Ecuador Defaults, Vows To Fight "Monster" Creditors

President Rafael Correa declared a default on Ecuador's foreign sovereign bonds on Friday, vowing to fight "monster" debt-holders in court in one of most aggressive moves against investors in the region for years.

Ecuador's dollar-denominated debt prices plunged on news of its second default in a decade and the first in Latin America since Argentina in 2002, although the decision was not expected to lead to similar moves around the region.

Read the whole story here.

Comments

[Chavez08]

South Americans have guts. I wish they export THAT North!

[castlerider]

This article makes no mention of the fact that Ecuador is currently sueing Chevron international for serious violations of international law in their cover-up of violations of polluting and virtually destroying the pristine environment of the Amazon and the jungles all around.

Serious infractions of destruction occured, where Chevron has summarily in effect admitted its gross negligence, but,in lalst reoports has demanded that the trail be taken back to take place in DC after demanding to bring it from the US when Ecuador had a more "friendly to business" corrupt government. Ecuador has refused, and Chevron was demanding that Bush remove "Favorite Nation " status because of it. Obama was involved with some of the legislation that was written in regards to this, and helping to keep this from becoming another legislative lobbied swindle, so I'm really surprised that more on this case wasn't reported.

Perhaps the big cause for this has been that Bush has probably acted predictably on behalf of his corrupt oil buddies and done damage to this case on Ecuador's behalf, and now this is in response to another one of Corporate America's wonderful episode in destroying our American foriegn policy in the name of our corporate behemoths.

[1201SLD]

Well, they are just following our example. "Bailout" is in the air, and, if you hadn't noticed, it's catching.

[SeaBlood]

The words "monster creditors" don't quite fit here. Ecuador is not some hapless home purchaser duped into taking a mortgage that he should never have been persuaded to take. Ecuador in an oil rich nation which can well afford to pay its debts, which it had willingly taken on. The nation will suffer because of this action and it's leader will probably have to pay a severe price for his unnecessary, and uncalled for arrogance.

[Danny]

If the "debt" was "funny money" this action makes sense, SeaBlood.

[castlerider]

You have no idea what you're talking about, and the extent of how Ecuador has been screwed by companies like Shell and Chevron in the recent years and going back 2 generations. The Amazon has been polluted beyond repair by these companies in their zeal of finding resources with absolutely no regard to conservation, and in fact, violated international laws by frauding the nation and then covering up their intentions as well as their violations.

What they're saying basically is to hell with people like you and your shortsighted judgements, accusations, and convictions, as they obviously prefer to tough it out.

Personally, I don't blame them. Not one bit.

[EinChicago]

"The Amazon has been polluted beyond repair by these companies in their zeal of finding resources with absolutely no regard to conservation, "

Ummmm. Good point but largely irrelevant on the issue of debt bond default. Not everything resolves back to mouth-foaming rabid greeny-ism.

[Hdaryl01]

The list of non prosperous countries should include the United States, as in the aggregate, we the populace have a negative savings rate, little to no positive net worth-50% of us over 50 have less than $10K in net worth (as of earlier this year-probably worse now), 25% of our houses are mortgaged for more than they're worth, we're working longer and harder and less secure at multiple jobs for more hours just t keep our heads above water, our government services are being cut, our taxes and future payment obligations for "financial institution" bailouts are increasing massively, we must continue to pay for multiple expensive wars, we lack medical security, and retirement security is greatly in question. In the final analysis, our current situation sounds alot like that in a "third world" developing country like Ecuador. At the end of the day, we're all Ecuadorans..........................the global "financial institutions" and their health is what matters. Not us. Has anyone considered what this "industry" does anyway? Nothing. They make and produce nothing. They are middlemen that extract a tax from the people for the people to spend their money. It's time for revolution folks, we need to take back control of our financial system from these parasites. Or, we are cowards and deserve what we continue to get.

[olephart]

Looks like its time to charge Ecuador with aiding the terrorists and possessing WMDs. A few forged letters and the testimonies of a drunk and someone on our payroll who was complicit in bank fraud should be enough proof. They"ll great us as liberators. Oh, since they have oil the war will pay for itself.

[Danny]

You said it, olephart.

[geobushono]

Freedom is on the march in Ecuador. Populist Socialism is inevitable.
We Americans just watched the banks, and the ENTIRE Government steal 7-8 trillion dollars through manipulation of CAPITAL fraud......hey, these guys/gals have dachas to pay for.....mercedes for the kids.
Now when the masses are directed to get back into the hole and dig, some people realize throwing the bankers into the hole is a smarter plan.
LIFE BEFORE DEBT................it's making to more sense than ever.

[tenstring]

Someone mentioned "Confessions of an Economic Hit Man" -- this is a must-read. What this article does not say is that much of the money "loaned" to Ecuador (and other countries) is never seen by Ecuadorans. It goes straight into the coffers of Shell or Halliburton or whoever to extract resources with no environmental concern or regard for the people affected. A handful of people get rich, everyone else gets stuck with a mess and a debt. That's how the system works. Ecuador, like Argentina, Venezuela, Chili, Nicaragua, and Brazil now have governments put in place by the People to resist such a scam. Right-wing governments have brought nothing but economic imperialism to these places and created a small wealthy class that "plays ball," and a vast majority mired in poverty that serves as a labor pool for capital. Rebelling against such a system seem quite reasonable.

[Erdgeist]

Having prosperous countries is not advantageous for U.S. capitalism. The overarching goal of the U.S. has always been to promote poor economic policies for most of the Americas to insure countries like Ecuador wll provide sufficient numbers of wage slaves for big American corporations.

[Hdaryl01]

Your list of non prosperous countries I'm sure includes the United States, as in the aggregate, we the populace have a negative savings rate, little to no positive net worth-50% of us over 50 have less than $10K in net worth (as of earlier this year-probably worse now), 25% of our houses are mortgages for more than they're worth, we're working longer and harder and less secure at multiple jobs for more hours just t keep our heads above water, our government services are being cut, our taxes and future payment obligations for "financial institution" bailouts are increasing massively, we must continue to pay for multiple expensive wars, we lack medical security, and retirement security is greatly in question. In the final analysis, our current situation sounds alot like that in a "third world" developing country like Ecuador. At the end of the day, we're all Ecuadorans..........................the global "financial institutions" and their health is what matters. Not us.

[balatro]

Ecuador is being supported by other marxists state, but Correa has little leverage with his debtors. He is in peril of creating another Cuba.

[geobushono]

look around, you're surrounded.

[octo]

Alabaman

Yes, but loading all the blame (and hence all the responsibility for solving the problem) onto the banks is overly simplistic. We've been addicted to unsustainable growth for ages now and yes, cheap credit played its part. But you can't blame it all on the banks.

I'm concerned, because this type of one-dimensional analysis is always an easy card to play during times like these. Blame some vague financial elite (J,,e,,w,,s), curse the usury-based credit system and absolve ourselves of any part of the blame.

What about the politicians the people vote for and the corporations they work for and spend their money on? The sysytem is far more complex.

This pattern of scapegoating has been around for centuries. Look up a notorious forgery called The Protocols of the Elders of Z.i.o.n., fabricated in Russia over a hundred years ago.

You are unconsciously buying into this myth.

[Mogamboguru]

Okay -

I've got your spin.

Now please stop whitewashing your kin and start giving answers to the problem, will you?

Immesurable, insatuable GREED is the core of all the current economic problems worldwide.

And to solve the problems, the World has to tame the greed of the greedy and cut it back to reasonable levels.

There have to be set rules and regulations, and there has to be imposed a strict, forcefull oversight over ANY financial transaction - just like any other economic transaction is being monitored, to abide by strict federal, as well as internatinal rules and regulations.

Greed + Deregulation = Chaos

[escobar]

Nothing Changes.
The book, "Confessions of an Economic Hit Man" can explain a lot.
The concepts of colonialism have evolved to imperialism to globalization.
The USA now shows as broke too, but money does not evaporate.
Like energy it just takes another form. Trickle down economics was supposed to raise all boats but it always was a big lie.
In this case, it the money has just gone into other pockets, same as ever. The nation has been sold out and cheated by the greedy few and their bully boys.
They have squeezed this fruit to it's pulp...what can they do promise the unborn to indentured servitude or sign away the soverignity of the nation to pirates? Famine will soon follow if the military is strong enough.
Ireland went through the same, millions died.

[alabaman]

To Octo:
I stand by what I said about creditors. The proof is in the financial crisis we have today brought on by scheming actions of creditors, bankers, and financial manipulators. Who do think created all those toxic securities and derviatives? It wasn't "lack of self-responsibility" that caused our economy to colllapse. It was greed on the part of creditors and their ilk. They have a stranglehold even on this Democratic Congress. It was they who pushed the shameful bankruptcy bill that penalizes those who are forced into bankruptcy because of medical bills--the major cause of bankruptcies. They have earned the derision they deserve.

[NorthernCross]

Meanwhile, we're gonna end up spending trillions to bail out the corporate sugar daddies of the Establishment Democrats and Republicans in D.C. Change I can believe in, I guess.

[Raster]

More like change you will pay for.

[dac253]

It sounds like a good idea to me!

National Debt? Screw it!

We owe most of our debt to China and they're not even supposed to be capitalists; they're communist!

I think the Jews were on to something back in the old testament with the concept of Jubilee.

Let's scrap all the books and start over.

[Zeje]

Agree

[CaptainHowdy]

It's called... Force Majeure.

When you hear it used on TV and radio, in reference to the US and it's creditors, get ready for the fallout.

It will be very, VERY ugly.

[OutsiderSA]

As of 2007 according to:

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html

Current account balance

Ecuador 51st on the list @ $ 1,064,000,000 (+)

USA 188th on the list @ $ -731,200,000,000 (-)

Sure it is much much worse now.

My own country ranks:

178th @ $ -20,630,000,000 (-)

[octo]

Good link. Its a pity its not on a per-capita basis.

[OutsiderSA]

Well you need only divide by the population

USA ±301M = - $2450

SA ±46M = - $440

I think the figures would be much higher seeing for Ecuador they report a 5.4Bn deficit.

I have read many reports showing the USA as in the -12T area so what exactly these figures are based on is unknown.

[Ramirez]

I think you are confused as to what "Current Account Balance" is. It is not about debt. It is about investment, both foreign and domestic.

The current account balance is the difference between a country's savings and its investment. If the current account balance is positive, it measures the portion of a country's saving invested abroad; if negative, the portion of domestic investment financed by foreigners' savings.

Your country and the USA have a negative balance because foreign investors view them as good investments. Thus they attract capital from abroad. Ecuador is "positive" because of the flight of capital out of the country. "Positive" is not always good.

Hope that helps.

[OutsiderSA]

"Hope that helps."

Maybe in your reality? I seriously cannot see how you can say what you say when the top 5 are

China
Germany
Japan
Saudi Arabia
Russia.

Are you seriously trying to say the USA is better off than say the top 4 when it comes to what it boils down to - having money in the bank.

I should try your logic with my bank manager and I too can get to "spend my debt" and buy stuff.

[adamsmith3]

Seriously, I thought mercantilism died a few centuries ago.