Interest rates, commodity prices pressure LA economies

    The thing is this, the U.S. dollar is declining in value (“dollar weakness”).  This tragic phenomenon is also called inflation and are a sign that an economy is “overheating”.  The amount of crap a dollar bought at the Maxie Mart decreased, so poor slobs like us have to buy less crap.  If we buy less crap PinchaDime Corp’s independent contractors just outside Managua will get less money so they will need to cut the salary of their security contractors from UnionBgone Ink.  So the guard will not hit the day laborers as hard and naturally they will begin to whisper about unions.  Whenever workers start to whisper about unions the Fed. (Federal Reserve Bank, in the U.S.) rases rates so I can only guess that Bemex detected whispers.  The Fed “tightens” credit so the fewer commercial enterprises have credit available to them.  This act reduces the demand, and price, of that yet to be traded on the CBOT (Chicago Board of Trad) commodity, labor.  Thereby increasing the size of the army of unemployed who’s vital social role is to push Maxie Mart carts around and remind us all how lucky we are to have a job at the PinchaDime Outlet’s photo booth.  
    Some of the terms used in the article like “CRB, $/NP rate, greenback rebounds, bps, reduce duration and beta,” and “lowly correlated with core markets” are technical gibberish that impresses the hell of potential “new accounts.”  CRB is the Commodities Research Buro.  CRB is an index of several lucky commodities which are indexed (grouped together) and the price is monitored as a measure of inflation.  Oil, Wheat, Soy Beans, Copper, Live Cattle, and many more are indexed and the futures contract is traded at the CBOT.  If the price of one of the commodities drops, say in coffee, it will not move the index much so their will be little sign of inflation or deflation (a.k.a., depression, recession, and the R word).  If on the other hand the whole index moves, up or down, it is seen as a general change in the value of “currency” (greenbacks in the U.S.).  You hit the nail on the head, much like that Mel Gibson movie, on the $/NP thing, “(dollar to Mexican New Peso?).  I couldn’t have said it better except I might have made a quip about Nuevo Peso being a suburb of Santa Barbara.  “Bps,” hummm, I am at a loss here but in context of the article I would guess “Brazilian bonds were tattooed, losing 42 bps, or 2.4%, to end the session at 672,” would dissect like this.  “Bps” is the Brazilian bond’s letter code on Christopher Whalen’s Trade Station software or Brazilian Pesedos (or whatever script they use) and the value of the bonds dropped by 42 of them.  “Reduce duration and beta,” and “lowly correlated with core markets” need there own paragraph.
    The last paragraph in this article is brokerspeek and is only vaguely understood by the common person.  The language is used to explain why a client has lost his or her money with the broker.  It is full of slang and technolengo so the client will only say “ah hu . . .oh” and “ . . .I see” as the broker explains where their money went and why they should another trade.  The broker must have advised his clients to buy and now the prices have fallen.  “ . . . but we believe that the correction (movement towards where prices “ought to be”) in commodity prices will be temporary. We believe commodity prices will soar (go up) after the shakeout ( prices move in one direction until the clients get out of the market because all their money is gone and then goes the  direction the broker said it would when the client first made the trade).”  “That is why we repeat our mantra” (brokers generally say “buy” because people’s personal experiences tell them prices go up) . “Maintain a defensive position!” (A truly “defensive position” is not having money in the market, but that would mean no commission for the broker, so add the word “maintain” and an exclamation point and that means buy the futures and cover with a put option, woohoo two commissions!)  “Reduce duration and beta.”  This one is true poetry. . .wait I am wiping a tear . .there.  Beta is a word the broker read in “The Economist” while waiting in the lobby to meat clients who are coming in to open new accounts.  The word is a math expression used in intermediate algebra and lower level calculus.  It is a “function” if that helps.  It is used in the options market to express the volatility of a commodity price.  If, lets say, the New Peso traded at 11 pesos to a dollar most of the trading day and 5 mins. before the market closed it went to 22 pesos to the dollar, that would cause a high beta compared to if it slowly went to 22 over the corse of the whole trading day.  
    The broker needs a good editor for the last bit.  “The reinsertion of China and the India, (“the India?  Is it a ship?)  representing more than 35% of the world (China + India = only 35% of the population? I think it is closer to 60%)’’s population, is a permanent process. And, this will ensure a continuous bid for commodities.”  Just because there are generalized pressures of more buyers over some indefinite future it does not mean you can make money trading on those expectations.  The prices may, over the long term go up because of population and new consumers; but trading is short term.  It seem smarmy to me that Christopher Whalen is posting his broker add on Narconews.  Especially if he is not writing the usual disclaimer “past performance is not indicative of future results” on the add.
    As to the price of cocain, well, tightened credit markets generally do not affect the user.  They tend to have such bad credit that even if the rate went down they still could not get a loan.  On the production end? No effect at all, as they are cash heavy and do not need to borrow.  They even may find it easier to launder money as the tightened credit market will make cash even more “King.”

Ah, mi querido inversionista, I knew it would be fun to have you around The Narcosphere!

We can finally start arguing about stuff in a public forum!

First, let's start with your closing statement:

I wonder how much the Castro government is paying comrade Hugo under the table in "solidarity" for the below-market oil exports to Cuba?  Any thoughts?

Do you really think that statement makes any sense at all? What money does Cuba have to bribe Venezuela compared to Venezuela's great size, oil reserves, and wealth?

Venezuela is an economic giant, thanks to oil.

Cuba is, economically, after 45 years of economic embargo and the fall of the Soviet 15 years ago, as poor as any nation in América (perhaps save Haiti).

The suggestion that Cuba is in any economic position to bribe Venezuela is ludicrous.

What Cuba has provided, in return, is above board and disclosed, on the table: doctors, nurses, teachers, scientists. Because Cuba, having invested in education more consistently and passionately than any other land in the hemisphere (more than the U.S., that's for sure), has trained more doctors and similar professionals than it needs. (That Cuba is much closer to developing treatments and cures for such elusive plagues as cancer and AIDS than "free market" countries is one of the most censored stories of our time: because to admit it is to admit that "market forces" do not create investment in what the people really need and want.)

Secondly, Chávez provides the same discount prices on oil to most Caribbean (and some Central American) countries that he provides to Cuba.

So why are you so focused on this one guy who governs an island of just 12 million people? Let me guess: because, if the whole truth were allowed to be told, he has disproved the neoliberal economic model.

As for Chávez, I stipulate that he has paid the IMF and World Bank on time, that he has provided a steady flow of oil to the United States, and has been, in fact, exemplary in terms of obeying capitalist rules imposed on Latin American countries. I much prefer the Kirchner-Argentina model: Fuck the IMF, cancel the debt, default! But to say that because Chávez has played his deck of cards very shrewdly that his strategy therefore comes from Vladimir Lenin is red-baiting. Gee, I thought it came from Nicolo Machiavelli. Silly me! Was Machiavelli a commie too? (No rap on Machiavelli: I studied him, too, as Banamex and others later found out.)

Finally, to say that Venezuela is an economic "basket case" because of Chávez's policies is bullshit. The country's own oligarchy has imposed lockouts (called "strikes"), sabotaged oil facilities and PDVSA (the state owned oil agency), converted every bolivariano it could into dollars and ripped them from the country into Miami banks, and the fault is theirs: and they must still pay the price for this unpatriotic crime against their own land.

Chávez, of all the elected (and he was authentically elected in fair and free elections) the smartest, most conscientious, in the hemisphere: He figured out the rules of democracy, and he played by them, and he won. And if he is, as you say, "president for life," it will be the people's decision. Like FDR, really. Of course, the U.S. oligarchs called Franklin Delano Roosevelt a commie, too.

Whalen writes:

Despite his pretensions of revolutionary leadership, Chavez has done nothing -- yet -- to threaten U.S. access to VE oil, ensuring for him the favor of the Bush White House.

Seems to me this was a threat to U.S. oil supply.

The six-week strike led by right-wing business groups and unions to force the democratically elected President Hugo Chavez from office has severely cut Venezuela's oil production from its usual 3.1 million barrels per day.

Follow the money, as you indicate, and you find that maybe it's not in the best interest of the people to prop up a coup by cutting out the legs of their economy. All oil is fungible, so it don't matter who's buying it -- us or Cuba. What's interesting is that it was the right-wing biz folks who tried to use oil as leverage to unseat a democratically elected leader.

Grasshopper wants to know: Are you suggesting that Chavez should use oil to unseat himself as well?

You need to source your claims. Otherwise there is no way to believe them or discuss them.

For example, this one:

There is no effective difference between Cuba's "democratic" government and the evolving rule of Hugo Chavez.

I've never referred to Cuba as a democracy. There are many very effective differences between Venezuela/Chávez and Cuba/Fidel.

The first, easily documentable, and not disputed: Chávez and his allies have won seven elections in the past six years. All serious national and international elections observation organizations and human rights organizations have declared those elections exemplary by universal standards of fairness and freeness.

The second, also easily documentable, is that Chávez has been the most tolerant government leader - in the present and for all of American history - toward dissent. Not a single coup participant went to jail (I think that was a mistake, by the way, because it has only encouraged more, however lame, coup attempts since April 2002). The national government under Chávez has never prosecuted a single journalist, much less imprisoned him or her. These are shining standards of human rights far above those of Cuba, the United States, Mexico, Colombia, etcetera.

On these standards - fair, free, elections and tolerance for free speech and dissent - Chávez is more opposite Castro than Bush or Clinton.

Third, the myth that PDVSA was efficient pre-Chávez has never been backed up by any documents. It's more akin to a specialized public oligarch class saying "rah rah, we're the best" without ever having shown the data to prove it. To the contrary, according to Heinz Dieterich (and by way of demonstrating how claims can and should be sourced, I source mine) the PDVSA is, historically, a steal-ocracy:

Today, only 20 percent of the income of this mega-company goes to the State. Eighty percent goes to “operating costs” that enrich secret accounts of the beneficiaries of this economic cancer. The power of this petroleum “steal-ocracy” has become propped up progressively during recent decades. In 1974, the company delivered 80 percent of its income to the State and kept 20 percent (“operating costs”). In 1990, the ratio tied at 50 to 50 percent and in 1998 it reached the ratio of 80 to 20 percent. It’s logical that they are going to fight to the death – of the nation – to defend “their” black gold.

Today, only 20 percent of the income of this mega-company goes to the State. Eighty percent goes to “operating costs” that enrich secret accounts of the beneficiaries of this economic cancer.

Chávez, in fact, is the first president to try and break the institutionalized theft of this bureaucracy, whose executives have earned seven-figure salaries for sitting around and playing golf on the island of Margarita among other places. That senile old PDVSA executive retirees like Vheadline's Gustavo Coronel run around claiming they were "a model of efficiency" is betrayed by the facts. They were a bloated bureaucracy that took more than they gave. Only under Chávez has true reform begun.

As for your claims of money laundering and criminal activity by Castro in Cuba, you of all people know that if you made the exact same claim about anybody in the United States you would have to document it. Bankers and governments are, as we both know, litigious. That Castro is very unlikely to sue anyone in U.S. court (or get a fair hearing there) should not be cause for us to be lapse about our own ethics. Especially not here at this bright shining light of truth-telling known as The Narcosphere.

I doubt that even the Washington Times would allow you to publish such uncited, unsourced, claims (actually, I take that back: the Sun Myung Daily just might!). But the NYT wouldn't let Forero or Rohter say it without offering at least some shred of documentation.

Here's the challenge: when you offer documentation (as in "this was said according to X source, or found in X document") the credibility of your sources can - and should - also be questioned.

The only case you've made is geographic: Cuba is an Island, therefore it is "Sicily" (a problematic analogy for those of us with as many vowels as consonants in our names, but I'll let that boat sail by). How is Cuba "Sicily" in ways that the Dominican Republic, or the Colombian island of San Andres, or Mexico's Cozumel, or the Dutch Antilles or Bermuda or Grand Cayman are not? Those other ones I mentioned at least have an aggressive off-shore banking industry to help things along, and U.S. regulators instructed to turn a blind eye where Washington "allies" are concerned. How many billions of dollars get laundered on other Caribbean isles compared to the needle in that haystack that you seek regarding Cuba? For me, it's a matter of perspective, and math. It seems to me that you want Cuba to be "bad" for ideological reasons that are irrational in the context of Cuba's actual power and size. You want Venezuela and Chavez to be "bad" too, but you haven't made the case with any facts, just myths and deep, ingrained, ideology-driven fantasies are coloring the kind of sound analysis you so often have regarding Mexico.

And if you still disagree, let's see some cites and documented facts.