ST. MAARTEN, Leeward Islands - Getting to the Dinghy Dock bar and restaurant at Captain Oliver's Marina is an international experience. Walk down the dock from one side and you'll cross from the Dutch part of the island to the French part of the island. No passport required.
Officially, the island uses euros for money, but before long you realize that the island is a good example of the global currency situation, writ small. (It would be a good idea, however, to have your deepest thoughts about this before drinking your first Painkiller.)
Look around, and you'll see lots of dollars supporting activity that would otherwise not exist. While the official exchange rate between the dollar and the euro is $1.41 to 1 euro, the posted exchange rate at the Dinghy Dock is $1 equals 1 euro, if you pay in cash.
Pay by credit card, which no one in his right mind would do, and you'll get the official exchange rate and lose a lot of purchasing power.
The exchange rate at the Dinghy Dock isn't unusual. Anchoring a day later in Grand Case, the gastronomical heart of the island's French side, we had the same experience at Il Nettuno. The menu was priced in euros but the exchange rate was 1-to-1 - if we paid in cash. Later, while anchoring in Road Bay and Crocus Bay on the British island of Anguilla, we found that everything was priced in, yes, dollars. Still later we found that most everything in the once French island of St. Kitts was priced in dollars.
According to the CIA World Fact Book, about 1 percent of the economy in these islands is agriculture. Acres of untended sugar cane go unharvested on St. Kitts, for instance, because it is no longer economical to farm it. Another 14 percent or so is "industry."
The rest of the economy in these islands is tourism. As is true for many larger nations, the economy of these tiny Caribbean islands has been "dollarized" - the U.S. dollar, carried by cruising sailors and vacationers, is the de facto currency. Our European counterparts bring a veneer of euros, but when push comes to shove, it is all about the dollars.
One hint comes from the transoms of the big sailing catamarans in the nearby slips for the Moorings. This global sailboat charter company is providing our group of four couples with a brand-new, 46-foot sailing catamaran for a week of basking and brisk sailing. Our boat, the "Paw Paw," lists St. Thomas, BVI, as its home port. But a walk down the dock to check the other home ports shows such famous seafaring cities as Boulder, Colo., Minneapolis and Phoenix. Only a handful of Canadian or European home ports are listed. Again, it's all about the dollars.
These lovely boats have a delivered cost north of half a million dollars after the twin hulls have been stuffed with four staterooms, four complete en-suite bathrooms, complete electronics, including GPS chart plotter and auto-helm, zoned air-conditioning and twin diesel engines - not to mention a diesel generator strong enough to run the AC when you're anchored without shore power.
Someone in America gets to depreciate these floating mini luxury hotels.
The sharpest metaphor for the global currency situation is in Basseterre, the capital of St. Kitts. There, the Serenade of the Seas, a Royal Caribbean cruise ship, is tied to a long dock as we sail in. The dock leads directly to the domed customs house. From there, cruise passengers are unleashed to face the streets of a shopping mall. It is lined with shops offering luxury jewelry, diamonds and watches, all at bargain, duty-free prices. These are the kind of things that fill the glossy pages of upscale magazines during the Christmas season.
But step beyond that spiffy mall, and you're immediately struck by how poor the island is. And whether you are on St. Kitts or circuiting the much more developed island of St. Maarten, you can't avoid the abandoned building projects that represent bad loans made by bankers around the world. Will the tide of global lending rise again? Will these projects ever be revived?
Maybe. Maybe not.
Only one thing is clear. We can fret about the future of the dollar or the euro, but without them - without the spending of the industrialized Western world - the rest of the world is a truly desperate place.
Questions about personal finance and investments may be sent by e-mail to scott@scottburns.com or by fax to 505-424-0938. Check the website: www.scottburns.com. Questions of general interest will be answered in future columns.
- Universal Press Syndicate
