CDs in US$ safe?

[mondongo]

Paul T. and Shadley, good discussion. What we cant forget is that the exchange rate will only affect Paul's lifestyle if it inpacts prices and inflation.More to the point, if Paul's indulgences are made and consumed locally ,with little foreign "parts", then the inflation for that sub-category might not be affected.

The massive trump card in this analysis is how the central bank and government decide to handle this self-admitted crisis. If they decide to print pesos, then you have a situation like argentina. Not only do you get the depreciation, but also you get hyper-inflation. If this happens then there is no place to hide. Everything will increase in price. But as long as you keep your money in short term accounts, then the increased interest rates will somwhat offset the inflation increase.

Take another look at argentina.

inflation:
http://www.latin-focus.com/countries/argentina/argcpi.htm

interest rates:
http://www.latin-focus.com/countries/argentina/arginter.htm

devaluation:
http://www.latin-focus.com/countries/argentina/argexchg.htm

If Bozo The Clown does what is prudent and stops borrowing money and cuts government spending by at least 20%, then there is some hope.

 

[Andy B]

Everyday prices in the DR have ALREADY been affected by the current financial crisis. Those of you who live and do business in the DR (as I do) know this. Those of you who don't live here don't see or experience the changes in everyday life, some as subtle an offhand remark by a merchant that his supplier is raising his price because the price of gasoline went up and now everything costs more to ship across the island. Even local products such as red dirt to mix with concrete have increased. Why? The truck to haul it costs more to operate as diesel fuel prices increase and the men to fill the truck using shovels demand an increase in their wages as their salary will no longer feed their families; and the list goes on. Just cutting back on the luxuries such as rum, cigarettes and imported items isn't enough anymore when the price of staples such as platinos, rice, pork and fish continues to rise. Prices have risen so much in the past two years that Dominican families are having a hard time with spiraling food costs alone. Even in Samana where we have a lot of local vegetable production, their prices have gone up. Again why? EVERYTHING else costs more so the vendors have to raise their prices just to survive. It's all interrelated and to think that only certain segments of the economy will be affected is ludicrous.

Inflation and the declining peso is affecting everything and will continue to do so until brought into check.

 

[Golo100]

You have to learn how to live in DR

And beat the system.....I dont know where you get your information about platano prices. There are platanos from $1 to $5 pesos. It all depends how gullible you are. If you are fat and hungry you got problems! If you keep trim and healthy a $1 platano with eggs any style will do. Even though rice prices have gone up, most people waste a great deal of it overcooking it and turning it into con-con and using more rice than needed.

There are plenty of cheap cooking oils in the market made of soy beans. You dont need corn oil to cook. A platano only takes five minutes to boil ready.

If you stay away from imports as much as you can, inflation is not that much. Even apartments and houses can be bought at special prices. For instance in the range of $2,000,000 to $8,000,000 pesos you have a buyers market like you have never seen.

Of course, the perfect formula is this:

$US dollar income= or > than $Peso income, speculate with your dollars(let them sit as you see the flow, then switch to pesos ,invest your peso capital in certificates at 24% interest, reinvest proportionally to inflation and dollar rate and spend the rest of your money in women.

TW

 

[Andy B]

TW,
I've been here for 6 years and know how to work within the system. My wife has been here 16 years and is known locally as the "iron lady" as she deals just about every every asking price. Although I still pay a little too much on occasion, not much gets by her. We don't pay what the fat, lazy foreigners pay otherwise we would have been broke a long time ago. In addition to our hotel, we also own an internationally recognized restaurant so food prices are close to my wife's heart. She knows how to economize without sacrificing food quality. And by the way, platinos in Samana have doubled in price in 2 years. The small ones used to be 2 for $1rd and now they're $1rd apiece. The nice big ones are $2rd each. Bear in mind that the prices you pay in Santo Domingo are actually less than the prices we pay for just about everything. Due to our remote location, transportation costs, either direct or indirect, figure into everything sold in Samana.

 

[Golo100]

Andy.....

You should be very happy to get your platanos for $1 or even $2 pesos for the real nice ones(Barahoneros) in Samana.

The nice ones in Santo Domingo, unless you buy them at "mercado" prices are over $2. Some as much as $5. But years ago you could have paid $7 to $10 for a platano. I know someone who paid $12 per during Hurricane George.


TW

 

[Andy B]

We buy direct from the producers as much as we can to economize. Every day the local vendors stop by with produce from their trees or garden. Also, the same trucks with vegetables produced in the Cibao that sell to the colmados sell direct to us. However, when we go to the big supermarkets in SD, we are just amazed at the selection and the quality of most foods. You may be paying a little more for some items, but the selection more than makes up for it. I'd gladly pay 3 pesos a platino for having a supermarket like one of those located nearby. As it is we drive to Nagua at least once a month to shop at the "supermarkets" there for some items.