Chile Forum

ADMIN NOTE: UPGRADED TO GLOBAL STICKY, AS THIS MESS IS NOT GOING AWAY EITHER.

I thought this was worthy of its own thread.

I wanted to get everyone's 2 pesos on the economic crisis, and the potential impact on Chile.

Watching the international news the last couple of days, I have never heard so many economist use such strong terms. From the former fed chief saying things like this could be a once in a century crisis, to a investment anyalis at a press conference that was all but screaming that everyone should pull their funds out of the United States now while there is a short term dollar bounce, it grabs your attention. These are people that normally encrypt their concerns carefully in technical talk, that are bluntly saying RUN!!!

For our buisness we are watching carefully the impact on foreign Pensions that are entrenched. The dollar / pesos bounce is good for us in terms of traffic to Chile. It was getting a bit expensive for foreigners (big improvement over last year this time), but foreigners and investment funds are dramatically reduced it might bite us.

Chile overall seems to be taking it well. Brazil, Argentina, Mexico, and the rest that where already in bad shape and over exposed to paper foreign investment are getting whacked.

yea, almost everyone they interview these days on wall street is using very serious panic voice. The average investor seems to be the only one not in a serious panic yet ( which makes me think perhaps they should be ). The big boys on the other hand all look like they are trying to figure out how to get the window open so they can crawl out on their ledges.

The insurance companies imploding are likely to be the straw that breaks the camels back because of their international exposure. Right now Latin America is only being hit by investors withdrawing some speculative money, high fuel prices, and mostly exposure to big international companies like Endesa (guess that dam will have to wait).

From our buisness point of view this is much better for us than last Oct when the peso / dollar rate was dropping right at the moment everyone was planning their vacations to Chile. On the other hand, I am terrified that people might put off their retirement or go a bit more conservative with the their retirement.

We gave up our liter of blood in this blood bath about two years ago, and now we seem to be fairly well over it. That was when people stopped trying to finance properties using their over priced properties in the States when buying in Chile. There is likely still a few around, but we have become better at spotting them.

Once those people fell out of the market, then we only have to deal with people with real cash. I think it the long-run it makes Chile more attractive because as expensive as Chile is it is still a bargain in terms of stability.

The only way I see this ending is the U.S. government stepping in and buying out mortgages on the ground, and properties in default. Without support under the housing market and the source of all that messy bad debt, they are just using bubble gum to patch the dike ( i.e. billions of dollars to stop trillions of bad debt going really bad ).