Dollarization seems to be closer than close

[Camachosoft]

We have gold, and maybe some oil, but check this:

A private company has invest more tahn US$10 million dollars on research of oil on dominican republic, they found oil. If the oil is enought to proceed to drill more and be profitable, how will that? the goverment, NO!!. the goverment have NO MONEY and the private company made huge investmen. The govermen will have a little part of that bussines, just like the gold and "the rosario company".

Right now dominica republic dont need a "new peso" dominican republic need ECONOMIC STABILITY. A "new peso" will devaluate like "old peso".

sorry for my english.

peace

 

[gringo in dr]

I'd just like to point out, the US dollar is not going up. In fact the US dollar is loosing value. The US economy is not doing very well right now.

The value of the peso is going down. The peso is loosing value at a much faster rate than the US dollar. This is because the dominican economy is doing so much worse than the US economy.

The reason behind all this? A big part of it is mis-appropriated funds. To say that more simply, some people at the top are lining their pockets. Projects don't get completed, businesses fail. Everyone points fingers at each other. The government takes out more loans. They can't afford to pay the loans and interest, so they take out more loans to cover the payments on the previous ones.

They keep borrowing from Peter to pay Paul, until Peter says enough. Then you have Argentina.

 

[ERICKXSON]

Dollarisation afew months away...........

i'm telling you is coming

 

[mondongo]

gringo in dr, the US economy is performing better than the EU and Japanese economies....but the US$, as you point ou, is still falling against most major currencies...the US$ in fact is a precarious position....where it is getting ready to break down even faster....it better turn around soon

 

[Tony C]

gringo in dr, the US economy is performing better than the EU and Japanese economies....but the US$, as you point ou, is still falling against most major currencies...the US$ in fact is a precarious position....where it is getting ready to break down even faster....it better turn around soon

Don't worry Mondongo.
The Bush economic policies have the US economy well on the way to a strong rebound from the mess Clinton Left.
Now the question is will the DR be in a position to take advantage of the opportunties that will be available with the FTAA?

 

[bob saunders]

And what policies would those be?

 

[Bolt]

The only way the Peso will ever go down again is if the country suddenly finds a new massive gold or oil reserve!

Otherwise the best one can hope for is for it to stabilise at probably around 70 peso's to the dollar.

 

[ERICKXSON]

I doubt it if the current peso remains i see it around 300 before next year ends.

 

[simpson Homer]

The entire problem

Gov. can't take control about them self

How will they take care about economic situation?

Gov, says oil is up and they are raising prices in general
life in Santo Domingo
Oil UP = sugar -> rice -> chicken -> medicine -> tranportation ->
but employees salary less less less less

Salary = rd$3,800 per month

food at work rd$40. * 30 days= rd$1,200

transp. $20. * 30 days = rd$600

rent. un ranchito RD$1,000

breakfast ?

dinner ?

school for the kids ?

barbershop ?

try to keep healthy fo dont spend more

the worse thing is that old sistem of work, people cant have 2 jobs because any of them pay per hour all work are full time.



Earn in pesos spend in US Dollar

US1 = HP300 Hipo pesos

 

[Camachosoft]

In DR all the prices are dollarized... dollar up, and prices go up...

but the SALARY is the only thing its not dollarized.

Dollarization IS already in DR, but its not official

peace

 

[gringo in dr]

I feel like I'm kicking a dead horse here.

The Dollar is not going up.

The peso dropping like a rock.

As the value of the peso drops, it costs more pesos to buy things.

The devaluation of the peso has absolutely nothing to do with the dollar.

 

[simpson Homer]

give news brother

Tell me that the gas and food are going down too.

I' m scared maybe Dollar is going back to got power to go ahead.

 

[gringo in dr]

Lets try this again.

Lets say one gallon of gas costs $1.50 USD.

If the value of the peso is 16 pesos to 1 USD then one gallon of gas will cost 24 pesos.

If the value of the peso is 41 pesos to 1 USD then one gallon of gas will cost 61.5 pesos.

The cost of the one gallon of gas did not change, did not go up. The value of the peso went down. So it costs more pesos to buy the same gallon of gas.

Maybe I should try posting this in spanish.

 

[santobonao]

Esta muy caro el galon de gasolina esta por la nubes , si el dolar baja estonce la gasolina baja tambien.
como cuanto cuesta si el dolar fuera oficial en la republica dominicana.

 

[gringo in dr]

The price of gas in the DR would have nothing to do with the US dollar being the official currency of the DR.

If the price of gas is $1.50 per gallon right now, and the DR did change over to US dollars, the price of gas would still be $1.50 per gallon.

But here is the problem. Right now the peso is around 41 to 1.

So someone that makes 3,800 pesos per month, makes around $92 dollars per month.

To dollarize the DR they would have to figure out the real value of the peso, which I don't think is currently anywhere close to 41 to 1.

Lets say it is really 55 to 1. Then that person making 3,800 pesos per month would be making $69 per month.

Lets hope the ecomonic situation improves here. It appears hipo has done quite a bit of damage.

 

[Camachosoft]

Se?ores POR DIOS!!!

cuando el dolar sube, SUBEN TODOS LOS PRECIOS, MENOS LOS SALARIOS, tenemos 2 a?os en esto... es mejor dolarizar que tener el dolar a 100 x 1. cada vez que el dolar sube, uno gana menos y es por eso porque son monedas diferentes.

when dollar go up, ALL THE PRICES GO UP TOO, BUT NOT THE SALARY, we have 2 years on this... its better dollarize than have the dollar at 100x1 pesos. every time dollar go up, people have a smaller salary, because there are to diferent currencies.

paz - peace

 

[simpson Homer]

Why they dont dollararize

Why they are not going to Dollarize and Keep the Hipo-peso

the salary will be U$2 per day people spend US1. in gas and U$50.cent in food.

then people will realize whats going on!

camacho tell me what do you think

 

[Camachosoft]

Advantages of Dollarization

- Increase in International Trade

- Reduction in the cost of transactions

- Decrease in the Cost of Capital

- Elimination of exchange rate risk

- Increase in domestic and foreign investment

- Stabilization of Price Levels

- Elimination of inorganic issues

- The predictability and credibility of monetary policy

- Encouragement of fiscal discipline

- Prevention of brain drain from the dollarizing economy

-Higher innovation and incidence on economic growth

thats the theory...

 

[Conchman]

Government (whichever one is ruling at the time) will NEVER EVER allow dollarization because it will take away their power to manipulate, and steal from, the economy.

When in trouble, you just print more money. Government doesnt care about inflation, this is obvious. If they did, they would have done real changes to economy like stop paying ghost salaries (in military or other government institutions) or reduce government spending.

 

[MerengueDutchie]

it's not gonna happen or?

I would agree with Conchman, dollarization would take away an important tool for the government to increase the share of the local economy for their clique and thus increase their relative wealth. It would not be in their interest.

However a post by Golo would indicate imminent albeit covert invasion by the US (with tacit aproval from Hipppo, if you believe his statements made in Japan, probably the only way he can remain in power for now), to stop the take over of the country by druglords.

If the US invades dollarization is an option. If dollarization doesn't happen, the US will stop the moneypress to halt inflation. Either of both actions will stop the inflationary effects of printing additional money.

An important side-effect of dollarization could be a one-off jump in prices of imported goods if the real value of the peso at the time of dollarization is much below the artifical rate as upheld by the central bank. This difference will have to be swallowed in one go :hurt:

So I guess it all depends on what the consequences will be of the Pepegate (invasion/no invasion) and who will win the internal powerstruggle. It will be interesting to see what happens next