Sunday, July 1, 2018

Just An Observation Over Iran

Occasionally, I will essay over Iran....mostly because I see it as the next country to be in a massive revolution.

I noticed this week a chart which got into the currency exchange rate, and a suggestion of how bad things are going.

In a typical world....there is a official exchange rate (sanctioned by the government usually), and there is a black-market exchange rate.

It doesn't matter where you go in the world....they both work in conjunction with each other.  The black-market rate will always be 10-to-15 percent more.

Today for example....the official rate of exchange is roughly 40,000 Iranian Rial to one US dollar.  Back in January, it would have been 35,000 Iranian Rial to one single US dollar. 

On the black-market?'s figured to be in the 78,000 Iranian Rial to one US dollar (as of mid-June).

Why such a drastic difference between the official and black-market rates?

There are simply a lot of private 'pirates' around Iran who know that people are hyped up to dump their Rials, and the popular currency to dump into is either the dollar or Euro.  If you did go to the official currency handlers....there's a limit, and there's paperwork to show a trail.  So if you walked up and wanted to exchange a hundred-million Rial.....$2,500 in official exchange, someone might ask why and how you intend to use the money.

A sign of impending 'doom'?  I would suggest the trend will continue, with more Iranians of wealth shifting their money out of the country (probably into Dubai), and people standing by to wait for the banking collapse.  For the Mullah figures, they lack the banking knowledge to grasp how the system is failing. 

I also read through the Tehran Times this morning, with a curious three-line story.  Basically, three elements of the government (the President, the chief justice, and head of Parliament) had this meeting and agreed that something needs to be discussed (in a hurry) to head off the impending troubles. Their talk?  Mostly centered around money-laundering and how something has to halt it.  But the story basically ends at the third was a meeting to agree....things are screwed up.

My guess is that by early August, the three will come to some national policy of arresting the big-time players of money-laundering and executing them to make an example for the public.  Naturally, this will be taken the opposite way and probably accelerate the whole process of money-laundering.

I'm not going to say Trump's Iran strategy is brilliant or well-conceived....but there's one absolute consequence coming out of this....the banks will run out of money, and their collapse will lead to another revolution, unless the EU or the IMF folks do something stupid to prevent the revolution. 

The curious question to be tossed out and pondered upon....if revolution comes, and the Mullahs are put out of work....where exactly will they be able to retreat to? 

No comments: