Jan

23

Notwithstanding Mr. Chavez's anti-American, wildly popular pronunciamientos and Ecuador's newly elected Government's declaration that the country's foreign debt is "immoral," I think there is no risk of non-repayment. Ergo, Latin debt is cheap.

Qualifications:

(a) Venezuela and Ecuador are oil exporting countries, and their payment capacity is superb.

(b) They are in no danger of default.

(c) Argentina was a special case. Foreign creditors did not notice that Argentina was not the same rich country of the fifties, but a totally wrecked one, and it had no mineral exports. Since the wrecking took several generations, neither did we Argentinians notice the change.

(d) In Latin America, foreign loans are valued personal emergency resources and have been since the Independence.

(e) The situation of foreign owned companies (or just any private owned company or landowner) is very weak and unsustainable. No one can protect them against expropriation when the mood comes. In my opinion, real estate and stocks are risky and overpriced.

(f) Further antics and heroic positioning by the caudillos are only too expectable. I am old enough to remember Vice President Nixon's visit in Caracas, and how it taught the Latins the joy of spitting on gringos.


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