reader recently wrote and expressed concerns that Israel, or the US
(or both) would launch a pre-emptive strike at Iran's nuclear
capability, on or before March 20th.
They feel that March 20th is significant because this is the day Iran
no longer accepts the US dollar for their oil. They will only take
Euros in their new petrobourse. This could spread to other OPEC
That reader asked if since Ecuador uses the dollar, what do I think
the effects on life there will be. Will there be
more or less disruption there than in the US? Will Ecuador be a "safe haven" from
the economic storm of a potential dollar collapse?
These are interesting questions. I certainly don’t have a clue if
Israel or the US will bomb Iran. Let’s hope and pray not! There has
been too much bombing and fighting already. We need to start healing the wounds
and animosities between nations.
But the reader’s question really is, “could the US dollar fall? Could
there be disruption in the global economy. Could there be an oil
crisis. If so how will Ecuador be affected?”
Ecuador has struggled with a strong US dollar. Since dollarizing
Ecuador’s inflation has diminished, a lot. Inflation has dropped
increasingly almost every year. This is good long term, but not so
good in the short term. Colombia, Peru, Venezuela, Argentina and most
other Latin American nations have devalued their currencies versus the
US dollar. This has made Ecuadorian goods less competitive, a harsh
burden for an already poor nation.
A falling dollar (assuming that the other Latin American countries do
not devalue with the dollar) will help Ecuador compete.
there is an oil crisis, Ecuador will benefit because it is an oil rich nation. Higher oil prices will generate more revenue for this
If there is global economic turmoil, Ecuador like most equatorial
nations will have one edge. Food grows richly here without chemicals
and fertilizers and such. There is so much food that few people
starve. There is little need for heating and air conditioning either,
so shelter costs less. Finally the people are so poor and the country
so labor intensive that global economic disruption will have a little
less impact than in countries that are more reliant on imports and
wealth for their happiness and standard of living. People here are
already used to working in humble conditions and gaining joy in humble surroundings.
Plus being closest to the sun means that energy is so available here
that solar power and bio fuels could develop more easily here. This
Don’t get me wrong, a global economic disaster will hurt Ecuador as it
will all nations. There may just be a little less contrast than in
other places and the nation may have a slight edge.
Finally I believe that one huge advantage Ecuador would (and does)
have is the sweet and stoic nature of the people. My feeling is that
they are more likely to just get on with life rather than stand around
moaning “why me” as some societies might do.
These are my simple opinions relating to some very complex issues.
Don’t worry much about global disaster. If we look back for the
500 years or longer there has always been reasons to believe that the
sky is about to fall. Yet standards of living have just grown better.
No sense stopping now.
In a rosy global economic scenario Ecuador has all the same advantages
by the way. Plus being here, we find that life is good!
We hope we’ll meet you here!
P.S. Join Merri and me and tour Ecuador
on our Import Export Expedition.
Please consider joining Merri, Thomas Fischer
of Jyske Bank and me in at our next International
Business and Investing Made EZ course in North Carolina. Review where
to invest and do business now and learn which markets and currencies may be
strong in the year ahead. Details
P.P.S. Double your profit potential with the MultiCurrency Sandwich. Details on my Borrow Low - Deposit High service
One of the greatest assets of Ecuador is the sweetness of the people.
Yatchak Don Carlos is one of our great friends here and he performs a
wonderful ceremony at each of our courses.