catallaxy files

catallaxy in technical exile

Another South American election, another Castro wannabe

with 25 comments

Election news from Ecuador:

    Ecuador’s bonds may fall after exit polls showed Rafael Correa, an ex-finance minister who advocates defaulting on debt and cutting ties with the World Bank and International Monetary Fund, likely won the presidential election.
    Correa, 43, led yesterday’s race with 57 percent of the vote, according to an exit poll by Quito-based Cedatos/Gallup International. Alvaro Noboa, 55, Ecuador’s largest banana exporter, garnered 43 percent, the pollster said.
    An ally of Venezuelan President Hugo Chavez, Correa said last night he’s not concerned if the election results spark a decline in bond prices and push up Ecuador’s borrowing costs.
    Noboa, Ecuador’s richest businessman and a proponent of free trade and foreign investment, may have scared some voters by his references to God and by falling to his knees at campaign rallies to pray for victory, said Daniel Linsker, an analyst at London- based Control Risks Group, a political risk consulting company.

..

    Born in Guayaquil, on the Pacific coast of Ecuador, Correa studied economics in Belgium and later at the University of Illinois at Urbana-Champaign. Correa was appointed finance minister in April 2005 by President Alfredo Palacio. El Comercio reported he was fired four months later for fighting with the World Bank and arranging to sell bonds to Venezuela without providing details to the president.
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Written by Admin

November 28, 2006 at 12:03 am

Posted in Uncategorized

25 Responses

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  1. He went all the way to study economics …. in BELGIUM ….

    Sorry, that shouldn’t make me snicker, but it does …

    Jason Soon

    November 28, 2006 at 12:05 am

  2. It’s this bit that stinks like a fishing trawler:

    Correa was appointed finance minister in April 2005 by President Alfredo Palacio. El Comercio reported he was fired four months later for fighting with the World Bank and arranging to sell bonds to Venezuela without providing details to the president.

    I wonder who was going to win out of that little deal? Mind you, the other guy doing the Falwell thing don’t sound too good either.

    skepticlawyer

    November 28, 2006 at 12:11 am

  3. Chavez is a sap. Tell the idiot that you think he’s a great man and a wonderful leader and he’ll shower you with cash.

    I bet the world bank breathed a sigh of relief when Chavez took the bonds.

    JC.

    November 28, 2006 at 12:16 am

  4. It looks like most of the gang there is doing the same thing. Praise uncle hugo and then ask him for cash.

    sure enough Uncle hugo opens his wallet when he hears the good things said about him

    JC.

    November 28, 2006 at 12:23 am

  5. To be fair, it appears that he has a Masters degree from the Universite Catholique de Louvaine in Belgium and a PhD from the University of Illinois at Urbana Champaigne in the USA. See the following Wikipedia entry:

    http://en.wikipedia.org/wiki/Rafael_Correa .

    That seems to be a pretty good background in terms of education.

    Damien Eldridge

    November 28, 2006 at 6:09 am

  6. In fact, it seems to be to be an excellent background in terms of education.

    Damien Eldridge

    November 28, 2006 at 6:11 am

  7. Note that my previous comments were based on a general impressions rather than detailed knowledge. Nonetheless, I think they are probably correct. According to the “all economics” rankings on econphd.net website, the University of Illinois at Urbana Champaign is ranked 25th in the world, while the Universite Catholique de Louvain is ranked 76th in the world. By way of comparison, the Australian National University is ranked 84th in the world and the University of Melbourne is ranked 86th in the world. The complete list can be found at the following website:

    http://www.econphd.net/rank/rallec.htm .

    Damien Eldridge

    November 28, 2006 at 6:45 am

  8. He may just be a socialist. Also, too, debt defaulting can have good short-term economic consequences. Maintaining those effects depends on avoiding the situations that allowed the indebtedness to develop in the first place.

    skepticlawyer

    November 28, 2006 at 8:56 am

  9. Actually, Chavez is seeking to construct an anti-US bloc in LatAm and is willing to spend Venezuela’s oil windfall doing so. He has purchased bonds from most LatAm lefty governments (although is carefull to on sell them quickly). The debt defaulting as a policy is also a common idea among the left crowd – but it’s only useful if you don’t want access to international capital markets – viz Argentina getting on for 5 years after its economic collapse. This means domestic capital is the only source of investment, and goes mainly into low risk activities like agriculture or construction – certainly not into new manufacturing or services ventures. Result – medium term economic stagnation ! Good policy huh !

    jimmythespiv

    November 28, 2006 at 1:44 pm

  10. Jimmyt
    Who is he on selling the bonds to? I thought he just moved them around from one area of Venz’s balance sheet to another.

    Uncle Hugo is the brighest spark in the world, you know.

    Oil production in Venez. is flattish and he isn’t putting new capital in the replace or add to production. He’s is basically living off aging technology because he is giving away the country’s money.

    JC.

    November 28, 2006 at 1:51 pm

  11. ISN”T THE BRIGHTEST

    JC.

    November 28, 2006 at 1:51 pm

  12. JC

    Hugo buys, say, Argentine government bonds (a domestic instrument), and pays a premium. Then he sells them back into the local market at whatever the going rate is, taking a bit of a loss. Argentina and other LatAm countries have domestically based pension funds and banks who need to purchase bonds to maintain a varied balance sheet. No doubt Hugo is doing the same in Ecuador.

    It’s true that Venezuelan production is flattish and that he is not investing. But he beleives his anti-US bloc is growing in influence, and claims credit for wrecking the proposed Free Trade Agreement of the Americas, for example (despite evidence to the contrary). So he thinks he is onto something.

    jimmythespiv

    November 28, 2006 at 2:02 pm

  13. “But he believes his anti-US bloc is growing in influence, and claims credit for wrecking the proposed Free Trade Agreement of the Americas, for example (despite evidence to the contrary). So he thinks he is onto something.”

    Forgetting issues of trade diversion and trade creation, the man is promoting poverty. Either he is stupid or malicious. Or both.

    Mark Hill

    November 28, 2006 at 2:09 pm

  14. Jimmy,

    But why aren’t those govs selling the bonds to uncle Hugo. Can’t they just stuff their pension funds whith thse bonds whithout having to go through the merry-go round? I don’t get the motivation.

    ABL

    I really think he is a stupid man and very malicious when it comes to the the US. I think he blames the US for the coup.

    The guy is a twit.

    The whole region of South Am has a taken a vow of poverty.

    In some provinces in Argy up to 50% of employment is government.

    It seems there is also a racial thing going on too. The indig are starting to find their political legs politically squirmishing against the whites. The indig are very very socialist and anti-white. It’s gonna be interesting how all this works out. it doesn’t look good.

    JC.

    November 28, 2006 at 2:37 pm

  15. JC,
    You are right about the racial thing. The “whites” (“criollo” is normally preferred) of South America have been running the economies there for their own (short term) benefit for centuries. Now the mestizos and, increasingly those of non-criollo descent are trying to do the same back to them. Hopefully, it will not take them centuries to learn that this solves nothing and just makes it worse.
    In the mean time, look for more “socialists” to take over as dictators from the old military (read criollo) dictators. Joy.

    Andrew Reynolds

    November 28, 2006 at 4:13 pm

  16. right – why do the British always get blamed for all the ills of colonialism? Incredible isn’t it? The Brits and the Americans get blamed for the ills of colonialism even in Latin America when the bloody Spanish slaveholding shitheads and their anti-work ethic have been the worst blights of all (see DD’s comment on the other thread).

    Arguably the US would have ended up like Latin America too if the equally shitty slaveholding anti-work ethic and commerce South had gained ascendancy.

    Jason Soon

    November 28, 2006 at 4:19 pm

  17. The reason the Brits get blamed is because they were less efficient at killing their enemies. The Spanish destroyed entire civilizations. To my mind, the best view of what militant Islam may look like in the future is gained by reading a decent history of Spanish South America. No wonder they finish up with Allende/Peron/Pinochet/Galtieri/Chavez etc.

    skepticlawyer

    November 28, 2006 at 4:37 pm

  18. It’s a hell of a choice: agrarian socialists or socialist socialists. No middle ground to occupy, no common weal to appeal to, no liberals to tap-dance around them and render socialism unnecessary. Poms cop the stick because those who wield it get some traction. Those civilisations (?) who regard the perpetrators of Myall Creek as pikers do not have this problem: there is no robust debate, just irrelevant witteringg in Parisian academe or the silence of unmarked graves.

    Andrew Elder

    November 28, 2006 at 4:56 pm

  19. Snr Jason / Abogada Skeptika

    The Portuguese trounce all comers as colonialists- every single ex-colony a basket case with thousands / millions dead during the inevitable civil wars, and lefty economics.

    JC

    The governments do sell the bonds to CHavez -then Chavez re-sells them to domestic institutions. Chavez gives money away by paying a premium, then re-sells at the market rate. He does this to assist the financing needs to relevant governments, in exchange for anti americanism. BTW, certainly some provinces in Argentina would feature over 50% government employment – Santa Cruz and Tierra del Fuego in particular. But these povinces are like the Northern Territory – isolated and remote – which I bet also has over 50% government employment (state + federal).

    jimmythespiv

    November 28, 2006 at 4:58 pm

  20. jimmythespiv,
    Only one example, and a short lived one at that, but try the Belgians in the Belgian Congo. Arguably worse than the Portugese.

    Andrew Reynolds

    November 28, 2006 at 5:04 pm

  21. Nice, Jimmy! Probably true, but I don’t speak Portuguese and don’t know enough about the colonial history. Where does Brazil fit in this picture?

    skepticlawyer

    November 28, 2006 at 5:08 pm

  22. jimmythespiv;

    As a point of fact, the NT does not have a 50% combined NT-federal government employment rate.

    It is unusually high at around 18% if memory serves correctly, but over half is a bit too much.

    Jacques Chester

    November 28, 2006 at 7:48 pm

  23. Brazil is an excellent place for a holiday. But it is a nation built on slavery and continues to have human development problems. Compared to Timor Leste, Angola or Mozambique it is advanced, however.

    jimmythespiv

    November 28, 2006 at 7:49 pm

  24. Jaques

    Thanks for the clarification. But would I be right in guessing that it is the highest in Australia (or is it Canboring that wins the prize).

    jimmythespiv

    November 28, 2006 at 7:51 pm

  25. I believe Canberra has a higher total, but some electorates in the NT have very high public service levels.

    It’s a combination of a few things including the disproportionate size of the NTPS plus a large Defence presence.

    I have a table in an post I wrote which includes per-electorate NTPS figures:
    http://www.clubtroppo.com.au/2006/10/31/a-short-remark-on-a-tradeoff/

    Jacques Chester

    November 28, 2006 at 8:14 pm


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