Thread: Iraq/Dinar News. 09/05 to 01/14/07

I appreciate your comments. When they posted the CBI rules and regulations acouple of years ago, my first impression was "My God they have copied the Feds system almost completely. Since having worked for the Fed in a managerial role I recognized their rules and policies as being identical to the Federal Reserve System. So to respond the the question "How do we know ther CBI will act like our Fed. Its in the policies. Things such as reserve requirements of local banks, interest rate charged to local banks (discount rate etc.) and of course the management of the money supply. So their bank is structured like ours. It is one of their strenghts that will eventually prove to be a positive benifit for Iraq (and all of us). We should watch their CBIs behavior just like our Govern. and financial community watches our Fed everytime the Fed chairman speaks. From that we will make judgements. Thank you for your comments.

Originally Posted by Socata 850

Zhou announced to the conference that China plans to diversify its $1 trillion in foreign exchange reserves across different currencies, including the euro and pound, and investment instruments, including emerging markets, reports Reuters.

"All central banks are trying to diversify," the People's Bank of China governor said at a conference in Frankfurt. "We have had a very clear diversification plan for several years."

Money News readers will recall that China on Tuesday reported that they have accumulated a record sum of $1 trillion in foreign reserves and reported a record-high trade surplus for October. The country said today that it expects its trade surplus for 2006 to total $150 billion.

Of China’s cash coffers, Money News wrote, "That’s significant because it means that if China decided to sell off any of its reserves by dumping say U.S. dollars on the market and buying gold instead, the dollar’s value would likely tumble."
And that’s exactly what’s happening: China is preparing to sell off some of its dollar reserves so that it can diversify into other currencies and investments.

"[Diversification] includes currencies, investment instruments, including emerging markets," he told Reuters.

The dollar tumbled to a two-month low on the remarks. Gold and other precious metals rallied. However, when Reuters asked if the diversification plan included gold, Zhou said, "That’s a separate thing."


This could be part of the reason the dinar is climbing in value against the dollar. If China goes through with this plan, and there is an abundance of dollars on the market this will hasten the increase in value of the dinar. Good for all of us in the short term, bad if you plan to convert all dinars into dollars. I for one have always planned to convert a protion of our dinars into Euros. If China dumps the dollar, the US economy will take a big hit. Hold on to your dinars after the reval, at least most of them, they could be worth far more than we think !!

Unless of course the US Treasury see this coming and starts taking dollars off the market or investing in the same currencies the other countries are. Bottom line is the Gov will protect the value of the $ and there may be small movements but not large swings.

JMO

OSOK

Originally Posted by Socata 850

Warren Buffett is so convinced we'll see a steady downward spiral to the value of the dollar in 2006, he's placed a $16.5 billion dollar bet to back it up, putting his money where his mouth is! And I couldn't agree more. There's no doubt in my mind that the dollar will suffer this year and for many years to come.

In fact, last year's 14% dollar rally -- after three straight years of decline -- was a fluke ... smoke and mirrors ... artificially propped up by the Fed's steady rate increases designed to stimulate foreign investments in U.S. assets. And it worked! "Petrodollars" from foreign nations are being recycled back into the U.S. economy through the purchase of government bonds at a staggering clip, plugging the hole in the trade deficit.

Buffett ... billionaire financier George Soros ... and Microsoft head Bill Gates all bet against the dollar last year. They lost! A contagion of the world's largest banks in the currency market -- Deutsche Bank AG ... UBS AG ... and Citigroup Inc.-- all missed the dollar's rally in 2005. In fact, Buffett was so convinced of a dollar decline in 2005 that he lost almost $1 billion while bank analysts forecast the dollar would fall to an all-time low of $1.40 per euro. Instead it rose 14.4%.

But they all know the Fed can't run a large current-account deficit for long. So, the dollar bears are sticking to their predictions -- saying they weren't wrong ... JUST EARLY!

It's a sign that the people who have the money have a fairly good idea about what's to come. The dinar will rise in value against the dollar if only because the dollar could be in a steady decline. This will put more and more pressure on the Iraqi's to reval their currency. With their dependance on the value of their dollar reserves to help keep their economy going, and with a deccline in the value of those reserves, they would have to reval their currency.

You know more and more I see extremely compelling case for the dinar to peg to the Euro.

Originally Posted by Wm.Knowles

I appreciate your comments. When they posted the CBI rules and regulations acouple of years ago, my first impression was "My God they have copied the Feds system almost completely. Since having worked for the Fed in a managerial role I recognized their rules and policies as being identical to the Federal Reserve System. So to respond the the question "How do we know ther CBI will act like our Fed. Its in the policies. Things such as reserve requirements of local banks, interest rate charged to local banks (discount rate etc.) and of course the management of the money supply. So their bank is structured like ours. It is one of their strenghts that will eventually prove to be a positive benifit for Iraq (and all of us). We should watch their CBIs behavior just like our Govern. and financial community watches our Fed everytime the Fed chairman speaks. From that we will make judgements. Thank you for your comments.

Good points.

To have worked for the Fed gives you good insight into the parralles between our two systems. In your opinion, if the US was in a positionn to reval our currency, do you think our banking system would be going through the same gyrations as is happening in Iraq. Your thoughts?

Originally Posted by Socata 850

Warren Buffett is so convinced we'll see a steady downward spiral to the value of the dollar in 2006, he's placed a $16.5 billion dollar bet to back it up, putting his money where his mouth is! And I couldn't agree more. There's no doubt in my mind that the dollar will suffer this year and for many years to come.

In fact, last year's 14% dollar rally -- after three straight years of decline -- was a fluke ... smoke and mirrors ... artificially propped up by the Fed's steady rate increases designed to stimulate foreign investments in U.S. assets. And it worked! "Petrodollars" from foreign nations are being recycled back into the U.S. economy through the purchase of government bonds at a staggering clip, plugging the hole in the trade deficit.

Buffett ... billionaire financier George Soros ... and Microsoft head Bill Gates all bet against the dollar last year. They lost! A contagion of the world's largest banks in the currency market -- Deutsche Bank AG ... UBS AG ... and Citigroup Inc.-- all missed the dollar's rally in 2005. In fact, Buffett was so convinced of a dollar decline in 2005 that he lost almost $1 billion while bank analysts forecast the dollar would fall to an all-time low of $1.40 per euro. Instead it rose 14.4%.

But they all know the Fed can't run a large current-account deficit for long. So, the dollar bears are sticking to their predictions -- saying they weren't wrong ... JUST EARLY!

It's a sign that the people who have the money have a fairly good idea about what's to come. The dinar will rise in value against the dollar if only because the dollar could be in a steady decline. This will put more and more pressure on the Iraqi's to reval their currency. With their dependance on the value of their dollar reserves to help keep their economy going, and with a deccline in the value of those reserves, they would have to reval their currency.

IF the dinar rv at 1 to 1 or higher, or even slightly lower for that matter, and given all the dinar the US quite likely holds now, wouldnt that put the US in a position to pay off its debts, and raise the value of the dollar again to unprecedented heights? commence bashing.

By the way. China and the US have a symbiotic relationship. They are very prudent people and have a great deal of interest in maintaining an excellent relationship with their largest market. They will never do anything to destroy that relationship and would never do anything to harm the place in the world where they sell most of the manufactured goods. They are experiencing an economic boom. We are an essential part of that relationship and that boom. Thank You.

Originally Posted by bigred52

i think swiss francs may be the safest bet instead of euros. If chaos breaks
out in the middle east and europe because of the manics i think the usd will
rebound sharply. Is this okay ?

Pound sterling should be okay, any thoughts on this one please?

Originally Posted by crave681

IF the dinar rv at 1 to 1 or higher, or even slightly lower for that matter, and given all the dinar the US quite likely holds now, wouldnt that put the US in a position to pay off its debts, and raise the value of the dollar again to unprecedented heights? commence bashing.

I totally agree with that observation. It just depends on the actual amount the US holds. i think they have enough where the entire Iraqi war costs the US zip financially.

The question was asked if I thought our banks would be going through the same types of problems that the Iraqi system is going through. The answer
is very complex. No one thought that we would not only have to invade and defeat, but that we would have to build a society from the ground up in Iraq. Most of Iraq (having done a tour) was just about to implode. So everything you see has had to be build up from the bottom. So, no our banks are fully capable of handling a reval of the currency that would probably be done over a period time by market forces. They, the Iraqis are not stupid, but they are inexperienced. Now, I think a RV is fully within their capabilites, especially since they have had so much contact with the IMF and the world bank. Remember, the President of the World Bank is Paul Wofowitz (sp) an under secretary of defence that it has been said was the architect of the Iraqi invasion. I think they can pull it off. But i also think they arae being directed from others and this plan has been in effect for a very long time. Your comments are appreciated.

If the dinar pegs to the euro and not the dollar it would be a huge slap
in the face of America. Talk about a quick withdrawl.
1/3 euro, 1/3 oil, 1/3dollar-----maybe.