One Way Or Another – Venezuela Will Send Oil Prices Up

In a desperate bid to survive its economic meltdown, Venezuela is lobbying other OPEC members to agree to steeper oil production cuts, a move that would likely lead to higher oil prices.
Venezuelan officials have reached out to their counterparts in Iran, Russia and Saudi Arabia to press them on more collective action, according to Argus Media. If there was enough interest, the next step would be an ‘extraordinary meeting,’ which would weigh the option of cutting deeper.
The rumors about deeper OPEC cuts have been floating around since June, when oil prices collapsed into the low-$40s. The markets have grown deeply pessimistic about the health of the oil market, and doubt the OPEC cuts will balance the market by the end of the compliance period in March 2018.
But the behind-the-scenes effort from Venezuelan officials is notable, if only because the South American OPEC members was one of the earliest and most aggressive supporters of the original deal to reduce output. In 2016, for months the more powerful members of the cartel rebuffed Venezuelan pleas, but in the end they agreed to reductions in November after oil prices continued to wallow below $50 per barrel.

This post was published at Zero Hedge on Jul 19, 2017.

Latin America’s Pink Tide Crashes on the Rocks

Ten years ago, South America was witnessing the rise of what came to be known as the “pink tide.” Characterized by an allegedly kinder and softer version of socialism than the “red” communism of Castro’s Cuba, the pink tide had begun with the election of Hugo Chavez in Venezuela in 1998, followed by the election of Lula da Silva in Brazil in 2002, and followed by the rise of the Kirchners in Argentina in 2003. The tide continued to roll in with the election of Evo Morales in Bolivia in 2006, and Rafael Correa’s election in Ecuador in 2007.
As these new leftist candidates gained traction, their success was said to herald a new era of leftist politics in South America that would bring to an end the “neoliberal” consensus and impose a new, more humane economics on Latin American society.
Eighteen years after Hugo Chavez’s inauguration, things haven’t gone quite as planned.
The economy of Venezuela is in seemingly terminal decline with riots, shortages, and enforced slave laborimposed in an attempt to force more production out of the population. Meanwhile, the economies of Brazil and Argentina – while not comparable to Venezuela – are among the worst in Latin America, with Brazil heading for its its worst depression since 1901.
As economies worsened, corruption and authoritarian tactics worsened as well. Venezuelans have gotten the worst of it with citizens groaning under the weight of a police state that shuts down small business and persecutes even the smallest entrepreneurs for alleged economic “crimes” such as being a “class traitor.” In her final years, Kristina Kirchner became increasingly autocratic and paranoid, going so far as to prosecute and impose fines on economists who made economic forecasts the Argentinian state found to be be unflattering. Meanwhile in Brazil, corruption reached new heights as President Rousseff – the pink-tide successor to da Silva – attempted to save the economy and her political career by showering her political allies with “stimulus” cash.

This post was published at Ludwig von Mises Institute on Sept 8, 2016.

Brazil’s Lost Decade: We Must Free Our Economy

It was a lost decade for Latin America. Years of populist governments combined with a commodity boom turned out to be our oil curse, our Dutch Disease. This disastrous mix made bad public policies look like temporary successes, pushing developing countries to an unsustainable path. The collectivist ideology monopolized the debate for more than 10 years, and now that the natural resource party is over, the harm of these policies have become clearer: deep economic crisis generated by a utopia whose greatest achievement was turning toilet paper into a rare-earth product.
Populist and authoritarian South American regimes have set up government bureaucracies aimed at pleasing special interest groups that provide political support while tirelessly harming the population as a whole. These groups are divided into several small groups with special rights and privileges: judges, civil servants, members of parliament, friendly businessmen. These factions are getting their more-than-fair share while the unprivileged citizen foots the bill.
Latin American politicians played it very well during these favorable times. Cronyism and populism greatly benefited some chosen groups, while the harms were diffused enough throughout the whole country and difficult to measure during favorable economic winds. Brazil is just the biggest and clearest example of that.

This post was published at Ludwig von Mises Institute on July 21, 2016.

Memorial Day And The Abolition Of Historical Memory

We might as well get rid of Memorial Day, for all the good it does us. Originally ‘Decoration Day,’ the last Monday in May has been the designated time for us to remember the war dead and honor their sacrifice – while, perhaps, taking in the lessons of the many conflicts that have marked our history as a free nation. In line with the modern trend of universal trivialization, however, the holiday has been paganized to mark the beginning of summer, when we get out the barbecue grill and have the neighbors over for hamburgers and beer. As for contemplating the meaning of the day in the context of our current and recent wars, that is left to those few pundits who pay attention to foreign policy issues, or else to writers of paeans to the ‘Greatest Generation’ – World War II being the only modern war our panegyrists deign to recall, since it is relatively untouched by the ravages of historical revisionism.
Indeed, as far as our wars are concerned, the very concept of historical memory has vanished from the post-9/11 world. It seems the earth was born anew on September 11, 2001, and only ragged remnants of our mystified past – mostly from World War II and the Civil War – survived the purge. In the new version our victories are exaggerated and glorified, while our defeats – e.g. Vietnam, Korea, our nasty little covert wars in Central and South America – are not even mentioned, let alone considered in depth.
The abolition of historical memory is one of the worst aspects of modernity: it is certainly the most depressing. For the modern man, it’s an effort to recall what happened last week, never mind the last century. The news cycle spins madly and ever-faster, and the result is that we are lost in the blur of Now: for all intents and purposes, we are a people without a history, who recall past events – if we remember them at all – as one would summon a vague and confusing dream.

This post was published at David Stockmans Contra Corner by Justin Raimondo ‘ May 30, 2016.

How Deadbeat Argentina Sold $16.5 Billion Of Junk Bonds – -The Mindless Scramble For Yield

Debt investors should be a little nervous that Argentina received such a warm welcome back to the world’s debt market this week.
The South American country, which was returning to global capital markets for the first time since its 2001 default, easily sold $16.5 billion of bonds, the biggest one-day issuance of a developing nation on record. It could’ve probably sold twice that amount. It certainly got good rates, which were lower than similarly rated debt.
The sale was so successful that other developing nations are lining up to get a piece of the frenzied investor interest.
Here’s the problem: A lot of this demand is being driven by a broad-based desire for higher-yielding sovereign debt without much analysis about the specific countries seeking money. Investors who measure their performance relative to benchmark indexes bought Argentina’s bonds in anticipation of their inclusion in those gauges, according to a Bloomberg News article by Carolina Millan and Katia Porzecanski.
‘If you get it wrong, that’s a huge performance gap,’ Jean-Dominique Butikofer said in the article. ‘It’s like poker. Sometimes you have to pay up, even if you think you might lose,’ said Butikofer, who oversees $3 billion in debt as head of emerging markets at Voya Investment Management in Atlanta.

This post was published at David Stockmans Contra Corner on April 21, 2016.

Verge Of Revolution: The Story You Aren’t Being Told About The Brazilian Uprising

As online publications have hailed the major protests overtaking the streets of Brazil at the outset of an apparent political revolution, few discuss the problems that have been brewing for decades in South America’s largest nation.
While Brazilians are angry and tired of their economic hardships, they are also incensed at the country’s history of corruption, which now includes a massive presidential scandal carried out by politicians and lobbyists during the current and previous administrations. This misconduct has given residents of all walks of life enough incentive to take their demands to the streets.
But are the politicians listening?
The History of Brazil is a History of Corruption
Local sociologists often tout Brazil’s corruption problem as a ‘genetic disposition’ to crookedness. But late economist Ludwig von Mises disagreed. In Human Action, the famed economist claimed that corruption is simply a consequence of government’s heavy intervention in all public matters. ‘Corruption is a regular effect of interventionism,’ he wrote – not the root of a country’s woes.
As Brazilian newspapers and talking heads tend to focus on corruption scandals as the root of the political and economic issues the country faces, they are, in fact, some of the consequences of heavy government intervention – not the foundation of the nation’s ongoing problems.
Between 1930 and 1945, the country was under the rule of the populist tyrant Getlio Vargas, whose rise as a dictator was also tied to a series of corruption scandals, political persecution, and oppression. Nicknamed ‘the Father of the Poor,’ Vargas and his administration used images of hope and harmony to sell the leader as the country’s grassroots hero.

This post was published at Zero Hedge on 04/01/2016.

Canary On Mansion Row – -Luxury Real Estate Hits Air Pocket

The six-bedroom mansion in the shadow of Southern California’s Sierra Madre Mountains has lime trees and a swimming pool, tennis courts and a sauna – the kind of place that would have sold quickly just a year ago, according to real estate agent Kanney Zhang.
Not now.
Zhang is shopping it for a discounted $3.68 million, but nobody’s biting. Her clients, a couple from China, are getting anxious. They’re the kind of well-heeled international investors who fueled a four-year luxury real estate boom that helped pull America out of its worst housing slump since the 1930s. Now the couple is reeling from the selloff in the Chinese stock market and looking to raise cash to shore up finances.
Across the U. S., the story is much the same. The world’s economic woes – from China to Russia to South America – are damping sales in the high-end real estate market. Haywire overseas stock markets and dropping currency values caused in part by plummeting oil prices are dulling demand for mansions, penthouses and winter escapes.
‘There’s volatility in China and Russia and there’s the oil issue in the Middle East – I have no doubt there’s an impact overall on the market,’ said Dan Conn, chief executive officer of Christie’s International Real Estate, the luxury-property brand of the auction house. ‘You’re not going to see material price increases in most markets.’

This post was published at David Stockmans Contra Corner on January 26, 2016.

The Inescapable Trap of the ‘Dollar Short’ – – – Brazil Edition

For bond ratings agencies, finding a bottom is pretty much their job. In other words, they are supposed to map out and understand, as best as may be possible through regressions and equations, the forces that might define a worst case. By direct implication, a worst case probability is determined by at least some ray of hope, some perhaps buried light at the end of a tunnel.
Brazil has been downgraded rather regularly in the past few months. On December 16, Fitch downgraded the country’s sovereign debt to junk, BB with a negative outlook. Earlier in September, S&P had already cut its ratings on Brazil to junk, the first to effectively unwind what Brazil’s rapid rise in the 2000′s had seemingly delivered: investment grade status achieved notably in 2008 and more than that, recognition of economic and financial maturation. The events of 2015 tellingly no longer just threaten to unwind the progress, they are actively exposing the fable behind it all along.
Not be left out, Moody’s on December 9 placed Brazil on ratings watch for its own downgrade undoubtedly to junk, presenting the South American former powerhouse a glimpse of the full ratings trifecta. The reasoning was and is entirely simple; nobody can see a bottom.
Fiscal and economic activity indicators continue to sharply deteriorate with no clear sign of when they will bottom out. Rapidly and materially worsening macroeconomic conditions are leading Moody’s to reevaluate the extent to which the fiscal and economic performance will conform to the assumptions supporting Brazil’s rating at Baa3. The likelihood of a turnaround in Brazil’s economic and fiscal performance now appears unlikely in 2016, and the key assumptions underlying our Baa3 rating – a return to GDP growth of around 2% and a primary surpluses [sic] of a similar magnitude beyond 2016 – also appear to be at risk.
What Brazil is facing right now is in almost every way worse than the Great Recession. Already there are comparisons inside Brazil to the Great Depression. It may not be yet that far along, but everything is continuing month after month in that direction which can only leave observers wondering when.

This post was published at David Stockmans Contra Corner on December 30, 2015.

It’s So Bad in Brazil That Olympians Will Have to Pay for Their Own AC

The Brazilian economic crisis has finally hit the 2016 Olympics. Following a new round of cost-cutting by the Rio 2016 organizers, athletes will be asked to pay for the air conditioning in their dorm rooms. Stadium backdrops will be stripped to their bare essentials. Fancy cars and gourmet food for VIPs are out.
‘The goal here is to organize games without public funding and to organize games that make sense from an economic point of view,’ Rio 2016 spokesman Mario Andrada said in an interview.
That economic focus has changed radically in the six years since Rio was awarded the Games – South America’s first. At the time, Brazil’s government pledged $700 million toward any budgetary overrun. Then the economy tanked. Unemployment has soared, and the local currency, the real, has lost one-third of its value against the dollar in the last year.
Now, with costs that ran up to 2 billion reais ($520 million) over budget and the public commitment in doubt, the organizers must stick firmly to the 7.4 billion reais they expect to earn from sponsorships, ticket sales, and a grant from the International Olympic Committee. Final decisions on what to pare back and how much should be finalized by next week, Andrada said.
By the time the Games begin, the committee plans to have 500 fewer paid staff than the 5,000 it originally expected. The deepest cuts will probably come from operational areas like catering, transportation and cleaning services.
Shifting the cost for air conditioning and other amenities from the host city to each nation’s Olympic committee – or to the athletes themselves – is a big deal, said Nick Symmonds, a two-time Olympic runner.

This post was published at David Stockmans Contra Corner on December 4, 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.

Uruguay Does Unthinkable, Rejects Global Corporatocracy

Often referred to as the Switzerland of South America, Uruguay is long accustomed to doing things its own way. It was the first nation in Latin America to establish a welfare state. It also has an unusually large middle class for the region and unlike its giant neighbors to the north and west, Brazil and Argentina, is largely free of serious income inequality.
Two years ago, during Jos Mujica’s presidency, Uruguay became the first nation to legalize marijuana in Latin America, a continent that is being ripped apart by drug trafficking and its associated violence and corruption of state institutions.
Now Uruguay has done something that no other semi-aligned nation on this planet has dared to do: it has rejected the advances of the global corporatocracy.
The Treaty That Must Not Be Named
Earlier this month Uruguay’s government decided to end its participation in the secret negotiations of the Trade in Services Agreement (TISA). After months of intense pressure led by unions and other grassroots movements that culminated in a national general strike on the issue – the first of its kind around the globe – the Uruguayan President Tabare Vazquez bowed to public opinion and left the US-led trade agreement.
Despite – or more likely because of – its symbolic importance, Uruguay’s historic decision has been met by a wall of silence. Beyond the country’s borders, mainstream media has refused to cover the story.

This post was published at Wolf Street by Don Quijones – September 22, 2015.

China Fracture Alert: Volkswagen’s First Half Sales Drop For First Time Since 2005

July 20, 2015
Volkswagen AG posted its first decline in Chinese deliveries in 10 years after six-month sales fell because of the slowing economy, as once-hot emerging markets become a drag on the world’s second-largest automaker.
VW’s deliveries in China, its largest market, dropped 3.9 percent to 1.74 million vehicles in the period, the company said in a statement. First-half sales in China last fell in 2005, when deliveries slumped 14 percent.
VW also struggled in Russia, where sales plunged 41 percent, while the German automaker’s Brazilian demand tumbled 30 percent. Globally, VW’s deliveries slipped 0.5 percent to 5.04 million cars and trucks.
‘The brand in particular is a very sedan-centric fleet in an environment where there is this big switch to sport utility vehicles’ ‘Developments in South America and Russia remain tense, as do conditions in China, where growth on the overall market has been shrinking steadily,’ Christian Klingler, Volkswagen’s sales chief, said in the statement.

This post was published at David Stockmans Contra Corner By Bloomberg Business /.

Rigging Soccer Is Good For Jail, But Banks/Health Care….

The hypocrisy is amusing…. and disturbing.
A 47-count indictment was unsealed early this morning in federal court in Brooklyn, New York, charging 14 defendants with racketeering, wire fraud and money laundering conspiracies, among other offenses, in connection with the defendants’ participation in a 24-year scheme to enrich themselves through the corruption of international soccer. The guilty pleas of four individual defendants and two corporate defendants were also unsealed today.
The defendants charged in the indictment include high-ranking officials of the Fdration Internationale de Football Association (FIFA), the organization responsible for the regulation and promotion of soccer worldwide, as well as leading officials of other soccer governing bodies that operate under the FIFA umbrella. Jeffrey Webb and Jack Warner – the current and former presidents of CONCACAF, the continental confederation under FIFA headquartered in the United States – are among the soccer officials charged with racketeering and bribery offenses. The defendants also include U. S. and South American sports marketing executives who are alleged to have systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.

This post was published at Market-Ticker on 2015-05-27.

FIFA “Rampant” Corruption Exposed Following DOJ Indictment, 14 Arrested In Swiss Hotel – FBI/DoJ Press Conference Live Feed

Nine FIFA Officials and Five Corporate Executives Indicted for Racketeering Conspiracy and Corruption — Justice Department (@TheJusticeDept) May 27, 2015

US Justice Department and FBI comments on the FIFA Investigation
That FIFA has been a hotbed of corruption, shady backroom dealings and outright crime for years, has been known to anyone with even a passing interest in football. Which is why we were surprised to learn this morning that none other than the US Attorney General, seemingly content with all the wristslaps handed out to criminal US foreign banks (and subsequent SEC waivers) gave FIFA the red card in a charge detailing “rampant” corruption in international soccer hours after 14 officials were arrested on accusations of a 24-year scheme to enrich themselves through FIFA, whose office was searched in a series of dawn raids in Zurich.
The US charge was announced alongside of a Swiss criminal probe related to the controversial 2010 award of the 2018 and 2022 World Cups to Russia and Qatar, respectively, hours after seven soccer officials were arrested and 14 indicted in Zurich, concurrent with a raid on the soccer body’s hilltop office in Zurich. The case involves bribes “totaling more than US$ 100 million” linked to commercial deals dating back to the 1990s for soccer tournaments in the United States and Latin America, the Swiss Federal Office of Justice said in a statement.
The U. S. Department of Justice said in a statement that two current FIFA vice presidents were among those arrested, Jeffrey Webb of the Cayman Islands and Eugenio Figueredo of Uruguay. The others are Eduardo Li of Costa Rica, Julio Rocha of Nicaragua, Costas Takkas of Britain, Rafael Esquivel of Venezuela and Jose Maria Marin of Brazil. All seven are connected with the regional confederations of North and South America and face up to 20 years in prison if convicted of racketeering.

This post was published at Zero Hedge on 05/27/2015.

Downturn in South America Mauls Spanish Companies, Threatens Spain’s ‘Recovery’

As Spain gears up for municipal elections this Sunday, the prospects for the governing People’s Party (PP) are looking increasingly bleak. Times have changed dramatically: four years ago the party rode a wave of popular anger with the ‘socialist’ government’s disastrous handling of the financial crisis to win a landslide victory in the general elections.
Now, Rajoy’s government is mired in myriad corruption scandals and the PP will be lucky to hold on to half of its seats in the next general elections, to be held toward the end of this year. Just how bad things could get for the PP will depend largely on how the economy fares during the lead up to the elections. And that will depend on forces not only at home and in Europe, but also in Latin America, a region that in recent years has provided huge bonanzas for Spanish companies and investors. But now the good times are coming to an end.
A Rapid Slow Down
According to the IMF’s latest growth forecast, the region’s economy will grow by a meager 0.8% in 2015. Put simply, things are slowing, and fast. In 2010, Latin American growth clocked in at 6.1%; by 2011, it had fallen to 4.9%; in 2012, 3.1%; in 2013, 2.9%; and in 2014, 1.3%. You get the picture.

This post was published at Wolf Street by Don Quijones ‘ May 23, 2015.

Inflation over 270 years: It is hard to feel the tornado of price erosion when you are standing in the eye of the financial storm.

People tend to be creatures of habits. It always intrigues me how most of the people I speak with seem to already assume that prices will always go up. It is the default life position. They know the sun will rise, grass will typically be green, and prices over time will go up. While some are based in natural law, inflation is and will always be a human made condition. So it is important to step back from the day to day operations that guide us and actually look at where prices stand today in relation to history. I think most in the US really don’t have the fear of say South America or Europe when it comes to inflation because they have never witnessed a full crisis driven by out of control money policies. Today, we are told that inflation is low yet when we actually step back, inflation is already eroding the purchasing power of the middle class dramatically. It is usually helpful to look at history as to learn from our past.
270 years of inflation
I think we can learn a lot from looking at data. While we can learn a lot from history, you will also realize that people are still governed by greed, cronyism, and poor judgment. After all, the Great Recession was the worst financial crisis in the US since the Great Depression. Did we not learn the lessons from the past? Life is a live action situation and inflation is one of those components.
I found this chart to be extremely illuminating:

This post was published at MyBudget360 on October 2, 2014.