Chile Wealth, Inequality, and International rankings

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Chile Wealth, Inequality, and International rankings

Post by admin » Sat Oct 20, 2018 8:10 am

So, the new global wealth report for 2018 is out. Chile is ranked as the richest country per person in Latin America.

I thought this was the perfect opportunity for me to post a pet economic theory I have been working on for a while.

The number of $US dollar millionaires has increased to 67,000 this year, according to their estimates. I however, do not buy that. I believe it is far higher, due a long list of reasons. Many I have posted before. Likewise, I believe the actual poverty rates, and definitely those with less than $10,000 U.S. in assets is also distorted.

http://publications.credit-suisse.com/i ... t-2018-en/
Here is what they wrote about Chile:
LatAm wealth champion
Chile has the highest wealth per adult in Latin America.
The contrast in household wealth with its neighbors is
striking. Chile's Gross Domestic Product per adult is
similar to Argentina's and 46% greater than Brazil's,
but its average wealth is more than three times greater
than that in either of those two countries. Since the
turn of the century, wealth per capita has risen at an
annual average rate of 7.6% in US dollars. Using
current exchange rates, all of that growth occurred
before 2013, but using a smoothed exchange rate
indicates that growth continued over the last five years,
although at a lower rate than before.
Chilean household assets are split evenly between real
and financial form. Holdings of financial assets have
been encouraged by low inflation, well developed
financial markets, and a strong pension system. The
high urban home-ownership rate of 69% exceeds the
65% found in the United States, and contributes to
substantial holdings of real estate. At 14% of gross
assets, household liabilities are moderate by interna
-
tional standards.
Chile's wealth per adult, at USD 62,220, is close to
the world average of USD 63,100, and is high relative
to most emerging-market countries. It has a smaller
fraction of adults with wealth below USD 10,000 than
the world as a whole (36% versus 64%), and slightly
more above USD 100,000 (11.4% versus 9.4%).
Overall inequality is relatively high, as indicated by a
Gini coefficient of 77%. By our estimates, Chile has
67,000 US dollar millionaires, and 80,000 adults in
the top 1% of global wealth holders.

As I look out my window at Lake Llanquihue with my cup of coffee, I can see hundreds, possibly thousands of properties, that are worth more than a million dollars. I could get in my car, drive around the lake for say a week, and ID probably more than 67,000 properties that are worth more than 1 million dollars. That is one part, of one region, that is not even in the Central Region where most of the wealth of the country is concentrated.

Everything from the Sanitagian vacation homes, to the old German farms. In fact, in little Frutillar, population 15,000 people or so, I can probably find a 1,000, U.S. dollar millionaires without too much trouble. The farm, about 10 meters from my front door, sold recently for over $5,000,000 U.S.; I can see the property of one of the richest men in Chile, worth an easy $10 million, and he is worth an easy 100 million U.S. one farm over just beyond that one.

Now, granted Frutillar, and the lake, is fairly high rent district as Chile goes, but there are a lot of agro properties all across the country that are simply not counted, have never had an appraisal done on them (or at least not recently), that are worth tens of millions of dollars.

Now, we can debate who owns what, and how it is counted, etc; however, the point I am trying to make is this 67,000 millionaire number, does not even come close to passing the smell test.

I just was told that the sale of luxury cars has grown so much, that Porsche, is producing two cars just for the Chilean market. You do not buy a $100,000+ dollar car, unless you have assets approaching a million dollars (well, not a good idea anyway). As I have said before, stand on the street corner of say Los Condes, or even down town Santiago, and count the number of cars that cost more than 20 million pesos ($30,000 U.S.). It will confirm that most of the poverty stats being used internationally are wrong. No matter how rich you are, you can only drive one car at a time.

At the same time, as I am a great fan of watching the real estate auctions in Chile, I almost never ever see one of those low income house go to auction for less than 6-8 million pesos (over $10,000 U.S.), minimum. In other words, the minimum in those auctions is set at the legal value. They actually sell, at auction, for a lot more. Typically at least 2-3 times as much. That is in marginally desirable neighbourhoods of places like Puerto Montt.

My major reasons for all this is:

1. Real estate values in these international studies are grossly under reported, due to the property tax system in Chile. As near as I can tell, these property values are based on the "legal" value. That is, the basic value used by the Chilean IRS to determine the tax bases for property taxes. Due to a whole mess of historical reasons, this is, and has always been super low. For instance, rural agricultural property is still often tax exempt or pays very little in tax. So, a property with a market value in the millions of dollars, may very well only pay a few hundred dollars a year in tax or no tax at all. They historically have only reassessed the value of properties nation wide every 10 years, and then using a super politically loaded formula for setting the tax value.

Even people that own one of those government subsidized track homes, very rarely will you find one these days that sells for less than $10,000 U.S., add in a car or whatever, and most Chileans are worth more than $10,000 U.S.; Only recently, with the arrival of the large number of Venezuelans, Haitens, can I see how there is 36% of the population with less than $10,000 in assets. Even the new arrivals, given say 10 years or so, many will be worth more than $10,000. I am however going to set them aside for the moment, as they are likely distorting the stats in both directions. many are just now getting legal documentation to work and so on, so their numbers are very distorted. I will get back to this immigration impact.

2. Pensions and Health care. When you look at the income levels of many countries, they fail to subtract the lack of pension and cost of health insurance from overall income of the individuals. The most obvious example is the United States. I seen a recent number that pegged the cost of basic health insurance in the United States at around $8,000 U.S. per person, for a moderately adequate coverage, not counting deductible and rather slim health care services; or, how about nearly 70% of Americans have less than $40,000 u.s. in retirement savings, and that is just among Americans that have any retirement savings at all. Those should be viewed as debts, to themselves, on their books that should be subtracted from wealth calculations. Who cares if you make $50,000, $100,000, $500,000 a year, if you die early of some treatable condition; or, who cares if you make $100,000 a year, but then have to eat dog food once you retire (or, perhaps worse, can never retire).

3. Chileans are notorious for under reporting their wealth, through all sorts of mechanisms. For example, putting assets in their kids names. Using corporate structures to park their assets. So on, and so forth. Just looking at tax returns, will not tell you how rich, or poor, someone is in Chile. For example, I have a friend that has owned a company for 20+ years in Chile, makes well over $500,000 U.S. a year, that was denied a checking account by a bank due to not having sufficient income. All his wealth is tied up in a corporate structure, that does not get reflected in his personal tax return.

So, most of these above arguments I have covered at some point on the forum.

Now, something that has bugged me for a very long time about these international reports and rankings: Income inequality.

As the above report states:
Overall inequality is relatively high, as indicated by a Gini coefficient of 77%.
Stand by, I am going to make another post.
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Re: Chile Wealth, Inequality, and International rankings

Post by admin » Sat Oct 20, 2018 8:16 am

I happen to have just gotten back from Lima for a few days vacation, and to visit some friends.

Nothing get’s me thinking more about Chile’s place in the World, than going somewhere else in the World. This time, Chile’s income inequality was for some reason really making my brain itch.

I have been thinking for years about this claim that Chile has one of the greatest income inequality problems in the World.

Somehow it never sat well with me for a bunch of reasons. Some I could articulate (e.g. distortion of real estate prices in Chile in international stats, under reporting of income levels, etc.), and a bunch of reasons I have never been able to put my finger on.

So i am at a nice hotel in Lima, having dinner with my wife out on the patio restaurant. Sitting at the next table is one of Chile's richest men. Think he is worth a billion+ dollars, but i have not been following what he is up to much. I won’t publish his name. The only thing that is important is, he is just one of the really rich guys in Chile.

My wife and I have done well for ourselves in recent years, made some good moves financially (probably not having kids, and just staying out of debt was the most important ones), but we are not 'rich' by any broad international standard of "rich". I don't own a jet or a yacht, and probably never will.

As much as we like to pat ourselves on the back for our hard work or being smarter or whatever, I recognize most of our success was a combination of luck (e.g. being born to our families, in a time of relative piece and prosperity, etc, etc) and other people's hard work to help us out (e.g. our parents giving us both good educations, chances to travel, etc). We might of been sufficiently intelligent to seize the opportunities in life, but we did not make most the opportunities we seized. Someone else did that.

In fact, there was a study conducted in Europe, where they managed to control for almost every variable of family wealth, education, etc, and determined, it was still mostly just dumb luck that people were successful.

So I had the thought over dinner, as the waiter is pouring another glass of wine, 'in terms of income and wealth level's, I am far closer to this waiter, than to the billionaire sitting next to me'. I have had plenty of crappy, dead end, low paying to no paying jobs in my day. I was never a waiter, but I once washed dishes in a restaurant that was no where near as nice as the one I am sitting in (I do pat myself on the back for quitting that job after a day).

Point is, had I made a few more bad choices in life (more than made my fair share of those), or my luck ran out here or there a few more times along the way, I could be serving wine in a restaurant rather than eating in one.

Why am I sitting at this table in a 5 star hotel rather than the waiter that is working in it?

Then it hit me. Why Chile's income level's are so distorted, compared to say Peru, Colombia, Brazil, etc: Chile stopped leaking rich people.

Then it occurred to me, Chile also stopped leaking poor people, middle class, and most everyone else.

In fact, Chile has reached a point of consistent economic opportunity, where it is attracting poor people, rich people, and everyone in between. Everyone from the Haiten labourer, to the Cuban Doctor, to the Douglas Thompkins of the World, to all you fine folks reading this on the forum.

Basically, they are all sticking around, and so is their money (or lack of it).

A recent study found that unlike most developing countries, some 80% of the wealth, held by the wealthiest families in Chile, is invested in Chile. Not only does the wealth stay, but it is multi- generational wealth.

By contrast, another recent study I seen found some 56% of the richest people in Brazil, said they were planning to leave Brazil. I seen a similar stat in China. Something like 70% of the billionaires in China wanted to move out of China. Same is happening in the U.S., perhaps not as dramatically as other places, but we see all the articles about American billionaires buying up properties in New Zealand. There is a lot of money in the World, and those that control it are voting with their feet.

So my wife and are in Peru for a bit of a reunion with a few close friends from grad school in the Netherlands. We have not all been together for like 16+ years. One friend is Peruvian and lives in Italy. Another is Colombian. My wife is the Chilean. Our friend from Peru is back to see her family for a week, and her brother that is a doctor lives in Spain is also happens to be in town.

So, while we were in Lima, we all went to visit the family of another classmate that had died from cancer a few years earlier. Why this is all relevant, I will explain.

In the course of talking to the mother of our classmate that died, she brought up how all of her kids had earned their degrees and moved to Europe. Just like our other Peruvian friend. All of these Peruvian families are very middle to upper middle class Peruvian. Not wealthy, but pretty wealthy by Peruvian standards. They all went to extraordinary lengths to educate their kids, insure they were more than just fluent in English, and then send them to Europe for graduate school.

What do they all have in common?

They did not come back. Nor, do any of them have any intention of moving back to Peru. That was five, including our friend that died, of the best and brightest of Peru, that did not return to Peru after finishing their studies abroad.

So, I return from this trip. Have an extra day in Santiago, and manage to sneak in a last ski day with my brother (that has been in Chile for 25+ years).

My brother owns an English school, that among other things, does things like GRE test prep for Chileans looking to get in to U.S. grad schools. We were talking about it. In all the years that he has been doing what he does, almost every single student that left Chile to study abroad, returned to Chile after their degree to live in Chile. We are talking a lot of them went to places like Harvard, MIT, Princeton, etc. It was not for lack of opportunity somewhere else; they simply always come back to Chile.

Further, in our line of work, we have seen a very large number of exiles that left Chile in the 70’s and earlier, return to Chile in recent years to retire. Even more important, we have seen a very large number of Chilean “descendants” taking advantage of the their right to dual citizenship to claim their Chilean citizenship, and move back to Chile. In the last 10 years, a lot of them. Most of them come back with money and education. They are well educated, well travelled, and often fairly well off financially; they have come back to Chile.

This is opposed to say the 70’s and 80’s, where Chileans left, and often never returned. Yes, Chile still has a flow of people out, but a relatively small flow these days.

So, what does that trend tend to do?

It blows out Chile’s ranking on income inequality. Pinera, and other Millionaire and Billionaires, are being ranked against the poor Haitens or Venezuelans that just arrived in Chile, that just got their work permit, and own little to nothing in the World. Even excluding the recent arrivals, the poor in Chile are not leaving in great numbers. They are not sneaking across the boarder in to the United States in the middle of the night; or taking a boat across from Africa.

That tends to create a rather large, grand canyon of income inequality on paper.

In fact, while your average, poor to working class Chilean might have a house, property, cars, and many other things; the recent flood of poor immigrants are probably not even registering in the statistics fully. The income inequality numbers, over the next few years, should blow-out in a very dramatic fashion (at least for a while); and, I expect also in dramatic fashion a slew of articles in the international press to follow about how evil Chile’s capitalism is, bla, bla, bla.

Now, yes, income inequality is bad, bad, bad. Everyone should be equally rich, or poor, in some some science fiction socialist fantasy land (e.g. star trek is my favourite) or Venezuela (more like reality TV, or Faces of Death).

This is, however, in Chile’s case, not the sort of income inequality indicating some fundamentally corrupt evil capitalist plot to keep the poor people poor. This is not for example, Moscow, with a Bentley dealer sandwiched between two Lamborghini dealers across the street from Putin’s office, while most of the country makes less than most Indians; or, Argentina, where the politicians collapse the economy regularly to enrich themselves.

This is the income inequality, that is a symptom indicating Chile’s progress and success; relative to the rest of the World. It is a symptom, of capitalism working the way it should, for everyone’s benefit; while being balanced to create an even playing field and opportunities for everyone. Basically, for lack of a better description, it is well functioning democracy keeping a boot on capitalism’s neck; rather than capitalism keeping a boot on Democracie's neck (hummmmm, USSA).

The Economist Magazine recently ran an article about Chile’s middle income trap; but, they are reading the stats wrong. More exactly, they are drawing the wrong conclusion from the stats.

Now, yes, Chile will have to deal with filling in that Grand Canyon of income inequality (how to do that is a whole different conversation); but, for the most part, everyone that is playing the game, rich, poor, and everyone in between, seems to believe that it is possible to fill it in (otherwise they would stop playing the game and go somewhere else). There is a belief that there are real opportunities. It is that possibility of opportunity, that everyone is buying in to when they invest in Chile. That is what makes Chile different. It is what many other countries once offered, and now almost no one believes they do any more.

The point is, the gloom and doom being shovelled in the international media about Chile, is a fundamental misunderstanding about what is going on in Chile. Honestly, even though it is perhaps against my own economic interests, I kind of prefer Chile’s place on the map (glance at a World map, is Chile the first thing you see?), that tends to be overlooked and misunderstood. For those that do see it, we get to share bigger slices of the opportunity pie because of it. If Chile has a higher international profile, it probably would also have more international problems. Chile is quietly becoming (or is) a a developed country, and no one is really noticing it or giving Chile full credit for how far it has come.
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Re: Chile Wealth, Inequality, and International rankings

Post by admin » Sat Oct 20, 2018 8:50 am

I had a funny thought just now.

In terms of who is going to benefit the most over the next few years from Chile, it will probably be the poor Venezuelan or Haiten that basically arrived with nothing.

Take Pinera for instance. He is worth a billion dollars, mas o menos (think the last stat was 600 or 800 million U.S.). His wealth, over the next 5 year or so will likely only increase at a rate of say 10-20%, probably he would be happy if he only increases it by 4-5% a year with some set of relatively conservative investments.

Now, take a hypothetical Haiten or Venezuelan, that arrives with little to nothing. In 5 years, assuming he does nothing too stupid, works hard, etc, he should be making at least minimum wage, have some pension savings, possibly a government subsidized house, buy a car, etc. Let's say he just get's above the poverty line. He is looking at several hundred, if not thousands of percent, increase in net wealth vs. what he arrived with. That is assuming he does not strike out and start a biz, gets an education, or makes some other financial moves to really boost his net worth (I am sure a few will). Essentially, by starting with little to nothing, there is a far greater upside to Chile for them than say the average billionaire.

Now the debate is of course, just how much upside there is; but, there is the opportunity.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

41southchile
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Re: Chile Wealth, Inequality, and International rankings

Post by 41southchile » Sat Oct 20, 2018 9:31 am

The new groups for household incomes ABC1 has been split .
1 percent of population and 3 percent of Santiago earn over 6.4 million pesos per month
https://www.emol.com/noticias/Economia/ ... Chile.html
In the Lakes Region Chile for 6 years. It looks like New Zealand in some ways, and is nearly at the bottom of the world too, but there the similarities end.

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Re: Chile Wealth, Inequality, and International rankings

Post by 41southchile » Sat Oct 20, 2018 9:51 am

admin wrote:
Sat Oct 20, 2018 8:10 am
So, the new global wealth report for 2018 is out. Chile is ranked as the richest country per person in Latin America.

I thought this was the perfect opportunity for me to post a pet economic theory I have been working on for a while.

The number of $US dollar millionaires has increased to 67,000 this year, according to their estimates. I however, do not buy that. I believe it is far higher, due a long list of reasons. Many I have posted before. Likewise, I believe the actual poverty rates, and definitely those with less than $10,000 U.S. in assets is also distorted.

http://publications.credit-suisse.com/i ... t-2018-en/
Here is what they wrote about Chile:
LatAm wealth champion
Chile has the highest wealth per adult in Latin America.
The contrast in household wealth with its neighbors is
striking. Chile's Gross Domestic Product per adult is
similar to Argentina's and 46% greater than Brazil's,
but its average wealth is more than three times greater
than that in either of those two countries. Since the
turn of the century, wealth per capita has risen at an
annual average rate of 7.6% in US dollars. Using
current exchange rates, all of that growth occurred
before 2013, but using a smoothed exchange rate
indicates that growth continued over the last five years,
although at a lower rate than before.
Chilean household assets are split evenly between real
and financial form. Holdings of financial assets have
been encouraged by low inflation, well developed
financial markets, and a strong pension system. The
high urban home-ownership rate of 69% exceeds the
65% found in the United States, and contributes to
substantial holdings of real estate. At 14% of gross
assets, household liabilities are moderate by interna
-
tional standards.
Chile's wealth per adult, at USD 62,220, is close to
the world average of USD 63,100, and is high relative
to most emerging-market countries. It has a smaller
fraction of adults with wealth below USD 10,000 than
the world as a whole (36% versus 64%), and slightly
more above USD 100,000 (11.4% versus 9.4%).
Overall inequality is relatively high, as indicated by a
Gini coefficient of 77%. By our estimates, Chile has
67,000 US dollar millionaires, and 80,000 adults in
the top 1% of global wealth holders.

As I look out my window at Lake Llanquihue with my cup of coffee, I can see hundreds, possibly thousands of properties, that are worth more than a million dollars. I could get in my car, drive around the lake for say a week, and ID probably more than 67,000 properties that are worth more than 1 million dollars. That is one part, of one region, that is not even in the Central Region where most of the wealth of the country is concentrated.

Everything from the Sanitagian vacation homes, to the old German farms. In fact, in little Frutillar, population 15,000 people or so, I can probably find a 1,000, U.S. dollar millionaires without too much trouble. The farm, about 10 meters from my front door, sold recently for over $5,000,000 U.S.; I can see the property of one of the richest men in Chile, worth an easy $10 million, and he is worth an easy 100 million U.S. one farm over just beyond that one.

Now, granted Frutillar, and the lake, is fairly high rent district as Chile goes, but there are a lot of agro properties all across the country that are simply not counted, have never had an appraisal done on them (or at least not recently), that are worth tens of millions of dollars.

Now, we can debate who owns what, and how it is counted, etc; however, the point I am trying to make is this 67,000 millionaire number, does not even come close to passing the smell test.

I just was told that the sale of luxury cars has grown so much, that Porsche, is producing two cars just for the Chilean market. You do not buy a $100,000+ dollar car, unless you have assets approaching a million dollars (well, not a good idea anyway). As I have said before, stand on the street corner of say Los Condes, or even down town Santiago, and count the number of cars that cost more than 20 million pesos ($30,000 U.S.). It will confirm that most of the poverty stats being used internationally are wrong. No matter how rich you are, you can only drive one car at a time.

At the same time, as I am a great fan of watching the real estate auctions in Chile, I almost never ever see one of those low income house go to auction for less than 6-8 million pesos (over $10,000 U.S.), minimum. In other words, the minimum in those auctions is set at the legal value. They actually sell, at auction, for a lot more. Typically at least 2-3 times as much. That is in marginally desirable neighbourhoods of places like Puerto Montt.

My major reasons for all this is:

1. Real estate values in these international studies are grossly under reported, due to the property tax system in Chile. As near as I can tell, these property values are based on the "legal" value. That is, the basic value used by the Chilean IRS to determine the tax bases for property taxes. Due to a whole mess of historical reasons, this is, and has always been super low. For instance, rural agricultural property is still often tax exempt or pays very little in tax. So, a property with a market value in the millions of dollars, may very well only pay a few hundred dollars a year in tax or no tax at all. They historically have only reassessed the value of properties nation wide every 10 years, and then using a super politically loaded formula for setting the tax value.

Even people that own one of those government subsidized track homes, very rarely will you find one these days that sells for less than $10,000 U.S., add in a car or whatever, and most Chileans are worth more than $10,000 U.S.; Only recently, with the arrival of the large number of Venezuelans, Haitens, can I see how there is 36% of the population with less than $10,000 in assets. Even the new arrivals, given say 10 years or so, many will be worth more than $10,000. I am however going to set them aside for the moment, as they are likely distorting the stats in both directions. many are just now getting legal documentation to work and so on, so their numbers are very distorted. I will get back to this immigration impact.

2. Pensions and Health care. When you look at the income levels of many countries, they fail to subtract the lack of pension and cost of health insurance from overall income of the individuals. The most obvious example is the United States. I seen a recent number that pegged the cost of basic health insurance in the United States at around $8,000 U.S. per person, for a moderately adequate coverage, not counting deductible and rather slim health care services; or, how about nearly 70% of Americans have less than $40,000 u.s. in retirement savings, and that is just among Americans that have any retirement savings at all. Those should be viewed as debts, to themselves, on their books that should be subtracted from wealth calculations. Who cares if you make $50,000, $100,000, $500,000 a year, if you die early of some treatable condition; or, who cares if you make $100,000 a year, but then have to eat dog food once you retire (or, perhaps worse, can never retire).

3. Chileans are notorious for under reporting their wealth, through all sorts of mechanisms. For example, putting assets in their kids names. Using corporate structures to park their assets. So on, and so forth. Just looking at tax returns, will not tell you how rich, or poor, someone is in Chile. For example, I have a friend that has owned a company for 20+ years in Chile, makes well over $500,000 U.S. a year, that was denied a checking account by a bank due to not having sufficient income. All his wealth is tied up in a corporate structure, that does not get reflected in his personal tax return.

So, most of these above arguments I have covered at some point on the forum.

Now, something that has bugged me for a very long time about these international reports and rankings: Income inequality.

As the above report states:
Overall inequality is relatively high, as indicated by a Gini coefficient of 77%.
Stand by, I am going to make another post.
While I agree with most of what you say and the 67000 figure is probably on the low side, I am not sure about looking at cars is a valuable indicator of wealth. It would be helpful to see debt figures too in Chile. I wouldn't mind betting that most of the nice cars that are driven around are on financing deals and credit from banks, Chileans love their cars and pickups (look at how many nice cars you see out side shit houses) and will lock themselves (usually from dealerships) into high interest plans and options to get the latest model. A lot of these flash late model cars are owned by dealerships and banks, few people buy a car outright, especially if they want to keep upgrading to the latest one next year, dealer locks you in with maintenance and everything and let's you trade up easily , but at a cost..As long as you have sufficient income to support the payments you don't have to have a high net worth.
In the Lakes Region Chile for 6 years. It looks like New Zealand in some ways, and is nearly at the bottom of the world too, but there the similarities end.

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Re: Chile Wealth, Inequality, and International rankings

Post by Space Cat » Sat Oct 20, 2018 10:14 am

41southchile wrote:
Sat Oct 20, 2018 9:51 am
While I agree with most of what you say and the 67000 figure is probably on the low side, I am not sure about looking at cars is a valuable indicator of wealth. It would be helpful to see debt figures too in Chile. I wouldn't mind betting that most of the nice cars that are driven around are on financing deals and credit from banks, Chileans love their cars and pickups (look at how many nice cars you see out side shit houses) and will lock themselves (usually from dealerships) into high interest plans and options to get the latest model. A lot of these flash late model cars are owned by dealerships and banks, few people buy a car outright, especially if they want to keep upgrading to the latest one next year, dealer locks you in with maintenance and everything and let's you trade up easily , but at a cost..As long as you have sufficient income to support the payments you don't have to have a high net worth.
Household debt in Chile is one of the lowest in the OECD: 67% of net disposable income vs. 292% in Denmark, 266% in the Netherlands, 185% in Ireland, or 122% in New Zealand.

https://data.oecd.org/hha/household-debt.htm

41southchile
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Re: Chile Wealth, Inequality, and International rankings

Post by 41southchile » Sat Oct 20, 2018 10:43 am

Space Cat wrote:
Sat Oct 20, 2018 10:14 am
41southchile wrote:
Sat Oct 20, 2018 9:51 am
While I agree with most of what you say and the 67000 figure is probably on the low side, I am not sure about looking at cars is a valuable indicator of wealth. It would be helpful to see debt figures too in Chile. I wouldn't mind betting that most of the nice cars that are driven around are on financing deals and credit from banks, Chileans love their cars and pickups (look at how many nice cars you see out side shit houses) and will lock themselves (usually from dealerships) into high interest plans and options to get the latest model. A lot of these flash late model cars are owned by dealerships and banks, few people buy a car outright, especially if they want to keep upgrading to the latest one next year, dealer locks you in with maintenance and everything and let's you trade up easily , but at a cost..As long as you have sufficient income to support the payments you don't have to have a high net worth.
Household debt in Chile is one of the lowest in the OECD: 67% of net disposable income vs. 292% in Denmark, 266% in the Netherlands, 185% in Ireland, or 122% in New Zealand.

https://data.oecd.org/hha/household-debt.htm
That is low, what is Denmark spending all their money on?
I definitely do agree though that wealth is underreported and there is also something wring with figures on incomes in Chile, they just don't add up, even amongst their own reporting. There was a report out a month ago on average spending by Chilean households, where they spent their money and on what, but guess what ? average household spending in different cities in Chile per month, varied between 800000 and 1.3 million .
How does that add up when wages are supposedly so low?
You don't even need to look at big ticket items and only have to look at the prices of everyday stuff. I stopped at a Shell station the other day to have a bite to eat, a chicken sandwich and a small cup of coke was 4500 pesos or 6.60 USD, the place was full, everyone eating items that if the country were all on such crappy wages they shouldn't be able to pay the equivalent prices of what they pay in NZ for example (my comparison)
Rents in Puerto varas are equivalent to Taupo in NZ a comparativley similar city, on a lake, volcano etc, but supposedly wages in NZ are 2.5 times higher and they say there is a housing crisis in NZ because people can't afford it, here they moan, but still can afford them, then there is schooling costs, parking costs, tolls, fuel, so many things that are more expensive than most of our home countries, yet, in other countries the wages are supposedly so much higher. Something does not add up whateveway you look at it.
In the Lakes Region Chile for 6 years. It looks like New Zealand in some ways, and is nearly at the bottom of the world too, but there the similarities end.

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Re: Chile Wealth, Inequality, and International rankings

Post by 41southchile » Sat Oct 20, 2018 10:57 am

Another thing I have noticed selling Parcelas is that very few apply for a mortgage to buy, they just seem to have a spare 30 or 40 million sitting around somewhere? I don't know many people in New Zealand that could just pull out 40 or 50 grand from under the mattress.
In the Lakes Region Chile for 6 years. It looks like New Zealand in some ways, and is nearly at the bottom of the world too, but there the similarities end.

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Re: Chile Wealth, Inequality, and International rankings

Post by admin » Sat Oct 20, 2018 12:16 pm

41southchile wrote:
Sat Oct 20, 2018 10:57 am
Another thing I have noticed selling Parcelas is that very few apply for a mortgage to buy, they just seem to have a spare 30 or 40 million sitting around somewhere? I don't know many people in New Zealand that could just pull out 40 or 50 grand from under the mattress.
super true.

i was at an tax auction for a three hectar lot a week ago. there was 40+ people in the court room. when the price hit 60 million, about 3/4th of them went 'dam it' (in english and spanish) under their breath, and we all had a good chuckle.

the lot sold for 130 million, and my calculations was it was worth north of a million dollars.

what was interesting, being a tax auction, is you had three days to pay (vs. bank auctions are more like 30 days). so all those people had 60 million liquid, cash. even a fast consumer loan, with a high interest rate, typicaly takes a bank more than 3 days to process the paper work. same with selling stocks, etc. basicaly it had to be in your account or at least a cd.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

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Re: Chile Wealth, Inequality, and International rankings

Post by admin » Sat Oct 20, 2018 12:24 pm

almost forgot. it was worse. it was three days to pay, but only 2 bank days as the court was open saturday.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

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Re: Chile Wealth, Inequality, and International rankings

Post by admin » Sat Oct 20, 2018 1:05 pm

even if you assume most the cars are bought on credit, people have income and credit to qualify. the banks are very good about protecting their loans.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

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Re: Chile Wealth, Inequality, and International rankings

Post by at46 » Sat Oct 20, 2018 7:47 pm

A couple dozen sail boats in the Valpo-Vina bay today. Five years ago I'd be lucky to spot one in a week.

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