The Santiago Economy is growing again

My wife works very closely with the big retailers here in Chile and she estimates that November will be better then what Forbes writes about October.

Santiago retail sales expanded 3 percent in the first 10 months of the year, and the chamber estimates sales in the capital will grow about 3.5 percent this year from 2008.

Head over to Forbes to read the rest:

Forbes.com: Santiago Chile retail sales up 9.3 pct in October

Is Argentina a "Banana Republic"?

 

..that is what we in Austria call countries where there is no consistency in laws and you cannot trust your politicians.

See here the meaning of Banana Republic

There have been many examples (please add your examples in the comments) about bad politics in Argentina and I will list the ones that I have heard about through international media (mostly economist) here:

Current event: Cristina Fernández de Kirchner (the president) is working on a law to impose a new electronic tax on TV’s, Laptops, personal Computers, GPS Navigation Systems and phones if they are not produced in the south of Argentina. This will raise the VAT of such goods to 21% from previously 10.5% . Now the populist President calls things like laptops and computers luxury goods and this is the reason why she had proposed this law. The problem as I see it: A GPS system or a PC will never be produced in Argentina anyway. All that can and might happen is that they will be assembled in Argentina so the Argentinean companies will buy the usual components (GPS modules, computer chips, batteries, lcd screens etc…) from foreign companies and assemble them in Argentina. In my opinion two things will happen: Some people will build these assembling companies in the south of Argentina but not many. Reason being in a "Banana Republic" laws change quickly and there is no guarantee of investment. Imagine building a factory and then 1 year later the law which was responsible for you building the factory changes. Goods produced in Argentina will become more expensive as there is a lot less competition. The rich Argentinian consumers will still be able to afford computers and will mostly bring them from their holidays in Chile, Uruguay or the US but the poor will be pushed out and that is a real shame / no computer / no access to knowledge.

This is bad because there are foreign companies that have invested in Argentina and created good jobs there. The mostly Argentinean employees of these corporations will suffer. But it is worse because the general Argentinean consumer will suffer by paying higher prices for luxury goods (sic) – essential goods like a computer (!) It is hard enough for Argentineans to afford a computer right now.

While I did not find a international price comparison for Computers here is one for TV’s before the new tax

 

Lets hope the Argentinan MP’s don’t vote for this new “luxury tax”.

There is a Facebook cause which you can join and there are also blogs which have been created to speak about this issue: No Al Impuestazo tecnologico

This is my personal opinion about Argentinian politics. I like the people, the food and the country itsself but the politics are terrible. If you have an opinion I invite you to state it in the comments below. Feel free to comment in English or Spanish or even in German (I volunteer for translating the German ;)

The Chilean Finance Minister

Andre’s Velasco the Chilean Finance minister
picture from wikimedia

 

There is a great story on Bloomberg about the Chilean Finance Minister Andrés Velasco and the government savings from Copper which he is starting to spend to stimulate the Chilean economy. The article is really well written and there is not one good part to cite. If interested you will have to read it all. The good news is that Chile will manage this economic down turn better than most developed countries and a lot better than other Latin American countries. Read the article here –>

My previous post about the Chilean economy can be found here: Chile’s economy