Expat Community > Ecuador

HGQ2112
Joined 2009
Posts: 1640

Cyprus & The Global Implications

11 years ago

Sometimes one has to look a little more deeply to see how global events can impact Ecuador. Sometimes one has to realize that events that are global in scope, do not somehow bypass Ecuador, directly or indirectly. One such event is the recent drastic decision out of the EU, regarding Cyprus banking, which is well-detailed in the Stratfor Global Intelligence report linked below:

http://www.stratfor.com/weekly/europes-disturbing-precedent-cyprus-bailout?utm_source=freelist-f&utm_medium=email&utm_campaign=20130326&utm_term=gweekly&utm_content=readmore&elq=ef1a0b55250642bdaf1b8af6b459252d

What is interesting about the Startfor report is that the Stratfor Group is generally considered a political lapdog for the USA and Western Europe, merely masked behind the "independent think-tank" facade. While this Stratfor report does make an effort to frame the Cyprus debacle in the "best" possible light, even Startfor can't mask two critical points: 1) The EU decision is precedent setting, at least since the early 1930s; and 2) The decision by the EU was at least partially heavy-handed in response to Cyprus being considered by some an off-shore banking haven.

As a minimum, the least that can be deduced from the Stratfor report is that the EU is willing to break ground on new, more aggressive, financial sector policies, some which apparently put at risk personal and corporate funds held in banking institutions. The other message clearly being sent is "keep your money at home" and don't send it offshore.

As frightening as the first implication may be, the second might be more so. It is a thinly veiled shot at capital controls, the same for which the Western press has lambasted Argentina and Venezuela in recent months. It is a short step, down a slippery slope, between curtailing access to offshore havens and imposing the heavy-handed demands of full capital controls. With the USA and Canada often moving in lock-step with Western Europe, it begs the question, "How long before it comes to a shore near you?" I know...I know...never here...can't happen...too evil. Normalcy bias rears its ugly head.

However, if for a moment we consider this as even a remote possibility, how long do the "free" people of the USA and Canada have to invest in Ecuador, or any other international locale? How long before the sanctity of bank accounts is plundered, under the guise of the "Cyprus precedent"? How long, in essence, do we all continue to murmur, "Everything is ok"?

That the Cyprus debacle occurred is bad enough. That it merited Stratfor's coverage, shapes the importance of the event. However, that even the usually docile Stratfor lap dog couldn't frame the entire incident, prettied up in pink and wrapped in a bow, readily denotes the severity of the action. The Emperor has no clothes and some, if not starting to stare, are at least peeking a glance.

If you are moving investment money off-shore, whether to Ecuador or elsewhere, your decision-making deadline just might be waning. My suggestion: Do not act hastily, but prepare now and, certainly, do not procrastinate. History has not been kind to those that failed to heed it. We haven't seen historical events like these since, as minimum, the 1930s and then, proportionately, nothing like this in terms of the excessive and bad debt floating through the global banking systems.

Hector G. Quintana
[email protected]
“Patriotism is supporting your country all the time, and your government when it deserves it.” -- Mark Twain

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Cyprus & The Global Implications

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