Venezuela: Default by September 2015?

December 11th, 2014

Casey Breznick posts,

A CNBC report on the prospect of a Venezuelan default cited a Capital Economics report stating that a default could be expected by next September or October when $5 billion in debt payments come due. Only an upswing of oil prices to somewhere around $121/barrel would allow Venezuela to balance its budget, according to some estimates. But with OPEC recently slashing its 2015 production levels to a 12-year low in response to decreasing estimated global oil demand and increasing supply via U.S. shale production, a significant oil price increase in the short-term seems highly unlikely. Bloomberg reports that the implied probability of default—derived from complex financial formulas—in the next five years stands at 93%, the highest in the world.

The Devil’s Excrement looks at Maduro’s New Script,

You may laugh all you want at what he says, but I don’t. He is making a very specific narrative out of all this and I am not sure where it is heading. It may be that he just wants to blame  the US for the intensification of the crisis in the next few months or simply, that he is preparing the ground in case there is no money to pay international investors. There is a one billion Euro payment in March, which looks doable, but there are much larger maturities in October 2015. But investors have so far believed that Venezuela had a “willingness” to pay, and the action in the markets today indicated some people were losing faith.

It did not help that Bloomberg reported today on a meeting with investors at a New York law firm, which actually took place like ten days ago. This meeting actually ended in a somewhat positive note, as many suggested that Venezuela and PDVSA could not get away with a restructuring below current prices for most bonds, as the oil cash flow would not justify it.

Francisco Toro:

It’s not the gobs of debt monetization, the billions of make-believe-bolivars the Central Bank loans PDVSA leading to an uncontrolled monetary expansion and the collapse of demand for real money balances.

It’s not the opacity in public accounts, the drop in reserves, the commercial default, the implosion in the goods markets, or the fact that you need your kid’s birth certificate to buy her diapers.

It’s not the fiscal deficit at 17% of GDP, or oil at $58 per barrel, or the tapped-out Fonden “sovereign wealth fund,” or the fact that the Finance Minister gives every possible public sign that he’s an idiot.

It’s not that the one regime official who announced a semi-reasonable reform that might have stanched the flow got shifted sideways to a non-economic job.

It’s not the Central Bank’s scandalous subservience to the Executive branch, or the fact that it won’t even dare publish basic inflation statistics.

It’s not that PDVSA has missed every production increase target it’s set for itself since 2003, it’s not that its refineries are badly maintained and barely functional, much less profitable.

It’s not that labour laws make it insane for a worker to waste his time working, and unreasonable as well as that is time he needs to spend queueing for basic consumption goods.

It’s not that the investment climate has been so shitty for so long, and the profit repatriation picture so bleak, no one sane even considers putting money into Venezuela.

Nope. It’s none of that. According to Maduro, it’s all a conspiracy, led by some flunkie sitting at a cubicle at Moody’s, someone who for some weird reason has decided to mess with his revolution. That’s why it’s expensive for Venezuela to borrow.

PDVSA 2022 bond in the last three months. It was losing 14% of its value today, with a yield to maturity of 31.4%:



U.S. releases 6 al-Qaeda detainees to Uruguay

December 10th, 2014

Following up on yesterday’s post, my post, U.S. releases 6 al-Qaeda detainees to Uruguay

Four were members of the “Syrian Group;” all are connected to Abu Zubaydah; only one was deemed as “medium risk,” the other five were “high risk.”

The four Syrians are Ali Husein Shaaban, Ahmed Adnan Ahjam, Abd al Hadi Faraj and Jihad Ahmed Mujstafa Diyab; from the West Bank, Mohammed Abdullah Tahamuttan; from Tunisia, Abdul Bin Mohammed Bin Abess Ourgy.

And as soon as they got to Uruguay, they were given rights to come and go as they please.

Peru: Greenpeace vandalism

December 10th, 2014

Peru Says Nazca Lines Damaged By Greenpeace Protest
A protest by Greenpeace on Monday to call attention to global warming has damaged a protected area in the ancient group of geoglyphs known as the Nazca lines, Peru’s Ministry of Culture said late Tuesday.

A protest by environmental group Greenpeace on Monday to call attention to global warming has damaged a protected area in the ancient group of geoglyphs known as the Nazca lines, Peru’s Ministry of Culture said late Tuesday.

Greenpeace didn’t bother to find out that you are not allowed to walk there, but they did issue a non-apology to “those people who may have felt troubled by the protest.”

I hope they get arrested.

Colombia: FARC using al-Qaeda for European drug trade

December 9th, 2014

Via Álvaro Uribe’s tweet,

FARC using al-Qaeda networks to bring in cocaine in Sahel FARC-coke-al-Qaeda

The EFE article (in Spanish, my translation) FARC Using al-Qaeda Networks to Bring in Cocaine in Sahel

The FARC attempt to bring cocaine into Europe through the Sahel [note: a band of desert stretching across Africa – from Senegal in the West to Eritrea in the East], and are relying on Al-Qaeda in the Islamic Maghreb (AQIM) networks active on the Argelia, Mali and Mauritania border, according to Monday’s Al Massae Moroccan newspaper.

The newspaper, quoting an official report, explains that the FARC use the Sahel as springboard to Europe, after entering through Argelia and Morocco.

According to sources, AQIM charges the FARC a 15% “tax” on the cocaine value to guarantee a sage passage through the vast area it controls from the Western Sahara to north Mali, Mauritania y Argelia.

This alleged collusion between the FARC and AQIM translates into heavier weapons traffic in the zone, believed to be paid by the drug trade.

Al-Qaeda in the Islamic Maghreb (AQIM) has gone on the record supporting the Islamic State of Iraq and al-Sham (ISIS).

The Telegraph has an interactive Al-Qaeda map: Isis, Boko Haram and other affiliates’ strongholds across Africa and Asia

Al Qaeda in the Islamic Magreb
Operates in the Saharan countries – mainly in southern Algeria and Libya, Mauritania, Mali and Niger. Formed from a hard-core of fighters involved in Algeria’s civil war in the 1990s, in which Islamist fighters took arms after a democratically-elected Islamic government was ousted. Briefly set up its own fiefdom in northern Mali in 2012, before being ousted by French-led security force in January 2013. Makes a living by kidnapping foreigners, earning an estimated $60m from ransoms in the last decade.

And Colombia’s president wants unelected FARC members in the Senate, and broadening the definition of “political crime” to include drug trafficking, but only for FARC members.

[Post corrected for more accurate translation.]



Uruguay: Gitmo alumni go free

December 9th, 2014

They can travel out of the country, too,
Guantanamo Inmates Get Rights in Uruguay
Six former prisoners in the Guantanamo detention center in Cuba were set to begin their lives as free men in Uruguay on Monday, as President José Mujica said they could travel in and out of the country.

Six former prisoners in the Guantanamo detention center in Cuba were set to begin their lives as free men in Uruguay on Monday, as President José Mujica said they could travel in and out of the country.

Under what country’s passports?, you would ask. Once they get (Uruguayan?) passports, where will they go?

Most of the men—a Palestinian, four Syrians and a Tunisian—were likely to leave the hospital on Tuesday once they cleared extensive physical and mental tests and move into temporary housing, officials said.

“They will be able to bring their families here if they want,” Uruguay’s defense minister, Eleuterio Fernández Huidobro, told a local news station. “They will be accompanied by people to help them adjust to the language and other things. They will have to find jobs.”

Ah-hum.

It’s all about the empathy,

In a televised interview on Friday, Mr. Mujica—a former guerrilla who was imprisoned for 14 years—said that while he had long criticized the U.S. for its “interventions and abuses,” he couldn’t decline a request by Mr. Obama to accept the men.

in other empathy news,

The Carnival of Latin America and the Caribbean

December 8th, 2014

LatinAmerARGENTINA
Argentina Fines Facebook for Defying Censorship Order
Social-Media Company Permits “Defamatory” Groups, Faces US$77,000 Rebuke

Prosecutor in Argentina Will Look into Hidden Swiss Bank Accounts

BARBADOS
Barbados PM to Visit Cuba

BOLIVIA
Bolivian Authorities Seize Huge Load of Contraband Fuel Bound for Chile

BRAZIL
Corruption Curses Mexico and Brazil

COLOMBIA
Pablo Escobar’s sister trying to pay for the sins of her brother
The sister of the Colombian drug lord Pablo Escobar, Luz Maria Escobar sits by her brother’s tomb
Luz Maria Escobar, the sister of Colombian cartel boss Pablo Escobar, has told how she is trying to make amends for her murderous brother

CUBA
Political Arrests Have Quadrupled in Cuba

GUATEMALA
Guatemalan Populism Meets Its Match in Gloria Álvarez
Education Can Restore Republicanism in Latin America

HAITI
Haiti hit by anti-government clashes
Thousands of anti-government protesters clash with police in Haiti’s capital Port-au-Prince, calling for overdue elections to be held.

IMMIGRATION
Watch: Gowdy’s brutal cross-examination tears apart immigration activist’s ‘racism’ argument

MEXICO
Mexico’s president
Business backlash

Mexico City Police Chief Says He Is Stepping Down

These graphics will show you why Mexicans are saying they’ve had enough
The 43 missing students have come to represent the more than 22,000 people who have disappeared since 2006

NICARAGUA
China’s Nicaragua Canal Could Spark a New Central America Revolution
Many critics thought construction of a canal across Nicaragua never would begin. Now that it’s about to, they ask how it will end—and some are asking for guns to stop it.
Er, it’s not the Chinese government, it’s Wang Jing and his Hong Kong Nicaragua Canal Development Investment Co. (HKND) – big difference.

PANAMA
Panama Invites Cuba to Summit of the Americas

PUERTO RICO
Opinion: Koch brothers eye Puerto Rico

URUGUAY
Uruguay to take Guantanamo prisonersPresident Jose Mujica 4 December 2014
Uruguay’s President Jose Mujica says his country is set to resettle six prisoners from Guantanamo Bay on humanitarian grounds.

VENEZUELA
Cash-Strapped Chavistas Bankroll Million-Dollar Music Festival
Opposition Blasts ‘Caracas Sound’ as Wasteful Government Spending

The week’s posts and podcast:
Colombia: Peace at all costs?

Venezuela: The oil teat runs dry

Saturday night tango: Matteo & Patricia

Puerto Rico: In search of roast pork

Venezuela: Diamonds are a girl’s best friend?

Cuba: Londoño meets with dissidents

Venezuela: Maria Corina charged; falling oil prices

En español: Unidad de quemados

Venezuela: Oil break-even price?

Colombia: Gen. Alzate resigns UPDATED

Kevin Williamson on Russell Brand’s Che fixation

At Da Tech Guy Blog:
Venezuela and the falling oil price

Russia aims at Latin America

Podcast:
Talking about art with artist Adrian Plasencia in Silvio Canto’s podcast



Colombia: Peace at all costs?

December 8th, 2014

Former president, now senator, Álvaro Uribe has been keeping track of the FARC casualty list during the peace talks:

FARCMETER (on peace talks) Attacks: 842,
Civilians wounded: 326, murdered: 105,
FARC wounded: 726, murdered: 650,
Kidnappings: 71

But president Juan Manuel Santos is intent on leaving a legacy as the president who ended “the longest-running conflict in the hemisphere.” Cynic that I am, he’s probably hankering for a Nobel Peace Prize.

Now he’s proposing broadening the definition of “political crime” to include drug trafficking, but only for FARC members. Mary O’Grady explains,

Not all drug traffickers would be eligible to have their crimes reclassified, he said. Instead the proposal would be a sweetener offered by the government “specifically” for the narco-terrorist Revolutionary Armed Forces of Colombia (FARC) in the peace talks, now in their fourth year in Havana. The idea, he said, is to prepare for “the day that members of FARC want to participate in politics.”

The negotiations, which were supposed to last a year, have gone on for 40 months, which gives the Cubans plenty to work on,

Cuba is notorious for 24/7 surveillance of influential visitors. The home-court advantage allows it to psychologically evaluate Colombian negotiators, study their weaknesses and develop relationships of trust to manipulate them. The KGB also taught the Cubans to recognize, and make use of, excessive personal ambition, Mr. García said.

Mr. Santos has not hidden his yearning for a deal that would be labeled the end of the longest-running conflict in the hemisphere. It’s hard to ignore the possibility that Cuba and the FARC are toying with the president’s ego.

Fifteen months ago, Santos was saying he was amenable to granting unelected guerrilla leaders seats in Congress. He has become enough of a tool to destroy democracy in the process.

Venezuela: The oil teat runs dry

December 7th, 2014

Earlier this week I mentioned that Venezuela needs to sell its oil between $150-$200/barrel in order to break even. While the country’s economy is increasingly dependent on oil revenues since oil accounts for 95% of all exports, Venezuela ships cut-rate oil to Cuba and 13 other countries. For the last year, Venezuela’s had to cut back:

For a decade, the 13 beneficiaries of Venezuela’s largess have depended deeply on the oil to finance social spending and infrastructure, and rewarded Caracas with diplomatic support on the international stage, regional diplomats said in interviews.

Even as Venezuela pledges to continue the program, the country’s oil exports to the countries fell about 20% through October compared with the same period last year, says ClipperData LLC, a New York data tracker. And last year, Venezuela’s cut-rate oil exports declined 15% from 2012, the International Monetary Fund says.

Petrocaribe may become a thing of the past, which curtails Venezuela’s influence at the OAS and the UN,

The program has cost Venezuela $22.1 billion, with Petrocaribe countries accumulating more than $11 billion in debt through 2013, said Mr. Piñon, basing his calculations on PdVSA data.

In return, Venezuela got loyal allies that voted with Venezuela at the United Nations, the Organization of American States and at other regional bodies, diplomats and officials from four countries said.

Let’s hope the US State Department recognizes this as an opportunity, especially as Russia and Iran widen their scope in our hemisphere.

But I doubt they will.



Saturday night tango: Matteo & Patricia

December 6th, 2014

Dancing to Duerme, mi amor by Carlos Di Sarli

No one does a better molinete.

Puerto Rico: In search of roast pork

December 6th, 2014

Where to Find the Best Roast Pork in Puerto Rico
Crispy, tender, salty, smoky lechón asado—whole pig roasted slowly on a spit—is a holiday specialty on the Caribbean island of Puerto Rico. Here’s where to find the ultimate places to indulge

Then there is the charcoal vs. gas debate. Many purists say that to find the best lechoneras, you should look for the smoke, which means they are cooking with charcoal. “When you cook with gas, the residue of the gas lingers on the meat,” said Junior Rivera, proprietor of Lechonera Angelito’s Place in Trujillo Alto, a laid-back town southwest of the capital. “Charcoal is natural wood and is always going to give a better flavor.” Yet some veterans, such as the Lopezes of El Paso, use propane. “It’s faster, more efficient, cleaner and more economical,” said Ms. Lopez, who believes seasoning is more important than fuel.

I drool just thinking of it.