Chile Forum

CLP/USD dropping like a rock under Jupiter gravity.

Indeed, again in spite of the latest rate cuts yesterday. Glad I at least caught 600 a couple of weeks ago.

James.

The warm and fuzzy accounting tricks are rolling out at the banks:
http://finance.yahoo.com/news/ALL-BUSIN ... 91774.html

I am playing bank stocks to some extent, but I am doing it in the same way I would play a video poker machine in Las Vegas. I assume the game is rigged, play with the house money, and keep my finger on the cash out button. Problem is, everyone else that is anyone I am sure has their finger on the cash out button. First sign of these fudged numbers boiling up to the stock market, and we will likly see another crash in the banks.

I found this an interesting (old) article about a side of Somalia we don't hear much about.
Odd that even the "skinnies" are leaving the sinking ship (Toronto in this case) and heading back. Warms the heart.....
http://www.theatlantic.com/doc/200105/maass

Before leaving the city I met with Hussein Abdullahi, a well-educated businessman who fled Mogadishu in 1991 and wound up in Toronto, driving a taxi. Three years ago, during a return visit, he was struck by the fact that his Somali friends were living better at home than he was in Canada, at the bottom of the immigrant ladder. He decided to move back and now manages a thriving pasta factory, a bread factory, and a medical clinic.

Sipping an ice-cold Coke in his office, Abdullahi offered to share a secret that, he promised, could make me rich. A chubby man with a beatific smile, he leaned forward conspiratorially. "Everything is possible in Mogadishu now, everything," he said. "If you have the money and the knowledge, you can do whatever you want. It is virgin here."

Perhaps so, but only in the way of scorched earth

admin wrote:I am playing bank stocks to some extent, but I am doing it in the same way I would play a video poker machine in Las Vegas.

In the moonless night, I'm making my way through fog..

Can anybody substantiate the rumor my wife heard from her friend that the U S Gov't. (or Pres. Obama as they said) is providing some sort of assistance to the Chilean forestry industry?

http://www.rgemonitor.com/economonitor- ... _good_news


CHILE – Going Into the Q1 2009 GDP Figures: Any Good News?


Bertrand Delgado and Italo Lombardi | May 19, 2009

Chile’s Q1 2009 GDP data came in tandem with our and the market’s expectations, printing a sharp decline of 2.1% y/y from the meager expansion of 0.2% in Q4 2008. A rough breakdown of the figures shows a dramatic collapse of domestic demand, -7.6% in Q1 2009 from -0.2% in Q4 2008, and a rapid deceleration in exports, -2.7% Q1 2009 from 3.4% in Q4 2008. Imports contracted at a faster pace than expected, -14.8% from a residual growth of 1.8% in Q4 2008, thus, certainly alleviating a more pronounced decline in output. Adjusted for seasonal factors, GDP posted a decline of 0.6% q/q (-2.5% SAAR) following contractions of 2% q/q (-7.9% SAAR) in Q4 2008 and of 0.9% q/q (-3.6% SAAR) in Q3 2009.

Total consumption, which represents more than 78% of GDP, decreased by 0.6% after having expanded by 1.1% in the last quarter of 2008, but the decline could have been worse if it wasn’t for the significant expansion of government consumption (3.9% from 2.7% in Q4 2008). Private consumption, 66.7% of GDP, collapsed (-1.4% from 0.8% Q4 2008) driven by a sharp decline in durable goods (-18.9%), especially automobiles, as credit conditions remained tight and domestic confidence worsened. Total investments, another important component of GDP (24.8% of total output), came within expectations (-9.3% vs. 10.4% in Q4 2008), and in this category too, capital goods such as machinery and equipments were hit the strongest (-16%). We highlight the fact that private investment had the largest negative contribution of 2.3 percentage points on the GDP result, which is larger than the -1.1 percentage points from exports and durable goods consumption. We also find interesting to point out that inventory adjustment was a significant figure too. The negative change in inventories represented nearly 4% of the total GPD and almost 5% of total consumption – we should not forget that the figure is likely to print positive and as significant numbers throughout the rest of the year when the recovery process starts to take place.

If we are looking for any good news on the dataset we find difficult to avoid the importance that the increase in government spending had, a +0.5 percentage point contribution, more than half of the negative contribution that private consumption had (-0.9 p.p.). Indeed, Chile’s prudent conduct of savings for a rainy day came handy and the government put in place an aggressive spending program intended to create jobs and mitigate the effects of the global economic crisis. The spending package (US$4 billion) on the other hand will likely push the public accounts into the first deficit in six years, and the gap could go as high as 2.9% of the GDP.

On the external front of the national accounts, the sharp decline in copper exports (-10.5%) was definitely significant and its negative contribution of -1.0 p.p. on GDP was the same as the combined contribution of both industrial and all ex-copper mining exports.

Overall, RGE Monitor maintains the view that GDP will likely contract by around 0.4% y/y in 2009 (0% to -1% range) on the back of slower global and regional demand, relatively low copper prices, tighter financial conditions, and limited domestic confidence. In RGE’s view, domestic and external data and conditions indicate that GDP will likely post a negative print in 1H09 (-2.1% y/y). Although we anticipate Chile’s economy to bounce back in the 2H09 (+1.3% y/y) as countercyclical policies take hold and external conditions somewhat improve so average growth for 2008 ends at -0.4% y/y, the risk to our scenario is still tilted to the downside. Finally, the sharp contraction in economic activity, coupled with falling inflation and inflation expectations, vindicates the central bank’s previous aggressive actions. We expect the central bank to bring the monetary policy rate to 1% by mid-year.

So, a good time to be car shopping if you have cash.

USD holders, got gold??

http://dailybail.com/home/there-are-no- ... rt-ii.html

Never heard of it.

Funny, I fell asleep the other day with Bloomberg on. I ended up having a dream in which Gold became the new World currency, when oil producers switched to pricing oil in terms of Gold and the Chinese and Russians joined them. I am sure some expert was talking about Gold while I was sleeping.

Somewhere, somehow, someone has got to pay the piper. The straw I bet that breaks the Camal's back will be the default of California. It is such a massive part of the U.S. economy, that I bet it starts a domino effect across the U.S. states, then the cities, and soon all those municipal bonds will become junk. How many of those bonds currently are rated BBB, or better and how many organizations such as mutual funds have their liquid cash parked in them? More importantly, how much of the sovereign investment is parked in them such as the Chinese, the oil countries, and so on?

It will be like little Argentina's defaulting all across the U.S. as the big boys starting dumping them first, then the smaller guys. Companies with debt can do swaps for stock. Cities and States don't get that option. Everyone has their eye on the federal debt, but what about the State and municipal debts that are out of control? Start adding those to the Federal debt, to get an idea of just how financially bankrupt the U.S. is right now?

Biggest mistake ever made in this crisis was not fixing the home mortgage market, and no one is really talking about it. The price of homes go down, the property tax goes down, the states and local governments can not pay their debts, the commercial real estate markets go down, and we end up in an even worse spiral.

Personally, I am keeping short term assets in dollars in just sufficient amounts to cover buisness cost in the U.S., and moving everything else as soon as possible in to other currencies or commodities.

Well I hope that isn't the case. It would be very nice for the US to get its shit in order, but that seems unlikely. My current biz generates all income in USD with US market, but our next project is going to be based entirely in chile and CLP. It would be nice to have a healthy business in each market, to hedge one another.. eventually something has gotta give up North and the house of cards will fall, or at least trash the value.