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Originally Posted by highthief
I was merely responding to another post about how oil-based economies have all done well in recent years.
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This is not true. I will try one more time, different source:
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While a five-month, 68 percent plunge in oil, the South American country’s biggest export, has crimped revenue, the government can still pay its debts, said Matias Silvani, who helps manage $12 billion of emerging-market debt at JPMorgan Asset Management in New York. Ecuador has $5.7 billion of foreign reserves, according to the central bank.
Total debt of $10 billion equals about 21 percent of the country’s gross domestic product today. Its debt equaled 97 percent of GDP in 1999. Argentina’s debt had swelled to 150 percent of GDP when it carried out the biggest sovereign default ever in 2001.
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Ecuador’s default in 1999 “was due to a solvency issue,” Silvani said. “Now they do have the money to pay. This is a purely willingness to pay issue.”
Ecuador paid bondholders 60 cents on the dollar in a restructuring in 2000, double the 30 cents Argentina paid five years later. About 25 percent of bondholders rejected Argentina’s offer and the country is still unable to access international capital markets as it fends off creditor lawsuits.
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Bloomberg.com: Exclusive
Regardless of the spike in oil revenues, those revenues can be mismanaged, and there is the issue of volatility in the price of oil which mean the good times have to be managed against the bad. Funny but that seem to be an argument US oil companies made to Congress as the CEO's were put through the ringer.
{added} To clarify - Oil revenues have been at record levels for many oil producing nations and they have benefited, however, with our current oil prices the economic conditions in these countries that are mismanaged quickly deteriorates. I was listening to CNBC and they quoted Buffet this morning - "When the tide recedes you get to see who was swimming naked" .