Chile Forum

This weekend while enjoying a pisco sour and an Asado, it occurred to me that Chile might have just dodged the bullet because Chile was on vacation. The Sept 18th holiday assured that no one in Chile was freaking out. They where all on a nation wide scheduled drinking binge. Yea, some I am sure like the boys traded in NY got hammered, but the overall economy and the guys trading pesos did not get a chance to crash.

They where showing all the stock markets around the World last week in the Mercurio. The Chilean market was only down 9% for the year. Everyone else in the World was down over 13% and most over 20%. Many where down 4% and 5% in a day.

In a few hours, when the markets open in Chile we will see if that is true. We will either see almost no reaction in the market and peso, or we will see a entire weeks worth of anxiety unloaded on the market all at once.

I am betting on nothing happening. Likly some radical swings in the pesos.

Hang on to your pesos boys, here we go.

On the bailout BS, I think it is going to amount to nothing. The markets will burn through that theoretical cash in their minds, and go back to panic mode in a couple of weeks once they realize this is mostly political theater for the election year. $700 billion, almost $2,000 per American, amounts to jack when the problem is trillions in unknown problems in the system. No fix for the housing market either.

Here would be my solution, if the government is going to piss money away.

Announce that the government will buy up good and bad mortgages at a discount, and will make new mortgages at a discount available to average Joe blow. Refinance the mortgage across the board with low interest rates. Any institution stuck with the mystery meat, will then see those assets regain value and at the same time have the ability to unload some of the mystery loans bundled up in those derivatives no one seems to be able to explain what the hell they are and who owns them.

A few of the benefits of the Spencer Plan is a massive infusion of liquid cash at the consumer levels, housing market returns, banks and other investment houses get relief, lending markets start functioning again, overpaid executives get to keep their jobs, stock market goes on a buying binge from lots of liquid consumer credit, new housing starts start again, government gets stuck with real assets with real appreciating market value, poor people get to keep their homes, credits, and pensions, the government is not nationalizing the dam stock market like this was 1950's communist Russia.

Well, all I can say is that the logical traditional relationships seem to be reasserting themselves.

Kicking myself for not taking out more CLP this weekend at 547. Now 530 and falling as the dollar falls and copper makes a comeback along with oil, gold and other commodities.

The debate about the US is the world vs. the US is not the rest of the world is still up in the air IMO.

Happy speculating and investing and do make sure you have a lifeboat. NIA. DYODD.

yea, Paulson and Bush are sounding like Chavez and Morales. Banana republic economics.

What's really frustrating is that even in this very real crisis that has very real consequences that are direct to US citizens, they are using the same strategy as Iraq (Urgent! We're in danger! nuclear bombs WILL come tomorow! If you don't agree to give us this power you hate working americans!)

Its so terrible. In this time, when such a huge bailout REALLY needs to be talked out and understood and analyzed, their doing the same thing. 3 Pages! The proposal was 3 pages! And Bush and crew resist limiting golden parachutes, resist giving tax payers ANYTHING in return for the bailout, and their excuse? Its urgent! we cant discuss this now, just sign the damn thing!

Well at least THIS time, unlike in Iraq, many many citizens are writing their senators and giving them an earful about how this sucks and they are not happy. People seem to not be falling for it. Though I don't have much hope, because hte simple arguments of Bush and Co (You hate america and the simple working class man if you dont do X or Y right now) seem to always work in the end. The democrats or other Republicans screaming about the implications, danger, and subtexts that this short crap proposal will allow, get turned into evil obstructionists that hate america, and people buy it.

I hope they don't.

Intersting article on how Sweden dealt with this crisis (and leveraged their buyout to get something in return, which Bush, Paulson, etc are pretty much refusing to do, just repeating how urgent everything is):

http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?em

i think the current crisis is gonna screw us all really hard.

hey anyone know where abouts...in Vina or Santiago I might buy silver or gold in bulk

no seriously anyone have any info on that?

Going shopping for land in Southern Chile. Sometimes it even comes with Gold under it.

boy, don't mix that one up your pocket when tipping the bag boy at the grocery store (you do tip him right).

What is the value of that now?

OpEdNews, PA wrote:... we as taxpayers should be happy that we are investing our tax dollars in toilet paper instead of something like gold ...

Below: 1- month TP (toilet paper), 3-month TP (toilet paper) yields update

admin wrote:Going shopping for land in Southern Chile. Sometimes it even comes with Gold under it.

I'll second that - but we haven't found gold - perhaps our eucalyptus are worth something again for toilet paper?

I thought this guy summed it up nicely:

http://www.lewrockwell.com/latulippe/latulippe90.html
Contemporary America is rather like an overdosed crack addict sprawled face-down in the gutter. For decades, our economy has been smoking the heady drug of cheap credit, which served to "stimulate demand" and produce pleasurable but artificial booms. Unfortunately, each boom was followed by an inevitable bust as the credit-fueled bubbles burst – first in internet stocks, and now in real estate.

Like every addict who finally "hits the bottom," America now faces a stark choice: Do we suffer through a violent, shaking withdrawal, or do we turn away from the painful rigors of "going clean" and reach for the bong one last time?

America’s addiction to cheap credit has ridden the nation into a box-canyon of sky-high debt and misallocated investments. The collapse of the sub-prime mortgage market has sent the balance sheets of our major banks into a sea of red ink. Strapped to a gurney and screaming for another hit, bank executives are now demanding a massive infusion of government (read: taxpayer) capital to re-inflate the bubble.

But this would only serve to "throw good money after bad" by perpetuating the ever-expanding mountain of malinvestments.

A better, "tough love" approach would be to simply allow the rotten structures to fall. This would liquidate bad investments and save precious capital for the rebuilding process.

Unfortunately, the folks with the most to lose by "going clean" are the ones with the power. The daisy-chain of collapsing financial structures has laid bare a horror-show of cronyism and corruption at the very heart of our financial and political system. The revolving door between quasi-governmental financial entities (like Fannie Mae and Freddie Mac) and the Washington power circuit has created a dysfunctional New Class that is determined to keep the racket going at all costs. If left to their own devices, this clique will eventually transform America into a giant plantation, with the vast majority of the population reduced to toiling under a lifetime of indentured servitude.

As I watched this circus of preposterous bailouts unfold last week, two distasteful ideas came to mind:

First, the quaint notion that America has a free market economic system is gone. In reality, our government is manipulating nearly every aspect of our economy in an inefficient and horribly unjust manner. Market forces, which normally function to sort out winners and losers, have been largely replaced by arbitrary government diktats.

For instance, our government is straining every fiber of its regulatory muscle to raise real estate prices (in a vain attempt to re-inflate the housing bubble). But this is not a socially neutral endeavor. After all, for every person who sells a house, there is also a buyer. When the government manipulates housing prices upward, the practical effect is to steal money from buyers and give the loot to the sellers.

Or consider our interest rates. The Federal Reserve has been holding interest rates at absurdly low levels (even below the inflation rate) for years, because easy credit policies give a short-term "stimulus" to the economy (and help to keep the bankrupt federal government from paying higher finance charges).

But for every borrower, there is a lender. If the government uses its influence to lower interest rates, it is essentially stealing money from lenders for the benefit of borrowers. Thus, folks who buy bonds or CDs are getting a far lower return on their investments because of the interventionist policies of their own government.

Another example is the carefully orchestrated campaign to keep stock prices inflated. It is a poorly-kept secret that our government maintains a "plunge protection team" whose main duty is to prop up the Dow and prevent any major downturns in stock prices.

Aside from the issue of whether stock prices are any of the government’s business at all (they aren’t), the government’s actions are again unfair and confiscatory. If a hypothetical investor analyzes the market and decides that stocks are overpriced, his most logical strategy is to sell short. If this assessment is correct and the market falls, he’ll make money. But government intervention to re-inflate stock prices steals wealth from the short sellers and gives it to long buyers.

In essence, our government has implemented a series of massive interventions in the marketplace which harm certain individuals for the unearned benefit of others.

By what right does the government do this? Why should a person who buys a house, or lends money, or short-sells stocks have his financial livelihood undermined by his own government? Are not lenders also citizens of our republic? Don’t short sellers pay taxes too?

And why should those who sell houses, borrow money, or take a "long" position in stocks be the beneficiaries of arbitrary government interventions? Is the world somehow a better place because these individuals make money at the expense of those on the other side of the trades?

The answer to these questions brings me to my second observation: The events of last week should make it abundantly clear – beyond any possibility of denial – that America is now a one-party state.

The great political division in this society is not conservative vs. liberal, or even Republican vs. Democrat. The great division is between a small group of plutocrats on one side, and the rest of the population on the other.

Time and again, high-powered, closed-door meetings were held to address the deepening crisis. Almost every major decision was made by people – like Fed Chairman Bernanke and Secretary of Treasury Paulson – who were never elected to anything and who are in no way accountable to the taxpayers for their decisions.

On the other hand, our actual elected officials were reduced to mere bystanders. Almost to a man (and woman), congress offered little, if any, objection to the plans hatched by the moneymen – even though trillions of taxpayer dollars were at stake. Despite some grousing and posturing, Barack Obama and John McCain were united in their support for a government bailout. Not even the heat of a presidential campaign could elicit a hint of disagreement or debate between them.

So the fix is in, and nothing is left for us but to watch events unfold.

By engineering a multi-trillion dollar bailout of the financial system, our ruling elites have decided to save themselves at the expense of main street America. They have elected to shun the rigors of free market economics, opting instead to reach for the enticing crack-pipe of government largesse.

And our bipartisan political class condoned this heist without any major objections.

When the day of reckoning finally arrives, the results will not be pretty.

September 23, 2008