Article - Will Ecuador turn into Latin America’s Greece?

Interesting article

. I think the dynamic is a lot different than Greece. EC is not at the mercy of the EU. So far the Chinese lenders don't seem to be calling in their markers.Much of the prior bail out money for Greece has been spent repaying previous debt  EC still has gold reserves and minerals yet to be extracted.

I don't think corruption rises to the level of the Greek government. The transparent grand standing by the Greek leader  was a  public lie that affected all sectors of the population.

If Correa is becoming a tyrant I am sure he is still mindful of the fate of his predecessors. That the mayor of GYE can get 350K protestors out in the street may help him see the handwriting on the wall.That he is resorting to Putinesque tactics is worrisome but also can be seen as a sign of his desperation. After all,  society in the US has been Orwellian for some time. The GW Bridge/Christie politics have been described as Nixonian. The Supreme Court picking the president and now giving tacit approval to buying the office legalizes corruption on an unparalleled scale. People who live in glass houses shouldn't throw stones.   

Venezuela already is SA's Greece Maybe worse.

I had read somewhere that cut flowers were EC's biggest export, maybe that's after bananas and now bargain priced oil.

Considering how the Chinese stockmarket has been tanking, and the questionable state of the Chinese economy more generally, I doubt if Correa can hope for further help from that direction.

Perhaps there are those in the financial world who wish for a governmental turnover in Ecuador to feather their own nests with the spoils of potential plunder? Kind of like Greece? Could Correa be standing in the way?

The Economist really cannot be considered a publication which rallies behind the rights of the people.

BobH wrote:

Considering how the Chinese stockmarket has been tanking, and the questionable state of the Chinese economy more generally, I doubt if Correa can hope for further help from that direction.

Funny how quite a few people have tried to put the troubling Chinese stockmarket in the background. Really all China did was transfer the huge real estate assett bubble into a stock market assett bubble, and now it's popped.

China still does have a large vested interest in Ecuador, as well as quite a few Latin American countries. Can't imagine the Chinese government will stop supporting those countries, or call in the loans. Too heavily invested, and can't really turn back at this point (in my opinion).

Of course I could be completely wrong. Hey, no offense to people. Everyone who has read a history book knows Ecuador, and Latin America has tended to have plenty of booms, and busts, mixed in with political uncertainties, dictators, and high crime rates. That's the chance you take when you move to that part of the world.

http://www.focus-economics.com/countries/ecuador

Assuming this data is fairly accurate, it's hard to see how Ecuador could be considered the next Greece. Perhaps the economic outlook isn't as positive as it has been in the past, but it's not like it's in absolutely horrendous shape either.

j600rr wrote:

it's hard to see how Ecuador could be considered the next Greece.... it's not like it's in absolutely horrendous shape....

Any reports of Ecuador's economic collapse have been greatly exaggerated.

Some highlights from the report J600 linked to, which showed the following positive changes in the period 2010-2014:

                                                                  2010          2014

EC gross domestic product in
     U.S. billions of dollars                           69.6             101

Rate of unemployment                                7.6               5.1

Exports in U.S. billions                               17.5             25.7


The main cautionary statistic is for public debt, which rose from 19.2 percent of GDP in 2010 to 31 percent of GDP in 2014.

cccmedia in Quito

How about America's Greece.

http://www.businessinsider.com/puerto-r … ory-2015-8

Suppose isn't a huge surprise. Is unfortunate. Puerto Rico is a nice place. Although the crime is a bit bad. Southwest has direct flights from BWI. Would occasionally catch a flight for a short vacation. Hopefully something can be worked out, but sounds like the creditors will probably bleed the country dry.

It's just another example of pure greed...hope the creditors will spend lots of money on lawyers  and "social interests"  will prevail.

Serves them right for not seeing the "underlying rot". What a freaking word to use to describe it. And of  course it wiil be the little guy that suffers.

As the article says the more they try to collect the less money they will recover

So unethical. It's sickening . What's worse, borrowing like there's no tomorrow  or unethical lending?.

Makes me want to charge an airplane ticket for EC and park the car at the bank with a note of apology about the remainder of the loan.

j600rr wrote:

China still does have a large vested interest in Ecuador, as well as quite a few Latin American countries. Can't imagine the Chinese government will stop supporting those countries, or call in the loans. Too heavily invested, and can't really turn back at this point (in my opinion).

I think the US has a fairly sizable debt with China, as well, does it not?

MikeGB wrote:

j600rr wrote:

China still does have a large vested interest in Ecuador, as well as quite a few Latin American countries. Can't imagine the Chinese government will stop supporting those countries, or call in the loans. Too heavily invested, and can't really turn back at this point (in my opinion).

I think the US has a fairly sizable debt with China, as well, does it not?

Not small. Largest owner of US foreign debt is either China or Japan. Not sure which one at this very moment. Probably is China. However, still by far, the largest owner of US debt is the good old taxpayer. 

With that being said. Perhaps am in the minority, but it's the US trade deficit that worries me more than the national debt. Granted the national debt isn't exactly a good or small thing.

j600rr wrote:

MikeGB wrote:

j600rr wrote:

.

. However, still by far, the largest owner of US debt is the good old taxpayer. 
.

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But at least we owe it to ourselves.....just hard to keep track of where the $$$ actually goes

In a word...no.

HGQ2112 wrote:

In a word...no.

Would you be so kind as to elaborate, Hector?

Not that Ecuador or anybody is going to be doing a reprise of Greece! but it looks like the whole region is hurting, in the wake of the China turmoil.

- bloomberg.com/news/articles/2015-08-24/latin-american-currencies-sink-to-22-year-low-as-stocks-tumble

Latin American currencies slid to a 22-year low and stocks joined a global selloff on speculation that the region's economic contraction will deepen as Chinese growth slows down.

Traders are turning bearish on Latin America as Brazil, the region's largest economy, heads toward the longest recession since the 1930s amid a political crisis and a sweeping graft scandal at the state-run oil company. Rising borrowing costs have slowed down consumer purchases, pushing President Dilma Rousseff's approval rating to record lows and dimming prospects for corporate earnings.

It's not much better elsewhere on the continent. The world's highest inflation rate has left Venezuela struggling with shortages of food and medicine, while Argentina is battling with hold-out creditors following last year's default, and Mexico tries to revive growth. Chile and Peru, which are among the biggest producers of copper and zinc, have seen export revenue tumble as prices for the metals have fallen.

Oil prices are also down again. Looks like a rocky period.

BobH wrote:

Not that Ecuador or anybody is going to be doing a reprise of Greece! but it looks like the whole region is hurting, in the wake of the China turmoil.

- bloomberg.com/news/articles/2015-08-24/latin-american-currencies-sink-to-22-year-low-as-stocks-tumble

Latin American currencies slid to a 22-year low and stocks joined a global selloff on speculation that the region's economic contraction will deepen as Chinese growth slows down.

Traders are turning bearish on Latin America as Brazil, the region's largest economy, heads toward the longest recession since the 1930s amid a political crisis and a sweeping graft scandal at the state-run oil company. Rising borrowing costs have slowed down consumer purchases, pushing President Dilma Rousseff's approval rating to record lows and dimming prospects for corporate earnings.

It's not much better elsewhere on the continent. The world's highest inflation rate has left Venezuela struggling with shortages of food and medicine, while Argentina is battling with hold-out creditors following last year's default, and Mexico tries to revive growth. Chile and Peru, which are among the biggest producers of copper and zinc, have seen export revenue tumble as prices for the metals have fallen.

Oil prices are also down again. Looks like a rocky period.

Their stock market  dropped like crazy again overnight into tuesday morning. Lost 20% in last 4 days, and down 40% from it's high in June.

October 15 contract of wti crude is still under 40, dropped to under 38 for a bit yesterday.

Chinese manufacturing also recently hit a 6 and a half year low. Not really surprising, has been dropping pretty consistentely every month for awhile.

Not really sure why there seems to be surprise all of the sudden about the drop in commodity prices. Most commodities went into a bear market several years ago. Oil was one of the lone hold outs, and we know what eventually happened to that. Is also very possible that China was stockpiling up on commodities. So even if their economy wasn't currently in a free fall, there would still be a good chance that they weren't going to be huge buyers of commodities, at least like they were in the past. Not really sure why some countries decided to rely so heavily on China with no plan B?

EC "oil shock," as seen through the eyes of a U.S. bank economist....

"Ecuador is facing a painful adjustment from oil shock and the stronger dollar that will probably lead to years of recession, wage cuts and severe unemployment," according to Bank of America Corp.'s senior Andean economist, Francisco Rodriguez.

Crude prices have slumped more than 35 percent since this year's closing peak in June.

source.... Bloomberg Business

cccmedia in Quito

Meanwhile, expats in other Latin American countries have their own concerns -- the US Ambassador to Nicaragua is worried that US landowners along the route of the new canal, assuming it gets built, may have their land seized at under-market prices.

http://www.ticotimes.net/2015/08/24/us- … sador-says

cccmedia wrote:

HGQ2112 wrote:

In a word...no.

Would you be so kind as to elaborate, Hector?

Sure...I mean an in depth answer is way beyond the scope of a forum environment. Ecuador's GDP to debt ratio is nowhere near what is found in Greece. Ecuador mostly funds social workfare and infrastructure programs, not social welfare, like Greece. Even in its current evolutionary state, Ecuador's economy is much more diverse than that of Greece. Unemployment in Ecuador is low, not the double-digit insane levels of Greece. While Ecuador faces serious USD$ pressures, it doesn't come close to equating the financial pressure on Greece to remain on the Euro. Ecuador is lead by an educated, rational and innovative leader. I believe the cast of Monty Python runs Greece.