my opinion, with many statements that have come out of the CBI that attest to a higher rate than 1 to 1. And to be honest, I don't put much stock in everything Kap says. It wasn't long ago that Kap actually thought articles were pointing to a LOP! I saw it on your own page, Dinar Detectives!

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