The BBC Hates Correa So Much that it cannot Restrain Itself

By William K. Black

I was peacefully reading a BBC article on Ecuador’s plans to introduce a digital currency to bring banking services to the rural poor, when in the midst of the article the anonymous author decided to attack President Rafael Correa because Ecuador borrows money from China.

“Ecuador introduced the US dollar as its currency after a crippling bank crisis in 2000. Since then, the government has tripled social spending and the state is currently billions in debt, mostly to China which buys most of Ecuador’s oil.”

The reader is meant to understand that Correa is recklessly increasing “social spending” through massive public borrowing from China. How did a story purportedly about an innovative program to marry new mobile telephony technology and a new digital currency to bring banking services to the rural poor suddenly include this gratuitous attack on Correa? Because any excuse will do if you piss off the Brits by giving sanctuary to Mr. Assange.

What is Correa’s great sin according to the BBC? “Ecuador … is currently billions in debt.” How many nations are “currently billions in debt?” Roughly the 150 nations with the highest GDP have at least a billion in public debt and over 100 have “billions” in public debt. So, if it is a terrible thing to be “billions in debt” – it is a terrible thing that should be in every BBC article written about virtually every nation in the world.

It is not a terrible thing for nations to borrow, which is why they virtually all borrow. It is true that Ecuador is more vulnerable to external shocks than other nations that have a sovereign currency. Ecuador’s currency is the U.S. dollar. For political reasons it is currently impossible for Ecuador to reestablish a sovereign currency. Correa, an expert economist, and one of the most popular elected officials in the Americas, understands both points.

So, how much public debt does the reckless Ecuador have compared to prudent nations such as the U.K., the U.S., and Germany? The CIA has the answer – and the CIA’s hate for Correa exceeds even that of the BBC. The CIA’s World Fact Book has an introductory discussion of Ecuador’s economy that is a cry of rage and spite. The one thing that the CIA can never forgive Correa for is the enormous success of Ecuador’s economy and the “social programs” that became the national priority under Correa. The CIA introduction to Ecuador’s economy does everything possible to try to suggest that Ecuador’s economy was performing brilliantly prior to Correa’s first election as President of Ecuador and that anything positive that has happened since Correa’s election is the product of luck that will soon be replaced by disaster. We know that the CIA is not stacking the numbers to make Ecuador look good under Correa’s leadership.

The CIA reports that Ecuador’s public debt as a percentage of GDP is a staggering 23.2 percent (as of 2013, the most recent available data). If you go online and click on the “public debt” icon for Ecuador (or any other nation) a chart will appear that gives the same data for almost every other nation. The BBC’s home is the ultra-prudent U.K. under the leadership of the ultra-prudent Tories. The U.K.’s public debt to GDP ratio is a mere 91.1 percent. The U.S. ratio under the vastly imprudent President Obama is 71.8 percent. The real proof of the BBC’s point comes when we examine the über-prudent Germans’ ratio under the leadership of Merkel the Merciless – an almost non-existent 79.9 percent.

How does Ecuador’s 23.2% figure compare to three conservative darlings in Latin America: Mexico is 37.7 percent, Colombia is 39.6 percent, and Guatemala is 31 percent. (Chile is back under socialist leadership.) Peru and Paraguay are the rightist regime in Latin America with a materially lower ratio, but they too are “billions in debt.”

We all know that the leftist national leaders of Latin America must be off the charts in their government debt ratios compare to the rightist leaders of Germany and the U.K. Ecuador must be the only leftist leadership in Latin America with a lower ratio than Germany and the U.K. Bolivia’s ratio is a whopping 36 percent, Brazil (which the BBC treats as respectable) is 59 percent, Venezuela (with the only Latin American leaders that the BBC treats with even greater disrespect than they do Correa) is so irresponsible that its ratio is a calamitous 34 percent. And the poster child in the conservative West for leftist Latin American insanity – Argentina – is off the charts at 46 percent (roughly the one-half the figures for the U.K. and Germany).

And, no, Ecuador has not been funding its government expenditures primarily by borrowing money. What has Ecuador “tripled social spending” on since Correa’s election? Infrastructure, health, and education are the three areas. Those are the three areas of governmental spending that the Washington Consensus said needed large increases? What have been the results? Substantially reduced unemployment, well below U.S. levels, reduced poverty, reduced inequality, and substantial growth without harmful inflation. And Ecuador, which lost more citizens to emigration as a percentage of total population than any nation in the Americas now has a net population inflow. People are “voting with their feet” by remaining in Ecuador or moving to Ecuador. Very few nations can boast of similar achievements, particularly given the drag caused by the Great Recession and then the second Great Recession (and Great Depression in the EU periphery) brought on gratuitously by austerity. Even now, parts of the EU are sliding back into their third recession is six years.

The remainder of the BBC article is simply unintentionally hilarious. This stems from the uncritical acceptance of the statements of Mr. Booney, a purported expert on digital currency. Booney’s concern is that Ecuador may be unable to replicate Bitcoin’s “success.”

“Bitcoin (a global digital currency) has faced huge challenges to get people around the world to use it, and that is a worldwide movement with thousands of developers working on it.”

First, Bitcoin is not a success, except at aiding and abetting a host of transnational crimes. Second, Bitcoin does not have “thousands of developers.” It may be used by thousands of web sites devoted to aiding transnational crime. Third, Bitcoin has been beset by enormous scandals because it attracts criminal “developers” and criminals who wish to steal Bitcoins. Bitcoin “faced huge challenges” because it is at heart a Ponzi scheme that is used overwhelmingly by transnational criminals. Bitcoin is simply a particularly shadowy product of the shadow financial system that blew up the global economy.

9 Responses to The BBC Hates Correa So Much that it cannot Restrain Itself

  1. All the bitcoin hate. Bitcoin is not a currency, it is a commodity; an asset. with strong controls on commodity issuance. Fine. That is all. Sure bitcoin is used in some illegal transactions, but not all transactions are illegal, and not all of those transactions which are illegal are immoral transactions.

    • I don’t think Bitcoin is any sort of threat. At best people should be educated about why it’s not a currency, if they then still dabble in Bitcoins, fine by me. I’d rather they do that instead of speculating on gold which does have some industrial uses.
      I don’t think any criminal justice system needs to be bothered with “Bitcoin theft”. The less governments get involved the better evident it is that the failure of Bitcoin is not due to government intervention.

  2. Totally agree with the tenor of the criticism of the BBC – the Biased Broadcasting Co. They are truly dreadful & Orwellian in their self belief.
    But… a couple of nuances here should be mentioned in the interests of correct MMT understanding.
    Bill makes no distinction as to what currency the Gov debt is held in when comparing debt or debt/GDP levels. This is hugely important. Debt in a sovereign (fiat, free floating) currency issuers own currency has zero (involuntary) default or exchange rate risk & the Gov/Central Bank determine interest rates. Load up on whatever ‘deposits’ (bonds) anyone wants, no problem, ever.
    But Gov debt in a foreign currency… totally different story… so one would be wise to keep levels (way) down. (This is of course the means for economic coups/warfare conducted by the IMF on behalf of global corporate/banking elites – laod the suckers up on dollar debt. Ensure their domestic currency then plummets, causing bankruptcy… then clean up buying firesale assets/natural resources, every ‘rent’ making thing possible.)
    However, since Ecuador is an oil producing country, that changes matters again… Oil is the next best thing to owning the Fed, practically your own US$ printing press… so Ecuador has very little exchange or revenue risk (at least as long as their oil lasts). In fact, revenues from oil – at least by price – are only likely to go up, not down.
    Big thanks to Bill, Randy, Stephanie etc. and all the team for your efforts in educating us all out here in general public land. Be in no doubt you are making a difference! 🙂

  3. Great article as usual,Bill, except for those “Brits” you speak of. The British government does not represent the views of its people, and the BBC is the puppet of the Elites, so also does not represent the views of the Brit in the street.
    Owen Jones has a new book “The Establishment, and How They Get Away with It” which describes in sorry detail how the Elites control the narrative in the UK. Of course, it’s only a pale shadow of your position in the USA, but they are trying hard to catch up!

  4. Bill – I am intrigued by the e-currency initiative, having looked into something similar as a work around for eurozone nations. Not able to find much about it, wondered if you could point me to some sources or contacts, as I would like to highlight it at the upcoming International Post Keynesian conference. For example, I did not know this was part of an attempt to get banking services more widely deployed. Thanks in advance, and keep up the good work,

    Rob

  5. Brian Stobie, have you ever listened to BBC broadcasting? The BBC is a huge organization and, I believe, it represents the views of British citizens better than the government does. There is a vast amount of programming that goes on at the BBC and it is not all run by elites. Listen to it, especially the radio, and you will hear very good programming from world-wide sources.

    http://www.bbc.co.uk/programmes

  6. I second Rob’s interest – I’ve done a bit of research into mobile money-based payments system innovation elsewhere, as well as prior government e-money attempts (like Canada’s Mintchip system), and would love for some greater detail on this initiative than the vague media releases flowing around at the moment. If you find anything and share, please add me to the email!

  7. JEHR,
    As a Brit who has lived here all my life, and approaching state pension age, it would be a miracle if I hadn’t listened/watched the BBC at some time. I do agree that some of the radio output is good.
    However, the editorial line on anything that criticises government is weak at best, and usually just slavishly parrots the party line. especially on the TV news.
    Want to hear about the reasons for not going to war with Iraq, or more recently (God forbid) Mr. Putin?. Want to hear details about the privatisation of the NHS by the present government?.
    Want to hear unbiased coverage of the Scottish independence referendum? Want to hear about 50,000 people demonstrating in London against government austerity policies? Want to read or hear about alternative economic views that oppose the Chancellor of the Exchequer’s Austerity Madness?
    Fuggedaboutit.

  8. Brian, point taken. Our CBC is being defunded to death and we will probably follow the route of least resistance in order to stay alive. Right now, the PM and his politicians rarely appear on CBC when they are invited because they think it is too “lefty” to suit them. But some of the best commentary about our politicians comes from panels on the CBC. Mind you, I also look for news on the Ukraine, ISIS and the financial crisis elsewhere as CBC does often cover alternative or in-depth views on those subjects. Thanks for the reply.