Chile Forum

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el puelche wrote:I would say that maybe by Thursday, it will have almost climbed back...maybe ...but down again on Friday, so they can all have a nice "pre-Christmas" in the hamptons and the vineyard (maybe bahamas for some sun cuz they deserve it>>>they will be dressed just like GW when he was their age>>>but along with the beer, they'll have a cell phone, fatty credit card and the all important E, for the getting the chicks in the mood) and then well rested for monday, riding in from jfk or la G in a paki cab, and in time to wreck havoc on the system again for the week.

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I may be a little less cynical than Pueche, but still regard the upswing of the dollar of the last few days as a "dead cat bounce." Stand by for some selling on the uptick.

Yeah, better get rid of them whilst they're hot. At some point in the next couple of months, however, when the Chilean pension funds have finished pulling their money back out of Brazil, there ought to be a bit less support for the peso in the short term.

Another factor: I seem to remember that Chilean companies have to repatriate funds for their end-of-year accounting. I can't remember which way that works, but presumably they will be bringing dollars back into the local market. Does anyone have better info.?

James.

yea, there is some end of year exporter fund repatriation going on, along with retirement fund rebalanced.

The news says that Chile is essentially in a deflationary environment with inflation at a -0.05% or something like that.

Unfortunately, my personal inflation index is not reflect this. At my wine section of my local grocery store, the price on lower quality bottles of wine has gone up dramatically. Even worse, there is nothing drinkable on the shelves.

When that happens, we almost always within 3-6 months go on an inflation ride. Chile needs to pull back its stimulus and liquidity sooner than the rest of the World, because Chile simply did not get hit with the economic downturn the way the rest of the World did in terms of severity and length. The copper prices have also rebound a lot.

The 9th region I see also is reporting lower unemployment numbers. It was running at 12%+ for most of last year, and this month it came in at 11%. 6-8% is normal for the most part. If the 9th region that had some of the highest unemployment in the country is showing signs of life, then the rest of the country has got to be improving also. We are also still not in to the summer months when public work projects, construction, tourism, agriculture really pick up. I would expect the 9th region to get to 9% this summer fairly easily.

I also noticed an explosion of properties for sale in the sunday papers, and what appears to be a real drop in the prices of the properties. I am not seeing a lot of houses for instance around Temuco with prices of over 100 million pesos (even if they are not worth 100 million, people still list them), and even a few large properties showing up for under a million pesos a hectare.

So, my money is on the Chilean central bank and government over shooting a bit with some inflation setting in. I doubt it will be bad thing or even all that dramatic, given the current state of the economy.

4-Week U.S. Treasury Bill Auction Results (Tue, 08 Dec 2009 11:41:11)

High Rate: 0.000%
Investment Rate*: 0.000%
Price: $100.000000

Total Tendered**: $157,012,362
Total Accepted**: $31,422,062
Issue Date: 12/10/2009
Maturity Date: 01/07/2010
CUSIP: 912795R78

The rate might be low, but you make money with volume!!!

Give me a Caribbean shell corporation with funding via other shell corporations thanks to "The Company" and I'll buy all the T-Bills Uncle Sam requests for a fee and a perk or two of course.

Right, since these are presumably not inflation indexed and 0% means 0%, can someone explain to me why any of them sold at all? Or is it really just as suspect as EEUU suggests? I'm not familar with US government debt...

James.

jehturner wrote:Right, since these are presumably not inflation indexed and 0% means 0%, can someone explain to me why any of them sold at all? Or is it really just as suspect as EEUU suggests? I'm not familar with US government debt...

James.

The people who are buying the treasury bonds are the ones who belive that the US gov will never default and that given that banks and the stock market are an unknown the safest place to park their money short term is treasuries. I know, I know...go figure!

There is too much to explain about how US treasuries(and there are a number of types that work differently) work here but keep in mind that treasuries are quoted both by yield(which corresponds to interest rates) and price. Price moves inversely to yields or interest rates. That means price goes up as yields or interest rates go down. You can research the way they work by googling but it seems there are many misunderstandings. Inflation adjusted treasuries are also sold but not exclusively.

So, investors buying 0% interest are looking for higher future prices. T-Bills are always sold at a discount of the par value(100) to create a positive yield to maturity and are sold without interest(0 coupon) so the oddity there is not that the T-bill was sold at 0% interest-they always are- but the "high rate" is actually a 0% discount rate-in other words no discount below "par" as is usual. And there was very high demand-competitive bids(it is an auction) were many which drove it to a non-discount par. This is less surprising than you would think as businesses at the end of the year like to be in cash. Treasuries can be sold on the highly liquid secondary market.

Nobody ever expects to make a fortune in treasuries. No brokerage firm will happily sell or encourage treasuries, there is no money(commission) in it. There are a number of formulas to calculate price, yield and yield to maturity etc on the web. Interest rates are only one component of all bonds.

I'm not interested in buying treasuries but many do and I don't think they are all foolish.

May mean something may mean nothing, I'm just a messenger but no need to shoot again because he is already full of bullet holes.

•Go to your bank's web site.
•Do you see a message like this?

Beginning January 1, 2010, Citibank, N.A. will no longer participate in the FDIC's Transaction Account Guarantee Program. Thus, after December 31, 2009, funds held in noninterest-bearing transaction accounts will no longer be guaranteed in full under the Transaction Account Guarantee Program, but will be insured up to $250,000 under the FDIC's general deposit insurance rules.

Beginning January 1, 2010 Bank of America will no longer participate in the FDIC's Transaction Account Guarantee Program. Coverage under the FDIC's basic deposit insurance rules will continue to apply.

Transaction Account Guarantee Program Update
Beginning January 1, 2010, U.S. Bank will no longer participate in the FDIC's Transaction Account Guarantee Program. Thus, after December 31, 2009, funds held in non-interest-bearing transaction accounts will no longer be guaranteed in full under the Transaction Account Guarantee Program, but will be insured up to $250,000 under the FDIC's general deposit insurance rules.

FDIC TRANSACTION ACCOUNT GUARANTEE PROGRAM

EverBank is not continuing its participation in the FDIC's Transaction Account Guarantee Program. As of January 1, 2010, all non-interest bearing transaction accounts are no longer guaranteed in full, but will be insured up to $250,000 under the FDIC's general deposit insurance rules. The standard insurance amount of $250,000 is in effect through December 31, 2013. On January 1, 2014 the standard insurance amount will return to $100,000 per depositor for all account categories except IRAs and other certain retirement accounts, which will remain at $250,000 per depositor.

Of course, anyone following the financial knows the basic FDIC fund is in need of more capital.

Other banks have NOT OPTED OUT and their web site will say something like this:

Member FDIC
Federal Deposit Insurance Corporation

As an FDIC member, we provide you with full deposit insurance coverage for non-interest bearing transaction accounts through June 30, 2010.

Read all about it here:
http://www.fdic.gov/regulations/resources/TLGP/faq.html

for the official story then if you like, you can find comments all over the Internet from no problom mon to the rantings of Bob Chapman (again claiming a new US currency is about to be released).

Could also be the reason Treasuries are still being bought as a Treasury Direct account can be perceived as safer than a US bank account for your US fiat currency holdings.

DYODD.

Why are they lining up to buy T-bills?

1) Sovereign default candidates:
Greece
Spain
Portugal
UK
Dubai
Serbia, Croatia, etc. (the Germans have money, but not that much money)

2) The wheels come off of China's economic "miracle" when the warehouses and docked ships are all full.