President Rafael Correa, lawyer, leftist, friend of Hugo Chavez and Evo Morales, deliberately set his nation on a course to default on foreign debt. Spewing standard leftist rhetoric, he called such debt immoral.
"Correa is really, really convinced foreign debt is like the devil and he doesn't have to pay," says Alberto Bernal, head of emerging-market macroeconomic strategy at Bulltick Capital Markets in Miami. "There's a strong ideological component here."
Great name: Bulltick. Outside the acronym-happy world of finance it might be associated with bull droppings; it is meant otherwise.
Investors said the main impact of Ecuador's move would be to make money managers even more pessimistic than they already are about the prospects of countries like Argentina and Venezuela. Together with Ecuador, these countries are considered exceptional cases within the broader group of emerging-market borrowers because of their unorthodox economic policies.
Interesting choice of words: unorthodox.
Claudio Loser, president of Centennial Group Latin America consultants and formerly the International Monetary Fund's chief for Latin America, said he didn't think there would be too much contagion, outside of Argentina and Venezuela. "Markets have already discriminated between Ecuador and other countries," he said. With less than $4 billion in global bonds outstanding, Ecuador isn't a major player in global markets.
It does have the money to make the payment just past due ($30.6 million), but the gesture is meant as defiance, an ideological flourish aimed as much to his country's population as to what he calls real monsters.
The Andean country of 14 million is volatile even by Latin American standards. It previously defaulted on its debt in 1999. Ecuador went through seven presidents in the decade prior to Mr. Correa's ascension in January 2007. One of the presidents, Abdala Bucaram, recorded an album called "The Madman Who Loves" while in office. He was deposed by congress for "mental incapacity."
It does make Italy look stable in comparison.
Mr. Correa ... was educated at the University of Illinois.
Interesting choice of colleges.
"I think President Correa thinks the country should default pre-emptively, not when it's in fiscal distress, because it maximizes their bargaining power," says Alberto Ramos, an economist at Goldman Sachs.
President Rafael Correa said Ecuador would skip a $30.6 million payment to bondholders due on Monday, calling foreign creditors 'real monsters.'