Dinar Redux

Online speculation regarding the 'investment opportunity' the new Iraqi Dinar represents is becoming a virtual cottage industry ...

However,I'm already on record as believing it's a great way to acquire wallpaper one note at a time.

With that in mind, I've noticed that a recent statement from the USA government has announced that they've 'hit the wall' budgetarily in Iraq; they've given enough financial aid to rebuild Iraq. Apparently, they've concluded that almost $19 billion in handouts is quite sufficient, especially when half of it was engulfed by fighting the continued insurgency there and thus had no lasting effect as a basis for reconstruction. Instead, the Americans believe it's time for other governments to belly up to the bar and make their own contributions to the cause.

That's about as realistic as thinking that the new Iraqi Dinar will amount to anything of value in the near future.

Given that, should the USA ever leave Iraq, the country is as liable to devolve into a prolonged civil war as the former Yugoslavia was when an imposed authority --- Tito's Soviet-backed communist confederation --- inevitably fell away. That would be a strong indication that the prospects of a stable currency in Iraq are slimmer than the profile of a starving amoeba.

The latest American report on their Iraqi 'investment' borders on the tragic. Details abound of unfinished schools and power plants, unrepaired roads and bridges, undermanned national miliatary forces and overpaid election costs. Again, a primary factor was the siphoning of funds to counter the insurgency.

Politics aside, does this sound like the foundations of a national economy that is going to improve anytime soon?

The sales point of most online Iraqi Dinar hawkers is that it only takes a minimal upgrade of their economy to profit from an increased exchange value for their currency. Fair enough, but who's going to want to accept it in exchange? And when?

There are numerous other opportunities out there which have a much greater growth potential than new Iraqi Dinar, and given the comparative odds, I'd even suggest horse racing.

That brings to mind an old bromide about the man who strolls by a stable and sees a boy excitedly shoveling through a pile of manure. When he asks the boy why he's doing it, the lad answers, "With all this evidence, there's got to be a pony in here somewhere!"

Perhaps, but given the current status of Iraq's economy and the dim prospects for its future, such an allegory may be making two different, but more salient points:

- Who would want a horse that made that much of a mess, and

- Someone else is going to have to clean it up.

The Americans have apparently come to the same conclusion, possibly even thinking that the oil business there is only a one-trick pony.

So, for anyone remotely thinking they can do better than the most financially dynamic government in the world and make money from anything representing the Iraqi economy --- especially speculating on its currency --- I can only make one recommendation:

Grab a shovel.