Chile Forum

Hmmm... Peso sinking...
No action on this thread lately...
So maybe an opportune time to bump it up for a current perspective

Dreams of 700 back in Oct. 2008... now 525 in Apr. 2010
My math sez about 25% fewer peso bangs for your bucks in the last year and a half
Anybody care... a lot ... or a little

April 20 (Bloomberg) -- Chile's peso sank for a sixth straight day, its longest losing streak in a month, on government plans to raise taxes to pay for earthquake repairs.

The peso dropped 0.3 percent to 527.03 per dollar from 525.65 yesterday. It touched 529.2, the weakest since March 29. The peso has dropped 2.4 percent since April 12, the most among the 26 emerging-market currencies tracked by Bloomberg.

The Chilean currency had appreciated in the first two weeks of the month on speculation the plan would involve selling dollars, either from bond sales or from its copper savings fund, to buy pesos. President Sebastian Pinera on April 17 proposed increased mining royalties and taxes on companies, and selling a 10-year bond of up to $1 billion. He didn't mention use of money from the fund or other foreign borrowing.

"The lack of an announcement on liquidation of dollars from the funds has led the market to understand that there will be none, or very little," said Jorge Selaive, chief economist at BCI Corredor de Bolsa SA in Santiago. "This shock will be transitory, so we're getting to the point where it makes sense to start taking positions in the peso again."

Perhaps we all should have bought US equities over the past 12 months. That's what turned out to be the best deal, except for the bank stocks. Everyone is saying the US Market is ready for another downturn, but I'm thinking the opposite will occur. Just a hunch of course. It may be years before the next "correction". I'm no broker but that's what's been good for me. A big stock market upturn will buy a lot of pesos. Actually any gains I make keep getting skimmed off by the wife!

I always make my plans based on USD at 500 CLP, everything else on top of that is gravy, getting below is painful (so far that didn't last long).

Ah, Jim Cramer is not as reliable as Ben Bernanke Bernanke made an interesting comment before congress last week, "most of the US debt is indexed, so inflation is not imminent and the interest rate will remain low."
(Bernanke is telling us what the FED plans to do.. so rather than listen to the Motley Fools, Ben Stein or Jim Cramer... I'm going to listen to Ben Bernanke. Remember Bernanke is giving sworn testimony he can't tell outright lies like my broker does

Indexed? Yes the Social Security, Medicare, and many others [which is most of the debt] are all "indexed" to the Consumer Price Index. The US govt will be unable to inflate it's way out of debt at this time. A year into the market mess there has been no inflation nor a double dip. I believe Bernanke has it right. I'm going to follow the money.

PanAmerican wrote:A year into the market mess there has been no inflation

Really? How come oil is back to $80+/barrel or timber is up 40% then? CPI is rigged with things such as hedonistic deflation and owner's equivalent rent. Not to mention the fact "core inflation" excludes food and energy, the most "core" products there are (great I'm starving and freezing but at least iPhones are getting cheaper). Of course there's inflation, from commodities (many went back to almost pre-crisis levels, i.e. bubblish) to real estate that dropped by less than it should have to get back in line with rent and income. In a free market economy, cars should have become more affordable through the process of clearing over-supply and inventory. Instead, used cars are now *more* expensive thanks to Crash for Clunkers (typo deliberate). GENIUS.

Besides, ultimately the Fed doesn't decide interest rates, bond buyers do. The minute the Chinese fail to show up at a Treasury auction is the minute when interest rates have to go up in order to refinance the debt. (Of course that makes debt refinancing more difficult.) The Greeks are finding that a very funny game (not!). FYI US Treasury is now auctioning pretty much every week the amount of debt it sold every quarter not so long ago. MADNESS.

The ratio of new debt + refinanced Federal debt in 2010 is 30%+ of total existing debt. Bernanke had better pray debt buyers don't skip a beat. DENIAL.

The mountains of bad debt will have to be cleared one way or another. It's been socialized (GSEs still on Fed balance sheet last time I checked) and it's going to take prolonged pain (15+% real unemployment rate as we have now) for a long time to clear it. We need rebalancing on a global basis, and there's very little of that yet happening. Waiting delays the pain somewhat, but it will be bigger eventually.

But, yeah, Bernanke is right, everything is going to be just fine. Just because the Euro has a good chance to crash before the dollar doesn't mean the US is out of the woods.

No inflation my ass. Anyone who is not rich or using someone else's money is paying more for the basics of life. Hell my expat policy just doubled my premium.

Follow conventional MSM wisdom and opinion at your own risk. Broken analog clocks are right for a second twice a day though.

PanAmerican wrote:.... The US govt will be unable to inflate it's way out of debt at this time.

That wont stop them from trying. They'll die trying.

A year into the market mess there has been no inflation....

Allow me to pile on...., dude, you're trippin.

I just had to share.
http://www.newmoney.gov/newmoney/Splashpage.aspx

Moody's just raised their debt rating for Chile from "A1" to "Aa3", citing financial resilience after the earthquake (I always thought it would be good for the economy in the medium term):

http://www.bloomberg.com/apps/news?pid= ... mo1FHQY6aM
http://www.economiaynegocios.cl/noticia ... p?id=75095

Apparently the Central bank also raised interest rates slightly more than expected, by 0.5%. With any luck that will help a bit with inflation and not just strengthen the peso.

James.

OK, today I bought equitiy: <BANNED WORD> cell phone - Finnish company, (NOK). I had bought this at $31 during the internet bubble. 640 shares... today, I bought 640 more shares today at $8.77 and the averaged dividend jumped to 4.3%. Holy crap! My bank interest is 0.035$ across several banks and reflective of banking interest averages. (Banks have been a loser for sure.)
I'm looking seriously at BP. I have no "interest in equities, other than my personal portfolio" This is not pump and dump stuff. Just informational.

Meanwhile the chilean peso vs the Euro has remained the same as my earlier post. ... as per my earlier post prediction.

Sell your Gold unless you are crazy. Look at the chart, don't listen to the pundits.

With full realization that this topic was started late 2008...
Hmmm... see how times have changed

This morning... for the first time since Jan...
The CHP/USD has slipped under 500...
Direction looks to continue...
Look at those moving averages...
How low to USD...can it go
(...or high, of course - from a Chilean perspective)
Be prepared xpats... to pay more for everything