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[SWFloridaGuy] I've read a bunch of posts lately where people are saying this is out of Iraq's hands. I respect their opinion and just wanted to offer my views on the subject.
[SWFloridaGuy] Is this about Iraq or are they out of the picture? Some investors maintain that according to their contacts this has been out of Iraq's hands for over a year and that Iraq's upcoming economic reforms are not about the country of Iraq because this is really about the PTB, good guys vs bad guys, etc. (notice they never provide details). This, in my opinion, is utter nonsense.
That's like saying my winning the lottery and then protecting that wealth would have nothing to do with me because I was instructed by some entity on how to get to the store to buy the ticket. This has everything to do with Iraq and I don't know how many years have to pass before people realize that their secret contacts were off the mark and all is not done, but rather a work in progress that is not on our time-frame. Iraq must have enough political stability to ensure the success of the economic reforms.
[SWFloridaGuy] If you don't believe that the economic reforms being delayed were due to the political unrest then you don't believe what the UNSC has said in open session, the IMF and World Bank have said in countless meetings, SIGR reported to our Congress, the Finance Committee and even the CBI itself all listed as the preeminent imbroglio which must be rectified before they can move forward.
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Clearly, they are talking about political stability and this has nothing to do with car bombings or rock throwing. There will always be those sort of tensions in that region. The CBI's plan (whatever that may be) has been in the works for over a decade and they are not going to compromise its success because the GOI hasn't formed a fully functioning power-sharing government with permanent (not interim) ministers appointed, in addition to having implemented HCL/Article 140 and investment laws passed prior.
[SWFloridaGuy] If you look at the history of large currency appreciations, you will see this stability has been absolutely vital in every single case and until that stability was reached, nothing happened. Nominal appreciation must lead to sustained real appreciation. Economic policy is influenced by international capital markets and central banks. I believe this has always been a team effort and not solely in Iraq's hands or out. For Iraq to recover after decades of war, reassert monetary sovereignty, dedollarize and give Iraqi citizens confidence in their own currency once again they have received a lot of help.
[SWFloridaGuy] Corporations, foreign governments, banks and powerful organizations have all aided in Iraq's reconstruction and invested heavily into sector growth because they also see Iraq's potential. Iraq is no different than any other country when it come to what determines the value of their currency though. Supply and demand determines the value. The value of a currency doesn't determine whether that country is rich or poor; that is determined by national income, price index and GDP.
[SWFloridaGuy] Confidence that an economy is strong and the faith that strength will continue are also contributing factors. Although occasionally governments may manipulate their currency, print more bills, prevent cross border currency movements, adjust as commodity supplies change (discovery of large oil and gas fields), manipulate markets etc., they will not be able to maintain that growth without stability. A government's credibility plays a part as well and and their purchasing power demonstrates how it is comparative to others. Supply and demand is the most important factor. If Iraq wants to control their market zone and have their currency used in international banking transactions, then they, of course, are going to need to raise the value of their currency.
[SWFloridaGuy] So, does the country of Iraq have anything to do with their own currency? Of course they do and it is completely arrogant and ignorant for us to think that they don't. But don't take my word for it, look at the history of large currency appreciations and the role that sustainable growth played. Countries that couldn't maintain stability showed negative effects after 2-3 years even with 10%-30% revaluations. Iraq has received a lot of help to get to where they are today and I believe that they will continue to because those same corporations, foreign governments, banks and powerful organizations all want to exploit Iraq's wealth and natural resources. That's all the more reason to protect their investment and ensure that its success won't be hampered by a dilapidated government.
[SWFloridaGuy] Ok all done. Sorry that was so long. Great seeing everyone here at MIG.
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