Dominican Republic: A Failed State?

[Criss Colon]

DR inflation rate at 31% for first 6 months of 2004!!!!

There is at least ONE reason why the DR recovery is sometime in the future!
"Inflation" is ususlly caused by to many "$$$$" chasing to few goods.That is not the case here.Here,the peso is STILL overvalued "vis-a-vi" the major World currencies!Goods cost more,because many are imported aand must be paid for with "Hard Currency" usually US $$$$!
Wages have not been increased in response to the rampant inflation of the last 2 years.In fact,they have felt a downward pressure due to increased un/under employment brought on by the economic disaster of the same time period!More people are available for the few jobs that remain!
Bank failures,and subsequent Government bailouts for the depositers,plus corruption/theft/fraud/and incompetance,combined with the failed infrastucture in the dr(no electricity/water/education/healthcare)have left the economy in a free fall!
Don't expect things to get better,before they get worse!!
We at least have a new President who understands basic economics,Leonel will have to impose drastic measures inorder to turn things around.If the Dominican people cannot,or will not, get on board(something I really doubt!)the dominican economy faces decades of turmoil.The Japanese economy has been in the toilet for more than 10 years!
The dominican economy needs more than the unrealistic optimism of the dominican public to right itself,it needs self-sacrifice and hard work.I'll let others judge weather or not they(the Dominicans) are up to the task!!!

Cris Colon

 

[gringo in dr]

Self-sacrifice is an unknown concept in the DR. Everyone is out for what they can get.

I believe Leonel is smart enough to understand what needs to be done. But I think he is also smart enough to know that will be the hard road and the people will fight him tooth and nail because they do not understand it is in their best interests. Knowing that, will he take the moral high road and end up a hated expresident or will he decide to go with the flow, lead the country further into the black whole and line his pockets? Either way the people will hate him, but one will leave him with large foreign bank accounts.

Which do you think he will choose?

 

[jsizemore]

it can be fixed

My question about the DR is this. In the US once upon a time the Agriculture subsidies were designed as a means to ensure the US had a certain level of domestic production in case of war regardless of profitability.
Could the DR set back and take a look at which products are being imported now. Create tax incentives to allow the domestic production of said items and do thier best to keep the money circulating with in country. I know for this to work it would require the corruption to go a way but I still can not see why the DR with the exception of oil and heavy equipment is not self supportive now. The DR is exporting the raw materials for heavy equipment to Spain for transshipment to Japan to be re imported as a high value added product.
John

 

[gringo in dr]

My question about the DR is this. In the US once upon a time the Agriculture subsidies were designed as a means to ensure the US had a certain level of domestic production in case of war regardless of profitability.
Could the DR set back and take a look at which products are being imported now. Create tax incentives to allow the domestic production of said items and do thier best to keep the money circulating with in country. I know for this to work it would require the corruption to go a way but I still can not see why the DR with the exception of oil and heavy equipment is not self supportive now. The DR is exporting the raw materials for heavy equipment to Spain for transshipment to Japan to be re imported as a high value added product.
John

But the problem is corruption. I remember many months ago, it might have been 1 year, Hippolito had the rice farmers destroy tons of their crop. Hippolito said there was too much rice and by destroying some of the crop they would keep the prices up. A couple of day later, in the paper, I noticed Hippolito made a deal to import rice. He was bringing the imported rice on the market at 1/3 the cost of local rice. I bet there was a nice wire transfer behind the scenes.

You would think there would be public out cry but it passed through the papers without ruffling any feathers. Amazing.

 

[jsizemore]

Gringo that is what hurts the most. As an outsider looking in I see the Dr as a place that I should need to ask for a visa to visit. The resources of the DR are there.
Location, polulation, land, natural resources, and so forth. I hear people talk about the Domincans being lazy. I dont agree with that. I see people that burn the candle at both ends but dont get anywhere for their effort. If corruption could be dealt with then I feel the hard work of the normal Dominican woudl bear fruit.
John

 

[NALs]

There is at least ONE reason why the DR recovery is sometime in the future!
"Inflation" is ususlly caused by to many "$$$$" chasing to few goods.That is not the case here.Here,the peso is STILL overvalued "vis-a-vi" the major World currencies!Goods cost more,because many are imported aand must be paid for with "Hard Currency" usually US $$$$!
Wages have not been increased in response to the rampant inflation of the last 2 years.In fact,they have felt a downward pressure due to increased un/under employment brought on by the economic disaster of the same time period!More people are available for the few jobs that remain!
Bank failures,and subsequent Government bailouts for the depositers,plus corruption/theft/fraud/and incompetance,combined with the failed infrastucture in the dr(no electricity/water/education/healthcare)have left the economy in a free fall!
Don't expect things to get better,before they get worse!!
We at least have a new President who understands basic economics,Leonel will have to impose drastic measures inorder to turn things around.If the Dominican people cannot,or will not, get on board(something I really doubt!)the dominican economy faces decades of turmoil.The Japanese economy has been in the toilet for more than 10 years!
The dominican economy needs more than the unrealistic optimism of the dominican public to right itself,it needs self-sacrifice and hard work.I'll let others judge weather or not they(the Dominicans) are up to the task!!!

Cris Colon

Also, keep in mind that smaller economies swing from good to bad and vice versa much quicker than larger economies. It would take more "energy" to turn the Japanese economy around (aging population starting to die off, hardly any immigration, people just want to keep their money and not spend-hence the deflation, etc). Whereas the DR economy would need not even a third of the "energy" that will need to be used in Japan to turn around the economy. Also, self-sacrifice and hard work is very evident in the DR, afterall, that guy that polished your shoes in Plaza Colon is not doing that out of his own will or likeness and that guy that made a home from cardboard and sticks is not something most people (I will include yourself in this) are willing to do. In fact, I would think that if Mr. Colon was in the position of some of those Dominicans living in Capotillo, he would have been part of those who try to flee in yolas than actually build a home out of cardboard, etc. Most foreigners are in the DR because they feel their lives are easier there, whether that impression comes from less stress or lower cost of living, the truth is that there is something better and easier about the DR than where all of you guys come from, hence you guys live in the DR.

If life in the DR would have been as hard on you guys as it is on most Dominicans, you guys would not have been living in the DR, which leads me to believe that if that is the case, whether many of you guys are as hardworking as many of you claim, considering that you guys are taking the road of least resistence to live the rest of yourlife, that road being the DR. I won't believe for a second that every expats life is worst in the DR than it was in their land, because you guys could just pick up your things and leave, but you are not doing that, so obviously there is something easier about living in the DR than in your previous country. So, I don't think there is a lack of hard work.

The DR economy is already turning around. This year we are going to end with zero growth, that means the economy is actually starting to grow because last year the economy shrank by -1%. If things are going to get worst, the economy should finish this year by shrinking by another -2% or -3%, but no that doesn't seem to be the case. The economy is expected and appears to be ending this year with a 0% growth, better than last years' -1% and its expected that the end of 2005 will bring growth by 1% or 2%.

THE DR HAS REACHED ROCK BOTTOM ALREADY, THIS IS AS BAD AS IT WILL GET DURING THIS CRISIS. THINGS ARE STARTING TO TURN AROUND. THERE ARE SOME DARK CLOUDS LINGERING, BUT THE SUNSHINE IS NOT FAR BEHIND.

 

[gringo in dr]

Hard working and self sacrifice do not have the same meaning.

Self sacrifice giving up what you have to help the whole. Working hard and building yourself a house is one thing. It is quite another to work hard to build a house and then give it away to a family that is in need.

To start the recovery process, everyone will have to do with less than they have now.

The recovery process has not even begun yet. There is a long way to go before we hit rock bottom.

Just take a look at some of the numbers. They are trying to get their hands on $100 million. They owe more than 4 times that amount just to the power generators. They already have a payment for $27 million to the IMF just days from now. Where is that money going to come from? They have already missed payments to the paris club and do not have a current plan on how to pay them. The public hospitals are all but closed.

With all that, they are still playing around with manipulating the exchange rate of the peso to try and get the IMF money flowing again. Just wait until the public finds out the "real" value of the peso. Of course that will land on poor Leonel's head.

Nalowhs, don't take this the wrong way. I'm not talking bad about the DR nor it's people. Personally I love the DR and the people here (well most of them . But unless Bill Gates decides he want's to make a donation, I don't see any quick road to recovery. It's going to take time and self sacrifice on the part of society that is not used to giving up anything.

 

[Texas Bill]

I think it's a matter of the government's habit of "robbing Peter to pay Paul" that has caused a lot of the problems. That, and the massive overspending of public resources without regard to how much was being spent. Coupled with the attitude that they could always go to the World Bank, the IMF, and others for the funds needed. just a matter if gross financial irresponsibility on the part of the Legislative bodies and the Administration.

Texas Bill

 

[ltsnyder]

I think most countries need a constitutional amendment that basicly says . . .

if government deficit spending increases over a specific % from the previous budget, then a referendum must be held with 50% approval. When you allow deficit spending in a governmant, you basicly allow them to steal money the government, the nation, the people, don't have and can't pay back. When Hippolito decided to underwrite all accounts no matter what size in the banking scandle, he spent money the DOminican People could not pay back in 10 years, let alone 20. One man , one moment 2.5 billion US dollars in underwriting, I'm sure he needed approval by members of the government to pass the spending, but what they spent in that moment (in amount of money) is mind bending for such a small nation.

-Lee

 

[Texas Bill]

Lee

I'm not disagreeing with you in principal, but I truly don't think such would work the way it was intended.
To begin with, you have a clientist system of government administration coupled with a Populist/Socialist leaning political philosophy. It would end up with a yearly referendum for deficit spending on infrastructure items which would be touted as essential to the well-being of the general population. And the people, not understanding the impact of continuous deficit spending, would approve these projects because they are beneficial to the country as a whole.
I'm afraid the country would end up in the same basket regardless.
Then you have those occasions where there are several natural disasters (floods, hurricanes, earthquakes, etc.) wich would require even more deficit spending to offset their impact.
In addition, to depend on referendum for fiscal control defeats the purpose of a democratically elected Legislature and Administration.
Referendum wouldn't solve the problem, in my opinion, for the reasons stated above.

Texas Bill

 

[Criss Colon]

Nalowls,your optimism is typical of a Dominican!

Thing are NOT about to get beter! Inflation is at 31% so far this year! The DR will soon begin to default of it's international debt! The DR's bond ratings are going down,not up!
Living in a box is not an example of "Self-Sacrifice,it is an example of "lazyness",and poor planning.Dominicans have this wonderful trait of no matter how far they have fallen,they are still optimistic about tomorrow!No other group of people in this World would have put up with the $hit that you have for the last 500 years! I have lived here fo 9 years.There has never been a stable source of energy.Your rates are the highest in the world! The stories in the press have all been "Variations On A Theme" since I have been here."Things are going to get better!"Guess what,they have gotten worse,much worse.It used to be cheap to live here(once you bought your house,furniture,and car!) it no longer is cheap to live here!
Those who don't have a source of "Dollars" have had to leave.Only thing "cheap" here now is human flesh!
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[Texas Bill]

One of the most offensive things I have noticed about the Dominican Canned Food industry is that they fill a 16oz can of beans with 9 oz of beans and the rest is water. At the same time they charge around RD$20 for that can of audultrated mixture. Beans (the dried variety), cost about RD$25/lb at the market. My personal opinion is that the canners are really gouging the public by shorting them to maximize their profit margin.

Are not the farms owned and operated by the canners? Surely, they are able to buy/grow those same beans at around 8-10 pesos/lb.

Can someone enlighten me on the subject?

I realize that Dominicans like their beans soupy to pour over their rice, but wouldn't it be better and cheaper to buy dried beans for home consumption and forego the purchase (at almost 3x the cost) of the canned variety?

Texas Bill

 

[ltsnyder]

A shot inthe dark for this one . . .

One of the most offensive things I have noticed about the Dominican Canned Food industry is that they fill a 16oz can of beans with 9 oz of beans and the rest is water. At the same time they charge around RD$20 for that can of audultrated mixture. Beans (the dried variety), cost about RD$25/lb at the market. My personal opinion is that the canners are really gouging the public by shorting them to maximize their profit margin.

Are not the farms owned and operated by the canners? Surely, they are able to buy/grow those same beans at around 8-10 pesos/lb.

Can someone enlighten me on the subject?

I realize that Dominicans like their beans soupy to pour over their rice, but wouldn't it be better and cheaper to buy dried beans for home consumption and forego the purchase (at almost 3x the cost) of the canned variety?

Texas Bill

The families I know do cook thier own beans, but it is a lengthy process and works best for a family with a regiment. First you need the carbon, then you need to start the stewingof the beans 1 -2 hours before the meal, so you need some one around thehouse, they don't sit and watch em, but justin case you need to be around. I guess if your single or in the center of town , canned beans might be the answer. For those who use propane, I don't think any one likes the price of propane, and also , becuse it is a long process, stewing of beans is done outside. Only a man would think a woman would stay in a house and stew beans on a stove, youhave any idea how unbearably hot the house wouldbe after an hour of "stewing". The beans would not be the only thing "stewing" when you got home.

-Lee

 

[gringo in dr]

The families I know do cook thier own beans, but it is a lengthy process and works best for a family with a regiment. First you need the carbon, then you need to start the stewingof the beans 1 -2 hours before the meal, so you need some one around thehouse, they don't sit and watch em, but justin case you need to be around. I guess if your single or in the center of town , canned beans might be the answer. For those who use propane, I don't think any one likes the price of propane, and also , becuse it is a long process, stewing of beans is done outside. Only a man would think a woman would stay in a house and stew beans on a stove, youhave any idea how unbearably hot the house wouldbe after an hour of "stewing". The beans would not be the only thing "stewing" when you got home.

-Lee

Only a man?

The beans are cooked in my kitchen, on the gas stove by a woman. My house is hardly unbearably hot. Just leave the windows open.

 

[jsizemore]

Beans aint hard

Cooking dry beans requires boiling for one minute turning off the heat and letting them sit for an hour and then to simmer about twenty minutes.
Not that much work.
.
John.

 

[ltsnyder]

Ok, Ok, I didn't claim to be an expert, then please answer TBills question . . .

Why do some choose the more expensive canned beans? I still stand by my hot kitchen statement, it applies for many. One of the families I know, the wife particularly mentionend this issue. She didn't have a well vetilated kitchen.

-Lee

 

[Fred]

I have to agree with Chriss

I have to agree with Chriss, Dominicans will never take responsibility for their own actions.

Blaming the Americans is complete nonsense. People forget that Americans can go to Puerto Rico(which is a domestic flight) and many other islands in the Carribean.

Plus, they can go to Florida, and other US states. What kills the Dominican tourisim for most Americans is that when you enter or leave the US there are no departure taxes. In the Dominican Republic just to enter you have to pay $10 US( if not more now) then another $20US to leave.

Goverment greed and corrpution will eventually put a severe damper on the tourist industry. Its their own fault.

 

[KrackedKris]

What is it?

Why do some choose the more expensive canned beans? I still stand by my hot kitchen statement, it applies for many. One of the families I know, the wife particularly mentionend this issue. She didn't have a well vetilated kitchen.

-Lee

All in all, it doesn't amount to a hill of beans