The DR and the Recession of 2008

[PICHARDO]

:cheeky:

No one calls them little leaguers.

But to ignore the impact of the expansive underground economy in the DR is to be in denial.

II knew it! Those IKEA funny accent people are always too happy and perky to be normal!!!

The group CCN is the biggest shaker and mover right?

Oh wait! Those Ferreteria Americana folks have done themselves in with their new mall Galleria 360... That play sand looked too pale for me on my last visit! So that's how they move it about? Wow!

That Blue Mall group has got to be dealing some serious ecstasy; no wonder the mall is called "Blue"....

Thanks Cobra for pointing out all the druggie biz in the DR!!! Miami encore!!!

 

[PICHARDO]

and it is good to know that BanReservas is making good use of my money

since if I deposit a US check it takes them 90 days to clear the money into my account even though they clear it through my bank in the US within 5

now, pretty soon, perhaps? we are going to see something like a FIXED 15 or even 20 or 30 year mortgage rate? yes?

Since who in the world can begin to finance a house with an initial rate of 9% for only one year and then the SKY IS THE LIMIT, no?

and no one except Picardo and his silver spoon friends and those people with lots of cash from sources we certainly are not going discuss has packets of hundreds of thousands of dollars laying about

That's exactly how we "Dominicans" buy our homes, cars, boats and everything else in the country. We save our hard earned money and instead of feeding the cookie monster in the banks, we pay CASH aka "AL CONTADO" in our local lexicon...

You come from a "charge it" culture; we come from a "paid for" one!

I guess the entire middle class of the DR and upper classes are dealing drugs according to you and Cobra...

The reality is that we work on a 300% + mark-up basis and we don't need to sell controlled drugs to make money, just what you could find in any other legal market in the developed world.

You still have no idea of how biz works in the DR...

 

[PICHARDO]

Strength of Dominican banks helped get the IMF’s US$1.7B

Santo Domingo.- The International Monetary Fund’s (IMF) Executive Directory took into account, among other factors, the strength of the Dominican banking sector to establish the US$1.7 billion the Stand-by Agreement.

In a statement the IMF executive directors stressed that in the conclusion of the 2009 consultation with the Dominican Republic, they see with approval the monetary authorities’ commitment to a flexible exchange rate and noted that the evaluation team found that the real exchange rate in effect is generally well based.

They also hailed the significant improvements in the banking sector’s regulation, supervision and financial solidity. “As the result of previous reforms, the Dominican banking sector remains liquid, reliable and profitable, in spite of the global credit crisis.”

The IMF Executive Directory approved the 28 month Agreement which entails US$1.7 billion on November 9.

http://www.dominicantoday.com/dr/ec...-of-Dominican-banks-helped-get-the-IMFs-US17B



LOL!!!! OMG!!!! LOL!!!!

But hey! What could the folks in the IMF know about fuzzy numbers (as called by the real smart president of the largest economy in the world, who was handed a surplus and left a depressed economy behind his tenure)...

 

[playacaribe2]

What do you expect the IMF...

or Lehman or any of the other alphabet soup agencies that have in the past lent money into the DR or tried to coerce others to invest in the country by touting its bonds, to say about the strength of the banking system.

This is the "dog and pony" show. The agencies lend you money (or credibility in the case of bond rating agencies) to build/buy things (as long as they are purchased from certain inside companies).

To be sure, they will talk about the important needs of the country, power, infrastructure, education, and healthcare. And when the money is gone and nothing has changed in two, three or five years, repeat the same wornout process again. This has been going on for years...and very very little has been accomplished.

You certainly deserve recognition as a strong and unwavering proponent of the DR, but that having been said, and in spite of all the money borrowed, the DR has little to show for it.


Respectfully,
Playacaribe2

Strength of Dominican banks helped get the IMF?s US$1.7B

Santo Domingo.- The International Monetary Fund?s (IMF) Executive Directory took into account, among other factors, the strength of the Dominican banking sector to establish the US$1.7 billion the Stand-by Agreement.

In a statement the IMF executive directors stressed that in the conclusion of the 2009 consultation with the Dominican Republic, they see with approval the monetary authorities? commitment to a flexible exchange rate and noted that the evaluation team found that the real exchange rate in effect is generally well based.

They also hailed the significant improvements in the banking sector?s regulation, supervision and financial solidity. ?As the result of previous reforms, the Dominican banking sector remains liquid, reliable and profitable, in spite of the global credit crisis.?

The IMF Executive Directory approved the 28 month Agreement which entails US$1.7 billion on November 9.

http://www.dominicantoday.com/dr/ec...-of-Dominican-banks-helped-get-the-IMFs-US17B



LOL!!!! OMG!!!! LOL!!!!

But hey! What could the folks in the IMF know about fuzzy numbers (as called by the real smart president of the largest economy in the world, who was handed a surplus and left a depressed economy behind his tenure)...

 

[PICHARDO]

Like I told you here months ago: It started!

As pledged, Electricity Superintendence names energy thieves

SANTO DOMINGO. - As promised yesterday, the Electricity Superintendence (SIE) today announced that charges will be filed against 40 people and companies for stealing energy, among luxurious condos and mansions.

In the statement issued in a press conference together with the Electrical System Prosecutor, the SIE presented a list of 156 people and companies accused of stealing more than RD$15 million, of which 116 cases were settled with a payment agreement; whereas 40 were sent to court, with various court orders imposed on 15 of those.

The companies charged with fraud includes the mote Caba?as Nuevo Mundo, in Santo Domingo West, fined RD$55,000; Irfel Super Colmado whose fraud is evaluated at RD$490,000 and the Patoruzo Restaurant, in the upscale Los Prados sector, which must pay RD$181,000.

Also accused of fraud is the company Margge Fromenta, in the upscale sector Cerros de Arroyo Hondo, RD$ 96,000; the Reposeria Vinicio, in Herrea and Pollo Rodriguez, in Santiago, among others.

After citing all of the companies charged, Electricity superintendent Francisco M?ndez said the fraud has cost Dominican taxpayers US$2.5 billion just during Leonel Fernandez’s Presidency, a crime he said won’t continue.

Mendez was accompanied by State-owned power companies (CDEE) vice president Celso Marranzini, the prosecutor Mois?s Ferrer, as well as officials of the distributors Edesur, Edenorte and Edeeste.

When asked why power cuts affect the Social Security hospitals, Marranzini, said it’s because they owe more than RD$800 million in electricity and warned that they will continue as long as they don’t pay for the service.

http://www2.dominicantoday.com/dr/l...ctricity-Superintendence-names-energy-thieves


The electrical service problem is more of non-paying than lack of power in the grid...

What most people don't know is that meters have been placed in sections divided by sectors. Each line meter tallies the usage in Kw/h per sector, which is later compared to billing done as per local meters that comprise those sectors. If a given sector tally goes above the normal % for loss in transmission/heat, the sector got multiple line meters to find the actual energy consumed and under billed in that area.

Even when they used the boxes to corrupt the meters in their location, line meters can't be affected by these kinds of tricks. The reason they're only publishing the found power stealing individuals/companies is that each sector is currently being targeted, once they detect huge differences, a court order is petitioned to enter the premises and carry out the full investigation under the mandated legal system, which was enacted just for that goal.

We're going after the big users first, later will be going after the individuals themselves as well. Those families unable to pay for electricity at current rates, will be offered a gov card that will enable them to pay lower rates and a set amount of Kw/h under the program, based on the size of the family and expected usage for a month of service. That's to say, no A/C or commercial applications running from those homes.

There's also a card based pre-paid electrical service that was planned long ago, but during the economic meltdown from the US, the loans to that goal were affected greatly. Now we're back in track to make those pre-paid meters possible for the poorest sectors of the population and large non-paying bulk of the problem as well.

By the end of 2012 the DR will have put under control the historical demon, which is today the electrical service in our country.

If we're to host the World Baseball Classic by then, we need to take control of many of the problems affecting us today.

The Santiago Light Rail is also going to be put on the to-do list soon enough!
As soon as the Santiago - Santo Domingo HVT/Freight rails starts, the Santiago Light Rail will be made a priority as secondary support for that line.

 

[cobraboy]

I guess the entire middle class of the DR and upper classes are dealing drugs according to you and Cobra...

Bite me, PICHARDO.

I don't care for people who put words in my mouth.

I have never said what you claim.

I HAVE said that drug money DOES represent of a disporortionate component of DR economy in the same way that remittances do.

 

[El Rey de Mangu]

Bite me, PICHARDO.

I don't care for people who put words in my mouth.

I have never said what you claim.

I HAVE said that drug money DOES represent of a disporortionate component of DR economy in the same way that remittances do.

Don't mess with Texas

 

[El Rey de Mangu]

Bite me, PICHARDO.

I don't care for people who put words in my mouth.

I have never said what you claim.

I HAVE said that drug money DOES represent of a disporortionate component of DR economy in the same way that remittances do.

AGAIN, a remittance is NOT a source of income. It is a vehicle. The income source is a family member or friend's income abroad. If that income is "clean" or "dirty", the remittance does not care!

This is like the folks that don't understand that a LOAN is not income. It may be used for capital purchases, but it does not go on the P&L as income.

Drug cash makes its way to the pockets of folks, bank accounts, funds, real assets, etc. through a delivery medium, like a remittance (Vimenca) SWIFT xfer, hand-to-hand, etc. Drug cash is a source of INCOME, A REMITTANCE IS HOW YOU GET IT THERE.

Love,
ERM

 

[bienamor]

Well

Like I told you here months ago: It started!

As pledged, Electricity Superintendence names energy thieves

SANTO DOMINGO. - As promised yesterday, the Electricity Superintendence (SIE) today announced that charges will be filed against 40 people and companies for stealing energy, among luxurious condos and mansions.

In the statement issued in a press conference together with the Electrical System Prosecutor, the SIE presented a list of 156 people and companies accused of stealing more than RD$15 million, of which 116 cases were settled with a payment agreement; whereas 40 were sent to court, with various court orders imposed on 15 of those.

The companies charged with fraud includes the mote Caba?as Nuevo Mundo, in Santo Domingo West, fined RD$55,000; Irfel Super Colmado whose fraud is evaluated at RD$490,000 and the Patoruzo Restaurant, in the upscale Los Prados sector, which must pay RD$181,000.

Also accused of fraud is the company Margge Fromenta, in the upscale sector Cerros de Arroyo Hondo, RD$ 96,000; the Reposeria Vinicio, in Herrea and Pollo Rodriguez, in Santiago, among others.

After citing all of the companies charged, Electricity superintendent Francisco M?ndez said the fraud has cost Dominican taxpayers US$2.5 billion just during Leonel Fernandez?s Presidency, a crime he said won?t continue.

Mendez was accompanied by State-owned power companies (CDEE) vice president Celso Marranzini, the prosecutor Mois?s Ferrer, as well as officials of the distributors Edesur, Edenorte and Edeeste.

When asked why power cuts affect the Social Security hospitals, Marranzini, said it?s because they owe more than RD$800 million in electricity and warned that they will continue as long as they don?t pay for the service.

http://www2.dominicantoday.com/dr/l...ctricity-Superintendence-names-energy-thieves


The electrical service problem is more of non-paying than lack of power in the grid...

What most people don't know is that meters have been placed in sections divided by sectors. Each line meter tallies the usage in Kw/h per sector, which is later compared to billing done as per local meters that comprise those sectors. If a given sector tally goes above the normal % for loss in transmission/heat, the sector got multiple line meters to find the actual energy consumed and under billed in that area.

Even when they used the boxes to corrupt the meters in their location, line meters can't be affected by these kinds of tricks. The reason they're only publishing the found power stealing individuals/companies is that each sector is currently being targeted, once they detect huge differences, a court order is petitioned to enter the premises and carry out the full investigation under the mandated legal system, which was enacted just for that goal.

We're going after the big users first, later will be going after the individuals themselves as well. Those families unable to pay for electricity at current rates, will be offered a gov card that will enable them to pay lower rates and a set amount of Kw/h under the program, based on the size of the family and expected usage for a month of service. That's to say, no A/C or commercial applications running from those homes.

There's also a card based pre-paid electrical service that was planned long ago, but during the economic meltdown from the US, the loans to that goal were affected greatly. Now we're back in track to make those pre-paid meters possible for the poorest sectors of the population and large non-paying bulk of the problem as well.

By the end of 2012 the DR will have put under control the historical demon, which is today the electrical service in our country.

If we're to host the World Baseball Classic by then, we need to take control of many of the problems affecting us today.

The Santiago Light Rail is also going to be put on the to-do list soon enough!
As soon as the Santiago - Santo Domingo HVT/Freight rails starts, the Santiago Light Rail will be made a priority as secondary support for that line.

At the risk of sounding childish again, Pichardo you don't mind if I don't hold my breath do you.

I have been hearing this since 1989 the the power problem will be fixed in 2 years. So thats Balaguar, Fernando, Hippo, and Fernando.

Having had a connection with W?rtsil? the Finnish company that built Las Palmas, and also ran both of the barges in Santo Domingo, plus others. The only group that ever tried to say that it was generating capacity was the Dominican Government. The power companys have always contended that it was payment from the government so they could either buy fuel or perform maintenance on the government equipment.

Now here in the DR there is a large difference between filing charges, and assessing fines. Case in point the all points bulletin for the lady out on bail?
Plus I seem to remember it took a looooong time for the Bank problem to ger cleared up and if I remember only 2 went to jail? Then we have the infamous 60 busses from Plan Renove. Or the General with the 6 stolen jeeps that had been recovered. When I read in the paper and see on TV that all of these companies have been charged and fines paid I will believe it.

 

[cobraboy]

AGAIN, a remittance is NOT a source of income.

Never said it was. It IS however a component of an economy.

You remove it and the economy has a negative effect.

 

[Onions/Carrots]

Never said it was. It IS however a component of an economy.

You remove it and the economy has a negative effect.

That is as plain to see as water. What's the fuss all about with Kid Mangu?

Claims of bank balance sheet improvement is clearly suspicious in my book.

How has the exchange rate changed in the last 3 years?

By how much has the money supply incremented in that same time period in the DR?

Issuance of gov't bonds has increased by how much in the same time period?

These and other similar questions goes a long way in explaining any alleged profits on a bank's balance sheet.

 

[Onions/Carrots]

Nice piece of commentary from Manzana. Yes, the last deflationery spiral was called the Great Depression.

The Dominican economy is certainly tied to the U.S., however, I believe that the balance of the D.R.'s treasury reserves, now has swayed to the devastating effect of political corruption, whereas, no matter how the world economy behaves, the party in power, whether the PLD or PRD, has only one goal: to enrich themselves through commissions and graft from continued lack of transparency as to what is being spent by whom and to whom is receiving.

No matter how much any incumbent Dominican president wants to move the country forward, it's not going to happen without severe punitive action against corruption. For the deputies and senators in office, the political enrichment will continue through their ability to stifle transparency, siphon funds from their bloated expense accounts. Meanwhile, they will lament that the country's treasury is broke and that they have to approve more foreign loans, or raise taxes on the Dominican people to keep the country solvent.

All this, while the country has little or no social services with dismal spending on education.

With the bigger factors of corruption, the electricity subsidy draining the national treasury to a dry river bed, .. that U.S. Economy actually does not play into an overwhelming factor as to how the Dominican economy will go forward.

In fact, I believe that even with the U.S. economy in great shape, the D.R. will continue to spend itself in poverty with bloated government payrolls, an endemic trait of Latin American countries, in which clientelism is rampant.

From another thread on this forum. I couldn't have said it better myself. The DR economy is a cesspool and a minefield of potential blow-ups. We just don't know which one will blow up first. At 40% of GDP, the excessive borrowing by the DR gov't will eventually crash their economy. If it weren't for the generous loan programs via the IMF and other institutions, the DR would have faced a collapse a long time ago.

Gov'ts must learn to live within their means. The problem is that doing so means a severe contraction with major social upheaval. Also, politically it is an untenable position. Thus the gov't largess continues and the economy continues disintegrating.

 

[Onions/Carrots]

The DR if it were a nation of the EU would have been expelled a long time ago and if it were a US stock would have been de-listed. 40% to debt obligations in my book equals a bankrupt nation!

According to the article the textile industry in the Dominican Republic specifically in Santiago has been on the decline, and will suffer even more......jobs going overseas, take a guess where.

Tem?stocles Mont?s, the economy and planning minister says the following....just look at the amount going for education, very sad and tragic for the future of the country. “The government simply doesn’t have enough resources,” said Mr Mont?s. About 40 per cent of its budget goes on debt obligations and another 15 per cent is dished out through subsidies. Just 1.5 per cent goes towards education.
my bold


FT.com / World / Americas - US economy threatens Dominican Republic

 

[El Rey de Mangu]

That is as plain to see as water. What's the fuss all about with Kid Mangu?

Claims of bank balance sheet improvement is clearly suspicious in my book.

How has the exchange rate changed in the last 3 years?

By how much has the money supply incremented in that same time period in the DR?

Issuance of gov't bonds has increased by how much in the same time period?

These and other similar questions goes a long way in explaining any alleged profits on a bank's balance sheet.

Well "Onions/Carrots", the fuss of which you speak is that many are confused over the use of remittances in economic data. Your latter points above I do NOT understand, because the ONLY comment I have made in the past and continue to make is:

A remittance is a LOAN. A loan that you may or MAY NOT have to pay back. Therefore, it cannot be statisti-fied (so-to-speak) as personal income.

I don't know to whom you thought you were speaking with the "Kid Mangu" cheap shot, but I am certain it was not me.

I don't understand who has made claims of "balance sheet improvement" as you put it above. If you are speaking to the PBI (GNP), then, perhaps you need to carefully examine what goes into that number, as I think you are a bit confused. My associate PICHARDO and Cobra may be able to shed some light for you.

Money supply pal? Foriegn cash and legit internal liquid in the banks and pockets of the DR citizens have been disproportionately displaced in the past 5 years by laundered funds like drug cash, etc.

THAT SAID, as I had made the same comment at least 100 times last month in this very thread, this destabilizes the exchanges (n.b. NOT the exchange rate) and DEVALUES the local currency. This is a pathological behavior that presents over years (like 10 I think most economists purport). That's why you haven't see your "so-called" flux in exchange rate appreciably in the past 2 years or so.

The problem is my friend, you tried to show up at the party in the final hour and walk out with the hottest chick left standing. But she shot you down, so now you have to go home.

Not everyone can go to B-school, but anyone can take an online course or read some books!

Now, I need a cup of coffee.

 

[Onions/Carrots]

I don't know to whom you thought you were speaking with the "Kid Mangu" cheap shot, but I am certain it was not me.

THAT SAID, as I had made the same comment at least 100 times last month in this very thread, this destabilizes the exchanges (n.b. NOT the exchange rate) and DEVALUES the local currency. This is a pathological behavior that presents over years (like 10 I think most economists purport). That's why you haven't see your "so-called" flux in exchange rate appreciably in the past 2 years or so.
.

Don't obfuscate a very simple point. Mismanagement be it fiscal or monetary causes currency devaluation. If nations, private entities, and people learned to live within their means we would have a stable currency.

SIMPLE

Remittances, drug money whatever are cash infusions and thus increase the money supply expanding economies. The removal of these and other things decreases money supply thereby contracting economies.

DR governmental mismanagement since Trujillo who actually was the only one to balance the budget ever in DR history have embarked on a perpetual failed Keynesian experiment extracting productive functionality and translating it into government largess.

RESULTS are obvious. You have the majority of the DR populace living like roaming bands of hyenas on the Serengeti plains. But if you are a Keynesian Faux Expansionist keep kicking the can until all productive functionality is dissipated causing the collapse of the sovereign.

I adhere to the Austrian Liquidationist economic Model.

CASE in POINT- THE US.

An increase in the money supply will reflect on a bank's balance sheet as a material improvement yet the culprit is Central Bank devaluation and is not an improvement by any stretch of the word. Banks will report this as a gain when it isn't sprucing up results.

WAMU was a a case in point which prior to its collapse was paying dividends from capitalized interest. They were only buying themselves time as the results evidently demonstrate. They were stating FUTURE interest payments from homeowners with neg-am mortgages as a material improvement on their balance sheet.

Credit to this is given to Karl Denninger for discovering this nasty little trick WAMU was using.

Banks have the capacity to window dress results and conceal broken balance sheets in ways that no household can ever imagine doing. Ditto for gov'ts.

I believe the one who needs to do a bit more reading is you but I'll keep the attacks to the message not the messenger KID MANGU,LOL!

Mr. Mangu, the comment about banks and their balance sheet was directed towards Pichardo who posted a glowing report on DR banks from the IMF, the same institution who has bungled up many a nation with their failed policies.

 

[El Rey de Mangu]

Don't obfuscate a very simple point. Mismanagement be it fiscal or monetary causes currency devaluation. If nations, private entities, and people learned to live within their means we would have a stable currency.

SIMPLE

Remittances, drug money whatever are cash infusions and thus increase the money supply expanding economies. The removal of these and other things decreases money supply thereby contracting economies.

DR governmental mismanagement since Trujillo who actually was the only one to balance the budget ever in DR history have embarked on a perpetual failed Keynesian experiment extracting productive functionality and translating it into government largess.

RESULTS are obvious. You have the majority of the DR populace living like roaming bands of hyenas on the Serengeti plains. But if you are a Keynesian Faux Expansionist keep kicking the can until all productive functionality is dissipated causing the collapse of the sovereign.

I adhere to the Austrian Liquidationist economic Model.

CASE in POINT- THE US.

An increase in the money supply will reflect on a bank's balance sheet as a material improvement yet the culprit is Central Bank devaluation and is not an improvement by any stretch of the word. Banks will report this as a gain when it isn't sprucing up results.

WAMU was a a case in point which prior to its collapse was paying dividends from capitalized interest. They were only buying themselves time as the results evidently demonstrate. They were stating FUTURE interest payments from homeowners with neg-am mortgages as a material improvement on their balance sheet.

Credit to this is given to Karl Denninger for discovering this nasty little trick WAMU was using.

Banks have the capacity to window dress results and conceal broken balance sheets in ways that no household can ever imagine doing. Ditto for gov'ts.

I believe the one who needs to do a bit more reading is you but I'll keep the attacks to the message not the messenger KID MANGU,LOL!

Mr. Mangu, the comment about banks and their balance sheet was directed towards Pichardo who posted a glowing report on DR banks from the IMF, the same institution who has bungled up many a nation with their failed policies.

Dr. Mangu, btw.

Dirty cash NEVER helps. NEVER. It displaces "good" cash in the banks and pockets, which devalues the peso or whichever currency. POINT in case.

The bull$hit of remittances: You have a nation of folk making capital purchases with loans (b/c that's what a remittance is for the most part). With what assets are we balancing that liability?

Educate me Peas and Carrots - as PedroChem says: "I'm here to learn"

 

[cobraboy]

The bull$hit of remittances: You have a nation of folk making capital purchases with loans (b/c that's what a remittance is for the most part). With what assets are we balancing that liability?

Three fallacies in your argument:

1) Remittances are not loans. They are gifts.

2) It's a stretch to use Income statements and Balance Sheets to track remittances. Money comes in, debit cash. What do you credit? Prepaid Living Expenses?

I don't contest the theory of the long-term impact of the dilution of the money supply drug cash or remittances cause. But doesn't accrued debt of gubmint do the same thing? Of course it does. And I would argue worse because of the interest accrued...a liability...continually offsetting the asset created (unless future favors leveraged through a bought-off judge, politician or bureaucrat is worth more than the accrued interest payable GL account.)

We aren't talking currency creation through debt instruments created by the CB or banks. However, drug $$$ and remittances deposited at financial institutions can be used for additional monetary creation in proportion to that institution's mandated Reserve Requirement.

3) I would suspect that the vast majority of remittances are NOT used to make capital purchases (goods with a life more than 3 years.) They are used to meet living expenses or increase the standard of living. Drug money is an entirely different animal. Much DOES go into the asset base (drug cash comes in: debit cash, credit capital asset (cars, real estate, business creation, etc.)

Interesting conversation with a knowledgeable Dominican very recently. You know what is becoming a favorite money laundering technique? Creation of and loans/direct investment in smaller financieras. They are plentiful and most are off the "formal economy" radar screen. There is a TON of dirty money just looking for these financieras.

 

[cobraboy]

Dr. Mangu, btw.

 

[El Rey de Mangu]

Three fallacies in your argument:

1) Remittances are not loans. They are gifts.

2) It's a stretch to use Income statements and Balance Sheets to track remittances. Money comes in, debit cash. What do you credit? Prepaid Living Expenses?

I don't contest the theory of the long-term impact of the dilution of the money supply drug cash or remittances cause. But doesn't accrued debt of gubmint do the same thing? Of course it does. And I would argue worse because of the interest accrued...a liability...continually offsetting the asset created (unless future favors leveraged through a bought-off judge, politician or bureaucrat is worth more than the accrued interest payable GL account.)

We aren't talking currency creation through debt instruments created by the CB or banks. However, drug $$$ and remittances deposited at financial institutions can be used for additional monetary creation in proportion to that institution's mandated Reserve Requirement.

3) I would suspect that the vast majority of remittances are NOT used to make capital purchases (goods with a life more than 3 years.) They are used to meet living expenses or increase the standard of living. Drug money is an entirely different animal. Much DOES go into the asset base (drug cash comes in: debit cash, credit capital asset (cars, real estate, business creation, etc.)

Interesting conversation with a knowledgeable Dominican very recently. You know what is becoming a favorite money laundering technique? Creation of and loans/direct investment in smaller financieras. They are plentiful and most are off the "formal economy" radar screen. There is a TON of dirty money just looking for these financieras.

Best comment yet. I am impressed for Alabama. This is infinitely better than your argument on the benefits of drug cash

However, of the good points you make: Remittances are loans that don't have to be paid back (from an audit perspective).

Income can come from gambling winnings, loans, employment. My point was that solid economic data is skewed when you make a statement like "X% of cash in the economy is attributed to remittances" and the subsequent leveraging of this data to show augmentation in the GNP. It's a false positive because it can't be balanced.

But I appreciate the class you took between last month and this! Wait a minute Cobra, I saw you having beers last night with PICHARDO!!!! Doah!!!

 

[cobraboy]

Best comment yet. I am impressed for Alabama.

This is infinitely better than your argument on the benefits of drug cash

[quote-El Rey de Mangu]However, of the good points you make: Remittances are loans that don't have to be paid back (from an audit perspective).

Income can come from gambling winnings, loans, employment. My point was that solid economic data is skewed when you make a statement like "X% of cash in the economy is attributed to remittances" and the subsequent leveraging of this data to show augmentation in the GNP. It's a false positive because it can't be balanced.[/QUOTE]But you keep harping on Balance Sheets and no offsetting liabilities.

Sorry, but every economic group I can think of, including the World Bank, list remittances as a component of GDP since they account for domestic spending and are not considered foreign investment.