Archive for the ‘business’ Category

Uruguay: High hopes

Monday, May 26th, 2014

Uruguay Has Big Hopes for Pot Industry
Uruguay hopes that its status as the only country to fully regulate the cannabis industry will turn it into a magnet for investment in medical and other applications of the plant

No word as to whether Uruguay hopes that its status as the only country to fully regulate the cannabis industry will turn it into a magnet for investment in the snack food industry.

Cheetos, anyone?

Meanwhile, back at the ranch . . .


President Mujica makes a sartorial statement.

Chile: Down with entrepreneurs

Thursday, May 8th, 2014

Letter to the WSJ editor:

Regarding Mary Anastasia O’Grady’s “Assault on the Chilean Miracle” (Americas, May 5): I am of German nationality and came to Chile last year, where the startup community was flourishing. I set up our company, a tech startup that optimizes recruitment processes through the automatization of internal referral systems. All was going well until the tax reforms provoked a state of shock among Chilean companies. It now seems that Chilean companies have been put on “stand by” due to the uncertainty of the tax reforms.

Many relatively new companies that have come to Chile to innovate are now struggling due to budget cuts from large, potential clients and will directly suffer because of this reform. The entire entrepreneurial ecosystem that has given the country so much international exposure is currently at stake. This will have a direct impact on the forward-thinking measures Chile has taken over the past years.

Alexander Theis

I would call it unintended consequences, but, quite frankly, I suspect the outcome is exactly what Bachelet intended.

Ecuador: Patton Boggs to pay Chevron $15 million

Wednesday, May 7th, 2014

HUGE:
Following Chevron’s win in the fraud case committed against them, Chevron and Patton Boggs settle their epic legal battle over jungle oil pits in Ecuador

Chevron and Patton Boggs have settled disputes linked to long-running litigation over toxic drilling waste pits in Ecuador, with Patton Boggs agreeing to pay Chevron $15 million, issue a statement of regret, and withdraw from the Ecuador case. Chevron agreed to release all claims against Patton Boggs and its partners.

The settlement is a stunning and highly unusual setback for any law firm, let alone the nation’s leading lobbying firm, long a bedrock of the Washington establishment. While the payment will cover only a tiny portion of the money Chevron has spent on the legal battle, the settlement overall tarnishes the reputation of Patton Boggs.

I know of no other instance where a top lobbying law firm has settled publicly in such terms, particularly when

Now, as part of the settlement with Chevron, Patton Boggs has agreed to assign its 5 percent interest in any money the plaintiffs might obtain. It also agreed to assist Chevron with discovery against the Ecuadorian plaintiffs and their New York-based lawyer Steven Donziger, who has been doggedly fighting Chevron for more than two decades and who Chevron has argued was part of a racketeering scheme to obtain a fraudulent judgment.

Daniel Fisher at Forbes puts it best: Patton Boggs Pays Chevron $15 Million To Rid Itself Of Donziger

The settlement, down to the humiliating, pre-negotiated press release, resembles deals Chevron has negotiated with London-based Burford Capital and other parties that assisted New York attorney Steven Donziger in his attempt to make the oil company pay for widespread pollution left over from a Texaco drilling program in Ecuador in the 1970s and 1980s.

Law firms are rarely found liable for tactics they use to zealously represent their clients, and multimillion-dollar settlements are even rarer. Perhaps more unusual is the law firm’s agreement to deliver partners James Tyrrell and Eric Westenberger to Gibson Dunn’s New York offices for depositions overseen by a court-appointed special master. The firm has also agreed to turn over documents, provided its former clients don’t prevail on challenges under the attorney-client privilege.

Maybe, just maybe this will give pause to anyone considering to engage in fraudulent legalfare against U.S. corporations.

Related:
Why Patton Boggs Has Come to Regret Picking a Fight With Chevron

A federal judge in New York has dismissed a suit Patton Boggs filed against Chevron (CVX), which accused the oil giant of bad faith in response to the law firm’s attempt to enforce a multibillion-dollar pollution judgment in Ecuador. While the fizzling of the Patton Boggs case by itself might not seem significant, the dismissal leaves behind Chevron’s counter claims against the law firm, in which the oil company accuses the Washington partnership of participating in a massive fraud and coverup related to that same Ecuadorian judgment.

I’lll be in Silvio Canto’s podcast tonight at 8PM Eastern to talk about this and other Latin American news.

UPDATE:
Paul M. Barrett writing for Business Week:

In nearly three decades of writing about the law business, I can’t think of a comparable retreat.

Linked to by Doug Ross. Thank you!

Linked to by Instapundit. Thank you, Ed Discoll!

Linked to by Bad Blue. Thank you!

Linked to by American Thinker. Thank you!

Le-gal In-sur-rec-tion‘s post of the day. Thank you! Understatement of the year: “Chevron must have really good lawyers.”


Argentina: Trade surplus plummets

Tuesday, April 29th, 2014

Argentina Trade Surplus Plunged 95% on Year in March
Broad Decline in Commodities, Manufactured Goods Exports Led to Drop

Exports fell 16% on the year to $5.25 billion in March, led by a plunge in grain and soybean exports. Shipments of industrial products like cars also fell as sluggish growth in neighboring Brazil trimmed demand for Argentine manufactured goods. Imports decreased 4% to $5.21 billion, led by declines in consumer goods and spare parts, according to preliminary data published by the national statistics agency Indec.

The trade surplus for the first quarter shrank to $121 million, from $1.5 billion a year ago due to a drop in farm shipments and rising fuel imports. Argentina’s energy deficit—the difference between energy exports and imports—widened 19% on the year to $792 million in the quarter.

While the country expects a record soybean crop,

The Argentine economy is widely expected to tip into a recession this year as inflation of more than 30% erodes the public’s purchasing power and spurs locals and foreigners alike to pull their money out of the country. Analysts at Abeceb and Barclays expect the economy to shrink about 1.5% this year.

According to the government’s own figures, industrial production fell 6% due to declines in the automotive and petrochemicals industries.

UPDATE:
Linked to by Israel Foreign Affairs. Thank you!

Ecuador: Looking for fools wanting to part with their money

Wednesday, April 2nd, 2014

Encumbered forever by desire and ambition
There’s a hunger still unsatisfied
Our weary eyes still stray to the horizon
Though down this road we’ve been so many times

This report is dated April 1st, but it’s no joke:

Ecuador to meet investors in non-deal roadshow

Ecuador has hired Credit Suisse to arrange meetings with fixed-income investors in the UK and the US beginning on April 4, according to two market sources.

Non-deal because Ecuador defaulted on US$3.2billion of debt in December 2008, and it’ll take quite a bit of tap dancing and some really high (pie in the sky, perhaps?) interest rates for incurably gullible optimists to buy Ecuadorian debt, and hope it doesn’t default.

Apparently Ecuador also hired Citigroup.

Sing it, guys!


#ThanksLarry: In praise of Larry Kudlow

Saturday, March 29th, 2014

“We believe that free market capitalism is the best path to prosperity!”
@larry_kudlow

I met Larry Kudlow at the Rainbow Room on Wednesday, November 16, 2005, at the Pajamas Media rollout party. Pajamas Media was having a momentary identity crisis, and we found out almost then that it was making its debut as OSM: Open Source Media instead.

There were a hundred people or so at the event, so I’m sure Mr. Kudlow doesn’t remember me, but here’s how it went:

Milton Friedman and Louis Rukeyser were instrumental in my transformation from a socialist to a capitalist, and I must partly thank PBS for that. As an economics/business major, I had read Friedman’s books, and they were pivotal to my change. (Years later, PBS aired Friedman’s Free to Choose series – which you can now watch on YouTube for free by courtesy of the Palmer R. Chitester Fund). While I was still in college, I started watching Louis Rukeyser’s Wall Street Week (W$W), which aired on PBS every Friday at 7:30PM. Friedman was a guest in the show.

I was a fan of the show for its entire run, from 1972 to 2002. There’s even a photo of me with my newborn son watching W$W on the day he was born.

In 2002 Rukeyser moved to CNBC, and he ended his show in 2004 due to his battle with cancer.

Larry Kudlow was a regular panelist in both shows, and, at the Pajamas party, I went over and introduced myself. Mr. Kudlow looks exactly as he does on TV, he’s shorter than I expected, and was (characteristically) very well dressed.

I started by asking him to tell Mr. Rukeyser, if he had a chance, that he was in my family’s prayers and convey our best wishes. Mr. Kudlow was most gracious, and he described how Mr. Rukeyser was the only person who would invite him to their show after Mr. Kudlow’s recovery following a scandalous and very public fall from grace due to his addictions. Mr. Kudlow also explained his conversion to Catholicism, as Catholics took him in during the time when he struggled to pry himself away from his disease. It was a remarkable conversation, and before we parted he mentioned again he’d convey my message to Mr. Rukeyser, whom he saw often.

CNBC started a show, Kudlow & Cramer, which I didn’t watch too often because I find Cramer annoying. Later on Kudkow got his own show, and I watched frequently (mostly while preparing dinner).

The Kudlow Report (and its earlier version, Kudlow and Company) was, without a doubt, the best moneypolitics show on the air. Differing, opposite, views were discussed civilly, and with clarity. It is entirely to Mr. Kudlow’s credit that he maintained such high standards on each and every broadcast.

Last night was The Kudlow Report’s last show. During his closing speech, Mr. Kudlow gave witness to his faith, movingly saying he “replaced addiction with faith.” He will continue as a CNBC contributor in other shows.

I wish Mr. Kudlow the best, and thank him for inspiring and encouraging Americans to prosper and grow.


Insourcing from . . . Mexico?

Thursday, March 20th, 2014

More, faster, please:
U.S. ENERGY REVOLUTION ATTRACTS MEXICAN INTEREST (emphasis added),

The media cliche is that free trade has sent U.S. jobs south to Mexico and overseas to China. But the boom in U.S. energy production, creating cheap fuel for manufacturing, has foreign investors thinking more about creating jobs in the U.S. Raul Gutierrez, who leads Mexican steel producer Deacero, tells us that, thanks to cheap energy, the U.S. is becoming more competitive as a place to manufacture. His company produces and sells on both sides of the border and he says that the U.S. is an attractive place to do business. Meanwhile, he’s urging his compatriots to end the government-enforced monopolies that have kept prices high for electricity and other industrial inputs south of the border. In urging Mexicans to embrace competitiveness reforms, he adds: “We need a free trade agreement with ourselves.”

As Don Surber says, GOOD.

UPDATE:
Linked to by Cherokee Gothic. Thank you!


Brazil’s high operating costs

Tuesday, March 18th, 2014

In the WSJ, an article on Forever 21‘s new stores, In Brazil, the Long Wait for Fast Fashion, highlights some of the issues business has to deal with (emphasis added):

Keeping prices low has been a challenge for most retailers because operating costs in Brazil are high. Apparel vendors in Brazil pay an estimated 35% in taxes on their products, compared with about 8% in the U.S., according to Alexis Frick, a São Paulo-based analyst for market researcher Euromonitor International. Retailers that ship their products in from abroad pay as much as a 35% in addition to those taxes in import taxes.

Take a look:

Price Check

Comparing prices in the U.S. versus Brazil for select items. These are website prices as of March 17.

Items U.S. price Brazil price
Mizuno New Prophecy 3 $210 $426
Mac lipstick $16 $28
Unlocked iPhone 5S (16 GB) $650 $1,190

When a friend from Brazil told me my Kitchenaid mixer (that retails for $250 on Amazon) sells in Brazil for US$1,000+, I asked that he take it when he went back, sell it, and we split the profit.

He already had bought one for himself, otherwise I would have sold him mine.

Related:
The Economist did a price comparison on Latin America iPhonomics.

UPDATE:
Linked by Dustbury. Thanks!


Puerto Rico: Hedge funds <3 the new bonds

Thursday, March 13th, 2014

Trading on hope, with junk:
Investors Flip for Puerto Rico’s Debt Offering
Hedge Funds Among Leading Buyers of Island’s $3.5 Billion Muni Deal

The smarter flipped theirs,

Then, as prices of the new bonds soared Wednesday, many investors sold at least some of their Puerto Rico debt for a quick profit. Investors and traders said buyers who got a piece of the bond sale Tuesday pocketed millions of dollars, echoing the quick winnings seen in last September’s largest-ever corporate-bond sale, a $49 billion offering by Verizon Communications Inc.

(Click for larger view)


And keep in mind,

The three major U.S. credit-rating firms this year downgraded the island’s debt to junk, or noninvestment grade, in a sign of lingering concern over its economy and governance.

Hate to be a party-pooper, but with numbers like that, someone’s going to get burned.

Argentina: Still in the hole for $185 million

Friday, March 7th, 2014

The Supreme Court on Wednesday revived a $185 million arbitration award British energy company BG Group PLC won against Argentina in 2007.

The high court, in an opinion by Justice Stephen Breyer, reversed a lower-court ruling that said the arbitration process that led to the award was invalid.

The case dates back to Argentina’s 2001-2002 economic crisis. BG alleged the Argentine government destroyed its investments in the country’s natural-gas distribution sector through a series of state actions. The company also said Argentina threatened businesses with serious penalties if they challenged the government’s crisis-era actions in that country’s courts.” target=”_blank”>The high court, in an opinion by Justice Stephen Breyer, reversed a lower-court ruling that said the arbitration process that led to the award was invalid.

The case dates back to Argentina’s 2001-2002 economic crisis. BG alleged the Argentine government destroyed its investments in the country’s natural-gas distribution sector through a series of state actions. The company also said Argentina threatened businesses with serious penalties if they challenged the government’s crisis-era actions in that country’s courts.

The BG Group case, by the way, is not the defaulted bonds case.