Adios Mi General: New Wave of Socialism Could Destroy Chile's Wealth

ZH: Chile Assets Dive After Radicals Win Election Mandate To Overhaul 'Free Market Friendly' Constitution

In what's being widely described as a shock loss after this weekend's historic election to determine who will draft the country's new constitution, traditional parties including President Sebastián Piñera’s ruling center-right coalition Chile Vamos got clobbered, seeing their parliamentary seats and influence greatly diminish in favor of both independent, hard-left and radical candidates Sunday night.

With over 90% of the votes counted by Monday afternoon, Pinera’s coalition won a mere one-fifth of the constitutional assembly's 155 seats (at 37 seats), while traditional center-left parties picked up only 25 seats, leaving the lion's share to "radical blocs" that include communists and independent leftists that are bent on implementing sweeping changes to Chile's constitution which dates back to Gen. Pinochet's military rule. Radical re-drafting of the constitution was a central demand of the 2019 protests triggered by high living costs and rampant inequality (which famously, it should be remembered, was initially sparked by a $0.04 metro fare price hike given long boiling anger among the working class).

BBC tallies that now with more than 98% of the votes counted, "independent candidates had secured 48 seats, the left 28, the centre-left 25, and the right-wing coalition 37." And an additional 17 seats will go to representatives of indigenous groups, the latter which were a driving force in the protests and unrest of 2019.

Given the ruling government failed utterly in its battle to secure the critical one-third of seats needed to block major changes, a radical new constitution is all but assured, with the new constitution expected to head to public vote by the first half of next year (after delegates will spend at least nine months drafting it).

The Chile ETF failed out of the monster wedge pattern.

USDCLP doesn't look helpful yet, but if Chile goes down the tubes, the currency will start driving the ETF.

Peru has elections next month. The country is headed in the same direction. The chart of the currency implies trouble, but the ETF could go either way thanks to resource prices. Veezuela is a stark reminder that the most resource endowned nations can still go straight down the tubes with a socialist government.