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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
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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.

Andres Velasco, Chile's finance minister, delivers a speech during a session at the Progressive Governance Conference in England last year.
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)
Farmers hold a sign that reproduces a US$ 1 bill, portraying Chile's Finance Minister Andres Velasco, during a demonstration in Rancagua, Chile, last year.
Farmers hold a sign that reproduces a US$ 1 bill, portraying Chile's Finance Minister Andres Velasco, during a demonstration in Rancagua, Chile, last year.   (AP Photo/Roberto Candia)
A worker is seen at a copper mine at Escondida, Chile. Smart moves from the country's finance minister meant the country's economy didn't suffer whiplash as copper prices rollercoastered.
A worker is seen at a copper mine at Escondida, Chile. Smart moves from the country's finance minister meant the country's economy didn't suffer whiplash as copper prices rollercoastered.   (AP Photo/BHP Billiton, HO)
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If you get some extra money, you will ask, 'Will I have this again next year?' If not you say, 'Well, I'll save part of it.' - Chilean Finance Minister Andrés Velasco

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COMMENTS
Showing 3 of 4 comments
Fondue
May 27, 2009 4:27 AM CDT
Looks like you opened your fat ignorant mouth....again. No surprise. Hell, I hope Obama is a Socialist Democrat - it just might get us out of this financial mess.
Observer
May 27, 2009 3:42 AM CDT
I am moving to Chile - they have gorgeous Latina women, great wines, delicious seafood and are far from the radioactive cloud that will envelope the northern hemisphere. (Thanks to Israel, Iran and Pakistan.)
Nwambe
May 27, 2009 2:29 AM CDT
The words 'democrat' and 'socialist' go together like the words 'right-wing' and 'nutjob'

Modest contraction expected in Chilean economy
Bloomberg

Velasco expects Chile to outperform trade partners
El Mercurio

World • Money

 
Latin America • Chile • copper • commodity prices • economic crisis • emerging economies

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