Friday, April 30, 2010

Piñera's honeymoon coming to an end

It seems Piñera's honeymoon is ending. Yesterday the polling company Adimark released it's monthly government approval poll, showing a small two point decline in Piñera's approval rating. Of course, this decrease is within the 3 point margin of error, but Piñera's rate of disapproval has shot up 13 points since last month, reaching 31 percent.

One odd result from last month's poll was that the overall government received a much higher approval rating than Piñera personally, 60 percent vs. 52 percent respectively. This result was in part attributed to public perceptions regarding his, at the time, unresolved conflict of interest due to the delayed sale of his LanChile shares. Well now, however, the approval rating for the government as a whole has dropped 9 points to 51 percent, more or less matching Piñera's own rating.

But what accounts for the precipitous drop? As can be seen below, much of it is explained by public perception of the government's handling of the earthquake. The left side shows approval to the government's help towards earthquake victims and the right shows approval of the reconstruction effort.

[Independently of your political orientation, do you approve or disapprove of the way Sebastian Piñera and his government are handing the following problems related to the earthquake?]
An interesting thing has also happened during the last month regarding the income demographics of his support: it has fallen among the wealthiest and registered a small increase among the poorest (though the latter is within the margin of error).

Now, all in all these results are still obviously quite good, reflecting the fact that so far Piñera has actually done a pretty decent job all things considered, contrary to the left's fears. Obviously, experiencing one of the largest earthquakes on record might change your political agenda slightly and prompt some to govern more pragmatically. But nevertheless, Piñera the consummate businessman deserves some credit. Who would've expected the business presidency to talk about increasing mining royalties, raise corporate taxes and raid the military's trust fund, even if it's to pay for the reconstruction?

The Count: Cuban edition

[Editor's note: Wow, the Count has certainly been traveling a lot these past weeks! After going to China to investigate it's commercial ties with Latin America and flying to Europe to ask pissed off Greeks in the streets about their opinions of the IMF, the Count has finally come home to the Western Hemisphere. But without further ado, maladjusted brings you this week's Count.]

78.6...

...is the number of years the average Cuban is expected to live (unless they live in Miami, in which case all bets are off).

The current issue of the prestigious Science Magazine features an article (sorry, subscription-based) on the quality of health care in Cuba since Castro took power. We've all heard of Cuba's health care before, but now it turns out Michael Moore was right...according to scientists! In all seriousness though, Cuba has managed to achieve first world health levels on a third world budget and all while enduring the U.S. embargo, which restricted medicinal imports. From the article:
"Despite the embargo, Cuba has produced better health outcomes than most Latin American countries, and they are comparable to those of most developed countries. Cuba has the highest average life expectance (78.6 years) and density of physicians per capita (59 physicians per 10,000 people), and the lowest infant (5.0/1000 live births) and child (7.0/1000 live births) mortality rates among 33 Latin American and Caribbean countries."
Not bad. Not bad at all. The graph below shows average life expectancy in Cuba, Latin America, Canada and the U.S. Notice how fast average life expectancy increased and caught up to U.S. levels after the revolution. Since then, Cuban life expectancy has more or less been on par with that of the U.S. except for the period after the collapse of the Soviet Union, when aid to Cuba contracted sharply.
But how did Cuba achieve such good results in the face of the embargo while at the same time spending far less per person than the U.S. and most European countries? The article explains:
"Cuba has one of the most proactive primary health care systems in the world. By educating their population about disease prevention and health promotion, the Cubans rely less on medical supplies to maintain a healthy population. The converse is the United States, which relies heavily on medical supplies and technologies to maintain a healthy population, but at a very high cost."
Another side of the story, the article notes, is the government's emphasis on community access to health care and deliberate policies to tailor each local practice to the health profile of the community it serves. This, combined with universal coverage and free service, explains a lot of the outcome. To this I would add a more broader point: government priority. Specific strategies aside, what is most striking about Cuba's health outcomes is that no matter how many obstacles a country faces (such as, for instance, fending off the most powerful country in the world for five decades) it can provide free health care to all its citizens so long as it prioritizes their well being.

There's a lesson to be learned somewhere in there me thinks.

Paramilitary violence in Oaxaca

So this news has slowly made its way into the press...and there is not a lot maladjusted has to add other than pointing those who want updates from the ground from someone much better informed than maladjusted, to Kristin Bricker at My Word is My Weapon.

Check it out.

Thursday, April 29, 2010

Mockus good for business?

So maladjusted hasn't done any scientific study on this, but the guess is that most casual observers would think the Colombian business community will support Santos in the upcoming election. It's not like Mockus' rise in the polls is rattling the markets or anything like that, but business generally likes continuity (and right wingers), not newcomers who dress up in super hero costumes and dispatch mimes to ridicule traffic violators. That said, one thing businesses like even more are profits. Currently, exports to Venezuela have collapsed (due to some testy relations, we'll say) and while the US has graciously stepped in (see the graphs below), the fact remains that Venezuela is right next door and even though they are pushing an FTA with the US, does Colombia really want to be EVEN MORE dependent on the US (just look at Mexico).

According to Reuters, "Colombia says the trade conflict could trim around one percent off its economic growth this year." That ain't no joke, especially not when your coming off this past year. The article also mentions that Colombia has relatively few exports to China compared to the rest of the region. So maybe to the extent that China takes the place of Venezuela that could be a good thing, but it seems the US is picking up most of the slack.


So this is where Mockus' statements about Venezuela come into play. During the presidential debate the other night Mockus stressed the need to separate relations with Venezuela from those with the US. This would be a serious break from the Uribe years in Colombia, where it seemed like their privileged relationship with the US was always put before everything else. Given that Colombia's neighbors aren't too thrilled with Santos, it seems pretty clear that Mockus would be the candidate most likely to repair relations with Venezuela and Ecuador. And who stands to benefit the most from that? Colombian exporters...



So maybe I'm over estimating the effect this is having, and how important this is for Colombian businesses (in which case let me know). Regardless, from everything I've read Mockus' economic policies would not differ much from Santos, and in any case it would be hard to argue that better regional relations would be a BAD thing for business.

(all images courtesy of Colombia's DANE)

How to buy access to the US congress, example # 23,113

This is about as unsurprising as it gets in Washington, but never the less worth noting. (even though the story is a week old..must have never hit post...my bad) Congressional slime and right-wing zealot Ileana Ros-Lehtinen is facing some heat over possible ethics violations. Not sure what the fuss is about, I mean it's not like the top Republicant on the House Foreign Affairs Committee sent out an email with the subject line:

“Ros-Lehtinen invites YOU to join her Foreign Affairs Advisory Board.”

Wait, she did? Holy shit! And all it takes is the $2,500 cover to attend an “intimate dinner”? Not a bad deal really.

Unfortunately (since I was definitely going to try and infiltrate her advisory board), the whole thing prompted accusations that this somehow violated ethics rules…as if ethics rules actually existed in Washington…and she canceled the whole thing.

For those who don't know much about Ros-Lehtinen, she is the worst of the worst when to comes to US foreign policy in Latin America. For instance she has been the main protector of the terrorist Luis Posada Corriles, while at the same time trying to put Venezuela on the list of state sponsors of terrorism. Most recently she was an ardent supporter of the military coup in Honduras, even heading down there for some nice photo-ops with the golpistas (pictured above, taken from her website under the section "Dignitary Meetings - Western Hemisphere").

Noriega is "sick"

According to a lawyer representing Noriega, the former dictator of Panama is not in the best physical health. As maladjusted's readers probably already know, Noriega was extradited to France a couple days ago after serving a 17 year sentence in Miami. He now faces money laundering charges for allegedly using drug money to buy luxury apartments in Paris (Noriega's defense is, quite plausibly, that he paid for those apartments with CIA cash instead).

Pardon my cynicism--yes, Noriega probably is an ailing old man--but it looks like his defense team is gonna try to pull a "Pinochet in London" and attempt to have him released on humanitarian grounds. As some of you may recall, Pinochet was arrested back in 1999 while he was in London getting medical treatment because of an extradition request from Spain. Long story short, after a protracted legal battle, it was determined that Chile's ex-dictator was unfit to stand trial due to his ailing health condition.

Well, just watch the video below to see how that one turned out. Upon returning to Chile, Pinochet--supposedly too sick to stand trial--surprised his welcoming crowd by immediately standing up from his wheelchair and proceeding to practically dance the damn cueca (Chile's national folk dance).



Ok, so maybe I exaggerated a bit on that last one. But the point is that the supposedly ailing dictator was certainly in far better health than it appeared. And, more importantly, putting on that little act allowed him to avoid prosecution for human rights abuses.

Now, this little blast from the past aside, if his defense succeeds in having his case thrown out in France, Noriega will probably face extradition back to Panama to serve more time there. But should we care where Noriega goes to jail next? Unlike in France, if extradited to Panama Noriega would have a chance of serving his sentence under house arrest. On the other hand, it seems more fitting for an ex-dictator to serve his sentence in his own country where he committed his crimes.

Wednesday, April 28, 2010

National security fantasies--Venezuela and Iran

Last week the idiots over at the Center for Security Policy, a Washington, DC-based think tank, sponsored a briefing in the U.S. Congress on the growing threat to U.S. national security posed by Latin America and Venezuela in particular. The event featured a well-rounded panel of paranoid delusional right-wing douche bags, including the one and only Otto "ignoramus" Reich and the illustrious Republican Rep. Ileana "bat shit crazy" Ros-Lehtinen, the ranking member on the House Foreign Affairs Committee.

According to this panel of experts (i.e. dumbasses who told their unpaid interns to google the words "Iran" and "Venezuela"), "Chavez’s expanding ties with Iran and Hezbollah and other terrorist groups" represents a "growing threat" to U.S. national security. You see, these experts had "evidence" and they "cited" it. And by "cited" I mean they simply assured the audience of its existence.

Well, while we're on the topic of "evidence", General Douglas Fraser, the commander of the U.S. Southern Command, had this to say yesterday:
"We see a growing Iranian interest and engagement with Venezuela. ... It's a diplomatic, it's a commercial presence. I haven't seen evidence of a military presence."
Whatever. The briefing's write-up gives you a good sense of the level of paranoia in that room last thursday. One fella by the name of Norman Bailey, commenting on Iranian industrial investments in Venezuela, stated:
“The tractor factory doesn’t make tractors, and the cement factory doesn’t make cement. The tractor factory makes weapons, and the cement factory is used for the export of cocaine.”
This guy was also extremely concerned about non-stop, 24/7 flights between Tehran and Caracas, which apparently “are permanently full."(!) He also claimed that Iranian experts have installed mines in Venezuela's major ports and refineries in anticipation of a U.S. invasion.

And these were only some of the claims made during the briefing that made it into the Center for Security Policy's website. But fortunately, maladjusted just so happened to be on the scene and had the (dis)pleasure to witness the panel's other dumb claims:
  • Iranian missionaries are converting entire indigenous tribes in Venezuela to Islam (oh the horror!).
  • Iran's nuclear program=nukes in Venezuela.
  • Islamic/Bolivarian-Communist drug traffickers could (will?) blow up the Panama canal.
Yes, yes. This would all be absolutely hilarious if it wasn't also dangerous. Believe it or not, people actually listen to these idiots! What's more, they react aggressively when confronted about their so-called evidence. Reporters from Telesur were at the event and asked the panel if there was enough evidence to justify their militaristic tone--noting that it all sounded very much like during the buildup to the invasion of Iraq, when the case for war rested on made up evidence about WMDs.

Of course, Otto Reich considered this type of questioning "harassing" and threatened to have the reporters removed from the room after verbally attacking them. The other panelists were only marginally more gracious, some managing to mumble something about the Reyes laptops proving all their claims conclusively.

In any case, the point is that these people can't be reasoned with and their paranoid national security fantasies are dangerous. These people, no matter the claims to the contrary, have not shaken off the Cold War mentality. During the event Otto Reich warned, and I quote, of Venezuela's "military buildup financed by the Soviet Union--oops--I mean Russia."

I don't care what your opinion of Chávez is. You can hate him and think he's a populist-whatever for all I care. But influencing the foreign policy of the world's most powerful nation through fear mongering and imagined threats most certainly makes the world a worse place.

RANT. OVER.

Update:

I seem to have written virtually the same post as Setty's Notebook, although far less seriously than he did. Boz seems to have also chosen to write about this in a more serious tone than yours truly. I commend both of you for having the restraint to write about this bullshit without resorting to mockery and insults as I did.

Monday, April 26, 2010

Obama speaks with Pepe "national reconciliation" Lobo

Why am I not surprised. Today Obama spoke for the first time with all around asshole Pepe "national reconciliation" Lobo. You see, although Obama is concerned about those recent "suspicious" murders of journalists (you know, the ones Lobo and his supporters couldn't possibly be involved with), he's nevertheless pleased with Lobo's great job promoting national reconciliation and all that democracy stuff. From the whitehouse press statement, via politico:
"The President commended President Lobo for his leadership in his first months in office in promoting national reconciliation and restoring democratic and constitutional order in Honduras. The President took particular note of the Truth Commission agreed to as part of the Tegucigalpa-San Jose Accord and championed by President Lobo that is set to begin its work in the coming days.

President Obama expressed his concern with the human rights situation in Honduras, particularly the recent suspicious killings of a number of journalists and civic activists. The President welcomed President Lobo’s plan to fully and transparently investigate these cases as well as his commitment to improve the overall human rights situation."

Paul Schäfer--nazi, pedophile, murderer--was buried today

Chile's La Nación today reported on Paul Schäfer's humble funeral in Santiago's parque del recuerdo cemetary. For those of you who don't know about Schäfer's comic book villain level of evil and the dystopian nazi cult community he ruled with an iron fist in the south of Chile, Colonia Dignidad (dignity colony), I recommend this great article.

Schäfer's story is so over the top and bizarre it's hard to convey without sounding made up. Long story short, he founded the Colonia Dignidad in 1961 after he was forced to flee his native Germany due to child molestation charges against him. The colony became a utopian German enclave isolated from the rest of Chilean society. It's members, known as colonos, dressed in traditional bavarian peasant garbs (no joke) and were completely beholden to Schäfer's rule.

Rumors of strange happenings, including rampant child abuse, have been common throughout the colony's history but it became most infamous during the Pinochet dictatorship. Schäfer gave the DINA (Pinochet's secret police) access to the colony's facilities to torture and murder political dissidents. According to victims who claim to have been tortured in the colony, Schäfer himself sometimes participated in the torturing and even trained the DINA in interrogation techniques.

At the time of his death, last saturday, Schäfer was serving a 20-year sentence for child molestation. However, charges related to kidnappings, arms trafficking and human rights abuses were pending. To this president Sebastian Piñera commented:
"The death of Paul Schäfer prevents the continuation of penal prosecution, because there isn't penal persecution in this world for the dead. However, we all know that there's a justice that never ends, and that's divine justice."
Well put. And this is certainly one of those times when I wish I believed in divine justice.

Quote(s) of the Day


First, from Miguel d'Escoto the former President of the UN General Assembly on the US' role in the region, via Democracy NOW!:

We need the United States as much as we need arsenic, and that is the fact. We don’t need it. We would need it, if they wanted to join the rest of humanity and together work for a better future for all of us, but they are not doing that. They are instilling, they have instilled, a culture of death, of greed, of selfishness. And this is killing the world.

Word. And secondly and more comical, from Colombia presidential candidate and former Defense Minister Juan Manual Santos, describing the differences between him and Antanas Mockus, via Colombia Reports:

"I am different from him in many ways. Firstly, I shaved off my beard. I believe in God. I believe in having an army."

My preference is for beards...and atheism and no army for that matter...

Sunday, April 25, 2010

More IMF public support for capital controls

Following up on maladjusted's weekend update, Nicolas Eyzaguirre, the IMF's top guy for the western hemisphere, said yesterday that the Fund supports the use of controls on capital inflows to prevent unwanted currency appreciation and potential overheating. Now, this isn't breaking news, but it's certainly nice to see someone high up reiterate this position, especially after the Global Financial Stability report released a couple weeks ago seemed to backtrack a bit.

In any case, Mr. Eyzaguirre had this to say:
In some cases, exchange rate flexibility, good fiscal discipline, and a prudent set of macro prudential policies, may not be enough to avoid an over-expansion or a potential bubble. Thus, we do not bar or disapprove the potential contribution of carefully designed taxes on capital inflows that may have a role in complementing the policy toolkit—although we should always bear in mind that these kinds of more orthodox responses do have their limitations.
And he should know too, having worked at Chile's Central Bank during the 1990s when the country implemented its own well known capital controls.

The IMF's new position on capital controls is by no means groundbreaking. It actually follows the consensus in the academic literature quite closely and can essentially be summed up with this nice flow chart (click to enlarge):

If you face a surge of capital inflows (as many developing countries are facing today due to low interest rates in the north) you should first consider if your currency has room to appreciate. If this isn't the case, then you should consider if reserve accumulation is desirable and if inflation is a problem, then you should attempt sterilization. But sterilization can prove too expensive, in which case capital controls become a useful policy option. Of course, if inflation isn't a problem you can just lower interest rates to discourage the inflows from coming at all.

This is all very right, but there are certainly a lot of caveats in the IMF's position--enough to make one wonder how often the Fund will actually recommend the use of capital controls during its consultations with its member countries. For instance, the Fund insists on overstating the problem of the evasion of controls by sophisticated financial actors and has also warned that controls cause distortions.

Now, of course any regulation is only as good as its regulators. But nevertheless, no matter the extent of sophistication of your financial sector, evading controls always entails a cost, which is exactly what controls are supposed to do. In fact, most empirical studies have found controls effective to the extent that they manage to "segment" the domestic financial market from the international market--meaning there's a wedge between domestic and international interest rates or between the price of stocks traded in both markets. And very frequently, this is the case even in countries where critics have claimed that controls were evaded.

Weekend Update


A look around, from IMF/World Bank spring meetings to States of Emergency...I guess those aren't that far apart actually. Onto the update:

  • IMF Survey gives the brief version of what Nicolas Eyzaguirre, director of western hemisphere at the IMF, had to say about the region. The region is rebounding relatively quickly, large countries could face serious capital inflows which could lead to boom-bust cycles, therefore capital controls may be justified. Looks like they might be backing up that talk...

  • Brazil is a prime example of country where cap controls could be applied, according to the IMF. From Bloomberg: "Noting the “high liquidity and high commodity prices” in Latin America’s biggest economy, “Brazil is one that should consider all the instruments in the toolkit,” Eyzaguirre said."

  • One country that won't be using capital controls...Colombia. Reuters has the story: "Colombia is not considering capital controls to limit appreciation of its currency, its finance minister said on Saturday, even though the measures are no longer seen as taboo by many other nations." Pretty good article though, good quotes about the surprise of Colombia's finance minister about the popularity of cap controls at this years spring meetings.

  • Finally, the IMF is calling out Argentina for not allowing the annual Article IV consultations. As a member of the G-20, Argentina is a "systemically important" country, says the IMF. Argentina, for their part, released a statement that said: “If we had followed the recommendations traditionally made by (the IMF) — which have favoured opening our economies, foreign indebtedness, financial liberalization and ‘unbeatable’ market-oriented reforms — the outcome would have been totally different and today we would have been embroiled in a fresh economic, social and political crisis,” and that “Therefore, we celebrate today our well-gained economic independence.” Buenos Aires Herald has the English language run-down.

  • From the World Bank, an announcement today of a boost of capital, and a change in voting structure towards developing countries. $86 billion in new capital, but more importantly, "A 3.13 percentage point increase in the voting power of Developing and Transition countries (DTCs) at IBRD, bringing them to 47.19 percent -- a total shift to DTCs of 4.59 percentage points since 2008. This increase fulfills the Development Committee commitment in Istanbul in October 2009 to generate a significant increase of at least 3 percentage points in DTC voting power." Not everyone is happy; China is now behind only the US and Japan, but some African countries actually lost shares, and the Brazilian Finance Minister thinks the aim should be for at least parity at the next round of negotiations in 2015. Its ridiculous how long it takes to change governance at the IMF and WB.

  • The Washington Post reports on the murdering of journalists in Honduras, death toll is now 7 since March 1. Amazingly, the Post doesn't discuss political motives, and barely mentions Zelaya, without ever mentioning the frente. More evidence that if you really want coverage of Honduras, check out The Real News, Honduras Culture and Politics and Quotha.

  • Judicial issues in both Colombia (threats and murder)...and Venezuela (jail)...

  • Also in Colombia, Piedad Cordoba, facing charges of ties to the FARC, blames Uribe. And it turns out not only was the DAS spying on judges, politicians, journalists and human rights activists in Colombia...but also in Europe. Colombia Reports has it all.

  • And, as has been covered by others, Mockus has pulled even closer to Santos. For a good-looking chart showing the change in polls since Mockus teamed up with Fajardo, head over to IKN.

  • Arizona is fucked up. But maybe it will just be a Pyrrhic victory? At least the White House is responding...maybe even with a lawsuit, according to Jake Tapper.

  • What did Evo really say about Chickens? Mexfiles calls out "chicken-shit "progressives""....and at least one person in the mainstream media seems to understand...

  • Lastly, Paraguayan lawmakers granted Lugo a 30 day state of emergency to combat the Paraguayan Peoples Army. Lugo will "be able to order arrests and the transfer of suspects without court approval," and "The new law also places new limits on civil liberties like the right to assemble by prohibiting public protests." Lugo has been criticized by the right for being to soft on the "army"....the "army" is an estimated 100 people.
I'm sure there is much more I'm missing, let me know...

Friday, April 23, 2010

The Count: Goes to Greece


51...

...is the percent of Greeks who, in a recent poll, thought that going to the IMF for help would hurt their country. See, the IMF has done been so fucked up in so many places that the Greeks, as bad as it might be, don't want anything to do with them. The Greeks have already been getting a steady dose of maladjustment in the form of "belt tightening", and they know turning to the IMF means even more. So, as Reuters reports:

The poll by Public Issue for Skai TV showed that 51 percent see the IMF's involvement as harmful while only 27 percent think it would be beneficial.

"As regards other countries which borrowed from the IMF, 52 percent of those asked think they did not benefit, while 28 percent said they did," Skai TV said.

Only 47 percent of those asked said they trusted Prime Minister George Papandreou to handle the economy compared to 55 percent in a similar poll in February.

The poll showed that 87 percent of Greeks were worried about the country's public debt, which based on government projections will hit 120 percent of GDP this year.

A bigger percentage thinks the overborrowed country could go bankrupt compared to February -- 55 compared to 38 percent.

So let me get this right, they think the country is going to go bankrupt, they don't trust the Prime Minister and they are scared about the country's debt….AND THEY STILL DON'T WANT THE IMF! You hear that IMF?!

A breath of fresh air really….but food for thought, if the alternative is the EU, is that any better?

GM Crops in Latin America

First the good news, Peru announced that they will be labeling foods that contain genetically modified ingredients. To the extent that countries are going to allow GM crops, labeling foods that contain them is definitely a good call. On the other hand, Latin America is literally full of GM crops, as the chart below shows (click for larger view), 9 of the top 18 biotech producers are in Latin America:



Or for those visual learners:



Most of these GM crops are soybeans, which means these farmers are literally Monsanto's (more aptly called Monsatan) bitches. For background on Monsanto, I'd suggest the excellent documentary "The World According to Monsanto". Basically this company is as close to evil incarnate as it comes.

One country where they are realizing some of the horrible effects of GM crops is Argentina. Argentine scientists recently published a study that found Monsanto's "Round-Up" to have negative health effects (surprise, surprise). For background on that, and more on GM crops in Argentina, this piece from CIP's Americas Program is pretty good.

So while we should be patting Peru on the back for labeling foods with GM crops in it, the bigger issue is the take over of GM crops throughout Latin America.

(images from the ISAAA 2009 GM crop report)

Thursday, April 22, 2010

Ecuador Grants First Compulsory License


Props go to Ecuador, which this month granted its first compulsory license for a patented drug. Intellectual Property Watch reports:

The compulsory licence was granted for ritonavir, an antiretroviral drug, on 14 April to Eskegroup SA, the local distributor for Cipla, an Indian generic pharmaceutical producer, according to Andrés Ycaza Mantilla, head of the Ecuadorean intellectual property office (IEPI).

The owner of the patent is Abbott Laboratories, a US pharmaceutical manufacturer. Eskegroup will pay royalties to Abbott for using the licence under the term of the compulsory licence. The compulsory licence has been granted for the time that was left on the patent, until 30 November 2014.

This is a big move, and will make life saving drugs cheaper for Ecuadorians, so again, props to Ecuador.

For some background on the issue in Ecuador, this issue brief gives the low-down.

But Ecuador is not the first country to take measures against Abbott Laboratories. Colombia implemented price controls last year on Abbott Laboratories' Kaletra (ritonavir is the generic name). However civil society was pushing for Colombia to issue a compulsory license, which they stopped short of doing as far as I know. Brazil took similar measures in 2007, resulting in savings of $11.5 million a year. So whats the problem with Abbott? Why all the calls for compulsory licenses? Well, this, from the Aids Healthcare Foundation, pretty much says it all; they charge way too much, crippling countries health care spending and resulting in thousands of people going without life saving medication.

The move by Ecuador is totally legit under WTO rules, so why more countries aren't doing this is beyond me....maybe they are just structurally maladjusted beyond repair, scared to upset the price gouging pharmaceutical companies. Either way, this is a good move by Ecuador, lets hope others follow.

(image from TACD)

Wednesday, April 21, 2010

Jackson Diehl is really pissed there aren't more covert, illegal wars


Or at least that is what one would have to infer after reading his latest deranged diatribe. Diehl, (better known as Jackson Peep) is one of the stooges that make up the Washington Post editorial board….he writes:

During the 1980s Ortega’s consolidation of power was regarded as deeply threatening by the Reagan administration, which sponsored an armed insurgency against the Sandinistas even after a prohibition by Congress. Now the strongman’s antics go virtually unnoticed in Washington, where the Obama administration has been largely indifferent to the spread of leftist authoritarianism from Venezuela to Ecuador, Bolivia and Central America.

Did he really just go there? Not. Very. Surprising.

(image courtesy of Diehl's favorite blog, Borev)

Business Weak on Colombia's GDP growth

The folks over at Business Weak, in an otherwise decent article, told its readers today that Colombia's GDP more than doubled since Uribe took office in 2002 (this is one of those moments when I really wish I could just cue Otto's owl). But then, after Dean Baker kindly explained the difference between nominal and real GDP, Business Weak posted an updated version of the article:
Under Uribe’s watch, foreign investors have poured as much as $50 billion into industries including oil and coal, according to the central bank. Gross domestic product measured in constant dollars has climbed about 37 percent according to the World Bank, while the benchmark IGBC stock index has risen more than ten-fold.
Oooh... "measured in constant dollars"... sounds like pretty fancy stuff. Nice to see them make the correction but it's really quite disturbing to see such basic mistakes coming from one of the world's leading business publications.

Paramilitaries are "capturing" the state

A real interesting video piece from the Latin American News Dispatch:


Colombian journalist and political analyst Claudia López talks about how the paramilitaries are infiltrating the political system; she would know, it was in part her investigative reporting that led to the parapolitics inquiries. So while she expresses hope that now only 29% of congress has ties to paramilitaries (it was 37%), everyone should listen to her when she says that she still believes that they are “capturing” the state.

And just in case you don’t get how awesome human rights are in Colombia, the video notes that she was laid off from the Colombian daily El Tiempo for an article she published last year. Surprise, surprise, the US’ favorite client state is not only controlled by paramilitaries but according to the IACHR is close to being labeled a place where "you can barely say that there is freedom of expression."

López explains the situation with El Tiempo:

“Why was I laid off from El Tiempo? Because I published a column, based on facts and proof, that demonstrated that El Tiempo was publishing false data and misleading the public because of their political and commercial interests.”

The paper considered it a resignation letter. I guess more convenient than considering it a problem.

Tuesday, April 20, 2010

The Real News on Honduras

The Real News brings us more great coverage on the situation in Honduras, this time focusing on a standoff between the coup government and a movement of landless farmers in the region of Aguán. The Lobo regime has gone to great lengths to demonize the peasant movement and intimidate them into accepting a watered down land redistribution deal. To this end, Lobo has militarized the region, mobilizing 2,000 soldiers into the area. Also, since last December six members of the farmers movement have been murdered.

But don't listen to me, watch the video below for the full scoop...


More at The Real News

How did Latin America survive the global credit crunch?

Back in 2008, after the Lehman collapse, bank lending to emerging markets contracted sharply. But while bank lending was retreating in Eastern Europe and emerging markets in Asia, it shrank comparatively little in Latin America. Why?

A partial answer can be found below, courtesy of a new working paper from the IMF.

[Share of foreign banks' lending through their local affiliates, 2008 (in percent of total)]
When talking about foreign bank lending it's important to distinguish between cross-border flows (when a foreign bank lends to another country from its headquarters abroad) and lending by foreign banks' local affiliates. The graph above shows that unlike other emerging market regions, foreign bank lending in Latin America is mostly conducted through their local branches.

This type of lending is much more stable than cross-border flows, in large part because loans by foreign banks' local affiliates are mostly financed by local deposits. These types of loans are also more likely to be denominated in domestic currency, which as can be seen below, turns out to be the case in Latin America.

[Share of foreign banks' lending denominated in domestic currency, 2008 (in percent of total)]
But there's another piece of the puzzle. The largest foreign banks in Latin America, Santander, Scotiabank and BBVA, to name a few, did not have large exposures to Eastern European markets, which made it less likely for tough conditions over there to affect lending in Latin America.

So in sum, it does indeed seem like Latin America is atoning for its original sin, and if foreign bank flows are to be taken advantage of, countries should promote the type that takes place through their local affiliates.

Sunday, April 18, 2010

Weekend Update


For those who don't like to do the google themselves....

  • Otto at IKN has the latest on opinion polls in Colombia's upcoming election, and Mockus continues to rise...29 percent to Santos' (and James Carville's) 36 percent. Past coverage here.

  • What else is going in Colombia? Oh the usual: The Special Rapporteur for Freedom of Expression at the IAHCR says that Colombia is close to being on the list of places where "you can barely say that there is freedom of expression." Because, ya know, that whole being spied on by the government and getting threatened thing....speaking of which...

  • Plan Colombia and Beyond has got the latest on the DAS scandal. The prosecutor-general released some files from their investigation of DAS showing that the direction came straight from the Casa de Nariño. The post is complete with pictures from the report which shows DAS' plans to start an international smear campaign against independent journalist Hollman Morris. One badass dude. No worries though, not like the former Defense Minister and presidential candidate Santos would have had any knowledge of all this.

  • But the largest mass grave in Latin America? You might have some 'splainin to do on that one Santos....2,000 unidentified corpses.

  • Elsewhere, Peter Krupa at Lat/Am Daily picks up where I left off on the NAFTA diet...and takes it to the CAFTA diet.

  • Still on the topic of Mexico being fat...here's a start: "The lower house of Congress approved two reform measures banning the sale of junk food in schools and making physical education classes mandatory in Mexico, where 30 percent of children are obese." They must have read our post...

  • Good news from El Salvador as remittances in March rose for the first time since October 2008. Pretty damn important for a country where some 2.5 million Salvadorans live in the US and remittances account for 17 percent of GDP.

  • Da BRIC met in Brasilia last week with Brazil, and to a lesser extent India and China, continuing to speak out against harsh sanctions on Iran. Noting that sanctions paved the way to the Iraq war years ago. Also, India and Brazil will back each other up for security council seats. Some may argue that the BRIC is weaker than the sum of their parts, but really Yglesias? No common interests between BRIC countries? That's just crazy.

  • Via Ken Silverstein, The Washington Post takes a look at a lobbying scandal that has put Jamaica's Prime Minister on thin ice. A big time lobbyist representing the Government of Jamaica has been hitting Washington hard to try and block the extradition of a drug kingpin, only thing is the Government of Jamaica says they didn't pay anybody, question remains, so who did? Best part, the drug dealer's name is "Coke". No joke, go read the whole story.

  • Venezuela and China are again making moves, one country gets mad cash to try and turn the economy around, the other gets endless supplies of that black sticky stuff. Good for everyone.

  • From Chile, Piñera announced a big reconstruction package worth about $8.4 billion, but who is going to profit??

  • Will be interesting to see what happens this week in Cochabamba as the people's climate summit begins. After getting funding from the US for climate change programs cut last week, Bolivia will continue pushing for stronger measures to be taken. Importantly, those that are actually effected by climate change will be able to participate in this conference.

Finally, in Bolivia the anxiously awaited "Coca Colla" has finally hit the market, they only cost a $1.50 and and you'd be giving a royal up yours to Coca-Cola at the same time. Made with real coca leaf (unlike that fake stuff up north), the drink is named after the indigenous Colla from the Bolivian highlands. Shocked? Shouldn't be, another group tried this before in that other coca loving country...Colombia. An indigenous group there released their version in 2005. Even better, get this, "Uribe's presidential Web site even promoted natural coca products as a rare commercial enterprise for poor Indian communities, and the federal food-safety agency provided quality-control advice to the manufacturers of coca tea, cookies, shampoo and other consumer goods." But that all changed when Coke busted out a trademark infringement suit. Or maybe it was just pressure from big daddy up north? As for Coke's use of coca in their soda (and maybe the real reason for the lawsuit), while the recipe might be locked in a vault and unknown now, there was a time when we got a taste of the real thing, from the New York Times in 1988:

This week, details of how Coca-Cola obtains the coca and how it is processed emerged from interviews with Government officials and scientists involved in drug research programs. They identified the Illinois-based Stepan Company as the importer and processor of the coca used in Coke. After Stepan officials acknowledged their ties to Coca-Cola, the soft drink giant confirmed those details of its operations.

So you probably had heard that Coke used coca, but did you know this Stepan company can legally import coca? And that the company supplied Coke with their coca flavoring? Amazing, I know. So now that the recipe is back in a box somewhere who knows if they still do use coca, but one thing is for sure, Stepan Co. is still importing coca, and in the Times article it says most of it is from Peru and Bolivia...kinda ironic.

Friday, April 16, 2010

The Count: China edition

19.3...

...is the percentage of total Latin American and Caribbean exports that will go to China in the year 2020. And before you ask: no, maladjusted is NOT clairvoyant...... or at least not yet.

According to a study prepared by ECLAC the world's workshop will soon also surpass the European Union as the second largest destination for Latin America and the Caribbean's exports. The graph below shows the share of the region's exports that go to its top three markets. The key take away here is that over the last ten years the region is significantly less dependent on US markets than before and that China has rapidly become an important alternative destination for exports.

[Latin America and the Caribbean: top three export markets share of total 2000-2020 (percentages)]

Of course, the U.S. will continue to be the region's main export market but it's relative importance will have dropped tremendously, from 38.6 percent in 2009 to 28.4 by 2020. The EU's share will more or less stay the same while China's will continue its impressive increase, from 7.6 percent in 2009 to 19.3 in 2020.

Yes indeed, while the US and EU were stuck in a severe recession last year, China's economy still grew 8.7%. Also, while the value of exports to the US and EU plummeted 26 and 28 percent, respectively, the value of exports to China actually grew 5 percent.

Significantly, the assumptions underlying ECLAC's projections don't require Chinese demand for the region's products to continue growing at the same pace. As the report notes:
"If demand for our products in the United States, European Union and rest of the world continues to grow at its current pace, and assuming that Chinese demand only grows at half its current pace, China would surpass the European Union in 2014 and would become the second largest market for the region's exports."

As can be seen below, China already represents a key export market for many Latin American countries. 13% of Chile's exports go to China, followed by Peru, with 11% and Argentina, with 9%.

[Latin America and the Caribbean: Asia-Pacific country/regions average export shares 2006-2008]
But what's more, it attained this huge share of Latin American exports very, very, very quickly. Between, 2000 and 2008 it climbed from being Brazil's 12th largest export market to being number one. For Costa Rica it went from being 26th to second. Chile: from 5th to first. Colombia: 35th to fourth. Venezuela: 37th to third.

But there's a downside to this story. The pattern of trade between China and Latin America and the Caribbean is not very encouraging. With a few exceptions, the region is only exporting raw materials.

[Latin America and the Caribbean: technological content of exports to China, 1995-2008]
Not much of a clear trend in this one, except for that big blue space at the bottom. Yup, that shows the share of raw materials in total exports to China increasing.

So in the end, if these projections hold up, by 2020 Latin America and the Caribbean will be less dependent on US markets and much more dependent on Chinese ones. It would be nice if the moral of the story was that trade between developing countries meant a better pattern of trade for the region, but so far this doesn't seem to be the case. There are some exceptions though. For instance, virtually all of Costa Rica's exports to China are high-tech goods. Mexico also exports a large amount of high-tech manufacturing. But at the end of the day these are just exceptions.

Wednesday, April 14, 2010

IMF backpedals its endorsement of capital controls

Maladjusted's readers may know that after being snubbed by developing countries because of its horrible policy advise, the IMF had a midlife crisis and was forced to do a little soul searching. But right when it was on the brink of utter irrelevance, the global financial crisis hit and the ailing institution was given a new lease on life. In the process, headed by french "socialist" DSK, the IMF began reevaluating many of its long held dogmas.

Most recently, the IMF came out in favor of using short-term controls on capital inflows. This was considered a BIG FUCKING DEAL, and rightly so, but the details of how this would translate into actual policy were anything but clear. So now it shouldn't exactly come as a surprise that the IMF seems to be softening it's support for capital controls--that is, taxes and restrictions on moving capital across national borders.

A little background might be in order.

Throughout the '80s and '90s, the IMF encouraged developing countries to liberalize their financial markets and to do it fast. Free market types basically believed that doing this would promote the efficiency of financial markets, channeling funds to where they were needed most and thus leading to better economic growth.

Well, at the beginning of the '90s many developing countries began to liberalize and, due to a combination factors, were faced with massive inflows of foreign capital. To simplify, the US Fed had pushed interest rates down to help the US recover from a recession, prompting investors to look elsewhere for places with higher rates. At the time, Latin America was just such a place. Moreover, apart from having high interest rates, most countries in the region had spent the last decade--the lost one--pursuing neoliberal reforms that investors perceived favorably.

In any case, countries that had been cutoff from international capital markets for years suddenly experienced a huge surge of foreign capital inflows. The problem, however, was that when it comes to capital flows you really can have too much of a good thing. It quickly became apparent that these large flows of foreign capital carried significant risks and posed a challenge to macroeconomic management.

One side effect of capital inflows is that it puts pressure on your currency to appreciate and for many of these countries, which were pursuing an export-led development strategy, this was a big problem.

Many of these countries were also concerned with a loss of monetary policy independence, meaning that the abundance of foreign money was pushing interest rates down despite the wishes of central banks to keep them high in order to fight inflation.

Policy makers were also concerned that these large inflows could make countries more vulnerable to financial crises. In particular, Latin American banks took advantage of all this cheap foreign money and borrowed excessively short-term and in foreign currencies, which put them at risk if the inflows were to stop and the currency to collapse.

The point of this story is that one country in particular managed to juggle all these problems quite well and it did so using capital controls. This country also happens to be the free market darling Chile (Colombia and Brazil have used similar controls with varying degrees of success).

Another famous success story comes from Southeast Asia during the Asian financial crisis. Facing massive capital flight, Malaysia broke with the IMF and imposed temporary controls on capital outflows to prevent it's economy from collapsing. Its economy proceeded to recover rapidly.

Whatever. So now, in spite of mounting evidence and it's own endorsement, the IMF is warning that capital controls could cause significant distortions:
"Since the use of capital controls is advisable only to deal with temporary inflows, in particular those generated by external factors, they can be useful even if their effectiveness diminishes over time... However, the decision to implement capital controls should consider their distortionary effects not just on the individual country, but also on the global economy in the event their use were to become widespread."
To be fair, there's nothing wrong with this statement. Controls on capital inflows shouldn't be used as an excuse to avoid pursuing meaningful macroeconomic adjustments and if controls become widespread they might slow global recovery (a rather large claim backed by little evidence). But it's clear that there are actors within the IMF trying to prevent capital controls from becoming standard policy. So before we rush to the conclusion that the IMF is seriously reconsidering it's long-held policy stances, we should wait to see how it's endorsement of capital controls translates into actual policy.

Tuesday, April 13, 2010

A New "Virus" Hitting the International Scene?


Yesterday the New York Times "Idea of the Day" blog should have simply taken the day off, without further ado:
Today’s idea: Venezuela, Iran and Russia together pose a serious threat to American objectives worldwide, a foreign affairs scholar writes, dubbing the combined peril the “Virus.”
Really New York Times? Really? They must have just been sooo happy that they now have a new name to call these countries, a new "axis of evil", ooooh so media-y.

Sean Goforth (the "foreign affairs scholar" who wrote the article) even acknowledges how stupid these silly names are:

Ever since “axis of evil,” broad characterizations of geopolitical threats have been considered impolitic, if not ignorant. Certainly this had a lot to do with the intractable stance taken by the US government after President Bush's 2002 State of the Union, which led to the invasion of one country that didn't have WMD while speeding the development of WMD in at least one, if not both, of the other axis members.
But never mind all that, Goforth thinks we should go ahead and label them anyway, just maybe not go to war this time. Because after all "Venezuela, Iran, and Russia constitute a VIRUS of instability that threatens the United States and Western order." And isn't that what its really about? These people don't care what these countries do, so long as it doesn't threaten "American objectives worldwide" or "western order". I mean that whole sovereign right thing overrated anyway. Because after all, America's never been wrong before....oh wait....except for the "axis of evil".

Monday, April 12, 2010

Is NAFTA Making Mexico Fat?


Saw this graph from the New York Times yesterday (part of it reproduced above, from Kevin Drum), but all the commentary I saw was about the US in relation to France and Spain, nobody mentioned what immediately jumped out at me; namely that Mexico eats a shitload of food, and that most of it falls into the "packaged food" category. Turns out Mexico is actually one of the most obese countries in the world. I had no idea.

But whats behind this massive consumption of packaged food and the rise in obesity?

Well, this document, from Agriculture and Agri-Food Canada has one take:

Processed, ready-to-eat and frozen food products are gaining in popularity in Mexico as a result of changing lifestyles, women entering the workforce and increasing per-capita income levels. Furthermore, rising levels of wealth mean a growing audience for imported foods. As purchasing power gradually increases, convenience foods become seen as a time-saving alternative to traditional meals.

Well that sure is interesting, and hey the market IS growing at 12% a year, good for Canada's agri-food business! But come on, doesn't this seem more reasonable? From New America Media:

In less than a generation, Mexicans have gone from a nation of relatively healthy people to a nation confronting an unprecedented health crisis: morbid obesity. The culprit? The NAFTA diet.

...

The public health crisis precipitated by the change in the Mexican diet is causing alarm among politicians. Mexico is confronting an unprecedented strain on its national health system. Since NAFTA, “there’s been a greater consumption in fats, fried foods, carbonated soft drinks and fruit drinks that contain high levels of sugar,” Tomas Gloria Requena, a deputy in Mexico’s Congress, complained.

...

The change in the Mexican diet, however, is only one part of a complicated equation. In the course of implementing NAFTA, Mexico has sought greater coordination with both the United States and Canada. This has meant, among other things, aligning Mexican hours to the U.S. daylight and saving time changes, which, for a nation that lies closer to the equator, means more hours in school and at work. More importantly, Mexico, after a heated debate, officially abolished the siesta -– the traditional midday closing of businesses for three or four hours to allow people to go home and share meals with their families. As a consequence, working “9 to 5” means that home-prepared meals are for the majority of Mexicans a thing of the past, and the “super-sized” fast-food alternative is just around the corner.

“I see it every day,” Salazar continued, “children given money to buy a ‘Happy Meal’ and stressed out mothers who can only think of serving a Pizza Hut pizza for dinner. Over time, the junk food takes its toll on the body.”

If Mexico hoped that NAFTA would be a ticket to becoming more like the United States, it may have gotten its wish. One of the unintended consequences of the trade agreement has been to make Mexico a nation in which morbid obesity has become a national health crisis –- just as it has with its neighbor to the north.


Yeah, correlation does not imply causation and a lot of the packaged foods Mexico is consuming comes in the form of bakery items (check out the whole graph on the NYT not just the tidbit above), but I think its probably fair to say the NAFTA diet hasn't really been a diet! And really those two explanations above are not that far apart; "changing lifestyles", "women entering the workforce", "time-saving alternative". The problem is one description sees an opportunity, one sees a looming public health crisis. My vote is for public health crisis.

Bogotá Cambió

So who is this Antanas Mockus guy? I mean, we all know he's a presidential candidate in Colombia and is rapidly rising in the polls... but who is Mockus the man? Where does he come from and what makes him tick?

Well now you can find out. The man was hugely successful as two-time mayor of Bogotá, where he set off what is arguably the strangest, most post-modern, and all around awesome process of urban renewal ever. As just one example that doesn't even begin to scratch the surface, this guy fired 3200 officers of Bogotá's notoriously corrupt traffic police and... replaced them with traffic mimes! Yes, mimes whose job it was to enforce traffic laws. Could I make this shit up?

And you know what's the real kicker? His unorthodox approach to city politics, inspired by his background in philosophy, paid off. But don't believe me, watch the great documentary below. And when I say great, I mean balls to the wall awesome. Cuddle up with a blanket and some popcorn and enjoy.

Oh and did I mention that before running for major he was the president of the National University of Colombia and...umm... mooned an auditorium full of people? True story.

Here's part 1:



part 2, part 3, part4, part 5, part 6, part 7.

Sunday, April 11, 2010

hmmm...

draw your own conclusions on this one (from the always irreverent The Clinic):

Weekend Update

Not a lot from maladjusted this weekend, but lets take a look around and see what people who were more productive have been writing:
  • Curious about inflation in Venezuela? I was, and so this post from Otto at IKN was much appreciated. Everyone knows inflation is high in Venezuela, but Otto breaks it down, and unlike the mainstream media he even notes that the minimum wage has tracked inflation pretty well over the last few years. Check it out.

  • Peter Krupta over at Lat/Am Daily posts about Mockus' presidential run in Colombia, picking up where I left off last week.

  • From Plan Colombia and Beyond we hear about the magic laptop.....wait, the other magic laptop, not from the FARC but from the paramilitaries. Files from a memory card from AUC leader "Jorge 40" provide some corroboration to the accusations against Colombia VP Francisco Santos of paramilitary ties. Read the excerpt from the files, or check out the whole thing, but take it all with a grain of salt (like any info from a terrorist's laptop).

  • Some big (and disappointing) steps are taken in the normalization of relations with Honduras. Pepe "reconciliation" Lobo was in Nicaragua on Friday getting the head of state treatment from Ortega. Lobo also got invited by Spain to attend the 6th European Union - Latin American and Caribbean Summit in May. This all follows Western Hemisphere point man Valenzuela's remarks that Honduras was ready to return to the OAS. All in all it looks like a successful whitewash at this point. Expect more remarks from Clinton like, "I cannot think of another example of a country in Latin America that, having suffered a rupture of its democratic institutional order, overcame such a crisis through negotiation and dialogue." Meanwhile activists and journalists continue to be killed at an alarming rate.

  • Also on Honduras, The Financial Times gives Andres Thomas Conteris some love. The guy was in the embassy with Zelaya from day one and his coverage of Honduras has been some of the most informative. A unique insiders view, we get tidbits like, "When we jogged on the patio, sometimes we saw little red laser dots trained on our bodies." Yay democracy!

  • Pablo Navarrete, editor of the Red Pepper Venezuela blog and director of the film "Inside the Revolution: A Journey into the Heart of Venezuela", has an op-ed in the Guardian on the media's representation of Venezuela. The article is worth a read, and the movie is worth a watch.

  • An interesting IMF Working Paper looks at the efficiency of foreign banks in Central America. Key take away: "foreign banks are on average not more efficient than their local or regional competitors."

  • In case you missed this last week, coverage continues on the US/Brazil military agreement, described by one senior official as "more “aspirational” than specific." The deal is set to be signed tomorrow in DC. In case you thought the US was trying to secure the Brazilian order for fighter jets with this move, think again; France's Rafale seems to have sealed the deal by offering full technological transfer. Defense Secretary Gates, after signing the agreement, sets off for a tour of the region to the US' BFFs Colombia and Peru where he will pay lip service to the war on drugs and combating terrorism, most likely at the same time criticizing Venezuela for leading some sort of "arms race".

  • From Bolivia, that crazy socialist Evo continues to lead the economy into the ground.....and announces THE HIGHEST GROWTH IN THE REGION IN 2009, an impressive 3.36%. No surprise to those who have been paying attention though.

  • Also from Bolivia, Jim Schultz at the Democracy Center looks back at the Bolivia Water Revolt ten years later.

  • Speaking of water wars; there have been large protests, led by CONAIE, in Ecuador over proposals for a new water law. The protests succeeded in delaying the passage of the law and secured promises from legislators that their concerns will be taken into account.

  • Finally, NACLA looks at a lawsuit in the New York State Supreme Court that pits Coca-Cola against two Guatemala union leaders. The prosecution is calling out a Coca-Cola subsidiary for encouraging violence against union leaders and generally just screwing the unions...I know, total shocker.

    UPDATE:

  • Via Bolivia Rising; Bolivia's ambassador to the UN, Pablo Solon, denounced the decision by the US to cut climate aid to countries who didn't back the Copenhagen accord. Bolivia and Ecuador both lost a couple million in funding.