Securities Firms and Argentina, any evidence something similar happened in DR?

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DCfred

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Jun 19, 2003
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I did not notice that you had posted the same Wash Article before I did, sorry. The article raises an interesting premise. I think is obvious now to everyone that the Dominican Republic was going through its own economic bubble and now everyone has to adjust to the correction that is taking place. As the article says, governments make the worst mistakes when there is too much liquidity in the system. I think the only thing that is certain is that a very painful adjustment will take place: people who were middle class will find themselves poor now and the poor, well now they will be dirt poor. However from all this economic destruction some good can come about, including consolidation of inefficient industries and the reduction of public expenditures.
 
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ltsnyder

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Jun 4, 2003
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Well . . . .

I don't see much good coming from an economic collapse. I think the DR goverment has grown too fast, and I do feel that Baniter was putting the economy on steroids a little while the theives put thier (stolen) money back into the economy and people spent more seeing they had such a sure thing "solid like a baniter" saved away at the bank. The DR collapse is hurting a lot of people badly because most mom and pop DR businesses made little more than it costs to pay the electric and telephone, now with this collapse a lot of small businesses are passing below the pay electic and telephone threash-hold. This may have a profound effect on the lifestyle/(quality of life) of many in the DR.

But after reading the Argentina article I think it is obvious that things in Argentina got a hell of a lot worse than anything that has yet happened in the DR. That might be a good thing, or a reminder of how bad things could get.

-Lee
 
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Porfio_Rubirosa

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Apr 26, 2002
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ltsnyder said:
Seems like securities firms had two hands in the cookie jar when it came to Argentina ... Was the Baniter collapse a complete suprise for all? Or is there evidence that some moved thier money/investments early?

-Lee
Click to expand...

I've actually posted this very conclusion before: That while readers of DR1 could for months see the train wreck coming, the investment houses continued to publish glowing reports about the DR, all while more and more sovereign debt was being issued. And I believe it was CreditSuisse/First Boston that was the investment bank for the sovereign bonds (what a suprise!).

So the answer to your question is, yes, some people got out on time. But it was NOT the people who read what Standard and Poors or Moody's had to say. Rather, it was the people who live in the DR, have connections to know which fruit is ripe and which fruit stinks, and stay tuned to good sources like DR1.

My question is whether this conduct by investment houses and ratings services is even considered scandalous any more (the ratings services like S&P and Moody are paid "consulting fees" by parties pushing their bonds)? We all know they're full of conflicts of interest. Isn't it just caveat emptor these days?
 
Keith R

Keith R

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Jan 1, 2002
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DCfred said:
I think the only thing that is certain is that a very painful adjustment will take place: people who were middle class will find themselves poor now and the poor, well now they will be dirt poor.
Click to expand...
Fred,
As my relatives kept saying during my recent trip to the DR, with a bittersweet laugh, "What middle class??? Hipolito has wiped it out!"
Regards,
Keith
 
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