Thursday, June 27, 2013

Ecuador more Democratic than USA

Ecuador's capital city has built a sustainable, eco-friendly city that puts most USA cities to shame:
Most taxis and many of the buses in Quito are operated by cooperatives, part of the booming solidarity sector made up of tens of thousands of community banks and credit unions and worker owned enterprises in the manufacturing, housing, agriculture and transport industries. It's important to note that this sector has grown along side, rather than instead of the traditional private and public sectors which have also seen healthy expansion.
People often ride the shared bikes provided by the city, use of which is available for a tiny yearly fee. Every Sunday a north south route through the city, including Avenue Amazonas, one of the city's main arteries, is given over entirely to cyclists and pedestrians, who come out in the thousands. The old airport, having been engulfed by urban expansion and replaced earlier this year, has also been turned over to the public as a park, and is already in use. 
Of course, everything is not perfect outside the city (violence, crime and poverty abound), but Ecuador is still moving in the right direction, expanding opportunities and safe, healthy, affordable living spaces for it's citizens rather than crying "austerity! cut everything!" like most "first world" democracies today:
Almost all this progress has occurred under the leadership of President Rafael Correa, a former economics professor who was made finance minister in 2005 during one of Ecuador's recurrent economic crises, running for the presidency the following year, assuming the office in 2007, and quickly bringing an era of unprecedented stability and prosperity. By the end of of 2012, unemployment had fallen to 4.1 percent, its lowest level on record and the poverty rate to 27.3 percent - that's 27 percent below what it was when Correa took power.
So, USA, care to take some notes?


  1. So, they declined to pay one third of their international debt. Wow, great idea, maybe we should all quit paying our bills, in the short term we have more money in our pocket.

  2. Dear Anonymous,

    You bring up a good point. Iceland did the same last winter; refused to pay its foreign debt, instead "bailing out" its common people, and sidestepping the global financial crisis. God, what a terrible way to be.

    We should all be like the US, exploiting other countries for the benefit of our rich, not our masses!


  3. Theres a whole bunch of thoughts I could have about this comment ... first, if your abusive ex husband grabbed your credit card and bought up a months worth of time in the Riviera, hookers and blow, would you be particularly inclined (from a moral perspective) to claim the liability for those expenses? Second, if the choice was food on your table today versus the possibility of losing your house tomorrow, which choice would you make? Thirdly, theres a REASON your greenback is just as valuable a unin\t of exchange for goods and services here as it is in Ecuador (and it has a lot to do with reasons One and Two) (If you don't believe me, google the unit of legal tender in Ecuador). While I may take issue with the assertion that Ecuador is more democratic than the United States (and there ARE grounds) I also take issue with the assertion that many of those debts are valid. Fact is, back in the day, American foreign "aid" (in this context, loan guarantees) were in the form of "we are going to extract your resources, but require you to pay for the infrastructure to export them. By the way, here are some hookers and blow". "*snneerk* Yay! Development aid!". So don't give us crap about Ecuador squelching on its loan obligations because we will fucking RULE you

  4. BTW: "unit of legal tender" = "cash to buy shit in Ecuador". No. Seriously. Go google that exchange rate. RIGHT THE FUCK NOW.

  5. "The Ecuadorian Sucre (ECS) is obsolete. It was replaced with the United States Dollar (USD) on September 15, 2000. 1 USD is equivalent to 25000 ECS."
    Interesting, tho I'm not sure what to make of that, care to elaborate?

    And thank you for sharing your info.

  6. Sorry, I was in a mood. The problem with issuing sovereign debt in, say, Ecuadorean Sucre, is called exchange rate risk; consequently, most countries have foreign debt denominated in euros or dollars (Brazil just recently got its credit rating upgraded to "barely investment grade"). And exchange rate risk is a very real thing: imagine you are a bankster (or an Ecuadorean in the United States looking to help your country out) and you buy bonds worth 500,000 Sucre with an interest rate of 10% at an exchange rate of 10 Sucre to $1. Then someone decides to print money to cover the budget deficit; I think it was in Ecuador's case that inflation was so high, and so much money in circulation, that the government literally bundled up a warehouse full of money and torched it. Maybe that was Peru, but point is that suddenly, the exchange rate is 100,000 Sucre to the dollar and, while Ecuador has managed to pay off its sovereign debt (early!) you are walking away with pennies on the dollar. Meanwhile, people in Quito are wiping their asses with 1000 Sucre bills because the toilet paper factory shut down. So: Lets run through this scenario again, except that Ecuadorean bonds are denominated in dollars. So, the economy is in shambles (rounds of hyperinflation will do that) and Ecuador STILL has bond payments to make. So, Ecuador basically threw up their hands and said "we cant manage our own currency" and decided to adopt the Dollar as the medium of exchange (Panama has as well). But, there are problems with this approach as well; it tethers them to a unit of currency managed not for the best interests of the Ecuadorean economy, but for the American economy; and Ecuador is in a much different place than America (the Euro has the same problems, or rather, countries on the Euro have the same problems), Not sure if this clarifies, but Ecuador is a very interesting place. Evo Morales seems to want to cast himself as opposed to the United States (as did Hugo Chavez) but economic growth lags because other countries in the region can still inflate their currency a little bit, making their goods and services less expensive on the world market while Ecuador cannot. There are some interesting (possibly not valid) comparisons between the British economy in the 1920s and the Ecuadorean economy now -- because people are weird and will accept rising costs of goods and services and a stagnant income more readily than an equivalent drop in income while costs stay the same (the Bank of England tried desperately in the 1920s to return the exchange rate to the pre-WWI exchange rate vis a vis the dollar, and the only way they could do that was to keep interest rates really high ... which caused widespread unemployment and lingering recession, without actually accomplishing the goals they had set out; part of that has to do with the gold standard, but thats neither here nor there; if you are interested in reading further, check out "Lords of Finance" by Liaqat Ahamed)

  7. Interesting. It would seem then, that adopting the US dollar actually would help stabilize the global economy more tho, and stop problems with future international investors losing money in Ecuador.

    It sounds like it will be easier for everyone in the long run, tho in the short run the investors are mad they lost returns and Ecuador loses the ability to manipulate the exchange rate in it's favor in the future.

    I'm not really crying about the investors losing money due to exchange rate and Ecuador defaulting it's currency. It seems like you should realize that's a risk if you invest in a very high-risk currency, and currencies that fluctuate so much should be allowed to die when it's in the best interest of the country that made that currency. If investors don't like it, they can stop investing. But I'd rather see a currency default than a whole country be stuck in poverty.