I saw this article about how Ecuador won't be paying interest on foreign debt, because it is "immoral and illegal". The center of the complaint seems to be that they've paid $7 million dollars so far on $4 million of loans, but the principle is untouched. And I thought... well, shit. That sounds like most mortgages. I realize that I surely don't understand much of the financial world, but doesn't it just seem wrong somehow, to pay more than twice your principle in interest, without ever touching the principle? I don't mean wrong for Ecuador, I mean, wrong for a basis of major financing? Obviously, US$4M and US$7M are small change in the international finance universe... but what is going on here? Why did Ecuador ever agree to that? Surely they didn't sign some paper without realizing what the payback terms were? Why does anyone ever agree to that? I can believe a lot of people who want to buy homes sign the paper without reading or understanding, but... is this NORMAL? Will little countries never get ahead (of...what?) because of outrageous loan-sharking?
Someone tell me what the heck, please?