Gun Control Laws Have Failed Latin America

It’s no secret that Latin America is rife with violence. A recent ranking from the Citizen’s Council for Public Security and Criminal Justice(CCSPJP) further illustrates this point with the top 10 most violent cities in the world being exclusively located in Latin America. Additionally, Latin America has the dishonor of having 43 of the 50 most violent urban centers located in the region.
These shocking levels of violence can be attributed to several factors – corruption, failed drug war policies, and the lack of rule of law in the region.
But there is one elephant in the room that is largely ignored in the discussion of crime in Latin America: the stringent gun-control laws present in these countries.
While the previously mentioned factors cannot simply be discounted, the lack of coverage on Latin American gun control policy is rather alarming.
Countries like Brazil, Colombia, Mexico, and Venezuela feature some of the most draconian gun control policies in the region. With crime rates at already high levels, gun control simply makes matters worse for law-abiding citizens fearful of criminals.

This post was published at Ludwig von Mises Institute on August 24, 2017.

As US Crude Exports Soars, Here Are The Biggest Foreign Buyers Of US Oil

Strange things are happening in a world continues to find itself with “low-priced” oil and an unprecedented gasoline glut, the latest of which is an unexpected boon for US fuel makers as Latin American refineries quietly go bust.
As Bloomberg writes, from Brazil’s Petroleo Brasileiro SA to Mexico’s Petroleos Mexicanos, state oil companies have failed to complete nine projects worth at least $36.4 billion that would have supplied 1.2 million barrels of gasoline and diesel daily. U. S. refiners have stepped up to help fill the gap, with exports almost doubling in the past six years, according to the U. S. Energy Information Administration. Falling oil prices, high levels of debt and failure to find partners to help finance the plants are among the reasons cited by Pemex, Costa Rica’s Refinadora Costarricense de Petroleo SA and Colombia’s Ecopetrol SA for postponing their plans. Brazil’s Petrobras has been slowed by the price drop as well as a corruption scandal.
‘Refinery investment plans in the region have really fizzled out over the past year or so,’ Mara Roberts, a BMI Research analyst based in New York, said in an e-mail. ‘Latin America is keen to take in growing U. S. supplies.’ As a result, US exports to the region have been rising steadily and reached a record 1.88 million barrels a day this year. Latin America now accounts for 42 percent of America’s fuel exports, up from 38 percent a decade ago. U. S. fuel output increased 4.1 percent over two years to a record 19.9 million barrels a day in 2015, EIA data show.

This post was published at Zero Hedge on Aug 12, 2016.

Oil Market Rally Masks Big Pitfalls Lurking Ahead

If the oil market needed a theme song for now, it might turn to the one where Taylor Swift nervously sings: ‘Are we out of the woods yet?’
A slump in U. S. production, unexpected cuts in output from Nigeria to Colombia and rising gasoline demand have helped drive a major rally since mid-February. As investors boost their bullish bets, analysts from UBS Group AG to Morgan Stanley and Goldman Sachs Group Inc. see pitfalls ahead.
The global crude glut has spread to diesel and will threaten gasoline after the peak summer driving season. Unplanned outages may be resolved in coming months, boosting supplies as Iran seeks to regain market share andSaudi Arabia defends its turf. Demand is ‘underwhelming’ in emerging markets, says Morgan Stanley. Goldman Sachs warns U. S. output may rebound if prices rally too quickly.
‘Oil fundamentals are improving but the market is still apprehensive,’ said Ehsan Ul-Haq, a senior consultant at KBC Advanced Technologies in London. ‘Only when refiners start complaining about the lack of supply will we see a sustainable recovery.’

This post was published at David Stockmans Contra Corner on May 6, 2016.

When Wall Street Made A Country – -The Rise Of Panama

This goes back a long way. The Panamanian state was originally created to function on behalf of the rich and self-seeking of this world – or rather their antecedents in America – when the 20th century was barely born.
Panama was created by the United States for purely selfish commercial reasons, right on that historical hinge between the imminent demise of Britain as the great global empire, and the rise of the new American imperium.
The writer Ken Silverstein put it with estimable simplicity in an article for Vice magazine two years ago: ‘In 1903, the administration of Theodore Roosevelt created the country after bullying Colombia into handing over what was then the province of Panama. Roosevelt acted at the behest of various banking groups, among them JP Morgan & Co, which was appointed as the country’s ‘fiscal agent’ in charge of managing $10m in aid that the US had rushed down to the new nation.’
The reason, of course, was to gain access to, and control of, the canal across the Panamanian isthmus that would open in 1914 to connect the world’s two great oceans, and the commerce that sailed them.

This post was published at David Stockmans Contra Corner on April 11, 2016.

Latin America – Seven Ugly Sisters In Deep Political Trouble

Get beyond endless Latin American headlines burning column inches and you come to far broader strategic conclusion: The seven ‘ugly Latino sisters’, namely Brazil, Venezuela, Ecuador, Bolivia, Colombia, Mexico and Argentina are all deep political trouble from collapsed benchmark prices. It’s merely a case of who’s in more advanced states of political decay where left leaning governments’ can’t hang on much longer vs. those trying to buy a bit of time with more ‘centrist’ positions. In either case, it’s going to be a classic example of too little too late where the seven ugly sisters have committed at leastseven deadly sins when it comes to resource mismanagement over the past decade. This isn’t about whether crisis can be avoided, but how bad the impacts will be. Another ‘lost Latino decade’ beckons.
The ugliest twins are obviously Brazil and Venezuela right now. We firmly expect Rousseff to be impeached next month on the back of endless corruption scandals, and the drastically ill-judged return of Lula that poured far more oil on corruption cover up flames. Watch for Michel Temer to take over the reins of a coalition PMDB government, busily negotiating posts behind closed doors with other players to tee up a formal Worker’s Party split to form a caretaker government through to 2018. How much Temer can get done depends on how far the outstanding ‘car wash’ scandal still rubs off on PMDB factions for major economic reforms, where the rot still runs pretty deep. Initial rhetoric (and inevitable market lifts) on supposed ‘structural reforms’ and far broader liberalisation measures remain unlikely to play through. Although it’s possible Petrobras might push through 2017 licencing rounds purely for political appearances, it’s not going to deliver tangible results in current price environments. Dig just ‘under the salt’, and Petrobras leverage will remain high; local content even higher. Until Brazil can properly clear its electoral decks in 2018 Mr. Temer is going to have a very limited mandate. If anything, his core challenge is trying to make sure his caretaker outfit doesn’t end up ‘washed out’ day one, given Temer is by no means beyond political reproach, with the PMDB basically as corrupt as the ruling PT. The smart move for Brazil would actually be calling fresh elections with the TSE (electoral authority) invalidating the entire Rousseff-Temer 2014 ticket to put a line under what currently shapes up to be the worst commodity driven economic crash Brazil has ever experienced. Regrettably, Brazilian politics has nothing to do with national interests at this stage, and everything to do with narrow self-preservation societies.

This post was published at Zero Hedge on 03/26/2016.

The oil Cartel’s End Is Nigh – OPEC May Split At The December Meeting

As oil prices are now hovering around $45 per barrel, the entire oil and gas industry is looking forward to the next OPEC meeting, due to be held on December 4 this year in Vienna. On October 14, non- OPEC member Mexicoconfirmed its participation in a technical meeting organized by the cartel on October 21 in Vienna to which seven other non-OPEC members were also invited.
‘We are going with a technical delegation to receive information and exchange it with other producers. But Mexico will not take part in any reduction in production volume,’ said Mexico’s Energy Minister Pedro Joaquin Coldwell. The meeting was held last Wednesday and was attended by representatives of five countries: Russia, Brazil, Kazakhstan, Colombia and Mexico. The main agenda of the meeting was to exchange different market views and create a common strategy in response to the current market conditions and low oil prices.
What exactly happened at the meeting?
Venezuela has been the most vocal OPEC member when it comes to the issue of raising oil prices by altering the cartel’s production levels. During the technical meeting between OPEC and non-OPEC members, Venezuela proposed that OPEC must resume its policy adopted in 1980s of fixing the oil price. It suggested a possible ceiling price of $88 per barrel which would naturally require OPEC to reduce its current production levels. In addition, Venezuela also proposed another technical meeting of this kind to be held during the upcoming Dec 4 meeting.

This post was published at David Stockmans Contra Corner on October 29, 2015.

The Strongest El Nino in Decades Is Going to Mess With Everything

It has choked Singapore with smoke, triggered Pacific typhoonsand left Vietnamese coffee growers staring nervously at dwindling reservoirs. In Africa, cocoa farmers are blaming it for bad harvests, and in the Americas, it has Argentines bracing for lower milk production and Californians believing that rain will finally, mercifully fall.
El Nino is back and in a big way. Its effects are just beginning in much of the world – for the most part, it hasn’t really reached North America – and yet it’s already shaping up potentially as one of the three strongest El Nino patterns since record-keeping began in 1950. It will dominate weather’s many twists and turns through the end of this year and well into next. And it’s causing gyrations in everything from the price of Colombian coffee to the fate of cold-water fish.
Expect ‘major disruptions, widespread droughts and floods,’ Kevin Trenberth, distinguished senior scientist at the National Center for Atmospheric Research in Boulder, Colorado. In principle, with advance warning, El Nino can be managed and prepared for, ‘but without that knowledge, all kinds of mayhem will let loose.’

This post was published at David Stockmans Contra Corner on October 22, 2015.

$5 Trillion EM Debt Bubble Begins To Unwind – – -FX Turmoil Ahead

Borrowers in emerging markets have started to address a $5 trillion mountain of dollar-denominated bonds and loans, reducing their obligations for the first time in seven years in a move that threatens to cut short a budding rally in currencies from Brazil to Malaysia.
Companies in developing nations paid back $38 billion of dollar debt last quarter, $3 billion more than they borrowed in the period and marking the first reduction in net issuance since 2008, according to data compiled by Bloomberg. Demand for greenbacks among borrowers needing the currency to repay debt is contributing to the largest capital outflows in almost three decades.
The borrowing binge, which took off in the wake of the global financial crisis as interest rates tumbled, may now be reversing as economic growth slows, commodity prices fall and lenders demand higher yields. While developing-nation currencies are rebounding from their record lows, analysts surveyed by Bloomberg expect the depreciation trend to resume as dollar debt repayments accelerate.
‘This is a massive event,’ said Stephen Jen, the co-founder of London-based hedge fund SLJ Macro Partners LLP and a former economist at the International Monetary Fund whose bearish call on emerging markets since 2012 has proven prescient. ‘They want to pay down their dollar loans. We are early in the game, there’s pretty intense pressure on emerging markets.’
Currency Rebound
After falling for most of this year, emerging-market assets have gotten a respite in recent weeks as weaker-than-forecast economic data fuels speculation that the Federal Reserve may postpone until next year its first interest rate increase since 2006.
The Indonesian rupiah has led the rally, gaining 8 percent this month, followed by the Colombian peso’s 7 percent advance. A Bloomberg gauge of emerging-market currencies fell 0.4 percent as of 10:26 a.m. in New York, trimming its advance to 4.6 percent since Sept. 28 when it reached an all-time low.

This post was published at David Stockmans Contra Corner on October 17, 2015.

Venezuela is now the most expensive country in the world

Forget Norway. Japan. Iceland. Switzerland. Or any of the other places around the world that are notorious for being painful on the wallet.
Venezuela is now the most expensive country in the world, hands down.
To give you an idea, the cost of a 15-minute taxi ride to the beach yesterday afternoon totaled an eye-popping $158.
(I paid less than that to rent a helicopter in Colombia last week.)
With all of its vast mineral resources, Venezuela should be the most prosperous country in Latin America by far. And it once was.
But years of corruption, incompetence, and central planning have taken their toll.
Normally, when huge companies like Exxon Mobil extract oil out of the ground, they reinvest a portion of their profits back into improving their operations.
They spend money on more infrastructure, technology, and exploration. In short, they invest in the future.
But in Venezuela, guys like Hugo Chavez and his successor Nicolas Maduro spent years funneling oil revenues into idiotic social programs designed to keep themselves in power.
Venezuela did not invest in the future. Now its oil infrastructure is rotting. Production is in serial decline. And the oil price has collapsed to boot.

This post was published at Sovereign Man on October 7, 2015.

KGB-Connected Russian “Gangs” Tried To Sell Nuclear Bombs To ISIS In Moldovan Nightclub, AP Imagines

Back in May, John Cantlie, a journalist held captive by ISIS, laid out the sum of all fears thesis in the group’s English-language online magazine Dabiq. To wit:
Let me throw a hypothetical operation onto the table. The Islamic State has billions of dollars in the bank, so they call on their wilayah in Pakistan to purchase a nuclear device through weapons dealers with links to corrupt officials in the region. The weapon is then transported overland until it makes it to Libya, where the muj?hid?n move it south to Nigeria. Drug shipments from Colombia bound for Europe pass through West Africa, so moving other types of contraband from East to West is just as possible.
The nuke and accompanying mujahideen arrive on the shorelines of South America and are transported through the porous borders of Central America before arriving in Mexico and up to the border with the United States.
From there it’s just a quick hop through a smuggling tunnel and hey presto, they’re mingling with another 12 million ‘illegal’ aliens in America with a nuclear bomb in the trunk of their car.
Ok, got that?

This post was published at Zero Hedge on 10/07/2015.

Still the best-kept secret in the world… but not for long

Growing up in the US I heard the same stories as everyone else about Colombia.
Corruption. Drugs. Kidnapping and ransom. Narcoterrorists. Pablo Escobar.
From the ivory towers in our suburban enclave, it seemed ludicrous why any sane individual would risk life and limb to visit such a dangerous place.
Hollywood drove the point home every chance they had.
When Harrison Ford’s character from the 1994 film Clear and Present Danger went to Colombia, for example, it was a nonstop onslaught of death and destruction.
And maybe that really was the way things were 25 years ago. But the Colombia of today is totally different.
It’s astonishingly safe. Stable. Civilized. Extremely pleasant. It’s gotten noticeably better each time I’ve visited over the last 7 years.
I don’t want to sell you a line of bull and pretend that Colombia is devoid of challenges.
Violent crime still exists, and paramilitary groups still operate in limited capacity in rural areas.
A tourist was killed recently as well… though this strikes me as a hollow criticism given that hardly a month goes by anymore in the US without a mass shooting.
The country risk in Colombia is clearly not zero. But the risk is nowhere near what it used to be… or what people still believe it to be.
Yet even though things are so much better now, the Hollywood reputation from a quarter of a century ago still lingers, which means that the perceived risk is very high.

This post was published at Sovereign Man on October 2, 2015.

Exodus 2015 – – The March Of Capital Fleeing The Emerging Market Accelerates

Traders dumped exchange-traded funds tracking emerging-market stocks at the fastest pace in over a year last quarter amid concerns over the slowdown in China, a selloff in commodities and the prospect of higher interest rates in the U. S.
Investors pulled $6.1 billion from U. S.-traded ETFs that offer exposure to a basket of developing-nation equities in the three months through September, the most since the first quarter of 2014, according to data compiled by Bloomberg. Exchange-traded funds that invest in both emerging-market stocks and debt as well as individual countries saw outflows in 12 out of 13 weeks ending Sept. 25, with losses totaling $12 billion, the data show.
The withdrawals came amid mounting evidence of slowing Chinese economic growth and as the Federal Reserve moved closer to an increase in the near-zero U. S. rates that have supported demand for riskier assets in developing nations. The concerns have roiled emerging markets from Colombia to Kazakhstan and spurred a deepening of the rout in commodities, further dimming sentiment toward countries like Russia and Brazil.
‘When you have all the headwinds emerging markets are facing, it really takes investors with a strong stomach to try to put money to work there,’ David Mazza, head of ETF research at State Street Global Advisers, said by phone in New York. ‘Emerging markets are universally hated, and investors continue to not find a catalyst for a reversal in performance.’

This post was published at David Stockmans Contra Corner on October 1, 2015.

Global Deflation Watch – – -Latin Currencies Tumble On China Growth Fears

Latin American currencies led by the Brazilian real fell to their lowest on record, posting the steepest two-day decline in two years, after Chinese economic data showed the world’s second-biggest economy is slowing.
The Brazilian central bank’s offer of $4 billion in foreign-exchange credit lines wasn’t enough to keep the real from tumbling 2.9 percent to a fresh record low as of 4:40 p.m. in New York. TheChilean peso breached 700 per dollar for the second time in a decade, falling 0.9 percent to 703.88 per dollar. Mexico’s peso slide 1.4 percent to 17.1227 per dollar even after the central bank sold dollars for a third straight day. The Colombian peso has weakened 4.8 percent in the past week, its steepest decline since 2009.
Emerging-market currencies worldwide sold off on the Chinese data, and declines were the biggest in Latin America, where the largest economies are dependent on the Asian nation’s demand for their commodity exports.

This post was published at David Stockmans Contra Corner on September 24, 2015.

Emerging Market Currencies Tumble to Record Low in ‘Violent’ Selloff

Emerging-market currencies are in free fall.
An index of the major developing-nation currencies fell to an all-time low this week, extending its drop over the past year to 19 percent, according to data compiled by Bloomberg going back to 1999. The Russian ruble, Colombia’s peso and the Brazilian real have fallen more than 30 percent over the past year for some of the worst global selloffs.
China’s economic slowdown is pushing downCOMMODITY PRICES, weighing on raw-material exporters from Brazil to Mexico and South Africa. Adding to the pain is the expectation that the Federal Reserve will soon embark on the first interest rate increase since 2006, threatening to lure capital away from developing nations.

This post was published at David Stockmans Contra Corner on July 26, 2015.