I have long ago stopped economic posts because, well, Miguel and Quico take care of this much better than what I could do. But that I took upon other tasks such as electoral analysis does not stop me from on occasion point out to the essential.
The New York Times carries today an article on how Michelle Bachelet was able to turn around a presidency that started very shakily into a 70% favorable popularity opinion a few months before she leaves office. Why? How?
Very simple: when copper prices were high during the commodities boom that lasted until the mid of last year, she set aside a large portion of the income for rainy days.
What is notable is that her administration managed to place in sovereign funds 20 billion USD. If to this you add that Chile is an export driven economy fueled by agriculture added value products (wine comes to mind and summer fruits in the US during its winter) you can understand that when the crisis came Chile indeed suffered, but not as much as other countries. Today Chile is hoping to get back next year into the 5% growth range, which is enough to finish to pull it off third world status very soon, and certainly earlier than any South American country. Some people might argue that Chile is already out of this category but it is not as its technological sector is not quit there yet, as well as its per capita GNP. Also Chile is still vulnerable to political adventurers such as the growth in polls of Enriquez-Ominami whose changing positions and media based program makes me nickname him Origami as a more appropriate name for an all show, no substance politician.
In short, Bachelet did all that Chavez did not want to do and as such she is high in polls just as Chavez is finally starting his long overdue slide into polling inferno.
Think about for a second: just out of copper Chile managed to save 20 billion, a commodity that does not compare whatsoever with oil. Had Chavez been a little bit more careful, imagine how much he could have actually placed in sovereign bonds without much trouble. 40? 60? 100? billions and with less effort than what surely had to do so create this piggy bank. Even more telling is that Chile today is a net creditor just as Venezuela is issuing yet another set of questionable bond issues, increasing dangerously its debt burden.
But what is even less forgivable when we look at Chavez balance is that he has damaged so much the Venezuelan productive apparatus, in particular agriculture, that now 95% of our exports are oil, and we import at least half of our food. It bears to recall that in Venezuela agriculture should be easier than in Chile since with adequate irrigation it could provide for year round production of some items. Nobody, in an oil producing country , is expecting that we export more food than what we import, but we could at least demand that we do not eat our oil, literally. You know where the oil money spent on food ends, do you?
The final irony here is that as we, an energy rich country, are facing major power blackouts for the next few years, Chile, an energy poor country, announces that its electricity output went up by 2% over the last 12 months.