Opportunity to cripple the Islamic Dictatorship

thank you so much Ashkan Goldstein for your kind words and offers of assistance.

unfortunately what i know of economics one could very easily write on a single sheet of paper. what Iranis are doing is trying to convert their rials into dollars or euros or another stable currency. there is not very much of a run on the banks yet. i have not a good enough grasp on economic theory to assist or advise people. economics courses did not seem to have been offered in very many places, probably to eventually ween everyone not IRG away from this field

with regard to a window of opportunity, i honestly have no idea how long it would take to collapse a currency/economy. this unknowing is contrasted with the following:

each side is still playing for position. as in chess, even after attrition begins, position is of utmost importance. the warrants for Mousavi & Co., for example, may never be served, but *do* serve to highlight Khamenei's refusal of various offer(s), his stance on Mousavi, they will keep some people off balance, etc.

because each side is maneuvering it is important to define when is 'too late'. too late is not a shooting war, with current conventional weapons. too late is not when people lose their nerve or determination, as this will never happen given all the things we have lived and grown up with, etc.

too late is the enrichment of enough fissionable material to create even a single atomic explosive device. the IRG cannot win a conventional war currently and will postpone with all tools at their disposal. all efforts seem (to me) to be aimed at postponing any sort of commitment or definable stance which can then be acted upon by Raf & Co. i have some difficulty convincing anyone here at home of this, however.

there is no wild card in chess, but on this board the people are a definite wild card. i believe no one - no one - has expected the people to behave quite as they have thus far. this is why the protests, and eventual armed escalation - even if only in small isolated pockets - are so crucially important. they play into Raf's hand and can only be detrimental to the regime. the peaceful maintain the high ground, the violent provoke the IRG troops. if there is enough violence, the military will have to be called. Raf may call out the military on friday anyway.

i think JohnDoe has said elsewhere, that we are in completely uncharted waters. to some extent this is true.

anyway, you asked about time.

pardon me please, time for what?

the question i think you were asking is, how much time do we have until the regime has a nuclear weapon? can the economy, therefor the regime, be crushed peacefully before this event? a correlating question: does the military have the will to move, or is outside force warranted?

i can give you only my perspective on information which you already posses: estimates range from approximately 6 months to 2 years on Iran's ability to create a nuclear device. the game the regime is playing is one of bait and feint. baiting the west abroad and Raf/Mous/et al at home; and feinting with short jabs and apparent mis-steps. is this a game one plays for 2 years? i hardly think so. this is a very short term game one plays against a much stronger opponent when one is convinced of the final upper hand. like waiting for the cavalry to arrive and troops have to hold the pass for some possibly unknown, but short period of time.

Khamenei has been given options- more than fair in my humble estimation. he keeps agreeing, then appearing to renege, then tries to agree to something else. it is a stall and i think this type of game (the way it is being played now) cannot last for long. *much* closer to 6 months than 2 years.

the military will move when Raf says so. errr, except for the smuggling weapons and advice part. and maybe some of the really patriotic ones have already uhm taken leave that was owed. and i have heard there is some distress (soldiers always complain though, right?) that soldiers feel they are betraying their countrymen who line up every day to be slaughtered or herded off to Evin for torture and rape. then slaughter.

so the peaceful and the violent are both helping to provoke our own honorable soldiers, as well.

please, having been given my estimation, i ask you: can we crush the economy within 6 months? i would prefer to see 4 months. perhaps a little less.

hello Bugs Bunny- please forgive me, but where would the IRG invade? the IRG have their hands full at home. only approximately 30% of IRG forces are with the coup leaders. possibly less if reports i hear re. retired Sepah generals arrests are true. an invasion might generate nationalism but would, with absolute certainty, bring the justifiable might of all the world's armies down on the regime. basij are used to occupy Iran and cannot wisely be used in an invasion force.

sorry, a civil war was what i meant. i think the estimates are optimistic on time and pessimistic on deaths, but that is the info i have. i think the real point to be drawn from this estimate is: we will take care of this trivial problem. we are out numbered and they are somewhat better equipped, but we will still carry the day due to exceptional levels of training and morale. i sincerely believe this interpretation, if not the actual numbers.

I tried to look a little more deeply into the numbers. Then one thing caught my attention:

The commercial lending rate in Iran is 11,5% annually.
The rate of inflation obviously reached 24,3% in 2008 and I bet my last penny that the final inflation rate for 2009 will be considerably higher than that.

That makes a wonder possible:
You earn 15%-30% annually, totally risk-free, no strings attached, on the money you don't even own, if you simply borrow money from your bank at the commercial credits rate.

Who the fuck gets those commercial credits? Everybody? Only Bazaaris? Only "certain" people?

Hell, go out there and get those commercial credits, if you can. Grab all they will give you. Simply convert the money to hard currency and get rich. By courtesy of "The Oil Wells of the Islamic Republic of Iran".

Seen like that, some Bazaaris might be happy inflation is running high. And they might truly, truly love the regime.

This is pure, unabashed madness. And with all their "Islamic banking principles" talk, they got away with it.

Regarding the time line:
If you count the central bank to spend 200m a day defending their currency, they'll need theoretically 300 days to burn their stash (if we take the estimate of 60bn). That's already counting the outflows of fearful money, because the underlying trade balance without outflows would be positive.
So without internal effects it would take a while.

Internal effects can mean three things:
-Interruption of the oil production,
-total standstill in Tehran (general strike) or
-people trying to convert all their rial to foreign currency

M2 (essentially the money that could be converted to foreign currency, not net wealth, but money readily accessible) was 115bn in 2007 (CIA factbook) and seemingly 174bn in April 2008 (source central bank). It should be even higher now, that's why there is so much and rising inflation. The underlying reason is the budget deficit of 50bn a year.
So my estimate for M2 right now is 230bn.

If you want to bring the 300 days down to 150, you would need to incite the people to exchange the equivalent of 30bn US$ from rial to foreign currency. 30bn of the 230bn there are. But most of those 230bn are probably in the hands of state enterprises and state agencies. So we are talking about a very large part of the money of all the people and private enterprises. This would be beyond idealism. The good news is: if they convert to foreign currency, they profit - absolutely risk-free, even if Ahmadi survives, even if Green fails. And if real trouble breaks out, then they just saved their life's savings.

The real thing would be a combination of these things. If oil production gets interrupted for one month, that might cost the central bank 4-5bn US$ in foreign currency, while at the same time hitting the internal budget deficit.

Most of these numbers are estimates. If Ashkan wants to discuss them in detail, I'm all ears.

Sidenote:
They may spend up to 1,2bn a day on basiji, but that is paid in rials and truly is nothing but colored paper. It feeds inflation, but if people don't react to that inflation by exchanging currencies, the government will not be hurt at all.

Thanks Machi and sp4rrowh4wk for an enlarging and informative exchange.

That's what I thought you meant. Just checking. Thank you.

I had suspected that the tactical ability of the opposition had improved over the weeks. But I am happy to hear from you that training and morale is exceptional.

A lot is riding on the oil rigs, it seems. Some folks might be wondering how to express their appreciation for all that foreign capital pouring in to develop that oil. A flock of red/white/n'green balloons floating over the oil rig horizon with sparklers in the night sky maybe? The sparklers are a bit risky, though. Afterall accidents do happen. One could burst and its sparkler plummet onto all that ignitable oil. Nobody would want something like to happen. No no no, Jack.

I've been thinking about pylons again. I am assuming that oil rigs and plants must require some big voltage. But in any case, a lot of energy. Reckon that there must be pylons or something big carrying the current in. One thing I have noticed about pylons over here is that the land is cleared for quite a distance around them. That must be to keep any possible forest fires away from the steel struts.

thank you very much for the very detailed reply, this is exactly what i needed in order to get a perspective of the possibilities of a forced economic collapse. if the end game is determined by the success or failure of the IRG's arms race into a nuclear device, and your estimation of a minimum time of 6 months is correct, then this is all to our advantage from an economic perspective.

why? well, because it theoretically takes 1-2 days to cripple the entire economy; that is if a significant amount of people follow the basic procedures simultaneously during these 1-2 days mentioned. i need to do calculations and also ask for some assistance from certain professors in order to give the exact number of people in Iran who need to participate in these bank runs, but it definitely isn't the entire population that needs to be involved, actually far from, which is also to our advantage.


so how is this done? simply put, every citizen has to go to their bank where they have deposits, and withdraw their deposits in cash. after a certain number of withdrawals the bank will default/bankrupt, because the amount of existing physical cash is just a fraction of the money in digital bank accounts on the banks' computers. in other words, after a small percentage of the bank's customers have withdrawn their deposits in cash, the bank will run out of actual cash.

when more people are asking for cash the bank can not give them any, so the only thing they can offer is to transfer the money to another bank, so the customer can withdraw their cash there. when this happens the bank will run out of assets in their accounts, thus being unable to pay businesses who need loans for their investments. this will result in a massive chain effect that puts the entire economy in an abrupt halt.

there are two problems here which need to be addressed:

1. in order for this strategy to work the bank run must occur in an organized fashion, and everybody who are willing to participate must do this within 2-4 days. if not, the government will make mass withdrawals illegal and have everybody who attempts to withdraw their deposits persecuted, harmed physically, and/or prosecuted as they will recognize that this is a form of protest.

2. usually when a bank run occurs the government comes in with their central bank and prints more money and give it to the private bank, so the bank can operate in order to keep lending money to businesses and allow any other customer to withdraw their deposits in cash. this will over time result in massive hyperinflation however, which will harm everybody in the country if the regime still manages to retain its power over the course of 1-2 years or more.

all of what i explained is still a very simplified approximation. i need to ask some higher up experts about all the small details and every complication that can occur, as the chain reaction involves an immense number of parameters, and we want to eliminate any possible negative consequences.

since this kind of action is easy to do practically and every adult can be involved basically regardless of age and physical ability, it's valuable to know if the organization of the people for an action like this is possible and look further into it.

Ahmad-Reza Radan, Kahrizak, Yadollah Javani, Esmail Ahmadi-Moqadam, Khamenei

Khamenei is directly responsible for the tortures at Kahrizak since many years. Mr. Ahmad-Reza Radan, a notorious torturer and close to Khamenei, was personnaly appointed in 2005 as Chief of Tehran Police (including the Basij) and intervenes directly in the Kahrizak prison tortures as shown in these series of articles below (lins to sources). Mr. Yadolan, who asked for the arrest of Mousavi, Khatami, is a notorious advocate of torture as means of extracting confessions. The team headed by Khamenei: Saeed Emami (judiciary, show-trials), Qorban-Ali Dori-Najafabadi (parliament), Yadollah Javani (Head political bureau Iranian Revolutionary Guard IRGC), Esmail Ahmadi-Moghaddam (senior IRGC commander and chief of the Basij militia), Gholam-Hossein Mohseni Eje'i (ex head Ministry of Intelligence) are the ones that are involved in the present human rights abuse or arrested Iranian civilians. Mr. Moudj E-sabz was commanded directly by Mr. Ahmad-Reza Radan (Deputy Chief Islamic Republic Police), who was present two, three times per week in the torture sessions at the Kahrizak prison. Please read.

Amazing! Chief Prosecutor "discover" torture in Iran! - iReport.com
Article from the NYTimes. Speaking to reporters at a news conference, Qorban-Ali Dori-Najafabadi, the prosecutor general, said “mistakes” had led to a few “painful accidents which cannot be defended, and those who were involved should be punished.” Such mistakes, he said, included “the Kahrizak incident,” a reference to the deaths of several detainees at Kahrizak detention center in southwestern Tehran. His comments came after weeks of reports that detainees had been tortured, and they fell somewhere between an admission and an accusation, as most of the arrests were made by the Revolutionary Guards and the paramilitary Basij militia, groups that are not under the control of the judiciary. “Maybe there were cases of torture in the early days after the election,” he was quoted as saying, “but we are willing to follow up any complaints or irregularities that have taken place.”

Dear Mr. Qorban-Ali Dori-Najafabadi: please read the statement of one Iranian citizen that escaped death in the hands of Ahmad-Reza Radan:

quote
Let’s all say a prayer for them. In a press release on Thursday the Islamic Republic Police confirms that serious violations took place at Kahrizak prison. Just read the Iran Human Rights Group report on Kahrizak. After I stop crying I’ll translate & post in a series of tweets. Kahrizak operated under direct supervision of Ahmad-Reza Radan Deputy Chief of the IR police.

This prison also known as “the death camp” held political prisoners as well as criminals. Also sent there were women who were arrested for non-proper Islamic attire.The fate of many sent there is still unknown (in December 2008, 18 women left to die of heat and thirst ina metal container, read here Wafe–Women.org - Women's Weekly Bulletin here another report Revolutionary Flowerpot Society: A Horrific Report from Camp Kahrizak ). Section where prisoners kept was below ground level. Also free standing metal bldgs were used cells.

The number of people killed in this prison before the current events is not known ( this information is already being traced by International Justice, that is already collecting information about the big fish as Ahmad-Reza Radan, Mohseni Eje, Mourtazavi and other. This proccess cannot be stopped now). Most of the dead were killed by blunt force to the head. Officials tried to say it was meningitis. The number of prisoners killed who were kept in the metal buildings are still unknown.

Prisoners entering this facility had to go thru a tunnel, where they were beaten with batons & metal cables. 40-60 people were kept in those small cells, which made it standing-room-only. The prisoners were beaten by the guards numerous times 24/7. Some of the prisoners would be taken to separate areas for torture.

Torture methods: rape (of men and women), rape with batons & other foreign objects, burning of the genitalia & rectum área. Ahmad-Reza Radan & his deputy Amerian, head of the guards Haghi & Keshmirie went to Kahrizak every Thursday by helicopter. It is said that toward the end they were visiting 2-3 times a week for torture sessions.

A survivor says Ahmad-Reza Radan would tell them to bark like a dog, bray like a donkey as they were beaten. 3 days a week, the warden & 8 guards would come there to beat up the prisoners. The guards wore full face masks & dark sunglasses, so they couldn’t be identified (no worries hiding your faces, we have the faces and acts of your bosses, they will indicate your names in due time). Two of the guards named Sayed Mousavi & Sayed Houseini were notorious for torturing & causing deaths of the prisoners.

Khamenei ordered the closure of this facility due to sub-standard conditions. It is said that Rooh-Alamini died in this prison from being tortured. He was hung from ceiling by his feet & bled to death from a large gash on his head.. Official cause of death Menengitis. Per Rooh-Alamini’s father, his son had shattered teeth & a broken jaw when he saw the body at the morgue. ———–

Brigadier General Yadollah Javani IRGC Head of Political Bureau
Propaganda director of IRGC In the aftermath of the post-election unrest, Javani warned the public that there was no room for dissent. “Today, no one is impartial,” he said, according to the official news agency IRNA.”the eye of the mischief was damaged, but it was not blinded. Now the eye of the mischief must be blinded completely and gouged out,” he concluded. He has been a big advocate of airing opposition confessions obtained through torture in order to discredit the entire movement.

Esmail Ahmadi-Moghaddam
General Ahmadi Moghadam is the commander in Tehran of the Basij, a conservative volunteer militia that is a branch of the Revolutionary Guards and that has taken part in a crackdown against pro-democracy protests. He is also a senior commander in the Revolutionary Guards. He is Ahmadinejad’s brother in law. Brigadier General of Revolutionary Guard, Esmail Ahmadi Moghadam was born in 1961.
Chief Police Orders Torture and arrests those who executed his orders! - iReport.com

Ahmad-Reza Radan Brigadier
General – Acting Police Chief of Tehran Radan is a veteran Revolutionary Guard (IRGC) commander from the Iran-Iraq war of the 80’s. Before his current role in Tehrah, he was the head of the police in the north-eastern province of Khorasan. He is to the right of the right-wing conservatives. Radan has been the enforcer of Taliban style laws targeting unIslamic hair and clothing in Tehran. Under his command, acts of on-camera humiliation, public beating and hangings were reinstated as punishment. Radan is very close to Ali-Khamenei, this later praised him and named him to the present office. Thousands of young “criminals” were detained for offending Islamic morals. One such “criminal” was Meysam Lotfi, a university student who was detained, tortured and eventually executed by hanging in 2007.
Human Rigths Abuser Gallery - iReport.com

Saeed Mourtazavi
Prosecutor General of the Islamic Revolutionary Court. Saeed Mourtazavi is conducting the present show-trial of 100 protesters arrested after the June 2009 elections). The trials are being promoted very quickly, the sentences being handed and the defendants without right to a defense attorney. Saeed Mortazavi is known as the “butcher of the press”. He is responsible for detention, torture and death of unknown number of Iranian citizens and journalists in the early 1990’s. Most notably, he is held responsible for the death of Zahra Kazemi, an Iranian-Canadian photographer who was arrested while taking photographs of the Evin prison, and died in custody in 2003. The Government of Canada continues to claim that not only did Mortazavi order Kazemi’s arrest, but he also supervised her torture and was present when she was killed. Kazemi’s mother, and a military doctor who later sought asylum in Canada, assert that Zahra Kazemi’s body showed signs of brutal rape and torture. The reason for raping gis that under Islamic law no virgin can be executed. They rape them first and then execute them. Please read the Wikipedia page for the full details of Zahra Kazemi’s fate and keep in mind, this is only one well documented case out of unknown number of ordinary people subjected to the same treatment.. Saeed Mourtazavi was the one that conducted the rigged process against Saeed Emami for the killings of Ahmad Khomeini and the Iranian Journalists. They forced Emami to kill himself and forced his wife to admit she was an Israeli agent, here you can see the video. At the end “Judge” Saeed Mourtazavi appears telling Emami’s widow to shut up. [ame=http://www.youtube.com/watch?v=p-TbAl0-9Go&feature=related]YouTube - Emami[/ame]
Human Rigths Abuser Gallery - iReport.com

If we are just providing ideas, and not material support, there is no reason at all for there to be a "network of operatives." And no redundant networks means less people to compromise. As long as it is just ideas and suggestions we are talking about, that can all be presented in places like this, and people in Iran, who are actually going to bleed and die if things go wrong, can pick and choose whichever ideas they like, and modify them as they see fit. They can also form networks locally, that are smaller and have less tendrils, and thus less of a chance of being compromised.

This all applies only if we are just providing ideas. It also works as far as communication goes. Same strategy. We can provide ways for Iranians to communicate with each other and the outside world using the same strategy. Little compromisable direct contact is necessary. Some kind of feedback from Iranians in Iran about what is effective and what is not would help, but at the same time the Iranian government watchers can intercept that feedback and use it to find out what to attack to shut down communication, so feedback can also be a bad thing.

I think one thing in particular that would really help Iranians right now is an explanation of how they can convert their money into non-Iranian money, and still have access to it from inside Iran. Or even if there is no access for a while, an explanation about how they can convert their money without leaving the country would still help. Anyone who can shed some light on that, would be nice.

Ways to protect oneself if civil war breaks out would be nice, too. Shooting war. Or martial law. People need to prepare, in case they decide to arrest Mousavi, Rafsanjani, et. al. and declare martial law. That is a real possibility in the upcoming weeks.

Fantastic review Machiavelli, truly impressive! What you are suggesting is theoretically possible, but there are some implications that I would like to point out.

Do you mean converting it to gold? That is not possible because the currency isn't tied to gold. What you could do is to buy gold however, but that would be a long term investment. Correct me if you didn't mean gold or precious metals by using the term 'hard currency' though, maybe I misunderstood you.

Using the M2% of GDP (purchasing power parity basis), assuming that the M2% is around 0.33 as it has been for the last 16 years, I get it to 270bn, but that is based on the M2% assumption for this year so your estimate might as well be right.

However, this strategy is based on currency exchange. If the government can use violence on its own citizens without inhibition, it can easily enforce a full stop of currency exchange into foreign currencies. I haven't reflected over the possible consequences of such an action though - in terms of beneficial or disadvantageous to the regime in its current state.

Once again, the question is for how long people can exchange currencies until the government makes it temporarily illegal. Therefore I think it's easier to pull of a run on the banks (and/or massive strikes), as it can be done very quickly and its effects will be seen immediately.

There are a number of very good reasons not to discuss the details of operatives and internal organization.

1) When dealing with untrained participants, group action is closely tied to the specific abilities of the individuals in that group. This is because the kind of leadership which occurs is 'situational' and depends on the optical abilities of the individuals in the group at specific times and places in the operation. Therefore, we cannot impose or even suggest operative or organizational strategies without seriously misleading people. Bottom line: the answer is always within the group.

2) Details on operative and organizational strategy give identifying information or at the very least clues as to who is involved on the ground. This increases the risk of discovery for those brave people. No no no, Jack. Let's not do that!

3) There are other reasons, but no need to discuss them here.

No! No redundant networks means it is easier for the regime to shut down an operation. The more redundant networks the safer it is for the people!

This will work if we are only talking about tactics like power outages, traffic jams, and so on.

This will definitely not work if we begin talking about who does what, when, and where.

Yeah, I agree. Those details would be useful.

I am not really clear about who the regime will be having a civil war with. The opposition is, for the most part, unarmed. Will different factions within the regime be warring with each other? In that case, I would think the opposition would just want to get out of the way. You know, buy some mountaineering equipment and go 'climbing' in the mountains for a while.

If people are thinking of camping in the mountains, just be sure to hang your food so the bears don't get at it. Power lines are good for this because the distance between poles or pylons is large and the bears can't claw your food packs down.

Also food packs should not be too... er... heavy or they will break the conductors inside the lines -- and regime industries would have to go without electricity! So, to avoid weighing down the lines too much, do not hang more than one food pack on a line. For instance don't hang five or six food packs and -- whatever you do -- don't have anything heavier than food in your pack.

Yes, I know this. You just reworded what I was saying.

Again, that is exactly what I was saying.

By redundant, I'm talking about involving people in things that have nothing to do with it, like people in other countries via the internet. I wasn't talking about redundancy on the ground, in the area.

Nobody should know who is doing what, when and where except the people doing it, and the people who will be with them doing it. Have you ever heard the term "need to know"? If they don't need to know, it is none of their business. And the only reason anyone needs to know anything would be if they were actually participating in something and the need the information to know what to do. They need to know certain information, so they can to their part. If they don't need the information to do their part, it is none of their business.

At war with themselves? Analyze the situation. These trials are an obvious attempt to drum up the energy to arrest Mousavi, Rafsanjani, et al. They want to do it. They haven't got the momentum to pull it off yet. They don't care if it sets off a civil war. Other factions in the government think they are fucking retarded, and are holding them back from doing it. If they can convince enough key people to go along during and after the trials, they'll do it anyway. Just like they did these trials anyway, even though the opposing factions told them not to. They don't care. They want to arrest them and piss everyone off, so they can declare martial law, kill the elements inside the military that support the other factions, and make the country an open military dictatorship.

The past month or two has shown them beyond a shadow of a doubt that their original plan to do a subversive coup and keep the clerics in place as figure heads isn't going to work. Now, they will push for the implementation of plan B.

You can't see who they are going to go to war with? Can you still not see who they will go to war with? Anyone who is in their fucking way.

Reworded for clarity. I take it we agree then?

OK. Let's analyze the situation. How can the regime be at war with unarmed populations? So if it is civil war that is being discussed, it must involve at least two factions both of whom are armed. The opposition is not armed. Factions within the regime are armed. Therefore any civil war will be within the regime itself.

We have been reading reports of infighting within the regime for some time now.

So it is possible that a civil war will not happen. A massacre might happen.

Agreed.

Calm down. War is between groups who are armed. The opposition is not armed. That there will be an escalation of violence against the opposition I do not doubt, but that is not war.

I think it is best to wait for sp4rrowh4wk to come back and clarify who will be fighting the civil war. It may well be that the opposition has been arming itself. And, then of course, there has been armed opposition to the regime among the so-called 'minorities' for some time.

You didn't read what I wrote, did you? Or you didn't get it. Sorry. I'm not going to keep re-writing the same thing over and over again. I never said anything about unarmed populations. And I'm not going into any more details. Sorry. Nice try. Just read it again until the light bulb comes on. All the details are there.

Have it your way. Happy now?

No. I really need a cigarette.

You basically just agree with me every time, but make it look like you disagree. No offense, it is just annoying me right now. Everything is annoying me right now, though, so don't take it personally.

Reply to Bugs Bunny

No, that wasn't my intention. It was more for the international community and any subsequent action to bring the perpetrators to justice. If no one cares, then so be it. But surely every day Iranians do care that the regime has stolen billions from them that should have gone to government spending, on education, infrastructure, job creation, health care, helping the poor and so on.

I'd be very interested to see how far that goes, or indeed if it can go anywhere at all.

Yes I see your point. I guess I was thinking about people who have experience in running a government. But your point, in effect, says that these Iranians can do it.

As long as that containment doesn't take the form of the current regime's idea of containment.

Hell no! I know there have been a lot of people slowly working from the inside for years.

Duh!! Please don't assume I'm stupid. I'll forgive the sarcastic and uncalled for multiple choice, as long as you actually get my point. Industry employs everyday people... and in particular, the targeted ones - these are large industries employing thousands of people! It's those people who will be most hurt in the process. Sure when the goal is achieved, we're talking freedom for a country. But will it be a country of starving people? It all depends on how long the process takes.

The economy is diving ever faster now. As ridiculous as it may be in this discussion, we can no longer get some every day products from Iran (in my country) because of the current situation. This is very telling. What happens to the people working in those companies when they lose their jobs because the company's revenue is severely curtailed?

The multi-faceted approach required to achieve the current goals for Iran, may still take far too long, and result in a country that will take years to recover. And it's everyday people who will suffer the most.

Anyway, thanks for taking the time to read my original post, and especially for the comments. I'm not too stuck in my thoughts not to acknowledge what others have to say about this discussion. Unlike that fox Rafsanjani, I'm not hedging my bets <grin>, I'm just trying to understand, present a point of view and ask questions. In doing so, I can learn lots more, and hopefully contribute in a very small way.

The wall street journal contains an analysis of the world through the eyes of capitalism. For the most part Murdock has kept his hand off. It is important to realize that there is no politics or morality in capitalism only what is good for company growth and shareholder value.

That being said. Their analysis is spot on and might be the most effective non-violent way to effect the changes that you want. It's not that they came up with this idea; they just made it public and explained what it would do to Iran economically.

Involve the armed forces. Help distribute this video

LiveLeak.com - Awareness of Army Revolutionary Guards in Iran بیداری و آگاهی سپاه و ارتش ایران ییغام برای ارتش و سپاه #iranelection کپی کنید و بدست ارتش و سپاه برسانید

Please watch video then help.
Copy video, make different formats on Livelink. Download, copy distribute widely.

Send link into Iran. Get it on CD into Iran. If you have friends and relatives in the army or revolutionary guards let them have it. Otherwise send the link to as many people as you can. Download and put it up on other video sites you know.

Also on u tube:

The above video

Livelink

LiveLeak.com - Awareness of Army Revolutionary Guards in Iran بیداری و آگاهی سپاه و ارتش ایران

Hard currency is any internationally, electronically in real-time tradeable currency. Insert here Yen, US$,GBP,EUR,etc.
The rial is not a freely tradeable currency. It looks like a market, it feels like a market to amateurs, but ask anyone if he can short it and he will say no.

You can also frame it differently: the Bank Markazi (Central Bank of Iran) has cornered the international market in Iranian rial and is dictating an artificially elevated price. Doing this incurs them daily costs between 180m and 240m US$.
How do we know this? The WSJ is the inofficial mouthpiece of the large New York commercial banks. If they give this estimate, this is the estimate of Goldman Sachs and JP Morgan. How do they know it? Because they are on the other side of those trades and there aren't any other trades in the Iranian rial, that I know of. Definitely not on Currenex.

The problem in this: If the US has a yearly inflation rate near 2% (maybe 4% for the sceptics) and Iran has an inflation rate of 24% in 2008, that is still rising, should the exchange rate between their respective currencies be stable in the medium and long term? You know the answer.

Your estimate is even higher than mine. That implies even higher future inflation and is beneficial for our purposes. I hope, you are right.

This is what this is all about. This action is called default. This is what we want. The publicly shown unwillingness to make good on financial obligations. That's exactly where we want them.

My estimate was: max. 150 days. But the shorter the better.

I am talking about a run on the banks. I am talking about physical foreign currencies stashed far away from every government owned bank. Make a hole in the wall. Something like that.

This government has proven to be reckless bordering the unbelievable. They have an estimated budget deficit of more than 100% of revenue. And if the current troubles intensify, it can still widen substantially.
In the meantime they keep the real commercial lending rate at a negative 15-30% (depending on inflation estimates). Have you ever heard of a negative real commercial lending rate? Just tell this to your professors, they won't believe you. I couldn't. Let alone negative in the double-digits?

Ever heard of coordinated expansionary policies in a galloping inflation environment? They are mad. They will simply fill large trucks with nice colored paper, if there is a bank run. They don't care. They'll give you the money and they'll even smile, because they can borrow at fairy-tale rates and pay back in worthless inflation scrips.

The truth is: this is already hyper-inflation. Goldman took the pleasure to notify us, with their little journalistic slut, the WSJ. But they are spot on. Just check the numbers.

Let me spell this out clearly: if your bank in Iran is mad enough to convert all the money you own into physical foreign currency (EUR,US$,Yen) at today's fairy-tale exchange-rates, then by all means TAKE UP THAT OFFER!!!

It won't last. It can't last. There is gravity after all and the earth was not flat last time I looked.

Whatever you do with the physical international currency is up to you. Hide it well, there might be a war coming.

And tell it to all your friends and enemies, they'll be eternally grateful to you!

They only possible way to do better than that is to take all the money from the bank, that you don't own (all the credit they will give you) at today's fairy-tale commercial lending rate and convert that into physical foreign currency at today's fairy-tale exchange rate as well.

Conversion to foreign currency is best but soon will not be possible. Buying physical items that have intrinsic value (precious metals or rugs) is also economically good for you and possibly as effective an action as trading rials for foreign currency.

Lets now examine the effects of this action if done in a widespread manner.
Please note that I am not an economist and would appreciate if someone who is would go over my line of reasoning.
Assume that the government will cut off your ability to trade rials for foreign currency. This is easy for them to do and enforce. Personally I'm amazed the regime ever allowed trading of currency. Now let's examine the effects of trading rials for items of intrinsic value if this action was pursued by a large number of people. First it would make those items scarce; a limited supply would drive up their price in Iranian rials. Given that there is little demand for Iranian rials in world markets those items could not be obtained from abroad. However trading for items of value wanted by the rest of the world (like rugs) would still happen. Good for you personally in the long run and good for your cause in the short run.

There is a downside which is that destabilization of the rial will lead to hyper inflation like happened during the Weimar Republic in Germany during the 30's. If that is the case necessary goods will either have to be purchased using foreign currency, traded for items of intrinsic value or traded for labor. The utter hell of living through conditions like that is what will convince the rest of the populace that change has to happen TODAY.

Machi, good work!

Can anyone translate this into Farsi: "bankrupt irg: borrow rials, convert to euros"

Thank you.

The next step would be to stage a local bank run in a small video clip and make sure BBC Persia gets his hands on it. (Make sure to anonymize faces)

It's important to remember:
Even if this is over on Friday and Mousavi is President on Monday (will take longer...), inflation will not go away.
But currency intervention will probably end. It's costly and stupid and the only reason is to show some imaginary economic progress.

This is a "show exchange rate", just as fake as the "show trials".

After a new government taking over, the rial would find a new equilibrium and that would be far away from where Ahmadi wants it to be right now.

Hey, you're on a roll today. Fab idea. Who will do it? Video production could be involved. Windows movie maker or Vista movie maker with some borrowed photos and a storyline is simpler.

tweeter @Shariatmadari made at least one amusing video in the past. i will ask him to look here and see if he is interested.

Sorry, mistook/misread it as "hard assets" as a result of my economic fetish for gold savings. Sorry about that, I follow you now.

You are referring to the article by Coker and Taghavi I assume? Very insightful article indeed, however, I do not find the inflation rate of the US to be at 2%. It is difficult to pinpoint the true inflation rate, because the Federal Reserve is extremely secretive with its real figures, but it is beyond doubt at double digits. Whether it is >10% or >20% is hard to say though.

The Fed would like us to believe that the inflation rate is as low as they tell us, but the truth lies in something called hedonics, which the US government implemented in their calculations sometime during the 90's.

They use this system to mask actual increases in prices. If the increase in price of a theoretical product is for example $500 than the year before, they claim that this increase is not an increase because the qualities of the product has increased. These claims of increased quality are however very subjective and not truthful at all. Sometimes they even go as far as claiming that a $500 increase is actually a decrease, because the improved qualities of this theoretical product is so huge, that is exceeds the price increase, thus making it cheaper than it would be. The hard evidence behind these quality increase claims are yet to be seen.

In addition to hedonics, they also distort the inflation rate by not rating house prices alone, but they also include the amount of money one will get by theoretically renting out the house. Since renting prices increase MUCH slower (I think five times slower) than the actual house prices in a housing boom, this will heavily distort the inflation rate.

They also wildly assume that if the price of a certain type of product increases, people will switch to cheaper substitutes of the product. For example, if the price of sneakers increase heavily, people will switch to sandals. This is absurd, yet all of what I mentioned are cornerstones in the new way the US government calculates in order to mask inflation.

These tactics are essential for the US government though, because if people knew about the real inflation rate, the dollar would collapse today instead of its inevitable collapse within these coming 5 years or so.

I guess my question to you is the following: are you hoping that the exchange rate between the rial and the dollar will be so heavily tilted towards one side so that the rial collapses this way? Or that the exchanges to foreign currencies and stashing them away, will lead to an immediate collapse?

The exchange strategy would work if everybody would do this in a very short period of time, but if it is to happen long term, one must also hope for the rial to be even more worthless compared to the dollar than it already is. The problem here though is that I think the dollar is catching up in the game of being worthless itself, much faster than you think. I.e., the dollar will catch up to the rial in the depreciation game.

I do also agree with you that a direct run on the banks (by withdrawing every deposit into liquid cash) will result in a massive print-feast. However I still do not follow you when you say that the game is basically over for the regime once they with the threat of violence disallow exchange into foreign currencies, in other words evidently admitting a default. Sure, people have rejected the use of rials, and the government is out of their backing currencies, but far from the majority of the population will have time to exchange their rials in a short period of time. The majority will still have their rials, and get along with it (in worst case).

I can just see it in front of me, that they enforce laws with violence as punishment against currency exchange, and there will be clashes for days or maybe weeks... but then what? If you can elucidate this issue more, I'd be very glad. Because I agree with you that exchanging into foreign currencies is a safer move, as the people will still own something that has a value, instead of just withdrawing all of their rials as I suggest, but I can not see how the aftermath of this would result in bankruptcy as the majority still are walking around with rials.

Hahah yeah, this is beyond madness, least said!!

Brilliant indeed mate, love the idea!!

Aaaaah, this will be long and geeky...
Sorry.

Sigh, yeah hedonics. I think, it's a permanent 6% to be added to "comparable" numbers from the EU. So, if the CPI is a negative -1,4%, we might have just about 4% of inflation. I know, there is a backlog in the system. Once the last remnants of the deflationary surge have died down, there will be a sudden, mighty increase - if they don't adjust hellishly quickly (which they won't).
But we're not there yet. Especially private households deflating keeps inflation still down. For more precise forecasts check Roubini's regular updates.

I would be astonished to learn rent prices in the US have risen in the last two years. As far as I know, a large number of people lives for free right now in their former own house, to avoid possible damage from vacancy.

That's an integral part of hedonics.

The dollar is, where a few people in Beijing want him to be. They pay the bill, they decide. I'd do it differently, if I were in their feet. But what the heck.

Two scenarios:
1) Inflation rate of 24,3% in 2008 rising steadily comparably to the surge from 2007 to 2008. (maybe 30-32%) Enter the basiji, who get paid fresh money that's in no budget anywhere yet.
Makes a likely inflation rate of 40% in 2009. If the show goes on much longer, more.

2) The bad scenario. A bank-run is successful. The government goes into full print mode to keep the banks afloat.
What's your guess? Where could we end in this scenario? I'd say, it's actually open-ended. My family lost serious money in the Weimar Republic 1923. It took weeks. Life could be so beautiful with that family fortune, they keep telling stories about.

Even in the worst case scenario. Simply no.
If you don't trust the buck though, take Euros. They won't have any meaningful inflation this year. They can be happy to avoid deflation.
Your choice.

The main point is: They will have nothing to show anymore! The GDP looks so nice at this exchange rate, but it's a lie. A lie, they prepared for well in advance. A lie, that was supposed to bring them the election victory.

And once people see through another one of their lies, who will believe them on their other claims?
Most of their supporters were in it for the money. When they find out it's just colored paper, they'll be really pissed.

If they simply outlaw exchange into foreign currency, it's enough to shatter the picture of the perfect economic world they were building. People are suspicious already. A hint like that, where it hurts them directly and personally, will be enough to finally doubt Ahmadi's ability to deliver on his promises.

He's already under siege. Another breach in a very unwelcome moment.
It's his opportunistic supporters, who are likely to be most angry.

Actually it's rational thievery. This is, where it all went. "Islamic" premium priced credits.

Thank you very much for the clarifications Machiavelli!

I took for granted that the money heads in Iran already could see through these temporary buy-outs that furnish the statistics, but I was wrong, and I definitely understand your point of view on this. Your explanation makes a lot of sense, and it has the upside of that things don't need to happen within a couple of days, as people can gradually begin to exchange their rials into foreign currency, until the government puts a stop to it or an actual default occurs - as long as the monetary balloon upheld by the illusions of the money heads is cracked.

Hi Machi and others. Been already tweeting and retweeting the bankrun idea and getting ppl to make a video. Have noticed that some tweets have shown up from others as well. But it sure would help if more ppl from here got on twitter and started sending out the message. You've posted enough small bites of information on this thread to keep ppl busy tweeting for hours.

149 days to go, everyone!

Shorten up your tweets, Bugs, so they are easier to RT, pls.

I'll do the best I can. Thanks for this. Much of my stuff I am rewording from other people's longer posts. Feel free to shorten anything you find of mine. Thank you for RTing.

Hi buds! There is now a truckload of tweets on the bankrun and on getting ppl to make the video.

But they're in English. Can a Farsi speaker get on twitter and start translating the tweets? Thank you. Bugs.

I don't know in any great detail about the content of Mohsen Sazegare's videos (did I even spell his name right?) but I remember reading people tended to follow his advice. So if he hasn't mentioned this already, maybe he should be contacted. I think, if he is convinced this is good policy, he would promote it on his videos. I would e-mail him myself but I am shit when it comes to economics so I wouldn't do a good job of convincing him... Just a suggestion..

I wasn't aware that one of the largest counterfeiters of US currency in the world is the Iranian regime. I have asked the person who told me to give me a link to a source.

bump

I want to give this thread another bump. It is really fascinating. If you are new to this thread, take some time to read Machiavelli's posts on the how to cripple the Iranian economy with a bank run. I recommend you start at post #75.

So to summarize, this is where we are now:

1. Real commercial lending rates are currently negative (-15% or more), because lending rates are significantly lower than inflation.

2. The Iranian government are running 100% budget deficits at least. That figure is probably higher now with the higher cost for suppressing demonstrations, and lower tax receipts as a consequence of the unrest.

3. Iran is spending ~$200 million per day to keep the riyal at a constant exchange rate to the dollar. That is actually more than Iran makes on its oil.

This is utter madness. I find it hard to believe this is actually what is happening, but the sources seem very good.

The main issue now is to get information out inside Iran. Wouldn't it be nice if BBC Persian did a special on the Iranian economy? If they could interview some economists explaining why the things just listed are completely unsustainable? Of course, they would probably want to put on some regime apologists just be fair, but I am sure the Iranian people know who to trust and not trust.

So here is a question. Does BBC Persian have an economics reporter? Perhaps someone with the creds of Machiavelli should approach them with the information laid out in this thread. It is certainly an important story, and the Iranian people deserves to know where things are headed, so if they can just be made to understand what is going on, I am pretty sure they would be interested in doing the story.

Thanks!

Most definitely. All except the part about Rafsanjani. My connections are to bazaari... well not exactly mine, but primarily my husband's. He was one for years. In fact, we have one visiting for a week. Some lively discussion has ensued. Hence my preoccupation with sightseeing and not this forum. So, sorry for the tardy reply.

So what you're saying is that despite Rafsanjani appearing to be such a fox, and everyone currently in our house agreeing, that's not the case? Interesting!

I guess time will tell about this one.

could you define fox? i think of wise and crafty, he out thinks the hounds. i have posted a lot about Raf today and yesterday. maybe those posts will help. thank you very much for your reply.

I'm bumping this thread to the top again. And again.

Well that 'again' didn't bump it at all. Hopefully this does.

Agreed. A vital topic thread.