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IMF Warns of Deepening Debt-Crisis Recession

2012-01-26T10:00:00.005+08:00

The International Monetary Fund cut its forecasts for growth in 2012 on Tuesday and warned of a possible deepening downturn in Europe.

Revising an earlier forecast, the IMF predicted that the global economy will expand 3.3%, this year, down from 3.8% last year and lower than the 4% growth it had forecast last September.“The world recovery, which was weak in the first place, is in danger of stalling,” IMF chief economist Olivier Blanchard said. “But there is an even greater danger, namely that the European crisis intensifies.

In this case, the world could be plunged into another recession,” he said.Oliver Blanchard is spot on in identifying a serious threat to the world economy. His only error is from where he sees the threat coming and how bad it is.On Monday IMF chief Christine Lagarde warned of a worst case scenario in the form of a possible Depression-era collapse in the global economy. If however Europe follows IMF recommendations, she said, the fund expects the euro zone to face a mild recession this year.

Nonetheless, it should be emphasised that this is still a “best case scenario.” Economists are increasingly concerned that Greece will default within weeks. Even worse, the larger economies of Spain and Italy are now under threat, pushing up the cost for Rome and Madrid to borrow to cover the risk of default.The IMF 2012 forecasts that the economies of both countries will contract, with Italy facing a contraction of 2.2% and Spain a fall of 1.7%.

Neither is expected to recover economically until 2014, at least. Meanwhile bigger economies such as the U.S., Japan, the U.K, France and Germany are expected to expand by only 1.5% on average next year, a growth rate too slow to curb rising unemployment levels. Moreover, the IMF forecast of slowing global economic growth is based on the assumption that the world will not see a dramatic rise in the price of oil. If that were to happen then the IMF’s most optimistic forecast would be null and void, making its worst case scenario seem optimistic.Iran’s recent rhetoric about “closing the Straits of Hormuz” seems intended to play on such concerns; with growing fears that a dramatic rise in the oil price could completely undermine prospects for global economic recovery.

Although Tehran’s ambassador to the U.N. may have only been bluffing when he spoke recently about the “option” of closing the Straits, he seems to have hit a raw nerve.Within days Western powers despatched naval vessels to the Straits of Hormuz – assuming, of course, that they had not planned this some time ago and were merely using his threats as an excuse.Either way, as the European Union voted to impose harsher sanctions on Iran’s oil – and Iran responded by suggesting it could close the waterway through which 35% of the world’s oil is shipped – French, British and American warships were all sailing toward the gulf.

In response Iran declared defiantly that sanctions would provide it with an economic stimulous and repeated threats to close the straits. Between claim and counter-claim and trading threats the West and Iran seem to be on a course for a confrontation. If it erupts into armed conflict then the world may not only face a slowdown in growth and financial meltdown.

For both Russia and China have warned that they view the prospect of conflict with Iran with grave concern.In fact Russia has repeated these warnings recently, as if to emphasise how seriously it views the situation. While China signalled a clear rejection of any new sanctions on Iranian oil. We live in dangerous times. They could be about to become even more perilous.
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Hormuz oil spike could spark global recession

2012-01-05T09:00:00.004+08:00

Escalating tensions with Iran have pushed the cost of crude oil higher as fears mount that a 1970s-style jump in the oil price could send both Eastern and Western economies into recession. Iran's threat to cut off access to the Strait of Hormuz – through which 40pc of the world's oil is shipped – has provoked an angry rebuke from the US, which has the Fifth Fleet nearby.

Today, French foreign minister Alain Juppe supported the American hard line with Tehran, and urged European leaders to impose an embargo on Iranian oil exports and freeze Iranian central bank assets by the end of this month. Currently, Italy imports 13.3pc of its oil from Iran, Spain 9.6pc, Greece 34.7pc and France 4.4pc.International strains over Iran's nuclear ambitions were further exacerbated by the country staging three days of war games in the Hormuz area. However, Tehran said that increased sanctions could result in it closing off the strait, which it declared was "easier than drinking a glass of water".

But Iran's own oil supply is only part of the problem - the real threat is that disruption would halt the passage of oil from other Middle Eastern countries such as Saudi Arabia - the world's largest oil producer – and Kuwait. Qatar's liquified natural gas supplies would also be affected.Roy Jordan, of FACTS Global Energy, said: "If supply through the Strait of Hormuz is cut off, just about everybody in the East and West would be in trouble. It would disrupt major proportion of the world's oil and gas at a time when many of the world's economies are very fragile and would not be able to sustain a serious oil spike."

Mr Jordan said that its effect on Asian countries, which are driving world growth, would be devastating. China, Iran's number one customer, imports 10pc of its oil supply from Iran."All it would take for Iran is a few mines put into sea, and ship owners and insurance companies would not go up there," said Mr Jordan.Brent crude rose $3.74 at $111.12 and Mr Jordan warned that if Iran's threat was fulfilled "there would be an instant escalation of price – we saw $147 in 2008 – and it could definitely reach that level and even higher."In 1974, after the Yom Kippur war and Iran's own embargo of its oil to countries supporting Israel, oil prices increased 400pc in six months.

However, Iranian officials have threatened to close the strait in the past but have not done so. But according to Mr Jordan if sanctions became such that Iran couldn't sell its oil then the country would have nothing to lose in its dealings with the West. "This is a situation we must avoid," he said.If no resolution is found, or hostilities break out, the International Energy Agency would have to force its members to try to make up the shortfall by releasing supplies from their reserves.But alternatives to Hormuz are few and far between. Iraq can already get its production into the Mediterranean through a pipeline across Turkey and a new Abu Dhabi pipeline is being built. This will come on stream early this year with 1m barrels of capacity, compared to the 18m that travel through Hormuz.

However, a recent article in Mashreq News, which is close to the Iranian military circles, pointed out that the new construction was "within range of Iran's missiles".Analysts suggested that while the closure of Hormuz remained a threat a premium was already priced into internationally traded crude that would slowly tick higher and higher. But if the strained supply days of the 1970s were to return, governments – including the UK's – would have to enforce demand restraint, with only essential services like ambulances and police getting access to petrol.

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A Hedge Fund Insider Explains Why Retail Investors Should Flee The Stock Market

2011-12-07T09:21:00.001+08:00

Regular readers know that ever since 2009, well before the confidence destroying flash crash of May 2010, Zero Hedge had been advocating that regular retail investors shun the equity market in its entirety as it is anything but "fair and efficient" in which frontrunning for a select few is legal, in which insider trading is permitted for politicians and is masked as "expert networks" for others, in which the government itself leaks information to a hand-picked elite of the wealthiest investors, in which investment banks send out their "huddle" top picks to "whale" accounts before everyone else gets access, in which hedge funds form "clubs" and collude in moving the market, in which millisecond algorithms make instantaneous decisions which regular investors can never hope to beat, in which daily record volatility triggers sell limits virtually assuring daytrading losses, and where the bid/ask spreads for all but the choicest few make the prospect of breaking even, let alone winning, quite daunting. In short: a rigged casino. What is gratifying is to see that this warning is permeating an ever broader cross-section of the retail population with hundreds of billions in equity fund outflows in the past two years. And yet, some pathological gamblers still return day after day, in hope of striking it rich, despite odds which make a slot machine seem like the proverbial pot of gold at the end of the rainbow. In that regard, we are happy to present another perspective: this time from a hedge fund insider who while advocating his support for the OWS movement, explains, in no uncertain terms, and in a somewhat more detailed and lucid fashion, both how and why the market is not only broken, but rigged, and why it is nothing but a wealth extraction mechanism in which the richest slowly but surely steal the money from everyone else who still trades any public stock equity.

From Reddit: I work in Wall Street and work in hedge fund analysis. I'm the only person in my office who supports OWS
This is a self-post, so I'm not trying to karma-whore or anything. I have a message I want to share with anyone who's interested.
I'm writing this in hopes that the OWS movement can have a better understanding of the hedge fund industry and the financial markets. With OWS being the zeitgeist of current politics, I think it's important to know how exactly the hedge funds, along with the financial markets are destroying the 99%.
Hedge funds. These guys are basically the vehicles of choice for ultra-rich people to get into the financial markets, besides family offices and private wealth managers. What are hedge funds? They are funds that have a 1-5 million deposit minimum, cater to the mega-rich, and can invest in anything without regulatory restrictions, use leverage to pump up their exposure by 15x, and pretty much eat up a vast majority of the industry's profits.
These guys invest in EVERYTHING. Instruments you've heard of - stocks, bonds, forwards, futures, currencies, and instruments that you, me, or anyone else have never even heard of, much less know anything about: commodity future swaptions, FRA/OIS swaps, CLOs, exotic future options, p-notes, index/commodity/equity exposures, and a huge array of OTC (over-the-counter) instruments that no regular investor would ever have access to.
Why I bring this up: the financial markets are rigged. 99% of the investing public has access to services such as basic brokerages, 401k/IRA's, mutual funds, pension plans, etc. Some of these services, especially pension funds, will invest into hedge funds, who take an additional 2 and 20 (meaning 2% of assets plus 20% of capital gains).
What this means is that if you go any of the traditional retail routes, you are utterly screwed facing off against the hedge funds.
First, you are paying exorbitant fees. Commissions on every stock trade. Mutual fund managers taking a cut - an annual % cut, as well as a % per profit cut. If these managers (i.e. pension plans) invest in another fund, that fund is also taking another % cut. You're down 2% the minute you invest your money.
Next, if you're doing the investing yourself, you're paying ridiculous spreads. The bid/ask spread of a stock will cause you to be down another 2-3% the minute you buy the stock. For example, if you're buying a share of company at $4.25, you can sell back at only $4.15.
Furthermore, you have absolutely no chance in terms of access to the best services. Hedge funds have a direct line to investment bank's institutional brokerage teams - these are the guys that spend day and night sucking up to hedge funds, trying to get them the best deals at the cheapest rates. This means that while you're buying stocks and bonds, hedge funds are getting special rights, warrants, sweetheart deals, private placement deals, options, bigger discounts on bonds, and much better bulk commission rates and lower spreads on stocks. If you're paying 4.25$ for a 4.15$ stock, they are paying something like 4.16$. And they are eating alive your profits because when the stock goes up to $4.30, they can activate another warrant to purchase 20m shares at $4.25, diluting the value of your shares.
Next, you lack information and exposure. You have no idea what is going on in the market besides what you see on the news - while hedge funds have analysts working around the clock and a bunch of service providers who give minute-by-minute analysis of their portfolio opportunities and weaknesses in all markets with exposures to nearly everything. Meaning, if there is an opportunity in the real estate market (i.e. legislation), it might take you weeks to get in - hedge funds will have gotten in the minute the legislation was passed. Furthermore, when IPOs come out for companies, hedge funds get top billing on the primary market shares - which means investment banks are selling directly to them. Once the secondary market becomes available, hedge funds are up 15-20% on these investments, sometimes within hours.
Finally, you have no capital compared to these hedge funds. The people who invest in these hedge funds are not just the 1%, they are the 0.1%. These are the guys with 500million dollar bank accounts and the ability to do whatever the fuck they want. Hedge funds know this, and they invest without having to care about whether their clients can pay the rent or send their kids to college. All of that is irrelevant. Their sole purpose is to earn money, not to mitigate risk.
What does this all mean? It means the hedge fund industry is making a gigantic proportion of the profits. The top .1% is earning nearly half of the profits in the industry, through not just hedge funds, but other similar vehicles.
The finance industry is a complete scam, designed to funnel money from the 99% investing public into the hands of the top .1%. Sure, some of you will make good money, but stastically, the rest of us will lose, and who is feeding off us? Hedge funds, and the .1%. You have better odds going to a casino and playing slots, the worst-paying game in the house, but still better than the stock market.
Also, the government is in bed with the financial industry. Tax loopholes give hedge funds and other top players the ability to write off losses and not pay taxes on gains for years at a time. For income they derive from the hedge fund (profits), they pay only 15%, rather than the 35% income tax charged to most people earning 80k and above. Meanwhile, you have to pay taxes for not just your own income but also capital gains.
The worst part by far is that the government "encourages" you to put your money into your 401k through 'tax exemptions', which basically puts your money with the lowest tier of the financial industry - pension funds, retail wealth managers, and retail asset managers. These guys have shit strategies like long-only or domestic equity (which means they only invest in American stocks), and have nowhere near the capability and reach of hedge funds. These guys are even more likely to lose your money than you are, and even worse is they will take a 2.35% cut while doing so. And you get penalized when you try to take your money out early. How f***ed up is that.
In other words, if you aren't in the .1%, you have no access to the derivatives markets, you have no access to the special deals that hedge funds and other wealthy investors get, and you have no access to the resources, information, strategic services, tax exemptions, and capital that the top .1% is getting.
If you have any questions about what some of the concepts above mean, ask and I will try my best to answer. I'm a first-year analyst on wall street, and based on what I see day in and day out, I support the OWS movement 100%.
tl;dr: The finance industry funnels money from the masses to the ultra rich, through vehicles like hedge funds which dominate all of the financial markets.
h/t Scott

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DINAR AND DIRHAM EFFECT ON THE BANKING BUSINESS AND ITS SOLUTION

2011-11-11T11:16:00.001+08:00

Proceedings of the 2002 International Conference on Stable and Just Global Monetary System
International Islamic University Malaysia (2002)

DINAR AND DIRHAM EFFECT ON THE BANKING BUSINESS
AND ITS SOLUTION

1Abdul Halim Abdul Hamid and 2Norizaton Azmin Mohd Nordin
1,2Faculty of Business and Law, Multimedia University,
Jalan Ayer Keroh Lama, 75450 Bukit Beruang, Melaka, Malaysia
E-mail: 1ahalim@mmu.edu.my, 2 azmin@mmu.edu.my

Abstract.

One of the issues that might arise when implementing the use of Dinar and Dirham is how it will affect the banking business. The introduction of Dinar and Dirham will retard the growth of the existing banking business. Banks that exist today are based entirely on the concept of interest-bearing instruments (Bexley, et.al, 2000). At present, a major portion of bank’s income is derived from interest income. Interest income is derived from the loan that was given out to a bank’s customer, from depositor’s funds after deducting the required reserve set by the law (Rose, 2000). Banks will loan out a portion of depositor’s money and charge the borrower with interest. The borrower will then deposits this loan into his account in the same bank or other bank, in which a portion of this money will be loan out to some other customer. This is known as money multiplier or money creation (Fabozzi, et.al, 1998). With the implementation of Dinar and Dirham, such money multiplier activities will be difficult if not impossible to occur. This is because each Dinar and Dirham must be represented with actual money that contains a certain weight of gold and silver. In this case Dinar will have 4.3 grams of gold and Dirham will contain 3.0 grams of pure silver (www.e-dinar.com). Dinar and Dirham can be considered as ‘real money’ or ‘live money’ and it is difficult to simply create or print or controlling its supply and demand. This is due to the fact that gold and silver is limited in supply by natural factors and requires scarce resources to produce (Rose, 2000). Therefore, it is different from fiat money, in which its existence promotes money multiplier and interest charges.

Dinar and Dirham will promote real economy instead of financial economy. Under the Dinar and Dirham system, for every transaction, trades and investments, real physical money do change hands. Thus, we can say Dinar and Dirham can become a threat to the banking business due to the fact that it cannot be simply multiplied. As a result, the interest income derived from the money multiplier activity shall also be diminished. If this is the case, how banks will survive in the Dinar and Dirham system? The current economic and banking system is a system made by non-Muslim. It is time that Muslims of the world design its own economic and financial system (Ahmed, 2000). Banks have to be totally reformed. The present banking system is irrelevant in Dinar and Dirham system. Therefore this paper is to discuss the type of bank that should exist in the Dinar and Dirham system. The information presented is only conceptual, thus further research in different areas of this proposed type of bank is still needed to make it complete.

Introduction.

Let's begin with an issue. The introduction of Dinar and Dirham will retard the growth of the existing banking business. Banks that exist today are based entirely on the concept of interest bearing instruments (Bexley, et.al, 2000). At present, a major portion of bank’s income is derived from interest income. Interest income is derived from the loan that was given out to a bank’s customer, from depositor’s funds after deducting the required reserve set by the law (Rose, 2000). Banks will loan out a portion of depositor’s money and charge the borrower with interest. The borrower will then deposits this loan into his account in the same bank or other bank, in which a portion of this money will be loan out to some other customer. This is known as money multiplier or money creation (Fabozzi, et.al, 1998). A better illustration of money multiplier can be seen from figure 1.

However, with the implementation of Dinar and Dirham, such money multiplier activities will be impossible to occur. This is because each Dinar and Dirham must be represented with actual money that contains a certain weight of gold and silver. In this case Dinar will have 4.3 grams of gold and Dirham will contain 3.0 grams of pure silver (www.e-dinar.com). Dinar and Dirham can be considered as ‘real money’ or ‘live money’ and it is difficult to simply create or print or controlling its supply and demand through the use of interest rate. This is due to the fact that gold and silver is limited in supply by natural factors and requires scarce resources to produce (Rose, 2000). Furthermore, in Dinar and Dirham system, a hundred percent reserve and liquidity requirement is required. Therefore, it is different from fiat money, in which its existence promotes money multiplier and interest charges.

Real economy versus Financial Economy: ‘The Dilemma of Conventional Bank due to Dinar and Dirham’.

There are two types of economy. They are: (1) real economy and (2) financial economy. According to Joel Kurtzman in his book titled “ The Death of Money”, the ‘real economy’ is where products are made, trade is conducted, research is carried out and services are rendered. The real economy is where factory workers toil, doctors tend the sick, and where teachers teach and where roads, bridges, harbours, airports and railway systems are built”. He further mentioned that, “The other economy, the ‘financial economy’, is
somewhere between twenty and fifty times larger than the real economy. It is not the economy of trade but of speculation. Its commerce is in financial instruments. Mostly, it is concerned with the exchange of equities, such as stocks, and securities, such as bonds and other forms of debt. The latest and largest type of debt that the financial economy trades from a technical standpoint is money.”

Unlike fiat money, which promotes ‘financial economy’, Dinar and Dirham will promote ‘real economy’. Under the Dinar and Dirham system, for every transaction, trades and investments, real physical money do change hands. Thus, we can say Dinar and Dirham can become a threat to the banking business due to the fact that it cannot be simply multiplied. As a result, the interest income derived from the money multiplier activity will be diminished. According to Rais Umar Ibrahim Vadillo in his article titled “Islamic Trading in
the Modern World”(www.murabitun.org), he said that based on traditional Islamic practice, banks are not needed. He also urged the Muslim society to get rid of the bank. In the present banking system, banks widened the gap between the riches (the haves) and the poor (the have-nots) through the use of interest (Diagram A). This gap cannot be narrowed by zakat because the fiat money system itself is already a Riba. However, under the Dinar and Dirham system, zakat and other Muamalat activities such as Musyarakah are bridging the riches and the poor. Zakat will be more practicable in the Dinar and Dirham system because Dinar and Dirham is not ‘a promise to pay’ as in the case of fiat money (Diagram B).

If this is the case, how banks will survive in the Dinar and Dirham system? The current economic and banking system is a system made by non-Muslim. Even with the existence of the so-called Islamic banks, Muslims are still skeptical about it operations (M.Jaffar, 2002). Many Muslims are now abandoning the so-called Islamic banks because they have realized that it is still a usurious institution in disguised as Islamic by its name and appearance. (Vadillo, Islamic Trading in the Modern World).

Solution for the Banking Industry.

It is time that Muslims of the world design its own economic and financial system (Ahmed, 2000). Banks have to be totally reformed. The new type of bank shall be called an ‘Entrepreneur Bank’ (En-Bank) (Diagram C). How will this bank operate? First and foremost, it is an entrepreneur by itself in which it will require its own capital to invest. It accepts deposits in terms of Dinar and Dirham and it operates electronically based on Dinar and Dirham. All Dinar and Dirham deposited into an entrepreneur bank is ‘real money’ with a hundred percent reserve requirement. Entrepreneur banks act as a safe keeper for Dinar and Dirham through the concept of Yad Amanah (trustee), therefore none of the deposited Dinar and Dirham shall be loaned out.

Entrepreneur Bank’s Tenet # 1: Allah owns all the wealth in this world and bank only act as trustee or manager.

An entrepreneur bank should be formed based on the above seven tenets (Table 1). First and foremost, banks should remind themselves that they are the trustees for Allah’s wealth in this world. As mentioned in the Al-Quran;

To Him belongs what is in the heavens and on earth, and all between them, and all beneath the soil.
(Taha: 6)

To Allah belongth all that is the heavens and on earth. Whether ye show what is in your minds or conceal it, Allah calleth you to account for it. He forgiveth whom He pleaseth, and punisheth whom He pleaseth. For Allah hath power over all things.
(Al-Baqarah: 284)

It is He who hath made you (His) agents, inheritors of the earth: He has raised you in ranks, some above others: that He may try you in the gifts He hath given you: for thy Lord is quick in punishment: yet He is indeed Oft-Forgiving, Most Merciful.
(Al-An’aam: 165)

If the bank regards Allah as the supreme creator and supreme owner of all the wealth, he must also abide by Allah’s rule. Allah strongly forbid Usury and Riba, as mentioned in the Al-Quran:

Those who devour usury will not stand except as stands one whom the Evil One by his touch hath driven to madness. That is because they say: “Trade is like usury”, but Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (the offence) are companions of the Fire; they will abide therein (forever).
(Al-Baqarah: 275)

Allah further forbid taking extra money out of debt, and He and his messenger declare war to those who commit Riba. In addition, He said without Riba, one will not do injustice to others, neither does others towards him or her. As mentioned in the Al-Quran:

O ye who believe! Fear Allah, and give up what remains of your demand for usury, if ye are indeed believers.
(Al-Baqarah: 278)

If ye do it not, take notice of war from Allah and His Messenger; but if ye turn back, ye shall have your capital sums; deal not unjustly; and ye shall not be dealt with unjustly.
(A-Baqarah: 279)

Entrepreneur Bank’s Tenet # 2: Promote real economy instead of financial economy.

Ideally, banks should promote real economy instead of financial economy. The present banking system are so corrupted that it disguised usury as halal. In real fact, the banking system commits usury everyday, which result in death of thousands of people throughout the world, the starvation of many others, the creation of unemployment situation, the destruction of small business and the general impoverishment of most mankind. In short banks are regard as destructive, parasites, usurious, promote slavery, monopolistic and bloodsucker. (Vadillo, Islamic Trading in the Modern World). Therefore, banks have to be shifted from these negative remarks. They have to leave these traditional roles (refer to Diagram A) and set to become the institution that promote the development of Muslim ummah (refer to Diagram B). One of the objectives of Islamic financial system in the context of tawheed and taqwa is to make the life in this world a happier and prosper place through a financial system that portrays an Islamic socioeconomic values. In an Islamic ethics,
each and every one of us has the obligation to contribute to create a system based on Islamic teachings. Islam gives the rights to its ummah to seek help from one another and help each other according to each ability (Yakcop, 1996). Therefore, an entrepreneur bank has the obligation to help Muslim ummah to develop themselves in order to prosper the society.

Entrepreneur Bank’s Tenet # 3: Discourage debt and encourage Musyarakah or Joint venture profit and loss sharing.

Fundamentally, banks should change its role from becoming a debt provider to a partnership (Musyarakah). Debt should be highly discouraged and should be avoided whenever possible. As mentioned in a hadith narrated by ‘Aisha (r.a), the wife of the Prophet: Allah Apostle used to invoke Allah in the prayer saying “.... O Allah, I seek refuge with You from the sins and from being in debt.” Somebody said to him, “Why do you so frequently seek refuge with Allah from being in debt?” The Prophet replied, “A person in debt tells lies whenever he speaks, and break promises whenever he makes them”. This clearly showed that being in debt should be avoided. How can this be possible for banks? Perhaps, banks should become a trustee and a partner in business, instead of being a guarantor for debts.

Entrepreneur Bank’s Tenet # 4: Be an active partner and provide consultation to its partners.

Here, an entrepreneur bank should become an active partner and able to provide professional consultation to entrepreneurs. If a customer approach the bank for business loan, an entrepreneur bank should treat it as a partnership (Musyarakah Mutanaqisah), in which the bank shall also take part in running the business. Musyarakah Mutanaqisah (Diminishing Partnership) is the sharing of the revenue with progressive dilution of shareholding. An entrepreneur bank shall not merely observe from afar and reaps the profit when the business succeeds and left the business in despair when it fails such as in the present situation. Banks should provide advises and assistance to entrepreneurs on how to improve the performance of their business. This is the most crucial element in an entrepreneur bank because this may become its major source of income replacing the interest income. Initially, the ownership of the business will be divided between the entrepreneur and the bank with the ratio agreed by both parties. The entrepreneur shall buy the shares from the bank through its profit until they owned 100 % of the business. In other words, banks have to release the business to the entrepreneur when they afford to buy back all its shares.

Entrepreneur Bank’s Tenet # 5: Encourage spending on savings not on credit.

An entrepreneur bank should encourage spending on savings instead of spending on credit. If its customers want to buy a car or a house, or planning to go for a vacation, design their financial planning so that they can afford it. Perhaps, customer may opt for Musyarakah Mutanaqisah Home Financing (Lease Purchase with Diminishing Partnership) In a Musharaka Mutanaqisah home financing scheme the customer and financier (Islamic Bank) jointly acquire and own the property. The financier then leases his share of the property to the customer on the basis of Ijara (lease). The customer, as an owner-tenant, promises to acquire periodically the financier's in the property. The customer pays rental to the financier under Ijara, which partially contributes towards increasing their share in the property. (eg. If the bank owns 70% of the property and the customer owns 30%, and the customer's monthly rental is RM1,000 then RM700 goes to bank and RM300 goes to increase the customer’s share of the property.) At the end of the lease term and upon payment of all lease rentals the customer would have acquired all the financier's shares and the partnership will come to an end with the customer being the sole owner of the house (www.ihilal.com). Refering to Diagram D, under the present scenario, banks will receive double interest income, which is x percent from house developer and y percent from homebuyer. Whereas under the entrepreneur banking
system, once the bank received income from investing in the housing project, it will not charge anything from home-buyer for the Musyarakah Mutanaqisah agreement except for the fees incurred (such as legal fees, etc.) to purchase the house.

For smaller expenses, an entrepreneur bank should encourage the used of debit card instead of credit card. Credit card promotes overspending, which means a person spends using money that he or she does not have. This is against Islamic teaching, as mentioned in the Al-Quran:

Those who, when they spend, are not extravagant and not riggardly, but hold a just (balance) between those extremes.
(Al-Furqan: 67)

Allah further stated that overspend makes a person closer to the devil, as mentioned in the Al-Quran:

Verily spendthrifts are brothers of the Evil Ones; and the Evil One is to his Lord (Himself) ungrateful.
(Al-Isra’: 27)

Entrepreneur Bank’s Tenet # 6: Encourage business creation and entrepreneurship.

Next, an entrepreneur bank should encourage Muslims to do business instead of working with others. The Prophet encouraged his ummah to do business. Al Suyuti mentioned in Al Jami` Al Saghir, a Hadith on the authority of Rafi` that: The Prophet (pbuh) was asked: "which are the best forms of income generation?" He (pbuh) replied: "A man's labor, and every legitimate sale". This will give all Muslims an equal opportunity to prosper and at the same time, discourage monopoly business. Those who worked hard enough will earn
a just reward for their effort. As mentioned in the Al-Quran:

And when the Prayer is finished, then may ye dispersed through the land, and seek of the Bounty of Allah: and celebrate the Praises of Allah often (and without stint): that ye may prosper.
(Al-Jumu’a: 10)

Entrepreneur Bank’s Tenet # 7: Educate Muslim ummah on Muamalat matters.

Last but not least, an entrepreneur bank should educate the Muslim ummah about Muamalat matters and help strengthened the ummah faith and belief in Allah. This is because the stronger the faith and belief in Allah, the stronger they will be in adhering to Allah’s command. A research conducted in Kuala Lumpur, Malaysia showed that almost all Muslim’s respondent knew the existence of Islamic banking in Malaysia, however, only half of it used the facilities. Out of this half, only 15 percent able to answer correctly the meaning of each product offered by Islamic banks. This is due to the fact that Muamalat does not being emphasize in the early stage of learning about Islam (Abdul Hamid, 2001). An entrepreneur bank should therefore emphasis the teaching of Muamalat and daily transaction activities to the Muslim ummah.

Conclusion.

Finally, banks should be more innovative, creative, more sophisticated and more professional when dealing with Dinar and Dirham system. The newly designed e-Dinar may take most of banks’ role as the medium for payment (www.e-dinar.com). It is only a matter of times that Dinar and Dirham system becomes a reality. And hopefully, when it’s finally arrived, banks are prepared with the new renaissance of an Islamic monetary system. To fine tune with this ideal ideology, lets contemplate this hadith narrated by Abu Huraira : The Prophet said, “An Israeli man asked another Israeli to lend him one thousand Dinars. The second man required witness. The former replied, “Allah is sufficient as a witness.” The second said, “I want a surety.” The former replied, “Allah is sufficient as a surety.” The second said, “You are right”, and lend him the money for a certain period. The debtor went across the sea. When he finished his job, he searched for a conveyance so that he might reach in time for the repayment of the debt, but he could not find any. So, he took a piece of wood and made a hole in it, inserted in it one thousand Dinars and a letter to the lender and then closed, i.e., sealed the hole tightly. He took the piece of wood to the sea and said, “O Allah! You know well that I took a loan of one thousand Dinars from so and so. He demanded surety from me, but I told
him that Allah’s guarantee was sufficient and he accepted Your guarantee. He then asked for a witness and I told him that Allah was sufficient as a witness, and he accepted you as a witness. No doubt, I tried hard to find a conveyance so that I could pay his money but could not find, so I hand over this money to You.” Saying that, he threw the piece of wood into the sea till it went far into it, and then he went away. Meanwhile he started searching for a conveyance in order to reach the creditor’s country. One day, the lender came out of his house to see whether a ship had arrived bringing his money, and all of a sudden he saw a piece of wood in which his money had been deposited. He took it home to use for fire. When he sawed it, he found his money and the letter inside it. Shortly after that, the debtor came bringing one thousand Dinars to him and said, “By Allah, I had been trying hard to get a boat so that I could bring you your money, but failed to get one before the one I have come by.” The lender asked, “Have you send something to me?” The debtor replied, “I have told you I could not get a boat other than the one I have come by.” The lender said, “Allah has delivered on your behalf the money you sent in the piece of wood. So, you may keep your one thousand Dinars and depart guided on the right path.” This hadith tells us that if weare honest and sincere in our endeavor to create a true Islamic monetary system as well as creating a just and fair banking system, Allah
surely will give us the way.

References

Al_Quran and Hadith.

Abdul Gafoor, A.L.M. (2001), “Mudaraba based Investment and Finance.” New Horizon, Issue no.119, July 2001.

Abdul Hamid, Abdul Halim and Mohd. Nordin, Norizaton A. (2001), “Islamic Banking Education Strategy for the 21st Century-A Malaysian Evidence.” International Journal of Islamic Financial Service, Vol. 2, No. 4, pp 3-12.

Ahmed, Saima A. (2000), “Global Need for a New Economic Concept: Islamic Economics.” International Journal of Islamic Financial Services, Vol.4.

Al-Omar, Fuad and Abdel-Haq, Mohammed (1996), 1st ed. , “Islamic banking: Theory, practice and challenges.”, Zed Books Ltd, U.K.

Ariff, Mohamed (1988), “Islamic Banking.” Asian-Pacific Economic Literature, Vol. 2, No. 2, pp. 48-64.

Astbury, Sid (1996), “Reaping Malaysia’s Islamic riches.” Asian Business, Vol. 32, Issue 8, p. 48.

Anonymous (1998), “Asia: Islamic banking, Chinese style.” The Banker, Vol. 141, Issue 786, p. 57.

Barakat, Munir and Sarver, Eugene (1997), “Western banks taking 1st steps into Islam’s ‘no interest’ world.” American Banker, Vol. 162, Issue 20, pp. 9.

Bexley, James B.; Maniam Balasundram and James, Joe F., (2000), “Perception of Islamic Financial System: Its Obstacles in Application, and Its Market”, Proceedings of the Academy of Accounting and Financial Studies, Volume 5, Number 2.

E-Gamal, Mahmoud A., (2000), “ A basic Guide to Contemporary Islamic Banking and Finance, RiceUniversity.(http://www.witnesspioneer.org/vil/Books/MG_CIBF.chapter2.htm.)

Fabbozi, Frank J.; Modigliani, Franco; Ferri, Michael G, (1998), Foundations of Financial Markets and Institutions, 2nd ed., Prentice Hall, New Jersey.

Gathura, Gatonye (1996), “Banking on Islam.” World Press Review, Vol. 43 Issue 5, p. 35.

Iqbal, Zamir (1997), “Islamic financial systems” Finance & Development, Vol. 34, Issue 2, pp. 42-45.

Kadir, Sharifah H (1998), “Funding Mismatch.” Malaysian Industry, Vol. 6, No. 61, pp. 187-203.(http://www.mmo.com.my/msianindustry/finance.html)

M. Jaffar, Maheran and M. Zain, Shaharir, (2002), Satu Ulasan Terhadap Model-model Matematik Bagi ‘Pinjaman’ Berdasarkan Prinsip Islam, Kolokium Siswazah, Fakulti Sains dan Teknologi, UKM Bangi.

Rose, Peter S. (2000), “Money and Capital Markets: Instruments in a Global Marketplace”, 7th ed., Irwin-McGraw Hill, Boston.

Shaikh, Samir Abid (1997), “Islamic banks and financial institutions: A survey.” Journal of Muslim Minority Affairs, Vol. 17, Issue 1, p.117.

Shaykh, Abdalqadir, (1995), “The Wealth of the Fuqara”, (http://www.geocities.com/Athens/Delphi/6588/dhikr.html)

Shepherd, William G Jr (1996), “Integrating Islamic and Western finance.” Global Finance, Vol. 10, Issue 5, p. 44.

Vadillo, Umar I. (2001), “The Fallacy of the Islamic Bank, (http://www.geocities.com/Athens/Delphi/6588/bfallacy.html)

Visser, Wayne, (1997), “Islam offers a more just banking system”. Money Values, 15 September 1997.

Yakcop, Nor Mohamed, (1996), “Teori, Amalan dan Prospek Sistem Kewangan Islam di Malaysia”, 1st ed., Utusan Publications, KualaLumpur.

Internet references:
http://www.e-dinar.com/net/org
http://www.murabitun.org
http://www.ihilal.com

source here

Apa yang perlu anda tahu tentang pelaburan@peleburan Dinar Iraq...

2011-11-10T20:41:00.000+08:00

Salam,
Secara tiba-tiba, wang fiat Dinar Iraq menjadi popular sejak kebelakangan ini walhal sejak tahun 2006 lagi benda ni dah wujud. Oleh sebab ia menjanjikan pulangan yang amat lumayan (ikut kata agen tersebut) maka saya menjalankan sedikit carian diinternet bagi mendapatkan maklumat lebih lanjut dan bebas dari pakar-pakar ekonomi dan kewangan antarabangsa termasuklah Al-Ustaz Zaharuddin. Berikut adalah senarai website yang menjadi rujukan saya;

Hukum Pelaburan Dinar Iraq
Jangan Tertipu Dengan Scam Wang Dinar Iraq
Bank Negara Malaysia Official Statement (Dinar Iraq)
Penjelasan BNM Mengenai Dinar Iraq
Amankah Jual-Beli Dinar Iraq Menurut Syariah Islam?
Dinar Iraq Boleh Jadi Jutawan ?
Dinar Iraq & Untung Besar ?
Berita Hangat - Dinar Iraq Baru
Nilai semasa 50000 Dinar Iraq vs USD
Nilai semasa 50000 Dinar Iraq vs Malaysia Ringgit
Myths and truth about the Iraq dinar
Suspicious Activity Involving the Iraqi Dinar
Top Ten Investment Alerts for 2011
New Investment Scam: Buying the Iraqi Dinar
Investing in the Iraqi Dinar: Expert Opinions
Iraq Said To Be Planning Currency Overhaul, Redenomination
A Fistful of Dinars
Iraqi Dinar Discussion Board (IQD)
The Iraqi Dinar Revaluation in 2011
The National Currency Re-Denomination Experience in Several Countries: A Comparative Analysis
New Dinars for Old
Iraq Currency Exchange Information
http://www.iraqi-dinar.org/
http://www.iraqidinar.org/
FAQ - Pro Dinar Iraq

Saya mengambil beberapa point yang menarik dari Ustaz Zaharuddin.

Pandangan Shariah

Jika pembelian matawang ini melalui internet secara ‘tempahan' dan akan sampai kepada pembeli dalam beberapa hari. Menurut kefahaman saya, pembelian matawang Iraq adalah HARAM. Perlu difahami bahawa Nabi SAW telah meletakkan syarat dalam pembelian jual beli emas, perak termasuk sesama matawang ; pihak penjual mestilah menerima wang belian dan pihak pembeli mestilah menerima matawang yang di ingininya pada masa yang sama atau dalam satu ‘majlis aqad'. (Sila rujuk http://www.zaharuddin.com/ untuk kefahaman lanjut tentang syarat ini).

Bagaimanapun, dalam hal ini, sekiranya anda membeli (menukar) Ringgit Malaysia anda kepada Dinar Iraq itu; apa yang akan berlaku adalah anda akan membayarnya sekarang iaitu melalui kredit kad atau cash dan lain-lain. Kemudian, anda hanya akan menerimanya dalam masa beberapa hari atau jam selepas itu. Tatkala itu, penangguhan yang tidak dibenarkan oleh Islam telah berlaku, ianya termasuk dalam kategori Riba Nasiah.

Walaupun demikian, sekiranya anda boleh membelinya secara tidak bertangguh seperti menukar matawang di Kaunter Pengurup. Ketika itu, pembelian ini adalah sah dan tiada Riba berlaku. Ini agak sukar di gambarkan kerana ibu pejabat syarikat maya yang menjual Dinar Iraq ini berada di USA dan Hong Kong.

Selain isu Riba, satu lagi sudut Shariah yang di pertimbangkan adalah hal spekualsi berlebihan dan judi. Tidak saya nafikan bahawa kebanyakan Majlis Penasihat Bank-Bank Islam di seluruh dunia memfatwakan pembelian matawang oleh pihak Bank-bank islam dan menyimpannya untuk dijual kemudiannya bagi memperolehi untung adalah di haruskan. Mereka menyebut bahawa spekulasi ini tidak samapi ke tahap judi dan masih berada di tahap yang diharuskan. Unsur ‘gharar'nya pula adalah kecil. Unsur perjudian juga tiada, kerana ianya bukannya seratus peratus dibuat atas dasar ‘nasib' tetapi adalah berdasarkan kaji selidik, ilmu yang benar dan analisa terperinci atau secara mudahnya disebut sebagai hasil analisa risiko dan peluang perniagaan.

Walaupun demikian, saya berpandangan :-

Setiap individu yang ingin membeli mestilah juga mengkaji dan mempunyai ilmu tentang peluang, potensi dan risiko pembeliannya bagi memastikan pembeliannya berbeza dengan satu perjudian yang didasari nasib semata-mata.
Jika dilihat menurut ‘Maqasid Shariah' atau objektif Shariah pula. ADALAH TIDAK HARUS untuk seseorang yang kurang berkemampuan untuk membeli set dinar tadi walaupun harganya RM 720 sahaja. Ini kerana dibimbangi ada umat Islam yang terlampau yakin maka, sanggup bergolok gadai dan membahayakan diri bagi membeli Dinar ini sehingga hilang kemampuannya untuk menyara saraan wajib terhadap anak, isteri dan keluarga. Dalam hal ini, hukum 'gharar' (ketidaktentuan) sudah menjadi amat besar dan hukum judi telah jatuh kepada si pembeli. Ini bermakna , hukum 'judi' dalam 'spekulasi' Forex jenis ini bergantung juga kepada kemampuan individu. Bagi sesetengah individu yang berada, membeli RM 720 adalah tidak memberikan apa-apa mudarat kepada tanggungan wajibnya. Maka tika, itu, elemen ‘gharar' akan berkurangan tidak sampai tahap haram. Berbanding seorang yang kurang berkemampuan yang menggadaikan kewajibannya, dengan harapan dinar itu akan naik pada satu masa yang tidak diketahui. Ia sudah jatuh dalam tahap judi. wallahu a'lam.

Beberapa Pertimbangan lain

1) Anda perlu memastikan bahawa anda membeli Duit Iraq yang asli. Di bimbangi andaditipu lalu membeli yang tiruan lalu anda memiliki wang yang tidak laku di mana-mana.

2) Perlulah mendapatkan pandangan undang-undang dari Bank Negara Malaysia atau Suruhanjaya Sekuriti agar anda tidak terjebak dalam sebarang masalah kelak.

3) Dinar Iraq versi lama kerap kali ditukar kepada versi baru. Saya mengingatkan hal ini diambil berat dan di pastikan sendiri oleh pembeli Dinar Iraq ini. Ini kerana, atas kelalaian seseorang sahaja, Dinarnya boleh luput tanpa sebarang ganti. Perlu diingat juga, bagaimana untuk anda yang sibuk bekerja untuk mengetahui bahawa Dinar yang anda miliki sudah di tukar versinya ?.

4) Saya juga difahamkan bahawa ada pihak yang menjualnya menggunakan cara ‘Multi Level Marketing', jika ini benar, maka hukumnya pastinya berlainan dari apa yang disebut di atas. Ini kerana, beberapa pertimbangan lain perlu dinilai semula.

Akhirnya, pastikanlah ianya disahkan oleh undang-undang dan sah juga dari sudut Shariah. Menurut Shariah seseorang harus untuk membeli Dinar ini tetapi dengan syarat mestilah dengan ilmu dan analisa dan terima serahnya dilakukan dalam satu masa. Ini bermakna, anda perlu mendapatkannya di kaunter jualan di Kuala Lumpur atau mana jua untuk membeli set dinar Iraq itu secara ‘by hand'. Tidak dibenarkan membeli menggunakan pos dan apa jua cara yang menjadikan penyerahannya tertangguh.

Perlu dingat juga bahawa lapangan pelaburan FOREX seperti ini adalah luas dan berisiko tinggi, menurut pakar, ‘trend' dan strategi yang berkesan pada satu masa lalu tidak semestinya terpakai dan sesuai dalam keadaan sekarang. Ianya juga amat sukar diramal dengan tepat.

...................................................................................................................................................

Saya telah menyatakan pandangan saya dalam thread Dinar Iraq di Carigold bahawa dinar Iraq ini lebih hampir kepada perjudian berbanding pelaburan kerana tiada analisa teknikal atau fundamental yang boleh dilakukan bagi menentukan trend turun naik matawang ini. Pembeli hanya berharap pada spekulasi dan nasib semata. Namun ramai yang dah terjebak dengan dinar Iraq ini tidak bersetuju dengan pandangan tersebut walaupun mereka tidak dapat menolak hujah yang mereka sememangnya berharap pada nasib. Wallahualam.

Seterusnya, saya paparkan perdebatan panjang lebar antara Brian dengan rakan forummer di sini yang banyak memberikan info yang jelas berkenaan Dinar Iraq ini. Anda nilaikan sendiri hujah-hujah mereka sebelum melabur@melebur. Sila gunakan google translator jika perlu.

Q1) I own several 25,000 dinar bills that I have kept as an investment. What happens to their value if their is a redomination. Will they have a value of 25? I was hoping they would be valued higher against the dollar and I would be able to make a profit on my investment.

Answer :
Hi Bill, yes "redenomination" means they will remove 3 zeroes from notes. So your 25,000 notes will be exchanged for new 25 notes but at a new ratio of say 1.175:1 instead of 1175:1. You won't lose any money (value is retained minus the trading fees), and in the long run you may make some profit if the Dinar appreciates naturally vs the $, but all these "become a millionaire by changing up $1k worth of Dollars for $1k worth of Dinars" "Dinar pumpers" have been lying and scamming people all along with fake invented "intel", etc. A 99,900% profit has never, ever happened in any RV process. Take a look at what the Turkish Lira (6 zeroes removed), Venezuelan Bolivar (went from 2000:1 to 2:1), the pre-Euro (franc, pesetas, deutschemark, etc) to Euro currency changeover went through to understand the process better. Hope this helps.

Q2) Your explanation on "re-denomination" in this case I think is flawed. In my opinion if you take their present total outstanding currency of 29 T Dinars, remove three digits and you get 29 B Dinar. Now spread this over the collective wealth of the country and your Dollar value per Dinar would be in the hundreds it not thousands. The rumored value of 3 to 4 dollars reflects the current outstanding money and to issue smaller bills is only in light of the new reality.

Answer :
No Peter, my explanation of how every single redenomination has worked in history including Iraq's neighbour Turkey isn't "flawed" at all:-

USA : There are $10.2 trillion (last M3 figures) from a country with a population of 310m people. This works out to approx $32,903 printed per American.

Euro : There are €8.5 trillion in existence (ECB M3 figures) from an entire continent with a Euro-using population of 327m people. This works out to approx €26,000 Euro's printed per European.

Iraq : There are 29 trillion Dinar's in existence from a country with a population of 31m (Iraq). This works out to 935,483 Dinar's printed per Iraqi (blatantly obvious hyperinflation).

If you remove 3 digits, yes you get 29bn Dinar but those Dinar will be valued at say 1.17:1 instead of 1,170:1. The dollar value will not change - just as the Iraq Central Bank have openly stated it won't back in April as reported on Iraqi Alsumaria TV. It's only a few vested interested conmen who just happen to sell Dinar who keep pumping the "instant millionaire" nonsense. If holding just $1k worth of Dinar will make you a millionaire, then by extension, you must believe every Iraqi who owns a house / car will be given between $50m-100m each if they sold it and changed the 50m-100m Dinars up at an FX outlet, and that the average $2k-$4k Iraqi income will become $2m-$4m. Um, no. That's not how it works at all.

Just to add, Peter : Countries can't and don't just magic 99,990% more money into thin air through an RD (re-denomination). The "rumored" value of $3-4 you mention was the value of what were known as "Swiss Dinar's" under Saddam Hussein. They got their name from the Swiss printing plates used (which were of much higher standard than the 3rd hand ones Iraq otherwise had), and this was the currency used prior to the 1990 Gulf War (the first one) after which they ceased to be legal tender.

Since the supply of Saddam notes increased while the supply of Swiss Dinar notes remained stagnant (even decreased because of torn / damaged notes without replacement), the Swiss Dinar appreciated against the Saddam Dinar notes (which is exactly what "inflation" is that some pumpers absurdly claim "doesn't affect Iraq and thus makes it 'different'"). In fact, the northern part of Iraq (Kurdish) which continued to use Swiss Dinars partly evaded inflation, which ran rampant throughout the rest of the nation.

The old Dinar was $3.33 against the $ because it WASN'T inflated. The Saddam Dinar fell below 1100:1 against the $ due to inflation during the economic sanctions (if you can't borrow or trade then you can only print). The $3-4:1 from the 1980's also involved Saddam picking an arbitrary value to peg the Dinar to which is also not the case with the market valued NID today. The reason the Dinar is so weak is because it's overprinted. It really is that simple.

Q3) Hi there! Your explanation does make quite a bit of sense, however the iraqi dinar replcaed the Kuwaiti dinar after iraq stole large amounts of banknotes in 1990 when Iraq invaded Kuwait. Later the Kuwaiti dinar was restored once Kuwait's currency and new banknote series was introduced. This resulted in a drastic devaluation of the Kuwaiti dinar at about just a few cents. It wasn't until 2003 when Kuwait finally pegged their currency to an exchange rate of approximately 1 dinar= 3.33745 dollars. Keep in mind that Iraq and Kuwait's situations were a bit different, however the profit of those who invested in the Kuwaiti dinar did in fact become millionaires overnight.

An opportunity like this investment does not come along that often so I would jump on it while you still have the chance, even if you have just an extra $100 you can afford to spend. It's not like your loosing your whole life savings (unless you are one of the gullible ones) on this investment. As long as Iraqi wants to progress, the rate of the currency should revalue. I don't quite get why people believe that Iraq wil just drop the 3 zeros off of their banknotes and just leave the value as is, it would be ludacris to do such a thing. Let's say the United States was faced with this situation and you have a $100 but they decide to drop the 2 zeros (3 zeros in Iraq's case) off of your hundred dollar bill, that would leave you with a one dollar bill, therefore your hundrend dollar bill is now only worth only one dollar because the value of our currency stayed the same. 1 dollar bill= 1 dollar...simple as that.

In Iraq, they are currently carrying around 25,000, 10,000 etc. dinar banknotes. Once Iraq drops the 3 zeros from that 25,000 banknote, it will become a 25 dinar banknote, but they are saying the value will stay the same. That cannot happen, everyone will loose so much money and business that have invested and are currently being ran in Iraq will loose tons and tons of money. Let me make this a little more simpler for those who are new to this investment. Say you have a 50,000 dollar bill (just as an example, I know we don't really have a $50,000 bill) for a new home but the U.S. decided to drop the 3 zeros off of your $50,000 bill making that bill only $50.

What kind of house is fifty bucks going to get you? Nothing. Iraq has to revalue their currency if they not only want to have their money to be worth anything, but also if they want to progress as a country. I don't know if many people know this but, Iraq has the largest oil reserve in the entire world, they will not stand to have such a devalued currency for much longer if they want to make any money at all.

Answer :
Bill, the Iraqi Central Bank have openly stated "re-denomination" multiple times, and "revaluation" not once. Only Dinar salesmen with vested interests are using "RV" over and over whilst the ICB are saying RD (lop) over and over. They do intend to appreciate the Dinar somewhat on top of the RD, yes, but not the 99,000% some people have got confused with (and it won't happen overnight either).

Angela, you're confusing the Kuwaiti Dinar with the Kurdish (Old Iraq) Dinar. They're not the same. You're also seriously misunderstanding how redenomination works. It doesn't take 99% of wealth away from people, but nor does it magic 99,900% of wealth out of nothing. Purchasing power is retained so businesses don't lose anything. What happens when zero's are lopped is that prices are readjusted to match:-

For example, if current 25k Dinar notes are turned into 25 Dinar notes, prices are adjusted by same. So eg, a 75m Dinar house now becomes a 75k Dinar house. A 1,000 Dinar loaf of bread becomes a 1 Dinar loaf of bread, etc. Look at what happened to Turkey to understand the process better - they lopped 6 zeroes off. Of course Turkish bread was not still priced at 1,000,000 Lira when 1m Lira banknotes changed to 1 Lira, it was repriced down to 1 Lira along with the new banknotes. This is the whole point of a redenomination : get prices of thing (in terms of zeros) back to sanity and parity with other countries which boosts confidence in the currency & economy.

Also, not only is your fact on Iraq's oil reserves "being the largest" incorrect...
http://www.nationmaster.com/graph/ene_oil_res-energy-oil-reserves

...but it's also irrelevant to the value of the Dinar because it is just as much a FIAT currency as everyone else's. Just because a nation has a nationalized oil industry doesn't mean its currency is backed by anything (any more than the $ is backed by Chevron or the £ is backed by BP). That's the first mistake first-time Dinar gamblers usually make : confusing nationalized oil with a specie currency. They are not the same thing at all. The Iraqi Dinar is a unbacked FIAT currency (which is precisely why it was so overprinted and devalued in the first place).

What's more, most of the world's oil is purchased in $ not Dinars (hence the origin of the term "petro-dollar"). And on top of that, many of Iraqi's oil fields are part-owned by non-Iraqi's (remember the 2009 oil services contracts?), so even if the Dinar was oil-backed (which it won't be for as long as buying countries are using FIAT currencies of their own), you can't just pick a figure and say "lets print ourselves all that wealth now before we've even dug it up, and then try and earn it all again when we actually do sell it in years to come". That's not how the Forex market works at all.

Q4) Brian, I apologize, you are correct about the oil reserve in means of “what was supposedly proven”, but it is believed that Iraq has much more oil (approximately twice as much than what was previously estimated) than what it was said to have, we will have to wait and find out. However, it is the Kuwaiti Dinar, not the Kurdish dinar that I am referring to. Here is the link so you can see what I am talking about http://en.wikipedia.org/wiki/Kuwaiti_dinar

Also, if prices are just readjusted to match and one Iraqi dinar is still equivalent to approximately $1170, then Iraq will still stay just as poor. You would think that a country with so much oil and potential wealth wouldn't have such a undervalued currency, especially if they plan on progressing anytime soon. In 1959, 1 dinar= $2.8 dollars, then in 1971 and 1973, 1 dinar= 3.3778, later reducing to 1 dinar= $3.2169. After the United Nations put sanctions on Iraq (because of Iraq invading Kuwait) new notes were issued. Finally, in 1995 the Iraqi dinar devalued to $1 = 3,000 dinars. The value did increase a bit throughout the years, but why keep the currency devalued for so long?

Do you believe they will keep their currency at such a low rate for much longer? Back to readjusting their prices to match their currency, what happens if the prices do get readjusted but someone only has a 25,000 note wanting to buy something that is only worth 25 notes? Does that mean the cashier will have to hand back that person 24,975 banknotes in lower denomination notes? They wouldn’t even have nearly that much in their drawer. Not everyone will have a credit card (smart card) just like not everyone uses a credit card in the United States, England, Australia, etc. The bigger denomination notes such as 25,000, 50,000, etc. are still going to be allowed to be used until they are all out of circulation, businesses will not be able to deny a person who wants to purchase items with a larger note.

The Turkish Lira and the New Turkish Lira were both allowed to be used until December 25, 2005 which was the last day the old Lira would be accepted. After this occurred, the value of the Lira was valued at USD $1= 1.51 YTL. The Turkish Lira ended up stabilizing and rose against the U.S. dollar, which means their currency did in fact revalue. This same exact process seems to be happening right now with Iraq and its currency. Wouldn’t you say that once the 3 zeros are taken off the banknotes, then the currency will revalue just as it did with the Turkish Lira?

Answer :
Hi Angela, thanks for your comment. As mentioned previously, the Dinar is "undervalued" because it's overprinted and the cure for that is not a further 1,000x expansion in the money supply (turning a $27bn Dinar supply into a $27tn supply by giving every 1,000x more for their Dinars than they bought) - that will just result in another Zimbabwe (where everyone's a billionaire but the price of a loaf of bread is 1.3m).

I can only repeat what I mentioned earlier : The Dinar is a FIAT currency, and like other FIAT currencies, it's value is derived by how many are printed and traded. What's underground and won't be sold until 2015-2020 is as irrelevant to the current Dinar value as untapped Texan oilfields are to the Federal Reserve $ or undiscovered Canadian "shale oil" is to the CAD. Norway has a lot of oil, and neighboring Denmark hardly has any, yet both currencies (NOK & DKK) are within 5% of each other. Simply finding oil does not magic a currency's value up by x0,000%. That smaller influence occurs when it is actually sold and money changes hands (and only then if it's actually sold in its native currency and not "petro-dollars"). You can't sell the same barrel of oil twice (once to yourself by printing yourself imaginary wealth now, and once again when you actually dig it up and sell it for real in a decades time).

Kathryn's excellent post (UK) correctly addresses the issue : Over 103 other countries on Earth also have oil and / or natural gas reserves in some form. There is absolutely nothing whatsoever unique about Iraq's. Every country on Earth has debt-based money (FIAT currencies) including the Iraqi Dinar. No country has an asset backed anything and hasn't for decades since the world came off the gold standard in the 1970's.

To those who think oil will magically sustain 1,000x more Dinars, here's a Mid-East reality check : There are only 1tn Saudi Riyals (approx $266bn) in circulation for a country that has more than 4x Iraq's oil reserves and more than 5x Iraq's daily oil production. There are also only 985 UAE Dirham's (approx $268bn) in circulation.

$29tn worth of Dinars would also mean that people who claim the Dinar will be "RV'd" to near 1:1 vs the $ are basically saying that a 3rd-world war-torn country smaller than Canada should have a monetary supply that's larger than all US & Canadian Dollars, Euros, Renminbi, Rubles and Yen *combined*, and approx 60% of the entire planets global combined GDP (even though Iraq sells less than 5% of the worlds oil), not to mention a currency that's 116x higher than Saudi Arabia) just because they found a little oil that 100 other countries also have and because they sell slightly more oil than Algeria and less than Mexico or Brazil. It literally defies all common sense, and basic mathematics / economics.

No matter how you "cut the cake", you simply cannot print yourself more wealth because the more you print, the weaker the currency gets. Take a look at Zimbabwe for a nation of "self-declared paper millionaires". Iraq won't stay poor in the long run because they can reinvest oil sales - but the point is that it's the *sale* of oil revenue already sold today not an RV/RD that generates wealth. An RD won't make Iraq wealthier no, but that's not its intention (and nor is it possible for any country to become 1,000x richer just by declaring it), and the only people who have been sucked into believing an RD = "a millionaire for $1,000" are confused amateur first-time Forex gamblers who do not understand the process, have never held any other currency through a similar RD before, and are being "bounced" around from one confused Internet "pumper" to another.

"Back to readjusting their prices to match their currency, what happens if the prices do get readjusted but someone only has a 25,000 note wanting to buy something that is only worth 25 notes? Does that mean the cashier will have to hand back that person 24,975 banknotes in lower denomination notes? "

No, no, no. OK it's clear there's some confusion here, so I'll explain the 3 steps of a redenomination : A redenomination (RD) simply means taking the zeroes out of the economy. Three things are done:-

1. All old banknotes are swapped for new lower denom ones at a fixed ratio (usually 1,000 for ease of exchange) within a fixed time-frame (3 months for prior Iraq banknote swaps). Eg, 25,000 Dinar notes are swapped for 25 Dinars. Iraqi's will change their old for new notes at their banks. The below article explains what happened during Iraq's prior bank-note swap when the "Swiss Dinar" was taken out of circulation in the Kurdish region for good during 2003 and Saddam's face removed from notes. When the time-limit is up, any old notes not exchanged for new are demonetized and become worthless.

It also states in the final two questions : "Q:Can dollars also be exchanged for new Iraqi dinars What will be the conversion rate for dollars?
A:Dollars will not be converted directly into new dinars during the official exchange. Following the exchange, dollars will be convertible directly into new dinars at the market exchange rate" and "Q:Will it be possible to exchange currency outside of Iraq? A:No. The only official currency exchange locations will be located within Iraq":-
http://www.exchangerate.com/iraq_currency_exchange.html

2. The currency is adjusted by the same factor for the *new notes only*. Eg, a 1170 vs the $ becomes 1.170 vs the $. You won't be paid $1m for handing in $1k worth of old notes, you'll just be given the equivalent in new notes (1k Dinars at 1.17 in place of 1m Dinars at 1170). This is what confuses many amateur Dinar speculators the most.

3. Prices in Dinars are also adjusted by the same factor. Eg, a 75m Dinar house becomes a 75k Dinar house. A 1,000 Dinar loaf of bread becomes 1 Dinar. 250,000 Dinar average rent becomes 250 Dinar rent, etc.

This doesn't have to be in multiples of exactly 1,000, it could be anything. But the PP (Purchasing Power) of *current* notes doesn't change the same way some "pumpers" are hyping it. The Iraqi Central Bank have openly stated the Dinar RD will be "based on Turkey". For those who don't remember Turkey's RD / lop, here's the official brochure explaining it:-
http://www.tcmb.gov.tr/ytlkampanya/bro.php

People weren't given $1m in cash just for holding $1 worth of Old Turkish Lira during their 6-zero RD/lop. And likewise, people won't be given $1m in cash just for holding $1,000 worth of Iraqi Dinar during their 3-digit RD/lop. The Dinar may appreciate in time when their oil exports increase in time and demand for Dinar rises, but not by silly 10,000% figures purported by some dishonest Dinar salesmen preying on FX first-timers. Hope this helps.

Q5) Hi again Brian, and thank you for your response as well. I understand what you are saying however, when Turkey dropped the six zeros off of their currency they revalued the new Liras (as well as the old ones until they became worthless at the end of that year) immediately afterwards. This means that whoever was holding the older Turkish Lira before the end of 2005 (when they became worthless) were able to exchange their Liras for U.S. dollars, Euros, etc. at a rate of 1 U.S. dollar= 1.29 Liras. The Lira actually became stable and rose past the U.S. dollar. They didn't exchange their Liras for the new Liras, at least not the ones who purposely invested in the Turkish Lira currency, they exchanged them for U.S. dollars, Euros, and so on. I actually know someone who, not only invested and made a profit off of the Turkish Lira, but also the Kuwaiti Dinar. Iraq does in fact need to have a stabilized currency if they want to be able to progress and be right up there with other stablized countries. I guess only time will tell, we will just have to wait and see how this will all play out.

Answer :
"Hi again Brian, and thank you for your response as well. I understand what you are saying however, when Turkey dropped the six zeros off of their currency they revalued the new Liras (as well as the old ones until they became worthless at the end of that year) immediately afterwards."

Hi Angela. Actually Turkey didn't "RV" - it was a straight RD/lop. On 31st Dec (last day for TRL Old Lira), the value was 1,339,320:1 :-
http://www.xe.com/ict/?basecur=TRL&historical=true&month=12&day=31&year=2004&sort_by=name&image.x=51&image.y=15

And on 3-4 Jan 2005 (first day of TRY New Turkish Lira), the value was 1.347:1. The real value difference was under 1% which is well within the perfectly normal daily fluctuation that happens in all currencies:-
http://www.xe.com/ict/?basecur=TRY&historical=true&month=1&day=3&year=2005&sort_by=name&image.x=31&image.y=18

The 1.29 figure you're using from Wikipedia is the mean average value over the whole of 2005 when it appreciated by around 4% over the first year due to increased trading. But it wasn't part of any "RV" process - it's just due to increased trading demand when the NTL was seen as a more serious currency without all the zeroes. This is also entirely possible with the Iraq Dinar - that it will go up slightly by maybe 5-10% when it loses its zeroes, and maybe appreciate more in the longer run if and when it develops an economy beyond just selling oil for dollars (most oil is priced and traded in $ not Dinars).

But that's not due to an "RV" trying to create money from nothing without inflation, it's due to market demand. And it's certainly not a 99,900% increase some conmen are targeting confused first-time speculators with. Same goes with the Venezuelan Bolivar (another oil economy) RD in 2007 : 2,144:1 to 2.147:1 = No RV. This is normal for the redenomination process.

Q6) Brian, I am so glad you were able to explain all of this to me. Not once, in the past 4 years have I been able to figure out all the possibilies as to what could happen with the Dinar. I think I may have (did) misunderstand much of what I have heard and read about this investment. One of my classmates in college told me that their parents "made money" off of the Lira but maybe they misunderstood their parents, or they just straight up lied for some odd reason (keep in mind that the conversation was about currencies).

Let me just make sure that I understand this correctly, once Iraq drops the three zeros off of their currency, the banknotes I currently hold will not have a change in rate, but the new currency may end up revaluing eventually (yet, it still will not apply to my banknotes). Soon after, my banknotes will become worthless and will no longer be legal tender. However, during this time period both currencies will be legal tender and will both be able to be used for purchasing. The reason why the value will not change on the old banknotes, but will on the new notes is because they will be considered two seperate currencies not one whole currency.

Is that correct? Now that I really put a lot of thought into it, it does make a lot of sense.

In your opinion, do think that the U.S. and Iraq have some sort of deal that was made since the U.S. forgave Iraq of it's debt that was owed? Do you think it is possible for Iraq to revalue it's currency before it drops the 3 zeros for maybe a couple of months until all the larger banknotes are out of circulation so there is no confusion, like there was with the Lira and other currencies that used two seperate currencies at the same time, and then drop the 3 zeros? Maybe that was the plan on how Iraq would be paying the U.S. back the debt they owed them? I am just curious if you think that could be a possibility, or if it would be completly bizzare.

Thanks again for your insight on this, it has really helped clear things up for me, as I hope it has for others as well.

Answer :
Hi Angela, yes that's absolutely how it works. You're not alone in this as there's an obscene amount of fraud and disinformation in the amateur investment community that makes even 2nd hand car dealers look honest!

As far as taking larger banknotes out of circulation are concerned before the RD, some people have got the wrong idea in thinking it means they're being torn up whereas in reality, many are being used for inter-bank transactions instead of public circulation. I don't think any "RV" is likely before a lop because there's simply nothing to RV. A "revaluation" simply means "moving a peg" (like China have revalued the CNY vs the $). The Dinar's low value genuinely does match the huge 29tn worth of currency created, and the only way of bringing that down is an RD. Iraq's 29tn money supply is already 30x higher than Saudi Arabia's whilst their economy is 5.5x smaller. That fact alone is enough to make the Dinar worth 165x less than the Riyal even without taking their 80% destroyed infrastructure and state of near civil war into consideration, or the fact much of their current economy is imported $ driven subsidies and foreign aid rather than Dinar driven exports.

I do believe the Dinar will go up in the long run, but not radically so. Many Forex "newbies" are confused and believe a country's currency should match its resources. This isn't the case anywhere on Earth because a fiat currency is a liquidity measurement (how much money is needed for ongoing trade at any one time) - not a "gold standard" full reserve bank of every potential mineral export for the next millenium up to 3011AD (and supposedly unique only for Iraq!) all squeezed into 2011's money supply valuation! Oil isn't owned by central banks either.

Saudi Arabia has $27tn of proven oil reserves yet only $266bn worth of Riyals in circulation. Kuwait has $11tn of oil but only approx $120bn of Kuwait Dinar in circulation. UAE has over $10.3tn of oil yet only $268bn worth of Dirhams. Russia has $7.8tn of oil yet only $720bn worth of Rubles. Nigeria has $4tn of oil but only $75bn worth of Naira. Venezuela has $10.3tn of oil yet under $175bn worth of Bolivars, etc. People thinking "well Iraq has around $12-15tn of oil sales for the next century therefore it must have $12-29tn worth of currency in circulation today" are seriously misunderstanding how the world works.

Iraq's net export economy would only be $12-15tn if they sold the whole lot at once all in one year without using a single drop for themselves or importing a single thing (which is impossible). And then when it ran out after a year, they'd sink like a stone. Iraq may have $12tn, $15tn or even $20tn worth of oil, but it won't be selling even 1/10th of it at any one time even with restored infrastructure (and won't be exporting it all either). And that's assuming every drop of oil is sold in Dinar's, whereas it's usually sold directly in $. And most of the currency earned is simply sent straight back out again in the form of imports.

Iraq currently exports $49.1bn - but they also import $42.56bn so the net export is only $6.54bn, which isn't much money at all. (To keep things in perspective, Russia's net export is $139bn, oil production is 10m bbd and the Ruble is only 27:1 vs the $). $6.54bn per year is the real trickle rate at which Iraq as a whole is getting richer from oil. Total oil reserves for all countries make little impact on their paper fiat currency valuations. It's total amount of money created (M2/M3 figures) that determine a currency's value relative to another, and at 29 Trillion, Iraq has printed more for its 31m population than USA + Europe + China + India combined have for 3.4bn people which is why it's so weak and devalued.

As for US debt forgiveness, a lot of that has to do with "favors for oil contracts" politics in my opinion. I'd like to thank you too for this great conversation!

Q7) Hi again, Brian, I had one more quick question. Sorry for the hundred questions but, I was just wondering if you understand what this sentence in this article is explaining, or what it really means. I'm not asking you to read the entire article since it is very long, i'm just confused about the part that says "after the balance sheets have been cleaned up, revalue the remaining foreign currency denominated balance sheet items." If you type in "revalue" in the box at the top of the article and press enter, it will bring you to that sentence.

Here is the article link: http://www.imf.org/external/np/loi/2011/irq/030311.pdf

Answer :
Hi Angela. "Balance sheet items" usually refers to debt owed to other countries. Although there's been some voluntary debt write-off by some countries, Iraq's debt is still quite high. The main purpose is to stop the Dinar tanking the day it starts trading (due to countries and other foreign entities all trying to cash in on the debt at once). The wording seems to talk about revaluing Iraq's debt for those countries who haven't written it off.

As said previously, the Dinar will probably appreciate in time as their GDP increases (as long as "growth" isn't just oil sold for $ but goods that are actually priced in Dinars). What is wrong and what I do speak out against is the deliberate fraud committed by some Dinar conmen "pumpers" (named because they're doing a classical "pump and dump" on the outgoing old Dinar notes) who openly and deliberately missell the Dinar as having a 99,900% ROI profit and creating fake "intel" to "support" that when the Iraq Central Bank has repeatedly and clearly stated it will do an RD (lop).

One popular licensed pumper (like many others) sells $85 worth of Dinar's (100,000 Dinars) for $185. That's an insane 115% spread. Normal FX cash spreads are under 5-10% whilst pro-Forex trading is in "pips" (a "pip" is 1/100 of a cent). Even higher denom trades are a total ripoff, ie, selling 1m Dinar's ($854 worth) for $1,220. On top of that, they also charge a minimum $150 per 1m Dinar's ($854) fee when changed back leaving people spending $1,220 and getting back $704. Between 40-80% of the investment would have been swallowed up in outrageous trading spreads & fees. At those fees, the Dinar could "RV" up a whopping 70% and many still wouldn't break even.

This has happened to many folks including elderly people who gambled their pensions on it and have since been evicted from their homes (after people mislead and lied to over how and when it would happen). Needless to say, this popular "Dinar Trade" has since stopped trading Dinars after rumors of a lawsuit being filed by one group of people and "strong" demands (threats) for refunds came from a few others. And that's a licensed one! Unlicensed ones using Dinar's smuggled in from Jordan are illegal, and heading for jail on federal fraud charges:-

"A South Dakota man who banked hundreds of thousands of U.S. dollars by selling Iraqi dinars to investors outside the state has been indicted on federal fraud charges... What dinar dealers don’t say, according to Jim David of South Dakota’s Better Business Bureau, is that *Iraqi currency cannot be exchanged for dollars in the U.S*. "It seems as if people don’t realize that they’d have to take it to Iraq to get anything out of it,""
http://dinarscams.com/?p=1

Q7) Hi Brian, I absolutely agree with you, it's terrible what the pumpers are doing to people and their emotions. I for one have never bought into the lies of any pumper, it would be ridiculous to believe someone when they say every single week that the iraqi dinar is going to revalue on this or that day of the week. It is very much like the story about The Boy Who Cried Wolf. What happened with me was, I was simply misunderstanding my research. You have really cleared everything up for me though and I thank you again for that.

Do you think it may be possible that Iraq will revalue its debt for the countries who have written it off as well, maybe as their way of paying them back? Or do you think it's completely just for the countries who have not written it off? I'm still trying to figure out why one country would forgive Iraq of it's debt owed to them, and the other would not forgive them. Do you think that some countries agree to, as you stated before "favors for oil contracts", and others did not agree to it, which is why Iraq still owes them money and would that mean that Iraq will not give "favors for oil contracts" for those countries that did not forgive the debt owed to them by Iraq? Sorry again for all the questions, i'm just thinking out loud right now :)

I'm going to start letting people know about what you have explained to me so they don't end up blowing all their life savings! Thank you so much, again.

Answer :
Hi Angela, I honestly don't know how / what arrangements are there for clearing Iraq's foreign debt simply because many countries barter over it without cash all time. Eg, back in 2001, Russia offered Austria MIG-29's instead of cash for relief of old Soviet debts to Vienna. A lot of other stuff happens all the time over the world. There was a lot of open speculation the USA and many countries were annulling Iraq's owed debt to be seen as more favorable during the 2009 oil services contract bidding. But much of that stuff is "realpolitik" rather than economic! No problem, and thanks again for a great conversation!

Q8) Brian thanx for keeping it Real..And giving facts about whats to come..But what do u think about people that are holding on the 50.00 Dinar notes without three zeros..??

Answer :
Hi Tony, when low denom notes are RD'd downwards and they end up at the equivalent of $1 or less (fractional values), then often get issued as new coins instead of new notes. Eg, when the 500,000 Lira banknote was redenominated down by Turkey's 6-digit lop to 0.5 New Lira (50 New Kuru's), it became a 50 New Kuru coin (Kuru is the Turkish equivalent of "cent") instead. Basically, this note...
http://upload.wikimedia.org/wikipedia/commons/8/8e/500000_TL_obverse.jpg

...was replaced by this coin (both have the same value):-
http://upload.wikimedia.org/wikipedia/commons/7/7b/50kr_obverse.png

Q9) This all sounds wonderful, but here is my question. If the Iraqi government has a budget of 82b dinar for 2011 (per Reuters) , how will they put themselves in a place where they only have 29b total currency. It just doesn't make sense. How will they be able to improve infrastructure? Heck, how will they be able to pay their people?

Here is the link to the Reuters reference: http://mobile.reuters.com/article/idUSTRE71J1SP20110220?irpc=932

Answer :
How can they spend more money than they have in circulation? Because to a large extent, they're spending $ not Dinars. Much of Iraq's spending income isn't coming from internal taxes collected in Dinar's - it's coming from a combination of foreign aid, the USA war budget / "supplemental spending", and "petro-dollars". Most wages for Iraqi's, etc, is in Dinars, but a lot of the expensive infrastructure projects (which make up the bulk of the budget) is in "petro-dollars" : Iraq sells oil to the US directly for $ (not Dinars) and will then spend much of the same received $ back on employing US reconstruction, industrial & defence contractors without a single Dinar changing hands in the process. Also, that $82.6bn budget includes a $13.4bn deficit.

Same is true of other "petro-dollar" countries. Eg, between 45-75% of Saudi Arabia's government budget is technically $ paid by American oil consumers and not Riyal's coming from domestic Saudi taxation. Only some of these incoming $ are converted to Riyals, the rest are re-spent on imported defence equipment, foodstuffs & agriculture, non-oil related industries, transport & medical equipment, etc. This is how much of the mid-East economic region works. Notice the article said "budget" in dollars (what gets spent) and not "revenue" (where and in whose currency the money actually comes from).

Q10) Brian's comments are not bullet proof. Here's why: The Iraqi government has been removing the notes with 3 zeros from circulation since 2009. If they were to LOP the currency then why remove the notes? LOP only occurs when there is hyperinflation-check out the history. Iraq's inflation is currently 7%. If you are worried about a LOP then open a Warka account. Your money is electronic there-no exchange of notes-just an adjustment to your net worth once the exchange rate becomes "on par" with the USD, which by the way was a stipulation from the IMF to the GOI. This is very real-not a pipe dream.

Answer :
Hi Gary. There's a great deal of misunderstanding with the removal of high-denom notes. The Iraq govt isn't going around stealing them from people and giving nothing in return, they're simply printing more lower denom notes, ie, replacing 1x 25,000 note with 5x 5,000 notes. This doesn't reduce the money supply in the way some pumpers claim it does. Europe has done the same thing by withdrawing the 500 Euro note that was targeted by counterfeiters - but it hasn't made the Euro value go up a ridiculous 99,999%. The vast majority of denomination banknotes printed in any currency are the lower commonly used notes. The highest denominations usually make up just a fraction. As an example of the Euro, there are only 56 million 500 Euro banknotes printed out of 6 billion total banknotes (approx 0.1%). Same is true of Iraq with the 25,000 notes. It simply doesn't make any difference as different denomination banknotes don't get RD'd at different rates. It's one rate for everything in the currency.

You also greatly misunderstand what happens to bank accounts (all bank accounts in IQD currency) - they'll be "lopped" too when the currency changes from IQD to the new currency. ie, if you have an account with 1m IQD Dinar in it, it will be RD'd down to whatever ratio the new currency is to the old (probably 1000:1 if they're lopping 3 digits), so you'll have 1,000 of the new currency in it (but which is worth 1,000x more than the old so it won't lose its $1,000 value). In no way shape or form will you turn $1k of Dinar into $1m just by sticking it into a bank account during a lop no matter who you bank with any more than sticking $1k's worth of Old Turkish Lira into a bank will magically become $1bn after their 6-digit lop.

If that were true, every man, woman and child living in Turkey must all be secret billionaires! Bank deposits are converted at the exchange rate of new for old currencies. They don't keep the same face value (which is precisely why bank notes need to change in the first place - nothing retains its face value after a lop which is the whole point of a lop). There is no "one rule for notes, another for bank accounts". All get lopped at the same rate. This is nothing new - it's happens dozens of times before on every continent on Earth, and the rules for Iraq are no exception just because it has a little oil or some confused / dishonest pumpers say it is.

Also "LOP's only occur during periods of hyperinflation" is another untrue "pumper myth". Most LOP's occur *after* inflation has fallen after a period of chronic / hyper inflation. No-one "lops" during high inflation because it doesn't boost any confidence in the currency if prices continue to rise after the lop. So the fact that inflation is falling in Iraq actually justifies a lop even more.

Q11) Remember two things: Iraq has been removing the notes with 3 zeros from circulation since 2009. If they were going to LOP why worry about the removal of these notes so far in advance? 70% have been removed-reducing the M2.

Also, note through history, including Turkey and the RV of the lira, LOP's or devaluations only occur during times of high inflation. Iraq's inflation has been kept low, typically under 5%-now 7%. That's why a LOP will not occur.

Answer :
"70% have been removed-reducing the M2."

Hi Gary. The above is not true. That claim comes from someone confusing M0/M1 figures (only banknotes in circulation) with M3 (total Dinar in circulation). That claim is openly debunked in paragraph 7 of this article we're commenting on itself : "Saleh said there are currently some 29 trillion dinars in circulation in Iraq, represented by some 6 trillion banknotes of various denominations." That 29t in circulation figure is just one week old. It hasn't gone down at all - someone just compared "total money" to "banknotes" and got confused.

It also says "most of them [banknotes] are quite small" which means removing 25,000 won't make any difference because they make up less than 1% of the 6tn Dinar in circulation.

"Also, note through history, including Turkey and the RV of the lira, LOP's or devaluations only occur during times of high inflation."

Turkey didn't "RV" they redenominated. The two things are completely economically different. A genuine "RV" is a peg adjustment (like China "RV-ing" the Remminbi vs the $). Free floating currencies cannot "RV" they can only appreciate. Iraq's inflation has only recently fallen to 7% yes, but in prior years it was high. It's this past inflation not current inflation, that lops take out.

Q12) First of 3
From the moment I’ve been in this investment even until now, the debate of LOP versus RV has been raging. That very argument is what drove me and thousands of others AWAY from Investors Iraq (IIF), as it appeared it was absolutely overrun by those who felt it was their mission to squash the hopes and dreams of other investors. I am sharing this with the permission of those who have helped bring me this concept to light, from several legitimate economists and very sharp minds, their perspective to help each of you understand this dilemma.
I don’t know about you, but I’ve been told time and again by those who are absolutely in a position to know that this will NOT be a LOP, but will be a straight-up RV, yet I found myself not being able to refute the arguments of those who brought only “part of the truth” forward, using the “numbers” to their advantage through logical focus on that which was clearly understood. This post of mine is dedicated to explaining how an RV will happen.
CONCEPT EXPLAINED:
First off, I’ll use the exchange of a 10,000 IQD note as my example. To help explain the economics of this cash-in example, I will use a 1:1 cash-in ratio between the USD and IQD, that is given a two-tier payout, and a 2% bank spread.
What You Will Receive:
If you were to cash in your 10,000 IQD note with a bank that charges you a 2% spread, you would personally receive a net take-home of $9,800 credited to your bank account.
What Your Bank Will Receive:
Your Bank will receive a $10,000 credit to its Federal Reserve Account. They will also be able to add the $200 profit to their “capital account”.
If you don’t understand the “Fractional Banking“ concept that runs our country, you may want to, as that is what this is based on, and is what is behind this entire concept and plan. To learn more about this concept, I suggest you click HERE, and go to a video post I brought to the forum previously, and posted in my “Tidbits“ section.
Ultimately, the bank wins because they are able to gain $2,000 in lending power under the 10% “Fractional Banking“ model.

What the US Treasury Will Receive:
First off, the US Treasury will receive $3,500 in estimated taxes in the quarter after the exchange, because you are now in the “rich” category and get to enjoy the 35% tax bracket. This lowers the “net cost” of the IQD exchange to the US financial system to $6,500 USD (i.e. $10,000 out – $3,500 in). Furthermore, the US Treasury’s rate is higher than the banking rate (we will use in this example 1.25), thereby further reducing their “net cost” from $6,500 to $4,000.
Oil Now Enters the Picture:
At some point, a Fed-appointed agent orders $12,500 worth of oil from Iraq. Payment will consist of a $12,500 transfer from the Fed’s foreign currency reserve IQD account to the IRAQ Oil payment account at the CBI in a form otherwise known asPetroDollars/PetroDinar. Even though the world spot price of oil is defined in terms of USD, the actual transaction may take place in any internationally recognized currency agreed to by the parties. For example, Iran only accepts Yen from Japan for their oil orders, because they don’t want USD in their foreign currency reserves.
How the CBI “RECAPTURES” the Money:
The $12,500 order is filled with 250 barrels of oil based on the spot price on the date of the sale (for this example we used a $50 USD spot price). What does it cost Iraq to produce the oil to fill this order? Well they have negotiated productions agreements for approximately $1.50 USD/barrel. From that price $.50 USD goes to the national Iraqi oil company who is the partner in the field the oil came from. Out of the remaining $1.00 the other oil field partners have to pay the Iraq government a profit tax of $.35 USD (35%). The net cost to Iraq to produce a barrel of oil used in this scenario is $.65 USD. (i.e. $1.50 – .50 – .35)
What does all that mean? It cost Iraq $162.50 to bring back a 10,000 IQD note! Can they afford that? I think so! So, instead of paying out $12,500 for a 10,000 IQD note, they only pay $162.50! That doesn’t add to the money supply much at all does it! They receive their IQD back and place it in the CBI, or destroy it.
The transaction is completed with the Federal Reserve exchanging foreign reserve credits which are equal to $12,500 USD (which had a net acquisition cost of $4,000 USD for the US) for 250 barrels of oil (which has a TOTAL COST to produce of $162.50 USD for Iraq.
More completely explained, and simply put, it cost Iraq $162.50 USD from their foreign currency reserve accounts to redeem the value of 10,000 IQD, which goes into their operating accounts. At the same time the US got $12,500 worth of oil for a net cost of $4,000. That’s how it was originally planned for Iraq to RV at 1 IQD = 1 USD, with the variable being the political element (i.e. UN Sanctions, GOI actions, IMF actions, World Bank actions etc.)

3rd section
Other Factors that Strengthen Iraq’s Position and Ability to RV:
DFI Funds Returned & Other Assets: $280+ Billion USD, plus other frozen assets (estimated at $100 billion) will be returned back to Iraq and added to their foreign currency reserve, bringing it up to $430+ billion USD.
CBI IQD Reserve Requirement Adjustment: The CBI will change the current fractional IQD reserve requirements from 100% to 15% at the appropriate time. As a result, the the total potential money supply will be raised in value to $2.8 Trillion (430 billion/15), while at the same time, the total physical IQD in circulation will be reduced by removing the large bills with the 3 zeros over a period of 2 years, as they have indicated.
Oil Production Increased: Iraq will also execute the plan they announced to increase oil production from 2+ million barrels/day to 10 million barrels/day with the resulting revenues flowing directly to the Iraq treasury.
Oil Futures & Forex Contracts Added: To further stir the pot, the CBI will continue to use it’s sales window to market oil futures and forex contracts. They have shown they can generate significant cash flow in the private market. Think of their impact in public markets.
There, my friends, is how this plan will be enacted and made possible. Taking NOTHING, and turning it into SOMETHING, then bringing it back to a “manageable and reasonable something” that is accepted and supported by seeming endless supplies of oil. This is how the world’s ENTIRE NEW MONETARY SYSTEM will be regenerated and supported and backed, given, in essence, a re-birth and renewed for most governments and economic regions… even by “Black Gold”.
So, here’s the summary for all the “players” involved, giving ballpark numbers, and not taking into account superfluous costs, fees, and other small details that don’t really affect the larger picture:
Investor’s Net Gain: $10,000 – $200 = $9,800 x .65 = 6,370 for an investment that cost $10
Bank’s Net Gain: $200 added to “capital account”, plus $2,000 they can use to loan out.
US Treasury Net Gain: $2,500 from the .25 spread on top + $3,500 in quarterly taxes = $6,000
CBI/GOI/Iraqi People Net Gain: $12,500 – $162.50 = $12,337.50 + Profits from “Other Factors”
Overall Net Gain for All Involved: $6,370+$200+$6,000+12,337.20 =$24,907.20
This is the wealth that was generated from a single 10,000 IQD note that was given an original value of approxi

Answer :
Hi Parkerro. The Iraq Central Bank have openly and repeatedly stated they will redenominate - NOT "RV". Only pumpers invented a "Dinar RV" rumor-mill. There's really no arguing with their intention anymore after the clear April & June announcements to specifically "redenominate based on Turkey". What's really happening is that some people have been so desperately attached to being a promised millionaire just from changing $1k of dollars into Dinars and back again that they won't even look at what the ICB are saying anymore if it's not what they want to hear because "the dream" (as you openly admit it is) is more important to them than the truth. So they ignore it and cling onto failed pumper conspiracies as to why the "RV hasn't happened yet". It's because there isn't one and never has been outside of some chat rooms run by pumpers who whip people up into an unhealthy state of despair and permanent excited anticipation of a non-event. I understand your upset about "squashing the hopes" of those who like to dream, but there are many mature people out there who are more interested in the truth than just dreaming, and it's morally wrong for dreamers to fool those who do want to know the truth, just because they like to "dream".

As for your posts : The ICB has no "100% fractional reserve requirement". Any reserve at 100% is a full-reserve gold standard that's no longer fractional. Last August Iraq's reserve req. was cut to 15% from 20%. It's not at 100%. To be at 100% reserve for 29 Trillion, Iraq would need 60% of the entire $50tn global GDP. In reality they export just under 3% of the oil market which in turn makes up 6% of the global GDP. 3% of 6% = Iraq has approx 0.18% of the share of global GDP. It's surprising to hear you talk about fractional reserve banking and fiat currencies and then declare oil backs the Dinar. There is no oil backing it. It's weak because it's overprinted. And currencies are not "RV'd" according to oil futures at all. And the US Treasury won't receive any more from taxes because $1k will not magically become $1m due to an RD in the first place.

If anyone is in any doubt as to what will happen, here are two of Iraq's recent announcements in plain English from the people who are in charge of the whole process:-

April 13th 2011 - "Iraq’s Central Bank announced on Tuesday that the project of Iraqi Dinar re-denomination consisting of removing three zeroes is close to completion. The re-denomination project is believed to be a strategic plan that will be passed to the ministerial council and Parliament once complete. Iraqi economists believe the re-denomination of Iraqi Dinar will not have a major influence on the purchasing power of the Iraqi Dinar which the government has hopes high on it."

June 24th 2011 - "Iraq’s Central Bank announced on Thursday that it is planning to delete the zeros from the Iraqi currency. The new currency will be printed after deleting the zeros and will include the Kurdish language in addition to the Arabic language. It will bear as well photos of Iraq’s civilizations and patrimony in addition to symbols of Iraqi intellectuals and figures”, Saleh noted. On June 19, Iraq’s Central Bank Governor Sanan Al Shebeibi affirmed during the meeting of independent commissions with Prime Minister Nuri Al Maliki that the bank is preparing all requirements needed to replace the Iraqi Currency."

You don't get new banknotes from an "RV" (which keeps the same notes), you get it with a redenomination. Those x,000 notes you hold are going to cease being legal tender and replaced with new x notes at a ratio of probably 1000:1. There's really nothing to take out of context on the above very clear announcements. The word "redenomination" (lop) was used no less than 3 times in just the April 13th announcement alone. "RV" has never been used by the ICB. It's only psychological denial and "dreaming" out of fear of the truth that's keeping some people confused.

Q13) http://www.youtube.com/user/iraqidinarnotes
Tell me what you think BRIAN..

Answer :
Hi I watched it. A few points : The problem is that for some people "doing a lot of research and getting to the bottom of it" is often just looking for and agreeing with what they want to hear then twisting it to fit what they think. The "law passed in Iraq saying people cannot say anything bad about Iraq" is pretty silly. Many Arabic language Iraqi newspapers openly criticize Iraq's economy all the time. Outside Iraq, Iraq's laws don't apply. And on the net, they're ignored. There is no real secret "news blackout on criticism". People in Iraq still without reliable electricity after 8 years know what way the wind is blowing with or without a media blackout. As do the 15-20% of unemployed Iraqi's.

As for "after a lop, the value of a 1,000 Dinar bill remains the same but the price of everything is 1,000x lower" - that's total nonsense. A lop means deleting 3 zeroes off everything, both prices - AND currency (both notes & bank accounts). You can't have one without the other as doing so will be no different to printing 99,999% more money overnight (hyperinflation). If the Federal Reserve printed $9.99 quadrillion ($9,990tn) overnight, would America be better or worse? It's the same thing - a 1,000x fold increase in money supply relative to prices. There's nothing new about this - it's been done dozens of times before:-
http://en.wikipedia.org/wiki/Denomination_%28currency%29#List_of_currency_redenominations

A "lop", "cutting zeroes", "lifting zeroes", etc, are all slang for the same thing : a redenomination. If 3 zeroes are cut / lopped, then people will be given 25 Dinar notes for current 25,000 notes, prices will fall by 1,000 (ie, average rent in Iraq will fall from 250,000 to 250), bank accounts adjusted by same 1000:1 factor, and doing so will raise the value of the currency by same rate 1170:1 to 1.170:1. The same multiplier factor is used right across the board, and cannot work any other way. People don't get 1,000x richer from lops, nor can they buy 1,000x more goods afterwards. After the lop, the Dinar may (probably will) appreciate gradually if and when it's Dinar economy (which doesn't include selling oil for $, nor does it include just finding oil which won't be drilled for another 5-10 years).

A lot of these people really need to stop posting confusing videos until they understand what's what. The blow excellent PDF (click the download button) explains the entire lop process in detail (especially the "redenomination history" on the last page):-

"Afghanistan 2002 - 3 zeroes removed : 1,000 Afgani = 1 New Afgani
Turkey 2005 - 6 zeroes removed : 1,000,000 Lira = 1 New Lira"

etc, for over 80 other lop's by over 50 other countries:-

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1347407

Q14) Brian your awesome! I love to read your post do you have a website?

Got a good one for you the puppers are saying if they drop the 3 "0"'s this is one of many FUNNY examples is you go to the store in Iraq with a 25000.00 note to buy something for 25.00 that use to cost 25000. They will give you change on the 25000 yes he said change of 24,975.00 the store keepers would have to have a room stocked of dinar.

I almost fell of my chair when I heard this one sadly enough people believed this?

Answer :
Hi Car (of Canada). Yes I know what you mean! No I don't have a website (though some pumpers do drive me to start considering writing a "plain English" page of what a redenomination is)! There's nothing wrong with buying a small amount of FX currency as a first-time experiment if people treat it as an equivalent of a lottery ticket and they use their common sense as to realistic expected gains, understand what a "fiat" currency is (and why they aren't backed by anything) and just as importantly - "keep it real" regarding how much time / effort they spend monitoring it after they've purchased (enough to understand it but not to being a daily obsession like the Dinar is for many people). What is wrong is when people panic buy hundreds / thousands of dollars of Dinar which have ceased trading on the international market on the back of a promise of being a millionaire from a group of faceless secrecy-addicted chat room strangers who permanently speak & write in a deliberately misleading over-excited style to make it sound "imminent" to put pressure on people to impulse / panic buy.

I personally know one elderly couple who lost their home because of the Dinar ("It'll RV next week, so buy more now! Quick!!! Just $300 dollars will be an extra $300,000 next Monday!!!" - every single day since 2006 from some pumpers). No serious Forex advisor would ever do that. Increasing numbers of others are literally making themselves ill spending all day every day, desperately trawling dozens of Dinar forums being whipped up into a frenzy by pumpers posing as "secret intelligence collectors" who keep followers on an emotional roller-coaster ride cycling between frantic despair and unhealthy almost rapturous anticipation day after day, month after month, year after year (and yet not only can they not get anything right in 5 years despite throwing daily predictions around like confetti but some days are outrightly contradicted by the Iraq Central Bank and have to scrabble around inventing a new "secret" conspiracy to keep the illusion alive, or twist meanings like "a redenomination is not a lop" (and thus contradicting their advice in past months) when they can no longer claim Iraq will not redenominate).

Many, many of these people are just posers and drama queens being paid commission from every Dinar sale they refer (some are also paid commission from offshore financial services for referring and selling offshore accounts to put their "future millions"). Some of them don't even attempt to hide it : if you order your Dinar through Dinar Trade and mention you were referred by Dinar Daddy, you will get a discount. Another long-term Dinar pumper named "Phoenix" also uses the names SekretKey, Ranger77, and Ema266 to pump dinar on many different sites. He also used to pump penny stocks under the Ema266 name. Many people are beginning to understand that these people's profit is not getting rich from *holding* Dinar, it's getting rich from getting rid of them before the RD! Have a good weekend!

Q15) Could someone explain to me what my 25000 note is worth in the U.S. Should I hang on to it or take it to the bank?

Answer :
Hi Tracy, your 25,000 Dinar note is worth about $21.45. Most banks won't change up Dinar at the moment as it isn't being internationally traded. Most Internet Dinar sellers also won't buy them back (and some offer such ripoff rates it isn't worth it). One other option could be to find someone going out to Iraq (in the Armed Forces maybe) and swap it for a $20 note?

Q16) Hello Brian. This is just absolutely false. Although the exchange rate you posted for the 25k note may be close, most of the banks that sold the IQD will also buy it back today.
I have purchased all my notes from my banker. And whatever happens, they have a buy back rate to buy it back today. Yes there is a spread and I will lose a little. But there are others who have had their Dinar longer than me that bought years ago. They could sell today and realize a profit...today. Although some banks don't sell anymore because of difficulty in getting it...they do buy it back.

You obviously have a lot of information about trading the Forex...I don't think you understand fractional banking totally. I wont restate the argument already made...but that's they way IT WILL happen. There are pumpers out there and I agree they have ill motives...but that doesn't make the investment a bogus one.
Your response was not adequate to make me change my opinion of this speculative investment. I understood the risk going in...that's why the possible return is higher. More risk...more return.

Your basic answer to fractional banking and the RV was that Iraq has mention redenom not and not RV. Do you honestly think they will "announce that they will RV?" No they won't! Most people including you and many other currency traders and speculative investors and even foreign Country's around the world would buy as much as possible and wait for the RV.
Before Kuwait Rvd they said as close as the week before they did it that they were not going to Rv. And they did it the same week!

I agree there are pumpers out there but there is a lot more going on that you don't see, such as banks carrying more cash on hand, training tellers on IQD and currency exchange, contractors in Iraq with contract rates of over the 1170 rate posted at CBI signed and waiting for the RV. There is so much more than the facts that you know about. There are other facts on the table such as when Shabbi was in Washington a few weeks ago talking to business men about investing in the future of Iraq. (you tube it) Shabbi was asked when pint blank...when would the Revaluation happen. He said if he knew , he certainly couldn't tell it and laughed it off! If they didn't 't have revaluation in the plans, he would have said so when asked. I just think you are missing too many other details other than the ones you have.

Answer :
The FX rate for the Dinar isn't secret and is openly and visibly 1,168.50:1. So 25,000 Dinar = $21.39:-
http://www.xe.com/ucc/convert/?Amount=25000&From=IQD&To=USD

Pumpers FX rates are far worse (>1400:1) when buying back at market rate (and >1800:1 with rip-off selling spreads). Many Dinar sellers don't buy back, and others have secretive priceless contact forms with "Your submission of this form does not obligate The Currency Vault to purchase your currency notes from you" disclaimers.

Let me clarify : the Iraq Dinar is not being openly traded on the Forex. Some places may buy back sure - many soldiers, contractors, etc heading to Iraq, buy them like that. But they don't *have* to buy them back the same way a FX outlet has to change say Euro's to $ and they can withdraw that at any time. It also doesn't mean they'll be able to do so during the RD if Iraq installs currency controls on money heading in / out of Iraq (which is exactly what they did last time in 2003).

Sure some people bought at 2000:1. The problem is holding it for 9-10 years at mostly 30-70% inflation rates will wipe out most wealth gained in real monetary terms. Here's Iraq's annual inflation rate over the past 7 years : 2003 = 70% / 2004 = 29.3% / 2005 = 25.4% / 2006 = 33% / 2007 = 64.8% / 2008 = 4.7% / 2009 = 6.8% / 2010 = 6.8% / 2011 = 6-7%. You'd have made far money buying gold & silver in 2002 than Dinars. A lot of 3rd world currency FX movements look great if you ignore inflation!

"Do you honestly think they will "announce that they will RV?" No they won't!"

Sorry twash, but all this "secret society" nonsense is getting old. Iraq have already announced they will "RD based on Turkey" and openly described their new banknotes in detail (the banknotes that most "secret society" Dinar pumpers swore blind wouldn't happen because new notes = a lop) and are now scrabbling round like headless chickens trying to invent plausible sounding conspiracies to avoid admitting their deception. The only people who use "RV" are the pumpers who fail miserably at getting *anything* right, week after week, year after year. You cannot reprice everything & every bank account in the nation *and* change all banknotes and related logistics (ATM's, banknote counting machines, etc) in secrecy all in the space of 24hrs. That's complete nonsense that stretches gullibility to the limits. The only reason the pumpers are pumping this secrecy stuff is to create excuses to keep the "RV" illusion alive now that they're being overtly contradicted by the ICB on an almost daily basis. They've switched from plausibility to paranoia & propaganda tactics called "appeal to authority" : "I have secret intel contacts, therefore do not question me because everyone else is wrong" is what 99% of pumpers come out with every day. And it's utter claptrap.

"Most people" aren't buying Dinar at all anymore than they were the Bolivar or Lira. Nor are most countries. "Countries are hoarding Dinars" is yet another lie churned out by the drama queens and posers on Dinar rumor forums with nothing to back it up - and plenty to disprove it. Statistics are widely available on this pumper myth:-
http://www.imf.org/external/np/sta/cofer/eng/cofer.pdf

Also, in his Washington speech, Shabibi's exact words were : "I think, ah… to bring back the Iraqi Dinar, where to actually, the three zeros have to be removed". Again : "remove zeroes" = lop (about the 5th time he's said it now). He also spent most of the speech talking about inflation. He said he didn't know because he doesn't - one prior requisite given was a pre-RD educational programme for Iraqi's on the new currency (which shatters the "it will be done in secret" pumper BS).

Also Kuwait had a pre-existing hard peg. The Iraq Dinar doesn't and geniunely is a lot more like Venezuela & Turkey in terms of being low market priced currency after high inflation. Iraq is in a totally different situation to Kuwait. Thanks.

Q17) Hey Brian take a look/listen to this video for the BH Goup posted on Sunday July 3/11
http://www.breitlingcurrency.blogspot.com/

And for the newbies
Dealers

www.msb.gov
Money services businesses generally are required to register with FinCEN, to establish anti-money laundering programs, and to comply with recordkeeping and reporting requirements under the Bank Secrecy Act. Dinar sales websites frequently claim that their businesses are registered with the Department of the Treasury. These assertions are not always accurate. Further, it may be diffi- cult to discern from the money services business registration list on FinCEN’s website (www.msb.gov) whether the business is in fact registered, particularly if the business is an affiliate of, or a “doing business as” alias for, the business that is registered. Moreover, even if the business is registered with FinCEN, that registration does not guarantee that the business is in compliance with other Bank Secrecy Act requirements or with applicable state law. For these reasons, a financial institution that conducts business with entities selling Iraqi dinars should conduct appropriate due diligence to assure itself of the legitimacy of such entities. All financial institutions that do business with, and potential customers of, such money services businesses, are reminded that registration with FinCEN in no way authenticates either the legitimacy of a business, or the compliance of the business with any federal, state, or local laws.

And to see the legal action that has taken place with these dealers better know as puppers
http://www.iraqidinarmoney.com/dinartrade/comment-page-1/#comment-36

While your on this siteabove you can look up other dealers

Answer :
Hey Car, yes I know about that. A lot of people don't understand that you do have to be licensed to trade in foreign currency beyond just selling on a few unwanted vacation notes on Ebay. EDinarFinancial has also violated that and and on the same day just a few weeks ago, the Arkansas Securities Commission issued a similar Cease and Desist Order:-
http://www.iraqidinarmoney.com/edinarfinancial/

The profits mentioned are also interesting : "From on or about January 1, 2008, through the date of this Order, Dinar Trade has exchanged approximately $4,400,000.00 into Iraqi dinars in approximately 5,000 transactions for residents of the State of Arkansas."

$4.4m just from the state of Arkansas (pop 3m)? That's works out to average $454m total money received for 310m US pop. And people wonder why they pump like they do...

Q18) Brian, the CBI sells this worthless currency to banks, foreign investors, they now have made billions, for their international reserves and are ready to become a stronger country and currency.

This is suppose to be a World wide Historic event, and like your saying about other currencies that go up or down in value and those countries have good resources too, that this iraqi currency is no different. This is where I think you are wrong. Why do so many millionaires, Governments all over the world have so much dinar if it is a worthless investment.

Along with tax attorney's , dinar sites, and all the other people getting a kick back from this investment, they have already made some money. Yes , every investor has been given the tip, " Only invest in what you can afford to lose" then there are the investors who are totally brainwashed, quit their job, 24/7 on computer waiting for big day, sold everything to get more dinar. Hey , those are the ones who would invest in a bunch of other things, if not the dinar. It is so easy to get fooled by people , they make it seem so real.

IMO I think this is 50% about Iraq and 50% to help all the other Governments and their countries around the world. I think we are waiting on some currency tax law world wide or per country. Then Poof , RV of many currencies, but the iraqi dinar will be worth the investment at least revalues to one dollar per dinar as now , not worth a penny, so still one dollar would be a good return, and would be easy to control.

This will be an Historic Event, so that is why this is different. Economically the World needs this. We will have a Great Blessing Brian, and hopefully it will change lives for the better. God Bless you and maybe you should buy a little , just in case making sense , at the end makes no sense at all, and you miss the Big Historic Day. Take care Theresa

Answer :
Theresa, as I posted in my link to the IMF, countries don't have that much Dinar at all. It's a complete myth that they've been buying and hoarding it in vast quantities. If any country can just declare itself 1,000x richer, well, so can all those other countries! Maybe 6 other countries could "RV" after Iraq and you could invest one straight after the other - that way you'll be a Septillionaire! Maybe 150 countries could "RV" and you could be a Quinquagintacentillionaire! All of a sudden, reality starts to implode when you realize claimed "RV" in the way Dinar holders dream of is just printing money and pretending it's "different" because they want it to be! A real "RV" is a peg adjustment and no new banknotes are involved with that.

It's also rather meaningless to say "Iraq won't say they'll RV because it'll be like insider trading" if everyone already apparently "knows" the "super-ultra-secret" that it'll supposedly go up by 99,999% overnight given the amount of Internet pumper-chat-room hype. Do people really believe that Forex pros and much of the educated general public are sitting there scratching their heads not "getting it"? The real reason they've said it won't "RV" is quite simply because it won't - it'll "RD" instead. And I'll repeat it again : You cannot "print yourself richer" with fiat currencies. Not now, not ever.

"IMO I think this is 50% about Iraq and 50% to help all the other Governments and their countries around the world."

Iraq creating 99,999% more money overnight without selling a single drop more oil will *NOT* make either Iraq or the world richer, any more than Zimbabwe or WW2 Germany made it richer, it'll just export chronic inflation. $1,300 loaves of bread? No thanks! The world "saved" by a war-torn country with 15% unemployment, 12hr per day electricity supply and 0.18% of global GDP share? Keep it real people.

Ask yourself these common sense questions:-

1. If everyone ran out tomorrow and bought $1k worth of Dinar with the $10tn of US notes in circulation, where do you think the $10quadrillion would come from to give everyone $1m back other than printing it? Where do you think this 99,999% increased money supply falls into existence from?

2. The average Iraqi earns $2k-4k in Dinars. Do you seriously believe they'll be given $2-4m each year for sweeping the streets, and will be able to sell their old 1990's Toyotas for $5-10m and their 3rd-world houses for $50-75m each after the RD by changing up Dinars for $? Some of this stuff is bordering on insanity.

3. The total global GDP is approx $60tn of which Iraq's share is 0.18%. If that 0.18% is supposedly "magic" enough to sustain a $29tn Iraq money supply whilst the other $30tn is shared by 99.82% of the rest of the planet then by extension, you must also believe everyone else on the planet can magic $16 quadrillion into existence via similar "RV's" including Obama who can magic $4qdrn and will hand out $13m to every American all without inflation?

4. If Iraq's 0.18% is enough to sustain $29tn money, then by extension, the $60tn total global GDP can be substituted for just 0.37% GDP. Or in other words, everyone can just stop working, buying and selling, and constantly "RV" (print) themselves money and no inflation will occur anywhere because everyone on Earth will be a retired millionaire...

The sad truth is, some people are so brainwashed by this "millionaire for nothing" stuff, that when the RD does take place, they won't even understand it then and will just angrily shout at the exchange cashier they've had $999,000 promised money "stolen" by Iraq when they change their original $1k worth of Dinars back into $1k. Seriously people, if you truly believe the more money you print, the more value each note has and that printing enough for $1m each will make everyone rich with no other negative effect, then I have some magic beans to sell you...

Q19) Thank God for you and your ability to explain it in fairly plain terms. I hope people read your comments and actually have the courage to listen to the truth.

Answer :
Thanks very much for your kind comments. Really, Forex is a "zero sum game" - when you buy currency at a rate, someone else has to sell it at same rate - and vice versa : when you sell currency, someone else has to buy it at same rate. All this talk of "everyone's a winner from an RV" really is uneducated nonsense. If the Dinar "RV'd" without any RD / lop, then Iraq would have to monetize $25bn (29 Trillion Dinar at 1170) into $25tn (29 Trillion Dinar at 1.170) worth of overprinted currency - or in other words, it would have magically create $24.975tn overnight from nothing causing massive hyperinflation. Contrary to popular belief, oil reserves don't massively affect currency values at all - it's only oil production sold in native currency that does that. Oil is only worth something on a currency level when you sell it as you can't sell the same oil twice - (once when you find it and once when you actually sell it) any more than other countries can sell the same oil, food, electronics, etc, twice.

My above question has gone not only unanswered here but everywhere else even on the most educated pro-RV Dinar forums : If there are only $10tn US Dollars in circulation and if everyone bought Dinar and magically became 1,000x richer, then where does the other $990tn come from to give them "their" $10qdrn back? Even if as little as $2bn were gambled on the Dinar, a 1,000x increase in value means that even if 309.9m Americans gave the other 100,000 Dinar holding Americans every $ banknote in circulation - there still wouldn't be enough (total USA M1 figure (banknotes in circulation) from March 2011 is only $1.9tn)! This is why the whole "RV" thing the way some use it is mathematically impossible. A true "revaluation" is simply moving a currency peg. China "RV'd" a while ago. That's what a real "RV" is.

Almost every serious site out there is saying the same thing about Iraq will RD / lop. The Iraq Central Bank said it 5 times over (including in Washington). Serious Forex sites are saying it:-

"In 2010, the Central Bank of Iraq announced their plans to redenominate the Iraqi Dinar to ease cash transactions. The intention would be to drop three zeros from the nominal value of bank notes; but the actual value of the dinar would remain unchanged. That would mean that 1,000 IQD (pre-redenomination) and 1 dinar (post-redenomination) would both be worth the same amount in US Dollars. Although the announcement stated that the change would take place by the end of 2010, there has been no redenomination as of January 2011 and no further announcements have been made."
http://www.xe.com/currency/iqd-iraqi-dinar

And serious Iraq investment boards (those looking to long-term invest in Iraqi companies rather than Dinar gambling) are saying it too:-

"At the end of last month, a spokesman for the Central Bank of Iraq (CBI) told reporters that a plan to redenominate the Iraqi dinar will be presented to the Council of Ministers in the near future. The Council is then expected to submit the relevant legislation to Parliament for a vote. If the lawmakers approve the project, all existing banknotes will be replaced with new currency at the rate of 1,000 old dinar for one new over some unspecified period of time."
http://www.iraq-businessnews.com/2011/07/05/new-dinars-for-old/

I can only end my post by saying : To the "RV" crowd, the Dinar is more an emotional investment (like "Tulip Mania") than an economic one. People aren't buying because they've sat down and done the impossible maths - they're buying because others encourage them to "not miss out", who in turn are encouraged by others who say the same thing, all in a chain leading back to the pumpers who make their money not holding Dinar - but from getting rid of them!

Q20) Thanks for your posting. You have really helped to educate a lot of people on the IQD and shut down a lot of rumors. Here is my question to you. Do you believe that it's a good idea to open a bank account in Iraqi and just putting my Dinar in that account? I have been thinking about for some time now. Thanks.

Answer :
Hi Julian. I really don't know what advice to give you. Opening a bank account in Iraq won't make any difference in $ value vs holding the same Dinar in physical notes even after an RD / lop as bank accounts and notes get lopped at the same ratio. It may make it easier to exchange from Dinars back to $ if American outlets do not do so during an RD due to imposed currency controls, but there may still be imposed controls on wired-money out of Iraq during the RD. If you do, then do be careful, as there are a lot of shady "3rd-party proxy" firms who claim to do it for you, who I wouldn't let anywhere near my bank account details!

The real issue there is security : If you look on the CBI's website at the list of "Financial Companies", even many official listed ones are using hotmail, gmail and yahoo accounts for supposedly private email contact which doesn't exactly inspire confidence! Many Iraqi banks also do transactions via wide-open unencrypted email which leaves the door wide open to ID theft. The Internet works by sending packets through a series of nodes and your data could pass through as many as 20 other computers between your end and Iraq's. Personally, I wouldn't as their infrastructure is just too immature at the moment in terms of overall transaction security. In fact, these days I wouldn't even use a domestic US bank which requires you to use unencrypted e-mail for transactions, let alone international accounts.

As for traveling to Iraq, reading both the Travel Advisory and Travel Warning is still required both for security advice (carjackings are rife, avoid crowds, foreigners still targeted by kidnappers, etc) and knowledge of Iraq's many rules and regulations (visa's, currency limits, etc):-
http://travel.state.gov/travel/cis_pa_tw/cis/cis_1144.html
http://travel.state.gov/travel/cis_pa_tw/tw/tw_5429.html

This includes the Special Circumstances : "Iraqi law prohibits adult Iraqis and foreigners from holding and transporting more than 10,000 USD in cash out of Iraq. Iraqi customs personnel are taking action to enforce these laws and may pose related questions to travelers during immigration and customs exit procedures. All U.S. citizens are reminded that it is their duty to respect Iraqi laws, including legal restrictions on the transfer of currency outside Iraq. If you are detained at the airport or at any other point of exit regarding your attempt to transfer currency out of Iraq, you should contact, or ask that Iraqi authorities immediately contact, the U.S. Embassy. Please be aware that large wire transfers may require Central Bank of Iraq approval due to measures in place to combat money laundering."

Q21) The researched information provided by many is well appreciated. I have 1 comment in reference to the IQD's redenomination/revaluation. As Angela mentioned; in order to print lower denomination dinar the value has to increase period. If not, the Iraqi people would have to carry truck loads of money to purchase goods (it was also mentioned prices will go down by the thousands). Does any remember the $1000 notes & $10,000 notes (usd)? When we did away with printing those and they were removed from circulation, did those notes some how become $1 and $10 notes?

Now, if someone has one of those notes laying around, would it not be worth $1000 or $10,000 when deposited into a bank account. The 3 zeros have to go because the IQD will RI or RV and large notes will no longer be needed in the country of Iraq as Angela explained the merchants with truck loads of money to give change. Investors who have purchased 25K notes will have 25K to cash in/out, it will not be 25 dinar; the triple 0 notes will be removed from circulation ~ although the UST will collect those notes for purchasing of oil.

Answer :
Not necessarily. It's entirely possible with a redenomination or "lop", to take a lot of inflation out by deleting zeroes without the relative value of the currency to appreciate / depreciate. That's actually what the Iraq Central Bank want - to get rid of the zeroes and have a stable currency that isn't of a radically higher value because due to being a net exporter (like China), Iraq actually benefit from having a weaker currency.

The high denomination US notes you mention : $500 (William McKinley) / $1,000 (Grover Cleveland) / $5,000 (James Madison) / $10,000 (Salmon P. Chase) and $100,000 (Woodrow Wilson) were for inter-bank transactions back in the pre-electronic gold-age era (before money was "wired" between banks and being more portable for daily / weekly transit than gold). They've long been out of circulation and have been discontinued since July 14 1969. There are only 336 $10k notes still existing - and most of them are owned by numismatists (rare coin & note collectors) traded on their numismatic value rather than $10k face value. The massively printed 10,000 Dinar notes due to inflation aren't the same thing at all and will certainly be demonetized after the new bank-notes were introduced after a set period (3 months during last Iraqi bank note change). US $10k notes didn't become $10 notes because America didn't RD / RI or "lop". These notes were introduced specifically for bank transactions, not for general public circulation in response to the price of a loaf of bread increasing to $1,000 (which is exactly what happened in Iraq...) They were used more like bonds than bank-notes.

"Investors who have purchased 25K notes will have 25K to cash in/out, it will not be 25 dinar; the triple 0 notes will be removed from circulation"

*ALL* current NID banknotes will be completely taken out of circulation and replaced with new designs across the board (dual Arabic & Kurdish writing) - not just the 000 notes but ALL of the lower denoms too due to the new designs which will be universal on all new notes. It's a complete myth that current lower-denoms will be kept "as is" or that they'll leap up 1,000x in value (that's like saying 5 cents and $50 should have the same value!).

The current 1,000, 5,000, 10,000 and 25,000 Dinars will probably be replaced with 1, 5, 10 and 25 (or 20 as in 5x 20 notes for each 4x old 25k). New 50 / 100 Dinar (50k / 100k current note equivalent) notes may be introduced at the new value to fulfill a high-value circulation note gap. And many of the current lower denom notes 50 / 250 / 500 Dinars will probably be replaced with sub-unit coins, ie, the equivalent of 5, 25 (or 20) and 50 cents (as happened in Turkey and 50 other countries who've gone through the same thing).

Q22) Just got word the IRS has opened two offices in Iraq...makes me think some people are going to make some $ and they want their cut...Contrary to what the general outlook on this forum is I believe there is some serious $ to be made with the RD/RV.

Answer :
The "IRS setting up in Iraq" rumor started by "pied piper" King Pumper "Okie" is false. It's just yet another lie told on the back of 1,000 prior ones, including:-

"[OKIE_OIL_MAN] THE 27TH STILL LOOKS LIKE AN OPTIMUM TIME BUT IT MAY OCCUR PREVIOUS TO THAT" - March 22nd 2011

"[OKIE_OIL_MAN] will occur at any time from now thru tomorrow evening our time. no need for further calls–all is settled and done" - Feb 13th 2011

"[OKIE_OIL_MAN] more confirmation coming in from many sources–looks like monday will be a day that will be really busy if your a banker. you guys–screw your heads on straight–monday will probably be the 1st opportunity to cash in—-geeeessssshhhh. its all done–what more is to be said. he filled the positions yesterday. everything done yesterday" - Feb 3rd 2011

"[OKIE_OIL_MAN] Hearing no later than Wednesday or Thursday. signed off on RV yesterday Shabibi ordered to Parliment meeting today we are 48 hrs. oil production goes into affect on Feb 2.. has to happen before then This source is very very good..." - Jan 31st 2011

The same fake, debunked and failed "intel" recycled over and over to keep people hooked into an excitable state of impulse buying "just a few more last minute" Dinars from his salesmen bosses...

Q23) Brian, you're one of the few that make sense....and common sense. A while back, someone posted about the secrecy of purchasing IRD and making it sound like a *religious* venture for a *selected few*. I think the only people that don't want it unknown are the *posers and drama queens* whom I'm beginning to wonder if they're all the same person. Another reason for the secrecy is that scams are simply not promoted. I have to admit that I bought some a while back hoping for an RV.

Now, I believe dropping the 3 zeros will bring it back closer to my intial investment but I plan on leaving it in Dinar and hoping for their economic recovery possibly doubling my money plus intial fees if it gradually becomes worth more towards the 3+ they talk about hopefully within a few years. A friend once said that when he was in the Vietnam war that over night the government declared their currency worthless and printed all new denoms. Everyone lost. Brian, is this possible with the Dinar? Can they or will they just declare it worthless?

Answer :
Hi Rich, I don't think Iraq will just instantly declare their currency worthless. They've already said they'll change old for new notes, the only "sticky" issue for non-Iraqis is whether people will have to travel to Iraq to change them up. This is what happened the last time they changed bank-notes back in 2003 during the 3-month time limit for the changeover (Oct 15 2003 to Jan 15 2004). No-one will become millionaires from a lop, and they'll retain their value overall short-term and probably appreciate slowly long-term, but I do hope people who bought them can change them back / into new post-RD Dinars without getting ripped off by outrageous scamster trading fees (some want up to an eye-watering 40-80% spread!)

As for the "religious venture for a selected few" I agree that's what some people on some forums have turned it into. Some are hugely egotistical, eg, "I won't rub it in too much when I get my 12 Porsche's" and "I'm practicing my 'millionaire look'". Oh, boy!... I've seen one forum where people were hounded, censored and banned simply for posting recent Central Bank of Iraq statements saying "redenomination". A lot of it stems from fear and panic.

As you say, common sense dictates the Iraq Central Bank will inform the Iraqi people openly before it happens, and Shabibi openly stated in his Washington speech that before *anything* happens, and before any "hard date" is set / can be given, there will be a large-scale educational campaign in Iraq for Iraqis. In my opinion, much of this secrecy stuff came about when the pumpers who previously were riding off the back of "it could go either way" (RV vs lop) ambiguous silence were started to be openly contradicted and discredited by Iraqi Central Bank statements when they started affirming "lop", so they invented and try to maintain a paranoid conspiracy where pumpers were secret agents with "secret intel" and anyone who disagreed was "compromised" (basically "shoot the messenger" and "turnspeak" propaganda tactics).

Much of this is blatant nonsense, as all prices, bank accounts, bank notes, ATM's, bank-note counting machines, etc, in the country will have to be adjusted to remove the zeroes which simply can't be done in secret. Anyone who says Iraqis won't be told in advance / will be the last to know is a scamster. Hope things work out for you long-term Rich!

Q24) Hi Brian, Hate to be late to the party but I just found out about this Dinar craze yesterday from a friend who wants me to buy millions of Dinar so I can be a billionaire just like they're going to be. I'm wondering how I could not have known about this? I mean have I been living in a cave? I watch CNBC and read the Wall Street Journal and never heard anything about it. So I started investigating and ran into this thread with your comments. WOW!! What a treatise on economies and currency trading. Incredible stuff!! I'm not saying I would've bought but I was sorely tempted and you lectured me out of it. Thanks!! Is there anyway you can hop over to this dinarvets.com site and chat some sense into these kool-aid drinking dinar wackos? It would be very entertaining to see them wilt before your intellectual prowess.

Answer :
Hi Jack, thanks for your comments! Don't worry, you haven't been living in a cave! The reason the WSJ, CNBC, FT, etc, don't carry it is because the way the pumpers are blatantly mis-selling it is basically fraud. They can get away with it by hiring people to "pump" with anonymous usernames like "OkieOilMan" and "Phoenix" and keeping it small scale, but professional economics publications could face lawsuits if they started mis-selling it in the same way. In short, a lot of pumpers don't want it to make the TV news as there'd be massive calls for an investigation into mis-selling if it did. There's no real difference between what these guys do (sell Dinar on the back of fake intel their pumper friends invent in return for a cut of the sales) and insider trading / stock price fixing / "pump and dump" of the same thing in the stock market.

As for posting on Dinar forums, a lot of people have tried that only to met with censorship both direct (deletion of posts) and indirect (people shouting down / spamming / abusing "dissenters" / closing topic discussions). On the dinarvets forum, it says "Lop talk is not allowed in chat". Given that the Iraq Central Bank are openly talking about redenomination (lop), this results in the absurd situation where no-one can talk about official Iraq Central Bank statements about the Dinar on the dinarvets forum because the truth makes them feel uncomfortable as it openly contradicts what pumpers and scamsters have been shoveling out over the past couple of years! Really, DV is a site for those who can post anything they want on the Dinar - as long as you agree with the pumpers (ie, a "shill site"!)

A lot of people who post there long-term have shut down their minds to anything that doesn't include making them a millionaire just from changing up $1,000 into Dinars and back, and aren't interested in genuine debate - just conformity. Instead I prefer to post the truth on forums like this where people can honestly debate the issue from both sides without the thinly veiled censorship that's rife on many "RV" forums. Thanks for your comments, and thanks also to rferl.org for allowing a much needed honest debate on this issue!

Q24) I have enjoyed reading your comments and have tried to explain many of the same things to my family members. Unfortunately, they have continued to buy the Dinar. As a matter of fact, a couple weeks ago they were told it was close to RV by a 'source' so they have gone out to buy more.

Anyhow, I was doing more ‘research’ to try and show them the errors of their ways when I came across this article from Greg McCoach. In the article he mentions the follow:
- The U.S. Government is the Largest Holder of Iraqi Dinar Outside of Iraq

- Experts speculate the U.S. government received nearly 4 trillion Iraqi dinars at an exchange rate of 4,000 dinar to USD1.

- About two months ago, Iraqi dinars could no longer be purchased; the recent Dodd Frank bill appears to have legislation related to the revaluation of a foreign currency and preventing mass hysteria.

-If this is even close to true — and the UN allows Iraq to revalue their currency up to USD1: one Iraqi dinar — the U.S. government would stand to profit in trillions... as would anyone else who speculated on the dinar over the years.

http://www.wealthdaily.com/articles/the-revaluation-of-the-iraqi-dinar/3145

I don't know much about Greg but he doesn't appear to be a Dinar pumper. He actually seems to be a legitimate source of investment advice in the precious metals arena. I am curious as to your thoughts about his comments.

Answer :
Hi Paul, in response to the article you quoted : First up, "The dinar collapsed after the United States invaded Iraq and toppled Saddam. Prior to U.S. invasion, the Iraqi currency was trading over USD3 to one Iraqi Dinar on the strength of the country's massive oil industry" is factually incorrect. The Dinar collapsed long before the US invaded Iraq due to Saddam printing massive amounts of it under UN sanctions. It was still over 1200:1 even back in May 1997. It wasn't the US invasion that caused it to collapse but rampant chronic self-inflicted 1990's inflation.

The Iraqi Dinar was introduced in 1932 replacing the Indian rupee (used due to British occupation in WW1) at a rate of 1 Dinar per 13.5 rupees. It was pegged par the British £ then the peg was switched to the US$ at a rate of 1 Dinar = $2.8. In the 1970's, the Dinar rose to 1 Dinar = 3.3778 which remained until the Gulf War. This peg value was mostly artificial, evidence of which lies in the fact the black market rate was 6x higher ($1 = 3 Dinars) meaning no-one was willing to pay it's 1:3 *over-valued* arbitrary peg in reality even with Iraq's oil industry in full flow. This value was using what are called "Swiss Dinars" (due to Swiss printing plates used) and they were relatively strong vs the $ because they weren't overprinted.

After sanctions, Swiss printing was no longer available and new inferior quality "Saddam Dinars" were introduced and due to massive printing, they were rapidly devalued to below 1000:1. The sad truth is, most people who use this 1 Dinar = $3 of the old Swiss Dinar as an "RV" benchmark don't even realize that the "RV" old-to-new value correction they're waiting for already took place in 2003 when holders of the old Swiss Dinar changed them up at a rate of 150:1 for the NID (New Iraq Dinar)! ie, they were given 150 New Dinars for each old Swiss Dinar they handed in, whereas the Saddam Dinar were exchanged only for 1:1 for the NID to correct the value discrepancy between the old 3:1 Swiss Dinar (long been demonetized) and the newer never had a 3:1 value NID notes (which everyone owns today).

The over-printed NID (and Saddam Dinars) have never ever had any exchange rate even remotely approaching 3:1. Only the pre-1991 "Swiss Dinars" did, and that 150:1 "RV" already took place back in 2003, long before most modern Dinar speculators even bought NID's post 2003. The only way of getting back to near parity vs the $ is via a lop. There's simply no 3:1 value to "restore" the Dinar to via an RV because the NID's never had that value in the first place.

As for the amount of Dinars held by the US, most of that openly admits it's just wild guessing, and even if they did, it wouldn't matter as Iraq are going to "lop" meaning their value in US $ will not change.

Demikianlah perdebatan yang telah berlangsung pada bulan julai 2011 lalu. Cuba renung makna ayat-ayat dibawah;

I can only end my post by saying : To the "RV" crowd, the Dinar is more an emotional investment (like "Tulip Mania") than an economic one. People aren't buying because they've sat down and done the impossible maths - they're buying because others encourage them to "not miss out", who in turn are encouraged by others who say the same thing, all in a chain leading back to the pumpers who make their money not holding Dinar - but from getting rid of them!

Saya hanya boleh menamatkan post saya dengan berkata: Untuk penyokong "RV", Dinar adalah lebih pelaburan emosi (seperti "Tulip Mania") bukannya ekonomi. Orang ramai tidak membeli kerana mereka telah duduk dan buat matematik yang mustahil - ia membeli kerana orang lain menggalakkan mereka agar "tidak ketinggalan", yang kemudiannya digalakkan oleh orang lain yang mengatakan hal yang sama, semua dalam rantaian utama kembali ke pengepam aka scammer yang membuat wang dengan tidak memegang Dinar - tetapi membuang daripada simpanan mereka!

Kemaskini 11/12/11
Video Iraqi Dinar Scam Part 1

Video Iraqi Dinar Scam Part 2

Kemaskini 14/12/11
Ini antara soalan terkini berkaitan dengan IQD RV dari sebuah forum.

Why a lot of people still selling all their dinar when the withdrawal of all the remaining US soldier will end in this month?don't they believe in Sonny1's prediction by middle of January 2012 or should I say don't we all believe in Sonny1's prediction? I do believe what Sonny1 and Adam say. Does this means that the quickest all the remaining soldier back to the states by this month, the closer we are to the RV. Don't they ( people that are selling their dinar ) want their dinar RV, do they?I am confused why they are still selling when the time get closer.

Antara jawapan yang menarik

I have been doing this for 7 years at in the last 2 years each week there was suppse to be a RV. Pumpers have posted information each and every week about how close the RV is. The only thing that has happened is the dealers making more money each week. Everytime it gets to be November/December there is always a big push on how close we are and leading people to buy more. Don't buy what you can't afford to throw away and you will be fine. I got rid of a big chunk of mine and made some investements that have made money for me. We heard Thanksgiving, then now when the visit from M he will be bringing the RV with him, and then of course March, 2012 is now on some sites. No one knows except certain government officials if/when this will happen. Read the Iraq news and not the Iraq rumor sections.

I hope everyone that did invest does get the chance to make some moeny because we have all have had to deal with the weekly disappointments of no RV after the weekly pumping. Review all the archives and you will see some excellent articles on why it will happen after x, ,x,x, is complete and you will see that it did not actually happen after the events occured. You will see many articles that " it has to happen in order for x to happen" but nothing really has to happen.

Stay grounded and do your own research. When it RV's it will be on the CBI website and you will know.

Sila sambung baca disini

Akhir Zaman: Wang Kertas VS Emas

2011-10-12T00:11:00.000+08:00

Semua orang Islam wajib beriman dengan kemunculan Hari Akhirat. Ia terkandung di dalam rukan Iman dan mana-mana Muslim yang tidak mempercayainya, maka imannya pastilah tidak lengkap. Percaya pada Hari Akhirat adalah rukun Iman ke-5. Dalam menuju ke Hari Akhirat, kita diberi tanda-tanda kecil dan besar hari bagi tujuan persediaan.

Biasa dengar kemunculan Dajjal, turunya Nabi Isa A.S, yang mana akan muncul dahulu. Kerana kedua-dua akan turun ke bumi. Jika diamati, Dajjal akan dibunuh oleh Nabi Isa A.S. di Israel. Jadi Dajjal itulah yang akan turun dahulu. Tetapi apakah kaitannya semua itu dengan wang kertas dan juga emas? Wang kertas dan emas adalah matawang. Hari ini kita guna wang kertas, dahulu guna emas.

Zaman Dahulu

Zaman dahulu, semua negara menggunakan emas. Ramainya manusia menggunakan emas adalah sama seperti mana ramainya manusia menggunakan wang kertas pada hari ini. Emas dipilih kerana ia mempunyai nilai semulajadi. Emas sememangnya disukai oleh semua orang suka di seluruh dunia ini. Cuba lihat sukan SUKMA baru-baru ini di Lembah Klang, atau sukan Olimpik, apakah yang dikejar-kejar oleh para atlit? Pingat apa?

Mengapa mereka tidak dikalungkan dengan kalungan wang kertas? Adakah kita tahu berapa lama sukan Olimpik diadakan? Sukan Olimpik ialah sukan antarabangsa yang diadakan setiap empat tahun. Sukan ini bermula dari Yunani Purba, dihidupkan semula oleh seorang bangsawan Perancis bernama Pierre de Coubertin pada akhir abda ke-19. Asal sukan Olimpik tidak lagi diketahui tetapi banyak lagenda tertulis bersama sama sukan ini. Sambutan pertama Sukan Olimpik yang direkodkan adalah pada 776 SM, walaupun tarikh ini bukanlah kali pertama Sukan Olimpik diadakan. Pada masa itu, hanya satu acara dipertandingkan. Sejak itu, sukan mula menjadi penting dalam Yunani Purba dan mencapai kegemilangannya pada abad ke-6 dan ke-5 sebelum Masihi. Olimpik juga mempunyai kepentingan agama iaitu sebagai penghormatan kepada Zeus (patung besarnya ada di bandar Olympia). Pemenang sukan ini akan dihormati dan dimasukkan ke dalam puisi dan dijadikan patung. Sukan ini semakin hilang kepentingannya dengan penaklukan Rom ke atas Yunani (sekarang dikenali sebagai Greece). Apabila Kristian menjadi agama rasmi Empayar Rom, Sukan Olimpik dilihat festival orang tidak beragama (pagan) dan pada 393, Maharaja Theodosius mengharamkan Olimpik, dan ini menandakan berhentinya sukan Olimpik selama ribuan tahun sehinggalah diadakan semula pada abad ke-19.

Tidak cukup dengan itu, lihat sultan-sultan Melayu hari ini, apakah yang sultan-sultan kita pakai? Emas tidak akan jatuh nilainya, kerana emas tetap emas. Ia memiliki nilai emasnya yang tersendiri yang tidak ada pada kertas. Seperti wang kertas, ia dicipta untuk menjadi wang yang ditentukan nilainya oleh manusia.

Allah S.W.T sebagai jurutera pencipta manusia tentulah tahu apa yang terbaik untuk ciptaannya. Hari ini, kita tolak emas sebagai wang. Kita terima wang kertas. Wang kertas jika dikaji asal-usulnya, ia hanyalah surat hutang yang mewakili jumlah emas. Sejak zaman dahulu sememangnya kerajaan-kerajaan di dunia menggunakan emas sebagai wang. Para penjajah pun menggunakan emas sebagai matawang. Siapakah yang pernah menjajah negara kita?

Portugis, Belanda, British (United Kingdom), Jepun dan Siam (Thailand). Tak kiralah negara mana pun yang menjajah kita dahulu. Mereka semua menggunakan matawang emas.

(Kerajaan Siam)

(Kerajaan Jepun)

(Kerajaan Portugis)

(Kerajaan British)

(Kerajaan Belanda)

(Kerajaan Kelantan)

(Kerajaan Johor)

Tapi mengapa mereka semua bertukar pada wang kertas? Jawapannya ialah kerana kerajaan mereka mengalami masalah kewangan. Mana tidaknya, wang emas itu habis digunakan bagi tujuan berperang. Kepulauan Melayu bergolak dengan penjajahan demi penjajahan. Sehingga tulisan Jawi kita jua dijajah menjadi tulisan Rumi (Roman) seperti yang huruf-huruf yang anda sedang baca sekarang ini. Sehingga juga ada warga veteran yang masih hafal lagu negara Jepun.

Apakah banyak wang terlibat dalam peperangan. Oh! Sudah tentu. Siapa tukang bina kapal? Siapa tukang kimpal? Siapa tukang jahit layar kapal? Siapa jurumudi kapal? Siapa buruh kasar kapal? Siapa jururawat di kapal? Siapa pengawal di kapal? Siapa tukang senjata di kapal? Siapa tukang masak di kapal? Siapa dan siapa? Jadi wang kerajaan sesebuah negara itu habis dek peperangan. Wang ketika itu ialah emas dan perak. Ia tidak boleh diulang-cetak. Ia sangat unik. Hari ini, kerajaan Amerika Syarikat turut mengalami benda yang sama. Mereka kerugian kerana peperangan. Peperangan cara sekarang lebih banyak melibatkan wang. Bom-bom berkuasa hebat, teknologi canggih dan lain-lain.

Taktik Penjajah

Jadi semasa para penjajah kehabisan wang emas dan perak. Jadi penjajah ini mula menggunakan kertas sebagai ganti kepada emas. Rakyat jelata disuruh bekerja atau pun berkhidmat. Tetapi rakyat jelata tadi tidak diberikan emas.

(Lihat perkataan promises to pay the bearer on demand)

Perkataan tersebut jika diterjemahkan, ia bermaksud "janji-janji untuk bayar si penanggung beban atas tuntutan". Katakan anda orang Melayu yang menjual goreng pisang ketika itu, anda dapat kertas ini. Anda kemudiannya boleh menukarkannya kepada wang. Wang ketika itu ialah emas. Jadi kertas ini bersandarkan kepada emas. Hari ini? Tidak lagi. Wang kertas tidak lagi di sandarkan pada emas. Buktinya? Kita akan lihat nilai wang kertas ini semakin menjunam. Ia akan mengalami inflasi dan spekulasi. Manusia boleh mainkan nilai wang kertas itu. Ia tidak sama halnya dengan emas. Kerana emas mempunyai nilai tetap di dalamnya terkandung berat, karat, saiz dan lain-lain.

Berbalik pada cerita penjajah tadi. Apakah kertas tadi boleh diterima oleh rakyat jelata? Apakah mereka tidak marah? Mereka marah dan tak suka orang berhutang dan memberikan selain daripada emas kepada mereka. Maka dari situ British pun mencantikkan kertas mereka seperti yang kita dapat saksikan di bawah ini:-

Dengan kertas ini rakyat jelata boleh mendapatkan emas mereka. Rakyat jelata menjadi tenang apabila terpampang gambar pemimpin British di kertas itu. Kononnya penjajah serius menjaga kebajikan rakyat jelata. Tetapi pada hakikatnya ini semua hanyalah untuk meredakan kemarahan rakyat jelata atas penipuan demi penipuan.

Maka seterusnya penjajah pun saling berperang. Kerajaan Jepun pun mahu kaya. Mereka kata Asia Tenggara ini mereka yang punya. Masih ingat British lawan Jepun di Tanah Melayu? Apabila Jepun menguasai Tanah Melayu, mereka juga turut mengikut jejak langkah British. Dengan hasrat ingin untung sama seperti British untung. Maka Jepun pun mencetak kertas di bawah:-

(Kertas bergambar pokok pisang yang sering diperkatakan warga veteran kita)

Rakyat jelata tentu marah. Mereka mahukan wang sebenar iaitulah emas. Bayangkan seorang peniaga goreng pisang menjual goreng pisang, dia tidak terima langsung sebutir emas dalam setiap jualan goreng pisangnya. Bahkan dia terima pula kertas yang ada gambar pisang di atas. Mesti marah bukan? Tetapi dalam keadaan dijajah begitu, mana nak berani marah-marah?

Jika difikir, penjajah semakin untung, kerana rakyat jelata disuruh bekerja dan berkhidmat dengan hanya diberikan kertas-kertas bernombor. Semasa British digulingkan oleh Jepun, kertas-kertas British masih ada disimpan oleh ramai rakyat jelata. Kerajaan Jepun tak mahu bertanggungjawab dengan kertas-kertas British. Jadi siapa yang rugi? Tentulah rakyat jelata. Mereka kehilangan emas mereka.

Setelah itu, Kerajaan Jepun pula digulingkan oleh British. British kembali berkuasa. Tetapi kali ini mereka datang dengan mencetak kertas yang baru.

Lagi sekali rakyat jelata ditipu. Kertas-kertas terdahulu yang disimpan tidak dapat ditukarkan kepada emas. Malah tidak laku kerana British mengatakan kerajaan terdahulu dan terkemudiannya berbeza. Walau bagaimanapun kertas baru ini masih menjanjikan emas. Setelah British memasukkan Borneo ke dalam Malaya, kertas baru dicetak lagi.

Apakah bezanya dengan kertas baru ini? Kertas ini tidak lagi melibatkan emas. Emas tidak lagi diwajibkan sebagai pertukaran. Ia hanyalah kertas bernombor semata-mata. Gambar Permaisuri Elizabeth digunakan. Pada masa itu, gambar ini sudah cukup seksi untuk meredakan kemarahan rakyat. Rakyat jelata sudah ditipu dari penjajah demi penjajah dan dari penipuan demi penipuan. Ini semua melambangkan tenaga rakyat jelata boleh dikerah, diguna tanpa melibatkan sebutir emas pun. Cukup punya pandai penjajah ini. Kalau penjajah pandai, makanya rakyat jelata?

Kerajaan British amat bijak dalam melakukan persedian bagi menghadapi akibat terburuk. Maka mereka sekali lagi mencetak kertas yang baru.

(Kertas ini ada gambar pemimpin negara kita)

Cerdiknya British, mereka sanggup menggantikan gambar Permaisuri dengan pemimpin negara kita demi menghalalkan kertas ini. Rakyat jelata rata-ratanya hormat akan pemimpin sendiri. Jadi hasilnya tiadalah lagi api kemarahan rakyat. Tetapi tidakkah kita terfikir, bagaimana pemimpin kita boleh mendengar cakap British?

Mengikut sampaian orang-orang veteran, raja-raja Melayu, ulama' dan pemimpin Melayu yang tidak berpihak pada British akan dibunuh dan dibuang ke pulau-pulau kecil. Jadinya kuasa-kuasa istana dan pemimpin di parlimen yang ada pada hari ini berpihak pada siapa? Amalan jelik ini masih diteruskan oleh budak suruhan British hingga ke hari ini. Sekaligus terus-menerus menidakkan hak rakyat jelata untuk mendapatkan kembali emas kepunyaan nenek moyang mereka sejak zaman penjajah dahulu.

Ini semua akhirnya akan menjadikan kita semua, satu negara kita ini meleset dari segi ekonominya, akhlaknya dan lain-lain akibat tempias penggunaan kertas itu tadi. Satu contoh, peperangan yang berbekalkan dana emas akan berakhir apabila emas habis dibelanjakan. Ia tidak mungkin dapat dicetak lagi seperti kertas. Jadinya kezaliman dan keangkuhan pemimpin untuk terus berperang akan terbatas dengan ketiadaan emas. Tetapi hari ini, kertas boleh diulang cetak.

Mengikut kiraan ulama' Sheikh Imran Hosein pada ceramah 2007 beliau, katanya setelah kejatuhan wang dalam bentuk kertas tadi, Dajjal pun akan muncul. Kedatangan Dajjal boleh disaksikan oleh budak-budak yang sedang bersekolah hari ini. Jika kiraan ini tepat, maka Dajjal yang dikatakan lahir dari keluarga Yahudi, berambut kerinting akan memerintah dunia dari negara haram Israel dalam sedikit masa lagi.

Tambah Sheikh Imran Hosein, Dajjal akan menggunakan wang elektronik bagi menggantikan wang dalam bentuk kertas. Satu lagi penipuan secara elektronik bakal mewarnai dunia. Katanya lagi, apa yang umat Islam perlu lakukan ialah melaksanakan apa yang ada di dalam Al-Quran dan Hadith.

Oleh itu, kami menyeru kepada semua para pembaca, agar kita kembali kepada dinar (emas) dan dirham (perak) serta menghayati sistem ekonomi Islam yang popular dengan pengharaman riba'. Tidak seharusnya kita mengaku kalah dengan kedatangan Dajjal. Kerana terdapat juga proses menyambut kedatangan Nabi Isa A.S dalam menewaskan Dajjal di Israel kelak. Jadi tidak mahukah umat Islam turut serta menyambut Nabi Isa A.S?

source

A beginner's guide to investing in gold

2011-10-11T18:42:00.000+08:00

Gold has been sought after for its unique blend of near indestructibility, beauty, rarity and because of its status as a means of exchange and universal currency par excellence for centuries.

Empires and nations have sought to possess gold as a medium of international exchange, as a store of wealth and in order to increase and preserve power. Individuals have used gold as a store of wealth and as insurance against the fluctuations and depreciation of paper money and to protect against other macroeconomic and geopolitical risks.

Throughout history, perhaps no other asset in the world has had the universal appeal of gold and this appeal has increased in recent times due to the very significant macroeconomic, geopolitical, monetary and systemic risk facing our modern global financial system and economy.

Successful investing is about the diversification and management of risk. In layman's terms this means not having all your eggs in one basket. We know from history that markets can and do crash and if you are not properly diversified your nest egg can be severely affected.

So a healthy portfolio will include a wide range of assets including a variety of equities with exposures to different market sectors and regions; a variety of different countries' bonds of different durations; a diversified property portfolio; a cash component and a 5-15% allocation to gold related investments and gold bullion. In these uncertain times, caution and risk consciousness is crucially important and counterparty and systemic risk should be considered.

The key is to determine what amount of each asset class to have and to own assets that will whether the onslaught of inflation, deflation, stagflation and even hyperinflation.

Some exposure to gold should be included in all diversified portfolios. A good rule of thumb would be a minimum allocation of around 10% to gold and related gold-investments.

One's motivation for buying gold is fundamental to deciding in which form you should buy it. Are you a speculator, investor or saver? Do you wish to take a short term speculative position in gold? Are you investing for the short, medium or long term? Or are you diversifying, saving or using gold as a form of financial insurance?

Investing in physical gold

Physical gold should form a part of a properly diversified portfolio. Gold remains a universal finite currency, held by every central bank of note in the world. And central banks are set to become net buyers of gold in 2009 for the first time since 1988. The Indian Central Bank's purchase of 200 tonnes of gold from the IMF in October 2009 ( and a further 200 tonnes is being acquired) is the biggest single central bank purchase in such a short period of time (at least known to the markets) for at least 30 years.

In the same way that the family home should not be regarded as an investment, gold bullion is not an investment per se, rather a form of 'saving for a rainy day' or of financial insurance. It is to be taken possession of or stored with a secure third party and should not be traded. One does not trade an insurance policy and thus as a form of financial insurance, physical gold should not be traded.

Gold is money and is the ultimate safe haven asset and a great way, if not the best way, of ensuring wealth preservation and for passing wealth from one generation to the next. Once the solid base or core holding of gold bullion is achieved in a portfolio then other investments in gold such as mining stocks and mutual funds and other more speculative gold investments can be considered.

Modern bullion coins and bars

Modern bullion coins allow investors to own investment grade gold (between 0.90 and 0.9999 fineness) legal tender coins at a small premium to the spot price of gold as quoted on the markets. The value of bullion coins and bars is determined almost solely by the price of gold and thus follows the bullion price. Larger bars are not generally taken delivery of due to the cost of insured delivery and the security implications of having very large amounts of bullion outside the chain of integrity (say in a private residence). A London Good Delivery Bar weighs 400 troy ounces and costs over $400,000, £270,000 and €300,000 (prices as of 20/11/09) and is prohibitive in terms of cost and thus big bars are normally the preserve of large companies, institutions and central banks.

Gold, silver, and platinum are all available in the form of bullion coins, minted in the UK, the US, in Canada, South Africa, Austria, Australia, China and other countries. Most bullion coins are minted in 1/10oz, 1/4oz, 1/2oz & 1oz form (and some can be bought in 2oz, 10oz & 1 kilo). However, one ounce gold bullion coins such as Krugerrands or Britannias are by far the most popular for both small investors and high net worth individuals who see the advantages of owning legal tender bullion coins, either in their possession or in depositories, and recognise the advantages of the divisibility afforded by them.

Buying investment grade gold bullion for investment is stamp duty free and tax free (VAT exempt) in the UK and EU due to the EU Gold Directive of 2000.

Providers: Goldcore, Gold Investments Ltd, Baird, Chard, ATS Bullion

Semi-numismatic and numismatic gold coins

Numismatic or older and rare coins are bought not solely for their precious metal content but also for their rarity and their historical, aesthetic appeal. They are leveraged to the gold price which means that the price of these coins will generally surpass and increase faster than the gold price in a bull market (due to their historical and aesthetic value and to their rarity) and will decrease by more when gold is in a bear market.

The British Gold Sovereign (originally the one pound coin) is the most widely traded and owned semi-numismatic gold coin in the world. Important is the fact that, unlike the other forms of gold investment, British gold sovereigns are not subject to capital gains tax (CGT). Thus all post-1837 British gold sovereigns – because they are legal tender and have a legal tender face value - are capital gains tax free, which is obviously a significant benefit to investors vis-à-vis other gold investments.

Also highly owned are high-quality pre-1933 gold coins graded MS-65 or better by either the Professional Coin Grading Service or the Numismatic Guaranty Corporation. They are bought by both collectors and investors and most opt to take possession of these older coins unless they have invested in significant quantities.

Insured delivery of bullion and numismatics is usually some 1%-2% of the total value. Insured storage of bullion and numismatic coins in an allocated account will cost some 1% per annum. Investors should choose their storage provider carefully, making sure of a high credit rating and high net worth. This leads some to prefer an offshore bank or specialist depository.

Providers: Goldcore, Gold Investments Ltd, Baird, Chard, ATS Bullion

Gold certificates

The Perth Mint Certificate Programme is the only government backed precious metal certificate programme in the world. It allows investors to own bullion in unallocated or allocated accounts. The Perth Mint retains its AAA credit rating from Standard and Poor's and Moody's and is one of the safest and securest ways to own investment grade gold bullion. There are no initial or ongoing shipping, insurance, holding or custodial fees and thus it is one of the most cost effective ways for investors to own bullion over the long term.

Gold certificates are liquid and can be sold easily (soon investors will be able to buy and sell in real time online). Most investors opt to own their bullion in unallocated accounts as there are no insurance or holding fees on them and there is the flexibility of being able to transfer to an allocated account simply by paying small fabrication fees should the investor deem it necessary. Every gold bar is audited and accounted for and it is thus considered a safe way to own bullion. Bullion in a format of your choosing (coins or bars) can be shipped internationally from an allocated account or from an unallocated account once it has been converted to allocated.

Providers: GoldCore

Allocated accounts

Allocated gold accounts allow an investor to buy gold coins and bars from a bullion brokerage which will transfer or ship the bullion to an individual's account in a depository or bank. Allocated accounts involve ownership of specific gold and the owner has title to the individual coins or bars. Due diligence should be done on allocated gold account providers and the history, security, credit rating and net worth of the provider is of vital importance.

Providers: GoldCore, specialist depositories

Digital gold currency or e-gold

Digital Gold Currency, goldgrammes or e-gold are also increasingly popular. There are no specific financial regulations governing DGC providers, so they operate under self-regulation. DGC providers are not banks and therefore do not need to comply with bank regulations and there are concerns that there are unscrupulous operators operating in this emerging sector.

However, two of the more respected providers who have rightly garnered trust are Bullion Vault and Gold Money. They offer allocated accounts where gold can be instantly bought or sold just like any foreign currency. Every gold bar is audited and accounted for and it is thus considered a safe way to own bullion. Digital gold is primarily used by clients to buy gold for saving or as an investment and/ or as electronic money amongst users.

Providers: Gold Money, Bullion Vault

Gold bullion in SIPPs

UK citizens can as of April 2006 invest in gold bullion through their Self-Invested Personal Pensions (Sipps). US citizens could already do so in their Individual Retirement Accounts (IRA's). Sipps are new types of personal pension scheme that hold investments until you retire and start to draw a pension income. They are designed for people who want to manage their own fund by investing in asset classes of their choice. Investments made in gold bullion are topped up in the form of tax relief, meaning individuals can claim up to 40% back depending on the income tax band they fall in to.

Gold bullion is allowed in a Sipp providing it is investment grade gold which is gold of a purity not less than 995 thousandths or 99.5% pure and which is in the form of a bar, or of a wafer, of a weight accepted by the bullion markets. The bullion must be immoveable and stored with a secure third party. It cannot be taken possession of and used as a "pride in possession" article. Thus ETFs, some digital gold providers, allocated gold accounts and gold certificates are all allowed in the new SIPP.

Providers: GoldCore, Bullion Vault

Investing in paper gold

Mineral exploration, mining and the processes used to mine and produce metals are highly technical. Investors in gold production and exploration company stocks need to equip themselves with a basic understanding of the industry, in order to identify possible pitfalls and the risk-reward relationships of entering this investment sector. Investors should generally not buy just one or two stocks, but rather a basket of unhedged stocks or a mutual fund.

Derivatives, such as ETFs, forwards, futures, options and spread betting are normally short term speculations on the future price of gold and other markets such as commodities, shares or bonds, interest rates, exchange rates, or indices. They are financial instruments which derive their value from or whose price is dependent on the underlying asset. One does not directly own the underlying asset and one does not have a right to take possession of the underlying asset. Leverage or borrowing substantially may increase investment gains but also increases risk as if the price goes against the purchaser they may be subject to a margin call. There is significant leverage involved with derivatives and they are thus considered risky for non professionals as the potential positive or negative outcome is greatly magnified.
pyramid

Gold exchange traded funds (ETFs)

The recently launched ETFs are derivatives that track the price of gold and silver. Two of the more popular are the Streettracks Gold Shares (NYSE:GLD) and in London the Lyxor Gold Bullion Securities (LSE:GBS). They can be bought through stockbrokers.

There is an annual administration fee of between 0.4% and 0.5% per annum. Thus every year the amount of gold or silver backing an ETF share shrinks by that amount. This makes them unattractive as a medium or long term way to invest in gold. They are akin to derivative contracts that track the gold price and one does not own or have title to the underlying asset. Thus they are primarily used by day traders, hedge funds and institutional players going long and short and speculating on short term movements in the gold price.

Providers: Stock Brokers, Online Brokers

Gold stocks

Gold stocks are not gold - rather they are shares in gold mining companies. If the gold price rises, profits of a gold mining company should rise and as a result the share price should rise. There are many factors to take into account and it is not always the case that a share price will rise when the gold price increases. It is important to consider the performance and abilities of the management, auditors and geologists; the conduct of trade unions; a company's gold hedging position; whether it is producing or exploring; its cost basis; how much reserves it has in the ground and whether it is subject to political, economic, nationalisation or environmental risk.

Individual gold shares would be regarded as very volatile and high risk. Gold shares are regarded as more speculative as there is a higher risk-reward scenario. However, the added risk can be compensated for by the leverage which can result in higher returns. Such higher returns would be expected from mid and large-capitalisation un-hedged senior gold mining companies with proven reserves and strong earnings which have strong balance sheets and growth in resources and production and effective company management.

Providers: Stock Brokers, Online Brokers

Gold stock options

Stock options are a contract between two parties that expires at an agreed-upon time in the future. The contract purchaser is buying the right, but not the obligation, to buy a gold mining stock (a 'call' option) or sell (a 'put' option) a gold mining stock (the 'underlying') at a specific price, on or before the agreed-upon date, the date of expiration.

Stock options allow for a lot of leverage as a trader can control a large stock position with only a small outlay. However due to the very short term of the option contracts, they can expire worthless with the entire outlay being lost. Stock options allow speculators to make bets on market movement without having to pick an up or down direction. Because of this, stock options traders are often said to be trading volatility rather than price.

Providers: Online option brokers such as Options Express and E-Trade and certain stockbrokers

Precious metal unit trusts or mutual funds

Instead of personally selecting individual shares, some investors spread their risk by investing in collective investment vehicles specialising in investing in the shares of gold mining companies. These include mutual funds, open-ended investment companies (OEICs), closed-end funds, unit trusts. Two of these funds are the UK-based Blackrock Gold & General Fund and the Canadian Sprott Gold & Precious Minerals Fund by Sprott Asset Management. There are many precious metal funds in the US but investors assume US dollar currency risk when buying them.

Collective investment vehicles are a good way to invest in the precious metal mining sector as an investor's risk is reduced; mutual funds are not dependent on the performance and profits of one or two individual gold mining company and specialists in the field choose a portfolio of gold mining companies.

Providers: Blackrock Gold and General Fund, Sprott Gold & Precious Minerals Fund

Gold futures

Gold futures are traded on exchanges in London, Tokyo, Sydney, Singapore, at the New York Mercantile Comex Exchange (COMEX), the New York Mercantile Exchange (NYMEX) and at the precious metals department of the Chicago Board of Trade (CBOT).

Gold futures contracts are firm commitments to make or take delivery of a specified quantity and quality of gold on a prescribed date at an agreed price. Investors may take or make delivery of the gold underlying the contract on its maturity although, in practice, that is unusual. A benefit for some is that such contracts are traded on margin, so that only a fraction of the value of the contract has to be paid up front. As a result an investment in a futures contract, whether from the long or the short side, tends to be highly geared to the price of bullion and consequently more volatile.

They are normally the preserve of some mining companies, speculators, hedge funds and institutions. The leverage makes them a high risk/high reward investment. Participants are either hedging the gold price or attempting to predict whether the value of gold will rise or fall in the short term. Gold futures contracts are valuable trading tools for commercial producers and users of the metal to hedge their price risk.

Success depends on the price movement of gold during the contract term. Traders in these markets without protective stop-losses can quickly find themselves on the wrong side of a fast moving trade, losing large sums of money. Part of the risk is due to the leverage involved which can result in a speculator losing more than their initial capital outlay. Therefore, futures markets are not for amateurs or novice investors.

Providers: Commodity Brokerages, Online Brokerages such as Internaxx

Gold futures options

All the bullion banks trade in gold options and a list of bullion banks is available from the London Bullion Market Association (LBMA). Another way of trading options is through the COMEX Division of the New York Mercantile Exchange. The third route would be to contact a futures broker. They are often used to contain risk in the trading of futures.

Providers: Commodity Brokerages, Online Brokerages

Spread-betting

An alternative is to use spread betting to gain leveraged exposure to precious metals. Firms such as Cantor Index, CMC Markets and IG Index offer the ability to take a bet on the price of gold through what is known as a spread bet.

No commissions or taxes are levied in the UK on spread betting. The advantages are that any gains are CGT free and one can also take a view on movements in either direction. The downside is that in a spread bet the spread can be high, your exposure is geared up and short term bets are risky as it is extremely difficult to forecast any markets short term movement. One can lose more than the initial capital thus they are for speculators with very short term horizons rather than investors.

You can compare leading spread betting accounts here

The World Gold Council is a good resource for investors looking for established and reputable providers of gold related investments in the UK and internationally.

Assessing your options

One's motivation for investing in gold is fundamental to deciding how to invest. Are you a speculator, investor or saver? Do you wish to take a short term speculative position in gold? Are you investing for the short, medium or long term? Or are you diversifying; saving or using gold as a form of financial insurance (gold's primary role)?

When assessing one's gold investment options one must decide what one's motivation is. Once this is done, the primary considerations which should be looked at are the costs (both upfront and possibly recurring annual fees), proximity to your asset and perhaps most importantly today counter party risk.

In the table below we have looked at the various vehicles for accessing the gold market and graded them with regard to cost, ability to take delivery and, most importantly, proximity to your gold and counter party risk.

Type	Costs		Risks			Delivery	Considerations
Type	Initial	Recurring	Counter party risks	Proximity	Investor suitability	Physical delivery?	Considerations
Gold certificates	Med	V good(none)	Low	Good	Diversifier	Yes	Consider solvency & credit rating. A sovereign AAA credit rating and govt. guarantee is best.
Bullion bars/coins delivered	Med	V good (none)	Low	V good	Diversifier	Yes	Use safety deposit boxes, home or office safes, and insurance.
Bullion bars/coins stored	Med	Med	Low	Good	Diversifier	Yes	Consider the solvency and credit rating of the depository. Safety and security are key.
Gold bullion in SIPPS	Low	Low	Low	Good	Diversifier	No	Make sure you get impartial fee-based asset allocation advice.
Semi numis matics	High	Low	Low	Good	Diversifier/ Speculator	Yes	Premiums can vary. Get reputable and professional advice before purchasing.
Digital gold	Low	Low	Med	Med	Diversifier/ Speculator	Some do	Concerns over dependence on technology (internet, website, servers, etc) which is attendant risks.
Exchange traded funds	Low	High	Med	Poor	Speculator	Large minimum	Suitable for speculators, own shares in a trust and not gold. Annual costs quite high at 0.5% per year.
Precious metal unit trusts	Med	High	Med	Poor	Diversifier/ Speculator	No	High annual charges (funds can have hidden charges). Analyse the prospectus fully.
Gold stocks	Low	Low	High	Poor	Speculator	No	Very volatile. Management, geologist, auditor, trade union, environmental and nationalisation risk. Seek advice.
Gold futures	Low	Med	High	Poor	Speculator	Yes	Only suitable for speculators. High risk, involving leverage. Seek advice.
Spread betting	Med	Med	High	Poor	Speculator	No	Only suitable for speculators. High risk, involving leverage. Need to monitor trading constantly. Seek advice.

In an age of significant systemic risk, proximity to the underlying asset is increasingly important. Investors are increasingly wary of having too many counter parties (brokerages, banks, trustees, custodians, sub-custodians, delegates of sub-custodians etc.) between them and their asset. If storing gold with a third party, it is important that you have a direct relationship with that counterparty and there is not significant intermediation and thus increased risk. Another consideration is the ability to take delivery of gold in the event of a systemic crisis.

Investing in gold: conclusion

As we have seen, there are major differences in the various motivations for buying gold and ways to buy gold – from trading and speculating to investing and saving.

Holding precious metals in a portfolio can provide distinct benefits in the form of speculative gains, investment gains, hedging against macroeconomic and geopolitical risk and / or wealth preservation. Traditional asset allocation theory, as represented by the investment pyramid, advocates higher risk speculations at the top, with lower risk assets at the bottom. Commodity futures contracts, options and exploration junior mining companies should be placed at the top of the pyramid, while cash equivalents and fully allocated or taken delivery of physical bullion should form the foundation or base.

Experienced and knowledgeable investors have long known that gold and gold related investments can be solid investment choices. Gold is stable in times of global geopolitical instability and when there is economic uncertainty, recessions and depressions. It is important that investors look at their portfolios holistically. Used correctly, gold and gold related investments can be highly effective components of a properly diversified investment portfolio.

• This article was written by Mark O'Byrne, executive director of international bullion dealer GoldCore. GoldCore has an international media profile (CNBC, Bloomberg, CNN, BBC, FT, Wall Street Journal, Bloomberg, Dow Jones, Associated Press, Reuters etc.) and takes part in the Reuters Precious Metals Poll and the Bloomberg Gold Survey.

source

PHB And MIM Announce 2nd Income Distribution Of 3.25 Sen For AHB Trust Fund

2011-10-11T09:29:00.000+08:00

KUALA LUMPUR, Oct 7 (Bernama)-- Pelaburan Hartanah Bhd (PHB) and Mayban Investment Management Sdn Bhd (MIM), have announced a second income distribution of 3.25 sen a unit for the Amanah Hartanah Bumiputera (AHB) Unit Trust Fund for the six-month period ended Sept 30, 2011.

AHB is managed by MIM and sponsored by PHB while the trustee is AmanahRaya Trustees Bhd.

"This translates to an annualised income yield of 6.5 per cent which is benchmarked against the 12-month General Investment Account-i of Maybank Islamic Bhd," the companies said in a joint statement today.

The statement also said the total dividend payout to all AHB unit holders for this second income distribution amounts to RM31 million.

"With this, the total income distribution for the first financial year of the ten-month period ended Sept 30, 2011 is 5.42 sen a unit equaling an annualised yield of 6.5 per cent," it added.

The first income distribution of 2.17 sen a unit for the four-month period ended March 31, 2011 was made in April this year.

Meanwhile, the statement said of the total 60,000 unit holders of AHB, almost 40,000 or 67 per cent of them, are small investors investing in a range of RM500 to RM1,000.

"This indicates that the Fund is well received by the low to medium income Bumiputera groups and therefore, augurs well with PHB's objective of reaching the people as a whole," it added.

--BERNAMA

Bank Muamalat Launches Islamic Dual Currency Investment Product

2011-10-11T08:21:00.001+08:00

KUALA LUMPUR, Oct 10 (Bernama) -- Bank Muamalat Malaysia Bhd, a leading full-fledged Islamic financial institution, has launched the Islamic Dual Currency Investment (DCI-i), which will be initially offered in the Malaysian Ringgit, Euro and US Dollars to wholesale customers.

DCI-i is a foreign exchange-based structured investment product under the concept of Wakalah bil Istithmar (an agency for investment) linked to the performance of a pair of foreign currencies, Bank Muamalat said in a statement.

The product essentially allows investors, who have a view on foreign currencies, to enjoy potentially higher returns compared with traditional deposit products.

The DCI-i entails a relatively higher risk profile as it is not capital protected but provides an avenue to generate higher returns from investment in alternative currencies.

Bank Muamalat Chief Executive Officer Datuk Mohd Redza Shah Abdul Wahid was quoted as saying in the statement that the bank continued to expand its range of services and products, encompassing not only traditional Islamic banking products, but also more innovative syariah compliant investment products to cater to increasing levels of customer sophistication.

He, however, reiterated the importance of investor education and protection through proper disclosure and, the need for investors to clearly understand the nature of such products and risks involved.

-- BERNAMA

Silver Has Its Worst Day Since 1987. Gold Has Worst Week Since 1983.

2011-09-25T09:25:00.000+08:00

: FactSet; Silver. Rock climbers call this “extreme verticality.” Click for jumbo chart.

This has been an historically awful day for precious metals.

Here’s just how grim the selloff in silver was today:

The $6.49, 18% decline to $30.05 an ounce (that’s the September contract) was the worst dollar loss since January 22, 1980 and the worst percentage loss since April 27, 1987.

It was the second-biggest dollar loss in history and the fifth-largest percentage loss in history.

Silver has tumbled 26% this week.

Gold had its own very bad, no-good day, too, and its week was actually much worse than silver’s.

Gold lost nearly 10% this week, or $175 an ounce, to $1637.50 (again, that’s the September contract). That was the biggest weekly dollar decline since January 25, 1980, and its biggest weekly percentage loss since February 25, 1983. This was only silver’s worst week since May 2011 — silver’s been pretty volatile this year.

Today’s loss in gold, $101.70, or 6%, was its worst percentage loss since June 2006. It was the third-worst dollar loss for gold in history.

Somebody out there is clearly dumping silver to cover losses, but there are more fundamental reasons for the pounding, too, writes Tatyana Shumsky:

silver is also facing pressure from the darkening economic outlook because it is widely used in manufacturing and industrial applications. Alarms were raised this week when China, long considered the world’s economic engine, showed its manufacturing sector has contracted for the third consecutive month.

“With China’s economy slowing, with our economy going into a recession, with Europe going out the window, the industrial metals are being sold off viciously and silver is caught up in that,” said Frank McGhee, head precious metals dealer at Integrated Brokerage Services in Chicago.

Silver is used as a catalyst in making polyester, a common fiber used in clothes; the precious metal also coats CDs and DVDs and is used in glass for flat-panel TV screens. A sharp decline in economic activity would reduce demand for these products and undercut physical demand for the metal.

Meanwhile, gold has utterly failed as a safe haven this week, as investors have had to sell it to cover losses. The world has also rushed to the dollar for safety, and a stronger dollar is bad news for gold. And a weaker economy is bad for inflation, also bad for gold.

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Malaysia : Economic Statistics

2011-09-22T20:08:00.000+08:00

Total Government Gross Debt (National Currency) for Malaysia in year 2010 is MYR 415.174 Billion. Gross debt consists of all liabilities that require payment or payments of interest and/or principal by the debtor to the creditor at a date or dates in the future. This includes debt liabilities in the form of SDRs, currency and deposits, debt securities, loans, insurance, pensions and standardized guarantee schemes, and other accounts payable. Thus, all liabilities in the GFSM 2001 system are debt, except for equity and investment fund shares and financial derivatives and employee stock options. Debt can be valued at current market, nominal, or face values (GFSM 2001, paragraph 7.110).

Current Account Balance (US Dollars) for Malaysia in year 2010 is US$ 28.119 Billion. Current account is all transactions other than those in financial and capital items. The major classifications are goods and services, income and current transfers. The focus of the BOP is on transactions (between an economy and the rest of the world) in goods, services, and income.

General government total expenditure (National Currency) for Malaysia in year 2010 is MYR 238.079 Billions. Total expenditure consists of total expense and the net acquisition of nonfinancial assets. Note: Apart from being on an accrual basis, total expenditure differs from the GFSM 1986 definition of total expenditure in the sense that it also takes the disposals of nonfinancial assets into account.

Population for Malaysia in year 2010 is 28.251 Million .

Unemployment Rate (% of Labour Force) for Malaysia in year 2010 is 3.3 %.

Inflation (End of Year Change %) for Malaysia in year 2010 is 2.354 %. Data for inflation are end of the period, not annual average data.

Gross National Savings (% of GDP) for Malaysia in year 2010 is 33.113 %. Data are based on individual countries' national accounts statistics. For many countries, the estimates of national saving are built up from national accounts data on gross domestic investment and from balance of payments-based data on net foreign investment.

Investment (% of GDP) for Malaysia in year 2010 is 21.297 %. Data are based on individual countries' national accounts statistics. For many countries, the estimates of national saving are built up from national accounts data on gross domestic investment and from balance of payments-based data on net foreign investment.

GDP (Current Prices, National Currency) for Malaysia in year 2010 is MYR 765.966 Billion. GDP is expressed in billions of national currency units.

GDP Growth (Constant Prices, National Currency) for Malaysia in year 2010 is 7.156 %. Annual percentages of constant price GDP are year-on-year changes; the base year is country-specific.

source

What is the US-Europe turmoil's impact on Asia?

2011-09-22T19:05:00.000+08:00

WHY should Asian stock markets react negatively if America does not create any new jobs? This is the question on everybody's lips, especially those who have argued that Asia can stand alone and Asian growth has decoupled from American growth.

But the news on Sept 5 that most Asian stock market indices dropped appreciably because America did not create jobs in August, must in fact mean that Asia cannot stand alone and is not decoupled from the West. The West can still influence what happens in most Asian economies including Singapore, Malaysia, the Philippines and Thailand because these Asian economies are linked to America and Europe through the real and financial economy.

The real economy in many Asian economies are dependent on and in fact compete for greenfield investments in the form of foreign direct investments (FDI) from America and Europe. They are also dependent on America to absorb the manufactured exports from the multinational corporations (MNCs) operating from Asia. Asian stock markets and bond markets are also open to foreign portfolio investments that are managed by foreign hedge funds.

In fact, it has been said the peaks and troughs of Bursa Malaysia are determined by foreign portfolio investments and the floor of the Bursa Malaysia is maintained by government investments in government-linked companies (GLCs) listed on Bursa Malaysia.

A man looking at a stock quotation board outside a brokerage in Tokyo. The Nikkei 225 index added 0.23% to 8 ,741.16 points yesterday. — Reuters

The foreign ownership of stocks in Bursa Malaysia, for example, is quite high and amounts to about 22%. Recently the bond market in Malaysia got a boost because of the large inflow of foreign portfolio investments into the bond market, including the sukuk bond market.

The Asian banking system is also linked to the West as there are numerous branches of foreign banks in Asia and an increasing number of Asian banks are setting up branches in the West to participate in the financing of trade. The financial links are then kept alive by the banks and the capital markets.

If America does not create jobs then it means that the recovery from the recession is slow and this means that incomes will not grow and hence consumption will not grow in America.

Most of the exports of East Asian countries are destined to the USA and Europe although there has been some growth in exports to China. If American consumption does not grow then the demand for manufactured goods from countries like Malaysia will fall. If this happens investor confidence in the Malaysian economy might turn negative. If American jobs do not grow, then American GDP will not grow and may even fall if the recession gets worse.

It has been found that Asian economies are very sensitive to changes in the GDP of the USA. A study by, for instance, Bank of America (BoA) Merrill Lynch found that if the US GDP declines by 1%, it will have the impact of reducing GDP by 1.7% in Singapore; 0.8% in Malaysia; 0.4% in Thailand, 0.3% in the Philippines and Indonesia. It is clear then that the more an economy is dependent on trade as a percentage of its GDP, the more it is affected by an economic crisis in the USA. The sensitivity of GDP growth to changes in the GDP of the USA is then a function of the trade dependence of the Asian countries. Singapore, for example, is more trade dependent than Indonesia and hence its GDP is more sensitive to movements in the GDP of the USA.

If Asian countries are not able to keep up their export momentum, their incomes will drop and their companies may not generate more profits.

In fact profits might fall and this may lead investors to sell the stocks of the companies negatively affected by the fall in exports. If incomes go down as a result of the drop in external demand then savings will drop and the amount of funds available for margin financing of stocks might fall. Tighter loan conditions or credit conditions may persuade investors to move out of the market and this may cause stock prices and the market index to fall.

So American jobs mean an increase in aggregate demand for manufactured goods from Asia and this translates into increased incomes and increased demand for Asian stocks.

If Asian exports decline then the demand for Asian currencies will decline and this will trigger a depreciation of the local Asian currencies, which will mean that foreign portfolio managers will not be attracted by the prospects of an appreciating local currency.

If the money supply declines as a result of the drop in exports, then interest rates will rise and this will cause the price of stocks and bonds to tumble because there is an inverse relation between asset values and interest rates.

The rate of job creation in a crisis economy such as America, which is linked to the real and financial economies of Asia, has therefore a significant effect on the stock market performance of the dependent Asian economies.

In August, for example, foreign investors sold more than RM3.8bil worth of Malaysian stocks because of the fall in the S&P credit rating of America and the European debt crisis because of the expectation that the external demand for Malaysian exports will decline. As a result, the FTSE Bursa Malaysia KLCI Index fell 6.6% in August.

source

How Can China Save Europe When It's Defaulting On Its Own Debt?

2011-09-19T10:32:00.000+08:00

About 85% of Liaoning province’s 184 financing companies defaulted on debt service payments in 2010 according to a report from the province’s Audit Office. The report also noted that 120 of these borrowers, de facto government agencies, operated at a loss last year.

Since 1994, provinces and lower-tier governments have not been permitted to issue bonds or borrow from banks. Despite the strict prohibition, their debt has skyrocketed as local officials incurred obligations through LGFVs, local government finance vehicles. The central government’s National Audit Office said these companies, at the end of last year, had taken on 10.7 trillion yuan of debt. No one, however, knows the true amount of LGFV indebtedness, and some have calculated the real amount to be more than double the official figure.

Why the disagreement as to the amount of debt? Local governments have gone out of their way to hide borrowings, perhaps in part because of their doubtful legality. As famed economic journalist Hu Shuli points out, new local officials sometimes do not know the extent of obligations left by their predecessors. There have been a number of stratagems employed, from the issuance of illegal government guarantees to the transfer of funds in roundabout routes.

The case of China Zhongwang Holdings, a giant aluminum producer, illustrates how Liaoning province effectively went into debt in a roundabout manner—and concealed the borrowing. As disclosed in a footnote in its 2009 financial statements, Zhongwang had borrowed 2.3 billion yuan from two Liaoning banks and, as reported by Naomi Rovnick of the South China Morning Post, had “given the money” to a government-owned entity. Zhongwang, based in Liaoning, kept the loan on its books but disclaimed any responsibility for repayment. Apparently, the series of money transfers among Liaoning’s government-owned entities through Zhongwang was intended to facilitate development of the local economy.

The debt problems of northeastern Liaoning may be worse than those of other provinces because it is in the heart of China’s “rust belt,” but LGFVs in other parts of the country are also beginning to experience difficulties. Yunnan Investment Group, the largest financing vehicle of southwestern Yunnan province, has just put restructuring plans on hold after China’s most widely followed rating agency warned of a downgrade in July. Most LGFVs, however, are not rated and so there is virtually no public scrutiny of their activity.

LGFVs can continue to meet existing debt obligations as long as they can borrow new funds. “If the government doesn’t tighten its policy too much, there shouldn’t be any problem,” said Tianjin Vice-Mayor Cui Jindu on Friday. “But if we end up not getting a single new loan, there could be problems.” The problems Cui was referring to, according to the official China Daily, included non-completion of projects. And if projects are not completed, there will be no sources of repayment.

The problem is that Beijing, to control inflation, is in fact putting the brakes on the money supply. The growth of M2 is the slowest it has been in six years—less than half of what it was two years ago—and central government regulators are trying to restrict new loans with periodic increases in bank reserve requirements and direct administrative measures.

As a result, China’s debt-fueled growth is slowing fast, probably faster than official GDP figures indicate. Electricity usage, perhaps the best barometer of economic activity, was essentially flat this summer on a month-to-month basis. Moreover, export and shipbuilding orders are down. The closely watched HSBC purchasing managers’ index, at its record lowest point, is close to negative territory and headed south.

Xu Lin, a senior official at the National Development and Reform Commission, says there is no need to “panic,” but there are plenty of reasons to think that China’s economy is already landing hard. And a hard landing will soon cause LGFV defaults around the country, which will roil banks. Fitch early this month put China’s local-currency debt on downgrade watch due to concerns about bank asset quality and general concerns about financial stability.

Many analysts, thinking Beijing has plenty of cash, don’t worry. Yes, it is sitting on $3.2 trillion in foreign exchange reserves, but for various reasons dollars, euros, and yen are of little use in a local-currency crisis. Of course, the central government can print more renminbi to pay off LGFV creditors, but that, by increasing the money supply, would only aggravate what is China’s most serious economic problem, inflation.

Everyone now wants to know whether Beijing will buy Greek and Italian debt to save Europe. Yet the better question to ask at the moment is this: “Can China save itself?”

source

TNB to issue RM5bil sukuk for Janamanjung plant soon

2011-09-18T20:35:00.000+08:00

PETALING JAYA: Tenaga Nasional Bhd (TNB) will raise RM5bil from a 20-year ringgit-denominated sukuk issuance at the end of next month to finance the extension of its Janamanjung power plant.

This comes at a time when the national utility company is facing a severe gas supply shortage that may result in it incurring additional fuel cost.

In a Bernama report on Thursday, TNB president and chief executive officer Datuk Seri Che Khalib Mohd Noh said the group would do its book-building exercise in the third week of October. “The timing is good as the domestic market is now flush with liquidity,” he said.

In April, TNB awarded French group Alstom a 650-million-euro (RM2.8bil) contract to build the Janamanjung 1,000-MW supercritical coal-fired power plant.

Alstom will engineer, procure, construct and commission a 1,000-MW steam turbine, a generator, a supercritical boiler and auxiliaries. The plant is expected to come online in 2015.

The plant will be the single largest in South-East Asia and will produce enough electricity to power nearly two million households in the country.

The project follows TNB's 1999 contract with Alstom to build the currently operating 2,100-MW Manjung coal-fired power plant.

The supercritical power plant operates at a higher temperature than regular coal-fired power plants. Its high temperature increases the pressure at which it operates, which in turn improves its efficiency, increasing the amount of power output and decreasing emission per unit of fuel burned.

Meanwhile, TNB is still bogged down by cost concerns whereby it may incur additional fuel costs of up to RM3bil.

On Tuesday, Che Khalib said the company's fourth-quarter performance would be weak and his earnings estimate for 2011 had gone haywire and had been cut by more than 50%, marred by a continued gas supply shortage.

Analysts have said the gas shortage might only be permanently resolved by the second half of 2012, when Petronas Gas' regasification terminal in Malacca was operational and Malaysia started importing liquefied natural gas at market prices.

source

MLM Guidelines According to Shari'a

2011-09-14T16:15:00.000+08:00

This article is a direct translation from the source using google translator. It's probably not 100% accurate. Please click the source link for your reference.

PURPOSE

Direct Sales Business Guidelines In Multi Level Marketing (Multi-Level Marketing) According to the Shariah is provided for the purpose of providing guidance to the company's direct sales business plan based on multi-level marketing (MLM), the participants, including distributors, sales representatives or agents, buyers, the who are involved directly or indirectly in the business and the public to ensure that the direct sales business in line with sharia principles.

BACKGROUND

2. Direct sales business conducted in general and in particular MLM is one form of business has contributed to the income of individuals and the economy. Businesses in this category to be a platform that provides space and opportunity for the public to increase household income generating livelihood on a regular or incidental to improve living standards.

3. However, multi-level direct sales business (MLM) has made many polemics in relation to the status from the perspective of Islamic law. In this regard, the Dialogue Fatwa Committee, National Council for Islamic Affairs Malaysia Ke-72 time is sitting at 25 to 26 February 2006 has decided that:

"The concept, structure and business legal multi-level marketing (MLM) which was approved by the Government is a must, and do not conflict with the business concept of Islam".

4. Advanced decision, a committee was formed to develop guidelines on business practices. The committee consists of experts in the field of paka-sharia and related agency representatives as follows:

(I) Dr. Zaharuddin bin Abd. Rahman

International Islamic University Malaysia

(Ii) En. Mohd. Talal bin Abu Bakar 

Ministry of Domestic Trade, Cooperatives and Consumer Affairs

(Iii) DJ Keramat Keramat Ali bin Ahmad Fadzil

International Islamic University Malaysia

(Iv) Ustaz Wan Wan Husin bin Rumaizi

International Islamic University Malaysia

(V) DJ Zaharudin bin Muhammad 

Alliance Islamic Bank's Shariah Advisor and Prudential BSN Takaful

5. Draft Guidelines have been formulated by the committee was approved and reviewed by the Review Panel Meeting Shariah-74 Jakim time to 24 to May 26, 2011. Furthermore, the Dialogue Fatwa Committee, National Council for Islamic Affairs Malaysia Ke-95 time is sitting at 16 to June 18, 2011 has agreed to recommend the Direct Sales Business Guidelines In Multi Level Marketing (Multi-Level Marketing) According to the Shariah.

OBJECTIVES

6. Guidelines were established to achieve the following objectives:

(A) to refine the results of the Dialogue Fatwa Committee, National Council for Islamic Affairs Malaysia to outline the criteria required and prohibited in the MLM direct selling business, and

(B) serve as reference and guidance in relation to the MLM direct selling business in accordance with Islamic law to ensure fairness and transparency to all parties involved in this business.

DEFINITIONS

7. For the purposes of these guidelines:

(A) "Marriage" means the agreement between the company and participants who have understood and agreed by both parties in accordance with Islamic law.

(B) "goods" means property of every kind whether tangible assets (tangible) or intangible assets (intangible) and assets in the form of real or virtual. The property must also be other than choses in action, negotiable instruments, shares, debentures and money.

(C) "Bonus" means the amount of commission payments as promised and paid to the participants as a reward to players being able, either alone or in groups, resulting in the outcome-the outcome as stated in the contract and detailed in a marketing plan or defined benefit plans.

(D) "Electronic" means technology that uses electrical, optical, magnetic, electromagnetic, biometric, photonics, or other similar technology.

(E) "intangible property" means any goods or services that do not have a clear value or benefits to participants and users.

(F) "Incentive" means something given or offered as an inducement or encouragement.

(G) "direct selling" means selling directly from the distributor to be appointed to the customer without going through layers of wholesalers and retailers in layers include door to door sales, mail order or sales through electronic transactions. 4

(H) "Door to door sale" means sale of goods or services conducted in the following way: A person or any person authorized by him to:

(I) go from one place to another than a fixed place of business, or

(Ii) to make phone calls to find people willing to enter into contracts as a purchaser for the sale of goods or services.

The first-mentioned person or any other person then or subsequently enter into negotiations with the prospective purchaser with a contract.

(I) "mail-order sales" means the sale of goods or services by any person, whether himself or through any person authorized by him, by accepting an offer for the sale by mail.

(J) "Sales through electronic transactions" means the sale of goods or services electronically by using the marketing network for the purpose of obtaining a commission, bonus or any other economic benefits.

(K) "Commission" means the wages paid to attorneys or agents for selling goods or services.

(L) "Services" means any rights or benefits except for goods and performance of work under a contract of service.

(M) "Participant" means a person who takes part in the direct sales business in MLM as a party that entered the contract with 5

direct selling companies, including distributors, dealers or agents and buyers.

(N) "Products" means goods or services.

(O) "pyramid scheme" means any scheme, arrangement, plan, operation or process chain bonus or benefit is derived solely or primarily from the recruitment or recruitment of participants in the scheme, plan, operation or process chain with sales pyramid goods, services or intangible property by participants.

DIRECT SALES BUSINESS MARKETING PLAN

8. There are three types of direct sales business marketing plan as follows:

(A) Multi Level Marketing Plan (Multi-Level Marketing Plan / MLM)

(I) the Company shall appoint a person as a participant to sell goods or services.

(Ii) Participants will also appoint other individuals to form networks in which (refer) to sell goods or services. The process of recruitment of new participants may continue to a reasonable level.

(Iii) Each participant will receive a commission, bonus or other economic benefits from a private sale and the sale of or dealers in the network or in a group (overriding bonus).

(B) Marketing Plan A Level (Single Level Marketing Plan)

(I) the Company will appoint a representative or agent or sponsor the sale and pay the salary or commission or a combination of salary and commissions on their sales.

(Ii) representatives or agents are not allowed to appoint or to sponsor other representatives or agents.

(C) Sales through Mail Order (Mail Order)

Sale of goods or services by any person, whether in person or through any person authorized by post.

DIRECT SALES BUSINESS CRITERIA MULTISTAGE (MLM) THE PERMISSIBLE BY ISLAM

9. Direct sales business multi-level marketing or multi-level marketing (MLM) which is required by Islamic law, taking into account maslahah and justice parties transactions as well as legal provisions, contains the following features:

(1) Registered and licensed  

Company must be registered under the Companies Act 1965 and have a valid license to do business direct sales Direct Selling Act and the Anti-Pyramid Scheme 1993.

(2) Direct Sales Contracts In Writing

(A) The Company shall prepare a written contract that contains terms and conditions of a clear description of the agreement between the company and participants.

(B) The terms and conditions of the agreement shall be understood and agreed by the company and participants.

(C) The contract shall contain the clause "THIS CONTRACT IS SUBJECT TO THE COOLING-OFF PERIOD FOR TEN WORKING DAYS" printed in block letters in print not less than 18 point Times.

(D) The contract should be signed or shall be in accordance with law to be signed by representatives of companies and new players join a direct sales company.

(E) A participant may cancel the contract at any time before the expiration of the grace period, stating its intention to terminate or withdraw from the contract.

(3 ) Cooling-off Period

(A) the cooling-off period is a period of not less than ten working days from the date of entry that allow a participant to cancel or withdraw participation in the direct sales business.

(B) In the event of cancellation of membership, the company must return the entire membership fee paid by participants.

(C) If the buyer makes the purchase and intends to return the goods have been found not suitable, the buyer is entitled to do so before the expiration of ten days, and the company must return the entire money or the price the item.

(D) The purchaser also reserves the right to return goods purchased if found to not meet the required specifications. 8

This is based on al-syart khiyar the option to cancel a contract after a few days as agreed by both parties.

(4) Membership Fees On the Minimum Rate

(A) the prescribed fee, if any, shall at a minimum covers the cost of management and printed materials are included in the sale of equipment containing a marketing plan and code of ethics.

(B) Using either the registration fee if dtetapkan by the company without payment of fees charged by the company if not, players automatically have become members or distributors, sales representatives or agents for direct selling companies.

(C) Membership fees shall not at a pace that is reasonable and so high that it no longer remains in accordance with the capacity to cover the cost starter kit or the business tools provided by the company during the registration but more towards the source of payment to the recruitment of new members as the basis pyramid schemes.

(D) Payment of entry fees without any consideration or exchange goods or services, except for a reasonable sum to cover the cost starter kit or business tools and the like are contain elements of riba al-fadhl and riba al-nasi'ah, which is putting some money (entry fees ) in cash in order to obtain a sum of money that occurs more grace.

( 5) Purpose To be participants  

The purpose of participating in direct selling company should be clear and consistent with legislation such as the following resolution:

i) buying and using goods or services produced or offered by the company to enjoy the privileges and incentives that have been prescribed and / or

(Ii) a distributor, representative or agent selling the goods or services produced or offered by the company to enjoy the privileges and incentives that have been set.

(6) Wedding In Direct Sales Business

(A) Marriage between the company and participants must be clearly defined between the company and participants.

(B) Subject to (a), and by not denying the possibility of the use of other obligations, essentially the main contract in the direct sales business multi-level marketing (MLM) is a contract al-ju `alah (الجعالة).

(I) Al-ju `alah (الجعالة)

Al-ju `yield is the contract that promises the salaries of those who managed to produce a desired outcome and required by the contracting iatu al-ja'il. This contract is result-oriented nature of Success-oriented rather than outcome-oriented which is oriented effort is required to cause the wages given by al-ja'il and deserve by the person doing the work of al-'amil, when the outcome required by the al-ja' il successfully realized and not merely to make the effort and apply oneself.

For example, to facilitate understanding of the difference between the contract and contract-oriented results-oriented effort, said Mr A said to Ms B: "If teachers would teach my child C that he can read, I paid RM500 teacher". Ms B did everything hard to teach C, but he still can not read. As a result, Ms B is not entitled to the RM500 as promised even have to spend time and energy teaching children to Mr A because here the conditions set by Mr A and Ms B agreed by contract to be results-oriented causes.

Unlike the case if Mr A said to Ms B: "Ms B C help teach my child to read four hours a week for a month, I paid to Ms B RM500". Here, whether C is subsequently able to read or not, as long as Ms B had carried out the work required of teaching children to Mr A, C, reading in the period, then Ms B is entitled to RM500 as promised because the contract here and time-oriented efforts .

Akad al-ju'alah contract generally is not binding on both parties (gyair common) and found to be suitable in practice with MLM practices in which participants are not employees of the company and the company is not the employer to the employee.

In the context of MLM, direct sales company to be al-ja'il or the person making the promise by al-ju'alah contract offered by the prescribed marketing plan and the participant will be al-'amil or executor to fulfill the conditions stipulated wages in the marketing plan and agreed set of participants. Among the participants were between the uplines and downlines a particular contract does not exist other relationships as al-musytarikun fi al-'amal or parties who perform a task together to share their wages through the formula set forth in the marketing plan.

(Ii) Al-Wakala representative ((الوكالة) or agent)

Al-Wakalah is the contract that authorizes the person (al-attorney) to act on behalf of that power (al-muwakkil). Typically companies doing business in MLM direct sales explicitly deny the existence of al-attorney relationship, and al-muwakkil between participants and companies. Therefore, the potential use of this contract occurs in the direct sales business in SLM compared with MLM. In this contract, participants, including distributors, sales representatives or agents perform the task of creating a description of the company, promotion of goods or services, sell goods and services and sign up new members to the company. The Company will pay the salaries, commissions, bonuses or other economic benefits for the task or work when the players achieve sales targets based on the concept of al-ujr or al-ju `yield or a combination. Under the contract al-wakalah, participants or representatives may stop or withdraw at any time when the participants no longer perform the work within the time prescribed by the company such as a year. If participants do not withdraw after this period, the contract will end in itself although it is not known to the company in relation to termination.

(Iii) Al-Wakala bi ujr (باجر) representative ((الوكالة) or agent of wages)

Al-Wakala ujr bi is the contract that authorizes the person (al-attorney) to act on behalf of that power (al-muwakkil). Normally, this contract is applied in the direct sales business a stage. Through this contract, the company will appoint the participants, including distributors, sales representatives or agents perform the task of creating a description of the company, promotion of goods or services, sell goods and services and sign up new members to the company. The Company will pay commissions, bonuses or other economic benefits on the job or work when the players achieve sales targets based on the concept of `alah al-ju. Under the contract al-wakalah bi ujr, both parties do not have to cancel the contract without the consent of other parties.

Note: In terms of fiqh, al-wakalah bi ujr divided into two:

First: Al-wakalah with the concept of al-ju `alah (wages for the work)

Example: "A is representative of B to promote the goods, if unsold goods, 5% will be owned by B."

Al-wakalah with the concept of `alah al-ju, all the jurists' view is not binding, but binding Maliki said if the person receiving the offer has started work or tasks.

Second: Al-wakalah with the concept of Ijarah (wages over time eg a week, year)

Example: "A is representative of B to sell goods to pay RM10 a day." A regular for wages even if not to sell the item.

Hanafi and Maliki view that the concept of Ijarah wakalah binding on both parties. According to the Shafi sect "i and Hanbali schools, they are not binding.

(Iv) Grants (الهبة)  

Grant is a voluntary giving by the company is required by Islamic law to the participants.

(V) al-bay '(البيع) (sale)  

Buying and selling that occurs between companies and participants or between companies and end-users or between participants and end users.

(7). Principle-based contract-seller interaction Reda (التراضي).

(A) Marriage between the contracting parties shall mutually down-seller (التراضي (when signing the contract. Jurists' consensus that the principle of inter-pleased with the contract seller is the legal conditions.

(B) Islamic law stipulates that the principle of mutual-meredhai pleased occurs when there is intent to give effect to the contract that is free from pressure or coercion. Thus,   a direct sales transaction between the parties shall be based on the principle of mutual-meredhai pleased and free from elements of coercion, manipulation and exploitation.

(8) Features Participants  

Each participant is entitled to a direct sales company to enjoy one or a combination of the following privileges:

(I) Obtain a rebate on every purchase and / or receive vouchers or coupons for products offered by the company. The deduction is based on the contract of al-wa'd bi al-grant (promise to give the grant).

(Ii) To commission, bonus or other economic benefits for each purchase or a private sale or the purchase or sale of the network under contract or in a group based on al-ju'alah.

(Iii) Being a distributor for the company's product range to become a separate business entity under direct selling company (independent business owner).

(9) Product Criteria

(A) issued by the company's products consist of halal goods and services and benefits according to Islamic perspective.

(B) products generally have a quality product and safe to use and must be expected in an equitable, reasonable and fair that the products offered are favored targets for purchase by consumers regardless of MLM marketing plan prepared.

(C) This product is not a "mask" or contrivance in a transaction to obscure the features of a pyramid scheme or get rich quick scheme. The strength of the direct selling company is located to the product quality and not on short-term objectives for the purpose of immediate profit alone.

(D) Food products, beverages and consumption of goods sold by the company to get halal certification from JAKIM or halal certification bodies recognized by JAKIM. To ensure the company's management system is mengik ut Islamic principles, it is recommended that direct selling companies to apply standards of MS2400: 2010 Standards on Halal Logistics, MS1500: 2009 Halal Food: Production, Preparation Handling and Storage, MS2200 Applied Products Division-Muslim 1:2008 Part 1: Cosmetics and toiletries-General Guidelines and the MS1900: 2005 Standards on Quality Management System from Islamic Perspective to provide value added to the lawful recognition of the company products.

(E) Product is not made up of ribawi goods such as gold and silver can be traded in grace as it involves elements of interest.

(10) Product Price

(A) Prices of products offered by the company to be reasonable, reasonable, not excessive, and in proportion to the type and quality of goods and services.

(B) Their products are still sought for purchase by consumers at a price that is offered without regard to MLM marketing plan prepared.

(11) Provision of Incentives

(A) The provision of incentives by the company to participants may include commissions, bonuses or other economic benefits.

(B) Payment of commission, bonus or other economic interest in the direct sales business is based on the principle of al-all `is or grant.

(C) Grant of commissions, bonuses or other economic benefits should be based on quantity of sales of goods or services and non-recruitment or recruitment of new participants only.

(D) the direct selling company's marketing plan and plan of incentives aimed at recruitment or recruitment of new participants solely or primarily as a qualification for a commission, bonus or other economic benefits is contained elements of gambling money game or not required by Islamic law.

(E) Upline entitled to receive commissions, bonuses or other economic benefits from the purchase or sale of referrals based on the contract ju'alah parties were united in carrying out any work (al-mushtarikun fi al-a `mal) and the company as a party that promises wages (al-ja'il) as detailed division of the company's marketing plan.

(F) The commission, bonus or other economic benefits to be derived from the sales of products and / or company contributions.

(G) The Company shall specify clearly the work to be done and the outcome and results to be achieved by the participants to be eligible to receive commissions, bonuses or other economic benefits and declare the terms and conditions.

(H) The Company shall give a fair chance to all participants to earn commissions, bonuses or incentives.

(I) States are encouraged to diversify their products to the participants the opportunity to increase sales in order to get commissions, bonuses or other economic benefits. This approach seeks to prevent exploitation of the money system or network games.

(J) the company's marketing plan and providing incentives to plan participants should be stated clearly by the company in a written document that participants should be given the opportunity to understand before entering the contract.

(12) Appointment of Shariah Advisor

(A) The Company shall appoint a Shariah Advisor, comprising at least two Muslims who at least has a degree in the field of Shariah, including studies in Fiqh and Usul Fiqh Transactions.

(B) States are encouraged to appoint a Shariah Advisor who has appropriate experience in the field of recitation.

(C) of the Shariah Advisory should not have any relationships that may affect the position of making independent decisions with immediate family relationship as spouse, child or sibling with the Chief Executive Officer of the Company or the Board of Directors and have no interest in selling company shares directly or its subsidiaries.

(13) Training Program

(A) The Company shall organize training programs for the following purposes:

(I) to introduce the product to the participants, especially for products with specific features of a technical nature and specific features that comply with Islamic law and

(Ii) to give exposure to participants on the marketing methods to increase the company's sales performance in an ethical and legal compliance.

(B) The Company shall organize training programs either free or paid with reasonable entry fees.

(C) Conduct training programs shall be in conformity with Islamic principles, including preserving manners and socializing between men and women.

(D) The company has appointed Shariah Advisor, Shariah Adviser shall be given appropriate space to play a role in providing training, guidance and understanding   about the theoretical and practical adherence to sharia in the direct sales business in MLM for participants to be practiced and appreciated by them.

(14) Repurchase Policy or Payback Policy

(A) The Company shall prepare a written contract that contains terms of the buy-back policy or pay back.

(B) The Company shall buy back any marketable goods sold to participants in the six months to make payments of not less than ninety percent (90%) of the amount paid.

(15) Participant Withdrawal  

Any participant may withdraw from participating companies at any time based on the terms and conditions agreed by both parties.

ELEMENTS ALLOWED IN MULTISTAGE DIRECT SALES BUSINESS

10. The elements are forbidden in the direct sales business multi-storey or multi-level marketing (MLM) is as follows:

(1) Containing Element Pyramid Scheme

(A) A pyramid scheme or get rich quick scheme is not to comply with Shariah principles-based gambling or betting (qimar) in game money (money game) that is sponsored by the new downline upline will lose money if it does not seek the participation of other referrals .

(B) a written contract between the company and the participants are not available.

(C) The plan focuses on the search or recruitment of new members (downline) solely or mainly and not the purpose of conducting business through the movement of products to end users as appropriate.

(D) Income of participants in a pyramid scheme or get rich quick scheme generated from the new member fee solely or mainly and not the proceeds from the sale of goods or services.

(E) a compulsory purchase of goods or services or intangible property or the minimum payment or sales requirements imposed as a condition to qualify a person for a bonus or other economic benefits in the scheme to purchase or private sale or the purchase or sale of under it.

(F) Participants are not given the option and required to do the "front-loading inventory" of buying goods or services within a reasonable amount not to exceed the expectations may be sold or consumed within a reasonable period of time.

(G) Purchase of rank or purchase more than one member is an approach that contains elements of a pyramid scheme and as such is contrary to Islamic law.

(H) which set the structure of the bonus payments in accordance with a strict hierarchical order, without allowing participants to skip off payment regardless of actual ability and efforts of participants is contained elements of a pyramid scheme that is contrary to Islamic law. 21

(I) refund policy (refund) or policy buy-back (buy back) not available

(J) Not to allow participants to withdraw from participating in the plan.

(2) Contain Elements fraud, oppression, manipulation and exploitation of the Marketing Plan and Grant of Incentive Plan

(A) The Company shall ensure that the marketing plan and plan incentives are transparent and fair and free from any form of fraud, oppression, manipulation and exploitation that can deceive members or users.

(B) Any element of fraud, oppression, manipulation and exploitation by members or distributors in the search for new members only or mainly to improve the achievement of the target group is forbidden by Islamic law. "Manipulation" means all actions and know-how to deceive people or influence other people stand without knowing the person. "Exploitation" means the act (action) took the opportunity to exploit a person or situation and is not just in the interest or the profits themselves.

(3) Contains Element Coercion

(A) Efforts aimed to find new members must be made through a transparent approach and method, and wise without the element of coercion that can disrupt or cause distress and annoyance to the person who approached.

(B) After each session of the company profile, products, marketing plans and incentives plan, individuals who are approached should be given space and time to think, to make judgments as to whether to become participants or reject the invitation.

(C) Participants shall be given full freedom in the purchase and are not compelled to buy packages of certain products to meet sales requirements to qualify for the bonus scheme or when they might not need a few items in the package or require the goods offered in the package but not on the amount so much as determined.

(4) Contain Waste Element

(A) Purchases in large quantities without reasonable justification simply to get the bonus on offer without having a proper marketing strategy.

(B) purchase products offered by the company to be based on real consumer needs and / or ability to sell the product.

(5) Promising Fixed Gain Without Efforts  

Any direct sales company that promised a fixed profit to the participants by giving commissions / bonuses without any apparent effort includes promotional activities and sales of goods or services are contrary to Islamic law because it contained elements of riba.

(6) Includes Elements syubhah

In the context of a direct sales business that is based on multi-level marketing, companies must ensure that marketing plans are free of things that are not clear or syubhah شبهة)) in every aspect of the business including marketing plans, providing incentives, goods and services and other matters related to it to ensure that business conducted is in compliance with Shariah principles outlined by Islam.

CONCLUSION

Direct Sales Business Guidelines In Multi Level Marketing (Multi-Level Marketing) According to the Shariah is in accordance with the provisions of the Direct Sales Act and the Anti-Pyramid Scheme .1993 Therefore, any matters not specified in these guidelines, with the should be referred to the Direct Sales Act and the Anti-Pyramid Scheme .1993 relevant parties should refer to these guidelines to determine the parameters required by the shari'a in relation to direct sales business multi-level marketing.

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House price rises continue, albeit slower

2011-09-14T13:05:00.001+08:00

Property price increases continue in Malaysia, albeit at a lower rate, amidst slower exports and economic growth in the first quarter of 2011.

The national house price index rose 6.5% y-o-y to Q1 2011, after annual increases of 7.9% y-o-y in 2010, according to the Valuation and Property Services Department (JPPH). When adjusted for inflation, house prices rose by 3.4% over the same period.

In Kuala Lumpur, the house price index surged by 11.4% y-o-y to Q1 2011, with a rise of 7.1% during the latest quarter. House prices also increased in Selangor (9.6%), Perak (8%), and Negeri Sembilan (5%) over the same period. On the other hand, in the year to end-Q1 2011, Pulau Pinang and Johor experienced price falls of 1.2% and 1%, respectively.

By property type, nationally:

Terraced houses rose 7.7% y-o-y to Q1 2011
Detached houses rose 5.8%
Semi-detached houses rose 5.3%
High rises rose by just 0.9% over the same period.

The national average price of houses was MYR201,851 (US$67,791) in Q1 2011, based on the latest figures released by the JPPH.

In 2010, property transactions rose by 11% y-o-y to 376,583 while transaction values increased by 33% y-o-y to MYR107.44 billion (US$36.08 billion), according to C.H. Williams Talhar & Wong, a local real estate services company.

There were about 7,982 units sold in 2010, up 21.6% from 6,563 units sold in the previous year. However in Q1 2011, total property sales dropped by 36% to 1,033 units from 1,607 units in the same period last year, according to the JPPH.

In Q1 2011, there were just 6,109 new housing units launched in the market, down 52.3% from the previous quarter and a 59.3% drop from the same period last year, according to JPPH. In 2010, there were a total of 55,768 units launched, up 14.3% from 48,791 units launched in 2009.

In 2011, moderate property price increases are expected in Malaysia, based on the 2011 Property Market Report (PMR) published by C.H. Williams Talhar & Wong.

Malaysia’s economy grew strongly in 2010, with a real GDP growth rate of about 7.2%, after experiencing a 1.7% contraction in 2009 due to the global crisis.

Confidence since then has been boosted by Najib Razak succeeding Abdullah Badawi as Prime Minister on April 3, 2009. Badawi’s last months were marked by public criticism of cronyism, ineptness and corruption. Disaffected members of the ruling party threatened to provide support to the opposition’s Anwar, if Badawi did not resign.

In 2011, the economy is expected to grow by 5.2%, according to the Malaysian Institute of Economic Research (MIER).

In June 2011, inflation may have peaked at 3.8%, driven by high electricity and gas prices. In 2011, the inflation rate is to stay in a range of 2.5%-3.5%, up from just 1.7% in 2010.
Despite inflationary pressures, Bank Negara Malaysia maintained the benchmark Overnight Policy Rate (OPR) at its current level of 3%. However, some economists predict that the central bank will eventually hike the OPR by 25 basis points later this year, and by another 25 basis points next year.

Economic boost, tax cuts

In the wake of the crisis, Malaysia’s budget deficit rose to levels unseen for two decades. The over-all deficit in 2009 was around 7.4%, according to the Malaysian Institute of Economic Research (MIER), an independent think-tank. This followed 2008’s 4.8% of GDP deficit (the deficit averaged 3.4% from 2005 to 2007).

A stimulus package worth MYR60 billion (almost US$17.5 billion) or 3.5% of GDP, was announced in March 2009. Implementation will be spread over two years and includes spending (MYR15 billion), guarantee funds (MYR25 billion), equity investments (MYR10 billion), private finance and off-budget initiatives (MYR7 billion) and tax incentives (MYR3 billion).

There are also tax cuts:

a tax relief for homebuyers on housing loans interest relief up to MYR10,000 (US$2,900) a year, for 3 years
deferred housing loan repayments for 1 year for those retrenched.

The first stimulus package, announced in November 2008, had amounted to only MYR7 billion (US$2 billion) or 1% of GDP, and was allocated to spending on projects with high-multiplier effects like infrastructure. Fuel subsidy savings financed the packages - in April 2004, petrol pump prices were raised by 40%.

Home ownership made easy

Malaysians face low barriers to homeownership, according to Datuk Michael Yam, REHDA’s deputy president:

Mortgage interest rates can be as low as BLR minus 2.3%
Financing is available up to 100%
There is zero lock in period
There are stamp duty exemptions
Repayment periods extend to 30 years, or up to age 75.

Outstanding housing loans reached MYR177.5 billion (US$51.6 billion) in 2009, around 24.7% of GDP, up 11% from a year earlier.

A low and steady base lending rate (BLR) has encouraged loan growth. From May 2006 to October 2008, Bank Negara Malaysia (BNM) pegged its key rate at 6.72% before gradually adjusting it downward to its present 5.51% in August 2009. Average lending rates fell from 6.63% in September 2006 to 4.83% in December 2009.

Capital gains taxes are back?

In mid-2009 the cash-strapped government announced it would restore the 5% real property gains tax on all transactions, abolished in April 2007. But the real estate community reacted strongly, and the government backed down and restricted the 5% real property gains tax to properties sold within five years of acquisition.

The government also added some exemptions:

The level of exemption is increased from MYR5,000 (US$1,454) to MYR10,000 (US$2,908) or 10% of the chargeable gains, whichever is higher
Gifts between parent and child, husband and wife, grandparent and grandchild are exempt
One residential property in a lifetime is exempt

Foreign buyers more discriminated against!

The Malaysian government has partly retreated from its December 2006 liberalization of foreign property purchases. Effective January 2010, the price floor below which foreign buyers can buy is hiked to MYR500,000 (US$145,383), twice the previous level.

Foreign purchases above MYR500,000 (US$145,383) are placed under the “purview of the State Authorities” under the new regulations. Approval is expected to take one to two months.

The REHDA opposed the new restrictions, arguing that “the restriction might impact residential property acquisition by foreigners in the country, as the number of properties priced above MYR500,000, especially outside the Klang Valley areas, are limited.

“The ruling may be applicable to properties in Kuala Lumpur areas, but we should also consider other states with lesser price ranges,” said Datuk Ng, president of REHDA in a statement.

“This is definitely not the right time to restrict the property value to be purchased by foreigners.”

Serious over-supply

The over-supply of high-end condominiums is a concern. There were 66,328 units unsold at end-2010, though this was lower than 2004’s peak level of 83,888 units unsold.

The take-up rate has however improved says James Wong, president of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS). He added that many developers scaled back or postponed projects in the first half of 2009. The resale market for luxury condominium will remain soft until 2H of 2010, Wong adds.

The secondary market for landed residential properties is strong.

There is a constant flow of new supply of mass housing, as a result of the government’s attempt to make housing more affordable. From 2004 to 2008, more than 100,000 low cost housing units were built by government agencies nationwide.

In October 2009, the government announced the construction of 44,000 low cost housing units priced between MYR21,500 and MYR 35,000 (US$6,250 – US$10,176). It also ordered the construction of 74,000 low-cost rental housing units by the end of 2010.

Weak house price growth

The house price index rose 4.7% in 2008, but actually fell slightly (-0.66%) when adjusted for inflation.

In 2007, the house price index rose 4.8% (2.6 % in real terms)
In 2006, house prices rose 2.1% (a fall of 1.4% in real terms)
In 2005, house price rose 2.3% (a fall of 0.7% in real terms).

In Kuala Lumpur:
2008: house prices rose 4.5% (-0.9% in real terms)
2007: house prices rose 7.9% (5.7% in real terms)
2006: house prices rose5.3% (1.7% in real terms)
2005: house prices rose 6.5% (3.35% in real terms)
2004: house price rose 6.5% (5% in real terms).

House prices in Malaysia are still below their pre-Asian Crisis levels. House prices rose rapidly in the early 1990s with two particularly dramatic upward surges – in 1991, when 25.5% (20.3% in real terms) price rises were achieved, and in 1995 which saw 18.4% price growth (14.7% in real terms).
After the Asian Crisis, prices of luxury detached Kuala Lumpur houses fell by no less than 39%, between 1997 and 1999

Small rental market

Malaysia’s rental market is small. Only 6% of the housing stock is in the private rental sector. About 85% of the total stock is owner-occupied, while government-provided housing accounts for 7% of the housing stock.

The active luxury rental market caters mainly to expatriates, centered on Kuala Lumpur. Rental yields in Kuala Lumpur are relatively good, ranging from 5.5% to 8.7% in October 2009. Smaller units generally earn higher yields. On the other hand, yields on KL bungalows are relatively poor at around 3% – 4%.

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Oppressive taxes like VAT and GST are Haraam in Islam

2011-09-14T09:46:00.000+08:00

Date: Thursday 5th Zil-Qa’da 1431 AH / 14/10/2010	NO: PR10061

Oppressive taxes like VAT and GST are Haraam in Islam.

O Traders! Reject them and throw them at the faces of these agent rulers!!

Government has announced to implement VAT (Value Added Tax) with the new name of reformed GST (General Sales Tax) under American diktats. This is a conspiracy to destroy the industrialists, traders and the common masses. The shameless and honourless rulers are planning to impose tax on 122 new major categories thus looting the masses by 150 billion rupees. These categories include meat, fish, eggs, pulses, vegetables, fruits, medicines, fertilizers, livestock, textiles, sports goods, surgical equipments, leather and many more. Indeed this is the real democracy which sacrifices the masses for the sake of a few elite, as is the practice in democracies of the East and the West. The people ask from the government, why do they not collect Kharaaj and Usher on over one crore acres of land? Why do they not collect Zakat from the rich of the society? After all why the Sandick and RikoDiq gold and copper mines, Thar coal reserves and oil and gas of Balochistan have been handed over to the foreign companies at throw away prices? And why can’t the revenues of these sources spent on the welfare of the masses? After all what is the reason that the government does not stops Rs. 400 billion of seepage in corruption in just 4-5 corporations but is eager to impose a new tax on the masses?

Islam considers all indirect taxes including GST and VAT as haraam. In this type of tax, both the rich and the poor are taxed equally which is completely unfair. In Islam all the taxes are imposed only on the rich people like Kharaaj, Usher, Rikaz etc. In the Islamic revenue system, a huge sum is collected through Zakat and protecting a portion of public properties like Oil, Gas, Coal and Minerals etc for the state expenditure which, in the current capitalist system, is being pocketed by the foreign multinational companies by gaining ownership over this public assets. Besides these sources of revenues, the state cannot impose any tax on the common man. The prophet (ﷺ) warned the collector of any such tax with hell fire. The prophet (ﷺ) said;

لا یدخل الجنۃ صاحب المکس

“The one who collect tax will not enter into paradise”[Ahmed, Abu Dawood, Al-Hakim]

And said;

وان صاحب المکس فی النار

“The one who collect tax is in hell fire”[Ahmed]

On the one hand, government is not willing to reduce its royal expenditure whilst on the other hand it is even snatching the hard earned piece of bread of a common man. Hizb ut-Tahrir calls upon the trader’s community and the industrialists to stand up against this oppressive tax and do not let the government build its palaces from the ration of the poor. Only the Khilafah can liberate the Ummah from the cobwebs of these indirect taxes with its ideal economic system and provide the people of Pakistan much needed economic relief and prosperity who are currently suffering from severe economic crunch.

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Euro Debt Crisis Bankruptcy Bailout Queue, Protect Savings & Deposits From Banks Going Bankrupt!

2011-08-05T11:08:00.000+08:00

The global banking system that publicly went bankrupt during September 2008 prompting government interventions in the form of capital injections, buying of toxic assets, insurance of bad debts and even outright nationalisation's has started to bankrupt the states that bailed them out, starting with the smaller states with Iceland setting the ball rolling, and this year the bailiffs came knocking on the doors of the Eurozone club members, with first Greece, and now Ireland requiring a Euro-zone bailout (German) to prevent debt default bankruptcy, where if one falls then soon would all of the dominos tumble.

The Euro 200 billion bailout out of Greece and Ireland is in the form of a series of loans set at a 5% interest rate, against which one can measure the relative credit risks in the market as theoretically 5% should be seen as a cap with the view that market rates should be below the 5% bailout rate. However the bond markets are NOT responding positively to Ireland's bailout as they had done during May's Greece bailout, which is evidenced by the yields on 10 year euro-zone sovereign bonds rising across the board:

Greece's 10 year yield continues to trade at a high 12% despite the Euro 110 billion bailout at 5%, because Greek bond holders continue to discount a highly probable eventual debt default / restructuring as a deflating economy has sent public debt to GDP soaring to 135%.

Ireland's yield has surged higher to stand at 9.2%, following Monday's bailout low of 8%, again suggesting debt restructuring given depression inducing public debt at 95% of GDP.

Portugal's yield has crept higher to a new credit crisis high of 7.1% from Mondays low of 6.7%, confirming that a bailout of Portugal at an estimated Euro 40-80 billion is imminent for an uncompetitive economy carrying a rising debt to GDP ratio at 83%.

Spain's yield has now crossed above the 5% bailout rate to 5.2%, which suggests that the market is pricing in a bailout for Spain, which is not surprising given the exposure of Spanish banks to Portuguese debts, official debt is put at 64% of GDP but this does not fully take into accounts Spanish banks bad debts that as with Ireland could easily send Spain's debt to GDP to well over 100%.

Italy's yield has trended higher to 4.42% putting Italy firmly in the queue for a debt crisis blowout given that public debt is already at 120% of GDP.

Belgium's yield rose to 3.7%, which illustrates an elevated risk as a consequence of the failure of the political parties to form a new government and public debt is already at 100% of GDP.

UK - Whilst not part of the eurozone has seen its 10 year yields continue to trend higher to 3.3%, marginally below the recent high of 3.4%. The lower UK yield despite Britains huge debt mountain illustrates the flexibility afforded by being OUTSIDE the euro-zone as it allows Britain to continue to stealth default on its debts by means of printing money induced high inflation that the Eurozone countries cannot do individually I.e. the UK government prints money that it loans to the bankrupt banks at 0.5% to buy UK government bonds at 3.3%, hence why the yields are lower than the likes of Spain and Italy, which acts as a safety valve preventing outright bankruptcy but the price paid is in high inflation, with the doctored official inflation measure of CPI is at 3.2%, the more recognised RPI at 4.5% and real inflation at 6% as the following graph illustrates.

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Seven startling things most people still don't know about the national debt, banking and the money supply

2011-08-02T15:39:00.000+08:00

Fact #1 - There is no FDIC insurance fund.

The money at your bank is insured against loss by the FDIC's insurance fund, right? Nope. That's total fiction. There is no actual money in the fund. The FDIC insurance money has already been looted by the U.S. Treasury which has simply replaced the money with a bunch of IOUs.

Why does this matter? Because it means that if the U.S. government goes into default, so will the FDIC! And that means all your bank funds have zero insurance. That's gonna be a big shock for tens of millions of people when they finally figure this out one day...

Fact #2 - There are no social security funds, either.

When you pay social security taxes, all that money goes into a trust fund that's held for safekeeping until the day it pays you back, right?

Ha! That's the "sucker's view" of social security that only ignorant people believe. In reality, there is no money in the social security trust fund because it too has all been looted by the U.S. Treasury and spent. In truth, social security is already broke. Can't wait for people to wake up and figure this one out, either...

Fact #3 - The U.S. Treasury is stealing money from you every day, even if you pay no taxes!

Here's a mind-boggling truth that most people just can't seem to get their heads around: The U.S. Treasury is stealing money from you every single day by the simple fact that they keep creating new money and handing it out to wealthy banksters. Well, technically this is being done by the Federal Reserve, which isn't even part of the federal government. But it's all done in cahoots with the Treasury, which is eroding the value of your money through these money creation and distribution actions.

That's why prices keep going up all around you, folks: Food isn't suddenly worth more money; the truth is that your money is worth less! That's how the Treasury and the Federal Reserve steal from you without even breaking into your home.

Probably 99.9% of the population has no understanding of this phenomenon -- the erosion of currency valuation through the centralized government printing of more currency. And yet it is a government scam that has been carried out against citizens of the world time and time again, spanning millennia! As history has clearly shown, every nation that goes down the path of printing more currency to pay its bills eventually ends up in a runaway hyperinflation scenario followed by economic collapse. The USA will be no different.

Fact #4 - The "balanced solution" isn't balanced.

Don't you love the quirky White House Press Secretary who keeps spewing out the phrase "balanced solution" even while the debt deal leaves the U.S. budget entirely unbalanced?

When you're spending more money than you're earning, that's not financial balance. When the White House says "balanced" what it really means is "compromised" -- as in, half way between the Republican position (spend us into purgatory) and the Democratic position (spend us into oblivion). Neither party has any real solution to the cancerous growth of Big Government. That's because they are creatures of Big Government!

Politicians can no more solve the problems of Big Government than arsonists can solve the problem of office fires. Because they are, themselves, creatures of runaway debt spending (how else do you get elected these days?), they simply do not possess the cognitive framework from which real financial solutions must stem.

Fact #5 - The government is going to steal everything from you before it collapses

Oh my, this is a tough one for people to get their heads around... especially those who naively trust governments to act in the interests of the People. The simple truth of the matter -- and I've publicly made this prediction before -- is that the government is going to STEAL almost everything you own as it heads toward a total financial implosion. This will include:

• The government theft of private retirement accounts. The feds will claim they're taking them over "for your protection." Yeah, right. And then one day they will simply all vanish. Kiss your IRA goodbye...

• The government theft of precious metals. Within the next 3 years, watch for a national emergency to be declared, followed by government confiscation of gold and silver. The feds will take your gold and hand you paper money in exchange. The paper money, of course, will be all but worthless shortly thereafter. Only the suckers, of course, will actually turn in their metals...

• Government takeover of your bank accounts. As banks begin to fail in the big collapse, the government will step in and take ownership of the failed institutions, just as it did with Fannie Mae and Freddie Mac (which used to be publicly-owned companies but are now largely just government finance operations). This will put your bank accounts under the direct control of the White House, which can use executive orders to do things like banning all wire transfers out of the country or limiting daily withdrawals and transfers. Sure, you'll still "own" your money in the bank, you just won't be able to freely access it!

Fact #6 - Most people have no idea about fractional reserve banking, derivatives, the money supply or the Federal Reserve

It's not just that most people don't understand banking and finance; it's that even members of Congress have no idea how all this works. With few exceptions (like Ron Paul), they're just clueless!

Get this: Even most bankers don't even know how fractional reserve banking really works. They don't understand derivatives, either, which is why they screwed them up so badly in the housing boom that crashed in 2007. And because bankers, investors and bureaucrats have no idea how it all works, they unwittingly turn it all into a runaway catastrophe.

Allowing ignorant adults to play with debt and derivatives is like letting infants play with nuclear weapons. It can only lead to something messy.

Fact #7 - Most people are betting their lives on the dollar

People buy insurance for their cars, their homes and even their health. But when it comes to money, 99 out of 100 people in America are betting their entire financial existence on the U.S. dollar! They get their paychecks in dollars, their savings accounts are in dollars, and all their assets are denominated in dollars. As a result, they have no diversity to protect them against dollar devaluation.

That's kinda crazy, considering just how quickly the dollar could collapse in the near future and become totally worthless. That's why smart people are diversifying their assets and converting dollars into land, gold, silver or even storable food. Here in central Texas, even ammunition has a long-term barter value that far exceeds dollars.

Looking around at the financial behaviors of others, I'm just stunned at how many people are betting everything on the dollar because they never realized they had any other option (that's the way the government likes to keep it, of course!).

Coming soon: A huge national finance education of the masses

Mark my words, folks: The great financial collapse of America is now closer than ever. While I can't put an exact prediction date on it, there's absolutely no doubt that it's coming. The morons in Washington aren't doing anything to avoid it, either -- they're all just cashing in as much as they can before the big collapse rolls in.

Bunch of cowards and crooks running this country. They don't understanding banking and finance, and they're determined to make sure you don't either. Because the less you know about what's really going on, the longer they can continue to loot the U.S. economy while people stand around and do nothing.

How bad is the situation, really? Just yesterday, Vice President Joe Biden called Congressional Tea Party members "terrorists" for their insistence that the U.S. budget be balanced. So now, the mere idea of calling for a balanced budget turns you into a "terrorist" to be prosecuted under the Patriot Act.

And why not? Demanding financial sanity MUST be labeled an act of terrorism for our criminal government to continue its own criminal looting operation. Next we'll probably see the President ordering the arrest and prosecution of any members of Congress -- i.e. "terrorists" -- who do not go along with unlimited increased in the debt ceiling.

Now you see what the terrorism laws are really all about: They are legislative weapons to be used against political enemies, not actual terrorists. Meanwhile, Big Government is technically engaged in the use of financial weapons of mass destruction against the People, yet no one notices.

A bizarre world we live in, folks. It is dominated by the mindless masses and run by criminal sociopaths. Those who demand real solutions are labeled terrorists, and those who try to explain all this to everybody else are labeled "alarmists."

Just wait until this house of cards collapses, though. There will be a day of reckoning in which a whole bunch of apologies will be owed to all those people who tried to warn the nation what was really happening (and where it would lead us).

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Federal Reserve Admits: We Have No Gold

2011-06-08T11:23:00.000+08:00

The following exchange between Congressman Ron Paul (R-TX) and the Fed’s attorney Scot Alvarez proves, without a shadow of a doubt, that The Federal Reserve has no gold backing the US dollar.

Most in the alternative news sphere suspected it – now it’s fact.

The Federal Reserve does not own any gold at all. We have not owned gold since 1934, so we have not engaged in any gold swap.

…

What appears on our balance sheet is gold certificates…Before 1934 the Federal Reserve did, we did own gold. We turned that over by law to the Treasury and received in return for that gold certificates.

The exact relationship between the Federal Reserve, the US Treasury and these non-tradeable gold certificates is not exactly clear, but an attempt to explain what’s actually going on has been put forth by goldnews.com:

In any case, we can analyze the implications of the basic facts and come to a couple of conclusions:

1) The widespread notion that the Fed owns gold is false. The corollary to this is the mistaken belief that the Fed understates its gold holdings on its balance sheet by only reporting certificates based on the $42.22 statutory gold value. The Fed does not in fact own the US gold stock multiplied by the market price of gold, unless the Treasury defaults and even then its not clear. The Fed does, however, own a claim to currency totaling $11.1 billion and this value has a remote chance of going up significantly if the Treasury revalues its gold and maintains the practice initiated in the Par Value Modification Act.

2) The fact that the Fed owns no gold, nor claims to any gold, means the fundamental value of the dollar lacks any backing besides dollars themselves, not including Fed building and equipment. Dollars are in essence worth a lot less than many people thought, and the Fed is much more impotent in using the prowess of their assets, and conducting monetary policy in general, than many believed. In all, Alvarez’s clarification strengthens the case for gold’s high dollar value immensely.

An interesting perspective, and one, if true, suggests that the value of your dollar in terms of gold is actually much less than believed – like close to zero. Our currency is not only not backed by gold, but in the event of a dollar meltdown the only assets backing the world’s reserve currency are worthless toxic mortgages purchased by The Fed in recent years from insolvent banking institutions.

The only thing holding this thing together at this point is market confidence. When that goes, everything else goes with it.

Author: Mac Slavo
Date: June 6th, 2011
Website: www.SHTFplan.com

Fukushima now a Level 7 emergency

2011-04-12T11:52:00.000+08:00

UPDATE: Japan has now decided to raise the severity level of the accident at the crippled Fukushima Daiichi nuclear plant to 7, the highest on an international scale, from the current 5, government sources said Tuesday.

The sources close to the Nuclear and Industry Safety Agency under the Ministry of Economy, Trade and Industry said the Japanese government decided to raise the level to the highest 7 on the International Nuclear Event Scale, which has so far only been applied to the 1986 Chernobyl catastrophe.

The current provisional evaluation of 5 is at the same level as the Three Mile Island accident in the United States in 1979.

news.yahoo.com...
www.huffingtonpost.com...
www.commondreams.org...

* * * * *

SHUTDOWN: Less than 16 hours remain for Congress to strike "budget" deal

2011-04-10T19:28:00.000+08:00

President Barack Obama said he hopes lawmakers can reach a last-minute deal today to avert a government shutdown after a third round of talks with congressional leaders last night failed to end an impasse over the federal budget.

After meeting with House Speaker John Boehner and Senate Majority Leader Harry Reid, Obama said issues remained unresolved and he hoped for a breakthrough that would prevent a shutdown, set to begin at midnight tonight.

"I'm not yet prepared to express wild optimism but I think we are further along," he told reporters. "My hope is, is that I'll be able to announce to the American people sometime relatively early in the day that a shutdown has been averted."

The president canceled a scheduled trip to Indianapolis, where he was to promote his energy policies. He had met with Reid and Boehner earlier yesterday and late on April 6 in an effort to reach an accord.

Without an agreement, the government would begin shutting down for the first time in 15 years. Roughly 800,000 "non-essential" federal employees would be furloughed, affecting a host of government services. National parks would close, those filing paper tax returns wouldn't receive refunds, government permits would be unavailable, and most passport applications would go unprocessed.

Dow Slips

Concern over a possible shutdown helped push down stocks yesterday. The Dow Jones Industrial Average slipped 17.26 points, or 0.1 percent, to 12,409.49 at 4 p.m. in New York and the Standard & Poor's 500 Index dropped 0.2 percent. Futures on the S&P 500 index rose 0.4 percent at 10:30 a.m. in London, indicating the benchmark index will rebound today.

Bond yields in the U.S. are lower now than when the government was running a budget surplus a decade ago even though Treasury Department data show that the amount of marketable debt outstanding has risen to $9.13 trillion from $4.34 trillion in mid-2007.

Treasurys fell today, sending the yield on the 10-year note five basis points higher to 3.60 percent. That's below the average of 7 percent since 1980 and compares with an average of 5.48 percent in the 1998 through 2001 period, according to Bloomberg Bond Trader prices.

'Extremely Narrow'

Neither Obama nor Reid identified the outstanding issues. Reid said they were "extremely, extremely narrow," yet "the sad part about it, we keep never quite getting to the finish line." He said he is "not really confident" that a deal will be reached, though "I'm very, very hopeful."

Boehner said in a statement with Reid that they had "narrowed the issues" and would "continue to work through the night to attempt to resolve our remaining differences."

Senator Dick Durbin of Illinois, the chamber's second-ranking Democrat, said yesterday that lawmakers are divided by provisions, known as policy riders, woven into a bill funding the government for the rest of this year. They would change administration policies on environmental regulations as well as funding for Planned Parenthood, which provides abortions among other health services.

"It appears that the debate is no longer over deficit reduction," Durbin said. "It has really devolved into a debate over policy questions that have nothing to do directly, maybe even indirectly, with the budget deficit that we face or the money we're going to spend."

Lawmakers had also been debating about $40 billion in cuts from the government's $3.7 trillion annual budget.

Veto Threat

Yesterday, the administration threatened to veto a House-approved measure that would keep the government open for business until April 15, cut $12 billion in spending and fund the Pentagon through Sept. 30, the end of the 2011 fiscal year. The administration called the measure a "distraction from the real work" of forging a compromise.

"Non-essential" federal workers face the prospect of going without pay during the impasse. Representative Jim Moran, a Virginia Democrat, is advising federal workers living in his district just outside Washington to conserve cash, warning a shutdown could stretch into next week. With so much concern over the budget deficit, he said, lawmakers may not agree to provide federal workers with back pay as they have in the past.

'Conserve Their Money'

"They're going to have to conserve their money to make their mortgage and car payments – they're going to have to determine what are the essentials," Moran said. He estimated that 100,000 workers in the Washington area may be furloughed.

Many government programs would continue during a shutdown, said Jeff Zients, deputy director of the White House budget office.

Social Security checks will continue to flow, the postal service will deliver the mail, military operations in Afghanistan, Iraq and Libya will go on and the air traffic control system will operate, Zients said.

"Generally speaking, services that are critical to safety of life and protection of property are excepted from a shutdown," he told reporters. So too, he said, are programs that don't rely on the budget bill being debated for their funding.

Elected officials, including Obama, Boehner and Reid, would be paid as usual during a shutdown unless Congress changes the law. Democratic Senators Ben Nelson of Nebraska, Sherrod Brown of Ohio and Joe Manchin of West Virginia all announced they would forgo their paychecks during a shutdown.

Soldiers, law enforcement officials and others whose jobs are deemed essential would continue to work, yet wouldn't get paychecks until the budget impasse is resolved.

Obama said the dispute "could severely hamper the recovery and job growth."

"We've been working very hard over the last two years to get this economy back on its feet," he said. "For us to go backwards because Washington couldn't get its act together is unacceptable."

source

Emergency evacuation of workers ordered after Reactor No. 3 emits grayish smoke

2011-03-22T08:11:00.000+08:00

(NaturalNews) Here's the latest on the Fukushima nuclear power plant incident in Japan:

• Releases of radiation from the Fukushima nuclear power plant are "now significant and continuing" said Andre-Claude Lacoste, said the head of France's Nuclear Safety Authority (ASN). (http://news.asiaone.com/News/Latest...)

• A "grayish smoke" cloud was observed coming from the roof of Reactor No. 3, causing an evacuation of all the workers there while Japanese authorities figure out if it's safe to return the workers to the site. It was called an "alarming setback" and provides further evidence of a worsening problem with Reactor No. 3 (where the MOX plutonium fuel is stored). (http://www.nydailynews.com/news/wor...)

• Radioactive contamination has now likely reached to a 100km radius around the Fukushima power plant.

• WHO admits that the radiation leaks from Fukushima are far worse than what the public has so far been told (http://www.speroforum.com/a/50605/W...).

• Power cables have so far been physically rigged to all six reactors, but only one or two coolant pumps are working so far.

• Abnormal levels of radiation continue to be found in Japanese food and milk products.

• The World Bank reports that Japan will need to spend $235 billion to rebuild after the Fukushima disaster. (http://www.washingtonpost.com/world...) Note: Japan currently owns over $800 billion in U.S. debt and may start selling off some of that debt to pay for its rebuilding efforts.

• Two of the six reactors are now considered placed in "cold shutdown," meaning they pose very little risk of further escalations. Reactor No. 3, on the other hand, still poses a threat of what experts are now calling "re-criticality." (A fuel rod meltdown.)

source

Pelaburan Hartanah may expand fund size

2011-03-03T11:00:00.000+08:00

SHAH ALAM: Pelaburan Hartanah Bhd (PHB) is looking to expand the size of its Amanah Hartanah Bumiputera (AHB) unit trust scheme to RM1.5bil by year-end from RM1bil now.

According to PHB managing director and chief executive officer Datuk Kamalul Arifin Othman, since AHB was launched last November, more than 95% of the RM1bil fund has been subscribed.

“We need to expand the fund size to promote bumiputra ownership of prime commercial real estate and enhance opportunities for their ownership in high value and strategically located prime commercial properties in major cities,” Kamalul told StarBiz yesterday.

AHB is a fixed-price syariah-compliant real estate backed unit trust. It was designed with a specific objective to provide opportunity for bumiputra investors to participate in the beneficial ownership of real estate assets that would give the investors regular and consistent income streams.

Kamalul said PHB would be taking an “enterprise approach” in its expansion plans as it increased its footprint in the prime commercial real estate sector.

“Moving forward, we are looking to buy more completed and income-yielding assets, expand our landbank and venture into more property development projects,” he added.

To comply with its fund size expansion plan, he said PHB would need to source for new assets to be injected into AHB.

This year, another three to four assets are expected to be added.

Kamalul said the asset procurement through acquisition of completed assets and property development would ensure continuous asset accumulation for PHB.

“The completed assets facilitate immediate injection into AHB, while property development ensures future supply of good assets. This will ensure the fund will be able to meet its commitment to provide investors good and consistent income streams,” he said.

Currently, AHB's property portfolio comprises five assets three office towers, a hypermarket and a warehouse worth a total of over RM1bil.

These properties CP Tower, Wisma Consplant, and 26 Boulevard in Putrajaya; Tesco Setia Alam and a logistic warehouse in Shah Alam provide an average gross annual rental income of RM100mil. All the assets are located in the Klang Valley.

Kamalul said the plan was for PHB to have a market presence in every state throughout the country within the next three years.

“We are open to all good potential markets and income-yielding commercial property that have good tenants occupying the space,” he added.

The company is involved in a joint venture with Malaysian Resources Corp Bhd to undertake the Penang Sentral integrated transportation hub and a retail complex for the Northern Corridor Economic Region. The RM230mil project is expected to be ready in 2014.

PHB also owns three parcels of land including six acres in KL Sentral which is currently being developed into an integrated commercial project comprising a seven-storey green lifestyle retail mall named Nu Sentral and a 27-storey office tower.

The gross development value is estimated at RM1.4bil and it is scheduled to come onstream next year.

PHB also owns a 20-acre site in Bangsar and five acres in Jalan Ampang, Kuala Lumpur. Both parcels are designated for integrated high-end mixed commercial and residential developments that are expected to take off by next year.

“Through our profit-driven initiatives, we aim to achieve competitive returns for our investors,” Kamalul said.

The fund will pay out income distribution twice a year, in April and October. The first will be made in April.

source

Gold Now and beyond

2011-02-21T18:54:00.000+08:00

Hi,
I just want to share my current gold Daily chart that show something interesting.

The price has already touch the moving average 200 on 28 Jan 2011 and since then never looking back. Based on the price action, the price may go up to 1750 before any major retracement.

Next, another chart from here

Expected the major retracement would be on jun or july this year but nobody really knows.
The most important thing is never short bullish trend especially precious metal like gold.

Gold and silver default scenarios

2011-01-20T21:00:00.000+08:00

Buyers, who have legally contracted to take physical delivery of metals, are said to be accepting large, paper bribes to accept a cash settlement instead.

The reasons are obvious why there has been a great deal of discussion about actual, formal “defaults” in the precious metals markets. Among those “obvious reasons” is that informal defaults are apparently already taking place in both gold and silver markets.

Beginning in the London gold market over a year ago, and now rumored to be occurring in New York’s “Comex” silver futures market, buyers who have legally contracted to take “physical delivery” of the metals they have purchased are said to be accepting large, paper bribes to accept a “cash settlement” instead.

There are many reasons for investors to take such “rumors” seriously. Empirically, we see the premiums being charged for physical bullion (even from large, established dealers) rising to levels never before seen (around the world). This strongly suggests a very tight market for bullion. This is confirmed through the anecdotal reports of both industrial users and large institutional investors (such as Sprott Asset Management) that they are having a great deal of difficulty locating any large quantities of bullion available for sale.

In theoretical terms, we are merely seeing the culmination of arrogant bankers attempting to defy the elementary laws of supply and demand for over a quarter of a century. Even those with no training in economics know the basic rule (since it is merely an expression of common sense): when prices rise, demand falls; when prices fall, demand rises.

There are many derivative principles which flow from this one basic law. Among the most salient (and the one apparently beyond the comprehension of bankers) is that if you under-price any good it will be over-consumed. I have demonstrated the unequivocal truth of this principle previously, and so will not do so again. Suffice it to say that in deliberately under-pricing gold and silver for well over a quarter of a century (through their relentless manipulation of these markets), the bankers have caused more than 25 years of excessive demand – where previous surpluses in these markets have been transformed into huge supply-deficits.

In the gold market, where virtually all of the bullion ever produced has been conserved, this distortion of markets has merely resulted in a massive transfer of bullion: out of the vaults of the West and into the vaults of the East. The situation in the silver market is entirely different.

Being both much cheaper than gold, and possessing even more superior chemical and metallurgical properties, silver was written off by those with no understanding of precious metals as merely an “industrial” commodity. As a matter of common sense, the rapid increase in industrial demand for silver must make it more “precious” rather than less so.

Illustrating this elementary logic, the combination of gross under-pricing and surging industrial demand has served to decimate global silver stockpiles and inventories. Noted silver researcher Ted Butler has estimated that global stockpiles of silver plummeted from over 6 billion ounces (fifty years ago) to approximately 1 billion ounces today. Silver is literally six times “more precious” today than it was a half-century earlier. In terms of “inventories” (the amount of silver actually available for sale today), the destruction caused by the bankers is even more apparent.

Between 1990 and 2005, global silver inventories plummeted by roughly 90%: from over 2 billion ounces to little more than 200 million ounces. Since 2005, there has been a massive inventory-sham perpetrated by the bankers and the quasi-official “keeper of records” for the gold and silver sector: GFMS and the CPM Group.

Through the farcical practice of adding the paper-bullion of silver “bullion-ETF’s” to inventories and pretending this represents “new silver”, inventories have magically “risen” by roughly 400% since then – despite the seemingly incongruous facts that silver demand has increased dramatically, while supply has remained flat.

In fact, any bullion actually held in a bullion-ETF cannot be an “inventory”, since it fails to satisfy the basic definition: it is not for sale, but rather is privately held by the unit-holders of these funds. How can the holders of such funds sleep at night, knowing that the legal “custodian” of their bullion is telling the world that their silver is “for sale”?

Secondly, these holdings of bullion-ETF’s are not “new silver” in any possible sense of those words. The bullion-ETF’s didn’t mine their own silver. They didn’t discover “secret stockpiles”, all they have done is to buy 100’s of millions of ounces of silver out of existing inventories. For the record-keepers of the silver sector to pretend that these funds are “new silver inventories” is nothing but a shell-game of the clumsiest nature.

It is because of the enormous differences between gold and silver inventories that a “default event” is likely to be much different between gold and silver. With gold bullion being principally a financial asset in global markets, it is much easier to forestall a true “failure to deliver” from occurring at the official bullion exchanges (i.e. London or New York) through the unofficial default-mechanism of “cash settlements”.

Indeed, the bankers consider this mechanism to be a “perfect solution” for the parameters of having very finite amounts of (extremely leveraged) bullion, while having access to infinite amounts of banker-paper from central bank printing presses.

In reality, as the “cash settlements” continue to get larger and more frequent, at some point one or more large holders in this banker Ponzi-scheme are going to lose their nerve, and insist on real bullion rather than paper bribes. Such an event does not need to result in an official default. It merely needs to “spook the herd”.

As word gets out of some prominent investor refusing any quantity of banker-paper in favor of physical bullion (i.e. real “money”), this will cause the holders of $100’s of billions of dollars of “paper bullion” products to ask themselves a very pointed question: “am I holding ‘bullion’ or am I holding ‘paper’?”

More importantly will be their response to such a question. The two obvious responses are either to demand delivery or to sell their paper bullion. At that point, it won’t matter which path is taken, since both roads will lead to the obliteration of the bankers’ 100:1-leveraged, paper gold Ponzi-scheme.

If large numbers of bullion-holders demand delivery, there will either be a formal default in London or New York, or a formal default of the bullion-ETF’s – since their “custodians” (the world’s largest bullion “shorts”) will simply walk-away from their commitment to unit-holders in order to cover their own, massive short positions.

If large numbers of paper bullion-holders choose to sell their paper-bullion, this will create a massive decoupling between real “physical” bullion, and the vast quantities of paper-bullion products, where vendors are unable to conclusively prove these funds/accounts are fully-backed.

While the default scenario in the gold market is necessarily complicated, the silver market offers a much clearer picture. The billions of ounces of silver which have been “consumed” industrially are now buried (in tiny quantities) in land-fills all over the Western world. Meanwhile, a large and obvious supply-deficit remains (for any observer not duped by the clumsy inventory-fraud).

This can only end one way. Irrespective of whether the bankers can continue to mollify silver investors with their cash-bribes – and delay a formal default through investor demand alone, obviously this same mechanism cannot possibly work with the vast number of industrial users for silver – who need silver, or many/most of their businesses will cease to operate.

You can’t use banker-paper to make solar cells, lap-top computers, hybrid cars, anti-bacterial textiles, high-precision bearings, or satisfy any of the other myriad industrial applications for silver. Note that the bankers caused all of this incremental industrial demand through their decades of under-pricing silver – and now they have no possible means of meeting that demand.

The only question which cannot be answered for investors (the question which they would like answered the most) is “when will default occur?”

My own answer to this question is simple: the one aspect of “control” which the bankers still exert over the gold and silver markets is the timing of their own funerals. Allow these manipulated, grossly over-leveraged markets to implode today, and prices will soar higher (to multiples of current prices). Attempt to prolong their inevitable demise for several more months (years?), and all that happens is the implosion of these markets is even more catastrophic, with an even greater exponential effect on prices.

Investors should not be troubled by this relatively minor level of uncertainty, as their strategy should be obvious: continue to accumulate precious metals until the bankers self-destruct. The longer we are forced to wait for our final pay-off/validation, the greater the reward for our patience.

Meanwhile, the big-buyers who now rule this market can be expected to march precious metals prices higher – subject to occasional banker-orchestrated pull-backs, since these big-buyers will joyfully accept any “sales” on bullion provided to them by the bankers. The “obituaries” can already be written with respect to the era of banker-manipulation of precious metals markets.

source HERE

The Eye of the Recession's Storm

2011-01-01T20:36:00.000+08:00

by Robert Kiyosaki

posted on Dec 23 07:30am

For some, the recession has been like Hurricane Katrina. For others, the recession never started. The reality is, unfortunately, that it’s far from over.

Is the recession really (not just technically) over? Is the economy coming back? Are jobs coming back? Obviously, the answers to those questions depend upon whom you talk with. As the old saying goes, “If your neighbor loses his job, we’re in a recession. If you lose your job, we’re in a depression.”

Here in America, the economic news is still pretty dire. A recent survey of college seniors revealed that 85 percent said they planned on moving back in with Mom and Dad. They simply can’t find jobs. The October 25, 2010, edition of USA Today ran the headline: For Many Over 55, Debt Defers Dreams: Recession Strips Away Savings, Jobs. The article states, “The unemployment rate for Americans 55 and older was 7.2% in September, a major increase from 2.9% in September 2006.”

Overseas, the news isn’t much better. The British government recently announced austerity programs that will cut 500,000 government jobs and cut welfare payments drastically. The French rioted in the streets, protesting the retirement age being raised two years from 60 to 62. Japan is now sending work overseas, which means more unemployment in Japan. The Yen’s strength makes Japanese products more expensive. So they seek lower-wage countries to manufacture their products. Toyota is set to produce 57 percent of its product overseas, up from 48 percent in 2005. Nissan will produce 71 percent overseas, up from 66 percent just last year. Bye-bye, Japanese jobs.

What Does This Mean?

Recently, as I was finishing my dinner at a local Italian restaurant, my waiter asked me, “May I talk to you about my mortgage?”

“Sure,” I replied.

“I haven’t paid my mortgage in over 18 months,” he said. “What do you think I should do?”

“Has the bank been calling you?” I asked.

“At first, but lately I’ve heard nothing,” he said hesitantly. “And I’m not the only one. Three of the cooks in the kitchen have also stopped paying their mortgage.”

“And what are you doing with the money?”

“We’re saving it.”

“And what do you plan on doing?” I asked.

“Wait till they take our houses,” he said. “Do you think this is a good idea?”

“I wouldn’t do it,” I said with a smile. “Why are you doing it?”

“Because the mortgage is more than the value of the house. We’re better off not paying the mortgage and saving the money. Let them take our houses.”

I didn’t agree or disagree with this man…yet, silently, I couldn’t fault his logic. Since he was 18 months behind on his mortgage, he was so far behind that he was actually ahead.

As you probably know, the mortgage mess is only getting worse, not better. Many people aren’t paying their mortgages because they don’t have a job. Yet there are a growing number of people who have jobs but who are also refusing to pay their mortgage.

A medical doctor friend of mine confirmed this growing trend. He said the doctors he works with, doctors who make a lot of money, are buying a lower-priced second home and then defaulting on their primary residence.

If this trend turns into an avalanche, the real estate market will crash again. The only people holding onto their homes are people like me, people who purchased before the bubble and don’t owe much, if anything, on their homes.

If there is another real estate crash, it’s people like me -- people who pay their mortgages -- who might be the biggest losers.

Looking at the chart, it’s easy to see the eye of the storm. The second half of the storm is about to hit.

The leading edge of the storm was the subprime mortgage defaults, the storm that hit in 2007. The trailing edge of the storm will be the defaults of people who are solid citizens, people who have good jobs and good credit.

How severe the second front of the storm will be is yet to be seen. If there are more people like the waiter and cooks in the Italian restaurant and the highly paid doctors who don’t want to pay for a house that is going down in value, the second half of the storm will be very severe.

Good News

The good news is that the Fed and banks are hard at work trying to keep borrowers in place. The Fed and local banks have dropped interest rates, enticing people like me to borrow, borrow, and borrow some more, which I’m happy to do.

Thanks to my latest refinances, my wife and I will save over $7,000 a month in monthly mortgage payments -- that’s $84,000 a year savings. And as far as our rental apartments go, refinancing and saving 2 percent per year on over $100,000,000 in debt is substantial. Even better, since so many people are renting, our apartments are operating at near 97 percent occupancy, even when rents increase.

Bad News

The bad news is that inflation is likely to rise. This will make life even harder for the poor and the middle class. Every time the Fed implements “quantitative easing,” a.k.a. printing more money, two things go up: taxes and inflation. When taxes and inflation go up, more jobs are lost.

Making the situation even worse is President Obama’s Healthcare Reform Bill. In my heart, I understand why he put so much of his term in office to push this bill through. I have relatives who have no healthcare. So for them, the healthcare bill may be a godsend. But for millions of others this bill is their ticket to the unemployment line. The added cost of healthcare is forcing companies to lay off workers.

With Medicare set to go bust in 2019, I wonder how our leaders could pass another program we can’t afford.

So is the recession really over?

For some, the recession has been like Hurricane Katrina. They’ve lost everything in the storm but now the levies are about to break and the flooding will begin. For others, the recession never started. The reality is, unfortunately, that it’s far from over.

What advice do I have?

Over the years, my advice hasn’t changed.

In 1997, in Rich Dad, Poor Dad, I stated, “Your home is not an asset.” Real estate agents sent me hate mail.

In 2007 the first subprime mortgages began to collapse. In 2011, the second wave is about to hit.

In 2002 in Rich Dad’s Prophecy, I stated, “You may have up to the year 2010 to become prepared.”

In 2006 Donald Trump and I wrote Why We Want You to Be Rich, predicting the decline of the middle class. Today the working middle class is slipping into poverty.

For years, I’ve been an advocate for financial education in our schools, and I’ve preached that, as individuals, we must take financial education seriously. Today, my advice remains the same. Until we have comprehensive financial education, we’ll never see the end of our booms and busts.

SOURCE

Grameen, The World's Most Generous Bank

2010-12-29T13:10:00.000+08:00

By Sakina Mohamed

This is the first of a two-part series on Grameen Bank, the first in the world that gives out loans to those who live below the poverty line and revolutionised banking worldwide. The first part explains a brief history of the bank as well as its latest updates and efforts, as revealed by its founder during his recent visit to Malaysia.

KUALA LUMPUR, Dec 29 (Bernama) -- Who has heard the story of a bank that has loaned over USD10 billion to the poor without collateral, yet has a repayment rate of over 98 percent? For those who have yet to hear the story of Grameen Bank, the world's first micro-credit organisation, is indeed an extraordinary one.

Despite defying all the rules of conventional banking, Grameen Bank has single-handedly lifted the Bangladesh poor from poverty. More amazingly, it has even reformed social development and economy not only in the country but across the world.

The man that came up with the idea is now befittingly a Nobel Laureate. Professor Dr Muhammad Yunus, founder and Managing Director of Grameen Bank, started the bank while his country was going through famine in the 1970s. And his inspiration came one morning in 1976, while he was walking past a village to the university in which he served as an economics professor.

"I encountered a poor woman who explained to me that she earned only two cents a day from making these beautiful bamboo chairs, all because she had to borrow from a loan shark. The loan shark had demanded that she sell her products to him at a price so low that she made a profit of only two cents a day".

Muhammad said at that moment, he needed to pay the loan shark only USD1 to set her free from debt and help her out from that cycle of poverty. And so he did.

The happiness and relief in the poor woman inspired him to look for other people in the village who owed the moneylender. He found 42 people who needed a total of only USD27 to pay off the loan shark, as well as to buy raw materials for their businesses. With that amount of money they managed to become debt free and at the same time sell their products to the highest bidder, thus improving their economic status.

In doing so, he found that he had helped the first woman make a profit of USD1.25 a day, instead of only two cents. Thus began a journey for Muhammad to set up Grameen Bank which breaks the cycle of "low income, low saving and low investment".

Muhammad shared the inspiringly famous history of the bank during a luncheon in Malaysia recently, while delivering a keynote address titled "Social Business and Poverty Reduction". The special luncheon was organised by Khazanah Malaysia and the Malaysian Directors Academy (Minda).

BANK FOR THE POOR

Grameen means "rural" or "village" in Bangla. Its tagline is "Bank for the Poor". It provides micro credit to the rural poor in Bangladesh, so that they may start or finance their business and keep their income growing.

Muhammad says the bank lends tiny loans of USD200 per month to about 8.3 million borrowers all over Bangladesh and are paid back in weekly instalments. Amazingly, although the bank lends out to those living below the poverty line, it manages to recoup nearly 98 percent of its loans.

The economics professor says one basic fundamental of the banks since inception is that banks should go to the people and not the other way.

"We meet all these 8.3 million borrowers at their doorsteps. They don't have to go anywhere. We meet them every week and do banking at their doorstep.

"It's a big task. But it's the only way we can get them to do banking with us, as over 97 per cent of our borrowers are women. If you ask them to come to our office, it won't happen. The men will take over, being the mobile ones. Women usually stay home trying to settle numerous tasks in care giving", he explained.

An inevitable question arises: why does Grameen Bank tend to give out loans to women? The bank's website addresses this frequently-asked-question with the following answer:

"Women in Bangladesh are neglected by society. Through the opportunity of self-employment and the access to money, Grameen Bank helps to empower women. In addition, studies have shown that the overall output of development is greater when loans are given to women instead of men, as women are more likely to use their earnings to improve their living situation and to educate their children".

BANKING FOR EDUCATION

Today Grameen Bank is owned by the rural poor whom it serves. Borrowers of the bank own 90 percent of its shares, while the remaining 10 percent is owned by the government.

While watching the success of Grameen Bank in elevating the living standards of its borrowers, another question came to Muhammad's mind: what will become of the future of their families?

It was a natural question to ask, considering that the parents are mostly illiterate. This almost guarantees the perpetuation of the traditional cycle of poverty, ill health and other social maladies that come with it.

"We decided that we must ensure the children of all these families go to school in order to break out of that cycle and move on to a different direction", he says. So that plan was then set into motion.

Then a wonderful and unexpected thing happened. The children not only went to school, but thrived and excelled in their studies. They soon found themselves going to high schools and subsequently, colleges.

"There were thousands of them, flourishing and excelling in school. We didn't at all expect this as we thought having them go to primary school was the best achievement we could hope for from these Grameen kids. But the reality turned out to be much better than we expected", he says.

But then another problem surfaced. While parents were happy that their children were progressing academically, they soon realised that the cost of tertiary education was beyond their means.

"So then we had scores of children who were academically excellent but couldn't further their education. We debated within Grameen bank on how best to ensure that they stay on, and we came up with this solution - to introduce the education loan. Now, nobody is left behind".

As a result, there are now more than 50,000 students with Grameen education loans in medical schools and engineering schools in universities across Bangladesh.

Muhammad believes that children from wealthy families are no different than the poor ones in terms of capabilities. However, opportunity-wise, there is a big difference.

"And that makes all the difference in their lives.

"If the poor children could go to the best schools in the world and compete with their best talents, they'll be as capable and as talented as everyone else."

GRAMEEN STUDENTS IN MALAYSIA

Muhammad speaks fondly of Malaysia and his relationship with Khazanah Chief Executive Officer Tan Sri Azman Mokhtar. The former has visited Malaysia many times, even before the Grameen idea took off outside of Bangladesh.

"Malaysia is almost like my second home. In fact, the first time the Grameen idea was taken outside of Bangladesh was in Malaysia, with the first application in Penang", he revealed.

In 1994, Malaysia bestowed Muhammad the Tun Abdul Razak award in recognition of his remarkable contribution to the world. Since Grameen Bank's inception in 1976, he founded 25 companies, all of which aimed at improving the living situation of the poor.

He says on hearing his sentiments on education, Azman immediately come up with idea of providing scholarships to Grameen students to study in Malaysia.

Today, Yayasan Khazanah sponsors 10 students who are children of Grameen Bank employees in select universities in Malaysia via the Khazanah Asia Scholarship. The foundation also continues to annually select five students from families that are served by the Grameen Bank to be recipients of the scholarship.

"The students that get this fantastic opportunity are from families with very low income", explains Muhammad.

He describes the programme as one that binds both Grameen and Khazanah very closely and says he is happy with the partnership.

Today, the bank is the source of ideas and models for many institutions in the field of micro-credit. But in Bangladesh, it represents a whole lot more.

"It is the future of the second generation of borrowers", says Muhammad.

"Of where they can go, and what they can be. They no longer have to go back to age-old cycle of poverty. They can now take it forward".

-- BERNAMA

Financial resolutions for 2011

2010-12-27T15:35:00.000+08:00

Who doesn't like the fresh start of a new year? A clean slate and an optimistic outlook make January 1 a magical time. The only problem is that every year we vow to take care of our finances, but we ultimately get sidetracked with excuses. But this year will be different, and to help, here are some smart money moves for the New Year.

Review the previous year
What better place to begin a new year than to reflect upon the past? Take a look at last year's budget, identify the good and bad money moves you made last year and resolve to make the necessary improvements for the upcoming year.

Set one financial goal
Keep it simple this year and set at least one goal you'd like to achieve by the end of this year, then put all of your focus and energy towards achieving the goal.

Some financial goals could be to:

— Automate your finances
If your money seems to slip through your fingers before you can save any of it, putting yourself on an automatic savings plan to debit even $50 per month from your account is a good way to save without feeling the pinch. If you don't see the money, you won't miss it and before you know it, that $50 per month in savings will be $600 at the end of the year.

If your problem is more that you keep forgetting to pay bills and end up paying interest on overdue bills, you can also automate your bill payments by calling the companies directly to ask if they can debit your account every month, or talk to your bank about automating your recurring bill payments.

— Improve your investing knowledge
This is probably the area most people are afraid of. Of course it will all look confusing to begin with if you want to tackle everything under the sun in a short amount of time. So start slow and simple with something like learning what bonds, stocks and mutual funds are. For each topic, apply your newfound knowledge towards your money so that the information becomes relevant to you.

Your company might also offer free seminars to understand your finances better. You can also go online to learn the basics at your own pace.

— Get out of debt
For anyone who is in debt, it is really better knowing what your financial situation is than to stay in the dark. Next, create a budget listing your net income per month and where you plan to spend your money in each category.

Once your budget is done and you know what you have to work with, make a separate plan to get out of debt. Start by listing all of your debts, their interest rates and minimum monthly payments.

Now minus the total amount of minimum debt repayment you'll have to make each month, and whatever is leftover should be applied to either the lowest debt balance you have or on the debt with the highest interest rate.

As you clear each debt, take the amount you used to pay towards that debt and apply it to the next debt in line until you're debt-free.

You may find that your minimum payments equal or exceed 15 percent of your net income. In that situation, you will need to adjust your budget percentages and cut back on your housing, life or transportation costs, or simply make more money.

Don't rob your savings category in the beginning to pay down your debt. You should save a minimum of $1,000 for emergencies before adjusting your savings.

Investopedia.com: Top 5 budgeting questions answered

Make a plan
Keep it simple and make sure you've covered all the bases for each goal. For example:

Goal: Save $5,000 by the end of the year for an exotic holiday vacation.

Step(s): Save an additional $417 per month, or $208.50 per bi-weekly paycheck.

The Plan: Review your budget and set up an automatic withdrawal from your paycheck into a savings account.

The bottom line
There are plenty of other goals out there, such as buying a home, a new car or going on a European vacation. The main thing to remember is that without a plan, your goals will always be dreams.

source

A $100 New Year Gift from UWCFX (United World Capital)

2010-12-23T01:00:00.000+08:00

Dear active CariGold users!

As a courtesy of our long cooperation, I have decided to make a gift for you for the Christmass and New Year - I decided to give a $100 (ONE HUNDRED) US Dollars to every active CariGold user (providing you have not less than 100 posts in CariGold Forum) who become a client of United World Capital (UWCFX - http://www.UWCFX.com) in the period of December 21, 2010 to January 7, 2011.

In order to open an account with United World Capital, please visit our web site at http://www.UWCFX.com and signup for an account. Once your account will be opened and your identity verified, please contact our support staff to credit your account with this ONE HUNDRED Dollar Gift.

Please note: This ONE HUNDRED US Dollar Gift is for trading only, so you will not be able to withdraw this gift from your account, but, you can withdraw a profit received from your trading providing you completed trades for a total of 5 standard lots.

Sincerely,

Sergey Mayzus
CEO & President of
United World Capital
http://www.UWCFX.com

United World Capital Limited is registered as a Cyprus Investment Firm (CIF) with the registration number HE230122 and licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 093/08 in accordance with MiFID Directive. All retail client assets are insured by the Investor Compensation Fund up to the value of €20,000 per client.

source

ps : A nice offer to all carigold.com forum members who are interested in trading forex with ZERO capital risk. Lets try it.

Shariah hedging derivatives start in Malaysia

2010-12-22T17:00:00.000+08:00

STANDARD Chartered Plc and Bank Islam Malaysia Bhd plan to offer Shariah-compliant derivatives in Malaysia that will allow investors to hedge against interest rates and commodity prices.

Standard Chartered, the U.K. bank that earns most of its profit from emerging markets, will begin selling contracts in the first quarter that provide protection from fluctuations in the cost of items such as rice and oil, according to an e-mailed reply to questions yesterday. Bank Islam Malaysia, the country’s oldest Islamic lender, will offer swaps that allow two parties to exchange different forms of payments from an underlying asset.

The lack of such Shariah products is hindering industry growth, Badlisyah Abdul Ghani, chief executive officer of Kuala Lumpur-based CIMB Bank Islamic Bhd., said in an interview on Dec. 20. The market will be limited to hedging after derivatives contributed to the global financial crisis, which resulted in $1.8 trillion of credit losses and write downs.

“The industry has gone through a set of innovations over the past 10 years to offer Shariah-compliant solutions and today the industry can say we have Islamic derivatives,” Syed Alwi Mohd Sultan, director of origination at Standard Chartered Saadiq Bhd, the bank’s Kuala Lumpur-based Islamic banking unit, said in a telephone interview on Dec. 15. “A wide acceptance of the standards will bring greater convergence of the industry.”

Derivatives are contracts whose values are tied to assets including stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.

Regulatory Approval

Standard Chartered started offering its commodities-based contracts in the Persian Gulf in March as the International Islamic Financial Market, a Manama, Bahrain-based agency that sets guidelines, provided standardized legal documentation for Shariah derivatives the same month. The U.K. bank will be the first to provide the products in Malaysia and is awaiting regulatory approval, according to the e-mail.

Islamic contracts can’t be traded or used as a speculative investment under Shariah law, said Aznan Hasan, assistant professor at the Kuala Lumpur-based International Islamic University of Malaysia, in an interview on Dec. 20. Standard Chartered’s products are vetted by a Shariah panel of experts to ensure compliance and that they are backed by a real underlying asset, Syed Alwi said.

“Customers need hedging instruments; if you have a customer who needs to make payment in the future for properties the company bought overseas, they have to hedge their currency,” said Aznan, who sits on several advisory boards including the one at Malaysia’s central bank.

Asia-Pacific Market

The Asia Pacific overtook North America as the biggest market for derivatives in the six months through June and accounted for 38 percent of the global total, according to data from the Washington-based Futures Industry Association published in September. That compares with North America’s 33 percent market share.

CIMB Islamic, the world’s top sukuk arranger this year, is “exploring” Shariah-compliant credit-default swaps to complement the bank’s Islamic profit-rate swaps, cross-currency swaps and cross currency profit-rate swaps, Badlisyah said.

“It’s still very early days for the market but we’ve been receiving interest for our derivatives products from institutional investors as well as companies who need to hedge their positions,” Badlisyah said. “Without effective risk management, Islamic financial institutions cannot grow in a stable and aggressive manner.”

Sukuk Returns

Malaysia, the Asian hub for Shariah-compliant finance, accounts for more than 50 per cent of the $144 billion of outstanding Islamic bonds, or sukuk, globally, according to data compiled by Bloomberg. Total sales of the securities, which pay asset returns to comply with the religion’s ban on interest, have dropped 24 per cent to $15.3 billion this year.

Shariah-compliant bonds returned 12.4 per cent in 2010, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. Debt in developing markets gained 11.7 per cent, JPMorgan Chase & Co.’s EMBI Global Diversified Index shows.

The difference between the average yield for sukuk and the London interbank offered rate shrank two basis points, or 0.02 percentage point, to 305 on Dec. 21, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. The spread has narrowed 163 basis points this year.

Rising Demand

The yield on Malaysia’s 3.928 per cent Islamic notes due June 2015 rose two basis points to 3.10 per cent today, according to prices from Royal Bank of Scotland Group Plc. The debt has returned 5.8 per cent since it was issued in June.

The difference in yield between the Dubai Department of Finance’s 6.396 per cent sukuk due November 2014 and Malaysia’s Islamic note was little changed at 339 basis points today, according to data compiled by Bloomberg. The gap shrank 59 basis points this month.

Demand for services complying with Shariah law is increasing by about 15 per cent a year and assets will rise to $1.6 trillion by 2012, from around $1 trillion currently, according to the Kuala Lumpur-based Islamic Financial Services Board.

Bank Islam Malaysia plans to introduce new contracts that will allow an exchange of profit or return rates between two counterparties, Hizamuddin Jamalluddin, the bank’s assistant general manager, said at a seminar for Islamic derivatives on Dec. 14 in Kuala Lumpur. These will be in addition to its existing Shariah-compliant hedging contracts, he said.

Record-low borrowing costs in the U.S. may rise in 2011, providing a “timely” opportunity for banks to issue swaps- based derivatives, Hizamuddin said.

“It is very critical that holders of sukuk have access to hedging solutions that would enable them to counter the challenges in a rising interest-rate environment,” he said. “Interest rates seem to have hit rock bottom.” - Bloomberg

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7.5 sen dividend, 1.25 sen bonus for ASB

2010-12-21T21:14:00.001+08:00

Amanah Saham Bumiputera (ASB) unitholders will receive a dividend of 7.50 sen per unit for the financial year ending Dec 31, 2010 compared with 7.30 sen declared last year.

The 7.04 million unitholders who currently hold more than 82.72 billion ASB units will also receive a bonus of 1.25 sen, similar to last year.

Permodalan Nasional Bhd (PNB) Chairman Tan Sri Ahmad Sarji Abdul Hamid said the income distribution portion involved a total payout of RM5.93 billion while the bonus portion RM603.34 million.

Up to last Friday, he said, the scheme registered a gross income of RM6.58 billion.

"Dividend income from investee companies contributed RM3.27 billion or 50 per cent of the gross income, and profit from the sale of shares contributed RM2.78 billion or 42 per cent," he told a press conference here today.

He said the remaining eight per cent or RM0.53 billion was derived from investment in short-term instruments and other investments.

PNB President and Chief Executive Officer Tan Sri Hamad Kama Piah Che Othman said this year''s earnings were supported by the increase in dividend contributions from subsidiary companies particularly Malayan Banking Bhd (Maybank) which amounted to 55 sen compared with eight sen a year earlier.

Dividend contribution from Sime Darby Bhd, meanwhile, dropped to 10 sen from 20.3 sen in 2009.

"In terms of income, last year's dividend was less than 50 per cent but this year, we managed to achieve 50 per cent resulting from dividend returns from our investee companies.

"This year's performance was quite fortunate. Even though Sime Darby paid less than last year, we received a higher dividend from Maybank which had been gradually recovering," he said.

Asked on Sime Darby's performance, Hamad said: "We are always hoping that the performance of our companies will improve.

"If we look at Sime Darby's performance, they have projected the situation to get better in the future and we hope this will can help us get better returns." -- BERNAMA

Credit cards SLAMMED: Visa and Mastercard plunge more than 12%

2010-12-17T18:39:00.000+08:00

Thursday, December 16, 2010
From Bloomberg:

Visa Inc. and MasterCard Inc. plunged more than 12% in New York trading after the Federal Reserve Board proposed rules that may slash debit-card interchange fees by 90%.

The new rules, posted today by the Fed on its website, may aid retailers and cut profit for lenders who reaped about $15 billion from such charges last year. Terms outlined by the Fed include a plan with caps of 12 cents per transaction. The fees currently average about 1%.

The result could be an 80% to 90% drop in the fees that Visa and MasterCard pass on to banks, according to Tien-tsin Huang, an analyst at JPMorgan Chase & Co. Jason Kupferberg, an analyst at UBS AG, said investors had been expecting a 40% to 60% reduction.

"Visa is still reviewing the specific elements of the recommendations," said Will Valentine, a spokesman for the San Francisco-based company, in an e-mailed statement. "We cannot comment in detail on the proposed regulations until we have had a chance to fully consider their implications."

Visa fell $9.82, or 13%, to $67.12 at 3:08 p.m. in New York Stock Exchange composite trading, the most in two years. MasterCard dropped as much as 12%, its biggest one-day slide ever, before recovering to $222.04, an 11% drop.

The central bank is crafting the caps on "swipe" fees, also called interchange, to comply with financial curbs that Congress passed in July. Analysts have said the limits could erode profit for Visa and MasterCard. By contrast, the new rules may cut costs for retailers such as Wal-Mart Stores Inc. and Target Corp.

Network Choice

"Setting a cap ensures that no issuer is able to receive an interchange fee at an unreasonably high level," said Janet Yellen, Fed vice chairman, in a memo outlining the proposals.

The Fed also proposed rules that would let merchants choose from at least two independent debit networks for routing transactions, potentially creating more competition for Visa and MasterCard.

To compensate for the lost profit, banks may eliminate rewards on debit cards and charge some customers for using them, increase fees on deposit accounts and promote other products that aren't covered by the regulations, such as charge cards that require consumers to pay their bills in full each month, McDonald said.

The debit caps were part of a measure pushed by U.S. Senator Richard Durbin, an Illinois Democrat whose new rules permit retailers to refuse credit cards for purchases of less than $10 and offer discounts based on the form of payment. It exempts lenders with assets of less than $10 billion and reloadable prepaid debit cards, which are used to distribute government benefits such as Social Security.

Credit Cards

The industry has escaped attempts to regulate interchange on credit cards, which average about 2% per transaction, saying the fees are needed to compensate for the risk of lending money. Debit fees don't have that problem because cash is immediately deducted from the consumer's checking account.

The so-called Dodd-Frank financial overhaul requires the Fed, which writes regulations on electronic payments, to complete the rules by April 21 and implement them by July 21. Today's vote will open a public comment period, after which the Fed board will meet to vote on the final rules.

To contact the reporter on this story: Peter Eichenbaum in New York at peichenbaum@bloomberg.net.

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.