Recent NY Time's article "Dominican Republic on Edge of a Default"

Hooray Formasano!! New York Times!! Well done

I think that board subscribers who report information from such reputable, unbiased, & foreign sources as the 'New York Times' [only 1 example of several] deserve an occasional word of commendation. Many of the postings are merely gossip, chatterings, [at times] attacks, & speculation, sometimes well informed. But, . . The New York Times. Well done, Formasano! Please give us more. Thank you.

TiberiusMineola said:

I think that board subscribers who report information from such reputable, unbiased, & foreign sources as the 'New York Times' [only 1 example of several] deserve an occasional word of commendation. Many of the postings are merely gossip, chatterings, [at times] attacks, & speculation, sometimes well informed. But, . . The New York Times. Well done, Formasano! Please give us more. Thank you.

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Don't praise too hard, remember The New York Times was under much scrutny lately for creating certain stories! There was misleading information in many articles carried by the NY Times lately.

I'm not disqualifying this article on the DR in the NY Times, because it was a good article, though pessimistic. They never wrote anything when we rated #1 in economic growth back in the 1990s, but now since all hell has broken lose they write more than something about it. Again, it was a great report, just that it would have been better if they would also cover the positives of this country as well, and that goes to all media companies, not just NY Times.

But, like I said before, despite this article being quite good, don't praise too hard. Even the "best" media sources have fallen under the umbrella of shame in recent years.

Don't believe everything you read!

Sometimes the "Chatterings" of those of us who have lived,worked,and raised families here for "Decades",are more accurate than the "Times"!
Example: They say that the cost of basic foods "nearly" doubling over the last year,well,they have "More" than doubled over the last year!! CCCCCCCCCCCC

Reprinted in the International Herald Tribune

at http://www.iht.com/articles/532880.html

The most chilling line from Standard & Poors: "We think a default is a lot more likely than not at this point."

For those of you economically inclined, what would a default provoke?

A bailout

anonymous1960 said:

For those of you economically inclined, what would a default provoke?

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I'm not completely versed in economics, but I know a little bit. Argentina once had a thriving economy. They thought they were rich, but failed to pay back their loans. Completely over-extended on credit as an emerging market, speculating on future riches. Along with that came a certain arrogance in South America, as they valued their peso 1-to-1 with the USD.

As the worldwide recession took hold in 2000 & 2001, emerging markets never emerged, completely drying up. In late 2001, Argentina defaulted on over $140+ billion in loans owed to the IMF/World Bank and all other creditors. Basically, they now have very bad credit. Their peso devalued at one point to 5 Argentina pesos to $1 USD.

Sounds okay, but think of it like this AND THIS ONLY A SUPPOSITION TO MAKE A POINT. Last year, the DR peso was approx. RD$16-17 to $1USD. Imagine if it went to RD$80-85 to $1 USD.

You get a little bit of an idea of how much pain their economy was in. It is now back to 3.5 pesos to $1 USD. But they are still struggling trying to give anyone confidence that they have a sound plan for recovery in place.

Here are some links to get comfortable with this, as it appears that la RD is on the brink of such. Hope this helped a bit.

http://www.swlearning.com/economics/econ_news/argentina_shall_0203.html
http://www.businessweek.com/magazine/content/01_44/b3755149.htm
http://news.bbc.co.uk/1/hi/business/1726265.stm
http://www.iht.com/articles/532970.html - for the story on RD

toneloc24,
An excellent explanation. You are too modest, you know more than a "little bit"!

The problem is not IMO to default or not, but what the government would do in case of a default.

If the government decided not to pay the debt now, but at the same time took structural measures to cut botella-type government spending, everybody would say this is sound management.

The problem is that is is unlikely to happen.

On the banks' side, I don't know if in the US exist the "abusive support" concept. In France, if a bank keeps lending money to a commercial borrower when obviously he will be unable to repay, the loan is "abusive".

The "default" would take nobody by surprise.

Barnab?

The problem is not IMO to default or not, but what the government would do in case of a default.

If the government decided not to pay the debt now, but at the same time took structural measures to cut botella-type government spending, everybody would say this is sound management.

The problem is that is is unlikely to happen.

On the banks' side, I don't know if in the US exist the "abusive support" concept. In France, if a bank keeps lending money to a commercial borrower when obviously he will be unable to repay, the loan is "abusive".

The "default" would take nobody by surprise.

Barnab?