The Million Dollar Question - Literally

When you are a gray spot in the bigger gray picture, often whatever you have to say goes completely unnoticed to the world. You are gray spot in the bigger gray picture if you are not famous, and I mean Celebrity Deathmatch famous, not like today's Real World Stupid Alka-Seltzer celebrities. So, basically you and me are gray spots on the tapestry of the human universe, and there's nothing wrong with it. Like Max (played by the astonishing Vanessa Redgrave) said in Mission Impossible, "Anonimity... is like a warm blanket" (quote taken from Wikiquote), so why shall you be unhappy with it? Yeah, my point exactly.

Thing is that, as a gray spot, you still can see a lot of things in the world and do unthinkable stuff, such as "think" and "draw conclusions". You are not expected to do so, as you are basically cattle that produces statistics and generates votes for Presidential Elections. This is how I put my pretty little head to all kind of unproductive and completely meaningless tasks such as follow the national devisa market's pulse and try to find out what could be happening there. I formulated so my theories, which were either wooed by people "much better prepared for the task", and even contradicted entirely by shinier spots of our humble national tapestry.

In Costa Rica the topic of what the dollar (American dollar) does next is of HUGE importance, basically because there's no availability of other devisas nor any interest in them. The Euro, though has timidly entered the market, doesn't have an independent value, but a value always expressed in dollars. Naturally, this has given chance to some less-than-respectable banks to refuse to take dollars for Euros, and instead buy the dollars, then sell them and THEN sell the Euros. Tricky, huh? Oh, and this happened to me in a State Owned Bank, in case you wonder. Now, this narrowness doesn't only show in the devisa supply, but for instance also in the fact that the country rushed like hell and made a HUGE deal out of the Free Trade Agreement with the U.S. (though since then we have like 20 FTA's, and even one with China, which, naturally, will leave us poor and gaping, but then, that's the opinion of this gray spot), and up to recently the only language that was promoted as a foreing language was English. People ACTUALLY thought that outside Costa Rica people either spoke Spanish or English.

The position of the dollar in our market strenghtened year after year for over 20-25 years with a system of micro-devaluations, where each day the dollar was one cent of colon more expensive than the day before. This gap was widened through the years. This, naturally, helped the importing industry by buying at some price in dollars outside, pay that with a given amount of colones, and then selling it in the country for quite the same amount in dollars, transferred to colones, and get even more colones than originally paid (plus other costs and the margin of utility). For the exporter it was good in the sense that it could sell it's goods outside for less dollars and get back the colones input, therefore making the product cheaper outside.

So it happens that the heads of State decided that importing and exporting wasn't enough, and they decided to invite companies to invest in Costa Rica, set their factories and offices, hire Costa Ricans and spend money here. This went on a large scale ranging from original maquilas to call centers and service centers. The dollar was appreciating day by day, and so day by day the enterprises investing here had to pay less and less to their workers.

Then shit started to happen. Seeing that Panama was doing so freaking well with all those dollars circulating as their own money, and being that the dollar each day worthed more, a lot of much better prepared people started throwing to the table the idea of dollarizing the economy. They pushed the agenda, pushed the agenda, and even argumented that dollarizing was gonna expenses and headaches. Dude, really. To my absolute outrage, even economists started pushing the agenda. I guess they all fell asleep when they were taught about the fact that minting is a tool the National Bank or Central Bank of Federal Reserve has to get the State out of the shit it gets into sometimes (or most of the times, depends on the given Government). To put it easy for the un-economist masses, it's like when you spend a fucking lot of money on some stuff and then you have to pay a lot of other stuff, or like when you buy on credit or take a lot of loans and then you have to pay them back. You gara get the money out of somewhere, so either you find a new source (like a second job) or you make money. For countries that's legal and it's called MINTING, for people is illegal and it's called COUNTERFEITING. Now, of course, for countries it is legal when they print their own money.

Our Central Bank here, decided then, one good day, to let the dollar loose to dance and wander away... within defined bands. What happened? The dollar stuck to the floor.Why on Earth? Well, it was already too inflated. I mean, allegedly Costa Rica is one of the strongest economies in the region, but is one of the weekest devisa, and the weekest in all Central America. With all sorts of tricks and traps the dollar was ripped off the floor and securely nailed to the ceiling for a while. The devisa started wobbling, making many foreign companies start paying their workers in dollars to minimize the cost impact. In other words, transferred it to the working class.

The claiming for the dollarized economy reached the heavens. After decades of stability, people rushed to the banks to put their dollars in good ol' colones, which seemed like the only safe place.The claiming of the dollarizers was that the colon was such a piece of crap currency that we were better off with the American dollar, which was such a sturdy, valuable, world wide accepted currency. Proof of it, they said, were the bucking and kicking the colon was doing when left free.

Me, being as suspitious and prone to think the works of the Government as I am, immediately thought that this was a maneuveing. "No, no!" claimed the media and the much better prepared people "this is the normal behavior of the colon. This is what the BCCR has been saving us from for years now." Well, like I would buy that. This went on, with a devisa value often nailed to the ceiling. Then, the bucking started to happen, and happen wilder and wilder as the term of the past Administration was coming to an end. Neck breaking jumps of over 20% of the value were seen happen within hours. The market? Why? We have here some Wall Street we don't know about? And I said, and told Kari, "Someone is playing the currencies to exert profit". But "Oh no! That's the normal market movements! You don't know that because you don't read indexed magazines nor are you much better prepared". Yeah, yeah, yeah... I like my fiction with ghosts, vampires and Winchesters, thank you very much. I mean, I don't know how much better prepared am I supposed to be to suspect something is seriously fucked up when the dollar falls all over the world and here it strenghtens day by day, or that slides down when all over the world climbs up. Could it be that Costa Rica is the Dollar Spa? Or the Currency Twilight Zone? Or am I right and someone is playing with the currency to it's own benefit?

Then, in these days, all sorts of articles started popping up. One said that this past Administration, which according to former president Arias "left Costa Rica so much better than at the begining", left a humongus debt, with Public Debt reaching the 44% of the GDP. Well, you ain't gara tell me, homie! Last year the 13th month salary was paid with debt. First time in history. The Scholar Salary, which is paid from the savings people do through the whole year, was put in danger of not paying because "there was no money". Dude, we were FORCED to save it up! It's our money, so fucking give it back!

Be it as it is, the country is up to its eyeballs in debt, the currency is drifting away, infrastructure is falling apart and one of the quickest way to tackle this is by printing money. So, dollarize? Yeah, right away. I mean, something dollarizers should get through their thick skull is that when you adopt another country's currency, you give up power upon it. You can be drowning in debt (kind of like Greece) and you CAN'T save yourself by printing more money. No can do. You can do well, be strong in the international market, but if the currency you use starts to fall, so do you. And can you do something? Yeah, pray. So, if you think the colon is out of control, try getting dollarized.

Now, pulling the ends together, dollarizers and currency players, yesterday I found this article:

What's Going On With the U.S. Dollar in Costa Rica?

It is short, and I would like to quote the ending phrases of it to make my point.

Our experience shows us that this type of trade based volatility in small economies usually imply large profits for a few and losses for many. Those who win are usually the ones who enjoy some form of privileged information.

Who made profits when the dollar was falling in Costa Rica? Who are making them now with its steep recovery?

 

Who are the owners of these large capital flows that are shaking market? Where do they come from?

Does anybody have the answer?

So, in the light of that, seeing that my less better prepared, gray spot conclusions seem to find an echo out there, why would some push for the dollarizing now harder than ever? Evidently, to cover this business up.