Ecuador defaults, calls lenders ‘monsters’

Ecuador, surely the first of many countries to do so in the months ahead, is defaulting on its debt. And who does President Rafael Correa blame for this parlous state of affairs? The lenders, whom he calls “monsters” whose loans are “obviously immoral and illegitimate.” Hmm. Too bad Correa has alienated Uncle Sam. Maybe his ...

591120_081213_correa5.jpg
591120_081213_correa5.jpg

Ecuador, surely the first of many countries to do so in the months ahead, is defaulting on its debt. And who does President Rafael Correa blame for this parlous state of affairs? The lenders, whom he calls "monsters" whose loans are "obviously immoral and illegitimate."

Hmm. Too bad Correa has alienated Uncle Sam. Maybe his friend Mahmoud Ahmadinejad will help? Surely Iran has the clout to convince lenders to agree to new terms, no?

In any case, here's a possible side effect of Ecuador's default: prices of bananas may go up. Seriously -- Ecuador is literally a banana republic, and agriculture is a business fueled by credit. And after this move by Correa, it's going to be awfully expensive to borrow money in Quito.

Ecuador, surely the first of many countries to do so in the months ahead, is defaulting on its debt. And who does President Rafael Correa blame for this parlous state of affairs? The lenders, whom he calls “monsters” whose loans are “obviously immoral and illegitimate.”

Hmm. Too bad Correa has alienated Uncle Sam. Maybe his friend Mahmoud Ahmadinejad will help? Surely Iran has the clout to convince lenders to agree to new terms, no?

In any case, here’s a possible side effect of Ecuador’s default: prices of bananas may go up. Seriously — Ecuador is literally a banana republic, and agriculture is a business fueled by credit. And after this move by Correa, it’s going to be awfully expensive to borrow money in Quito.

UPDATE: Felix Salmon says the default is “idiotic“:

In the annals of idiotic political decisions, today’s default by Ecuador has to rank pretty high. […] This debt has already been restructured twice, and there’s zero chance that bondholders will agree to it being restructured a third time. They know that Ecuador has the ability to pay, and they don’t like being bullied.

Photo: AFP/Getty Images

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