Chile Forum

cali_chile48 wrote:....when is the catastrophic collapse coming, the one that destroys pension funds around the world? (rhetorical question...i don't expect anyone to have a firm answer).

Ummm. See Calpers and what the state gov financial geniuses want to do with those juicy funds.

Proceed at your own risk ...

I have, love sales

Cali Comrades are $7 Billion in the hole and we haven't even gotten to the coming debacle with CALPERS and their wild bubble fun in commodities...

Do Chile Comrades have these problems also like Commiefornia?...

Well, it's part of their rhetoric, but they don't seem to have implemented much of it yet. Of course, were another Allende to come to power in this highly centralized state . . . .

641.75

So the peso dropped to 617 with the rally, we've got a big question mark tomorrow when credit markets open ---

where will the peso be in a week?

I hoping for +625 at least...

641? Rune, what are you chookchas smoking in your chuma?

I know that no one really knows whats going to happen..

But guesses for value of CLP beginning of next week?

At 596 as I post.

Who knows?

Back at 626 today. Drop in Chilean copper exports down by 20% in September (Y/Y):
http://www.bloomberg.com/apps/news?pid= ... 6nEvipnsiU

Even if the banking system is stabilized, construction and manufacturing are not going to bounce back for a while. There's a lot of housing inventory to be sold first. Housing markets tend to crash hard and recover slowly. Given copper and timber are Chile's two main exports, I'm betting that the US dollar is going to stay above 500 for years (works for us as we've budgeted at 500), and maybe above 600 for a while (hey I just got a big raise ). Weather permitting, Chile is probably headed into a stellar produce and wine export season, but that's not enough to compensate net export volumes.

Anyway, that's my forecast barred unforeseen catastrophes of course, but I find the comparisons with the great depression silly. It's not nearly as bad as 1979 (re: inflation or unemployment numbers) and oil already dropped by almost 50% from its peak. Six months ago everyone was afraid of double digit inflation. Now people are talking about 90's Japan-like deflation. It was just too easy for consumers and business alike to get into debt, so some clean-up is both necessary and healthy. In my own business, things are tense but the rug has yet to be pulled from under our feet, and we're still focused on improving our fundamentals and growing. Lean companies have an opportunity to gain market share from bloated competitors ill-equipped to cope with a recession. If credit markets regain some modicum of flexibility and people start adjusting their spending/saving habits a bit, there's a way out of this crisis.

Now the problem is that governments are blaming this on deregulated markets and "unbridled capitalism" which is a red herring (financial markets shouldn't be confused with the free market enterprise), but public opinions might agree and support more bureaucratic overhead and taxation combined with increased public spending (on top of already unsustainable public deficits). I'm cautiously optimistic for the next few years business-wise (I don't see the sky falling), but quite worried about yet another New Deal/Great Society spending and regulatory socialist binge, which cannot be a good thing long term.

Edit: so I should mention that the recent recovery in copper prices seems short-lived to me, given underlying demand trends:
http://www.bloomberg.com/apps/news?pid= ... Qm.zkGrq6s

Not just Chile, see "Currency worries in Brazil and Mexico":
http://www.economist.com/world/americas ... d=12432297