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Is Colombia in an Economic Depression?

I just read the article in El Tiempo this morning about how the Colombian middle class -- defined by the article as people earning between 6 and 12 million pesos a month -- is really suffering now. I am curious because I am thinking about buying an apartment here but it seems as if there's a housing bubble in Bogota. I am thinking of waiting until this bubble collapses like it did in the US.

Do those people on this forum who live in Colombia see significant evidence of economic hardship with people they know in the Colombian middle class? I'd be curious of people's perceptions. I've seen some indication in very specific sectors, but not the sort of global slowdown that El Tiempo describes -- although unemployment is inching up.

A second observation. It seems to me that Colombians are incredibly proud. That they tend to present themselves as being better off than they actually are. In the States it's the opposite. A working class American guy who's "made it" and now makes a lot of money almost relishes continuing the dress and act the same way as he did before he "made it." In Colombia, particularly Bogota, it seems as if everybody pretends to earn and have much more than they actually do. Even people making peanuts tend to dress really well, look good, and maybe they don't have a peso in their pocket. Is this true?

By LifeChange on Nov 22, 2009, 08:35 in Friendly Talkzone.

Paisa/Calena/Luver says on Nov 22, 2009, 08:50:

12million a month in Colombia is MIDDLE CLASS?? thats $6,000usd a month or $72,000usd a year.. I dont think there are many people on here who make that kind of money. I think you must mean annually. Most people I know make 500kcop a month with a few making as much as 800kcop a month.

"PAY ATTENTION! I wonder if that person knows that when we push the FUNNY button, its because we are reading something outrageous, trying to be cynical, derogatory, sarcastic and/or obnoxious!"

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oneforyourmillion says on Nov 22, 2009, 09:02:

Middle class? I think maybe 2 million a month would be the medium but 6 to 12? that is upper class for sure. I wonder if EL T actually beleives its own propaganda?

All that up in the high life you can have it. False rich, false friends and well a false life. Get down to the bear bones of it and you will find yourself, your friends and your life. Colombia can show you the way if you look...

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tasco66 says on Nov 22, 2009, 09:08:

"That they tend to present themselves as being better off than they actually are. In the States it's the opposite."

I don't think so. In the States everything the middle class buys is on credit...they are living way above their means...

Newsweek on Uribe: "he's delivered the trifecta of peace, security, and prosperity"

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oneforyourmillion says on Nov 22, 2009, 09:11:

Same goes for here tasco credit credit credit they have adopted that way of life. Only it is going to restaurants and clubs not tangible items. See the boom...

The thing to keep in mind is this. Colombia has always been in an economic depression. The move up was not that noticeable so the move down might not be either depending on where you are. Now in Bogota I see a big hurt comming ot people who have inflated apartment prices 400%. It will be ugly.

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Paisa/Calena/Luver says on Nov 22, 2009, 09:15:

Cuanto Quotas?

"PAY ATTENTION! I wonder if that person knows that when we push the FUNNY button, its because we are reading something outrageous, trying to be cynical, derogatory, sarcastic and/or obnoxious!"

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LifeChange says on Nov 22, 2009, 09:16:

Interesting, the article said 6 to 12 million pesos a month. Maybe they were talking about the big cities: Bogota, Medellin, Cali, etc. Weirdly enough, I had dinner recently with a person who self identified as "estrato 5" but who said she was making three million a month. I thought maybe that was because her family was estrato 5 she considered herself that even though she was only making 1450 dollars a month, which I would consider pretty poor in the US. But she had a good job.

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oneforyourmillion says on Nov 22, 2009, 09:20:

Cuanto Quotas?: JAJA yes can anyone say nuclear economic bomb???

Stretching that minimum credit out over quotas is not even going on in the US and look what happened to them. Changing 2 millions credit into 20 millions in credit over quatas is only making the problem worse when it finally all comes to a head it will be dissaterous. That credit has to be paid back and the banks will be happy to take your apartment to get it paid back. trouble in when the banks start taking over the apartments they do not care about price. They care about recovering their loss and they get that ahead of anything the buiyer has put in. His deposit in the home or anything else. it will spell dissaster for this housing boom. It is just a matter of time. Once you lsoe your job? You lose everything there is no protection.

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tasco66 says on Nov 22, 2009, 09:26:

"Same goes for here tasco credit credit"

OK, tell me which bank will give me a zero down payment mortgage in Colombia?

Newsweek on Uribe: "he's delivered the trifecta of peace, security, and prosperity"

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panthdave says on Nov 22, 2009, 09:32:

Which bank will give a zero down payment in the States NADA right now..Its back to Full Doc and 5%-20% down..then its luck of the draw..If your suit and tie matches the bank's standards..

panthdave Miami

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panthdave says on Nov 22, 2009, 09:35:

Cuanto quotas LOL...After three years my wife is finally adjusted to una quota...She never could understand why I did una...I explained to here I went thru my financial disaster and learned in my early thirties..She still did not understand....Its Credit Credit Credit..at interest rates that are outrageous..in Colombia...

Matter of fact you must not be watching the news....Banks are sending letters out to everybody raising there rates...My mother just received one that her rate is going to 30% and she does not have a late payment or default....She is closing the account before the deadline...so she is locked in the old rate....

panthdave Miami

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La_Huella says on Nov 22, 2009, 09:44:

It's near impossible to get a zero down mortgage in Colombia, I have seen it done, but it was done as a favor to people who were bank managers... the general public can NEVER get that... the standard here isn't even 5-20% down, it's 30-50% down. In my case I was REQUIRED to put 50% down...

The cuotas thing is a sure invitation for bankruptcy you've got that right, and they charge incredible interest for the privelege but there's a real relatively small amount of people here who can even get a debit card much less a credit card. Remember 71% of the country doesn't even bother with a bank account here...

6-12 million a month would put you in the top 1% economically here... the average in bogota is between 2-3 minimum salaries, or between a million and a million and a half a month.

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Londoner says on Nov 22, 2009, 09:50:

Paisa/Calena/Luver says on Nov 22, 2009, 09:15 (today): flag

Cuanto Quotas?Right on the money .Stand in any supermarket check out and sure enough,you,ll be the only one paying in 1 cuota.A lot of Colombians are up to their neck in debt.All those new cars are all on finance.

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oneforyourmillion says on Nov 22, 2009, 10:29:

Yes and they all have an apartment who have a credit card, some have it and don't but most do. It does not matter how much they put down on the apartment. Not one little bit does it matter. Why? Because when you don't make the second payment on the credit card the bank can take your apartment and sell it. No not everyone has a credit card in Colombia and not everyone owns property here either.

Yes the interest rates are terrible and the reason is that Colombians do not know how to manage credit. It will not take much to get the prices in these apartments falling. I know that is not what some of you wnat to hear but if the banks start collecting on unpaid credit card and car loans it is going to flood the market with repoed houses and that is what will do the housing industry/prices in every time. It will happen in the car industry as well. Too many cars on the road and too few are paid for. If the bank takes them and there is no market to sell them they will be liquidated and man watch out for falling prices.....

Which is better a broad spectrum of people using credit, a large credit base spread out of hundrends of millions of people like in the US. Or what is in Colombia a small part of the wealth and credit controlled by a very few people. It to me is very clear and it will only take a small amount of job loss impacting that group in Colombia to lead to BIG problems.

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oneforyourmillion says on Nov 22, 2009, 10:36:

Oh and PS

Very strict loan procedures is a two edged sword do not forget. On one side yes it leads to more responsible loans. Then on the other edge it makes it very hard for people to get loans to buy homes in a recessionary environment where comming up with 20% down or whatever is not going to come easy. Thus again the perfect storm to lose your ass in the housing market in Colombia. We won't even bring up what it will do to the peso...and what that will do to your final nut.

Why do you thnk the fed has dumped billions into our banks? To get them lending. Without that, prices fall lower and well there is no bottom.

I just see and don't know when but there is a comming economic dissaster here that will make what is happening in the US look like a dair at the beach. Don't know when but it looks more and more like the next corner with every passing day.

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luck4unme says on Nov 22, 2009, 11:00:

From the OP:

"Colombian middle class defined as people earning between 6 and 12 million pesos a month -- "
__________________________________________________________________________________________

Must be an itty bitty, teeny weeny middle class! I know very, very few Paisas who make that kind of money. Il Tiempo is blowing toxic smoke up our collective culos. :) :)

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Paisa/Calena/Luver says on Nov 22, 2009, 11:03:

Im not sure how stretched the Colombians are with credit but when you get a 50mil bill at exito and they ask you "cuantos quotas" and some people say 3 or 4... Colombia will run into a credit crunch down the road soon..

"PAY ATTENTION! I wonder if that person knows that when we push the FUNNY button, its because we are reading something outrageous, trying to be cynical, derogatory, sarcastic and/or obnoxious!"

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stocktrader says on Nov 22, 2009, 11:54:

The people that use CC in Colombia are a small percentage of the population. I wanted to get one and it is typical to get charged 24.000 peso monthly handling fee. Most people don't want to pay that, they use debit cards.

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LifeChange says on Nov 22, 2009, 12:26:

Okay so what's going to provoke a further deterioration? I don't understand how things are holding up now. The peso-dollar exchange rate has got to be killing the flower industry, as well as any other export-driven industry. There was the interesting story in the paper last week about how the president of one of the most exclusive clubs in Bogota was allegedly taking money from narcos and was put on the Clinton list (which essentially kicks him out of the formal financial sector). I can only suppose that if this story is true, it's because the guy wasn't making enough money in normal business activities (he's reportedly a lawyer) to pay for his expensive lifestyle. In my neighborhood there are innumerable apartments for sale that top 500,000 dollars (I live in Bogota's Zona Norte). Who is still buying? What's making the economy go round and round? It just doesn't make sense to me.

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LifeChange says on Nov 22, 2009, 12:32:

Sorry guys, I just looked at this other post, which fully addressed this question just four days ago. http://poorbuthappy.com/colombia/post/colombia---recession-finally-bit... It appears a lot of us our thinking in the same terms right now -- which I guess means it's getting obvious!

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makopp5 says on Nov 22, 2009, 12:33:

LC
I think you have to wait many years to see the "bubble" burst, since there are so many people waiting to invest like you in Colombia, there will be no burst. Perhabs in 30 or 40 years.

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LifeChange says on Nov 22, 2009, 12:38:

Maybe, but the situation is getting bad everywhere. I was traveling in Miami two weeks ago. Amazing how many houses are worthless now; lost more than half their value. And the boarded up houses in places that used to be considered "good suburbs" just two years ago. (Remember what they told us then -- ha! -- "real estate NEVER goes down".) And the consequences in the States are getting worse and worse. I had dinner with the CEO of a pretty large bank in the States recently who said the situation that he's seeing among his best customers is the worst he's ever seen. And he's been CEO for twenty years. He was telling me that next year is going to be far worse than this year in Florida, and the year after that may be worse still. I don't think Colombia is immune. Look at the region. Venezuela -- and granted they have a horse's ass president -- is an economic disaster area. I don't know Ecuador but Peru is showing stress as well. And everybody is expecting the US economy to pick up and start the party all over again. How's that going to happen?

Now to bring things back to here. The job situation is catastrophic. Everytime my company advertises we're flooded with AMAZING candidates everyone of whom could probably replace me at a fraction of my cost and do my job better than I do. And there are fifty of them for every position! And more graduating all the time! And the ones we bring on we can't raise up, because there's no "up" for them..

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span_colombia says on Nov 22, 2009, 12:58:

moral of the story: start your own business.

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oneforyourmillion says on Nov 22, 2009, 13:45:

Only on here do I hear where Colombia is doing fine or recovering. I left my office today and ran into a friend who imports large machinery and industrial equipment, trucks, etc. He is not doing well at all. I asked him how things are and he looked at me like I was stupid. Duro was his word for it and then on and on about how tough it is. My friend who was on the export side shipping out Bananas suicided with this strong peso. SO exports are done, have been. Imports are also getting hit hard. So take out Oil, Gold and Coal from the export number on Colombia and it does not look good. So are those industries going to hold things up? nope.

I would love to beleive everything is wonderful but I am setting on inventory right now. My customers are setting on inventory and I have downsized further shipments until this inventory is gone. You know I went to the local central commercial today and most of the stores were setting empty of customers. January is going to see a lot of closures and a lot of layoffs. Colombia is just behind the US in feeling this but they are going to feel it just the same.

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oneforyourmillion says on Nov 22, 2009, 13:51:

As far as doing business with narcos? I am sure I do it everyday. So does everyone else.

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excavator59 says on Nov 22, 2009, 14:02:

Yes they do try to present themselves as better off then they are ,even the builders when they finished work would clean themselves up & change their clothes before going home .You can see it in the English Academies they come up with an excuse to take their kids out saying things like they're not learning or some other often lame excuse rather then say they can't afford it any more like you say very proud.

Life is like a Pubic Hair on a Toilet Seat (Sooner or Later you get Pissed Off)

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makopp5 says on Nov 22, 2009, 14:35:

jc
Colombia is not the us. Here no bank has mayor problems and there was no capital destruction like europe and us. Brasil is out of resecion and colombia is too coming out. here in colombia there are only a few real estate financed by bank credits. And you need a downpayment from 30% that`s a big difference.

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LifeChange says on Nov 22, 2009, 15:37:

in my experience what the Colombians consider "upper class" fall into the falling categories:

-- people who have certain last names (e.g. Santos, Bettancourt, Barco, etc.). It doesn't mean they have a huge amount of money, but it means that at least one ancestor with the same last name was likely a president of the country sometime in the last hundred years. That's important here. They all belong to about five clubs in Bogota. A lot of them now have cousins who are senators, etc. The families split up the task of keeping in the upper class. Some of them go into elected office -- and protect their brothers and cousins who are in private business. The politicians "make" a lot of money, but they go through a lot of money as well, just keeping up appearances and keeping in the game. Also notaries -- notaries are the real lawyers of Colombia, and make a ton of money.

-- the second group is the "farandula" crowd; the models and actors of the moment who don't necessarily make a ton of money but get invited to all the big events and who walk around looking beautiful.

My guess is that neither category is rich by US standards, in most instances. A pretty rich Colombian might have a million dollars excluding the over-valued apartment he lives in somewhere in Zona Norte; that's not much in the US. But with that million you live a lot better here than in the US, I think.

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turnmeon says on Nov 22, 2009, 16:14:

are you kidding me? one million US in Colombia get you in the ok group but not in the richer top, i know many people who have one million US on the bank and are still considered middle class.

i would say, to be considered rich in colombia you need to have atleast $5,000,000 US and up, the actual rich colombians have a few hundred million US.

the richest colombian have 1,4 billion US acording to forbes.

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makopp5 says on Nov 22, 2009, 16:16:

LC
Para los colombianos, el próximo año también pinta mejor que 2009. Los pronósticos indican que después de un crecimiento cero que se espera para el presente año, la economía colombiana se moverá entre el 2 y el 4 por ciento al finalizar 2010. Los más optimistas se van por la parte alta del rango, como Alberto Bernal, de Bulltick Capital Markets en Miami, quien cree que el PIB colombiano crecerá el 4 por ciento. El estimativo del gobierno es más conservador. Le apunta al 2,5 por ciento, cifra en la que hay un amplio consenso entre los analistas. José Darío Uribe, gerente del Banco de la República, se queda entre el 2 y el 3 por ciento.

Here is the outlook for next year, that may kill your dreams with a depression, that you can buy an apartment cheaper

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stocktrader says on Nov 22, 2009, 16:40:

A lot of people here use anecdotal evidence trying to prove their point. In this case I would say anecdotal and hearsay evidence is worthless without statistics. You can see a restaurant out of business, but how does it compare to the normal course of business where there are always restaurants going out of biz. You can hear from some people how bad it is, but there are always people having a hard time. People tend to complain when things are bad and not boast when they are good (except to good looking women of course)
Tax receipts where a bit lite by DIAN forecasts but where still higher than in 2008 and only missed by a small percentage. (that's emperical evidence as opposed to anecdotal)

Durable good sales will no doubt take a big hit, but most of these are imported. I don't see any slowdown on basic necessities. Brazil just stated next year they will have China like GDP growth at 9%.

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oneforyourmillion says on Nov 22, 2009, 19:05:

I agree with you LifeChange and then ther eare the rich upper class people who are in the catagory that turn is talking about but 100 million in liquid wealth is not common in Colombias upper class it is the exception. My expereince anyway

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El Expatriado says on Nov 22, 2009, 19:10:

"Colombians don't know how to manage Credit (or Money)".

Hmm. Sounds an awful lot like North Americans to me.

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El Expatriado says on Nov 22, 2009, 19:17:

Brazil can state what they want. Reality is what counts.

This is just like the early 80s. Big crash and long slow recovery. Things won't eally get worse, other than the unemployed will spend all their savings (if they have any).

Colombia is in a permament epression, always, for 7%% of the people. IN Cuba, iit's like that for 98%.

Some places are still bubling though.

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El Expatriado says on Nov 22, 2009, 19:18:

Sorry for typos" Colombia is in a depression always, For75% of the people.."

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La_Huella says on Nov 22, 2009, 22:16:

Of course the real truth is, not everything makes it down on paper.

Gringos love to look at a bunch of numbers and point to how much better they still are than the rest of the world..... but then you open your freaking eyes and get a reality check.... look at the people, look at how they live, their lifestyle....

For example, we don't have massive tent cities in Bogota....

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davidyamiga says on Nov 23, 2009, 06:12:

Million...what type of business do you have?

Back to work! It sucks,....

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pilotguy says on Nov 23, 2009, 09:03:

No massive tent cities, but massive barrios that would love to move up to a tent.... joe

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goin_south says on Nov 23, 2009, 21:31:

turnmeon (☼Travelguide writer) says on Nov 22, 2009, 16:14:
the richest colombian have 1,4 billion US acording to forbes...

...and, three armies guarding his castle.

Boba-ma: " i AM the president "

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La_Huella says on Nov 23, 2009, 22:12:

How the hell is living in a real house WORSE than living in a tent pilot??

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lpdiver says on Nov 23, 2009, 22:16:

It depends on the house and depends on the tent I suppose. On my recent trip I spent half a week with a family whose month rent was 50,000 pesos.

ts

Remember what the monkey says, "Fuck money it's free"

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christobeldawg says on Nov 23, 2009, 22:17:

same reaon that people who live in safe secure boring houses like to go camping.

traveling hopefully is always better than arriving

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El Expatriado says on Nov 24, 2009, 04:42:

I think La Huella is talking about campgrounds in the Ontario Lake district or the Okanogan on a long weekend.

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aztec says on Nov 24, 2009, 05:45:

Just look under the bridges in some areas of Bogota. Especially, early in the morning.

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La_Huella says on Nov 24, 2009, 08:42:

Believe me, I have, it has NOTHING on the homeless problem in LA and Miami, and that's saying a lot, because there is no shortage of homeless here either.

My point is people on here need to take the log out of their own eye first, that's all.... the US is NOT any better off than Colombia anymore, except for a few meaningless numbers people throw around to make themselves feel better.

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El Expatriado says on Nov 24, 2009, 19:18:

Yeah like the CIA, UN, IMF, APEC., Wold Bank

What a bunch of idiots. Do they actually think people are going to beleive the US has a $16 trillion GNP and per Capita income in US is $48,000 a year whereas in Colombia it's only $6,000 a year? Sheesh, What abunch of maroons. It's so obvious that the US is just as bad off as Colombia despite those meaningless numbers.

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El Expatriado says on Nov 24, 2009, 19:20:

And all those Colombians going to the US just to get away fromthier nagging families.

Thank god I pulled that log out of my eye. Almost as bad as that Douglas Fir stuck up my Heini.

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oneforyourmillion says on Nov 25, 2009, 05:12:

Homeless in Bogota? JAJA yea it is not that big a problem...yea right. Anyway let me inform you why there are not more homeless if I may. You see every now and again in the poorest neighborhoods these guys with guns and ski masks come driving through in pickup trucks. If you are a druggie or a homelss person they shoot you and throw you in the back of the truck, drive you to the river and chuck your dead ass in it. OK so now you understand how they deal with the homeless in Colombia. Don't talk about shit you know nothing about.

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La_Huella says on Nov 25, 2009, 06:03:

I know that... it happens in the US too dude..... which is MY WHOLE POINT....

You seem to have a real problem reading other peoples' posts.... NOBODY SAID THERE IS NO HOMELESS PROBLEM HERE... I just said that in some US cities it's even WORSE...

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El Expatriado says on Nov 26, 2009, 05:09:

Thats just because in NA they kick thier psychotic cousin out in the street, even though they are 3 people living n a 2200 sq. foot house.. In Colombia, the family takes care of them, Even ifit means 18 people crammed into a 400 sq. ffoot hovel.

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La_Huella says on Nov 26, 2009, 08:19:

Yeah and your point is?

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