www.CostaRicaTicas.com

"A lot of unscrupulous people made some big bucks and now a lot of unsophisticated people are having their dreams trampled."

ID, that is true. It goes even deeper than the current mess.

I think I wrote it on here before, but it seems there is always these big money makers that go bust over and over again. In the late 70s, silver and gold were going nutz, I'm not sure what happened in the 80s, the 90s was the dot com run up, 2000s was the housing market run up.

Anyone know what happened during the 80s?

Silver and gold didn't actually affect as many of the unsophisticated, but still one of the run ups.

Actually in the 80s I worked as a young consultant on developing CMO's (collateralized Mortgage Backed Securities) Sounds familiar huh. The big investment banks led the smaller, greedy and stupid S&L's down a path that destroyed many of them. The performance of the securites is haevily based on projected prepayments and defaults. When the projections are too low as now the house of cards crumbles pretty quickly.

BKTUNA
I am never going home

Oh yeah, thanks for the reminder.... the S&L mess! I couldn't imagine something not happening in the 80s.

What's next? Some think history will repeat itself (gold... and other metals), but I'm not so sure. Wait and see, I think.

Would you stop going to CR if the Dollar to colone rate falls to 400? Thats like a 20%+ price increase.

In some ways it might be better less GRINGOS !

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"Run silent, run deep"
Spunk glazed Chicas are the building blocks of the universe!

The question is somewhat moot for me, since I'm already here, but I do have a thought or two. If it was just a Colon vs. Dollar situation, it wouldn't stop me. The trouble is, the reason behind the devaluation is that the dollar is falling against almost all currencies. Also related are oil prices, which include gasoline and heating oil. These are rising to a great degree because the dollar is falling. Europeans aren't freaked out because they are paying about the same amount for a liter as they were last year. And there are, of course, other economic 'things' happening, such as rising inflation, falling home prices, foreclosures, etc. From what I see here, most of the frequent visitors are pretty affluent, so perhaps they will escape the worst effects of the coming recession. I suspect, however, that there will be some whose wives may begin to question these trips to Costa Rica... 'Darling, are these trips really necessary? Maybe instead we could turn the thermostat back up to 65 from 55?'

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"The only normal people are those you don't know very well." Joe Ancis

Why?

Most experts think the dollar is oversold on the international markets. The dollar has rebounded nicely recently, but that didn't get any press. If you know something I don't, then share the info, I am happy to convert my money to Euros.

Until then, I wouldn't bet against the dollar, not long term. Europe has all sort of "Big Government" problems that they can not pay for. Asias financial markets are a joke (sans Singapore). No one is putting their cash in Chinese banks that is for sure.

US is still the most stable economy in the world, despite the current credit crisis. One thing that is lost in all the bad press. While the housing economy has crashed, our export economy is BOOMING! The export economy more than doubled the loss to our economy due to the slump in housing. Nobody talks about that though. The press likes negative headlines.

Hey brother, I just love this sort of debate. So indulge me. I am no expert either, but I enjoy bringing a different perspective to these discussions. I hope you find my alternate view interesting.



First lets start by saying that a weaker dollar is not all bad for the US economy. In fact, the main complaint that the US government has with China is that they artificially keep the value of the their currency low. This gives their products a tremendous advantage in the market place because it makes their products artificially cheap.

The lower value of the dollar does a couple things for us. It makes our products cheaper and more competitive for export. It also has the effect of reducing our debt to foreign nations.



This just won't happen. The US Dollar is THE worlds reserve currency. If it plumets the rest of the world is hurt worse than we are, especially China. All of the their wealth is tied up in Dollar based asset, in particular Treasury Bills. If the dollar plumets they loose everything. China needs us. We have nothing to fear from the Chinese.




China is not even the richest county in Asia. Japan still has the largest economy in Asia. USA is by far the richest country in the world. Last statistics I saw, USA is still 25% of the entire worlds GDP.

China does have the fastest growing economy in the world and tremendous cash reserves. They have been growing their economy at a rate of between 12% and 15% per year, amazing. USA has been steady at around 4% growth, which is considered sustainable.

We are still the Big Dog, by a long shot!!!! Remember all the fear in the 80s over Japan taking over everything? Japan's economy overheated and blew up. Nobody worries about Japan any more and we are still #1.

Yes China is making a lot of shit. And that is exactly what it is, shit! Cheap shit, low value shit, shit! Shit they sell to lower middle class people in Wal Mart. We are supposed to be afraid of this?



Currency markets are the most efficient markets in the world. They are extremely difficult to manipulate, perhaps impossible. As a practical matter only a coordinated effort by many central banks (national banks) can effectively manipulate the value of the dollar. The reality is that foreign governments have the most to loose if our currency falls.



This might be true of the man in the street. But for the people that control things in in the world, they know who butters their bread, it is the USA. How else do you think George Bush got all those other countries to send (albiet token) troops into Iraq?



Our Export economy is kicking ass. China is selling sneakers. we are selling Power Plants, Damns, Jets, Software, Construction Equipment, Agriculture Equipment, Oil Rigs, Computer Systems and Franchise Food. Untold story!!!!

USA is kicking ass in the Global Economy.



NOW I AM GETTING HIGH ON MY SOAP BOX.

The most misleading statistic of all statistics is National Debt. TOTALLY BOGUS!!!!

The only meaningful way to measure National Debt is as a percentage of your entire economy (GDP). Yes the National Debt keeps getting bigger, but so does our economy. DUH! If you look at the percentage of National Debt to our overall economy, you will see that it is actually pretty stable over the decades.

Having a national debt is not necessarily a bad thing. When other countries buy our notes they are making an investment in our country. If their money is tied up in our paper (yes, paper) then they have a stake in proping up our economy. It is beautiful. They might not like us, but they cannot afford to have us fail either.

Just remember this, when we have a national debt, it means that we are:

TRADING STUFF FOR PAPER. PAPER THAT HAS VALUE BASED ON THE FUTURE VALUE OF THE US DOLLAR. IN REALITY, WHAT WE ARE GETTING IS STUFF TO DRIVE THE GROWTH OF OUR ECONOMY WITH A PROMISE THAT THE DOLLAR WILL STILL BE VALUABLE IN THE FUTURE. THINK ABOUT IT!

Its a great deal for us. No other country in the world could get away with it.



The government and the news media have an interest in the citizenry being fearful. It is all bull shit they feed us my friends.

We have everything, so much to be thankful for. Why are we afraid? When Regan and Clinton were around we weren't afraid.

5000 people died on 9/11. A tragedy.

50,000 die on the highways every year. 100,000 die in hospital from mistakes and infections.

Why are we more afraid of terrorist than we are of the highway? It you stop and think about it, it makes no sense, until you realize that they want us to be fearful.

In contrast the people of Costa Rica have very little, yet they do not live in fear. Why is that? They are not worried about China. Why? Because there is no reason for them to be fearful of China.

If Costa Ricans have no need to worry about China, why should we? Think about it!

Pura Vida Brother....... and Merry Christmas

So Bottom Line - It does not suck to be us!

There are pros of a cheap dollar.

The cheap dollar means more countries will import more US goods, because they are cheaper.

It also helps the tourist industry in America, because more tourists will come to America, because it's cheaper.

All this however, doesn't help us, (mongers).

Yes, the US is producing high tech stuff. However, in some point in time the chinese will catch up a little in technology. They are already taking foreign car making technology and using it for their own companies. I bet you they are taking the technology from Lenovo and using it. At some point they might be just as competitive as the US. Although I don't think they will ever build airplanes or stuff like that.

Back in 1971, I was working near the construction site of a bridge that was being built. I saw this large empty can with Japanese writing on it. It had contained rivets for the bridge. I remember being so tickled that there were JAPANESE rivets being used that I took the can home (where it spent many years as a waste can in the garage). Just imagine the JAPANESE importing things to the USA! Ah, for the good old days of innocence. I remember in 1977 in Canada seeing my first shirt made in China. How weird, I thought. Nowadays it's as hard to find something made in the USA as it was to find something imported back then. Times have changed. Exporting out way out of the financial mess we're in now isn't going to be easy, since very little of our manufacturing base remains. To paraphrase a famous Chinese saying, the USA is going through some 'interesting' times.

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"The only normal people are those you don't know very well." Joe Ancis

KC - you hit it strong man. Thanks a lot!

Everything you said is right on target. As I said previously, I'm reading Greenspans book and so I can see the light now, but it isn't so easy to put in words like you have point by point. The dollar over the long term will kick ass. When our economy is hurting others will likely be hurting more (rest of the world) and so it all comes back to stability. The rest of the world is hurting, now where are you going to put your money?

You were right on too about exports - airplanes and sneaks, MRI scanners and Toys-R-US bullshit. How many Barbies does it take to equal the value of just one MRI scanner? How many tricycles does it take to equal the value of a 787 dreamliner? Even if the dollar is strong - Barbies and tricycles can't stand up to Airplanes and MRI scanners.

Another reason why we will always be king of the hill.... If you are a foreigner with brains (PhD types), it is prestigious to work in the USA. PhDs all around the world want to work in America, because it is good on their resume. Harvard, Stanford, UC Berkeley, UCLA, MIT, Columbia, Johns Hopkins and the list goes on and on and on... if you are a PhD you would cut your right arm off to work at one of our great universities. PhDs get a foot in the door with special education visas and then they either continue at the university or slide stage left to the research facilities at IBM, Microsoft, Boeing, GE, Merck and that list goes on and on too. If we don't have the talent, the talent lines up to serve, because of the prestige, the money and "more." A lot of these PhDs have K*ds so the "more" part is that they want their K*ds to grow up here with a chance to attend our great universities (that's just one "more" scenario).

Our GDP: 13.1 trillion

Japan has the next biggest economy at 4.3 trillion GDP. China's GDP is 2.6 trillion.

The GDP of California alone is 1.7 trillion so California has a bigger economy than Canada, Spain, Brazil, Russia, South Korea, India, and Mexico (not all added together, individually).

Before anyone says China could catch up at the rate they are going - HOLD ON!!!!!! China has a shit load of internal problems. It isn't easy tending to over a billion people. They are producing at the expense of the environment and their people's health. At some point, they are going to have to clean up a huge mess. This will cost them trillions.... gazillions!