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Ecuador, as an emerging market, offers excellent growth potential.   However it has some banking problems that we should not ignore.

We live in a global economy so we can live anywhere and still have the best from home… and the

the worst.. such as the ubiquitous Coca Cola, Burger King, Baskin-Robbins and McDonalds.  At least they have customized the burger for Ecuadorian tastes, by adding avocados.  This by the way probably makes the big Mac even nutritionally worse (harder to digest with 3 kinds of fat)… if that is possible.

The great benefit of being a citizen of the world is you get to pick and choose.  You can enjoy the low cost, delicious, healthy Ecuador food and ignore the American fast food.

In a global economy, when you live in Ecuador, you can also choose to bank and invest where it is best for you.

Emerging economies and stock markets have out performed major economies and markets for more than a decade… without greater risk.

Today’s message at our other site is entitled Investing in Turkey shows how emerging markets have performed better than major markets this year.

Last week’s “Global Market Update” by Jyske Global Asset Management shows that the IMF believes emerging markets will highlight global economic growth in the year ahead. The IMF predicts that emerging markets will pickup while developed nations will slow down.

That global market update said:

Better-than-expected

The equity markets have been driven this week by better-than-expected announcements and key numbers. This resulted in increasing equity markets–globally, and a weaker USD as the risk aversion increased.

The International Monetary Fund (IMF) increased its estimates for global economic growth in 2010 from 4.2% to 4.6%. The upward revision is based on stronger growth in the emerging market nations, which is estimated to 6% per year. (My bold).

However, in the same report, IMF lowered their estimates for the developed nations and expects growth rates to drop from 3% in the first half year to 2% in the second half of 2010.

The IMF has furthermore commended Greece for their work and effort in implementing new economic reforms, which is needed to emerge from its debt crises. IMF and  European Central Bank states the following in a joint report: “The economic adjustment program appears to be acting as a catalyst, including in areas where reform efforts have been lacking for many years”.

Wednesday, bank State Street Corp. reinforced hopes of a better-than-expected earnings season and trumped fears of slower global economic growth.

Thursday, the European Central Bank kept interest rates at a record low (1%) and argued an increasing market borrowing costs and the sovereign debt crisis threatens to derail the region’s economic recovery. Bank of England decided also to keep its key interest rate unchanged (0.5%).

See below how to join Merri and me at Jyske Bank in Copenhagen to review the latest global economic update.

Ecuador from an investment point of view has an edge as an emerging market.
However there is a banking concern of which you should be aware.

Another message at our Garyascott.com site entitled Quantum Wealth & Independence showed how many overseas banks would no longer accept American customers and how they had sent letters to their American customers telling them they were closing their accounts.

A reader sent a reply to this and wrote: Hi Gary and Merri,  I really connected with your article today and wanted to share with you a tidbit.  I worked 20 years as an American banker, half of that time was in the securities division of our bank.  We too sent out letters to our customers who were not Americans, “sorry you can no longer be our customer because you are not an American.”  This happened a couple or less years after 9/11.  As staff we were told the events of 9/11 made this happen.  What a hoot!  Many blessings to you.

Here are three Ecuador banking crunches.

First, Ecuador banks will not open a checking account for you unless you are an Ecuador resident. However many US banks will not provide you with a bank account unless you have a US address.  Many Americans who live abroad find that it is hard to have a bank account where they live but they cannot have a US account either because they do not have a US address.

This problem is likely to grow because of fear of money laundering.

Ecuador seeking to strengthen money laundering and anti-terrorism funding laws after being placed on a black list in February 2010 by the Financial Action Task Force, a European agency.  The country was removed from the list after an Ecuadorean delegation traveled to Europe and met with members of the group.  Being placed on the list increased Ecuadorian banks’ financial transaction costs because of increased foreign scrutiny.

Expect Ecuador banks to grow increasingly cautious about who they open bank accounts for and how they monitor banking activity.

Second, Ecuador banks are not very safe. The added costs from the blacklist will  exacerbate pressure on Ecuadorian banks. Plus banks are rarely safer than the governments that back them and Ecuador has had a high sovereign risk.

For example the Fitch Ratings Sovereigns Group provides credit research and opinion on more than 100 countries, and assigns ratings to the foreign and local currency debt of sovereign governments that account for virtually all of sovereign international debt issuance.

‘AAA’ to ‘BBB’ are called investment grade with AAA the highest ranking considered the safest.

Another Credit Rating firm Standard and Poor’s (S&P) says only 17 nations or territories deserve AAA status. The elite are mostly larger, advanced economies, but there are exceptions. S&P’s AAA list comprises Australia, Austria, Canada, Denmark, Finland, France, Germany, Guernsey, the Isle of Man, Liechtenstein, Luxembourg, the Netherlands, Norway, Singapore, Sweden, the UK and the US.

‘BB’ to ‘D’ are called speculative grade with D the lowest and least safe.  D in other words is the lowest of the low.

AAA National Ratings denote the highest rating assigned by the agency in its National Rating scale for that country. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country.

‘CCC’ National Ratings denote that default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic conditions.  This is as bad a rating as you can have before the worst of the worst D.

As of May 2010 Ecuador’s credit ratings were:

MOODYS RATING     Caa3
MOODYS OUTLOOK  Stable

Fitch RATING     CCC
FITCH OUTLOOK     Stable

S&P RATING  CCC+
S&P OUTLOOK  Stable

Third, Ecuador’s current economic outlook is not strong.

The excerpt below of an April 2010 Businessweek article entitled “Ecuador Economy Constrained by Limited Credit, Lower Oil Output”  by Nathan Gill points out that the outlook is not good. It says:  Ecuador’s economy is constrained by limited access to credit and declining oil production even as the price of the country’s biggest export has surged, Fitch Ratings analyst Erich Arispe said.

President Rafael Correa needs at least $2.5 billion to plug an estimated $4.2 billion budget deficit this year and may not meet economic growth forecasts of 6.8 percent, Arispe, a director of sovereign ratings at Fitch, said today in a phone interview from New York. Ecuador’s gross domestic product will probably increase 2.3 percent in 2010, Arispe said.

Correa is trying to boost revenue and reverse declining oil production by increasing investments in oil fields and shuffling ministers to speed the negotiation of service contracts with private oil companies. The South American nation defaulted on $3.2 billion of international bonds since Correa took office in 2007. Recent threats to nationalize assets of oil companies who don’t sign the new contracts aren’t raising production, Arispe said.

“In spite of a recovery in oil prices, there hasn’t been a rebound in the economy like we’ve seen in other countries in the region,” Arispe said. Ecuador “needs significant sources of funding from abroad to finance this year’s budget gap. It’s not clear where they’ll find this.”

With the economy “deteriorating,” investors may want to be underweight Ecuador bonds, Barclays Plc said on April 19.

This is good news for tourists and expats.

The slow economy makes Ecuador more attractive for those who visit or live in Ecuador but do not earn or keep their savings in Ecuador.

A great solution to this problem (the one I use) is to be in Ecuador, but bank in Denmark and invest globally.

Jyske Bank created two subsidiaries Jyske Global Asset Management (for Americans) and Jyske Bank Private Bank (for all other nationalities) to help those who live outside Denmark invest globally.  They provide a VISA debit card so you can live in Ecuador, hold your assets in Denmark and yet get cash when required though your debit card.

If you can open an Ecuador bank account… this can help with your daily transaction.  However I recommend that you keep it small… not more than a month’s worth of expenditure. Do not leave your savings in an Ecuador bank!

Learn more about Jyske Global Asset Management’s services for Americans from Thomas Fischer at fischer@jgam.com

Learn more about Jyske Bank Private Bank’s services for all other nationalities from Rene Mathys at mathys@jbpb.dk

Join Merri and me at Jyske Bank in Copenhagen this August to learn more about global wealth and Jyske Bank’s services.

emerging-markets

Merri and I enjoy walking for miles along the harbor every day when we are in Copenhagen.  We love…

investment-course

the sights, the…

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cafes and…

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open air and…

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waterfront dining.  Summer is the best time to visit Copenhagen.

I love attending these Jyske seminars not just as a speaker but because I get to hear all the other speakers, whom I consider world class.

The strong US dollar makes this the year to enjoy Europe and Thomas Fischer at Jyske just sent me this note: Gary due to the increasing US dollar, the cost for our August seminar in Copenhagen for Americans has dropped from about $2,050 to $1,700, a 15% discount. (THE COST INCLUDES MOST OF THE FOOD, TRIPS, MAKING THE CONFERENCE A GREAT BARGAIN.)

Some great things about the Copenhagen conference are the seminar of course…then there’s the stunning food and the wonderful visits included…This package includes:  accommodation at the Copenhagen Marriott Hotel for four nights, (25-28 August) including breakfast,  Reception and dinner at the bank’s Copenhagen offices, seminar fee and materials for the seminar sessions on Thursday, Friday and Saturday. full lunches on Thursday, Friday and Saturday, canal & harbour tour on Friday in the late afternoon, four-course gala dinner with entertainment and dancing on Saturday evening, and a Sunday excursion including lunch.

Merri and I always go on the excursion also to Silkebord with a drive out into the country, lovely food, picnic cruise and a chance to see the main office and the trading center.  This is always our most interesting, favorite and delightful conference…and we hope you will join us there!  We love the stroll along the harbor, the fresh air, wonderful meals and interesting people from all over the world.

See details on how to join Merri and me at Jyske’s bi annual Copenhagen seminar here Global Wealth Management Seminar.

emerging-markets

We also really enjoy the restaurants and coffee shops along Nyhavn.

Gary

We provide three e-courses that can help you develop a micro business that can help you earn in Ecuador.

International Business Made EZ

Self Fulfilled – How to be a Self Publisher

Tangled Webs We Weave – How to Create Your Own Internet Business

July Special.  Save $299.

Enroll in our October Quantum Wealth course October 7-10, 2010 or any of the Ecuador real estate tours below and choose one of the three $299 courses above for free.

Pre enroll for our October 7-10 North Carolina Course click here for details.

See Ecuador tours for August, September, October, November and December below.

Learn more about how to invest and do business abroad.

Find ways  to have more fun as you earn more in investing and business. Join Merri and me with Thomas Fischer of Jyske Global Asset Management, Jean Marie Butterlin, who we support to conduct Ecuador real estate and shamanic tours,  and Bonnie Keough who we support to conduct Ecuador export tours at our upcoming Quantum Wealth – International Business & Investing Course October in West Jefferson North Carolina. Click here for details.

You enjoy discounts by attending multiple seminars and tours.

Here are our multi tour adventure discounts.

Two Pack… 2 seminar courses & tours $998 Couple  $1,349 Save $149 on couple

Three Pack… 3 seminar courses & tours   $1399 Couple  $1,899 Save $98 single or $348 on a couple or more

Four Pack… 4 seminar courses & tours   $1,699 Couple $2,299 Save $98 single or $697 on a couple or more

Five Pack… 5 seminar courses & tours  $1,999 Couple $2,699 Save $496 single or $1,046 on a couple or more

Six Pack… 6 seminars courses & tours  $2,199 Couple $3,099 Save $795 single or $1,395 on a couple or more

You can apply multi tour discounts in reverse.  Enroll in multi tours.  Learn about Ecuador in June, July, August or September and then include the October Quantum Wealth course in your multi tour pack.

Aug. 31-Sept. 1 Ecuador Shamanic Minga

Sept.   2-6   Ecuador Export Tour

Sept.   8-9  Imbabura Real Estate Tour

Sept. 11-12  Coastal Real Estate Tour

Sept. 14-15-16 Cuenca Real Estate Tour

Oct.  7 Quantum Wealth plus International Investing and Business North Carolina

Oct.   8-10   International Investing & Business North Carolina
Oct.   11-12  Travel to Quito and Andean Tour
Oct.  13-14   Imbabura Real Estate Tour
Oct.  16-17   Coastal Real Estate Tour
Oct.  19-20   Quito Real Estate Tour
Oct. 22-23    Cuenca Real Estate Tour

Nov.    4-7   Super Thinking + Spanish Course Florida
Nov.    8-9   Travel to Quito and Andean Tour
Nov. 10-11    Imbabura Real Estate Tour
Nov. 13-14    Coastal Real Estate Tour
Nov. 16-17    Quito Real Estate
Nov. 19-20    Cuenca Real Estate Tour

Dec.   3-5    Ecuador Shamanic Mingo
Dec.   7-8    Imbabura Real Estate Tour
Dec.  10-11   Coastal Real Estate Tour
Dec. 13-14    Quito Real Estate Tour
Dec. 16-17    Cuenca Real Estate Tour

Read the full April 2010 Businessweek article entitled “Ecuador Economy Constrained by Limited Credit, Lower Oil Output