Chilean Election 2009 & Economic Implications

[Aerosmith]

Salams all. Been keenly following the Chilean upcoming elections this december and from the looks of it Billionaire center right Sebastian Pinera will win Insha Allah. Do you´ll see Chile to pose problems for Brazil given Lula latest left wing spats and even joining the newly formed america latina development bank initiated by Chavez. I cant sleep over it. I see something big brewing here walahi in money market, especially with ING exiting Chile life market to free up money. Who here sees the brazilian real to tank in this quarter if not Q1 2010. A good hedging bet for FX swaps. Finance folks, traders, fx observers do tell. Could be be also another propeller needed to boost instrastructure ADR and bonds for RIO 2016. Lets hear it all. Am I dreaming.

On another note, its been a year since shit hit the roof, how has everyone fared so far. Are you better off now or one year ago?
Do you see housing prices to further tank when Uncle sam ends the tax incentives programs or do you see stabilization in your city. Loved ones still holding jobs.

Also with Etisalat now buying Tigo Srilanka, is it fair to say Smart money has already moved in on the little island? Anyone been to Sri lanka here?
http://somalinet.com/forums/viewtopic.php?f=18&t=226742

Discuss

[rabanam]

Well, the outlook is grim. The Obama administration continues to print more dollars, which itself continues to sink further the dollar's value. Meanwhile, China (and also much of the world) is angry at Obama's economic policies and the continuous decline of the value of its monumental reserves (paper dollar). China has sworn to never commit the same mistake again, as it has already began to diversify its currency reserves. What does that means? No more loan or credit for the US. I think this is one reason why Obama has delayed to send the troops needed in Afghanistan; there's no money to fund it. There's no easy way out of it. The US has run out of option, and patching the terminally ill economy cannot go on forever. Ultimately, the US has to let the economy collapse, and hope that it emerges from death after a few decades.

[Oxidant]

Well, the outlook is grim. The Obama administration continues to print more dollars, which itself continues to sink further the dollar's value. Meanwhile, China (and also much of the world) is angry at Obama's economic policies and the continuous decline of the value of its monumental reserves (paper dollar). China has sworn to never commit the same mistake again, as it has already began to diversify its currency reserves. What does that means? No more loan or credit for the US. I think this is one reason why Obama has delayed to send the troops needed in Afghanistan; there's no money to fund it. There's no easy way out of it. The US has run out of option, and patching the terminally ill economy cannot go on forever. Ultimately, the US has to let the economy collapse, and hope that it emerges from death after a few decades.

I don't believe its that bad. They had to bailout those financial institution or another great depression was looming.

America could easily save billions if they stopped the world policing and stop pointless wars

[The Nomad]

Well, the outlook is grim. The Obama administration continues to print more dollars, which itself continues to sink further the dollar's value. Meanwhile, China (and also much of the world) is angry at Obama's economic policies and the continuous decline of the value of its monumental reserves (paper dollar). China has sworn to never commit the same mistake again, as it has already began to diversify its currency reserves. What does that means? No more loan or credit for the US. I think this is one reason why Obama has delayed to send the troops needed in Afghanistan; there's no money to fund it. There's no easy way out of it. The US has run out of option, and patching the terminally ill economy cannot go on forever. Ultimately, the US has to let the economy collapse, and hope that it emerges from death after a few decades.

Even at the current levels the US's debt/GDP ratio is comparable to the periods in it's economic history where it has experienced the greatest growth. The argument that the debt would crush it's economy ignores that two of it's greatest periods of economic growth were post revolution and post WW2 both of which were periods where it's debt/GDP ratio were actually higher than they are now. The argument that government debt is problematic for economic growth runs contrary to historical realities. Debt only seems to become an issue for economic growth when the government cuts spending drastically in an effort to pay it off quickly, which is the opposite of what is currently happening.

Again, debt load is not prohibitive to growth. The US has not run out options, it isn't even close to the point where the economy is staring collapse in the face. We're talking about the most dynamic economy in the world, China cannot diversify it's currency reserves. It possesses 2 trillion dollars of foreign reserves bought with money that you can't even purchase outside of some countries, that's artificially pegged to the dollar. The Chinese called for an end to dollar hegemony and Obama showed a malleable negotiating style with a firm, pragmatic but strong outlook. They're stuck with it.

The dollar is going nowhere fast. No need for melodrama.

[rabanam]

I don't believe its that bad. They had to bailout those financial institution or another great depression was looming.

America could easily save billions if they stopped the world policing and stop pointless wars

You don't believe or you're hoping? The same financial institutions that have been bailed are in trouble and need another bailout, in case if you didn't know.

[Oxidant]

http://upload.wikimedia.org/wikipedia/c ... USDebt.png

Great post, Nomad

[rabanam]

[The Nomad]

Debt load is not prohibitive to growth

[Oxidant]

The world economy is starting to recover

The U.S. economy returned to growth in the third quarter

Japan’s jobless rate unexpectedly dropped to a four-month low in September

China's GDP grows nearly 9 percent last quarter, and tips a 10.6 percent growth in the 4th quarter

Most economists tipping the Uk will return to growth in the 4th quarter

I think the world leaders handed the world financial crisis excellently. Aggressive expansionary Monterey policy with a sound fiscal policy helps contain the GFC the world financial crisis since the great depression

[rabanam]

Oxidant, you like to be optimistic, but sometimes it's prudent to be cynic. Those rosy news you've mentioned could be bogus news meant to calm and reassure investors and the public. All what the administration is accomplishing is delay the inevitability by patching incurable holes in the terminally ill economy.

[FAH1223]

How does the dollar get stronger though?

[Oxidant]

Oxidant, you like to be optimistic, but sometimes it's prudent to be cynic. Those rosy news you've mentioned could be bogus news meant to calm and reassure investors and the public. All what the administration is accomplishing is delay the inevitability by patching incurable holes in the terminally ill economy.

It’s better being optimistic in economics and in life in general. I don’t know how unemployment rates and GDP can be bogus. There are statisticians who calculate this.

What the Obama administration is trying to fix the credit problem and help major business staying a float. When the time is ready they will exit in a timely manner.

2.36 percentage points of the 3.5 percent third-quarter growth in GDP came from consumer spending. The people are starting to spend again''

[rabanam]

A joyless recovery

Oct 29th 2009

THE American government reported on Thursday October 29th that gross domestic product rose at an annualised rate of 3.5% in the third quarter compared with the second. This was the first increase since the second quarter of 2008. It backs up other evidence that the recession ended in the third quarter or just before, though the official decision, by the National Bureau of Economic Research, a group of academic economists, is still some way off. Robert Gordon, a member of this group, is confident that the recession, which began in December 2007, ended in June. But at 18 months that would still make it the longest since 1933.

Consumers are sceptical. Their confidence fell in October, according to the Conference Board, a research group. A poll for The Economist by YouGov found that 35% of respondents think the economy is getting worse; just 28% think it is getting better. Unemployment is still rising, and even a White House adviser, Christina Romer, predicts it will remain “severely elevated” throughout next year.

A lot of third-quarter growth was the result of temporary government stimulus. Consumer spending grew by 3.4%, the best since early 2007, largely because people were buying new cars in July and August with federal “cash for clunkers”. Sales have since fallen back. Residential construction leapt by 23.4%, the first advance since the end of 2005, helped by an $8,000 tax credit for buyers of new homes. But new-home sales dipped by 3.6% in September, as the deadline to qualify for the credit passed.

Voters are more worried about the economy than anything else, YouGov found, and they disapprove of Barack Obama’s handling of it by a margin of 47% to 43%. That has spurred Mr Obama and Democratic leaders in Congress to explore new stimulus measures. One would extend unemployment-insurance benefits by 14-20 weeks for some workers. Another would extend a subsidy for health insurance for those who lose it along with their jobs. These measures make sense; the recipients badly need the money and will probably spend every penny.

A more dubious proposal would prolong the new-home tax credit until next April and, reportedly, offer a smaller $6,500 credit to people who already own a home. Also, Mr Obama wants to send an additional $250 each to Social Security beneficiaries because they will get no cost-of-living increase next year. This is daft: benefits are flat because inflation is negative, so real benefits have actually risen.

Calls for a new round of stimulus look premature. Temporary effects aside, growth in the third quarter reflects the dynamics of a genuine recovery. Exports and equipment investment both rose. Companies ran down inventories at a slower pace, a contributor to growth that should continue for at least two more quarters. Construction is so low that, even with sales so depressed, the inventory of unsold new homes has hit a 27-year low. This suggests that construction should expand further. And Mr Gordon notes that employment is still falling because, following the pattern of recent recessions, firms have slashed costs deeply so that productivity has grown even as sales have fallen. Profits seem to have turned around already and Mr Gordon predicts employment will follow by the first quarter of 2010.

More stimulus now would add to an already dangerously high deficit. There may be greater need for it in a year’s time, when the inventory boost will be waning and this year’s $787 billion stimulus plan is about to expire. Even then, more stimulus should be considered only if a deficit-reduction plan is in place. In the meantime, monetary policy can assume the burden of safeguarding growth.

The markets expect the Federal Reserve to start raising interest rates by May, and there is speculation that at its policy meeting on November 3rd and 4th it will water down its current commitment to near-zero rates for “an extended period”. Given downward pressure on inflation, the Fed could instead stay on hold all next year, providing a safety cushion for the economy and taking some pressure off the battered federal budget.

http://www.economist.com/world/unitedst ... s_box_main

Oxidant, as you can see from the article, the 3.5% growth is attributed to the “cash for clunkers” stimulus and $8,000 tax credit for buyers of new homes, not tangible growth. The administration is worried and is exploring new stimulus, meaning more printing.

[Oxidant]

Many factors affect the strength of the dollar. If government prints more money, that devalues the dollar. If country raises interest, the demand of that country’s currency increases due to higher return on investment in that particular country. You cannot attribute one thing to the dollar changing its value

Rabanam, nice article

I think we should wait until the end of the 4th qtr to asses Obama's economic policy fully. Hopefully, I hope for the best

[Aerosmith]

Good grief... Too much basic economic jargon here. I wanted your own analysis folks not the shit you hear on business news portals

FAH dollar is temporarily strengtening cause most borrowers in financial sector still depends on FED and US$ as other players like EU Bank and BOJ aren´t much involved. This temporary rise in Dollar to me is to mainly hedge and payback the loans owned in US$. A flee from equities to the dollar index by financial players.

Back to the topic do the US folks here see housings to stabilize? Do youll think Uncle Sam is on his way with another stimulus freebie? Do you see the extensiuon of first time homebuyers incentive?

To UK folks, is RBS on the brink of collapse? Maybe the next northern rock in the making. Insha Allah it and Citi will hit the dust soon.
Does anyone here trade ADRs?
Lets heat it folks