Chile's Thrift Pays Off as Downturn Bites Elsewhere

Finance minister hailed for dodging commodity bubble
By Rob Quinn,  Newser Staff
Posted May 27, 2009 8:59 AM CDT
Andres Velasco, Chile's finance minister, delivers a speech during a session at the Progressive Governance Conference in England last year.   (AP Photo/Lefteris Pitarakis)
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(Newser) – Chile's thrifty finance minister is starting to look like a prophet as spendthrift, "grasshopper" economies founder around him, the Wall Street Journal reports. Andres Velasco's tight grip on the country's copper revenue during the commodities boom made him and his party deeply unpopular at the time, but the country now finds itself one of the only emerging economies with enough cash to kick-start its own recovery.

Latin American history is full of "booms that had been mismanaged and ended badly," Velasco warned last year as protesters called for him to hand out the $20 billion bonanza from surging copper prices. Velasco's prudence meant the bubbles seen in other commodity-driven economies failed to inflate in Chile. His party's government—which hasn't spent a peso bailing out banks—is now a full 25% higher in the polls than it was during boom times, and the copper cash is funding stimulus projects.