Showing posts with label Latin America. Show all posts
Showing posts with label Latin America. Show all posts

Friday, March 23, 2018

IMF Wants Massive Illegal Immigration to Save Pension Funds

IMF Wants Massive Illegal Immigration to Save Pension Funds | immigration | Economy & Business International Monetary Fund Special Interests US News

[image: AP/Gregory Bull, file]

(The Real Agenda News) In Europe alone, the IMF promotes the arrival of over 5 million illegals to sustain the decaying pension funds.

The governments of Latin America, North America, and Europe have mishandled, not to say stolen, the money saved by workers for decades.


Most of the public and private savings accounts and pension funds were looted by governments to pay for political promises and an insurmountable public debt.


Government handled pension funds are some of the biggest scams ever perpetrated on the working classes in the history of humanity. Consider this: The average person begins working at 18 years of age and contributes to a public fund for over 40 years.


Once it is time to retire, the worker files the paperwork to receive proportionally the average salary he or she earned 40 years earlier. What happened to the earnings that his pension contributions earned over 4 decades?


Did they help pay for other people’s pensions? The answer is a decisive No. The profits made by governments on the monies provided by the working class over decades of hard work was stolen to pay for never-ending entitlement programs, skyrocketing interests from debt accumulated by governments over dozens of years.


Many of these payments are made to international banking institutions like the IMF itself, the World Bank and so-called partner states that lend money at a large profit.


What will happen to the pensioners of the future? In a recent analysis, the International Monetary Fund outlines a way to reform the system.


To do this, it draws up projections with all the variables that condition the Social Security accounts: the number of retirees that is expected, the number of workers, immigration, contributions or generosity with pensioners.


The IMF concludes that it is possible to articulate a financially sustainable system that is socially acceptable at the same time.


But yes: you have to touch many elements, make reforms in depth and, in any case, pensions will be reduced compared to the average salary.


“A public pension is not intended to cover the full income that the retiree would need to retire”, explains the IMF.


If there is such an expectation, it must be made clear that it cannot be fulfilled,“the report stresses. Hence, it asks governments to establish complementary plans.


On the one hand, the Fund collects the projection of retirements that will be in the coming years.


Given that the contributors of today are the pensioners of the future, the only certainty is that the number of benefits will grow.


On the contrary, the rest of factors can vary much more: the number of people working, immigration, contributions made by contributions or other sources of income and the generosity of the system with pensioners.


Adding all these variables and with the intention of giving an idea of the challenge, the IMF outlines various scenarios by 2050.


One is based on the premise that the current generosity is maintained: now the average pension represents almost 50% of the average salary.


To preserve this status, according to the estimates of the Fund, contributors would go from contributing 21% of the salary to 47.8% in 2050. And spending on pensions would be at 22% of GDP, twice the current rate.


In another scenario, the IMF freezes contributions at the levels they are now. Then the expenditure on GDP remain the same.


But in this case the funding of the system collapses during the next 30 years, and the relationship between pension and the average salary is cut by more than half to 22.6%.


In the Fund’s opinion, neither scenario is acceptable. Neither workers can bear a pressure for contributions as in the first case. Neither can a pensioner live with dignity with only 22% of the average salary as in the second.


So the Fund draws an intermediate horizon. In this third hypothesis, spending on GDP would be at 12.9% and the contribution for contributions would rise to 27.3% of their salary, a very high level.


Income would have to increase by raising the ceiling of maximum contributions while leaving the ceiling of the maximum pension the same.


That is, those who earn more would contribute more but would not receive more, penalizing contributivity, the Fund admits.


In addition, some 5.5 million immigrants would need to arrive in countries like SpainThat represents 12% of the current population and a similar proportion to the number of people that entered the country between 2000 and 2007.


And the rate of people working would have to climb from 59.7% to 79%, a very demanding milestone and more difficult to achieve if prices rise.


“This could be achieved through parametric reforms of pensions that lead to greater participation in the labor force, longer working lives and structural reforms that lower the natural rate of unemployment,” it says.


Even so, the pension would end at 35% of the salary. And that, in the opinion of the IMF, does not seem acceptable either. Therefore, consider that you need to save around 5% of the annual salary.


So the IMF recommends that governments adopt the alternative of “automatically enlisting workers in a second private fund backed by the State”.


It also suggests, as another option, private business plans that fatten the savings by taking a part of the future salary increases, in the style of the British system inspired by the Nobel laureate Richard H. Thaler.


Finally, given that there is a lot of savings in housing, the IMF urges that mechanisms be encouraged to sign reverse mortgages.


In the opinion of the men in black, this scenario would be “plausible, financially viable and possibly socially acceptable”.


As you can see, the size of the figures means that you cannot face the challenge with a solution taken from the hat.


You have to touch many things and none by itself fixes it. And, above all, “there is no room to reverse the reforms”, says the Fund.


The post IMF Wants Massive Illegal Immigration to Save Pension Funds appeared first on The Sleuth Journal.

Tuesday, December 26, 2017

The Obama-Hezbollah Conspiracy Could Shake The "Deep State" And Latin America

Authored by Andrew Korybko via Oriental Review,


Politico published an explosive investigative report which alleges that the Obama Administration politically interfered to obstruct a far-reaching criminal justice operation against Hezbollah in order to facilitate the 2015 nuclear deal with Iran.



The exposé is extensive and covers a wide array of purported activities over a ten-year period all across the US, Latin America, West Africa, Europe, and the Mideast, though the point of this analysis isn’t to summarize what’s contained in the report or to judge its veracity, but to interpret the significance of it being made public at this point in time. The codename given to the investigation into Hezbollah’s global economic network was “Operation Cassandra”, and it alleges to have discovered the mechanics behind the group’s self-sustaining financial ecosystem, some of which supposedly dealt with organized criminal activities such as drug trafficking and money laundering.


Politico’s bombshell wasn’t just the alleged facts that it uncovered, but the claims from some of the operation’s participants that the Obama Administration was undermining their work because it feared that taking action against Hezbollah would endanger Washington’s efforts to clinch the 2015 nuclear deal with the group’s patrons in Tehran. If true, then this would represent a major split within the American “deep state”, or permanent military, intelligence, and diplomatic bureaucracies, because it suggests that the State Department and possibly even the CIA were conspiring to subvert the law enforcement duties of the FBI and DEA on behalf of the President.


The implications behind this revelation could be enormous, and at the very least they seem to confirm Republican accusations that the Obama Administration was selling out domestic security interests in order to pursue the risky and now-failed foreign policy gambit of co-opting Iran through a tacit alliance with its ruling “moderate” elites. Seeing as how some of Obama-era “deep state” figures involved in this scandal might still be working with the government, the Trump Administration could use Politico’s report as the pretext for “cleaning house” and removing or professionally neutralizing some of its institutional opponents. It’s speculated that this is what Tillerson has been trying to do for months now, but the latest findings could add a renewed sense of impetus to his efforts.


In addition, apart from the obvious consequences that this revelation could have in further worsening American-Iranian relations and reversing the Obama-era trend towards a rapprochement, there’s another international aspect that needs to be looked at, and that’s the effect that the report will have on the US’ policy towards Latin America.


Politico alleges that “Operation Cassandra” uncovered a diverse criminal network stretching all across the hemisphere, and whether fully true or partially exaggerated, this news could be used to tighten the US’ security arrangements with its regional partners in complementing the theater-wide asymmetrical counteroffensive of “Operation Condor 2.0” that’s been ongoing ever since the 2009 coup against leftist Honduran President Manuel Zelaya.


Relatedly, the allegations of Venezuelan government complicity in Hezbollah’s trans-hemispheric conspiracy could form the basis for new sanctions against the Bolivarian Republic.


All told, this developing scandal might take a while to fully unfold, but it can still be expected to influence the course of the “deep state’s” War on Trump and the US’ policy towards Latin America to one extent or another by the time that it’s all said and done with.









Monday, December 18, 2017

Billionaire Tycoon Will Be Next President Of Chile

A billionaire who has been described as one of the world’s wealthiest politicians just won his second non-consecutive term as president of Chile when he defeated his center-left opponent in what observers are calling a landslide victory in Sunday"s election.


As the Washington Post reported, Sebastián Piñera, of the right-leaning National Renovation party and conservative Let’s Go Chile coalition, defeated center-left candidate Alejandro Guillier, of the ruling New Majority coalition, by 9 percentage points, turning the current government out of office. Piñera previously governed Chile between 2009 and 2014. Turnout increased between yesterday’s vote and a Nov. 19 runoff, as large numbers of conservative voters showed up at the polls, while leftists stayed home.


Guillier conceded and congratulated his opponent on his win and his return to the presidency after a four-year gap, according to the BBC.


Like we mentioned above, Piñera is a billionaire who once owned the television channel Chilevision, a large share of Lan Chile airlines, and the Colo-Colo soccer team. He won despite criticisms of his offshore holdings and use of tax havens. He joins Trump and Adrej Babis, a Czech tycoon who rode to electoral victory in a landslide in his home country earlier this year.



As WaPo points out, the 67-year-old will succeed Socialist President Michelle Bachelet, whose New Majority coalition came to power in 2014 on a platform promising sweeping change. Her administration reformed Chile’s tax and education systems and legalized abortion in the event of rape, endangerment to the mother’s life, or an unviable pregnancy. Bachelet began reforming Chile’s constitution, submitting a bill to the Congress earlier this year that would allow for a constitutional convention. Pinera is apparently a fan of many of these reforms and has vowed to preserve them. According to Reuters, Pinera said on Monday he would work to form a “broad cabinet, of continuity and change,” as he sought to strike a tone of conciliation a day after his resounding victory.


Regarding the bill calling for a constitutional convention to reform the dictatorship-era constitution, Pinera said he was in agreement “of perfecting it but in a climate of unity,” according to Reuters.


Pinera’s victory didn’t represent a sharp turn to the right for Chile - the world’s largest copper producer and widely considered Latin America"s most-stable economy - as it did exhaustion with Bachelet, whose second term was clouded by accusations of corruption, including an incident involving her son and daughter-in-law. The media and opposition politicians condemned Bachelet’s family for having secured a loan days before her 2013 victory to purchase land that was resold shortly thereafter, generating millions of dollars in profit. Though leftists weren’t the only ones impugned by scandal during her tenure: The right-wing Independent Democratic Union party was implicated in a campaign finance scandal, leading many Chileans to perceive the overall political system as corrupt. Bachelet leaves office with a dismal 23% approval rating.



Though Pinera’s victory is the latest in a wave of support for right-wing candidates across South America. Last year and this year, right-wing parties have won in Argentina and Peru. In Brazil, the impeachment of Dilma Rousseff brought right-wing Michel Temer to office.


According to WaPo, support for leftists parties was still strong during the runoff race, forcing Pinera to move to the center on issues like education and pensions, and managed to exploit divisions between the country’s far-left and center-left factions that caused many voters to stay home in the final round.


Piñera represents a coalition of conservative parties, but his victory does not signal a right turn. In the first round, Piñera won 36.6 percent of the vote, while Guillier took 22.7 percent, and the further left Broad Front candidate, Beatriz Sánchez, won 20.27 percent. The Broad Front increased its seats from 3 to 20 in the lower house, surpassing expectations. The coalition’s strong performance shows support for leftist ideology and pushed Guillier to the left during the second-round campaign; he changed his position on student debt forgiveness and pension reform.


 


Piñera sought to woo centrist voters by shifting his position on education and pension policy, while also mobilizing the far-right, in part because far-right independent José Antonio Kast did well in the first round. Kast ran a nationalist campaign that called for the construction of a wall between Chile and Peru and won just under 8 percent of votes. Piñera attempted to attract these voters, accusing the center-left parties of moving Chile in the direction of Venezuela and hinted that voter fraud had helped the center-left in the first round. These appeals likely motivated increased conservative turnout in Sunday’s runoff election.



If there’s any broader takeaway from the vote, it’s that Chile’s center is vanishing. In the first round, centrist Christian Democratic Party candidate Carolina Goic won only 5.88% of the vote.


Still, while he won the presidency by a wide margin, Pinera’s administration faces seemingly insurmountable obstacles in the battle to get things done.


This morning, he shared breakfast with president Bachelet and her family.


 



 


His coalition controls only 73 of the 155 seats in the lower house. The composition of congress means that the president will need support from the opposition to pass legislation. As we already noted, with fewer centrist lawmakers, the divisiveness in the legislature might soon rival the US Congress.


This may reinforce the electorate’s perception that Chile is “stuck,” generating further discontent.


Pinera will lead Chile until his term ends in 2022.
 









Friday, December 8, 2017

WeWork: London"s Soon-To-Be Biggest Property Renter Makes Massive Bet On Office Market Despite Brexit

The rationale for creating WeWork, the eco-friendly serviced workspace provider, was simple as co-founder Adam Neumann explained to the New York Daily News.


“During the economic crises, there were these empty buildings and these people freelancing or starting companies. I knew there was a way to match the two. What separates us, though, is community.




It wasn’t a bad idea since the company was recently valued at $20 billion. The first WeWork location was established in New York’s fashionable SoHo district (above) in 2010. Only four years later, Wikipedia notes that WeWork was the “fastest growing lessee of new office space in New York”. The company currently manages office space in 23 cities across the United States and in 21 other countries including China, Hong Kong, India, Japan, France, Germany and the UK.


WeWork’s growth has been little short of stratospheric, and investors have included heavyweight financial names such as JP Morgan. T. Rowe Price, Goldman, Wellington Management and Softbank. As Bloomberg reports, WeWork is about to repeat its success in New York and other cities by becoming the largest private lessee of office space in London. However, some old-school property developers are predicting that WeWork’s break-neck expansion is ill-timed.


A seven-year-old U.S. startup is set to become the biggest private tenant in London just as the U.K.’s economic outlook worsens. Three years after entering the British capital, WeWork Cos. has signed leases that will make it the city’s No. 1 private-sector user of office space, according to data compiled by CoStar Group Inc. for Bloomberg. The rapid growth makes WeWork, valued at $20 billion, increasingly important to the health of the city’s property market as well as more vulnerable to any future decline in rents.



“A downturn of some description has to happen at some point, and when it does the serviced office business will suffer very quickly,” said Michael Marx, the veteran developer who ran Development Securities Plc for 21 years through 2015. “In the present uncertain market many people are hoping that the WeWork model works -- but we have no idea whether it does on a sustainable basis or for how long. It appears to be a well-capitalized business, but if the cycle turns down, then the model looks vulnerable.”



As the chart below shows, WeWork’s expansion is occurring after the bull market in London office space is more than two decades into an upturn.



The company currently has 17 locations in London, with two more about to be opened, as shown on this map of the city. The majority of the office space is in the eastern part of the city, in and around the City of London.



The addition of the two about-to-open properties and another ten in the planning stage - one of which is the 620,000 square foot 12-building campus of Devonshire Square which the company is negotiating to buy outright from Blackstone Group (for $785 million) - will catapult WeWork into the number one position in London.



In short, WeWork is making a massive bet on the office market in London in spite of the risks posed by Brexit. From accounts filed by WeWork’s UK business, Bloomberg learned that the company has committed to £815 million ($1.09 billion) of rent payments in the future, of which £231 million ($309 million) is due over the next five years. Income in 2016 was £61 million ($81.7 million) and the company posted a loss of £11.1 million. Some anecdotal evidence unearthed by Bloomberg raises concern.


WeWork’s most basic membership plan, which allows access to the company’s offices two days a month and use of the firm’s app, starts at $45 a month, according to its website. The company ran a promotion this summer offering tenants half of their lease for free in an attempt to fill that space. In some cases, it has also paid brokers fees of as much as 20 percent for bringing in tenants, double the industry norm, people with knowledge of the matter said. WeWork’s standard broker payment is 10 percent, another person said.



WeWork is exposing itself to a classic case of liquidity mismatch. This is normally associated with the banking sector and banks being caught out in a crisis from borrowing short to lend long. In the property sector, the equivalent is borrowing long to rent short. Bloomberg reports the contrasting view of one of WeWork’s competitors, which shuns this strategy.


Jamie Hopkins, CEO of WeWork competitor Workspace Group Plc, said he prefers a business based on purchasing the properties the company rents out as short-term offices. “Buying long-term leases and selling short ones at a profit is not a model we are comfortable with at all,” Hopkins said in an interview. Owning its buildings gives Workspace “much more flexibility in terms of pricing if we need it,” he said.



Not surprisingly, WeWork sees things differently and Bloomberg relays its take.


While the company has acknowledged that Brexit poses economic risks, it also said that uncertainty surrounding the move will support its business as companies remain wary of long-term commitments. WeWork has secured deals with firms including International Business Machines Corp. and Amazon.com Inc. in its U.S. business and is seeking similar deals with blue-chip tenants in London.



Some companies have as many as 600 people in WeWork sites, McKelvey, the chief creative officer, told Bloomberg in an interview in July. “Our approach appeals to companies of all shapes and sizes,” he said, discussing a plan to expand rapidly in Latin America. The chief creative officer also described WeWork’s approach to growing quickly.



“To build out locations is a challenge,” he said. “But we came out with a very sophisticated platform of how we manage that whole process and it allows us to run it like a software development process, and it gives us a lot of confidence in our ability to execute.”



In WeWork’s defence, Softbank invested $4.4 billion in the company, which is what established the $20 billion valuation. While that is reassuring, the story behind Softbank’s investment is bizarre and doesn’t inspire confidence in WeWork’s prospects.


Before the deal was announced SoftBank Vice Chairman Ron Fisher -- who led the investment -- met with executives at IWG Plc, a competitor with a much lower valuation and more than 10 times as many sites, people with direct knowledge of the matter said. The meeting was held to better understand the temporary office business model and address the investor’s concerns over WeWork’s valuation, they said.



IWG, in its former incarnation as Regus, filed for bankruptcy protection for its U.S. business in 2003 after it expanded too rapidly in the dot-com boom. IWG has a market value of just 1.8 billion pounds despite having nearly 3,000 locations worldwide compared to WeWork’s 235. More recently, the Swiss company has seen the value of its shares drop almost 40 percent since Oct. 19 when it issued a profit warning, citing in part weakness in the London market.



IWG is “the same business, the returns are the same and there is no difference -- there’s no alchemy in it,” CEO Mark Dixon said in an interview about half-year earnings, comparing his company to WeWork.



Some old hands in UK real estate are pointing out how WeWork’s expansion across London is merely transferring risk, not reducing it. Indeed, by bidding up for office space, WeWork is taking on the risk previously in the hands of landlords, since it needs to rent out the office space. The CEO of the UK’s largest REIT, Land Securities, noted “You are effectively transferring risk from a landlord to an intermediary, that space still needs to be let out.”


Meanwhile, the jury on WeWork’s rapid late-cycle expansion is still out and we sympathise with the tone of the feedback reported by Bloomberg. Either WeWork is going to blow-up, or it’s the work of genius. If  pushed, we’d probably side with the former.


Despite the risks, WeWork has its backers in the London property market. “I hear people say it is going to blow up any minute now, but they have got major investors,” Tony Gibbon, founder of broker GM Real Estate said at the Bisnow event. “People question the valuation but so what, it is a considerable scale and it is a trend that isn’t going to disappear.”



“There are clearly risks associated with the speed of expansion of WeWork,” Toby Courtauld, CEO of London office landlord Great Portland Estates Plc, said in an interview. “It is probably too early to call whether that’s a systemic problem or in fact is a fantastic call by them.”










Tuesday, November 21, 2017

Trump Administration Ends Immigration Protections For Haitians Displaced By 2010 Earthquake

In a decision that was widely anticipated, the Trump administration has decided to end immigration protections for Haitians who migrated to the US following a devastating earthquake that laid waste to Haiti back in 2010.
Now, the 50,000 Haitians still living in the US under the protections have 18 months to leave, according to the Department of Homeland Security.


As the Washington Post pointed out, the decision was made to appease immigration hard-liners who insist the program was never intended to grant permanent residency to Haitians who were displaced by the quake.



Per the Los Angeles Times, back in May, John F. Kelly, who was DHS secretary at the time, said that conditions in Haiti had improved enough that the US would be unlikely to continue extending the temporary protection. At the time, he extended Haitians’ protected status for six months, but urged them to prepare to leave the US


Unsurprisingly, many heeded this warning. Following Trump’s upset victory in last year’s election, thousands of Haitians started crossing into Quebec, where they requested asylum. Indeed, the wave of migrants into Canada since the election has strained Canadian public services to the limit and bogged down the country’s system for approving asylum requests, leaving many in an uncomfortable legal limbo. In the meantime, hundreds of Haitians are living in makeshift shelters in Montreal, and elsewhere in the province.


Acting Homeland Security Secretary Elaine C. Duke reaffirmed that decision Monday, but provided an 18-month delay, until July 22, 2019, before the order to leave will become effective. Some of the Haitians currently covered by temporary status will be able to stay if they have other claims for legal immigration status, administration officials said.


An estimated 3 million Haitians were affected by the 2010 quake, which had its epicenter near the town of Leogane. Death toll estimates ranged from 100,000 to 160,000.









Saturday, November 11, 2017

Venezuela Bans Magazines From Publishing Photos Of Women In Bikinis

While Venezuela’s embattled government struggles with the fallout from being declared officially in default by ISDA after delaying a principal payment on the Petroleos de Venezuela SA, or PDVSA, bond that matured Nov. 2, its Supreme Court has been busy robbing the country’s downtrodden public one of the few small pleasures still available in a country that has been deprived of seemingly every necessity, from food to medicine.



Local media reported that Venezuela’s Supreme Court on Friday ruled that magazines that circulate to the general public can no longer feature images of scantily clad women on their covers.


The decree specifically mentions “pornographic” content, yet includes many mainstream magazines: According to the court, “images of nude or partially nude women in compromising and suggestive poses that stimulate sexual arousal for commercial ends” are now banned from magazines, regardless of whether the photos are editorial content, or found in advertisements.


 



 


The decision was a response to a complaint filed by a citizen against weekly sports publication El Heraldo, a subsidiary of 6° Poder. The complaint requested that the government prohibit the “publication of any example, be it digital or printed, including private subscriptions, of images with sexual content … whether it be by way of a photograph, other image, advertisements or links that could be accessed by children and young people."


The court claimed that when such images go public, the publishers aren’t aware of their responsibilities as “media outlets in society to transmit appropriate content” seen by both adults and children.


This ruling directly affects the country’s primary publications Meridiano and Líder, both of which make use of images of women in bathing suits on their covers.



“These types of sexual images don’t come with a warning, which could bring about negative consequences with respect to people’s baser instincts, and thereby put at risk the constitutional rights of the most vulnerable, namely children and young people,” the court’s ruling continues.


Venezuela’s Supreme Court has regularly kowtowed to the whims of the Maduro government, most famously when it certified a Maduro-approved directive to disband the country’s Congress, a ruling that led to the successful (if rigged) referendum vote to create a new National Assembly to help Maduro change the country’s Constitution to cement his long-term grip on power - and marginalize political dissidents who have been rallying in the streets of the country’s cities for months.


Venezuela’s economy has been locked in a vicious downward spiral after falling oil prices and years of mismanagement by Maduro and his predecessor, President Hugo Chavez have spurred inflation rates above 2,000%.




Given these endemic economic troubles, it would appear women in bikinis are the least of the societal ills plaguing Latin America’s favorite Socialist Paradise.
 









Friday, October 20, 2017

ScotiaMocatta Put For Sale After Multibillion Money-Laundering Scandal

The world"s oldest gold trader is for sale after a massive money laundering scandal may have terminally crippled one of the most iconic names in the business.


Canada’s Bank of Nova Scotia is exploring options for its gold business ScotiaMocatta, the Financial Times reported, which include a possible sale of Canada"s most popular precious metals trader. Scotiabank made a decision to sell ScotiaMocatta following a massive money laundering scandal centered on a U.S. refinery that involved smuggled gold from South America. The ScotiaMocatta business, a mainstay in PM trading, is one of London’s main gold trading banks and is being sold by JPMorgan.


According to the FT sources, ScotiaMocatta’s future had been underway for several months, with ScotiaBank allegedly seeking a buyer for up to a year and was likely to shrink the business if a sale is not completed, although according to the article Chinese buyers - the world"s dumbest money these days - are rumoured to be the key targets of the sale.


While gold trading has been in a cyclical decline in recent years, the “straw that broke the camel’s back” in prompting the sale was Scotiabank’s lending to Elemetal, a precious metals refinery in Dallas. Scotiabank was one of its biggest lenders, they said. The problem emerged in March, when US prosecutors accused workers at a subsidiary of Elemetal, NTR Metals in Florida, of a money laundering scheme using “billions of dollars of criminally derived gold” mostly from Peru.


Here the story take a turn into a slightly surreal detour:








NTR imported more than $3.6bn of gold from Latin America between 2012 and 2015, the court documents allege. Two of the accused, Samer Barrage and Juan Granda, pleaded guilty last month to a charge of money laundering in plea deals.


 


After the story came to light in March, Elemetal was kicked off the London Bullion Market Association’s “Good Delivery List” of gold refiners;



This was an almost instant death sentence for the company as buyers will usually only buy gold from a refiner on the list. Indeed, in the same month, New York’s Comex futures exchange said it was no longer taking gold from Elemetal for delivery against futures contracts in the world’s biggest gold futures market.


And this is where the scourge of gold rehypothecation emerged, as in the scandal surrounding Elemetal, it became impossible for holders of Elemetal gold to sell the gold bars on, leaving them sitting in bank vaults, according to traders quoted by the FT. Buyers are reluctant to take the gold, given the investigations.


This means that hundreds of millions in loans made to Elemetal by ScotiaMocatta are suddenly stuck in limbo. It also means that one of five bullion banks that settle gold trades in the London market, the world’s largest, has effectively been blackballed. It was built on the 1997 purchase by Scotiabank of Mocatta Bullion, which traces its roots back to 1671. And with Mocatta crippled, Scotiabank, which has the biggest foreign presence of any Canadian bank, is focusing its international strategy on the Pacific Alliance, a Latin American trade bloc comprising Mexico, Peru, Chile and Colombia. It will also hope to find a willing Chinese buyer for the gold trading operation.


Mocatta"s exit will be good news for HSBC and JPMorgan, which dominate the London market; their large balance sheets enable them to provide credit to clients and refiners around the world. Additionally, and unlike Scotiabank, they also have vaults in London. Gold trading in London is estimated to be worth more than $5tn a year, although as the FT notes, there are no precise figures on how much gold is traded there every day.









Tuesday, October 10, 2017

How Columbus Revolutionized The Global Economy

Authored by Ryan McMaken via Mises Canada,


Columbus Day this year brought with it the usual acrimony, and this Salon article hit the usual talking points by declaring European settlement of the Americas to be “the most massive act of genocide” in world history.


Salon quotes historian David Stannard who writes:





“[O]n average, for every 20 natives alive at the moment of European contact — when the lands of the Americas teemed with numerous tens of millions of people — only one stood in their place when the bloodbath was over.”



Figures like these remain hotly debated, but few disagree that, ultimately, the number of natives was extremely small when compared to the overall size of the Americas.


In other words, the number of people relative to the amount of natural resources in the New World was tiny, and population density in the Americas continues to be low by global standards even today.


While many pundits and historians commonly debate the violent conflicts between tribes and settlers in the popular media, we hear far less from scholars who take a serious look at the economic implications of the relatively underpopulated lands in the Americas.


The Americas are Different


There is a growing scholarship on the economic history of the Americas and on so-called “frontier states.”


Over the past century, scholars have noted that frontier regions in places like the Americas, Australia, and Eastern Russia are, in fact, different economically, politically, and sociologically from other parts of the world where the local ethnic population has — in many cases — occupied the lands for centuries.


This is not the case in the Americas where new groups of people settled on lands once held by completely different groups with different customs, economic practices, and institutions. The movement of peoples onto frontier lands, and the exploitation of natural resources there, has shaped the economic and political realities of today.


This scholarship on frontier settlement arguably began with Frederick Jackson Turner and his “Turner Thesis,” which was first advanced in 1893.


Turner focused primarily on the experience of the United States, but Walter Prescott Webb would attempt to develop these ideas into a more universally applicable set of ideas in his 1951 book The Great Frontier. For Webb, “the great frontier” included not just North America, but also Australia, New Zealand, and South Africa. (Later historians would add Eastern Russia to this list.)


Since then, most historians working on the issues of frontier history have attempted to either build upon the work of Webb and Turner, or to refute them. In either case, however, there is a recognition that frontier states are something different, and that the high period of frontier settlement, from 1500 to 1900, revolutionized the global economy and global demographics.


What is a Frontier State?


Frontier states are - to use a definition employed by political scientist Roberto Foa - “countries that in recent centuries have extended rule over new territories adjacent to their core regions.”


Economist Edward Barbier, in his book, Scarcity and Frontiers, adds that these regions are also characterized by a small labor force relative to the amount of land and natural resources available. That is, frontier areas are notable for experiencing labor shortages which lead to a wide variety of political and demographic outcomes.


Immigration and Slavery


Consider the problem a land owner faces in a frontier setting. He or she sees abundant farm land for crops, or mountain lands for mining. At the same time, there are few people in the area to plant and harvest the crops, or dig the mines. As noted by many historians of the native tribes, of course, the indigenous population had already been decimated by disease and military conflict. Unlike the situation in Africa, India, and East Asia, settlements in the Americas found themselves with large tracts of land inhabited by few people.


The solution to this economic problem, of course, is to bring in more abundant labor. This can be done through several means. First, of all, an owner (whether the owner be a private party or a state organization) can convince settlers to voluntarily move to a new region. A variety of different strategies have been employed in the New World in this regard. In early decades, North American colonies often relied on indentures servants who were held to a period of servitude in exchange for the cost of transporting the immigrant to the New World. The laborer, of course, was drawn by the prospect of obtaining freedom at the end of the contracted period. Later, the US used the Homestead Acts and land-sales schemes to attract settlers to frontier lands. Canada employed similar tactics. In Argentina, on the other hand, the Argentinian state actively subsidized the migration of immigrants from Italy to South America in the late 19th and early 20th centuries. Throughout the Americas, settlers relocated from Europe in a search for relatively cheap lands or as a hoped escape from the social and economic ailments of the Old World.


Today, surnames throughout the Americas remind us of the pan-European flavor of immigration in the region. One need only peruse a list of Latin American heads of state to see names such as Michelle Bachelet, Pedro Kuczynski, Cristina Kirchner, Vicente Fox, and others.


Nor was voluntary migration limited to Europeans. By the 19th century, Chinese laborers attempted to take advantage of labor shortages in California, and Japanese laborers did the same in California, Brazil, and Peru. As slaves were emancipated in Cuba, tens of thousands of Chinese workers were imported to replace them.


In many cases, though, immigration was not sufficient to bring down wages to a level preferred by owners and their government allies. Thus, the politically powerful turned to slavery instead. Naturally, imported slave labor would depress wages for both the slaves themselves and for the existing free population that preceded the slaves. This tactic was especially useful in cases where manual labor was particularly difficult, as in the case of the sugarcane fields of the Caribbean or the cotton plantations of the American South. The greatest importer of slaves, however, was Brazil where slaves would, for a time, greatly outnumber the European-descended population.


What began as a basic labor-shortage “solution” would evolve over time into a major sociological and political issue that colors politics to this day. And, contrary to what many naïve American leftists seem to think, the issue of slavery and racial politics is anything but unique to the United States. It is a characteristic of frontier states across the globe. Moreover, we might note slavery in the Americas was hardly attributable to the settlers being especially inhumane in their practices relative to other societies at the time. What was different in the Americas was this: the relative abundance of land and capital relative to labor made slavery pay much more relative to other parts of the world. There’s a reason the Spanish home country abolished slavery decades before slavery was abolished in Cuba. It simply paid more in the Caribbean.


Effects on Europe


The new lands themselves weren’t the only areas affected, of course. As Webb noted, the Europeans were “transformed” by the settlement of these new lands. This became all the more obvious as Western Europe’s population began to explode in the Early Modern period and into the 19th century. The abundance of land in the Americas created an easy “solution” for European politicians who could simply encourage (either through exhortation or financial subsidization) troublesome social classes to emigrate across the ocean. The British actively shipped criminals to their colonies across the sea, and certainly the large scale movement of laborers from desperately poor places — like southern Italy and Ireland during the 19th century — transformed the demographic and political realities of those regions.


Even in the face of imported slave labor, the relatively low density of workers in the New World allowed for a constant re-adjustment of wages in both Europe and the colonies as the population exodus to the New World increased workers scarcity — and therefore wages — back in the countries of origin.


Meanwhile, those who remained in Europe took advantage of the vast raw materials found in the Americas, including the region’s many fisheries, mining operations, and plantations.


Implications for Today


We continue to see the effects of the New World’s frontier origins in modern politics. Given the relatively recent histories of their populations, the social dynamics of the Americas are quite different from that of Europe.


In spite of recent claims that Europe is being erased by immigration from the Near East and Africa, the fact is that Europe remains far more culturally uniform than is usually the case in any modern post-frontier state. While the United States is, for example, 70-percent European in origin, most European countries remain at least 90 percent “white.” Not even Canada, which is is much more “European” than the US — with only 19 percent of its population listed as “visible minority” — comes close to the sort of cultural uniformity that is today common in the nation states of Europe.


Latin America, of course, is far more diverse still, with Brazil, for example, reporting less than 40 percent of its population as being primarily of European ancestry. The legacy of imported slaves and surviving indigenous populations remains an undeniable factor in Brazilian politics today. Only Russia — itself a recent frontier state — comes close to experiencing a similar situation in ethnic demographics.


Thus, it is “cute” when Europeans lecture Americans (including Latin Americans) about “tolerance” and “openness” when history suggests that it is the denizens of the New World who know far more about such things than the Europeans who stayed home and attempted to exploit those who made the hard journey to frontier lands. It was, after all, the European regimes that exported their political problems to the New World and happily profited from the exploitation of slave labor to supply Europe with sugar and other staples. It was the residents of the Americas themselves who had to deal first-hand with these issues, including broader demographic trends. The fact that the US population quintupled between 1830 and 1900, for example, was certainly no small affair. As historian Jon Grinspan notes, during this period, “at least 18 million immigrants arrived from Europe, more people than had lived in all of America in 1830.” Given the propensity for world war displayed by Europeans over the past century, one can only guess with extreme trepidation how a similarly destabilizing situation would be faced by Europeans in the modern world.


But many other issues in New World political realities are a legacy of its frontier past as well. Foa writes:





Frontier zones are found to have ongoing lower levels of public order and deficient public goods provision. Several theories [may] explain this discrepancy, including internal resettlement, costs of monitoring and enforcement, and the relationship between settlers and the indigenous population.



When American states are criticized for being “low-trust” societies, lacking social cohesion, and experiencing relatively high crime rates, these all stem from the realities of the New World’s lack of cultural uniformity and common history among residents. Non-frontier societies have had centuries to become more uniform and more cohesive. New World societies still have a long way to go.


It’s a safe bet that Columbus had no idea the social and economic revolution he was setting off by beginning Europe’s drive toward the “Great Frontier.” He just wanted to get rich. But, we are still living with the legacy of Europe’s expansion to these new lands today.

Thursday, October 5, 2017

"Freedom Insurance" Has Never Been More Crucial - How To Get A Second Passport

Authored by Nick Giambruno via InternationalMan.com,


The biggest threat to your personal freedom and financial security is the government, hands down.


Today, skyrocketing government debt is only making that threat worse. In the US, the bill amounts to more than $167,509 per taxpayer.


At some point soon—in a desperate attempt to squeeze citizens for every penny—politicians will try to further restrict people’s movements. They may even prohibit people from leaving outright.


Wealthy people are always the first they trap. New Jersey already hits certain taxpayers fleeing that sinking ship with an “exit tax.”


There’s also a federal exit tax. It’s a significant blow to wealthy people giving up their US citizenship.


But wealthy people (and Americans across the board) are not the only ones at risk.


Many countries have notoriously turned to people controls at one point or another. For example, the Soviet Union routinely revoked the citizenship of its perceived internal enemies.


In Castro’s Cuba, the government made citizens apply for exit visas to leave the island. It did not grant them easily.


Or look at how the US government revoked Edward Snowden’s passport with the stroke of a pen.


This all reinforces a grave truth… You don’t own your passport or your citizenship. The government does. And it can use that as a weapon.


If you hold unpopular political views, don’t be surprised if the government restricts your travel options. The same goes for wealthy people who want to leave a country in financial trouble.


The good news is, you can do something about this problem…


A second passport is your best insurance against any out-of-control government.



You probably know the benefits of diversifying your investment portfolio. If you put all of your asset “eggs” in one basket, you could lose your entire portfolio if that basket breaks.


The same idea applies to political risk… the risk bureaucrats and politicians pose to you.


Most people have medical, life, fire, and car insurance policies. You hope you never have to use these policies. But you have them anyway. They give you peace of mind and protection if the worst comes to pass.


International diversification is the ultimate insurance policy.


I call it “freedom insurance.”


It frees you from dependence on any one country. Achieve that freedom, and it becomes extremely difficult for any one group of bureaucrats to control you. The results can be life-changing.


A second passport is a crucial piece of the puzzle. Among other things, it lets you invest, bank, travel, live, and do business in places you otherwise couldn’t.


Unfortunately, there is no route to a genuine second passport that is fast, easy, and cheap. Deciding the best place and way to get one is not necessarily simple. There is no one-size-fits-all solution.


But today I’ll show you the path of least resistance.


It helps to view the whole world as your hunting ground. Don’t dismiss the idea of becoming a citizen of a small or backward country. Unlike most mega-government countries, these places generally lack the capacity and desire to monitor their citizens or treat them as milk cows.


The Four Roads to a Second Passport


There are exactly four legitimate routes to a valid second citizenship and passport. If you hear about a fifth route, assume it’s a scam.


To find the best route for you, start with the decision tree below.



No matter the country or method, you should be able to point to specific naturalization laws with explicit requirements. Everything should be clearly spelled out in black and white. You’ll usually find this information on a government, consulate, or embassy website.


Route No. 1: Citizenship by Ancestry


If you qualify, a citizenship-by-ancestry program is the fastest and cheapest route.


Each country has its own eligibility requirements and procedures. If you have an ancestor from one of these countries (usually no more remote than a great-grandparent), you should find citizenship information on the country’s website. Or you can visit the consulate.


If you’re eligible, you will need to give the consulate official legal and translated documents (birth certificates, marriage certificates, death certificates, naturalization records, etc.) proving lineage to the relevant ancestor when you apply.


Route No. 2: Economic Citizenship Programs


Economic citizenship is the most expensive route to a second passport. But it’s also the quickest.


You make a substantial payment or investment, and in return, the government grants you full and permanent citizenship. You can often complete the process in a matter of weeks. And you don’t ever need to live in the country.


Currently, the governments of Dominica and St. Kitts & Nevis (two English-speaking countries in the Caribbean) offer the only established and reliable economic citizenship programs. A passport from either government enables visa-free entry to most of Latin America, the Caribbean, and Europe.


Dominica is currently the cheapest option. It requires a donation to the government starting at $100,000. You should also expect additional administrative costs for due diligence, background checks, processing, and other fees. That can amount to at least $10,000.


Other countries also offer economic citizenship programs. But they haven’t been around nearly as long as the Dominica and St. Kitts programs.


A reliable and stable history is important. Ultimately, any government has the authority to revoke the passport and/or citizenship of any of its citizens at any time for any reason, real or concocted.


A shift in the political winds could mean that an economic citizenship program in favor today could be out of favor tomorrow. That could have negative consequences for foreigners who participated in the program.


Only the St. Kitts and Dominica programs have stood the test of time (decades) and been successfully used by thousands of people.


Route No. 3: Extreme Measures


If you’re willing to take extreme measures, there are shortcuts.


You could marry a foreigner. Many countries will grant citizenship to foreign spouses after a period of time, usually at least two years.


France grants citizenship upon completion of military service.


Jews are eligible for Israeli citizenship. However, in most cases, military service is required of applicants over the age of 18.


Brazil offers a shortcut to citizenship for those who adopt a child.


Route No. 4: Residency


So, if the family bloodline leads to a dead end… and you aren’t willing to marry a foreigner, serve in a foreign military, or take any other extreme measures… and you can’t afford an economic citizenship program… the last route is permanent residency.


Most countries will grant citizenship after five or so years of permanent residency. Some take more time, some take less.


Here, again, the time requirement varies widely. And these requirements are constantly changing. Some countries require you to spend substantial time on the ground and build real connections to the country. Others are less stringent.


Some factors you should weigh in considering a country’s program:



  • Required length of residency




  • Minimum time required in-country during the residency period




  • Costs and/or mandatory investments




  • Requirement to demonstrate language proficiency



A Crucial Step


The easiest route to citizenship in a second country will differ for most people, depending on their personal circumstances. It’s not a fun process any way you slice it, but that should not dissuade you. The benefits far outweigh the costs.


The rules on second passports can change quickly. So it’s important to have the most up-to-date, accurate, and actionable information out there.


Be sure to get our guide we just released on the easiest countries to get a second passport from. Click here to download the PDF.

Wednesday, October 4, 2017

After Vegas Shooting, It's Time To Take Private Security Seriously

Authored by Ryan McMaken via The Mises Institute,


In the wake of the Aurora Theater shooting, I suggested that private sector establishments ought to be expected to be more concerned about the safety of their customers. In the case of the Aurora Theater, this was magnified by the fact that the theater was a "gun free zone" and did not allow patrons to carry their own firearms as self defense. At the same time, the theater owners themselves couldn"t be bothered with taking even the most rudimentary steps against allowing a gunman to casually carry multiple weapons from his car into one of the theater"s back doors


The issue came up again with the Orlando shooting in 2016, when the perpetrator simply walked into a private establishment with a rifle and started shooting. Again, we find ourselves with a situation in which the owners of a private establishment refused to take simple steps such as checking entrances for people with rifles, or employing reasonably well-trained security personnel to be present inside the club. 


I wasn"t the only one to suggest that maybe, just maybe, private establishments such as the Orlando nightclub and the Aurora Theater may share some responsibility in preventing violence on their own premises. 


In response to this position, numerous commentators - mostly conservative and libertarian - took the position that it is outrageous to expect private owners to take steps to prevent events like these. At the time, I noted Reason magazine"s response as representative of this type of thinking:





Reason magazine has ... hopped on the bandwagon of pre-emptively and unconditionally absolving the theater owners of any possible responsibility. Reason writer Lenore Skenazy claims that a focus on worst-case scenarios is "worst-first thinking" and that such thinking "promotes constant panic. The word for that isn"t prudence. It"s paranoia."



In other words, Skenazy"s position is that private owners should simply assume terrible things won"t happen and proceed accordingly. If bad things do happen, then let"s all just throw our hands in the air and declare "who woulda thunk?" 


This sort of thinking results in what security consultant Bo Dietl calls  the "panic, forget, repeat." It"s not a serious approach to security. 


Unfortunately, this problem has become apparent again with last weekend"s shooting in Las Vegas which has so far claimed at least 59 lives, making it the worst mass shooting in modern American history.


To perpetrate the shooting, the shooter used the Mandalay Bay hotel as a sniper"s nest from which to rain down death on a crowd assembled at a nearby music festival. (Both the hotel and the venue are owned by MGM Resorts International.)


At the same time, it appears the organizers of the event did not take steps to prevent a shooting of this nature. The police response to the shooting, not surprisingly, appears to show disorganization and lack of knowledge about the situation. 


The State Protects Its Own


Some readers will scoff and say "how could anyone be expected to anticipate a sniper situation like this?"


In response, I suggest this thought experiment: imagine that a US president or any important political figure were present at the music festival. What do you think security would have looked like? There would have been well-trained security personnel stationed to keep an eye out for snipers, with spotters and "good guy" snipers all around. 


Obviously, we would have found out that looking for the worst-case scenario would suddenly have mattered when "important" people are involved. But protecting ordinary members of the public? Well, that"s just "paranoia," we"re told. The state, of course, is highly invested in protecting its own personnel and its own interests. The organizers of the music festival, however, appear to have relied on blind faith as their primary defense. 


The importance of competent professional private security in this case is also illustrated by the fact that a large number of private individuals armed with side arms would have done little to prevent the situation. Even if festival-goers on the ground had been able to quickly spot the source of the gunfire — which itself seems unlikely — a handgun would have been of little use. The often-repeated claim by gun-rights activists that conceal-carry is the answer to all shootings falls flat in this case. 


Inaction from Public and Private Police Forces 


Private security weren"t the only ones who appear to have taken a rather lackadaisical view of the situation. 


Interviewed in the wake of the Las Vegas shootings, The Boston Herald interviewed former Boston Police Commissioner — and current security consultant — Edward Davis about the situation. Davis notes: 





There"s always been a fear — not so much among the security chiefs, but by the police out here — that there would be an attack. It is their worst fear coming true.



There are two things we can take away from this claim. First of all, assuming Davis is right, we learn that the private sector security chiefs weren"t terribly concerned about this situation arising. Second, we learn that the public-sector police were concerned about it. Yet, it appears that nothing was done to address the fear by either group. 


Moreover, Las Vegas has long been recognized as a target for terrorism, given its iconic status. "This is, just on its face, a big glaring target for Islamic terrorists," Davis added. (Davis is right that it"s a target. But he"s wrong that only "Islamic" murderers are interested.) 


Davis also confirms our suspicion that the safety of government personnel in the area have been a subject of worry, in regards to security. The general public? Not so much:





Working on presidential visits and with the Secret Service, snipers are a concern for them, but you don"t think about it around a concert.



And why not consider security around a concert? Are we already incapable of remembering the Paris theater shooting of 2015? This sort of amnesia-based thinking is apparently the best that our security personnel have to offer. Had security personnel and their employers been taking the situation seriously, they might have concluded that the chosen locale for the event could not be conducted while offering sufficient security. Certainly, were the Secret Service to conclude that a location can"t offer sufficient safety for a political figure, they would recommend against that political figure accepting the risk at all. Perhaps concert organizers in Vegas should bring the same level of scrutiny to their own events. 


The Imagined Cure-All: Gun Control 


Predictably, in the wake of the shooting, gun control advocates have already seized on the tragedy to push for preferred legislation. They like to portray the US as an exceptionally violent place, and claim the reason is too little gun control. 


Forgotten, of course, is the French Bataclan Theater shooting, which resulted in 130 deaths. Forgetten, of course, is the 2016 Brussels airport bombing which took 35 lives. Forgotten is the spate of car-rammings, including the Nice, France, massacre which alone took the lives of 86 innocent people. 


Indeed, if we look at mass-murder events such as these public rammings and shootings in 2016 and 2017 - and thus excluding the 2015 Bataclan Theater shooting - we end up with a total of approximately 140 victims in Western Europe, and around 120 victims in the US (this includes the Orlando shooting.) This alleged juxtaposition between chaotic America and serene Europe appears to be rather misplaced.


Moreover, as total gun sales in the US climbed repeatedly in the 1990s and the 2000s, homicide rates fell. Stringent gun control laws are common in Latin America, yet homicide rates are much higher in that region than in the more laissez-faire United States. Clearly, gun control does not explain away differing levels of violence absent consideration of other factors. 


Government Won"t Protect Us 


Shootings in night clubs and theaters simply are not matters requiring national policy. Nor is the challenge of stopping terrorists from driving trucks through crowds of revelers, as has happened repeatedly in Europe in recent years. Prevention in these cases require that security personnel on the scene employ competent security to control what goes on inside their own buildings and venues. 


The knee-jerk appeal to national policy such as nationwide gun control, however, highlights what happens when the private sector blithely relies on a disinterested government to provide security instead. In the US, the Supreme Court has ruled (in Castle Rock vs. Gonzalez) that police are not obligated to provide protection to citizens. As a result, de facto policy is that the lives of police officers receive priority over that of members of the public. It also means that government police are protected from any liability should they be AWOL or incompetent when homicidal maniacs unleash themselves on the public. Thus, there is absolutely no reason to expect public-sector police agencies to provide security at night clubs, movie theaters, or large public events. 


Nor is there any reason to simply sit back and assume that gun control will protect us. Experience in high-gun-control zones like Latin America, Russia, and Europe suggests otherwise. 


Should Private Owners Be Expected to Provide Security? 


But, as soon as someone suggests that private owners of public-access venues be expected to take security seriously, then the very idea is denounced by many as simply a bridge too far. For these critics, apparently, it"s much better to just trust in government, and hope for the best. 


It"s easy to see why the private sector and its defenders might vehemently oppose the idea that private owners need to do more. Private security is costly and could drive up prices of goods and services. If the legal system simultaneously protects these owners from any responsibility in allegedly "unforeseeable" events, then we have no reason to expect them to do anything differently. The Aurora-Shooting lawsuits against the theater"s owners was significant because it called into question whether or not a private owner should be held legally liable for allowing a nut with multiple guns to so easily plan and set-up a mass-shooting scenario under their noses. 


In the end, the theater was found not liable, and the theater owners"s attorney claimed the event was "unpredictable, unforeseeable, unpreventable and unstoppable." This claim is obviously nonsense. Of course the shooting was preventable. It simply wasn"t preventable using the minimal amount of time and effort the theater owners were willing to devote to customer safety. 


In the future, will we continue to label shootings of this nature as "unforeseeable"? It"s true that, given the size of the population, events of this magnitude remain exceedingly rare. Yet, how many times must an event of this nature take place before it does become foreseeable? How long will it be before customers should enjoy a reasonable expectation that private owners will plan ahead to prevent these sorts of threats?


The response of some people to this revelation will be to indulge in maudlin declarations of "it"s a crying shame." "It"s a crying shame we have to live in a world where we have to worry about gunmen!" Perhaps. It"s also a crying a shame we live in a world where not everyone drives the posted speed limit in residential areas. If they did, we wouldn"t have to worry about our children as much when they play outside. It"s a crying shame we live in a world where the plane you"re flying in might malfunction and fall out of the sky. Thanks to human error, malice, and stupidity, many bad things happen every day. 


Many other bad things happen thanks to an unwillingness to plan ahead. And so as long as we continue to declare things like mass shootings on private property to be "unforeseeable" and "unstoppable" and generally not worth the effort needed to prevent them, we"ll just be left relying on the same government agencies who are under no obligation to protect citizens from anything.

Friday, September 29, 2017

This Is What $100 Buys You In Venezuela

Authored by Simon Black via SovereignMan.com,


The gunfire on the streets near my hotel started around 9pm last night.


The sound is unmistakable, especially at night on an otherwise quiet city street.


I had recently returned to the hotel after a few evening meetings. And coming back after dark it was as if they had rolled the sidewalks up — restaurants with no patrons, bars and clubs that were totally empty.


There was an incredibly striking woman I remember, standing in front of her restaurant playing hostess to absolutely nobody.


And with few people on the streets, it felt like some sort of zombie apocalypse.


Amazingly enough this country used to be THE wealthiest in the region. And not too long ago.


Throughout the 1950s, 60s, and 70s, Venezuela enjoyed robust growth. Low inflation. Substantial foreign investment. High wages. It was the envy of Latin America.


It was all based on one industry: oil. Venezuela has effectively been a one-trick pony for decades.


And when oil prices were strong, the government was swimming in cash. Even as recently as 2007, the Venezuelan government’s oil revenue was so high that they PAID OFF ALL FOREIGN DEBT.


Think about that: only ten years ago Venezuela had ZERO foreign debt.


But at the same time the government here had a long history of excessive spending. Social programs. Military. Fuel and electricity subsidies. Whatever it took to remain in power.


The government spent so much money that, even when oil prices exceeded $100 per barrel between 2011 and 2013, they STILL couldn’t break even.


Then oil prices collapsed. By early 2016, a barrel of oil was fetching less than $30.


Venezuela’s public finances were in shambles… so the government resorted to the same old tactics that nearly every bankrupt government has relied on throughout history.


For one, they started spending their foreign reserves– essentially burning through the public savings account.


Today Venezuela has its lowest level of foreign reserves in decades, less than $10 billion, compared to $42 billion in December 2008.


They’ve also sold off a huge portion of their gold reserves.


In late 2015 Venezuela held 373 metric tons of gold. Today that’s down to 188 metric tons, a nearly 50% drop in less than two years.


More importantly, though, the government has resorted to printing incomprehensible quantities of paper currency and vastly expanding the central bank balance sheet.


This chart is really amazing to see– the Venezuelan central bank’s balance sheet literally TRIPLED in a SINGLE MONTH between April and May of this year.



They keep printing more and more money, to the point that the currency has become totally worthless.


I remember coming here a few years ago when the black-market rate was around 8 bolivars per US dollar.


On my next trip, it took 100 bolivars to buy a dollar in the black market. And the rate kept dropping with each trip.


This time I exchanged dollars at around 27,000 per US dollar. Meanwhile the ‘official’ rate is a laughable 10:1. It’s a nearly 3000x difference.


So, depending on which exchange rate you use, Venezuela is either absurdly expensive or absurdly cheap.


A ride from the airport was about 80,000 bolivars. At official rates that’s EIGHT THOUSAND DOLLARS. For a taxi ride.


But at black market rates it’s less than three bucks. Quite a difference.


Last night I exchanged $100 and received this brick of cash in exchange.



Needless to say this monetary insanity makes life extremely difficult.


Anything imported is prohibitively expensive. And with the economy collapsing, domestic production is also grinding to a halt.


There’s very little economic activity. People are sitting in their homes trying to survive. Medicine is scarce. And even staples like food are running out… which is totally nuts.



Venezuela is a vast country with rich, fertile soil and abundant sources of water. There is absolutely no reason why there should be food shortages here.


Chalk up another victory for socialism and central planning.


In their desperation, people are turning to crime, prostitution… anything they have to do to make ends meet. I routinely see people picking through garbage cans eating scraps, anything they can find.


Incredibly there is still a hint of normalcy in the city, at least during the daytime.


People are out on the streets going about their lives… heading to work, taking their kids to school, playing sports, chatting with their friends.


I find it remarkable how well this place has held itself together. Venezuelans constantly display ingenuity and resilience in their ability to deal with such an epic crisis.


And the good news is that this will one day get better.


The government has nearly run out of money and is dangerously close to defaulting on its debts. At some point they’ll no longer be able to pay the armed thugs who keep the population in line.


It’s inevitable. Totalitarian governments almost invariably fall when they run out of resources to sustain themselves.


It may get worse before it gets better. But eventually this madness and oppression WILL come to an end, whether through war, revolution, peaceful means.


What I find so strange is how little optimism there is for Venezuela.


By comparison, investors are perennially excited about Cuba. People have been saying for decades that Cuba will be an investment paradise once the authoritarian regime comes to an end.


Sure, great. I’ve been to Cuba. I like it. And there will certainly be great opportunities there.


But few people apply this same logic to Venezuela. And I find that strange.


This place is huge. There is SO MUCH opportunity here. 30+ million people. Enormous reserves of natural resources. Plenty of coastline. Ports. Infrastructure. Manufacturing capacity. Strategic geography. Renewable energy.


Whether it’s next year or ten years from now, this country has the potential to some day become one of the most exciting places in the world. 


Do you have a Plan B?









Wednesday, September 20, 2017

US Sanctions Against Venezuela Will Hurt Americans




After fifty years of imposing embargoes and other sanctions, the United States never managed to topple Cuba"s communist regime.



After forty years of the same in Iran, the US met with similar amounts of success.



Ongoing sanctions against North Korea have not toppled to regime there. 



But, some people in Washington won"t let decades of failure dissuade them. 


Last week, Congressman Mike Coffman (R-Colo.) introduced new legislation to bar Americans from importing oil products from Venezuela. The Washington Examiner reports





[T]he Protecting Against Tyranny and Responsible Imports Act, or the PATRIA Act ... would target Venezuelan President Nicolas Maduro after he stripped the country"s democratically elected national assembly of its power and authority. According to the bill, the proposed ban on imports would last until the assembly"s power is fully restored.



"The goal is to change the conduct, the character of the Venezuelan government under Maduro. I think the window is closing," Coffman told the Washington Examiner. "They are dependent upon the export of oil really to fund their government, and without that, they can"t pay their security forces."



Experience suggests there is little reason to believe that sanctions will cause the regime to give up in Venezuela. If the regime has less oil money with which to pay the military, the regime can always steal more from the average citizen to make up the difference. In other words, ordinary Venezuelans will suffer more in response to US sanctions. 



oilprice.png


Source. 


Moreover, aggressive moves such as these against the Venezuelan regime have tended to only solidify support for the regime among its supporters. Both the current president Maduro, and his predecessor Hugo Chávez, were both successful in building support for themselves on a platform of opposing US meddling in Venezuelan political and economic institutions. 


When the US threatens to intervene in local politics, this only strengthens the resolve and support of the regime"s supporters. 


The US has already been acting in a reckless manner in this regard, as illustrated by President Donald Trump"s recent speculations about invading Venezuela to effect regime change. As noted by Daniel Politi at Slate, American threats directed at the Venezuelan regime do nothing to help the opposition





Throughout his power grab that has accompanied Venezuela’s descent into chaos, Maduro has long warned the United States was planning to invade the country. Trump’s words seemed to play straight into his narrative, recalling a time when Washington saw Latin America as its backyard where it could intimidate governments into doing its bidding.



“Maduro must be thrilled right now,” said Mark Feierstein, who was a senior aide on Venezuela to former president Barack Obama. “It"s hard to imagine a more damaging thing for Trump to say.”



Similarly, threatening Venezuela with more sanctions — something that may make the regime even more violent and desperate — do nothing to help the Venezuelan people in general, and only energize the regime"s base. 


Coffman claims the sanctions would be lifted if the Venezuelan regime were to restore the prerogatives and power of the national legislature, which has essentially been disbanded by Maduro. 


In recent months, the Venezuelan regime has rapidly become more dictatorial as forces loyal to Maduro have increasingly clamped down on opposition politicians and essentially ignored the results of recent elections that have brought many opposition leaders to power in the National Assembly. 


The working philosophy here, apparently, is that the imposition of sanctions will force the Venezuelan regime to democratize in response. One would be hard pressed to find examples of similar tactics actually working, however.


More astute observers might also ask why — if Coffman is so committed to democracy — he hasn"t called for similar embargoes of Saudi Arabian oil. The Saudi regime, of course, has been a dictatorship ever since its founding, sponsors international terrorism, and tolerates no religious freedom or freedom of speech. The Saudi regime, for instance, routinely arrests critics of the regime, and the regime"s spokesman has outright denied that elections should be allowed in Saudi Arabia. 


If human rights are of such pressing concern to the Congressman, its unclear why Venezuela is at the top of the sanctions list. 


As with all Trade Sanctions, Americans Suffer 


As with any discussion of sanctions, of course, we need not even consider the strategic futility of sanctions, or the morality of foreign regimes. 


Far from being a matter only of concern to foreigners, US sanctions are built on the cornerstone of limiting the freedoms of Americans.


As I noted earlier in regards to the Cuban embargo





[S]upporting an embargo means supporting the government when it fines, prosecutes, and jails peaceful citizens who attempt to engage in truly free trade. Support for an embargo also requires support for a customs bureaucracy that spies on merchants and consumers, and the whole panoply of enforcement programs necessary to punish those who run afoul of the government’s arbitrary pronouncements on what kind of trade is acceptable, and what kind is verboten. Naturally, this is all paid for by the taxpayers...



At their heart, embargoes are nothing but a specific type of prohibition. Sometimes, the government imposes prohibitions on transactions involving certain goods, such as cannabis. Other times, the prohibition extends to all transactions with people in a certain place. The fundamentals are the same, however, in that they prohibit peaceful exchange, with heavy penalties for violators.



In the case of a new embargo against Venezuela, the effect would be to place prohibitions on American importers, and thus drive up prices for oil and energy for all Americans. Government bureaucrats would be dispatched to monitor private industry to make sure they don"t violate the prohibitions. Government agents will impose fines, and make arrests if necessary. The American government will become more powerful at the expense of American consumers and American taxpayers. 


Indeed, this has already been going on with smaller-scale sanctions imposed by the Trump administration against Citgo oil refineries. Thanks to the sanctions, Citgo refineries in the US, which constitute four percent of American fuel capacity, and which employ American workers, are finding it more costly to obtain the oil they need for the refineries. Both domestic and foreign suppliers must scramble to work around the new regulations in order to avoid fines and lawsuits from government regulators who oversee trade. The effect of this will be to put pressure on more marginal employees and on more marginal operations, leading to layoffs and diminished refining capacity. Ultimately, it is Americans who will pay the price.