Thanks George for sending to Dinar Recaps
UU1006 – “Expectations This Week?” by Mnt Goat
I wanted to pop on today to give all my dinarian friends a very, very quick and brief summary from a long conversation I just had with my CBI contact in Iraq. I literally just got of the phone.
I am going to tell you just what I heard but in a short summary format. In order to do this you have to know some background of what I have been telling you over these last few years. In other words THINK !
I assume you have been keeping up with my news letters. If you are completely new to this investment please assume what I am saying now is fact, relax and just try to understand and absorb it.
Then later conduct some research on your own afterwards if you chose not to believe me and verify what I am now saying.
I am not trying to predict a date or a rate but I am admitting I am adding in some of my own conclusions as to where all this information is leading Iraq. I hope you can see for yourself just how close we are to some kind of change in the value of the Iraq dinar.
I hope everyone also read my last news letters dated 01/25 since this is a continuation of this ongoing saga.
Today is Wednesday Jan 28th already. The final budget vote was postponed until today and then late last week we heard it was once again moved out until tomorrow Thursday 1/29.
I have repeatedly told you that the only issue with the budget is a matter of liquidity and having other laws in place to back up and support the budget size.
With the decrease in oil revenues brought on by the decrease in recent oil prices this has caused a dilemma for Iraq. How do they implement a budget this large with no revenues to match it?
Also we have seen over the last year an intentional effort by the CBI to bring in all the larger 3 zero notes (project to delete the 3 zero notes).
This was phase 1 with in country and phase 2 is taking them from us speculators. They did this so they can exchange them for USD or the lower denominations (to a very limited extent only in some provinces).
The CBI reported that nearly 80%+ of all the larger 3 zero notes had been collected from the Iraqi citizens already. All they had to use then was basically the USD.
Then in the middle of 2014 they outlawed using the USD and insisted in using the Iraq dinar. How can they do this since the collected over 80% of the dinar notes already?
They did this because the rollout of the revaluation called for it. After they sucked up most of the larger notes for USD they plan called for then exchanging the USD for the new lower denoms.
This was the final stage in the revaluation process. However the revaluation did not happen as planned. So they basically now have had very little currency in circulation for over a year now.
How did they get around this lack of physical currency in the market place?
What the CBI did to get around the lack of physical currency was to begin issuing money on the Qi cards for all government programs and salaries. These cards are as good as cash..
It also allowed them to turn in any remaining USD for what lower denoms were issued. Remember too these lower denoms were not supposed to be issued until the actual RV happened.
However they were staged at the banks already as the CBI collected truck loads of the USD from the process of taking it out of circulation. Some of the banks jumped the gun and with miscommunications from the CBI (once Dr Shabibi left) this just happened this way.
So some provinces are in fact now using the lower denoms but in a very limited extent since the CBI quickly issued orders to stop this rollout.
So this was a rehash of history as to where we now stand. In short - very little paper money of any kind in circulation and discouraged and outlawed using the USD.
In today’s conversation with my CBI contact I was told that if they open the budget today with an 1166 rate the country of Iraq will automatically be insolvent in the financial sector. Why?
Cause there is no paper currency in circulation to back it up. Remember they collected all the old 3 zero notes, or almost all of them and certainly not enough to back this sizable budget.
This is also why they have been playing with this budget for so long. They have been attempting to find a way to make it work without the revaluation since the USA has been up to now trying to push it out but instead has to keep stalling the process each time due to these matters in Iraq.
The USA did not want to push it out without the full approval of the CBI and the GOI. Finally they all agreed on the timing about over a week ago. Iraq would do it on their own timing and a schedule of possible timings was established.
Just these past couple days we read articles on the shifting of money from the CBI reserves to the five main banks in Iraq. Seeing that they just can’t give away money they loaned the money to the banks.
So the CBI reserves stay intact on the balance sheets. What does this mean?
It means they are positioning themselves and about to make some kind of drastic change in the value of their currency in order to support the backing of the 2015 budget amount. They are basically funding the new budget.
We all have seen a sneak peak of the new budget and now know this nonsense about the new rate being listed in the budget was just rumor. I told you they could theoretically pass the budget and open it to spend it with a 1166 rate, but only if they have the money to back it up.
Now with this shifting around of funds and a revaluation this is possible. They can actually now pass the budget and move forward if they decide to on Thursday. This is why I am now so optimistic this could actually happen this week.
Where do we stand today?
Today is Wednesday and just one day prior to the final vote of the budget. Will they postpone the vote again? Anything is possible but I am told they will not and Abadi is being very firm this time.
If they take this vote on Thursday and it passes (and it will) they will have had to have a revaluation or reinstatement of their currency prior to this timeframe in order to support all these funds they just shifted around at the 1166 rate.
Do you understand what I am saying? We may be very close.
In order to support the numbers in the budget they must have a better value to their currency or they will be insolvent in the eyes of the international community.
This is the last thing they want to happen not because they don’t have great wealth and assets but because they have no physical currency at the banks to back up their debt. The local banks not the Central Bank !
INSOLVENCY defined- When an individual or organization (bank) can no longer meet its financial obligations with its lender or lenders as debts become due.
LIQUIDITY defined - for a bank means the ability to meet its financial obligations as they
If they pass the budget my CBI contact also told me they might wait a day or two in telling this news to the international community and keep it to themselves, if they run into a snag.
But once the world hears about the budget being passed they are in BIG trouble should they not have value to their currency to back it up.
So you see Al-Abadi has to make a decision soon on when to RV his currency. I believe this decision has already been made and we are now in the final countdown window…tic toc...tic toc….
Peace and Luv To Ya All, Mnt Goat