Chile Wealth, Inequality, and International rankings

[admin]

villarica i actuelly like, and it always baffled me the fascination with pucon located on the windward side of the lake, when villarica is better situated relative to that very active volcano and has better weather.

that entire mainstreet of pucon is a volcanic red zone. you will see photos hanging in restauraunts in villarica of lava flowing down mainstreet pucon. it is not even theoretical. it has happened regularly; but the developers have maneged to mess with the zoning to stick more people and money in the danger zone. you can kick the dirt in central pucon and find a lava flow from the last erruption.

pucon has been the city of the future for 50+ years, and probably always will be.

villarica, more of a real city.

[admin]

well here is an interesting endorsment of chile from the new economics minister of brazil:

https://www.df.cl/noticias/internaciona ... 90951.html

perhaps going a bit far to call chile "Switzerland", but apreciate the complement.

[admin]

well here is a good one for a change.

chile listed in the top ten growing EM markets for the next decade, listed as number 8 along side the likes of china and india, and the only one in latin america:

https://www.df.cl/noticias/internaciona ... 14159.html

[admin]

O.k. the report card for 2018 is in from the Central Bank.

Here is probably the best summary of the overall stats.
https://www.latercera.com/pulso/noticia ... on/574909/

I am still pawing through the gory details of the original documents (they have not published an English Translation yet), but may be found here:
https://www.bcentral.cl/

The highlights, Chile GDP hits 300 billion U.S., highest in the region, number 41 in the world.

GDP per person hits: US$ 25.891, highest in the region, and just a hair shy of many European countries.

Chile's debt reports are also out:
https://www.bcentral.cl/web/guest/-/bal ... estre-2018

FYI, second half 2018 financial stability report:
https://www.bcentral.cl/en/-/informe-de ... estre-2018


Still readying through, periodically stopping to uncross my eyes with a knife. None of those reports will win a Pulitzer. Unless you are really in to this type of thing, I would highly recommend going over to my snake thread and getting bit. It will be a more pleasant experience.

[41southchile]

O.k. the report card for 2018 is in from the Central Bank.

Here is probably the best summary of the overall stats.
https://www.latercera.com/pulso/noticia ... on/574909/

I am still pawing through the gory details of the original documents (they have not published an English Translation yet), but may be found here:
https://www.bcentral.cl/

The highlights, Chile GDP hits 300 billion U.S., highest in the region, number 41 in the world.

GDP per person hits: US$ 25.891, highest in the region, and just a hair shy of many European countries.

Chile's debt reports are also out:
https://www.bcentral.cl/web/guest/-/bal ... estre-2018

FYI, second half 2018 financial stability report:
https://www.bcentral.cl/en/-/informe-de ... estre-2018


Still readying through, periodically stopping to uncross my eyes with a knife. None of those reports will win a Pulitzer. Unless you are really in to this type of thing, I would highly recommend going over to my snake thread and getting bit. It will be a more pleasant experience.

Keep up the good work Admin, good sumarry, A billion in Spanish is actually a trillion in English isn't it?
I remember when I first came to Chile I think GDP per person was about 11000 USD, so more than doubled in a generation, that's not bad going I guess.

[admin]

Yea, every time I try run calculations, I have to very carefully watch periods, commas, and count zeros on my calculator as to not loose a billion or a trillion dollars in translation from Spanish to English.

[admin]

Here is a summary of the external deficits of Chile:
https://www.latercera.com/pulso/noticia ... 18/574820/

The most important parts:

La deuda externa del país se incrementó en US$4.256 millones el 2018, alcanzando a US$184.440 millones, equivalente al 67,1% del Producto Interno Bruto (PIB), correspondiendo la mayor parte a las empresas que representaron el 67,7% del total, incluída la deuda con empresas relacionadas de inversión directa, informó este lunes el Banco Central.

Which, in a world where national debts are now denominated in trillions of dollars, Chile's debt is a rounding error.

Even more important is what make's up that debt. Seems lot's of corporations, loaning to their related companies. Making internal corporate loans is a very old accounting trick for dodging taxes, etc.

Le siguieron bancos y gobierno, con 15,5% y 12,5% del total, respectivamente, y finalmente, con participaciones marginales, otras sociedades financieras y el instituto emisor.

Según las monedas de denominación de la deuda, el 83,4% corresponde a dólares estadounidenses; 8,2%, a pesos chilenos; 5,2%, a euros, y el resto está distribuido en otras monedas. En términos de vencimientos, la deuda de corto plazo representó 13,8% y la de largo plazo, 86,2%.

La deuda de corto plazo residual alcanzó a US$60.572 millones al cierre del año. El 40,0% de este monto se pagará a empresas relacionadas en el exterior.

Only 13.8% is debt coming due in the short-term.

I seen a recent paper this week that made a good argument, that we need to stop obsessing about debt in terms of debt as a percentage of GDP, and focus on measuring debt servicing costs to GDP. It was in part a reaction to Modern Monetary Theory crowed ( "screw it, debts don't matter", or some silliness), but using a more orthodox theory of national debt levels to increase national debts.

Which, I think, is a much better way of going about it. Let's see if I get this example correct.

If I, as a private citizen, take on debts that are many times my annual income, who cares? As long as I can service the interest on it. Say I make $100,000 U.S. a year. I take out $1 million dollar loan. My interest payments however are like 2%, I can still afford to stay good with that loan, indefinitely (assuming i was a government, and not a human that dies) as long as it stays within my budget. Even better, If I actually go invest that money in to something useful, that returns more than 2% a year (e.g. roads vs. missiles).

It is when the interest payments blow-out, that people, companies, and governments get in trouble (e.g. Argentina at 50% interest on short-term debts), and really bad things start happening soon after (e.g. Venezuela).

But, I probably got that all backwards.

[41southchile]

Meanwhile the economy of Brazil continues to be weak,
https://www.emol.com/noticias/Economia/ ... meses.html
Mind you I wouldn't mind betting January was quite weak in Chile too, as for the rest if the region I haven't really paid much attention to it, but things globally were kind of depressed towards the end of 2018 and going into 2019, will be interesting to see how things pan out in the next few months . Just by pure observation things seem to have picked up a bit in the last 6 weeks or so around this part of the country. Tourism operators seem happy, restaurants are full, malls are full and people are definitely spending and there is a lot of new businesses opening and construction continues at a strong pace.

[admin]

yea, the one to keep an eye on this year is Argentina because of the election. i have been over to argentina twice this year, but never had the opportunity to really interrogate any man /woman on the street about how they thought the election was going to play out. i just was always in a hurry.

i am afraid, no matter what they do, another (bigger) financial crisis is just being kicked down the road and getting bigger by the day.

i just decided a little while ago i am going to make more trips to Argentina this year just so i can kind of see for myself what is going on as the elections aproach. my wife and i like san martin, and my wife has been on my case to go to concert in buenos aires for a while. even if i dont gain any insight in the black box of Argentina politics, the wine and stakes are really cheap right now.

brazil's stock market is on fire this year, and bolsonario seems to be getting pension reform through; i just have a sense that the market enthusiasm for his reforms are getting ahead of the reality of the long-term damage that has been done.

[admin]

i think what i am concerned about with brazil is that it is building up a critical mas of "hot money", and when things don't pan out as fast as it expects or there are some other (political) setbacks, that money is going to rush to the door all at once. probably going to take a lot of the money in the region with it, as investors panic.

chile has a pretty good tailwind right now, with copper prices up, and copper supplies around the world at some of the lowest in years. if the neighborhood can hold it together and not spook the gazelles, there should be some steady investment flows in to the country for the next say 3-5 years.

[admin]

peru should do pretty well if they can keep a lid on their never ending political mess.

colombia is overall doing good, but i seen today something go by about how the cost of the Venezuela mess is starting bite in to their fiscal situation.

mexico, i dont know; and, i think that is exactly the problem. no one knows. Mexico's politics for some reason i have never been able to really wrap my brain around it.

[admin]

overall though, the EM countries are not really worring me. they are in some of the best shape in terms of financial reforms ever (with a few isolated exceptions of course).

what worries me is the stability of the developed markets. the u.s. is a frigen shell game, and their is no stone under the cups. going in to a u.s. election cycle, with deteriorating economy, and the pile of debt; something has to give.

europe, is possibly even worse. everything that is wrong with emerging market debts, is concentrated in the european banking system.

i read this crazy report the other day, and i was kind of aware of this. the EU bailed out spain's banks right, for like 56 billion euros. the spanish banks turned around and dumped it in to emerging market debt. 86 billion euros went in to turkey alone. never mind argentina, mexico, etc. Turkey the country where three years ago they made it illegal for banks to forclose on zombie companies. that bad debt has got to come off someone's books, and that means it is going to end-up on the EU central bank books.

That is just one problem child. money laundering probes in german banks, brexit, itially, etc. that merger with deutcha bank just announced was a shotgun wedding for a zombie bank that was failing. that was just like back in 2008 when Lehman failed, and all the other banks that could fail were being forced to merge by the fed. they just don't want to panic the markets by calling it what it is.

the PIGS are back, and they made some friends.

it is just going to take a misunderstanding between central bankers, tighting a little too fast, to start that pig roast.

same with the u.s., and that is probably worthy of its own thread. the fed is playing chicken with an inverted yield curve, and he knows it. Never mind some dumb tweet from trump at 3 a.m., and we are all of to the races; and not the warm fuzzy free money ones we seen in 2008. the fed, and all the central banks, are out of ammunition.