Thursday, 4 October 2012

The Orange Dealer Story

It won't be discussed much on the nightly news, or dragged out in the Washington Post, or featured on the cable news channels much.....but Iran is watching a huge mess develop over the value of their currency...the rial.

If you were a regular "Joe" on the streets of Iran and made deals (a truckload of oranges for cash example)....then you generally want to be paid in anything BUT the rial.  So you accept gold, US dollars, European Euro, or just about anything of value except the Iranian currency.

You can run a country where a small marginal group of people have an attitude like this.....but after a while....when it's no longer a marginal group....and the economic experts admit it's killing the economy....you have to react.

So this week, the Iranian cops started showing up in business areas of various towns, and taking on the currency-converter crowd...both the licensed and unlicensed groups. As an American, we don't ever see currency-converters.  If you go off to Europe....you might see a few stands around cities like Amsterdam or Frankfurt or Paris.  If you go to Turkey, there tends to be a high number of currency-converters....mostly licensed of course.  Their job in life is to stand there and take rials, and quickly run up a deal for trading that for some other currency that might be more of interest for the orange salesman.

Here's the simple fact.  The government will say the currency level for rial is X, but on the open market....it might be less than that.  If you came and said that you needed to conclude a deal in another currency....and you can conclude a deal if you just had two pounds of gold, then it might end up as a better deal than the government would prefer you to have.

A year ago....the Iranian was rial was worth X, and today....it's lost eighty percent of that value.  That means if you wanted to buy a truckload of oranges to sell on the streets today....you'd need to pay four times what you paid a year ago.  This invites people to find currencies beyond the rial to deal on.  So gold might be more appealing to have and use on a daily basis....than the national currency.

Out on the streets of Iran...."Joe" has to buy groceries, gas, and a few things to survive each month.  You can figure that he's now paying more for the essentials of life, than he did a year ago.  He needs to blame some political group for this....to make any sense out of this.  The sad thing is that Iranian political figures can't really fix any of this currency issue business, unless they make the west happy over the nuclear policy....which isn't going to happen.

At the end of this whole mess....are a bunch of guys who deal in agricultural items like corn, apples, melons, and oranges.  They are accumulating a vast bucket of money in everything EXCEPT rials.  When this mess does finally correct itself, that dealer of oranges is going to be a fairly wealthy guy.  He might actually be able to retire for the rest of his life....off three hundred truckloads of oranges that he procured.  In the capitalistic world, that's a five-star fantasy.

Observations Over the Debate

I sat and watched the Presidential debate last night.  I came to three conclusions.

First, the President did an adequate of defending his policies and the economic successes of the past four years.  It could have been better.....but he could go home and feel that he delivered a good argument over things.

Second, while most folks were expecting some issue with the moderator.....I came to the end and felt it was handled in a fair fashion.  Both candidates got a fair deal.  Personally, I'd like to have Jim Lehrer do all three debates. I won't say Jim Lehrer is dynamic or a controlling moderator (which some folks really prefer)....but he kept them focused on the questions for the most part.

Third and final....about forty minutes into this debate....you could sense the President was frustrated.  His facial expressions weren't as positive as they were in the first ten minutes of the debate.  Around the seventy-minute point of the debate.....you could sense that he'd like for this debate to conclude shortly.  I'd probably take a guess that debates are something that aren't high on his preference list.

So, did it shift anything around?  It's hard to say or predict.  No knock-downs.  No real power-punches. You've got roughly a week before the Biden-Ryan debate.