By
Gary Scott

A 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 countries.

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.

If there is an oil crisis, Ecuador will benefit because it is an oil rich nation. Higher oil prices will generate more revenue for this nation.

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 really helps! 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 past 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!

Gary

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


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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.