Chile Forum

"US backing for world currency stuns markets"

http://www.telegraph.co.uk/finance/econ ... rkets.html

Seems a bit of a turnaround from a few days ago.

It seems the government has finally begun selling its $3bn today:

http://www.economiaynegocios.cl/noticia ... p?id=61366

James.

yea, there also seems to be some signs of life in the copper market. That very well might mean more than the dollar sales.

Copper is heading up again and most of the suppliers I deal with have run through their inventory that was bought at twice the price. I paid 34% less last week as I did a month before as the new inventory is being restocked at the new lower price but they also warned buy now as its moving up again. Should mean a stronger peso shouldn't it as the market price rises.

Yea, I would suspect the market is going to read today's announcement at least in the short term regarding the auto industry to mean less copper / metal demand.

What I suspect is going to happen, that will lead us out of all this is the just in time supply chain will run dry soon. One day we will all wake up and everyone will be screaming there are shortages of everything because industries around the World put the breaks on everything and also the credit markets froze. Really bad inflation I suspect is soon to follow in most of the World. Between distorted supply and demand relationships and all the money being printed, it will be a zinger shortly.

I seen one of the talking heads on bloomberg TV today talking about corn and soy futures. They mentioned that they are expecting a massive shortage next year of just about everything accept for soy, because just about every other type of seed has gone up in price. So, farmers are not planting things that cost more to start in an economic downturn. They are expecting like 40% reduction in things like corn and wheat production because of it.

According to my CPA, June 30th is the last date to declare your Chilean accounts to the FedGov (depending on the balance). .

Marketwatch/Bill Watts snapshot of where this stands as the G-20 prepare to say "Bon Voyage" to each other:

"Leaders of the Group of 20 nations are likely to agree Thursday to impose sanctions against countries that don't comply with a crackdown on bank secrecy rules, Stephen Timms, financial secretary to the British Treasury, told reporters at the G20 summit. Leaders are also likely to agree to publish a list of countries that don't comply. Ongoing discussions center around when that list would be published, he said. Germany and France have demanded that the G20 summit produce action against tax havens.

Leaders of the world's most powerful wealthy and emerging nations were working toward an agreement to at least double the International Monetary Fund's rescue capabilities and to sanction countries that fail to comply with a crackdown on bank secrecy rules, British officials said Thursday. Progress on those issues comes as disputes over the need for additional fiscal stimulus spending and measures to strengthen international oversight of the financial sector threatened to dominate the crisis summit of Group of 20 leaders.

Chancellor of the Exchequer Alistair Darling, Britain's finance minister, said there would be "concrete action" on the issue of tax havens by the end of the day.

The final G20 statement to be issued later Thursday is likely to include sanctions against countries that don't meet new, international standards on banking transparency, said Stephen Timms, a deputy to Darling.

The leaders would likely agree to publish a list of non-compliant countries, he said. Discussions now are centered on the timing of the publication of such a list.

A tough crackdown on tax havens is a key demand of French President Nicolas Sarkozy and German Finance Minister Angela Merkel. Leaders are also following through on a pledge by G20 finance ministers earlier this month to "substantially" increase funding resources for the IMF, Timms said. Officials were on track to "at least double" the International Monetary Fund's emergency resources to $500 billion, Timms said. "Discussions are taking place about exactly what that level would be."

"A disappointing G20 meeting outcome, which nobody hopes for, should favor the U.S. dollar, as investors are likely to bet on a resumption of risk aversion: expect, thus, equity markets and commodity currencies to return under siege, dragging [the euro] lower" versus the dollar, wrote strategists Luca Cazzulani and Roberto Mialich of UniCredit MIB in Milan."

They did it. Here goes the accounting slight of hand that will magically fix the economy (at least on paper):

http://finance.yahoo.com/news/FASB-give ... &ccode=TBD

As I have said before, the banks do not need bailing out. Their assets are fine. Now that they have all the government money they could get, they will revalue their assets and be all peaches and cream again. It was all an accounting scam. Why anyone did not see this as an accounting scam, as it started under the Bush Administrations Enron accounting standards, I will never understand.

I seen another talking head on Bloomberg explain, in the best analogy I have seen yet the derivatives AIG mess. He asked, "why would you insure your neighbors house"? That is what the derivatives brokers and the insurance companies where doing, and traders where gaming the system by shorting the derivatives. Rather than like normal shorting where you own a percentage of the underlying asset and your losses are unlimited, they risked almost nothing to short them.

I would rephrase it as more like seeing smoke in your neighbors house, and rather than calling the fire department you take out a fire insurance policy. You don't own the house, and risk nothing but your last premium you payed.

His suggestion was that they force everyone in the market to own the underlying bonds, in order to insure them. What a novel idea. He believed that in a week all the credit default swap bs would be gone.

By Ambrose Evans-Pritchard.

I always suspect there is some kind of agenda to his articles but he does write quite a few interesting ones that go beyond the boring blurbs that pass as news for the sheeple.


A 'Copper Standard' for the world's currency system?

Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal.

By Ambrose Evans-Pritchard
Last Updated: 2:41PM BST 16 Apr 2009

http://www.telegraph.co.uk/finance/comm ... ystem.html

All these government economic stimulus packages are just economic stimulus packages for Chile. Chile might come out of this economic crisis making money, rather than loosing money.

Don't throw those 10 peso coins away. Someday they might have 1 to 1 parity to the dollar naturally.

Ambrose often has interesting stuff (Euro bashing never gets old) but like you I have my reservations. I wouldn't be surprised if some traders where feeding him selected data to help tilt things a certain way.

Great news for Chile that China is stockpiling, however I'm thinking that the price of copper has gone up way too much way to soon. All that China is doing is ensuring that the price stays lower than the 2008 highs for many, many more years to come as they turn to their stockpiles when the price goes up.

A point that the article touches on regarding Hybrid cars is also spot on I believe. I read this article a while ago and this is yet another sign of China's long term economic ingenuity that will strengthen their status as a global superpower. It's scary to see the foundation that they're laying for their own future, but they deserve it for having the foresight.

http://business.timesonline.co.uk/tol/b ... 870223.ece

It really is a shame that science and innovation is so far on the back burner in Chile: the people here seem to prefer to import and buy rather than innovate. Any great scientist that Chile does actually produce will be rewarded tenfold in another country for their skill/accomplishments. As for the US we deserve to be passed by due to our complacency and perceived superiority.

I only wish it were any country besides China...

Amen.

Here's an interesting point of view on copper and molybdenum if you filter out the investment advice. If Gianni Kovacevic's analyses are indeed accurate Chile stands to benefit greatly.

http://www.commodityonline.com/news/Why ... 6-3-1.html

All things considered, Chile looks to be about the best thing going amid this crap

http://www.economist.com/world/americas ... extfeature

Even in the better-run countries, the scope for fiscal stimulus is limited. Only Chile, which saved the equivalent of 12% of GDP in a special fund during the boom, can repeat the dose for several years from its own resources.