Holy shizznit...dollar droping like a rock

[Argo]

That's the problem with a country that depends on others countries industries rather than our own.

That is why I'm against free trade and more for protectionism. That way, Dominican industries would flourish and we become less dependent on foreigners for our own survival!

II have read many of your posts and it appears you are really for an isolationistic (Is that a word?) economy.

Let me ask this: Assuming your idea bears merit (And I am conceding that argument as I am not an economist), exactly what have you done politically, investment, or through activism to promote this?

Please, please do not respond with rhetoric, spin or "I can't tell you or I will have to kill you," just a few tangible efforts you have made so that other like minded individuals might follow

A>

 

[mk-ultra]

yes foreign investment is good for the country. yes a hotel hear and a hotel there is good. provides work, etc... but the DR is much more than just the tourist beach towns. Ok you build a hotel in punta cana, but how about the people in moca, la vega, san cristobal, etc... there is much more to the dominican economy and infrastructure than the tourist towns and the foreigners who live and invest in them. again, so much of this sounds like good old american capitalism.

some here say they will no longer invest because the peso is now in its 20's. is that to say they wouldn't have invested a few years ago when it was in it's teens? is that to say there was no foreign investment then? did the foreign investment only happen when it was reaching 50:1? seriously?

to me the key seems to be stability. as soon as the peso stabilizes, which i'm sure it will, things will normalize. and besides, despite the strenghtening of the peso, the dollar still holds its weight and its still a hell of a lot cheaper to do business there than in the states. come try and open a hotel in nyc and see how many millions it'll run you and how much red tape and beauracracy you'll encounter. people should be happy the DR is still an open economy and welcomes foreigners with open arms and an ice cold presidente.

peace

 

[DominicanScotty]

I feel horrible for you man

I hear a few people sitting on this forum stating that Peso appreciation is good for the economy? Good for the Dominican People? And good for foreign investment?

Jesus, how wrong can you guys be?

Ok, so I want to build a 50 million dollar hotel complex somewhere on the north coast, I am sure you appreciate that this is not something that you wake up one morning and go and do, it takes some time and planning, so twelve months ago I send some guys over who start putting things together, find some land,research and account costs for local building products, workforce, taxes, supervisory expenses. Then I send a team to calculate how much capital I need to employ for the first 12 months of running (salaries, consumables etc) then I go to my investors and give them a DOLLAR amount that we are going to need for the project (less returns from recievables, which would be in dollars in any case)

Now I come to start my project 1st October 2004 and What The Hell I am 80% over budget before I can even start!!!!! OK so no hotel, no US dollars into local economy and NO EMPLOYMENT!!!! Lets go build someplace else!!

So thats good news is it guys?? I dont think so! Of all the places on earth for expats to live and work or invest why would anyone choose here in the DR?? Let me tell you because its CHEAP, take that factor away and all that foreign money is just going to go someplace else!

Ok, so theres my rant, but Iseriously believe that a bad situation has just become worse. Also why did no-one here tell me this was going to happen **** I could have made an easy 200K just converting to pesos at 50, not to mention the interest benefits in the mean time! (thinking particularly about those guys who seem a little quiet now but used to put nice example of how 60% interest actualy gave a negative return in the face of curreny devaluation & that guy who said it was going up again and if we didnt believe him to bet against him!! well I sure as hell wish I had and I bet he does too!)

Nick

Nicky,

This is Scottie...man this is the worse case scenerio for you bro. Whatever these people are talking about that this is good do not understand global economics. Send me an e mail at scottiewad@msn.com so you don't have to blab your biz on this board. I want to know what is going to happen now with your investors. This puts a damper on plans I had put into place. The condos, furniture store and taxi vans I presently own in Puerto Plata, Sosua and Cabarete are secure. However for future investments????

Scottie

 

[DominicanScotty]

Leonel has a big note to pay

This is an interesting thread. I have 2 broad questions:
a. The exchange rate seems to be set 5 or 6 days per week, usually. What person, probably a group, actually sets the exchange rate? It trickles down to us, the retail level w/i a few hours. Exchange houses learn the current rate via the telephone. Who makes the decisions that the peso will trade @ 25 - 35 - 45 today? I'm referring to trading vis-a-vis the US $. I don't think that the Central Bank or the government is involved? Directly, indirectly? If foreigners don't like the [descending] rate they are free to hold on to their [our] US $ for X days or Y weeks. This can be anticipated; a financial law of gravity. Does anyone know the names of the Dominicans actually making these daily decisions? Who? Trnasparent? How does the process work in practice?
b. Volatility: I think that everyone who has lived here for a few years expects the value of the Peso to move up or down 2 - 4 - 6 - 8% per month. Mostly down in the recent past. But, 20 - 30% in a week? In 4 business days. [ie 35 +- to 28 +-]. That's a decline of 20% in 4 business days. There appear to be no financial emergencies nor approaching Dominican miracles on the near or far horizons. Affter ranging from 35 to 40 for 3 - 4 monhts, why 20% in 1 week. Market forces? Manipulation? "Insider trading"? Do I see Kenneth Lay or Martha Stewart lurking in Santiago? Where is Allan Greenspan when Dominicans need him?
Thank you.​

The huge note that Leonel has inherited looms!!!

 

[DominicanScotty]

yes foreign investment is good for the country. yes a hotel hear and a hotel there is good. provides work, etc... but the DR is much more than just the tourist beach towns. Ok you build a hotel in punta cana, but how about the people in moca, la vega, san cristobal, etc... there is much more to the dominican economy and infrastructure than the tourist towns and the foreigners who live and invest in them. again, so much of this sounds like good old american capitalism.

some here say they will no longer invest because the peso is now in its 20's. is that to say they wouldn't have invested a few years ago when it was in it's teens? is that to say there was no foreign investment then? did the foreign investment only happen when it was reaching 50:1? seriously?

to me the key seems to be stability. as soon as the peso stabilizes, which i'm sure it will, things will normalize. and besides, despite the strenghtening of the peso, the dollar still holds its weight and its still a hell of a lot cheaper to do business there than in the states. come try and open a hotel in nyc and see how many millions it'll run you and how much red tape and beauracracy you'll encounter. people should be happy the DR is still an open economy and welcomes foreigners with open arms and an ice cold presidente.

peace

To "stabilize" the peso first one has to understand that they cannot continue to maintain high peso prices against the dollar and must bring their prices down. Now that we understand this good luck trying to explain that to the ones that don't understand. Oh by the way...that President (hopefully it isn't warm) will cost you about $2.14- $2.85 per bottle. If you own a car you will now have to pay a small fortune at the pump; hope it isn't an SUV? Have fun while things are "stabilizing".

 

[DominicanScotty]

i'm not an economist, but isn't a stronger peso against the dollar better for the dominicans and their economy?

Not when the prices stay the way they are. They came down a little but not much! Dominicans, Canadians, Germans, Americans and anyone else that consumes goods must pay more for less. How the heck can that be good?

 

[DominicanScotty]

Yes, in theory...the issue is that once prices go up they don't come down as they should. So now everyone suffers, even those people whose main income are remittances from relatives abroad, who were doing good before.

Like I said before, where is Hippo when you need him?

So you want Hipo back???? You got to be kidding.....you are aren't you?

 

[DominicanScotty]

If you have wealthy dominicans and Gov't officials "timing the market" they could load up on Green Backs at 32 and later sell them at 50, so if you exchange for a cool million you can make a profit of 18 million pesos or 360,000 smack-a-roos.

ps. I never met a third world government that didn't help the rich and screw the poor

Good point indeed! Someone was saying it was good for the Dominican people....which Dominican people???

 

[DominicanScotty]

again, i'm no econimist and infact this is a foreign subject for me, but i know as the peso was getting weaker and made it to around 50:1, the prices went up and the wages remained the same, which put a real hurting on the average dominican earning pesos. was good for the foreigners and tourists with their dollars, but bad for the dominicans. so it seems to me as the peso gets stronger again, prices will eventually go down somewhat and dominicans will be better off.

i know many on this board are foreigners, which is why they prefer hippo and a weaker peso. but isn't that a bit selfish? capitalistic to say the least? not thinking of the greater good for the dominican people? i mean after all, it is the dominican republic, not the american republic.

peace

Why always drag the Americans into everything?

 

[DominicanScotty]

That's the problem with a country that depends on others countries industries rather than our own.

That is why I'm against free trade and more for protectionism. That way, Dominican industries would flourish and we become less dependent on foreigners for our own survival!

With what capital???? Where will Dominican industry get the much needed money to become independent??? *sigh*

 

[NALs]

II have read many of your posts and it appears you are really for an isolationistic (Is that a word?) economy.

I am not isolationistic (btw, its not a word), but I am for protection when the DR needs protection, which is now.

Read "The Report of Manufacture" by Alexander Hamilton. Alexander wrote that back in the 1700s, before he became the tresurer for the newly created United States of America. He is partially responsible for why the US became what it is today, he and Adam Smith. Read the Wealth of Nations written by Adam Smith.

Once you read both, think of this. The US in the beginning basically followed what was said in the Report on Manufacture, which basically said "Protect infant and developing industries from foreign ones" and now the US (after its industry have mature) is following the tip from Wealth of Nations, which basically says "Free Trade".

I want the same to happen in the DR, first lets nourish our industries and support any new ones that pop up and once our industries have mature enough, then lets open up to the world.

Let me ask this: Assuming your idea bears merit (And I am conceding that argument as I am not an economist), exactly what have you done politically, investment, or through activism to promote this?

1. Politically, I have direct access to Mr. Leonel Fernandez and the IMF team.

2. Investment, I have done some serious investments in the DR with many folks (including some expats and tourist) using my goods and services almost on a daily basis.

3. Activism, I'm working on a book I plan to publish by next spring which should bring some insight into Alexander Hamilton's ideas of protecting industry until they mature and how the US followed Alexander advise and became self sufficient enough to become an economic powerhouse. I also am very influential to certain key figures in the DR government, business world, and last year I build up connections with some powerful people in the United States.

I will not give any more specifics, because that would expose my identity and that is not something I want simply based on the fact that I have expressed some of my non-economic ideas on this board which has brought alot of criticism, especially when it comes to the Haitian migration. I am not willing to let my business interest be hurt financially, at least not now.

Since I have responded, I would assume you would say what you have done also, right?

 

[NALs]

So you want Hipo back???? You got to be kidding.....you are aren't you?

Who ever wants Hippo back is a self centered greedy to the bone person.

Right now the DR is going through a very rapid shift from a downward spiral economy to upward moving.

Things are happening extremely fast and as such, the transition will be over fast. Before we know it, we will be flying high onto the trajectory of development and economic growth.

Of course, during the transitions there are always (trust me on this one) people that just start complaining, only to be shut up by their own words and tongue once things start to fall in place.

This is a natural phase of discussing change in DR1 or any other discussion forum for that matter.

 

[DominicanScotty]

The exchange rate has correlated well (this year) with the interest rate paid by Central Bank certificates. These interest rates have fallen from near 60% toward the end of Mejia to about 33.5% today.

What Fernandez has also done is stop issuing new, unbacked Central Bank certificates. Mejia was issuing, on a weekly basis, nearly DR$10 Billion. Fernadez has cut that back significantly. Just today's weekly auction was a mere pittance: DR$0.5Billion. This put a stop (temporarily?) to one of the largest sources of DR$ money supply growth. This in turn, bring the rate back down.

*******

I perused the half year report on the Central Bank website. There were many interesting tidbits....but suffice it to say that Fernandez and the IMF accomplished their goal in arresting the fall of the DR$. The Dominican economy is becoming increasingly indenpendent of the Dominincans in the Dominican Republic. The DR governement revenue is becoming more dependent on those parts of the economies that generate US$ directly. In other words, it is becoming less and less necessary to use DR$....at least as far as the central government is concerned.

Very good point! Good ole Hipo was printing money like it was going out of style not giving a hoot about paying the tab later.

 

[DogsRule]

Which foot is the shoe on?

Who ever wants Hippo back is a self centered greedy to the bone person.

Right now the DR is going through a very rapid shift from a downward spiral economy to upward moving.

Things are happening extremely fast and as such, the transition will be over fast. Before we know it, we will be flying high onto the trajectory of development and economic growth.

Of course, during the transitions there are always (trust me on this one) people that just start complaining, only to be shut up by their own words and tongue once things start to fall in place.

This is a natural phase of discussing change in DR1 or any other discussion forum for that matter.

I see so many people complaining that they can't change their dollars or euros or whatever into pesos now because the exchange rate is not favorable to them. But these same people were not complaining when the peso was so weak it was 50:1! Seems like they want to have their cake and eat it too. They want the "cheapness" of the D.R. but they also want to hang onto the stonger currency keeping one foot in each camp. Exploitation is never good for any people. The native Dominicans don't have the option of currency trading; the foreigners do.

 

[mharshman]

When the peso was 50, the prices reflected the rise. Now the peso is 29 and the prices have not come down. Never mmind the gringos, how about Dominicans now paying 83 peso per pound for chopped meat. I,am afraid it is the government leaders, and wealthy Dominicans that have made merchandise not affordable even to there own people, not the Gringos. The wealth who have raped the country for eons are still doing it.
Moreover this country could not survive 6 months with out us and Dominican Yorks.

 

[nickkieswetter]

I am with you all the way

When the peso was 50, the prices reflected the rise. Now the peso is 29 and the prices have not come down. Never mmind the gringos, how about Dominicans now paying 83 peso per pound for chopped meat. I,am afraid it is the government leaders, and wealthy Dominicans that have made merchandise not affordable even to there own people, not the Gringos. The wealth who have raped the country for eons are still doing it.
Moreover this country could not survive 6 months with out us and Dominican Yorks.

Dogsrule, the people who are complaining now were NOT complaining before, because as the currency rose so did the prices, therefore we had a level of equilibrium, this is why none of us guys with dollars were complaining!! (jeez I thought that was obvious) If you think that things were cheaper they were not, even at 50 to one many prices were still more when converted back to dollars than the year previous, however, I for one and many of the people with whom I associate thought that this was 'fair enough' but now the problem is I have 40% less spendable income and the prices in many cases have doubled!! this clearly is a problem!

To the guy who said (cant be botherd to look up his name) that a hotel here and a hotel there are good for a few, you really dont have any idea what you are talking about do you? How about all the farmers and transporters and even the relatives of employees who live in the areas that you mentioned that are going to suffer from fewer tourists (yes even in Punta Cana!) oh and you forgot to mention the Zona Franca, I have a good friend who owns a factory in, yes you got it, MOCA, and he is going out of business quickly! tell his 1500 employees that a sharp devaluation of the dollar is good for them and their kin!

It still goes back to the point that I was trying to make earlier, if this place isnt cheap then what has it got? Infrastructure? Law & Order? easily enforcable business contract? I dont think so, but there are plenty of other places in this world where you can build a hotel cheaper than in NYC with less red tape etc (put perhaps, and I think that you might have forgot about this point Mr. No-Name, you wont have the same level of income either by way of cash or from your customer base, as well as security, services etc, etc. This is why it should be CHEAPER!!)

Nick

 

[DominicanScotty]

I agree

When the peso was 50, the prices reflected the rise. Now the peso is 29 and the prices have not come down. Never mmind the gringos, how about Dominicans now paying 83 peso per pound for chopped meat. I,am afraid it is the government leaders, and wealthy Dominicans that have made merchandise not affordable even to there own people, not the Gringos. The wealth who have raped the country for eons are still doing it.
Moreover this country could not survive 6 months with out us and Dominican Yorks.

THIS is what I am talking about. As for myself? The economy doesn't really effect me even though I am not happy about the devaluation of the dollar. I have made enough money in my lifetime to live comfortably no matter what happens. I am concerned with my Dominican family and their friends and neighbors in the campo. They are Dominican cattle farmers and they sell their livestock to butchers usually in dollars. As someone wrote before, when the dollar was worth 50 pesos the prices climbed to adjust. Now the dollar dropped however the prices did not! The devaluation of the damn dollar is hurting the Dominican people.

 

[suarezn]

I think someone finally got the message that if the peso is going to go up against the USD then it needs to be a very slow process that would allow prices to catch up. The dollar is climbing back up. I think it will stabilize around 37. Stability is the name of the game and it needs to be maintained if the country to prosper.

 

[DogsRule]

Less Spendable Income

Anyone who bought 50 pesos for a dollar now has nearly two dollars worth of pesos at the rate of 30:1. However, anyone who kept dollars now has less spendable income. The person with pesos, however, has more spendable income. If the price of X was $10.00 in February, and it is still $10.00 now, then the person with pesos has to cough up fewer pesos now than in February. The person who is using dollars, however, indeed has less spendable income. The currency of the D.R. is pesos.

 

[NALs]

Yesterday the Listin Diario carried a story which basically stated that prices are expected to drop this week for most items, especially at Supermercado Bola in response to the drop in the Dollar.

This could be a sign of what's to come in this "new" Dominican economy.