It's all about the Benjamins.

Just received an email from Enrique, purveyor of the latest addition to the anti-fidel, Cuban-American blog family: Freedom 4 Cuba, with the following letter to the editors of the Toronto Star:

Castro converts dollars

May 25, 2006. 01:00 AM

This article by Oakland Ross is an excellent introduction to the economics of Cuba. However, he seems to have overlooked Fidel Castro's most innovative and startling attempt to overcome his cash problem, the "convertible peso."

Basically, the convertible peso is a tax on the millions of dollars of remittances by Cubans in exile, to their families back home. Not content with stealing the money through vastly inflated prices in the consumer stores that were run by the government and only accepted dollars, Castro now immediately confiscates the remittances as they come into Cuba and then issues "Monopoly money" — convertible pesos, levying a 10 per cent tax on the dollars as they pass through his hands.

In effect, it is a forced loan by ordinary Cubans to their government — at negative interest. There was even a conversion period where Cuba soaked up all the dollars already in circulation in Cuba.

Outsiders might wonder at this sudden need by the Cuban rulers for all the useful cash in the country, whether they have an eye on the increasing political instability and are looking to pad foreign bank accounts in advance for their own sudden exile.

There's little question that within days after Castro's exit from the scene, the convertible peso won't be convertible any longer. Where all those U.S. dollars will have gone at that moment in time, no one knows.

So, let's take a layman's look at fidel castro's Cuban economy, shall we? Let me see if I have this all correct.

First, there's the income. Contrary to popular belief by some myopics, Cuba's income from exports such as sugar or tobacco or nickel or rum is negligible. There remain, I believe, only a handful of working sugar mills on the island where there were once hundreds of profitable ones. Cuban cigars may be coveted, but the island cant produce enough of them each year to truly beef up its economy. Same thing goes with nickel. And rum is made all over the world, thus, regardless how good Cuban rum may be, the competition is just too stiff.

But Cuba does one export that is highly profitable. Some estimates for this export state that it produces a income of close to one billion dollars a year. Ive mentioned that export before: The Cuban Exile, Cuba's number one money maker..

It is a brilliant ploy by fidel castro. Divide the Cuban family by allowing some to exile or make some lives so absolutely desperate, so absolutely deplorable that they chose to leave, while other family members must stay behind. Separate the Cuban family, the one thing that is more important to a Cuban than anything else. Thus this assures a steady income in hard currency - US Dollars - for the regime in remittances.

The castro regime then prohibits the use of dollars by ordinary Cubans and makes it compulsory for all Cubans to use the "convertible peso" for all purchases and trades each dollar, if I recall correctly, on a par with each convertible peso. So, technically, for each dollar sent to Cuba, a Cuban only gets 80 cents in worthless Mickey Mouse money. The convertible peso is worthless outside the island and since Cubans arent allowed to have dollars, they cannot convert them back to greenbacks even if they wanted to.

But wait! There's more.

We all know that everything and anything is available in Cuba, despite the evil embargo - from Heinekens to Trojans to Tampax. These things are imported by some foreign corporation to Cuba via Alimport or some other arm of the castro regime. Said Cuban corporation gets these items at wholesale and in turn sells them for a substantial profit, and by substantial I mean huge, at their stores. Thus the castro regime gets yet another cut right off the top.

In the case of goods manufactured in Cuba, the maunfacturing plants are usually a joint venture between the Cuban government and a foreign investor. The investor supplies perhaps the machinery and raw materials while castro supplies the location and the workforce. Wages for said work force are paid in hard currency from the investor to the castro regime, who in turn pockets said hard currency and pays said workforce in the convertible pesos. Thus, the castro regime gets yet another cut of hard currency in an extremely one sided ratio. After all, said company may be paying a wage say of $1 per hour per employee, which means that each week an employee would earn $40. Yet the average salary in Cuba is around $12 US. A month. Where does the other $148 a month go to?

The same rationale applies to non-manufacturing ventures in Cuba such as the tourism industry.

Of course, there are the black markets where ordinary Cuban can use dollars from abroad to purchase goods, but since everything in the island is controlled by State, every single dollar traded on the black market ultimately ends up in the hands of one fidel castro. The man is sitting on a gold mine.

Forbes reported this month that fidel castro is worth $900 million dollars. A very conservative estimate by any standard as fidel castro ultimately controls the entire island. he controls every single cent traded on said island. He ultimately controls every single person or company trading said cent on said island. Does anyone really think fidel castro is merely worth a measley $900 million?

And we aint talking convertible pesos either.

Posted by Val Prieto at May 25, 2006 09:48 AM

Trackback Pings

TrackBack URL for this entry:
http://www.babalublog.com/cgi-bin/mt/hut.cgi/3380

Comments

Post a comment