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

The President and Vice-emphasize the importance of the success of national reconciliation, and to provide the necessary services for Iraqis

January 2, 2007
President Jalal Talabani, at his residence in the city of Sulaymaniyah, Mr. Tariq Al-Hashmi, Vice President of the Republic, on Tuesday, 1 - 2-2007.
During the meeting, and discussed the latest developments important in the political arena, and to discuss security issues in the country.
And the two sides agreed on the need to work together in order to consolidate security and stability in the new Iraq and make the necessary efforts to ensure the success of the national reconciliation among the components of the Iraqi people. As President Talabani and Mr. Hashemi on the support of the government of national unity headed by Mr. Nouri Al-Maliki, and the importance of providing the necessary services needed by the Iraqis in their daily lives.

They seem to be having meetings even on their holiday,
HAS ANYBODY CHECKED TO SEE IF OFFICIAL GAZZETT IS STILL DOWN,
Their still updating the presidency form I was just wondering

Originally Posted by Pippyman

Frankel re-examines why currency crashes are so costly


http://www.imf.org/external/pubs/ft/...004/112904.pdf


The most obvious interpretation of why devaluations carry high political costs is that they are accompanied by painful recessions. But why? After all, evaluations are supposed to boost competitiveness, increase production and exports of tradable goods, reduce imports, and thereby improve the trade balance, GDP, and employment.
One possible explanation, says Frankel, is that, even if there is no negative effect on GDP in the aggregate, the redistributional effects could be politically costly to leaders. For example, a devaluation in an African country may benefit small rural coffee and cocoa farmers because the price of their products is determined in foreign currency terms on world markets; but farmers tend to have less political power than urban residents, who may consume imported goods and thus be hurt by the devaluation. The problem
with this theory, Frankel points out, is that there are so many examples that go the other way, where the producers of the tradable products (agricultural, mineral, or manufactured) tend to have more political power than the producers of nontraded goods.
One can argue that simultaneous monetary and fiscal austerity (or banking failures or the sudden stop in foreign lending itself) are the true causes of these declines in economic activity. But Frankel says this misses a key point. According to the standard textbook theories, when a country faces a sudden stop in capital flows, there exists some optimal combination of expenditure-reducing policies (monetary or fiscal contraction) and expenditure-switching policies (devaluation) that should achieve external balance without
inducing a recession....

By now the evidence seems strong that devaluation is contractionary, at least in the first year, and perhaps in the second as well. Until the currency crashes of the 1990s, a mainstream view had been that any negative effects from a devaluation were relatively quickly offset by the stimulus to net exports, so that by the second year, when exports had gathered strength, the overall
effect on output would turn positive. Now, however, the negative effects seem stronger than first thought, and the positive effects weaker. The depressing conclusion is that there is no escape from recession. All policy
instruments that work to improve external balance do so by reducing income in the short run—devaluation, fiscal contraction, and monetary contraction.
Even structural policy reform, such as insisting that nonviable banks close, may have a negative effect on economic activity in the short run.Why is devaluation often contractionary?

Of the many possible contractionary effects of devaluation, which ones were, in fact, responsible for the recessionary currency crashes of the 1990s? Several of the most important contractionary effects of a devaluation
are hypothesized to work through a corresponding increase in the domestic price of imports or of some larger set of goods. Indeed, rapid passthrough
of exchange rate changes to the prices of traded goods is the defining assumption of the “small open economy model,” which was thought to apply
fairly well to emerging market countries. The contractionary effect would then follow in any of several ways: the higher prices of traded goods would, for example, reduce real money balances or real wages of workers, or increase costs to producers in the nontraded goods sector. These mechanisms were not much in evidence in the currency crashes of the
1990s. In fact, the pass-through coefficient fell significantly in the course of the 1990s, and the speed of decline was twice as fast among developing countries.

What, then, is the explanation for the recessions that followed many of the 1990s devaluations? Researchers have paid a great deal of attention—and
in Frankel’s mind appropriately so—to the balance sheet effect. This is a problem of “mismatch” between the currency in which a country’s debts are denominated and the currency in which its firms earn revenue. Domestic banks and firms had large debts denominated in foreign currencies, particularly in dollars, which they might have been able to service at the previous exchange rate, but which they had trouble servicing after the price of foreign exchange went up sharply. The results were layoffs and bankruptcies. How to mitigate the contraction
How might debtors mitigate contractionary currency crashes? It is not enough to instruct firms to avoid dollar debts or to hedge them, because international investors are not very interested in lending to these countries in their own currencies anyway, for under-standable reasons. The shortrun
solution is for countries to adjust promptly, rather than procrastinate. When foreign investors lose their previous enthusiasm for financing a country’s current account deficit, the national policymakers must decide whether to adjust or to wait. Typically they wait. As a result, even countries that had previously managed to keep dollar-denominated debt relatively low tend to switch the composition of their debt toward that currency during the
year or so preceding the ultimate currency crash.
A prime example is Mexico during the course of 1994. International enthusiasm for investing in Mexico began to decline after the beginning of that year, but the authorities clung to the exchange rate target and delayed adjustment in hopes that conditions would improve. During much of the year they ran down reserves.An important second mechanism of delay was to placate nervous investors by offering them Tesobonos (shortterm dollar-linked bonds) in place of the peso bonds (Cetes) that they had previously held. It seems likely that the magnitude of the Mexican recession in 1995 stemmed not just from the adverse balance sheet effects that have been so frequently noted, but particularly from the adverse shift in balance sheets that took place during the course of 1994. A third mechanism of delay was a shift toward shorter maturities. And the fourth was an explicit commitment to defend the peg. These tactics are part of a strategy that is sometimes called “gambling for resurrection.”What they have in common, beyond achieving the desired delay, is helping deepen the crisis, if it comes. It is harder to restore confidence after a devaluation if reserves are near zero
and the ministers have lost personal credibility. Further, if the composition of the debt has shifted toward the short term and toward the dollar, then restoring external balance is likely to wreak havoc with private balance sheets regardless of the combination of increases in interest rate and currency depreciation. The lesson, according to Frankel is to adjust sooner rather than later—but this is something, he admits, that is easier said than done.

Here is one of my post from another forum concerning Mexico and how they bailed them out with ESF fund. There will be no zero Lop in Iraq because Iraq is rich in resouces.

Bill Clinton in Mexican Currency Crisis Uses ESf to stabilize currency.

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The 1994 economic crisis in Mexico, widely known as the Mexican peso crisis, was triggered by the sudden devaluation of the Mexican peso in the early days of the presidency of Ernesto Zedillo. A week or so of intense currency crisis was stabilized when US President Bill Clinton granted Mexico a $50 billion loan.

1994 economic crisis in Mexico - Wikipedia, the free encyclopedia

February 1995 the President decided to use the ESF to provide up to $20 billion in assistance to Mexico. Building on the North American Framework Agreement (NAFA) and the ESF's standing Exchange Stabilization Agreement (ESA) with Mexico under NAFA, the February agreements provided for support in the form of short-term swaps, medium-term swaps (up to 5 years), and securities guarantees (up to 10 years). The February agreements included an Oil Proceeds Facility Agreement that provided Treasury with a source of repayment through Mexican oil export proceeds if needed. Treasury also agreed with the Fed that any Fed claim on Mexico remaining outstanding beyond one year could be assigned to the ESF. In 1995, Mexico drew on the medium-term facility in an amount totaling $10.5 billion. Mexico fully repaid the drawings in advance, by January 1997. The ESA remains the ESF's only standing swap line.

In November 1998, the United States committed to use the ESF for up to $5 billion of a multilateral guarantee of a $13.2 billion Bank for International Settlements (BIS) credit facility for Brazil. Drawings by Brazil on the BIS totaled $8.65 billion, and the ESF's share of the guarantee of these drawings amounted to $3.3 billion. Brazil had fully repaid these drawings by April 2000.

Are you reading the same thing I am? The oil Proceeds facility agreement that provided the treasury with a souce of payments thru oil exports.
This means they stabilized mexico for oil.

under credit operations Link U.S. Treasury - Exchange Stabilization Fund

Here is where they credited Mexicos account.
http://www.treas.gov/offices/interna...ry/credits.pdf

In Brazils case they did not require repayment in oil. This means the President has vast authority when it comes to saying when and where the esf is used.

This is solid Proof that the International compact=Marshall Plan.

Originally Posted by day dreamer

The President and Vice-emphasize the importance of the success of national reconciliation, and to provide the necessary services for Iraqis

January 2, 2007
President Jalal Talabani, at his residence in the city of Sulaymaniyah, Mr. Tariq Al-Hashmi, Vice President of the Republic, on Tuesday, 1 - 2-2007.
During the meeting, and discussed the latest developments important in the political arena, and to discuss security issues in the country.
And the two sides agreed on the need to work together in order to consolidate security and stability in the new Iraq and make the necessary efforts to ensure the success of the national reconciliation among the components of the Iraqi people. As President Talabani and Mr. Hashemi on the support of the government of national unity headed by Mr. Nouri Al-Maliki, and the importance of providing the necessary services needed by the Iraqis in their daily lives.

They seem to be having meetings even on their holiday,
HAS ANYBODY CHECKED TO SEE IF OFFICIAL GAZZETT IS STILL DOWN,
Their still updating the presidency form I was just wondering

Gazette is still down....

I am new, so don't kill me on my first day, but as I was looking at the CBI exchange rate history, is this the first time the CBI has closed for a week?

Originally Posted by buddyboy

I am new, so don't kill me on my first day, but as I was looking at the CBI exchange rate history, is this the first time the CBI has closed for a week?

Welcome, you've come to a good place. From what I gather, this holiday is unusally long, a little irregular.

Economic Inflation is the prominent event in 2006
The phenomenon has grown more frightening and threatening to disrupt production sectors

--------------------------------------------------------------------------------

03 January 2007 (Iraq Directory)
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Iraqi economy experts find that the economic inflation phenomenon, which has begun to increase and had reached a frightening threat to the Iraqi economy, is one of the most prominent events in the country during 2006.

They emphasized in an opinion poll: "When the inflation rates in the countries of the world rise, they will rise to varying fractional, and this will compel the governments to make adjustments and changes in the economic decision, but the phenomenon in Iraq have taken another foreshadowing form, if it is unleashed, it will disrupt all productive sectors".

The economic expert, Dr. Madhar Mohamed Salih, said: "The dangerous phenomenon of inflation experienced by the Iraqi economy is one of the most serious economic phenomena because it is still continuing without finding any radical solutions to eliminate or control it effectively", pointing out that "part of the State policy to eradicate this phenomenon was to raise interest rates and other measures which are considered procedures for controlling and not eliminating it".

He explained: "The things that could be considered high profile events during 2006 is the fruitful movement of the Iraqi government for rescheduling the debt of commercial banks and foreign private sector to the government and quenching them with an international bill equivalent to the conditions of the Paris debt, amounting to 20 billion dollars".

Dr. Mohammed Risan, from the Economic Studies Center, said: "the economic inflation is one of the most prominent economic phenomena experienced by Iraq in 2006. It began to grow from the beginning of the year and continued without taking effective steps to stop or reduce the rate of its growth; which means that the country will live a serious economic crisis if effective steps were not taken to deal with it".

He explained: "The decision of the current Iraqi government to raise the prices of fuel by 125% compared to its prices last year, had a significant effect in raising the prices of foodstuffs, consumer goods and others; which created the appropriate environment for the growth of the phenomenon of economic inflation", pointing out that: "This did not come from the vacuum, but from the pressure imposed on Iraq by the International Bank and the IMF to reduce its debt, in exchange for raising the fuel prices without seeing the negative side, which Iraqis would live as a result of international resolutions that have more negatives than positives".

Dr. Sundus Abd Jassim, professor of international economics at the Faculty of Management and Economics in Baghdad explained: "The dramatic decline in the dollar exchange rate during the latest weeks is a phenomenon which should be taken into consideration because of the economic implications that could be reflected positively on the value of the Iraqi dinar".

She said: "The optimistic predictions for rehabilitating the deteriorating Iraqi economy coincide with starting the work by the budget of 2007; however, those predictions should be backed up by the State to raise the value of the Iraqi dinar versus foreign currency", adding: " the Iraqi government can eradicate the phenomenon of economic inflation through ongoing work to develop plans and programs to reduce the value of foreign currency against the Iraqi dinar". It is noteworthy that the rate of inflation during the last year ranged between 25 and 30 per cent, while reached up to 77% during the current year.
Economic Inflation is the prominent event in 2006 | Iraq Updates

Originally Posted by kiko

The Ministry of the Interior-M / press conference.
(Voice of Iraq) - 03-01-2007

The name of God the Merciful Brotherhood media and the respectable media M / press conference.

The Brigadier Abdul Karim Khalaf, Director of the national leadership of the Ministry of the Interior held a "press" important "on the achievements of the Interior Ministry and security developments in the recent and sharp one in the afternoon of Thursday, January 4, 2007 in the ((Center of the Ministry of the Interior)), and also there will be another activity after the press conference 0

We ask you to all our brothers and media briefing viewers attend at the time and place designated to cover the proceedings of the Conference through your institutions august 00 and there will be a bus to transport journalists from the door to the headquarters of the ministry of the Conference and vice versa 0 With sincere appreciation and respect The Ministry of the Interior

Sotaliraq.com

i realize this is ministry of interior and they wouldnt be the ones to divuldge any budget information/dinar related, but that 'other activity' im wondering about what it might be. security would be their strong point and unless it was a total lockdown or something, or lifting of the curfew??

10% is the proportion of implementing projects in Iraq

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03 January 2007 (Iraq Directory)
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The Minister of Planning and Development Cooperation, Ali Baban, announced that the Iraqi government has allocated $ 10 billion from the budget of next year for the implementation of investment projects in governorates and regions and the promotion of development at governorates that suffer from insecurity, deterioration of services and widespread unemployment.

He said in a speech, during a workshop held by the ministry and attended by a number of representatives of ministries, provinces and companies to discuss ways to expedite the process of implementing investment projects and developing the regions, that the security situation will improve only when the Iraqi economy returns to its usual activity through the implementation of investment projects and services in the provinces.

Many of the ministries of the State failed to implement the platform of the investment projects for only a very modest achievement rates reached 10% of the overall achievement of the project until the end of the year.

The minister stressed that "this can not be tolerated", and that the ministry is determined to solve this problem, to reduce the widespread unemployment and raise the standard of living of the people and provide services to them.

He pointed out that there are many reasons formed obstacles to the implementation of investment projects, mainly: the deterioration of the security situation, the interruption of the production process, the widespread unemployment, the administrative matters including the instructions of the Ministry of Finance, the granting of allocations in late times of the year and other reasons.

He stressed that the ministry will put plans and proposals, after discussing them with the appropriate ministries, the concerned government departments, provinces and other relevant authorities, then present them to the government to solve all the problems and obstacles that hinder the implementation of these projects for the advancement of the Iraqi economy.

He added that the ministry has prepared a new mechanism for implementing investment projects and developing regions in due time. He pointed out that the implementation of these projects will substantially help in improving the security situation by creating employment opportunities for the unemployed, improving the standard of services and raising the standard of living of the individual.

The Minister explained that the Energy Committee in the Cabinet had reached the final stages of the oil law legislation, which provides for the allocation of oil revenues to the provinces according to the number of residents; legislating this law will help in improving the oil sector, and distributing its revenues to the citizens, as well as preserving the unity of the Iraqi people.

The workshop was attended by agents of the Ministries of: Municipalities, Trade, Finance, Planning in addition to the representative of the Vice-President of the Republic, and a number of representatives of the governorates of the country and other relevant ministries.

10% is the proportion of implementing projects in Iraq | Iraq Updates

Originally Posted by buddyboy

I am new, so don't kill me on my first day, but as I was looking at the CBI exchange rate history, is this the first time the CBI has closed for a week?

WELCOME WELCOME

HOLIDAY EID AL ADHA START SATURDAY DEC. 30 (FOR 4 DAYS) TO WEDNESDAY JAN. 3.

THURSDAY IS A "ARMY" HOLIDAY THERE JAN. 4TH.

FRIDAY AND SATURDAY JAN. 5 & 6 IS THEIR WEEK-END.

THIS IS WHY IT IS A WEEK-LONG

WELCOME TO THE FAMILY
CHEERS
CHRIS

Originally Posted by Pippyman

Frankel re-examines why currency crashes are so costly


http://www.imf.org/external/pubs/ft/...004/112904.pdf


The most obvious interpretation of why devaluations carry high political costs is that they are accompanied by painful recessions. But why? After all, evaluations are supposed to boost competitiveness, increase production and exports of tradable goods, reduce imports, and thereby improve the trade balance, GDP, and employment.
One possible explanation, says Frankel, is that, even if there is no negative effect on GDP in the aggregate, the redistributional effects could be politically costly to leaders. For example, a devaluation in an African country may benefit small rural coffee and cocoa farmers because the price of their products is determined in foreign currency terms on world markets; but farmers tend to have less political power than urban residents, who may consume imported goods and thus be hurt by the devaluation. The problem
with this theory, Frankel points out, is that there are so many examples that go the other way, where the producers of the tradable products (agricultural, mineral, or manufactured) tend to have more political power than the producers of nontraded goods.
One can argue that simultaneous monetary and fiscal austerity (or banking failures or the sudden stop in foreign lending itself) are the true causes of these declines in economic activity. But Frankel says this misses a key point. According to the standard textbook theories, when a country faces a sudden stop in capital flows, there exists some optimal combination of expenditure-reducing policies (monetary or fiscal contraction) and expenditure-switching policies (devaluation) that should achieve external balance without
inducing a recession....

By now the evidence seems strong that devaluation is contractionary, at least in the first year, and perhaps in the second as well. Until the currency crashes of the 1990s, a mainstream view had been that any negative effects from a devaluation were relatively quickly offset by the stimulus to net exports, so that by the second year, when exports had gathered strength, the overall
effect on output would turn positive. Now, however, the negative effects seem stronger than first thought, and the positive effects weaker. The depressing conclusion is that there is no escape from recession. All policy
instruments that work to improve external balance do so by reducing income in the short run—devaluation, fiscal contraction, and monetary contraction.
Even structural policy reform, such as insisting that nonviable banks close, may have a negative effect on economic activity in the short run.Why is devaluation often contractionary?

Of the many possible contractionary effects of devaluation, which ones were, in fact, responsible for the recessionary currency crashes of the 1990s? Several of the most important contractionary effects of a devaluation
are hypothesized to work through a corresponding increase in the domestic price of imports or of some larger set of goods. Indeed, rapid passthrough
of exchange rate changes to the prices of traded goods is the defining assumption of the “small open economy model,” which was thought to apply
fairly well to emerging market countries. The contractionary effect would then follow in any of several ways: the higher prices of traded goods would, for example, reduce real money balances or real wages of workers, or increase costs to producers in the nontraded goods sector. These mechanisms were not much in evidence in the currency crashes of the
1990s. In fact, the pass-through coefficient fell significantly in the course of the 1990s, and the speed of decline was twice as fast among developing countries.

What, then, is the explanation for the recessions that followed many of the 1990s devaluations? Researchers have paid a great deal of attention—and
in Frankel’s mind appropriately so—to the balance sheet effect. This is a problem of “mismatch” between the currency in which a country’s debts are denominated and the currency in which its firms earn revenue. Domestic banks and firms had large debts denominated in foreign currencies, particularly in dollars, which they might have been able to service at the previous exchange rate, but which they had trouble servicing after the price of foreign exchange went up sharply. The results were layoffs and bankruptcies. How to mitigate the contraction
How might debtors mitigate contractionary currency crashes? It is not enough to instruct firms to avoid dollar debts or to hedge them, because international investors are not very interested in lending to these countries in their own currencies anyway, for under-standable reasons. The shortrun
solution is for countries to adjust promptly, rather than procrastinate. When foreign investors lose their previous enthusiasm for financing a country’s current account deficit, the national policymakers must decide whether to adjust or to wait. Typically they wait. As a result, even countries that had previously managed to keep dollar-denominated debt relatively low tend to switch the composition of their debt toward that currency during the
year or so preceding the ultimate currency crash.
A prime example is Mexico during the course of 1994. International enthusiasm for investing in Mexico began to decline after the beginning of that year, but the authorities clung to the exchange rate target and delayed adjustment in hopes that conditions would improve. During much of the year they ran down reserves.An important second mechanism of delay was to placate nervous investors by offering them Tesobonos (shortterm dollar-linked bonds) in place of the peso bonds (Cetes) that they had previously held. It seems likely that the magnitude of the Mexican recession in 1995 stemmed not just from the adverse balance sheet effects that have been so frequently noted, but particularly from the adverse shift in balance sheets that took place during the course of 1994. A third mechanism of delay was a shift toward shorter maturities. And the fourth was an explicit commitment to defend the peg. These tactics are part of a strategy that is sometimes called “gambling for resurrection.”What they have in common, beyond achieving the desired delay, is helping deepen the crisis, if it comes. It is harder to restore confidence after a devaluation if reserves are near zero
and the ministers have lost personal credibility. Further, if the composition of the debt has shifted toward the short term and toward the dollar, then restoring external balance is likely to wreak havoc with private balance sheets regardless of the combination of increases in interest rate and currency depreciation. The lesson, according to Frankel is to adjust sooner rather than later—but this is something, he admits, that is easier said than done.

now would be REALLLLLLLLLLLLL good.