Two days at Banco Central-My personal story

If you did not take part in the 36% interest rate party thrown by Banco Central this whole week you were not where the action was. The whole nation had its eyes on this great party. The news headlines were dominated by this. I felt good being part of it.

Let me first say that I do not agree with the Central Bank gamble. I still dont understand why they did this. I will double my income for the next six months, but I am sure many others will only get poorer at my expense. But I had to defend my interests. No one else will. This is the survival of the fittest. I cannot worry for the "padres de familia". Anyway, this are the same people who voted Hippo in and will vote for him , or the PRD again. Let them eat crow.

I woke up at 5am for daily exercises to prepare for the party. You had to be physically and mentally fit for this party. I did not drive. I wore clothes fit for a homeless man in N.Y. I took OMSA to Leopoldo Navarro St. to confuse the muggers. No one knew how much I had in my pockets in checks and cash. I stopped by the famous cafeteria across from the police station and had $60 pesos worth of mangu and spaghetti, plus a Rica cereza juice. Then I went to BC door, placed my metal objects to pass the detector and picked up a number...lucky #583!!!! On my first day I was not lucky. They only served until #334. The crowd looked like a Mercado Modelo mess. Except we were all seated, some standing, air-conditioning, coffee and orange juice served by waiters with uniforms. BC staff was selling one certificate per minute. Very fast and furious. I was worried the money was going to run out. My first day they had already sold up to $7.2 billion. I lost close to $25,000 on penalties for cancelling my Bancredito certificate already. But the gamble was worth it. I am a gambler in finances. I figured if I get in, I could recover the losses and more in the 10 days left in the month. I left dissapointed, but with great hopes for the next day. On day two the crowd was smaller but just as maddening. Same routine, except that newcomers without tickets had to get into a waiting list with names. 76 additionals were listed in addition to the 260 with tickets left. At the rate of 1 per minute I figure I would be in by 1PM. I figured wrong, because the lunch hour slowed the rate. I got in at 2PM. My heart was stumping. I saw how smart asses were trying to switch their old 28% certificates for the new ones. They were screwed!!The computer picked it up and they only got the 36% on the excess over 28%. I went to the computer and passed the first test. You had to have a certified check(cheque de gerencia, or certified payable to BC, cedula or passport if foreigner and proof of a savings account to have the interest deposited. The interest is not cumulative. Your money is frozen for the duration...so what??? At 36% they can keep it till the next ice age. Not a fool went for less than 6 months. Who would? Only a nerd. I killed two birds with one stone. I got rid of my Bancredito worries(the new $10.6 billion blackhole) and doubled my income. We all had to pass by two check and document approvals, then to the cashier(another long line) and when you got your receipt for the money you were richer again. Thanks all to the stupidity of the monetary authorities!!!!! It was damn worth it. I beat the system again. The rich got richer, the poor got poorer. F-ck the "padres de familia". Who told them to rally for politicians carrying flags and sh-t!! The whole scene was like "who is who" in DR. I saw celebrities, singers, playboys, millionaires, socialites and even middle class savers with $25,000 pesos mingling together. The Rosarios were there.All the big business names were there. Generals in uniforms would break into the lines and get served first(Where did they get the money?)I even saw an AMET in uniform with a $100,000 check. The average take by BC was about $500,000 with about 1400 people getting certificates. Yesterday I figure the whole $10 billion were gone. They served everyone including the waiting list. The last person waiting outside when I left was Rafa Rosario, who had a sad face. He must have had a problem he could not get in. Some ventured to go out to eat lunch and missed their number called. They lost it all. Others just did not have the will power to be successful and left. Others did not read and arrived with missing documents and uncertified checks. An idiot brought in a personal check!!! Some came in without cedulas. They all lost the gamble. But I am like a Boy Scout. Always prepared. When it comes to money, I gamble with the right tools. Better luck next time to those who missed the great Central Bank Party, the greatest show on earth. This deal will make the earth tremble. This is a whole new ballgame. What will the bank robber lords do now? They can only increase the rates. They tried to take us for fools and lowered the rates when the Baninter money went their way. How sweet is our revenge. Let them sink in their greed. I dont know where this is going, but if I go down, I will go down with the biggies and with the whole country. This is where the buck stops. In the meantime, I kept my dollar accounts and certificates. The dollar is still king.

TW

Criss

Your point is well taken. Just remember that your dollars at lowly Cambridge Savings Bank are depreceating just as fast as my pesos just sitting there earning 1%, while gas, utililities, cars, housing, food, clothing, entertainment, and education is going thru the roof in the good old USA.

At least we can still buy an apartment in Piantini for less than US$100,000. What can you get in Cambridge, Mass for that much?

I will take my chances in this chaos and not be rich in Kankakee, Illinois.

TW

It makes sense on paper...but

Let me say that the figure of $10,000 is not the best example to use. Try using for instance $1,000,000 pesos. If you take the 180 day certificate(90 days was not the maximum), which was taken mostly by the big boys at the end of six months you would end up with $1,183,000 or approx. $30,500 a month calculated on a basis of 360 days(the certificate norm). US$850 dollars a month or $30,500 is still good money in DR, devaluation or not. Some people will be getting monthly sums bigger than their executive salaries in their companies. I will take my $100,000 plus monthly any day. Only senators, congressmen, chief justices, the president, executives at Indotel and top corporate executives earn such figures in DR. But they have to show up to work. I dont. They have to pay payroll taxes. I dont. They have to pay social security. I dont. Some have to run a business and deal with stinky Dominican employees who are a pain in the ass. I dont. I dont have to pay severance pay, vacation, pregnancy pay and bonuses to employees. I just draw an electronic transfer every month free of these inconveniences while I play in my computer.

You have to remember that the peso devaluation affects you more if you depend heavily on imports, or you have to travel abroad to share your living time or to conduct business. If you look for example at real estate in DR, you can still find the same bargains you used to find before. With the same $2,000,000 pesos you bought an apartment a year ago, lets say in Bella Vista, you can pretty much get something similar. Although you see many prices quoted in dollars, most are in pesos and sold by owners who are in dire need of money. Bargains will increase as the number of personal bankruptcies grow. Those who are show offs and buy new expensive cars will pay dearly. But most who do can afford it anyway.

The big gamblers at Banco Central are just as rich in dollars and did not turn in their dollars for certificates. Some did. Most of these people are also increasing their net worth as their real estate increases in value. Their gold, jewelry and other assets are also appreciating. They got nothing or little to lose, but much to gain. These certificates offer quick big returns. When they expire 180 days from now, inflation will be lower than the 36% rate of the certificate(18%). Even if the dollar goes up to 40 to 1, it will only matter if you do not adjust to the Dominican lifestyle.

We have been used to excessive comfort. It is time we adjust to normal living. Instead of having a maid, a gardener and a chauffeur, drive yourself, pave over your garden and start cooking yourself. Sell your house and move to an apartment to share security and other expenses. Houses are a pain in the neck in DR. Stop driving just for the hell of it. Have a purpose to your outings. Dominicans just drive around just to drive. No planning.

I saw people who flew in from New York, Miami and Europe to get these certificates. I dont know what drove them to this. But they must be having one hell of a time in the good old USA and Europe that they want to invest here. Some even slept at Banco Centrals sidewalk. We cannot all be wrong.

If you had the money available for this I am sure you would have been there too.

I rather play this than the lottery or black jack at the Jaragua. At the end of 180 days we will go somewhere else. I had Baninter and Bancredito certificates and got paid very well. I got my money back without problems. BC is the best gamble in town. Thats why they cant keep people away from their doors.

TW

Another interesting side of this

In the business news today and reflected in DR news note that banks are the biggest investors in these certificates and their reasoning seems to be that this is a better business for them than lending to customers. This development throws a dark cloud on our banking system and it begs the question....what are banks for and who needs them? Why dont we all bank at Banco Central?

I can also tell you why news reporters, who were there in masse did not inquire as to the origin of monies from generals and high government officials at the BC certificate party......they were too busy lining up themselves with the money they got from Ramon Baez Figueroa!!!!!

TW