January 16, 2009  Of all the cheap moves and all the dishonest, destructive games played by Rafael Correa, none is more costly to Ecuadorean citizens than his criminal speculations ginned up to defraud investors and speculators to place some quick, cool cash in the Bolivarian wallets. As noted in the complete article below, besides organizing financial crimes, Correa- who is not a functional economist [his degree indicates he is a political theoretician to justify Marxism by wrongly abusing economic statistics]  and certainly not anyone who knows how to manage anything, see today in the FINANCIAL TIMES that "...analysts warn that Ecuador could have a similar effect as Iceland, which sent emerging market assets of other countries into a tailspin last year after its banking system broke down. Nick Chamie, head of emerging markets research at RBC Capital Markets, said: “Ecuador is a small economy, but it could be a big drag on the rest of the emerging world because of its decision to default on some of its bonds. `It is one of the axis of evil in Latin America – together with Venezuela and Argentina – because of its market unfriendly governments.’ On Tuesday, the government promised to service future payments of its 2015 bonds, but not for those maturing in 2012 and 2030. Market participants speculate that Ecuador is prepared to service the debt of the 2015 bond because Venezuela, the country’s close political ally, has exposure to these securities."
 
Contrary to what the incompetent U.S. Embassy in Quito and the dishonest government of Rafael Correa of Ecuador report and want you to know, the government of Ecuador has driven away businesses- that means jobs- and has stolen Ecuadorean monies while planning a ruinous joint adventure to bring down not only Ecuador's once vibrant economy but also that of the entire region. This is beyond their nasty little War of Attrition and moves in to the realm of Economic Warfare.
 
Today's current extortion racket centers on the use and abuse of "sovereign funds" for speculations, in this case a communist racket run by Chavez and Correa to defraud derivatives values based on their insider trading schemes set off by Correa's bond fraud. Correa calls this good economic planning because it hurts investors and hurts Wall Street. In fact, like all of Correa's so called economic theories in support of expanding Cuban style communism, we say that Correa is lying here also. Correa's financial swindles are in full enormously expensive and incredibly destructive not just to Peru and Colombia but to the people of Ecuador in every single thing he has performed. The bets against Correa are now about 70 to 30....with you losing as citizens every time and Correa and Chavez jiggering their insider bets.
 
While Ecuadoreans seriously and immorally believe that it is great to swindle, lie and cheat from bond holders who are linked to U.S. laws and regulations, Correa instructs Ecuadoreans that repaying their debt is only helping "the evil empire" which is not evil and is not an empire. What Correa and Chavez are doing shows their criminal wanderlust and commitment to extort, defraud and operate self enriching rackets- supposedly all right in your immoral heart because this hurts Americans. Indeed while there is some investor loss, the fact is that Correa - with your ridiculous and stupid approval - hurts you and the nation of Ecuador with his criminality. The good you do... comes back to you. And every time you believe that lying and manipulating is a great ethic, you get evil back at your door also.
 
There is no good that will come back to you in Ecuador and nothing to save this nation unless and until all Ecuadoreans grow up and stop trying to represent the worst human elements known. Ecuadoreans today look as lovely as their cousins in Lebanon called Hezbollah and we see how well Hezbollah is doing today- they are dishonest and manipulative to the point where Lebanon is a dead zone run by Syria and Iran for whatever moral value that may be. 
 
The FINANCIAL TIMES 0n 1-15-09 wrote, "Ecuador vows partial bond buy-back
By Naomi Mapstone in Lima and David Oakley in London

Published: January 15 2009 20:50 | Last updated: January 15 2009 20:50

Ecuador on Wednesday promised to pay investors some of their money back on defaulted bonds in a move closely watched by the market because of its implications for other Latin American and emerging countries.

The buy-back offer is likely to involve a large so-called haircut of 70 per cent with the government expected to pay only 30 cents on the dollar. There was little reaction in the markets, although a decision earlier in the week by the government to service some of its debt has given support to its bond markets.

Some analysts warn that Ecuador could have a similar effect as Iceland, which sent emerging market assets of other countries into a tailspin last year after its banking system broke down.
Nick Chamie, head of emerging markets research at RBC Capital Markets, said: “Ecuador is a small economy, but it could be a big drag on the rest of the emerging world because of its decision to default on some of its bonds.

“It is one of the axis of evil in Latin America – together with Venezuela and Argentina – because of its market unfriendly governments.”

On Tuesday, the government promised to service future payments of its 2015 bonds, but not for those maturing in 2012 and 2030.

Market participants speculate that Ecuador is prepared to service the debt of the 2015 bond because Venezuela, the country’s close political ally, has exposure to these securities.

Last month, the country missed a deadline for a $30.6m interest payment on bonds due in 2012.

The government said these bonds and those maturing in 2030 were illegitimate or illegal because of the way they were negotiated after the country defaulted in 2000.

Its decision, described as bizarre by some analysts, to honour some bonds has also opened fresh grounds for legal appeals by investors holding the defaulted paper.

Ramiro Crespo, a Quito-based analyst for investment bank Analytica Securities, said the discrepancy between the treatment of the bond issues raised concerns about clauses relating to cross default and pari passu, or equal payment for bondholders.

Holders of the 2012 and 2030 bonds could seek to attach interest payments on the 2015 bonds, he said.

A credit default swap auction this week set the value of the defaulted bonds at a final price of 32.375, which means sellers of credit protection on those bonds will have to pay 68.625 cents on the dollar to settle their credit derivatives contracts. Although Ecuador has the capacity to pay its foreign debt obligations, its foreign exchange reserves in the central bank dropped from $6bn to $4.5bn and the country will have limited access to financing to cover an expected deficit of $3bn-$4bn if oil prices fail to recover.

BLOOMBERG news reports that Chavez will "assess Obama" and see if his efforts show enough "respect" for Chavez's crime spree. Of all the pathetic and tawdry moves that President elect Obama could do, he has just stepped in to a mine field of evil, set up like land mines by his pathetic and lazy and dishonest advisors. Obama needs to grasp the concept that Hugo Chavez wants the USA's blessings and partnering for his own communist cartel governance plan where the FARC and he are partners and where nothing is transparent or accountable and all is dishonest. Chavez says that Obama is an unknown and that may be his most honest statement to date. Obama is an unknown- be design. No one knows what he really believes in which monthly changes depending on who is bending his ear and his morals. But Obama will swear on Tuesday to protect and defend the U.S. constitution and as such, cannot be seen- as George Soros and his tens of thousands of paid minions both inside and outside the Obama administration would have him do- to be committing treason. Obama will swear- oddly- on the Bible last held by U.S. President Lincoln who was a Republican and revered by President Bush as his singular role model. For Obama, we can hope and pray that instead of looking like a loose autumn leaf dangling in a winter storm, that he actually performs as Lincoln or Bush did perform to uphold the constitution of the USA. But with an entire team of dirty sycophants surrounding him daily, the odds are not great.

But Chavez tells Obama that he will not re engage with the USA, as if that is some loss to the USA which it is not, unless and until Obama agrees with  Chavez that criminal rackets are good government and that lying about everything is a great way to co exist. If Obama re engages with Chavez and continues the planned escalation of Correa's drug protectorates, we will have to continue to expose the real man behind the Obama person- the Soros drugs supporting and derivatives-hedging ploys which has polluted any sane remembrance of these greedy and irresponsible Venezuelans and Ecuadoreans who are not fit for respect nor engagement....no matter what Soros and his over paid minions across the U.S. government and the fantasy world of made up issues activists called Soros NGOs who do not represent anything honest or honorable and do exist to gin up scenarios where Soros's political gambits pay off to his  speculative end runs.

Obama will have to break with Soros if he is to fulfill Lincoln's destiny of honor and honest leadership. Tragically Obama has no clue how to do this. We hope he figures it out pretty soon. It is easy- give back the money and break with the thousands of hate-selling and dishonest Soros folks, also called Obama's cabinet and governmental jobs protections...which exist today to protect Soros and his ilk, which is not diplomacy and is not sound investing nor banking, even though the U.S. Democrats just gifted Soros with co ownership of a huge USA bank.

Obama's Soros groupies also want free and unfettered travel to Cuba to engage in what Castro has reduced Cuba to: an island economy in bankruptcy which only attracts tourists for the sex trade- little boys and girls - also called pedophilia. Castro's hatred of the corrupt Batista regime of the 1950s has itself gone further than Batista did in sheer numbers of murder, false imprisonment and corruption. Castro correctly hated the cheesey U.S. mob run Cuban casinos but instead turns his island in to a dirty but cheap pedophile's paradise. There is not enough penicillin in Cuba to deal with this. Anyone who frequents Cuba is now known as a sex tourist.

Here also is a fact based piece from today's Wall Street Journal on the USA's President Bush:

"REVIEW & OUTLOOK
JANUARY 16, 2009
The 9/11 Presidency Long after George W. Bush boards Marine One next Tuesday bound for Texas, the enduring image of his epochal eight years will be the September 20, 2001 evening a relatively new President stood before a nation traumatized and in mourning.

"We will direct every resource at our command -- every means of diplomacy, every tool of intelligence, every instrument of law enforcement, every financial influence, and every necessary weapon of war -- to the disruption and to the defeat of the global terror network," Mr. Bush told a Joint Session of Congress. "I will not yield; I will not rest; I will not relent in waging this struggle for freedom and security for the American people."... The world remains a very dangerous place. Yet thanks to Mr. Bush's post-9/11 willingness to act decisively, and at the risk of his own popularity, Americans are safer today than on September 10, 2001." Read it here.

ECrisis asks you and your family to detail what it was that you so ardently hated about Bush and what are your fact based claims that back this up. Forget all the Soros-paid hate propaganda about Bush- everyone knows that Soros pays a lot for people to lie about Bush, about Obama's glories and about why we should love the FARC and hate Jews. But Ecuadoreans should have and hold higher morals than the idiots who actually believe Soros's paid propaganda of hate and crime enabling. Indeed no one who has even read the TEN COMMANDMENTS should not be entirely embarrassed for the gleeful hatred of Bush sustained across all of Ecuador while stupidly embracing the bigamy and true evil of Iran, as sold by Hugo Chavez and Castro’s Cuba supposedly so that you will be gifted with state hand outs and bribes for your morals and your votes. Selling out one's freedom is never a good or productive life choice. So we ask again- why do you hate Bush so much? We think it is because he holds a higher standard and calls all to join in this. Every time you make the best the enemy of the good you are actually hurting yourself and your family. Ecuadoreans can cease and desist from their ruinous addiction to manipulative and dishonest practices and can start moving toward a higher standard again. It is your individual choice- no one will do this for you.

And if the call to a higher standard holds no appeal, you may want to consider what the current call for a lower standard looks like: it looks like a lost nation.

Here from Goldman Sachs, 1-16-09 - Emerging Markets Today:

"Focus: Ecuador

President Correa Confirms Government Will Make Buyback Offer on 2012s and 2030s

 Following weeks of speculation, President Correa stated today that the government will soon present a buyback proposal for the 2012 and 2030 global bonds.

President Correa stated the government will extend the buyback to the “illegitimate” debt “by taking away most of its illegitimacy, which was the high prices that were negotiated when the bonds were issued in 2000.” This somewhat abstract statement presumably means the government intends to remedy the allegedly illegitimacy by imposing a large haircut on principal.

It is noticeable that the government lacks a coherent strategy on the debt issue. The stance of the government on this issue has also been manifestly inconsistent. The government is now slowly distancing itself from its original passionate assertions that the debt was “illegal”, instead making the more subjective assertion that the debt is “illegitimate”. Furthermore, the government seems also to have abandoned its previous position that it would go to international courts to seek the nullification of existing debt claims. Finally, it seems to have suspended allegations that some of the multilateral debt was also “illegal and illegitimate”.

The ever-shifting view/strategy on the external debt issue suggests that the decision to default was driven by non-financial considerations rather than by an inability to pay.

Government Thought to be Mulling Move to Bi-Monetary Economy

A local paper reported the central bank has been reviewing a proposal to move from a dollarized FX regime into a bi-monetary economy (dual-currency regime). That is, the central bank would start issuing its own currency which would circulate in parallel with the US Dollar. The government denied that it is studying changes to the dollarized regime.

Government officials have in recent years expressed, in no uncertain terms, their dislike of the dollarized FX regime but have also acknowledged that the regime should not be abandoned immediately. However, the policies that have been pursued in recent years (e.g., the loose fiscal stance and other policies that discourage capital inflows) do not seem consistent with the strictures imposed by a dollarized economy.

We believe dollarization has served the country well in recent years and firmly believe that, given the recurrent episodes of political and social confrontation, financial volatility would have been extremely high and the performance of the real economy much weaker were it not for the adoption of the USD as the legal tender.

Although dollarization still finds strong support amid the population, we believe that if the current policy approach is not changed there is a growing risk that dollarization will not survive in the medium term. However, a rushed exit from the dollarized FX regime amid weak confidence levels and inadequate policies creates the risk that the local currency could immediately overshoot on the weak side (due to very weak demand for the new currency) which would create serious monetary management problems that would impair investment spending and the overall performance of the economy.

President Correa Completes Two Years in Office

President Correa completed two years in office. The economic track record has been rather disappointing. Inflation accelerated significantly in 2008 (8.8% versus 3.3% in 2007), private investment has been retrenching, and the non-oil trade deficit continues to grow: from US$3.9 billion during January-November 2007 to a large US$6.9 billion during January-November 2008.

The decision to default on commercial debt allied with the nationalist inward-looking policy mix in place could lead to further erosion of macro performance."

---

ECrisis, while commending Goldman Sachs for its superb analysis, notes that were Ecuador to continue gaming and debasing the US monetary system by some wild eyed scheme to run a two track currency gambit, the USA has no option but to cancel dollarization in Ecuador because of Correa's criminality which is solely his doing and should be his un-doing.  Correa lied about Ecuador's debt and now steals openly. Correa lies about all that he does. This is no way to run anything.

-Pedro Camargo for ECrisis