* Ecuador Real Estate and Latin America
* International Investments – July 2006 Emerging
Market Value Analysis
* Natural Health Tip - More Cook DeBuggin
Latin American investments
are hot! You will see in tomorrow’s
July 2006 review of emerging market values that of the three emerging
market regional indices, Latin America stood out with a 4.2 % monthly
gain. Asia lost 0.8 % and Europe, Middle East and Africa (EMEA)
declined 2.3 %.
We’ll see that the two best performing stock
markets in the last month were Peru (+9.7 %), Argentina (+7.1 %)
and that for the year two of the best three top performing markets
were Venezuela (+51.3 %) and Argentina (+34.2 %).
So you would imagine we are pretty happy sitting of the middle
of this explosion in Ecuador.
We are, but not for what would seem the obvious reason…current
Latin market performance. Hot performance is not the best reason
to choose to invest. Hot performance does not guarantee value.
In fact hot performance is often a sign of bad value. Keppler’s
value analysis points this out. Though Peru, Argentina and Venezuela
are hot, the only Latin market he deems good value for investment
is Brazil.
Ecuador is too small a market to even be rated. This creates a
lot of ignorance in this market which has a value as well. If data
is hard to get, those who take the extra trouble get extra rewards!
However, it seems fair to point out that there are some concerns
afoot.
First, the volcanoes. On July 16, 2006 Tungurahua volcano spewed
ash, gas and molten rock for a second day.
Tungurahua, is located about 80 miles south of Quito and has been
increasingly active since May 2006 when it blew out big clouds
of hot gas.
No one has been injured, though a lot of surrounding area has
been evacuated. The short and simple fact is there are many active
volcanoes in Ecuador. The Andes are new mountains as far a geology
goes. New mountains have volcanoes and faults that are still settling
which bring eruptions and earthquakes. In our decade there this
has never bothered us but I grew up in the Cascades and Mt. Hood
and Mt. St. Helen’s were at our front door. They could have
erupted at any time (Mt. St Helen’s did of course). If this
was not enough, I then moved to California and worked in San Francisco
on the 44th floor of the old Bank of America building. Obviously
earthquake concerns were not at the top of my list.
So we do not worry about volcanoes and earthquakes, but you should
know they are there.
The Upside of Volcanoes. We know that every cloud has a silver
lining. Look at this picture of the volcano taken at night!
A Bigger Social Volcano?
A July 6 Wall Street Journal front page article voices another
concern. This article is entitled “a Dash of Mysticism: Governing
Bolivia the Aymara Way.”
The article says: “Since he was elected Bolivia’s
first indigenous president by a landslide vote in December, Evo
Morales, a former leader of coca grower’s union has assembled
a governing team of ex-guerrillas, former activists, a former maid
who founded the national maid’s union, is now the justice
minister although she has never studied law. Since Mr. Morales
assumed power he has pledged to redistribute the country’s
wealth among Bolivia’s poor Indians and exert greater control
over the country’s economy and natural resources. He had
forged a close alliance with Venezuela’s fiery anti-American
president Hugo Chavez.”
The article then goes on to say that some leaders want to go back
to the revolutionary 60s and some even farther clear back to 1491
before the Spanish invaded. The article explains why:
“That’s because the conquest of Bolivia in the
early 16th century led to centuries of exclusion and oppression
for its Indian inhabitants, a condition that has improved little
with independence in 1825. Today 65% of Bolivia live in an income
of less than $2 a day. Many Aymara intellectuals say they want
to recreate in the 21st century the values of communal Eden they
believe existed before the conquest, as place without poverty
and oppression.”
That’s a fuss. Communism has pretty well been discredited
as an economic solution in the modern industrial era. However industrialization’s
inability to help equalize wealth does create problems. The new
government is thinking that the one thing its new society will
not needed is competitiveness.
Sorry guys! Hey listen up. Competitiveness is not a legislated
thing. This is a force of nature. It cannot be stopped!
The new foreign minister, David Chaoquehuanca, brags that he has
not read a book in years because he does not want to cloud his
mind with European concepts. The article quotes him, “We
have been in the hands of people who have read books and look what
a mess the Earth is in.” Whoa…just what we need is
more lack of understanding.
He has a point, the earth is in a mess, but communism sure did
not clean up the environment or society in Russia or
China or Eastern Europe. Nor has it exactly made Cubans the richest
people in the world either.
Plus we have the problem of interface between this new society
and the rest of the capitalist world. Bolivia is a pretty isolated
country so if they just did their thing, fair enough..if this is
what the people of Bolivia really want.
However, I expect that this non-reading foreign minister will
still want to travel on airplanes that came from the messy West.
He’ll probably want to work at night with light fueled by
generators and oil from the West and abroad.
He’ll probably want his nation to have cars and trucks and
tractors and tools and medical supplies that were built by competitive Chinese, Japanese Europeans and Americans. What will his non-competitive
society produce to trade for these things?
Bolivia will need to interact with the rest of the world. The
good ancient values they want to emerge will have to blend in with
the competitive industrialized part of society.
Other solutions seem unlikely. The education minister states he
will erase the pernicious effects of colonization. Part of his
plan is to let Indian women know that they need to have five to
eight children each so the country’s white minority will
become inconsequential. This should really be a great way to help
the Indians enjoy higher standards. (I hope you see my tongue well
and truly in my cheek!)
I don’t see some of their economic plans working too well
either, such as allowing the farmers to go back to their old occupation
of growing coca. (The new president used to be head of Bolivia’s
coca grower’s union.) I suspect that if this new agricultural
supply develops the Bolivians will be looking to sell the stuff
outside their borders…perhaps in the West where this might
not go down too well.
It’s easy for me to sit here and say that all these plans
will not work. Criticism is easy but I sure don’t have the
answers and the poor Indians have plenty of reason to want to shy
away from the system that has treated them so badly.
But the point in this writing is to show that there are some problems
without apparent solutions in Latin America. These problems are
spreading. Cuba has been there for so long. Then Venezuela and
now Bolivia. Plus the Bolivian leaders recently met with Ecuadorian
Indigenous leaders in Quito. This suggests a tendency for this
to spread.
How far will this spread go? This is the question. Your guess
is as good as mine.
This could create some uncomfortable times in Latin America, but
I see fulfilling opportunity. Hints of a solution are in a 500
year old Indigenous legend. The legend says that a time will come
when the Eagle of the North and the Condor of the South fly in
the skies together again. This, the legend says, will help restore
the equilibrium of mankind.
The economic momentum in Latin America is clear. Richer societies
are emerging. There are more people with more money than ever before.
Yes, there are inequalities. Yes, the environment is in a mess.
But the good old days were not so good either.
We business people can make a good positive difference as we run
successful businesses, if we are not only good business people
but broad thinkers who treat clients and associates fairly and
honestly so prosperity is spread around more.
The village, Cotacachi, where Merri and I have chosen to live,
is a good example of the wisdom of the Indigenous and the West,
working in union. The village has its first indigenous mayor. Science
and the mystic united. Here, incomes are rising. The Indian culture
is intact yet they were proud to note that they have reduced the
high infant mortality to zero. Hurray! The Indians still dress
as they always have. They still maintain their beliefs. They still
respect their environment. But they also compete in the global
economy and enjoy the best of both worlds. They have learned to
integrate technology into their existing way of life.
There are still enormous inequalities of wealth, but income distribution
is getting better. This is one reason why Merri and I like Ecuador,
especially Cotacachi. This is a place caught in a huge dilemma.
We as business people can make a difference by bringing Western
standards there and uniting our business with the ancient ways.
This creates huge opportunity for wealth. Canada, the US and Latin
America are natural partners. Business will bind the union. Businesses
that unite wealth and spirituality will be on the leading front
and there are few places where this could happen more easily.
We welcome you to join us in this union which I believe is a powerful
trend.
Another reason we love Ecuador is its beauty. Here’s a shot
at sunrise from our suite at El Meson de Las Flores in Cotacachi,
Ecuador.
Plus we love the sweet people and their wonderful
successful culture. Here is a local coming to the Hotel el Meson.
He’s dressed as his ancestors but competing well in the modern
world.
International Investments – July 2006 Emerging
Market Value Analysis. See the best value markets at http://www.spottingtrends.com/stock_markets/stock_markets_24.htm
Until next message, good investing!
Gary
Join Merri, Thomas Fischer of Jyske Bank and me 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. Meet Steve Marchant,
our man in Ecuador, and learn about products to export. Go to http://www.garyascott.com/catalog/ibeznc.html
