Investment Biker

by Jim Rogers

He did it, I did it, and fifteen months after I gave them my dollar check I received the confirmations that I had bought shares. Cocky now, I bought some more—or rather sent another dollar check. Then I again had trouble getting confirmations of these new trades. I would call down there and one of Señora Inez’s clerks would tell me they had bought the shares, but they would never quite manage to get me the confirmation slips.

  International investing has its risks, and they’re not all those of declining currencies and share prices.

  Within an hour or so of crossing the Colombian border we rode again through the glories of the Andes. In a forty-five-minute period we went from blazing summer at low levels into freezing winter at the misty tops of mountains, where we rode into clouds and then came out above them. We plunged into the desert, then across fields and up, down, and around hills. For people who love to drive, this was one of the world’s great roads. These would be the last real mountains we would see until we hit the Canadian Rockies on our way to Alaska. What a glorious ride—but not many people vacationed here because of the guerrillas, the drug wars, and the cholera epidemic.

  Everybody had heard of the Shining Path, but the Colombian guerrillas were just as dangerous and we were as worried here as we’d been in Peru. These guerrillas didn’t have the PR geniuses on staff that the Shining Path had, or the cadres it sent to Europe to sell other left-wing movements on how terrific it was, how much it needed support, and how it was the “fourth wave.”

  We also began to worry seriously about the Darien Gap. Stretching from Colombia to Panama, it was a little more than a hundred miles as the crow flies of missing road, the only unfinished part of the Pan-American Highway between Tierra del Fuego and Alaska. Because of the swamp and jungle it covered, no ground traveler ever went over it as the crow flies.

  In fact, nobody had ever figured out how to pave a way across it, or even how to build a simple path. If an entrepreneur could, and if he could set up a toll road there—and keep the local authorities from taking it away from him—he would become fabulously wealthy, for tourism would become gigantic through the region. Opening such a road would be on a par with the opening of the Silk Roads and routes to California and to the Northern Territory in Australia: boom-time, big-time. To do it, he would have to fight raging rivers, jungle, swamps, and the rabid greed of politicians.

  Who would use it? Drive to Alaska in the summer and count the number of American RVs on the roads. Americans have an itchy foot. They’re now beginning to tour Mexico, and before long they will push farther into Panama. There they will look longingly south and wish they could go yet farther, but they will have run out of road. Americans aren’t going to load their RVs on a boat and tour Europe or Asia. South America is the obvious frontier for American travelers. A road to South America! It will produce one of the great travel booms of all time.

  We couldn’t find any guidebooks describing how to go across the gap from south to north. They all assumed you were headed south only, and nobody expected you to drive. We had to figure out how to cross it, a hundred-odd miles of swamp and jungle.

  On many roads we continued to get astonished looks as Tabitha’s bike swung into view.

  Heads turned to follow her. Smooth brown faces registered shock as they realized, “It’s a girl!” from the blond braid hanging out of the back of her helmet. Then they turned and said, “There’s another one!” as I passed by their astonished gapes.

  As tall, blond Tabitha strode down these streets in jeans and a black leather jacket, heads turned, especially those of women.

  Driving into Pasto felt and looked like driving into a typical American city. Colombia was more prosperous than Ecuador, with shopping centers, American cars, stores, the whole modern works. I wondered if drug money had come this far south in Colombia and made this into a boom-town. Despite condos that reminded us of Wichita, guerrillas were active here, too. Seven government officials were assassinated the same day we passed through, but we saw nothing. We continued on toward Bogotá, still on an extraordinary road.

  An investor had to be here to discover the prosperity, because it wasn’t in the balance-of-trade figures. Drug trade statistics don’t show up there. A lot of the money probably got stashed in Switzerland or Panama, so that it wasn’t recorded by the central bank.

  The road from Pasto to Cali was wonderful, but we had to be on the lookout for rock slides. The roadsides were full of vulcanizadoreos, places that patched and changed tires, symbolized by a used tire sticking up by the edge of the road. We had found this to be a symbol for these shops around the world. Tires here weren’t made as well as in the States, yet the locals rode on them forever and needed a place to have them repaired. Here there were many more roadside repair shops than back in Africa, Siberia, and China, as there was lots more traffic, lots more people riding.

  We encountered more blacks and people of mixed Native South American blood here than down south. The road life on the Pan-Am continued to be alive with cafés, hotels, fruit stands, and butchers.

  As we had in Guayaquil and Quito, in Pasto we made inquiries about crossing the Darien Gap at airlines and boat companies.

  In Cali we found out that a boat would take us around the missing leg of the Pan-American Highway. Boats left erratically from Buenaventura, although one travel agent here was certain they would not take motorcycles. The road to Buenaventura was bad, and we would have to cross a mountain. Another agent thought the boat would take the motorcycles but not us.

  Then we were told about an airline that would take us, motorcycles and all, and surprisingly, the airfare was cheaper than that for the boat. Cheaper and faster appealed to me. A couple of hours and we’d go from Bogotá to Panama City.

  That was the story, yet we had learned never to believe any of this stuff till we got to the point of departure and were actually on board.

  In Bogotá the airline agent said he had a load ready to go. He would put us on the plane if we would go the next day. It meant we wouldn’t spend as much time in Bogotá as we would like, but it also meant we wouldn’t have to take a chance on not getting a flight at all. Transportation between countries was never simple. Next week somebody might want to know who had authorized us, if we were transporting drugs, were we smugglers, who had allowed the bikes to come, and had we been vaccinated. Besides, it might take them two weeks to load another plane, and then it might not have room for us.

  At the airport we found that it was a cargo plane going north. As back in Beijing, they had never taken a motorcycle this way before, thus they didn’t have any regulations and were easy about it. They didn’t even want us to unhook the batteries and drain the gas tanks.

  Getting aboard turned out to be such a snap, taking only two or three hours to process us through instead of an entire day, that we were early for the flight by several hours. We hot-footed it back into Bogotá by taxi to the Gold Museum, which had more and better gold work than any place in South America, and for my money, in the world. The tragedy was that the Spanish had melted down tons of gold artifacts for coins and sent them back to the motherland, all in a futile effort to prop up the sagging Spanish empire.

  The plane turned out to be as long and empty as a truck. A hydraulic lift hoisted the pallet on which the bikes were strapped and shoved it inside. The plane was then loaded right up to the pilot’s aluminum door. I sat on a padded bench outside, next to the toilet. Tabitha spent the hour flight in the cockpit looking at the countryside and oohing and aahing, letting the pilots show her what was going on. Doubting they’d have the same enthusiasm for me, I read the International Herald-Tribune.

  I left South America even more bullish on the continent than when I’d arrived.

  The old dictators and exchange controls were mostly gone, and the people were no longer in a mood to tolerate dictatorships by the military or left-wing professors of philosophy. Chile’s economic miracle was a beacon to every other South American society: If Chile could better the lot of rich and poor alike, why
couldn’t their country?

  South America didn’t have the potential border problems of Central Europe and Africa, which lent it stability. The Spanish had given it two great gifts: a common language for a good portion of the continent and a common religion, Roman Catholicism. A third great cause of border strife, tribal differences, was minimal, partly because Chile and Argentina had solved their tribal problem by killing off everyone not of European descent in the nineteenth century. Only a stalled dispute between Peru and Ecuador over their border remained.

  The South Americans were developing real stock exchanges, and in many cases, sound money. What else did an investor need to know? Using my formula of buying nearly every stock on the exchange, I’d bought shares in Ecuador, Peru, Bolivia, and Uruguay, as well as shares in Argentina. As exciting as Chile’s prosperity was, its market wasn’t for me at the time.

  I was eager to see if the same economic revolution had visited Central America, where because of the strategic importance of the Panama Canal, Americans had meddled for more than a century.

  For all my sangfroid about Judd, we were rushing by the time we reached Panama. Compared with the places we had crossed, Central America was small, about the size of France. Its 29 million people were about half France’s population.

  I suspected that Panama was a great short. While there might be a boomlet over the next several years in tourism, over the long term, as the military and canal employees leave, the economy will contract. Someday the world will come to its senses and legalize drugs, which will cause the money laundering and banking frenzy in this Switzerland of Central America to collapse.

  The U.S. dollar is Panama’s official currency although the Panamanians call it the balboa. After we leave, the Panamanians will literally have to print their own currency, since I can’t see where else they will get more. When it comes to printing money, Latin Americans have a long and rich tradition of overdoing it. For a while they will make enough dollars off the canal to keep the country looking prosperous, especially if they allow the canal’s maintenance to run down.

  …

  Panama City is essentially an American outpost, an American colony. It made us think we were back in America—a Marriott hotel, a Kentucky Fried Chicken, and a McDonald’s. The supermarkets looked like those in the States. We didn’t even need a carnet to enter the country, which almost made me dizzy, like a deepwater fish suddenly come to the surface. We were told we wouldn’t need one between here and the States, which is one of the reasons recreational vehicles eventually will be able to come this far south.

  We found a BMW dealer. In addition to the regular ten-thousand-kilometer servicing, the luggage racks had to be welded again and one of my rear shocks had to be replaced. God knew when we would see another dealer. We had a book listing them, but it might be out of date or the dealers might have gone broke.

  Panama was peaceful because of the American military presence, but we were about to head into three or four more war zones. As usual, we gathered information about what was ahead. We would have to go through at least six of the seven Central American countries, although we still weren’t sure what to do about El Salvador, which was said to have a good road but was in an all-out, shoot-’em-up war. Costa Rica was at peace, but in Nicaragua, where theoretically the war had ended, the Sandinistas and the contras were going at it again because they weren’t happy with the peace settlement. Not only was the road through Honduras bad, but bandits and smugglers would come at you, and sometimes the guerrillas in Nicaragua and El Salvador spilled across its borders. In Guatemala, a major civil war raged. There were two ways to go through Guatemala, and we kept trying to find someone who knew which was safer.

  We set out to see the canal, which was extraordinary. I was prepared for an operation run with the efficiency of the U.S. post office, but I was surprised. As they did with the early days of the space program, our people ran the canal successfully, with military precision and dispatch.

  The canal itself is one of the wonders of the modern age. It took seventy-five thousand men ten years to construct it at a cost of $400 million, real money back in 1903. The builders of the canal faced huge problems: tropical disease; the unusual geology of the isthmus, which made landslides a constant hazard; the enormous size of the locks and the volume of the excavation needed; and the need to establish entire new communities, to import every last nail, and to organize work on a scale to rival that at the pyramids and Machu Picchu.

  Through an intricate series of locks, the canal raised a ship eighty-five feet to Gatun Lake, which at the time of construction had been the world’s largest manmade lake. Ships then crossed its 23.5 miles and were lowered a second eighty-five feet to the other ocean.

  The Canal doesn’t operate on a first-come, first-served basis. Ships make appointments long in advance. A screw-up, forcing the canal to be down for a few days, ties up shipping all over the hemisphere.

  Unfortunately, the canal had been built almost a hundred years before. By now ships had grown to the point where many were too large to pass through. Even when they fit, it took eight to ten hours to travel the fifty miles from deep water in the Atlantic to deep water in the Pacific.

  The Panama Canal is technically obsolete now—too narrow, and it takes too long for ships to go through. For years builders had had to design ships so they could pass through the canal by making them narrower and smaller than was ideal. With advances in engines and fuel efficiency, however, which enabled ships to round the Horn in days instead of months, they could build super sizes and bypass the canal for the Horn.

  Supply and demand was working hard once again. For a long time our government had had a monopoly on this Atlantic-Pacific passage and it had kept raising prices. When it had cost say $100,000 to go through the canal and $97,000 to go around, owners had sent their ships through the canal, figuring the risk of rounding the Horn wasn’t worth it. When it had become twice as expensive to go through the canal, they went around.

  In the history of the world there has never been a monopoly that has lasted forever. The canal was one you’d have thought was perfect; but the world changed, as it always does. Most monopolies price themselves too high or become inefficient and lax and provide bad service. Our post office is a good example, a monopoly imposed by law. No one but the U.S. postal service is even allowed to put an envelope into your mailbox. Still, United Parcel captured the package business because its customers couldn’t afford to send their packages through the monopoly.

  It was a marvel to watch huge boats go through the canal, no more than a foot of margin on either side of a hundred-foot-wide hull. The need for such military precision in all operations of the canal made me pessimistic about the future of the canal and Panama. What most heads of state do in a place like Panama with a prize like the canal is use it as a job source for cronies and hacks.

  In 1990 the canal took in $355 million dollars on thirteen thousand transits. During the prior ten years the U.S. government had spent $100 million a year streamlining and improving canal facilities and operations. Had it made a profit? Did anyone know?

  For the first year or even several years after the U.S. leaves in 1999, the canal will be well run by the old employees, who have been running it properly, but then some politician will decide his nephew can do a better job. (Remember, every nephew down here needs a job.) Taking a look at the books, this smart nephew will say, “Hmmm, our profit is going down. Why do we have to spend so much money oiling the gates?” or, “Why patch that crack where the tanker banged the wall? Why paint continuously? Why run the air conditioners night and day to keep out a little mold?” The easiest way to raise profits will be to defer maintenance.

  Eventually Panama will put itself out of the canal business, partly because all the money brought in by American support personnel will be gone, and partly because it will make a mess of the maintenance. The Panamanians have misjudged the canal as a big moneymaker. Nobody has any idea whether it’s profitable or not. If anyth
ing has ever been abundantly clear, it’s that the U.S. government does not know how to keep a proper set of books, and our government becomes especially hopeless whenever the money spent is listed for national defense.

  Central America, to a far greater extent than South America, has been heavily influenced by North America. Someday lots of Americans will drive down to Panama and back. I see the day when Avis will rent you a car you can drop off in Panama City, or you will be able to rent one there and drive to Tulsa. We were even able to find a road map in a filling station, something almost unheard of over the past four continents.

  The United States has had a 150-year-long history of basically owning these Central American countries. When they have strayed too far afield, when they’ve gotten too uppity, we’ve come in and thrown our weight around. Just in my lifetime, this has happened in El Salvador, Nicaragua, Costa Rica, and Panama.

  Costa Rica had a huge national or civil guard, to whom American advisors were teaching map reading and other military techniques. Map reading? After all these years, you’d think their instructors would have got the hang of it, but no, our advisors were still there, still a buffer between Nicaragua and our interests in Panama. With the airplane and today’s instant communications, the canal was not as important as it had been in the First World War, but generals often lack the vision to look ahead and continue to be stuck fighting the last war, if not the one before. Once Panama had become important, the domino theory took hold. Every country next to one next to Panama had become important to keep in line.

  Costa Rica periodically was pushed in the States as a place to invest because of its beautiful beaches, mountains, jungles, etc. Many American retirees had moved there. Costa Rica had been bankrupt three or four times in the past one hundred and fifty years, but the hucksters always left that out. It had an extremely high debt per capita, a huge fiscal deficit, and high inflation. We heard talk of increasing taxes on retirees going to Costa Rica to live. Talk about killing the goose that laid the golden egg! Nobody ever accused governments of being wise. The smart retirees would move to Nicaragua, Panama, and Mexico.