Tag Archives: economy

Beat Goes On But Ecuadorian Economy Reeling

DSCN1351Quito    I had not visited Ecuador for three years. I sat for hours in the sparkling new airport that opened after my last visit or more specifically in the Airport Center across the street from the actual ticket counters, security, gates and airplanes. If modern airports have become shopping malls serviced by airplanes and runways, Quito has essentially built a mall across the walkway from their airport. There’s a patio. There are plenty of chairs and free Wi-Fi. There are many worse places in the wide world to spent hours waiting for a plane.

Walking through the main streets of the city near our hotel not far from the major park and Botanical Garden, everything seemed clean and well-ordered. The coffee shops were active and on the streets people bustled along in well-turned sport coats or high heels and big leather purses. Talking to friends, colleagues, and organizers we had worked with us on campaigns either in the United States or Ecuador or both, a more unsettling picture emerges.

This is not Venezuela where food riots have become almost daily occurrences and political and social unrest is intense, but nonetheless Ecuador at all levels is feeling the pain. One former political activist we knew well from our work on field operations in the last presidential campaign in Ecuador in describing the impact of the falling price of oil, remarked that 60% of the national budget was derived from oil revenues and even as the price moves towards the $50 per barrel that is essentially breakeven in the United States, Ecuador needs the price to hit $60 to $70 because of the extra cost of bringing their crude to the market. An organizer I had worked with at Casa de Maryland, back home now and working at a governmental ministry, told us that this year the budget of her department had been cut from $20 million to $6 million. Needless to say, the impact was devastating and the layoffs severe. She was surprised to still have a job!

Many don’t! An activist we knew, was now living at home. Her brother had lost his job with the state, and her sister in another job had her hours cut in half. An old friend, comrade and former organizer who had worked with us in Florida on our Walmart campaigns a decade ago, told me when he responded to my email and arranged to meet us for breakfast at the hotel that he would do his best to make it because “he was so busy.” When we met, I asked him what kind of jobs he was handling now that were keeping him so busy. “None,” came the surprising answer from my well-connected friend. He was hustling just to keep above water. A job in another country had mysteriously fallen through a week before. When I asked after his father, an elegant and sophisticated gentlemen, whom I admired and knew well and would have thought traveled smoothly in the upper class of the country, I learned he was also now unemployed and in danger of losing his home.

I worried that our members, many of whom depended on the “bono” or basic, cash welfare assistance that President Correa had raised unilaterally in the previous political campaign, might have seen that cutback. The answer from everyone we talked to was, “Not yet,” which was hardly reassuring. Higher oil prices had led to more robust economic projects, expanded public programs and public employment, and increased debt for Ecuador, both externally and internally. Like any bubble of sorts, the country, like Venezuela and smaller states like Louisiana, was caught still standing when the music stopped and everyone raised for a chair.

After the encouraging gains in many Andean countries where recent economic growth in Ecuador, Peru, and Bolivia had lifted education, citizen wealth, health, and living standards, one gets the sense that this is unraveling in a case study of what globalization gives, it then takes away. We met with two young doctors. They were originally from Honduras, but had trained for seven years in the vaunted Cuban healthcare system. They wanted to practice in rural areas where the need was greatest, but Honduras had no government program to support their work, so then ended up in Ecuador about 4 hours by bus from Quito. I asked them to rank the healthcare systems they knew and how the economic situation was impacting healthcare. Not surprisingly, they said of the three, Cuba was first, Honduras last, and Ecuador in-between. As for the economy, they were still getting paid, so at least that was something they said, but they could already see shortages starting to show up in medicine supplies.

Being forced to root for the price of a barrel of oil to go up just about says it all about the unsustainable economy we have built in the world.




No End to Recession without a Solution to Housing Crisis

Mortgage & Housing Crisis

New Orleans    I’m going to keep this short and sweet, and the message will be clear.  The economy in the USA is showing some signs of improvement.  More jobs are coming into the statistics.  The President is getting a bounce in his step.  This is all good news.

Obama will have trouble winning without these trends continuing to improve.  And, that is nowhere near as important as the fact that working families are still in terrible shape throughout the country!

I don’t believe that we can get out of the recession or that Obama can salvage this mess without finally booting Treasury Secretary Geithner and bending Wall Street and the banks to the rack and at last getting them to right size the mortgages to the appropriate water level since millions now owe more than their houses are worth.  Doing so will allow there to finally be a real loan modification program rather than all of the promises and fakery – run by the banks! – that we have seen for the last three years plus.

Standing next to a fellow from my high school class that I hadn’t seen for decades the other night, he mentioned he ran a fairly good sized bunch of mutual funds out of Omaha, Nebraska.  I kidded him about Warren Buffet.  He said the dude was amazing.  We talked about the fact that his daughter was working for Buffet’s daughter and actually helping her get something right about the philanthropy she was doing, and we even both agreed that it was too bad that Buffet had moved his money over to Gates rather than putting his own stamp on the funds, since he would have spent them better.  I asked what his reading on the economy was, and he quietly shook his head and said, “housing, it can’t get settled until housing gets settled.”  I said I couldn’t agree more.

Later I looked him up on Google to see what the story was on the funds he managed.  It turned out that my friend and classmate Wally Weitz manages $4 billion worth in these funds and has for almost 30 years.   One link claimed Fortune magazine called Wally, “the other Sage of Omaha.”

Damn!  I knew I was right, now I think it’s unanimous, if folks are seeing this from the top, the same way it feels at the bottom, then somehow the White House needs to finally get the message and get it done.