Category Archives: Venezuela

China Latin America Trade: Who’s Dependent On Whom?

Yes, I am obsessed with charts. And if you’re still reading this blog with any regularity, you are too. Especially if they’re about China Latin America trade.

I finally had a chance to dig through a BBVA report from last month entitled, “How dependent is Latin America’s Economy on China?” Following are the essential takeaways.

  • Commodities have always taken a significant share of Latin American exports; the level of commodity exports concentration had been declining until the start of this century, which coincides with the further involvement of China in global markets.
  • The shift of China’s economic model makes it the biggest contributor to world commodity demand and the top importer of Latin America’s natural resources.
  • There is a positive China effect on commodity exports concentration; the dependency on Chinese demand for sample commodities has indeed increased during the last decade.
  • However, Latin American countries’ economic growth is far less dependent on China than the commodity exports figures might imply.

Now with those overview bullets out of the way, the first chart that strikes me is shown a few different ways but all with the same conclusion. This is one of the versions, demonstrating the proportion of each country’s exports that are commodities:

2013.03.12.Latam-China commodity exports percent share total

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The Only Hugo Chavez Obituaries You Need To Read

2012.09.06.DivergingMarkets.3Stooges.Hugo-Evo-RafaelOne is out today, from Time’s Tim Padgett. Here’s a sampling:

Chávez called himself a “21st-century socialist.” In reality he was a throwback to the dogmatic and authoritarian 20th-century socialism of Castro, Cuba’s former dictator—and, in fact, to the 19th-century caudillo tradition of Chávez’s demigod, South American independence hero Simón Bolívar. Chávez hoped that being democratically elected would obscure the fact that he didn’t govern all that democratically. It didn’t. So it’s tempting to dismiss him as an anachronism, a vulgar populist famous for gratuitous yanqui-bashing—for calling then U.S. President George W. Bush a malodorous “devil” at the U.N. in 2006—an erratic and messianic retro-revolutionary whose country’s vast petro-wealth let him indulge his Marxist nostalgia.

Chávez was all of those things. But if he was a leader behind his times, he still managed to influence them. Voters don’t make a radical like Chávez their head of state unless they’re mad as hell, and his stunning ascent in fact altered the western hemisphere’s conversation when it needed to be altered. When Chávez was first elected in 1998, post-Cold War Latin America was awash in free-market reforms. Those changes were necessary, but their implementation was criminally negligent, and the region’s already epic inequality simply widened. Chávez’s bellicose neo-statism was hardly the antidote, but his Bolivarian Revolution, which steered Venezuela’s oil riches to the barrios for a change, was a wake-up call. It re-opened the door for the Latin American left—and, fortunately, more moderates than Marxists walked through it, including former Brazilian President Luiz Inácio Lula da Silva, whose capitalist-socialist “third way” has since helped narrow the region’s wealth gap and brought countries like Chile to the brink of development.

The other was written four years ago, by Enrique Krauze in the New Republic, which technically isn’t an obituary, but goes deeper than anything else out there. A sampling of that:

To what political tradition does Hugo Chavez’s Bolivarian delirium belong? According to his own version, his destiny was revealed to him around 1977, when he read a book. It was, of all books, The Role of the Individual in History by Georgi Plekhanov. He has more than once told the story of his great moment of inspiration, his epiphany before the text: “I read Plekhanov a long time ago, when I belonged to an anti-guerrilla unit in the mountains … and it made a deep impression on me. I remember that it was a wonderful starry night in the mountains and I read it in my tent by the light of a flashlight.” Again and again he turned to it “in search of ideas [about] the role of the individual in historical processes.” He still has in his possession the “little book that survived storms and the years; the same little book with the same little underlinings a person makes, and the same little arrows and the same cover I used as camouflage so that my superiors wouldn’t say ‘what are you doing reading that?’ I read it all over the place, in secret, with a flashlight at night.”

Chart Of The Day: Emerging Markets Currency Wars Landscape

This is interesting:

2013.03.06.Swan FX Diagram

2013.03.06.Swan FX Table

And here’s an explanation of what we’re looking at:

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Chart of the Day: The top 10 stock exchanges of 2012

This is actually going to be a few charts, because the first chart as you can see looks ridiculous:

Top 10 Frontier Market stock exchanges v DJIA

It should go without saying that there’s something very wrong with this picture, and indeed Miguel Octavio sums it up better than anyone I know here, but the long and short of it is that runaway inflation and an ass-headed capital controls regime has wildly overstated the “returns” in Venezuela. So let’s get rid of Venezuela and look at how the rest of these stack up against the Dow Jones Industrial Average. Here’s what we get:

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New Beverage of Choice For Political Risk Analysts: Mexican Kool-Aid

2013.01.10.Mexican Kool AidIan Bremmer is on the take.

Eurasia Group released its “Top Risks for 2013” report last week. It’s interesting, and it’s worth reading if political risk is your sort of thing. But pretty early on this part stood out to me (boldface emphasis is mine):

“It’s worth breaking down emerging markets into three broad categories:

A – becoming developed. These are governments with the tools to respond effectively to domestic and international challenges and continue to put policies in place that make investment more attractive over time, reducing the chances of sudden crises. Many emerging markets in Latin America are in this basket. In part, that’s a structural advantage: the lack of geopolitical turmoil in the region and the ability of many Latin American governments to “pivot” in a more fragmented globalization environment. But it’s also a result of the work of three leaders who enter 2013 with significant political capital: post-Lula, Brazil’s Dilma Rousseff; post-Uribe, Colombia’s Juan Manuel Santos; and, the most exciting story, post-Calderon, Mexico’s Enrique Peña Nieto–one of the only leaders in the emerging market space willing and able to advance structural economic reforms.

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Photo of the Day: Hugo, Evo and Rafael as the 3 Stooges

Thanks again to our resourceful readers, we have today the presidents of Venezuela, Bolivia and Ecuador–Hugo Chavez, Evo Morales and Rafael Correa–as the Three Stooges:

If there’s anyone who cares to photoshop these three plus Fidel Castro into the Marx Brothers, by all means please don’t be shy.

Failed States: Latin America’s most improved

What better way to piss off a diplomatic mission than to tell them their government is a failure?

That’s the underlying thought I always have whenever Foreign Policy and the Fund for Peace release their annual Failed States Index. For those unfamiliar with it, this is a survey of 177 countries which endeavors to rank sovereign states according to their risk of collapse into anarchy (my interpretation). They’ve been putting this study out for eight years now and it never fails provoke reactions from governments who feel jilted, which means pretty much everybody except for the Swedes, New Zealanders, Swiss and other such perennial well-behaved A-students.
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How Argentina and Venezuela Can Rain on Mercosur’s Parade

I’m generally not of the disposition to say “I told you so” but the latest podcast from Business Monitor International is a pretty good follow-up to what I’ve already written previously about Argentina and already known for a long time about Venezuela: by pursuing Neverland-type economic policies, both of these countries are putting the whole neighborhood at risk, particularly now that economic growth is slowing.

Since Venezuela is the more urgent of the two, let’s hit those bullets first:
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