Archive for February 2009
US Economy in Worst Fall Since ’82 - Output Sank 6.2% Last Quarter; Plunging Trade, Investment Signal Trouble Ahead (More here)
Citigroup: World’s Worst Investment to Get Even Worse (Ritholtz)
Losers double down. The classic trading rule which the US government is about to violate in an enormous way is that one should never, ever, ever, under any circumstance, add to a losing position.
Chile’s industrial production fell the most since 1999 in January. (Bloomberg)
Argentina Has a Bond It Wants to Sell You - Deadbeat nations should be kept out of U.S. capital markets. (Link here)
El Salvador and the Chávez Model - With the presidential election approaching, chavismo weighs heavily on voters’ minds. When Salvadorans vote on March 15 to elect a new president, that concern may play a key role in influencing the vote. (WSJ)
Alleged CIA Activity in Bolivia and Ecuador (Bellum)
Mexico Is in Free Fall – Its state institutions are under threat as they have not been since at least the Cristero uprising of the late 1920s and possibly since the Mexican revolution of 1910. While the Obama administration is obviously aware of what is happening south of the Rio Grande, the threat simply does not command the attention that its gravity requires. More here.
The war we gave Mexico - The drugs, guns and culture that fuel the violence all are linked to the U.S. (LA Times)
Rosalino “Chalino” Sanchez – Father of the narco-corrido (YouTube)
U.S. federal government to yield marijuana jurisdiction to states (SFgate)
“Smoke Some Weed” (YouTube)
The West Africa Connection: how drug cartels found new routes (Times)
Five years ago the amount of cocaine shipped to Europe via West Africa was negligible. Today 50 tonnes a year worth £1.4 billion pass through the region. Interpol estimates as much as two thirds of the cocaine sold in Europe this year will reach the Continent via West Africa.
The New Che, Same as the Old – Steven Soderbergh’s biopic continues Hollywood’s worship of a brutal man. More here.
Financial crisis sparks unrest in Europe (Reuters)
Thousands of UK police to lose jobs as forces feel the pinch – One of Britain’s most experienced chief constables said that forces were being dangerously weakened at a time when a strong police force could be essential to “hold the line.” (Times)
Slums of Hope – For displaced peasants, the world’s vast urban ghettos are a gateway to a better future. As Planet of Slums author Mike Davis writes, residents of the new slums constitute the “fastest-growing and most unprecedented social class on earth.” (City Journal)
Russia’s economic troubles put Putin firmly in the firing line – Unrest has been crushed, but the real challenge could come from falling oil prices (Telegraph)
Iraq ‘now its own responsibility’ – The ‘drawdown’ (i.e. withdrawal) of US troops by 31 August 2010 “should send a clear signal that Iraq’s future is now its own responsibility,” says President Obama. (Politico)
Getting Beat in the War of Ideas – A new study of public opinion in Muslim countries was released this week by WorldPublicOpinion.org (Comops)
Three provocative essays on Iran by Spengler
Sex, drugs and Islam (Asia Times)
Excerpt: “How should we explain an eruption of social pathologies in Iran such as drug addiction and prostitution, on a scale much worse than anything observed in the West? Contrary to conventional wisdom, it appears that Islamic theocracy promotes rather than represses social decay. Iran is dying. It seems that a spiritual decay has overcome Iran, despite best efforts of a totalitarian theocracy. Popular morale has deteriorated much faster than in the “decadent” West against which the Khomeini revolution was directed. Two indicators of Iranian morale are worth citing. First, prostitution has become a career of choice among educated Iranian women. Second, according to a recent report from the US Council on Foreign Relations, 5% of Iran’s adult, non-elderly population of 35 million is addicted to opiates. That is an astonishing number, unseen since the peak of Chinese addiction during the 19th century.”
Why Iran is dying for a fight (Asia Times)
Excerpt: “Iran’s demographic catastrophe in the making impels Tehran to stake its claim for regional empire quickly, while it still has the manpower to do so. Before Iran is buried, it will have occasion to command the undivided attention of the West. The rulers of the Persian pocket-empire know better than Jenkins that today’s soldiers will become pensioners a generation hence, turning a belligerent and ambitious country into an impoverished, geriatric ruin. They believe that Iran has a last opportunity for greatness, on which they will stake their last dinar.”
Jihadis and whores (Asia Times)
Excerpt: “Wars are won by destroying the enemy’s will to fight. A nation is never really beaten until it sells its women. To understand Iranian politics, cherchez les femmes: the fate of Iranian women sheds light on the eccentricity of President Mahmud Ahmadinejad. By Spengler’s Universal Law of Gender Parity, the men and women of every place and every time deserve each other. A corollary to this universal law states that the battered Iranian whore is the alter ego of the swaggering Iranian jihadi.”
The “Worst Food Product Ever” – Hormel’s Canned Pig Brains in Milk Gravy (Consumerist)
The government of President Hugo Chavez got slammed twice in a week by the US government, first on human rights and then on drugs. No surprise there. President Chavez and other barking Bolivarian burrocrats immediately condemned the US administration, and Chavez once again voiced doubts about President Barack Obama (son of Dubya?)
Following are some excerpts of the State Department’s drug report card on Venezuela – which scored an F:
*Venezuela remains a major drug-transit country with high-levels of corruption and a weak judicial system. Growing illicit drug trans-shipments through Venezuela are enabled by Venezuela’s lack of international counternarcotics cooperation.
*Venezuela refuses to cooperate on almost all bilateral counternarcotics issues, rejecting U.S. criticism and accusing the U.S. Government (USG) of complicity with drug trafficking organizations.
*Venezuela is one of the principal drug-transit countries in the Western Hemisphere. The majority of illicit drugs transiting Venezuela are destined for the U.S. and Europe. Drug trafficking in Venezuela has increased five-fold since 2002, from 50 MT to an estimated 250 MT in 2007.
*In September 2008, the U.S. Treasury’s Office of Foreign Assets Control designated two senior Venezuelan government officials, Hugo Armando Carvajal Barrios and Henry de Jesus Rangel Silva, and the former Justice and Interior Minister, Ramon Rodriguez Chacin, as “Tier II Kingpins” for materially assisting the narcotics trafficking activities of the FARC.
*Members of Venezuelan security forces often facilitate or are themselves involved in drug trafficking, particularly the special counternarcotics units of the National Guard and the Federal Investigative Police (CICPC).
*Venezuelan security forces routinely take bribes in exchange for facilitating drug shipments, and seizures are most likely to occur when payoffs have not been made. Even when seizures occur, the drugs are not always turned over intact for disposal, and seized cocaine is sometimes returned to drug traffickers.
Illicit narcotics are smuggled from Venezuela to the principal markets in the U.S. and Europe in maritime cargo containers, fishing vessels, go-fast boats, and private aircraft taking off from clandestine airstrips.
Illicit narcotics destined for the U.S. from Venezuela are shipped through the Dominican Republic, Haiti, Central America, Mexico, and other Caribbean countries.
Narcotics destined for Europe are shipped directly to several countries in Europe, especially Spain, or are shipped through the eastern coastal waters of Venezuela and the Caribbean to West Africa, notably Guinea and Guinea Bissau.
Clandestine flights departing Venezuela are another means of transporting cocaine shipments to West Africa. Multi-kilogram shipments of cocaine and heroin are also mailed through express delivery services to the United States.
Between January and June 2008, the U.S. estimates that 116 MT of cocaine transited Venezuela: 28 MT via maritime routes and 87 MT via air, according to the Joint Interagency Task Force-South.
Drug traffickers routinely exploit a variety of routes and methods to move hundreds of tons of illegal drugs on the Pan-American Highway, the Mata and Orinoco Rivers, the Guajira Peninsula, and dozens of clandestine airstrips.
Venezuelan traffickers have been arrested in the Netherlands, Spain, Ghana, the Dominican Republic, Mexico, Grenada, Dominica, St. Lucia, and other countries.
The movement of drugs continues to compound Venezuela’s corruption problem, and increase the level of crime and violence throughout the country.
Whether due to security forces’ weakness, lack of will, or corruption, Venezuela has effectively lost control of large portions of western Venezuela, abutting Colombia, to narcotrafficking organizations, including the Revolutionary Armed Forces of Colombia (FARC).
The FARC’s ability to operate freely in this portion of Venezuela facilitates its well-established involvement in narcotrafficking. Venezuelan police and prosecutors do not receive sufficient training or equipment to properly carry out counternarcotics investigations. Without effective criminal prosecutions, and with the politicization of investigations and corruption, the public has little faith in the judicial system.
The USG assesses that Colombian guerrilla and paramilitary organizations, including two designated Foreign Terrorist Organizations (FTOs), the FARC and the National Liberation Army (ELN), conduct drug trafficking operations in Venezuelan territory, often using local traffickers to coordinate transportation and logistics.
The FARC and ELN often cross into Venezuela to facilitate trafficking activities, for rest and relaxation, and to evade Colombian security forces, often with the collusion of some elements of the Venezuelan security forces.
The USG-funded Container Inspection Facility (CIF) at Puerto Cabello remains unused by the GOV, despite the fact that the USG estimates that the majority of narcotics from Colombia transit the Tachira-Puerto Cabello corridor and other parts of the northern coast.
Completed in late 2006, the CIF was intended to provide a venue and equipment (forklifts, tools, and safety equipment) for Venezuelan authorities to unload and examine containers in a safe and protected environment.
The Autonomous Port Institute of Puerto Cabello (IPAPC) expropriated and now controls access to the unused facility.
Germán García-Velutini, president of Vencred Casa de Bolsa and brother of Banco Venezolano de Credito’s President Oscar Garcia Mendoza, was kidnapped shortly after 4 p.m. on 26 February near his office in San Bernardino.
News reports about the abduction have been confused.
But it appears that the kidnappers numbered 8-10 men, of which 4-5 wore business suits and were armed with “armas largas” (assault rifles?).
The kidnappers apparently were in 2-3 vehicles, including a Mercedes Benz sedan used to block the narrow street and at least one SUV (camioneta) that blocked Garcia Velutni’s vehicle from the rear. The abductors also may have used a motorcycle in the operation.
The abduction happened in a narrow street of the Sarria barrio in San Bernardino which is used as a traffic shortcut daily by hundreds of drivers.
Garcia-Velutini reportedly was driving alone in an Audi and speaking on his cellular phone to a colleague at the exact moment that the kidnappers executed their ambush. Eyewitness reports indicate it was a professionally executed operation.
The main assault team consisted of at least four men with assault rifles who overpowered Garcia Velutini and drove off in the banker’s Audi, which as of this post reportedly has not been located yet.
This is unconfirmed, but two businessmen who know Garcia Velutini say he almost always used the same shortcut through Sarria when leaving his office. If this is correct, Garcia Velutini may have committed a cardinal error in terms of looking out for his own security.
Some local news media (2001) report the kidnappers are demanding a ransom of 5 million euros, but this also is unconfirmed. [Update: Garcia's family released a statement saying the abductors have not contacted them yet.]
Hundreds of people are kidnapped every year in Bolivarian Venezuela, but this is the first high-level abduction in several years of a member of the traditional Caracas elite.
Based on the little information known so far, it appears that:
*The kidnappers clearly were familiarized with Garcia Velutini’s daily movements. He was abducted in an enclosed area on a narrow street where he had absolutely no chance to attempt any evasive maneuvers.
*If a motorcycle was involved, the kidnappers probably followed Garcia Velutini for some distance before the abduction occurred. The person (or persons) riding the motorcycle probably communicated by cell phone with the other kidnappers waiting in ambush.
*At least one SUV also was following Garcia Velutini’s Audi, carrying several of the abductors and blocking the rear of the banker’s vehicle to prevent him from backing away from the ambush.
Who might be the kidnappers?
The degree of professionalism reported by eyewitnesses suggests the kidnappers could be:
*Persons with an elite military or police (SWAT) background, in which case there may be links to current/former figures in the Bolivarian revolution.
*An organized crime gang (with foreign and Venezuelan members) which specializes in abductions of high net worth victims,
*Colombian paramilitaries, FARC/ELN guerrillas or professional kidnappers from the neighboring country who have moved their criminal business activities to Venezuela where civilian law enforcement and other state security entities are ineffective and easily corrupted.
God willing, Garcia Velutini will be not be harmed and will be freed very quickly.
The Economy & Finance Ministry issued a statement saying it is “investigating” a “campaign of rumors” allegedly being promoted by “sectors interested in provoking bank runs by diffusing lies, falsifying the government’s financial policy, and trying to panic savers.”
The ministry’s statement says it received “several reports” of this alleged rumor campaign after it intervened and closed Stanford Bank Venezuela.
The ministry’s statement also says “intelligence organs have been instructed and have already started the investigations to identify the (people) responsible for the campaign and apply the corresponding penal sanctions.”
If there’s a rumor campaign under way against the banks, the public was unaware of it – until the ministry issued the statement.
That’s not to say a very substantial portion of Venezuela’s banking system is not a potential financial disaster waiting to erupt.
There are some solid banks in Venezuela. But there are more troubled banks than healthy banks.
Hint: Banks with large portfolios of government paper are not a wise place to park one’s savings.
Hint: For some time, there have been quiet rumblings in the financial brokerage sector that there could be a large number of mini-Madoffs waiting to happen. “Some of the mutuales out there are mini-Madoffs,” a financial broker commented to us recently.
Former Vice-President/Defense/Foreign Minister Jose Vicente Rangel warned on his 22 February Sunday television show “Jose Vicente Hoy” that the Bolivarian Revolution of President Hugo Chavez “could founder…due to exhausting daily conflictiveness.”
Rangel’s televised warning came two days after Chavez rejected on 18 February any type of pact with the “defeated oligarchy” following his 15 February referendum victory by a margin of 54.86% to 45.13%, according to the CNE.
Rangel said on 20 February that the outcome of the 15 February referendum on Chavez’s bid to win perpetual re-election rights confirmed Venezuelans are “divided…and this division is tending to accentuate, though it hasn’t resulted in violence yet.”
To keep violence from erupting in Venezuela, there must be a political “aperture…and ghetto politics must be abandoned.” Rangel said.
Venezuela’s “political factors…are obligated to seek formulas that will facilitate easing tensions…the arrogance of the winner is a mistake, as is the arrogance of the loser…I would go even further in the classification: it’s a stupidity,” Rangel added.
Very unusual remarks from Rangel (aka Grima Wormtongue), considering that he sided with the Chavez regime’s radical factions in backing the president’s plan to slaughter his political opponents in April 2002.
Before 11 April 2002, Rangel met with the coutnry’s largest bankers and threatened them with government sanctions if they joined the national business and labor strike called jointly by Fedecamaras and the CTV.
While at the Fort Tiuna on 11 April, at the building where the Defense Ministry’s offices traditionally had been located until Rangel (who historically was despised viscerally by the military) was appointed defense minister, Rangel was seen and heard semi-hysterically issuing orders by cellular telephone to “call the ‘pueblo revolucionario’ to descend from the barrios and defend their president with sticks, rocks….”
In Miraflores presidential palace in the early evening of 11 April 2002, Rangel urged Chavez to fortify the palace “…and fight to the last man, the last breath… Make a stand here and give the world a lesson…let’s see if these ‘escualidos’ can take us.”
When Chavez insisted instead on negotiating with the rebellious army officers at Fort Tiuna, Rangel raged at the president “…eres un cobarde….la historia no te va a perdonar.”
A former government intelligence and Disip official who has known Rangel personally for the past 35-40 years says JVR “doesn’t believe in anything except power and history…not heaven or hell, sex, wealth or anything else.”
So why is JVR, a longtime co-conspirator with Chavez to dismantle Venezuela’s democratic institutions and kill the president’s political enemies, now calling publicly on Pfresident Chavez and the opposition leadership to open a two-way dialoque to rescue the nation from erupting in a civil war?
The plot thickened on 26 February when Teodoro Petkoff published an editorial in Tal Cual saying he was certain JVR’s warning was “an exclusive message to call the attention of President Chavez and (was) not directed at the opposition.”
Petkoff said JVR is not an official spokesman, but an “interlocutor” of the government because of his relation with “high commands of the revolution” – i.e. bolibourgeosie revolutionaries like Diosdado Cabello, for example – though it’s said by some that Cabello reportedly despises Rangel.
Petkoff also argued that Rangel has urged Chavez to “recognize the opposition… without disavowing or disqualifying” the revolution’s democratic opponents.
“It’s difficult to not agree with the conclusions of Rangel,” he added, but then asks whether anyone in the government (i.e. Chavez) heed JVR’s warning?
A colleague who knows Petkoff very well thinks “Teo… is secretly very concerned that Chavez could unleash violence at any moment… he knows Chavez and the group now in power will not hesitate to shoot and kill to keep what they have gained… no van a soltar el coroto por ningun motivo, ni para nadie…”
Perhaps our colleague is correct.
Perhaps JVR’s surprising call to Chavez, followed by Petkoff’s editorial endorsement of JVR’s remarks, reflects the concerns of two wise old men who have spent their entire political careers on the far left of Venezuelan politics (though Petkoff apparently moved towards the center after the Berlin Wall came down near the end of 1989, reinventing himself as a European-style moderate socialist a la Felipe Gonzalez of Spain).
But Venezuelan politics is rarely, if ever, what it appears to be superficially. As Jose Antonio Gil Yepes wrote in the 1970s, Venezuela is a “Sociedad de Complices” – a society of accomplices.
JVR is a brilliant but fundamentally evil individual. Everything JVR says has two, three or even more meanings – and audiences. He is a skilled manipulator of the news media and a confirmed disseminator of misinformation and lies.
Petkoff is perhaps the only former radical Marxist guerrilla in Venezuela who is respected by at least two generations of Venezuelans on the right. But over the past decade, Petkoff’s frequent swings from apparent apologist for the regime to acerbic critic and back again suggest that old revolutionary dreams (habits?) persist.
JVR and Petkoff have been “comrade travelers” for the past 50-plus years, but reportedly they were never close personally and in recent years have been in opposite camps.
But the Venezuelan people aren’t fond of Petkoff: When Rosales, Petkoff and Borges commissioned national polls in mid-2006 to decide amogst themselves who would be the opposition presidential candidate, Petkoff placed a distant third out of three.
*Are JVR and Petkoff worried that political violence or civil conflict could erupt as soon as this year?
Caracas Gringo thinks the chances of violent street protests will increase in coming months as the economy’s crisis bites hard. However, JVR and Petkoff presumably are in a better position than most to know about these things, given their contacts with “senior” people in the revolution (both inside and outside the government).
*Are JVR and Petkoff trying to head off potential civil/military revolts involving some figures normally associated with the opposition?
*Or, perhaps, JVR and Petkoff are trying to ease growing tensions inside the Bolivarian revolution by urging Chavez to mend fences with the political opposition before the most radical elements of the revolution revolt?
In January 2009, Venezuela’s most famously unrepentant Marxist militant, the septuagenarian but still very spry Douglas Bravo, warned that “true revolutionaries” inside and outside the government, including the oil industry and the military, could revolt this year and set things right.
These true revolutionaries will confront the “Bolibourgeoisie right inside the regime and the classic right” at the same time, and will defeat both, Bravo predicted.
[Caracas Gringo thinks there is a significant risk of a major confrontation in 2009 between organized labor and the Chavez regime.]
But the regime isn’t disposed to talk with anyone. Vice President Ramon Carrizalez said late on 26 February that there would be no dialogue with the leaders of the opposition. But the government is “always willing” to dialogue, he added.