09-06-2011, 10:00 PM
10 years of fraud and nothing happened in the interim to give you a clue. The DR economy during that entire time period was just humming along with every year producing greater gains than the previous one. Of course, as in the case of Baninter, it was all predicated on fraud and false returns. As Baninter and other like banks would have destroyed the Dominican economy were it not for the IMF, today the DR and the world face a greater challenge.
In 2003, three major Dominican banks failed. In each of the three cases, attorneys for the Central Bank and Superintendent of Banks established the method in which bank executives operated "clandestine banks" behind the facade of the real banks. In the failure of Baninter, a computer was used on a nightly basis to balance and reconcile a set of "second books" for a false entity that did not exist. In essence, Baninter was printing its own money on a daily (or, more appropriately, a nightly) basis. Upon the discovery of the scheme, the Dominican government realized that the failure of the bank could prove disastrous to the Dominican economy (eventually it did) and could be a signal that other banks were running similar scams that could also bankrupt the country (they were). It also determined that the Baninter scam was not new. The false bank had been in existence for at least 10 years.
Baninter has gone viral. Today, banks all over the world are colluding with one another, suspending mark to market and engaging in every fraudulent illegal tactic to maintain a semblance of growth and function. One accounting gimmick after another, one fraudulent money expansion after another with full complicity of all regulatory bodies worldwide to prevent an all out depression from materializing. Yet, just like Baninter there tactics will fail and when the collapse begins in earnest, many will be scratching their heads and asking why.
There is no WHY. For decades in Baninter form, banks have been producing false statements. They created collateralized debt obligations on the pretext that the mortgages that composed them were actually money good. In fact, as the housing collapse has shown, the mortgages were fraudulent. They were given high marks by underwriters who were in on the take. Gov'ts removed many regulations believing that the invisible hand of capitalism was enough to regulate the excesses.
It wasn't. Today in the US, housing prices have dropped by 33%. That's more than they dropped during the Great Depression and housing in America has way more to go. Housing in Europe is also sitting on a precipie waiting for the tipping point to cast it over the cliff. The collapse began in housing but not one sector of the global economy will be left untouched. Baninter and the Dominican economy is but a mere example of what will happen worldwide.
The only difference is that the outcome will be severe and permanent as it was during the Great Depression with only a world war to end it.
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09-06-2011, 10:43 PM
The very fact that UBS even did this analysis should scare folks, especially Euros, to death.
Maybe UBS just offered a template of what the future holds.
While folks rightfully point the finger at AmuriKa, those Euros with their head in the sand may be the first to feel the full wrath of financial collapse of the ill-conceived (IMO) Euro state. The crap countries may take down the Germany's and Netherland's with them...
UBS Quantifies the Cost of the EU Breakup
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09-07-2011, 12:24 AM
The amazing thing is everybody understands the corruption within the Dominican government and nobody from other countries wants to invest in businesses or investments.Labor is cheap and location is wonderful for business.Problem is government cheats, and fraud is rampant.DR needs to wake up and understand the opportunity they have to become a manufacturing country..But as long as the wide spread corruption continues nobody is willing to invest.
09-07-2011, 08:04 AM
Originally Posted by cobraboy
I actually think the UBS analysis was more of a backhanded way of lobbying to keep the Eurozone intact. UBS Public Relations people in a press release and appearances on CNBC declared that the cost to break up the EU would be greater than the cost to fix it.
While that maybe true, the top German court just upheld that country's role in the EU bailout....but gave the German Parliament more say in the rescue. As one can imagine, the German people are more than a little upset at the less austere countries that make up the EU, but adding more layers of beaureacracy may actually hinder the rescue process by making it harder to react swiftly should that need arise.
For the moment the European markets are up and the U.S. futures markets are taking the news in a positive light.
09-07-2011, 09:00 AM
While that may indeed be true, it does paint a bleak scenario, even in best case.
Originally Posted by playacaribe2
If Milton had been that economist he'd basically be describing two different levels of hell...
09-08-2011, 12:09 AM
It's really a myth that WWII brought the World and the U.S. out of the 1930's debt reconciliation. The fact of the matter is that the U.S. was already coming out of the decline around 1939 as debts had been massively paired down in the preceding years from 1931. WWII actually slowed the process of recovery from debt saturation from the 1920's.
Originally Posted by Onions/Carrots
In terms of Milton Friedman, I would not put him in the highest stead. Maybe some of you on here don't remember his hyperinflation rants from the summer of 1982 to 1983. Paul Volcker massively increased money supply aggregates in 1982 and Ron Paul-Milton Friedman went on a hyperventilating hyperinflation parade. Unfortunately for both of these men, money supply is just not the final arbiter in producing an inflationary or hyperinflationary environment. The same can be said for today as the World is wrestling with the continuation from 1932. That environment is a debt "deflationary" reconciliation. Tape painting in equity and commodity markets with hyper leverage by certain financial conduits does not have me fooled.
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09-08-2011, 09:07 AM
Pick posts pretty pictures of DR developments as proof the country is growing economically. Let's ask where this money is coming from. Well as the following excerpt proves, a lot of that money is dirty.
The exact same places that Pick and Nails love to harp about. Granted in the case of these corrupt Cubans, the DR gov't seized their belongings and sold them off to pay back Medicare but those who bought it own it in the DR and they show up as those pretty pictures that Pick and Nails love to post. Remember that for every lawbreaker caught, there are ten that are not!!!
The Miami FBI’s toughest case involves the Benitez brothers — Jose, Luis and Carlos — who owned and operated a dozen HIV-therapy clinics in Miami-Dade. They allegedly filed $119 million in false claims with Medicare, raking in a whopping $84 million.
The Cuban-born brothers, who fled to the Dominican Republic before being indicted in May 2008, are accused of funneling millions through sham companies to finance their purchase of luxury toys and properties in that country.
Their acquisitions included homes, motels, apartments, land, cars, boats, horses, a helicopter, a distribution plant leased to Coca-Cola, and a hotel flanked by water- and dinosaur-theme parks, all in the areas of Punta Cana, Bavaro, Higüey and the capital, Santo Domingo.
09-08-2011, 04:22 PM
O/C, also some gas stations?and they are not the only Cubans doing it, just the high profile ones.
09-09-2011, 11:44 AM
This may be it. Germans and Germany aren't stupid. They had world conquest ideas at one point in time which failed but they came damn close to it. They are going to ring fence their banks in case of a Greek default to ensure the continuity of their banking system. It's a what-if scenario.
Greece's finance ministry dismissed rumors that the debt-ridden nation is planning on defaulting over the weekend
, according to Dow Jones. The news came after Germany said it is preparing plans to shield banks should Greece end up defaulting on its debt, according to a Bloomberg report.
“Europe once again is leading the charge lower here …and the issues are not going away anytime soon,” said Ryan Detrick Senior Technical Strategist at Schaeffer's Investment Research. “While August is in the rearview mirror, the issues that caused the volatility in August are nonetheless still there.”
Should Greece default over the weekend, it could ripple across the global banking system causing banks all over the place to freeze withdrawals. Banks would stop lending to one another and tranches of the global economy could come to a standstill. The DOW would easily drop 10% in one day.
If Greece defaults, then we must see what will be the central banker's next move. Do they have any ace cards up their sleeve to keep the global economic Ponzi scheme going for a while longer? If the rumors turn out to be true, expect Lehman times ten if the global bankers have run out of tricks.
They've kept this together for 3 straight years. It was all a cover-up and it was never going to work in the long run. It was just long enough to buy them time in the hopes natural organic production would pick up the slack. Nothing of the sort occurred with the global bankers, the central bankers, the respective gov'ts picking up more and more the slack left behind by natural organic production be it in the industrial or financial sector.
How would this affect us all? You would go to the bank and you would not be able to withdraw money. Bank runs would happen at the corporate level as in money market funds breaking the buck as they did during 2008. Massive layoffs if the carnage continues and rapid declines in currencies worldwide with some rising stratospherically and others declining abysmally.
Let's what and see because it is getting really interesting. By the way, the 1 year Greek note is trading near 100%. Compare it to it's American equivalent and you'll know what I mean.
09-09-2011, 05:32 PM
Corruption burdens the DR
Originally Posted by Onions/Carrots
President Leonel Fernandez was a speaker at the World Economic Forum debates in Davos, Switzerland in January and then again in Rio, Brazil in April of this year, but ironically, the DR's rankings in the recent Global Competitive Index report continue to reflect a lack of leadership and efficiency in government.
After almost eight years of Fernandez administration, the DR slumps to the 110th place of 142 countries in the important index. The DR in 2010-2011 was ranked 101st on a list of 139 countries.
This year's report points to corruption, tax rates, inefficient government bureaucracy, inadequately educated workforce, access to financing, inadequate supply of infrastructure, crime and theft, and restrictive labor regulations as the most problematic factors for doing business. The DR is ranked as the world leader (142nd) in both wastefulness of government spending and reliability of police services in the 2011-12 ranking. The DR is ranked 141st in favoritism in decisions by government officials, 140th in diversion of public funds, 135th in public trust of politicians, reflecting the collapse of institutions in the Dominican Republic under the Fernandez administration.
The DR also made the bottom top 10 rating in quality of education system (136th) and quality of math and science education (139th).
Areas where the DR made the upper top 50 places were: strength of investor protection (47th), prevalence of foreign ownership (41st), business impact of rules on FDI (41st), flexibility of wage determination (45th), cooperation in labor-employer relations (37th), soundness of banks (34th), control of international distribution (49th).
The Global Competitiveness Report's competitiveness ranking is based on the Global Competitiveness Index (GCI), developed for the World Economic Forum by Xavier Sala-i-Martin and introduced in 2004. The GCI comprises 12 categories n the pillars of competitiveness - which together provide a comprehensive picture of a country's competitiveness landscape. The pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.