Chile Forum

Now that we are in this mess, I figure this thing is going to break a few different directions. Pointing fingers at who is to blame, well we have been doing that on the forum for the last three years. My finger is tired.

One, everything goes really bad. By this time next year or the year after we are all doing the road warrior thing for a gallon of gas. As most of us have that possibility covered by having moved to Chile in the first place, I will leave that to your imagination.

The other possibility is nothing happens. This all turns out to be election year media bs. Which, is a safe bet considering no matter what happens this is already confirmed media election year bs.

The other is the perhaps the worst case scenario. Even more than the mad max thing.

I think what will happen, no matter what happens, is that the politicians will attempt to bail out the financial institutions even if it means the governments comes close to or pass the point of bankruptcy themselves. Too much inbreeding between politicians and the financial industry going back hundreds of years. They will dump money in no matter what. There is no interest in buying up home loans, because home buyers are not campaign contributors.

So, governments go bankrupt spending themselves silly, other governments quit buying their debt, social programs get cut, taxes get raised through the roof all around the World, citizens protest, and so on and so forth all leading to serious political instability. Some form of martial law is imposed (by a snappier name of course). The U.S. and European governments fear for their existence, and start putting to work all the nice little capabilities they have built up to control the population under the concept of fighting "terrorist". Millions, and perhaps billions, start dying in indecisive low grade civil wars that drag on without the formation of new government or a total collapse of the old one. So, we all spend generations waiting for normalcy to return, until that becomes the new normal.

You know where I got the inspiration for that last script from?

A Chilean history book. They have been here and done this before in a slightly different situation. It is one of the reasons Chile is doing so well. They had many of the safe guards in place, because their financial system collapsed in the 70's and 80's under similar, all be it slightly smaller example, of the same circumstances. It took a dictator and a lot of deaths to right the boat with such a small population. What do you when there are billions of people involved?

admin wrote:well we have been doing that on the forum for the last three years.

Has it been three years already?

admin wrote:My finger is tired.

Doom fatigue - I hear you. My guess is we will hear all sorts of turn around stories this week, even "it's not that bad" and "it's a man-made problem with a man-made solution and here we are, and we have it" articles.

So the fundamentals I can learn from everyone here + MSM = there will be a significant downturn in all sorts of ways. Unless the world just went "Vanilla Sky" and someone will tell me to wake up soon, issues like food production, delivery, rising unemployment + rising population + all those boomers retiring, etc. will still have an impact.

admin wrote:It took a dictator and a lot of deaths to right the boat with such a small population. What do you when there are billions of people involved?

Control - You got it. I don't want to consider what steps would be considered necessary by TPTB when examining resource vs. population equations, but it'll be top down. My students have a whole different concept of privacy and they will melt seamlessly into the merging corporate state(s). I don't see Mad Max on the road unless we get a Judgement Day or 12 Monkeys scenario, but control, you bet, and a flat world, with even greater concentrations of wealth and more than ever in poverty will be the trend.

I still see the fundamentals of don't hold more paper zeros than you need right now, learn a trade and be self-reliant, and the boy scout motto as common sense. On the bright side: Water is the new oil, and SoChile has lots of it!

MikieO wrote:Make sure those seeds are heirlooms! And plant a few Kuntzmann seeds for me, I'll be down to harvest them when cold

That's the other liquid SoChile has a lot of and I for one plan on taking stock from my local Lider upon arrival.

... my job is safe, my pension is safe

I don't know about your job, but in regards to your pension that can be afected by the market. A pension fund will normally invest money to make the fund grow, they are considered institutional investor.

For simplicity sake if the investment of a given fund where worth 100 million dollars by the end of September, and they were heavenly invested on the market a drop of 30% means that now they are worth 70 million, so there are implications to a drop like this, on the other hand most funds will diversified their assets to mitigate the impact of a market correction.

The real fear on a defined pension is that the fund may go broke, on a 401K is that you may run out of money.

Interesting times we live on!

several writers on this forum have commented on my statement that "my job is safe" and "my pension is safe". i understand that there are no iron-clad guarantees about anything in the world of finance. i understand that my pension fund may be slightly affected by the current market turmoil. but i also know that CalSTRS (California State Teacher's Retirement System) is managed very conservatively, the fund is funded separately from the state government, it is big enough to be a player in the reconstruction of the market, it is an old-fashioned defined benefit plan and it will be among the last funds to fail if things continue to go badly.

as for my job.....what can i say? tenured teachers in the public school have a lot of job security. nobody wants our job when times are good, we often get brushed aside as "just teachers" and we put up with a lot of crap from students and parent and administrators...BUT....we get a lot of vacation (travel) time, and when the private sector sags, this job provides shelter from the storm. i can have this job for 20 more years, if i want it (i don't, i have other plans...in the southern hemisphere ). if things get so bad that the government fails to fund public education, then the whole society will be in some serious deep doo-doo. it could happen, but probably not during my career.

Nooo the USD dropped to 616! It needs to stay above 625 until next wednesday so i can buy my new computer in chile!

q. Do books actually burn at 451 degrees Fahrenheit?
a. Yes, paper burns at this temperature.

the stock market had a huge day yesterday (monday....record gains). it seems that investors like the idea of governments around the world socializing the banking system. i am sure that it grates against a few people, like people who truly believe in the "free market" and people who are paranoid of "one world government". in the end, though, economic practicality wins out over philosophy. what's next? a huge week on wall street? will we now see a drop in the value of USD vs CLP?

Credit markets whch are much more important than the stock markets still frozen.

Bond market will probably fail next. Time frame? - don't know. Can't keep printing money like there's no tomorrow without consequence. Dollar holders will get screwed sooner rather than later.

Stock market huge day gains compared to what? Where was it a year ago? Has the Japanese stock market ever matched the 80s highs?

Long term plan would be to buy investments and specs which will benefit from this idiocy - Asia, or whose fundamentals haven't changed - agro and similar.

Wow, what a drop.
10:27am
596 CLP/USD
dollar index falling towards 81 at 81.02
copper up 19 centavos to 2.51

FYI/FWIW:

Shipping Lines Say Tight Credit Cutting World Trade

Oct. 15 (Bloomberg) -- Pacific Basin Shipping Ltd., Hong Kong's biggest dry-bulk carrier, and Precious Shipping Pcl. said demand for moving coal, iron ore and other commodities will fall because banks are guaranteeing fewer loads.

``Letters of credit and the credit lines for trade currently are frozen,'' Khalid Hashim, managing director of Precious Shipping, Thailand's second-largest shipping company, said in Singapore yesterday. ``Nothing is moving because the trader doesn't want to take the risk of putting cargo on the boat and finding that nobody can pay.''

http://www.bloomberg.com/apps/news?pid= ... refer=home

Anecdotal observation:

Recent days have seen less cargo ships waiting offshore of San Antonio. Today I see only three when four weeks ago, it was common to see seven or so ships. May mean nothing as this is only anecdotal.

Anecdotal counts when the MSM has a narrow agenda.

Other observations to offer:

1. Most know I'm on a univ. campus when stateside. Two teams have cancelled their athletic games because they lacked the funds to travel to our location. More are expected. Coaches are comparing notes and while happy about the forfeit win, are concerned about the remaining season and what the forecast is for next season if the problem becomes widespread. It would be interesting to see if other colleges were experiencing similar cancellations for away games involving travel. Cancelled bowl games anyone? In light of the long list of states with serious deficits, and the warning/forecast meeting for all campus recently, these two cancellations could be seen as expressions of the situation.

2. This is copied from the Life After Oil board (not mine, just sharing):

Re: Grain shipments to international buyers stalled due to recent credit problems.
« Reply #20 on: October 09, 2008, 07:42:01 PM »

--------------------------------------------------------------------------------
There's a grain loader on the waterfront here in Seattle near where I work and it takes most of the day to fill one ship. I walk past it regularly after lunch as a sort of decompression thing I do each weekday. I see ships from all over, even places like North Korea on rare occasions, getting filled with American grain brought in by train from Eastern Washington. Today there were five, yes FIVE full sized ships flying Chinese flags waiting. I've never seen a backup there. It's really odd. That means they'll be there waiting over the weekend as they're loaded around the clock. Oh and yesterday there were two, both Chinese. Normally the grain shipments seem well organized. This is total chaos. I've been going there for more than five years and this is the first time I've ever seen more than one ship waiting while another is being filled.

Anyone in Seattle, look out from Myrtle Edwards Park, the grain elevators at the north end of Elliot Bay. There you will see at least five (there may be more by now) gigantic Chinese grain haulers making quite an eyesore on the sound.

http://www.doomers.us/forum2/index.php/ ... 32.15.html

The thread also has a discussion about how much they can hold and regardless of the debate, it is quite significant in terms of quantity.

The grain ships in Seattle is odd. I wonder what that means?

As for here in Region X, Futaleufu, we have dual factors affecting life here. The volcano explosion - closing of Chaiten as a port (for now?), and the world economic crises......

Fuel was always expensive in this area, Futa having no gas station. We could go to Chaiten or into Argentina, however in Argentina you could only fill you tank, not auxillary tanks to bring back. We just made the trip to Palena in the south to get fuel (One and a half hours) and paid 802 pesos for one liter. Gas in Futa is available at the mechanics shop for 1000 pesos per liter. To fill up our small Nissan pickup, and three plastic auxillary tanks cost us 96,000 CLP.

gregf wrote:This is sort of a time of opportunity isn't it?

With all the stocks going down so drastically -- if you picked ones that the most likely to be back to normal or better in 10+ years, you could clear a hefty profit, right? For example, I'm 24, if I invested just a modest $5k in a few wise places, 10-20 years from now those $5k in stocks should be worth a lot more, right?

I've been thinking of doing something like this. Am i an idiot? I don't know anything about trading so I'm not sure I should even if it IS a good idea, though

this market is NOT a place for a newbie. this is a dangerous environment. dont try to learn to daytrade now. concentrate on safety - dont try to pick a bottom - the bottom is a long way off - we are not gonna see a bottom for several years imho. many people will get killed trying to "catch a falling knife" dont be one of them. gold, silver, oil investment trusts, quality gold stocks, canadian or swiss government bonds. this is the kind of stuff that you should be looking at. dont put all your money in one basket and be careful of your broker - take delivery of your shares, or bonds

jon

Bold emphasis mine.

-eeuunikkeiexpat

Bill H from the Le Met site wrote:... We have witnessed an extraordinary move into short term treasuries that has only occurred once before in U.S. history, the early 1930’s. This is akin to all the passengers running to the back of the Titanic as the stern rose up as the bow was submerging. Back in the 30’s piling into short term Treasuries was a logical response as Dollars were Gold backed and Treasuries were Dollar denominated. It made sense back then, however it is a death trap today because of the fundamental flaw in our currencies. Now we need to watch to see when short term rates start to rise since that will be a clue as to the timing of the total sinking of the system. Short term rates will start to rise and CNBC will blare into your living room that “the worst is over, just look at short term rates, the credit markets are THAWING”! HURRAY! In a sense they will be correct, the credit markets will “thaw” for maybe 24-48 hours because capital will begin to exit the short end and rates will rise. BUT, and this but is HUGE, this will be the beginning of capital fleeing the fiat system. The credit market will go from thaw to total meltdown virtually overnight. Once short term rates start to rise they will not stop for quite a while. Short rates will blow past Fed funds, the discount rate and all other “official rates”. This will be the beginning of the end for the U.S. Treasury as auctions will fail and the world will ration capital to the world’s worst abuser of credit. This will be a panic into anything and everything real.

A good primer for what is to come would be Argentina in 2002. The stock market cratered, interest rates went up drastically and the currency value imploded. When people actually figured out what was happening, they got out of all fixed income including the banks and then panicked back into the stock market. They primarily bought shares in companies that actually produced real goods and real products. This was the response to a crashing currency. In other words, get your money into something real. ...