Posted on 05 February 2010.
Yesterday’s message Ecuador FARC Thoughts inspired many comments I would like to share.
Plus after the comments, I hope… is a provoking thought on why…
bears get rich… sometimes. Bulls get rich sometimes. Pigs always get slaughtered.
First, the comments on Ecuador FARC & drugs.
Ecuador FARC & Drugs Comment #1: Hi Gary and Merri, Of course Ecuador like most other countries had a ‘drug problem’ simply because drugs are in evidence all over the world. I found less evidence of drug-related stuff in Ecuador than here in inner-city Sydney where drug sales have been prevalent for the the last 30 to 40 years – mixed with a lot of alcoholism at the same time so this makes for a hight crime rate plus the odd racism riot from time to time which in turn makes for interesting anthropological studies as well. The Kooris here “explode” from time to time – thus venting their frustrations – but to their credit – don’t import/export hard drugs to exploit countries like the US. Most Kooris are soft drug users (eg Marijuana etc) and only a few are hard core users/dealers to which quite a few blind eyes are being turned by some in the know. Sad really – many suffer from the activities of a few… Ecuador is lot better than other countries – especially first world countries……
Ecuador FARC & Drugs Comment #2: Gary, Relentless good news, when discussing any area in the world, is misleading and dishonest to those trying to learn about an area in which they may wish to visit or invest and eventually live. Too many promoters would have us believe it’s just a rose garden paradise, but as so many U.S. Country singers have covered, “Along with the sunshine, there’s gotta be a little rain sometime”. Thank you for respecting the need to “keep it balanced”.
I did want to offer a comment to a statement in your recent article regarding “Ecuador drugs, military and FARC”. Your statement was: “Yet my opinion is that this problem with the Farc is minor and strictly limited to remote parts of the Ecuador Colombia Amazon border.” (I underlined the word “strictly” myself for emphasis).
I was in Ecuador in Jan. 09 and focused most of my visit on the central coast (an amazing place for many reasons and I will be back). I based myself in Bahia and explored north and south from there. While sitting out front of my accommodation one perfect evening, enjoying a cervesa with a couple of expats, I was told a story about a recent incident in San Vicente, just a few minutes ferry ride north of Bahia. It seems that two FARC rebels made it this far south and attempted to do the business they do. San Vicente residents identified these two for who they were and, publicly, beat them to death. This is a violent story and I couldn’t imagine standing there and watching it happen; however, it does seem to say a lot about the attitudes in Ecuador (in San Vicente anyway) toward FARC. They were hoping this would send a clear message to FARC that their business is not welcome there.
As we all know, it seems every rule has its exceptions. I thought this was a good opportunity to remind your readers to expect the unexpected and remain aware of your surroundings (without trembling in paranoia) wherever we go in life.
Ecuador FARC & Drugs Comment #3:
Hi Gary, Congratulations! I couldn’t imagine a more thorough debunking of the article. You really pummeled it. Of course there are always those who will keep their noses down in the dirt believing to have sniffed out a conspiracy. But there is nothing you can do about them. I happen to own pigs as you know and though I hear they are quite intelligent, mine, I’m afraid, also just keep rooting around in the garbage, never convinced that somewhere underneath a conspiracy is lurking. The analogy is purely intentional.
Ecuador FARC & Drugs Comment #4:
Hello Gary, You can go to www.snopes.com and locate these rumors or request they be checked out. Good site for debunking stuff like this.
This is a good suggestion I use www.snopes.com a lot. Another site for quick accuracy checks similar to www.snopes.com is www.factcheck.org
Ecuador FARC & Drugs Comment #5:
Hi – I KNEW you would be the guy to cover ALL the bases! Thx for a great report! Hope all is well and NC is getting thru this crazy weather OK!
Ecuador FARC & Drugs Comment #6:
Gary, Here’s my 2 cents worth to the discussion about Ecuador and the FARC:
1) When we were there in 2007, we planned to visit Tulcan to see a famous topiary garden, but were stopped north of Ibarra by the federal police, who strongly suggested we not go because of the danger of guerrilla activity. There had also been a recent kidnapping of foreigners in the area.
2) My workers, who come from Suzcal, not from anywhere near the border, insist that narcotraficantes are either taking over Ecuadorian farms near the border for coca production or chasing out the owners off them if they resist. This, of course, is hearsay.
3) A more interesting (at least to me) issue than the FARC is the rise of criminal armies who are replacing the 37 right-wing militias that Uribe managed to get rid of. Apart from the uncertainty of running for a third term, he has his hands full with the dilemma of either moving to control them (and having to admit his demobilization program has failed despite $5 billion of US anti-narcotic aid) and the hold that the US Congress has put on signing the treaty granting Columbia favored trading status until Uribe demonstrates a successful policy against drug gangs both right and left.
You may remember that the original purpose of the right-wing militias was to protect landowner interests against both peasants and the FARC. Over time, they morphed into drug trafficing and competition with the FARC.
My personal belief is that Uribe is unable to move against the criminal armies because too many members of his government, prominent businesses, and leading families are involved. If so, then Colombia is on its way to becoming Mexico 2.0. There’s so much money to be made that it becomes impossible to trust either the police, the army, the politicians or anyone else.
If you have access to today’s NYT, there an article on the above in the first section.
Personally, I doubt Correa is involved with the FARC: They have little legitimacy left as a populist, left-wing movement. I don’t doubt there are members in his government that support either or both sets of drug traffickers in Colombia. But as for specific fears about the FARC, I would be more worried about groups with deep connections in the political establishment.
Certainly Correa’s politics have led him to some dumb things like his deals with China. (You may remember the 2007 scandal where a chief minister was selling work visas and residency permits to Chinese employees of a company with a major contract in Ecuador). If he was awake, he would know that all over the world, China promises jobs, training, technology and support for local economies, then brings its own staff and stuff. If he imagines that China will be a better environmental steward in the Amazonian oil fields than Phillips and Texaco were, he’s in for a rude awakening.
I agree with this reader that the border areas of Ecuador should be avoided. We recommend that delegates do not visit Tulcan north of Ibarra nor Esmeraldas.
Ecuador FARC & Drugs Comment #7:
I follow your site with interest, having my own love affair with Cuenca while still living retired in New Mexico. Thought you should see this from today’s Los Angeles Times…gives quite a lot of detail on recent drug-related issues in Ecuador.
Perhaps someday we will cross paths down there.
That article in the LA Times is worth a read and begins:
Cocaine trafficking keeps Ecuador anti-drug authorities busy
Seizures set a record last year for the country, which is growing in importance as a hub for shipments to the U.S. and Europe.
An Ecuadorean police officer guards containers of cocaine-laced molasses at a news conference in Guayaquil last May. Reporting from Guayaquil, Ecuador – The beat cop quickly discovered why the three men at the entrance to the storage yard had bolted as he pulled up in his patrol car.
Inside the walled enclosure he saw 3 tons of cocaine and a large-scale processing lab, evidence of Ecuador’s growing importance as a trafficking hub for illegal drugs.
The mid-December raid in this port city’s Bastion Popular industrial zone capped a record year for Ecuador’s counter-narcotics police. They seized 63 tons of cocaine, twice as much as in 2008, and destroyed seven drug-processing laboratories, up from two.
Thank you readers for your comments.
Now, here… I hope… is a provoking thought about pigs.
The comments above about the intelligence of pigs reminded me of the aphorism Bears get rich… some times. Bulls get rich sometimes. Pigs always get slaughtered.
I began thinking about La Selva Jungle Lodge which has been owned and operated by Eric and Maggie Schwartz for 25 years. Imagine what vision it took that long ago to invest heavily in a lodge deep in the Amazon… hours from anything. Ecuador was very primitive 25 years ago compared to now.
Yet despite plenty of turmoil… including a war with Peru in the Amazon… they have built an incredible business. La Selva Lodge is an inspirational place and…
This thought conjured up two ideas… the first about the pig farm at La Selva Lodge.
Eric and Maggie have not only stuck with this project through thick and thin, and profited… they have come up with some aware winning ideas… like their pig farm.
Here is an excerpt from the La Selva Lodge website.
The Pig Farm – La Selva Jungle Lodge
Our indigenous neighbors from the community of Pilche raise no animals which is very good for La Selva for it means no forest needs to be cut for grazing or to plant crops for fodder.
Occasionally they have taken to hunting over the years as it is both instinctual and satisfies a need for protein. We wanted to come up with a viable solution to this pressure, however slight on our ecosystem and so devised the following proposal that you will find below as it was presented and won the 2007 Ecotourism Award.
To use food that would be wasted ; table scraps left uneaten by the tourists, parings not used in cooking, fruits and vegetables past their prime for usage as food to guests as fodder for a pig farm.
The pigs when grown from this ample diet are given to our indigenous neighbors.
1. In return for the pigs (protein) we eliminate hunting in the area since their dietary needs for protein have been satisfied and the agreement under which the pigs are given to the natives has been settled by contract.
2. Fertilizer is created from the pigs from which a tropical fruit will eventually be grown in an area of land on our property that was cleared many years ago and serves no use and is not big enough for a reforestation effort.
For over 20 years La Selva Jungle Lodge has made agreements with incentives to our indigenous neighbors to dissuade them from hunting and also from having domesticated animals larger than chickens (so as not to destroy the forest for grazing land.) But as their population has grown and their taste for wild meat has not abated- while we have had much success in this area- the problem is far from solved.
Tourists come to eat three times a day, as does a staff of about thirty. This provides enough food waste per day to fill three 55 gallon drums which all these years has been composted with the byproduct only occasionally used; especially in the butterfly farm. This amount of food waste will feed a large amount of pigs, bought in ascending size and to be grown and gifted to our indigenous neighbors at regular intervals. We built a pig farm, use tourist food scraps for pig feed, gift the pigs to the natives and by so doing save more rainforest animals and plants.
The Pig Farm is a simple well-drained cement floor located near the same spot as the former compost heap with ample space, an attendant, and a water hose as needed. It is covered with a kind of rebar cage to ward off jaguars.
What a great idea and this exemplifies the fact that international investments can be enhanced by value… because pigs want perfect.
Eric and Maggie instead recognized problems… took risks… worked hard and created a paradise within a paradise and continue to keep the area a paradise.
You can reach Eric Schwartz with questions about La Selva Lodge at firstname.lastname@example.org
Click here for La Selva Lodge’s website
Perfect rarely exists and the reality is that fear creates value.
Many readers write to me with their fears and seem to be looking for a perfect, easy to attain, low cost… totally safe… place where there is unlimited opportunity and where they will not have a worry in the world.
I have found and lived in some great places… Gresham Oregon, Petaluma, California, Hong Kong, London, Nailsworth Gloucestershire, Geneva Switzerland, Naples Florida, Cabarete Dominican Republic, Douglas Isle of Man, Lansing and Murphy North Carolina, Quito, Latacunga, Calacali, San Clemente, and Cotacachi Ecuador, Mt. Dora Florida.
These are all wonderful places… but I have not yet found Shangri-La.
Sometime back, a sharp reader noted that Merri and I stepped up our international investments in Ecuador real estate investing exactly at the same time the new left sounding President Correa was elected.
He missed the fact that I had stepped up real estate tours when the country crashed in 2000 as well.
This reader sent me an article about Venezuela.
Here are excerpts from this article about international investments entitled “Rich Venezuelans heading to Florida.”
“They call it ‘Plan B’. As Venezuelan President Hugo Chavez further tightens control of the South American country’s economy, wealthy Venezuelans who once thought they could live with his socialist edicts are turning to their backup plan — flight to the United States, particularly Florida.
“First the people who come are the businessmen in the highest circles, then the losing politicians, then the military and then the professionals,” said Miami-based immigration attorney Oscar Levin. “You’re beginning to see the (Venezuelan) professionals.”
“This latest and largest potential group of emigrants say they fear the effect Chavez’s socialist policies will have on the economy and on proposed educational reforms that could mirror the ideologically imbued education of Chavez ally and mentor, Cuba’s Fidel Castro.
I share this story for several reasons. First, I want anyone considering international investments or residence in Ecuador to understand what could happen if things go wrong.
Second, I want the same readers who are interested in international investments to note what is happening to Chavez and the Venezuelan currency.
Third, I want readers making international investments to understand the value of fear.
To understand fear generated value better… remember that my career started selling mutual funds and living in places where terror was taken for granted. I quickly learned that fear creates value. This simple fact should seem obvious, but is easy to forget. Arriving in Hong Kong for my first time in 1968 there were communist riots and bombs being set off in the streets. The first day I arrived a motorcycle policeman had his leg blown off by a terrorist bomb. The Chinese army was massed on the border and there were continual talks about an invasion. Hong Kong businessmen were fleeing. Real estate was literally being given away.
Life went on. We all figured out the fastest route to the British and American war ships in the harbor for a quick exit in case the Chinese decided to invade. We watched out for boxes in the street that could be bombs. Then we just got busy with life. I rented a huge apartment on Shouson Hill Road overlooking the ocean and the village of Aberdeen. The owner wanted to sell this block of apartments but I had no money or experience then. He was so desperate that he made a deal. Instead of paying him $250 a month rent I invested $250 into mutual funds for him.
So how much value did that fear create? I decided to look see and checked out equivalent apartments for rent on the same Shouson Hill Road in Hong Kong now. Here is what I found that apartments which ran $250 a month to rent then cost now: The ad said Features:
Size: 3000 – 3600 square feet
Rental Costs (approx. per month): HK$ 130,000 – 140,000 (US $16,667 – $17,949)
So rent jumped from $250 to $17,949 a month. Not bad if you are the owner. I was too young then to understand the value of fear and missed that opportunity. Now I know better.
Not all the profits in Hong Kong were caused by fear. Much of it was.
Those who made heavy investments in Hong Kong during that time of fear made huge fortunes. Had I understood the value of fear in the late 60s and early 70s, I could have made tens, even hundreds of millions of extra dollars.
In Hong Kong’s case there was fear that politics would go wrong. They did not and this pushed the value of HK international investments through the roof! Yet even when politics do go wrong investors can do well.
Take international investments in Chile as an example. This country went through one of the worst imaginable political scenarios beginning in 1973 when Pinochet led a coup d’état deposing democracy and using military power declared himself president and remained in power 17 years. The global press did not write as much negative news then because this dictatorship was against communism and this had the support of the United States. Hundreds, maybe thousands of dissidents were killed. Even more tortured. Yet those who invested there made fortunes.
In the early 80s, a really nice house in Santiago’s fashionable suburbs was worth about $25,000. Now the same house will be worth well over $1,000,000. Real estate throughout Chile has appreciated enormously over these years.
No one likes uncertainty. But there is uncertainty everywhere. As populations grow, as the rich and the poor become more divided, it becomes impossible to have real control anywhere.
If we are faced with change everywhere, there is a logic to investing in places where there is enough fear to at least create a nice risk premium.
Ecuador offers special value in my opinion. There is fear internally, but as an outsider I see this as a nation of sweet, pacific people. This country was formed by a combining of many cultures and has always been adept at forming a consensus. Democracy is strong. The military has refused on numerous occasions to become involved in political affairs and the population has shown itself to be adverse to violence.
Chances here are that whatever political change takes place, it will be calm. If I am wrong, that’s why we get extra profit potential to take the risk.
Here are a few of the properties we’ll see in our February and March 2010 Imbabura real estate tour.
Studio condo. Huge balcony. Some of the best views in town. $49,000.
Yellow townhouse. Recently completed. Just off leather street behind San Francisco park. 3 bedrooms, 2 1/2 baths, great rooftop terrace, all very
good materials and finishing, $55,000.
Three bedroom condo. 2.5 bathrooms…hardwood cabinets and closets… furnished. $59,000.
San Miguel house. 3 bedrooms, 2 full baths, office, inside and outside fireplace, fountain, flowers. Great condition. Owner has the lot next door
and is building another place. $104,000.
We hope to serve you on our 2010 tours.
Join Merri and me plus nine other speakers and contacts this February at a seminar that shares ways to invest, do business and live in Ecuador or globally February 11-14 at Quantum Wealth -International Investing & Business Made EZ, Mt. Dora, Fl.
You can also come on with us to Ecuador.
February 15-16 Travel to Quito and tour Quito
February 17 Travel Quito to Manta
February 18-19 Manta & Mid Coast Real Estate Tour
February 20 Travel Manta to Cotacachi
February 21-22 North Andes, Imbabura & Cotacachi Real Estate Tour
February 23-24 Quito & Mindo Real Estate Tour
February 25 Travel Quito Cuenca
February 26-27 Cuenca Real Estate Tour
Or join us in March 2010
March 11-14 Super Thinking + Spanish Course, Mt. Dora, Fl.
March 15 Travel to Quito
March 16 Travel Quito Cotacachi
March 17-18 North Andes, Imbabura & Cotacachi Real Estate Tour
March 19-20 Cotacachi Shamanic Tour
March 21 Travel Cotacachi to Manta
March 22-23 Manta & Mid Coast Real Estate Tour
March 24 Travel Manta to Cuenca
March 25-26 Cuenca Real Estate Tour
March 27 Travel Cuenca to Salinas
Mar. 28-29 Salinas & South Coast Real Estate Tour
The Ecuador airfare war makes it cheaper to get to Ecuador than ever before… and there is still time to enjoy great Ecuador tour savings.
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
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Even Better. Greater Savings. Our 2010 International Club membership allows you and a guest to attend as many of the 51 courses and tours we’ll sponsor and conduct in 2010 (fees would be $40,947 for all these courses individually) is only $3,500.
If you join the International Club, the entrance fee for 2010 is $3,500. Your attendance fees at all courses will be waived. You and a guest of you choice
can attend courses worth $40,947.You can calculate the savings as our schedule of all 2010 courses here.