Comments on: Is the Obama administration condoning Ecuador’s default?

By: dsquared

dsquared — Wed, 20 May 2009 20:47:46 +0000

Felix, I will bet you one pint of good English beer that your prediction that Ecuador will “cut off from private sector financing [...] for the forseeable future” turns out to be a crock.

This theory of yours that sovereign defaults in the past have a material effect on investor perceptions of the likelihood of sovereign defaults in the future, has a certain amount of theoretical attractiveness, but it’s been falsified empirically again and again. This alleged cost of default in terms of future access is illusory. It doesn’t exist.

By: av2ts

av2ts — Wed, 20 May 2009 07:02:35 +0000

Salmon is just mad because he got it all wrong. He predicted chaos and ruin for Correa and Ecuador and instead, its increasingly clear that Correa played everyone like a piano. The Ecuadorean people will be the beneficiaries. As a fellow Fighting Illini alum, I am quite proud of someone who can beat the sharks at their own game. What Ecuador did was perfectly legal, using the market’s own vulnerabilities against it. Salmon is probably right to be pissed, from the perspective of capitalism. But from any perspective that considers the poor and desperate people of the South, Correa’s actions are nothing short of heroic.

By: DollarEd

DollarEd — Tue, 19 May 2009 17:47:39 +0000

Felix is raising important points here.

But we should not forget the more traditional American role – participating in genuine defaults by impoverished nations, but operating as enforcer in chief for vulture funds that buy defaulted foreign debt for pennies on the dollar and then use the leverage of US foreign aid to force the poor countries to pay the vultures in full.

There has to be a balance somewhere….

By: George Doktorczyk

George Doktorczyk — Tue, 19 May 2009 01:57:15 +0000

When Correa was elected president, he became the CEO of Ecuador and he accepted resposibility for the assets and liabilites of the country. When viewed politically, both sides of the argument have merit. However, finacially and fiscally, to default on promisory notes shows a lack of integrity in the part of Correa and the Ecuadorean government. Ecuador went into those bond agreements with full knowledge of the cost, i.e. interest charged, for those loans. Correa’s so called “restructuring” of that debt is a sham, particularly in light of the fact that Ecuador had and has the money to make those payments.

By: nate powell

nate powell — Mon, 18 May 2009 23:07:35 +0000

You act like money is this blessed and holy thing. Money is nothing more than a means of exchange. Ecuador is in the process of building true wealth, it is developing infrastructure, it is developing a middle class, it has a good health care system, and the nation is moving in the right direction. I applaud their brave decision to stand up to vicious international finance. International bankers form a mafia like cartel that seeks to dominate all men, all nations. The “global economy” or international financial monetary system is a fraud, nothing more than a global casino that enriches a few and enslaves the rest. The usurious interest rates the IMF and World Bank charge developing nations is a crime against humanity. I only hope the rest of the 3rd world will follow Ecuador’s example and force Obama to embrace a saner pro-development model that only allows credit creation for infrastructure projects instead of financial tools.

By: John

John — Mon, 18 May 2009 22:35:01 +0000

That Presidential handshake with Hugo Chavez should not be forgotten. It certainly won’t be by Chrysler or GM bondholders. Defaulting on US debt may not be far behind.
Some continue to view President Obama by the company he kept in the past and the company he keeps now. Birds of a feather flock together.

By: Lgg

Lgg — Mon, 18 May 2009 21:30:48 +0000

Well, that CAF and IADB are somehow endorsing the deal is no surprise to me – not that they were willing to critizise a member country.

I can understand the CAF and the IADB not willing to be used as scapegoats for the average Ecuadorean politician – in any event, how fast can Correa switch from the “evil investor” to the “evil multilateral”?

Chavez already reneged publicly of CAF loans for purely political purposes – nevermind that CAF has been financing Chavez’s infrastructure plans…

By: Unsympathetic

Unsympathetic — Mon, 18 May 2009 20:43:00 +0000

This isn’t a nasty precedent, Felix – this is paving a way for the US to default on our debt. Ecuador is not a negative scenario – we should applaud the bravery of their indifference!