Thursday, April 30, 2009

Bullish On SOuth Africa!

Money & Investing

Short the West

Daniel Fisher, 04.16.09, 06:00 PM EDT
Forbes Magazine dated May 11, 2009

David Murrin smells opportunity in the demise of industrial democracies.

One theory has it that the decline of Rome began when its leaders determined they could get grain more cheaply by ship than overland across Italy. What seemed like a stroke of genius at the time ultimately drove the empire into bankruptcy as it tried to defend far-flung overseas trade routes.

David Murrin thinks a similar scenario is playing out today, only this time Americans are wearing the togas. Murrin, 46, is chief investment officer of Emergent Asset Management, a U.K. private equity and hedge fund firm.

Murrin has been steering Emergent, with an estimated $1 billion under management (he won't say exactly how much) into African farmland, Russian oil companies and emerging-market currencies. The moves are bets that the West, most notably the U.S., will be on the losing side of 21st-century history as Asian economies outbid it for commodities and outpace it in economic growth.

"America and the Western, Christian empire are about to jump off a cliff," says Murrin. "Along with that will come a decline in the dollar."

Murrin is a geophysicist with strong interests in military history and classic sailing yachts. Before entering the financial world he did geophysical surveys in the jungles of Papua New Guinea, where he spent time observing tribes like the Hauna. That led him to view people as subject to collective emotional behavioral patterns. We are, he says, inescapably captive to me-too behavior.

"We think we're clever. We think we're intelligent. But we have repetitive behavior patterns, and we can't change them," he says. Emergent "makes money when people are herding."

Murrin migrated from geophysics in 1986 to trading currency, bullion and equities for JPMorgan. He cofounded Emergent in 1997 with former colleague Susan Payne and sold a minority interest to Canada's Toronto Dominion Bank that same year.

Emergent's Alternative fund, which invests mostly in currencies and emerging-market debt, returned 75% last year (after fees) and 15% annually over the past decade, the firm says. Its smaller Ballistic fund, which focuses on long and short equity positions, returned 9% last year and an average 20% over the past three years. Emergent's funds are not widely available to U.S. investors, but many of the markets in which it's active are accessible through other funds.

Headquartered in Haslemere, a bucolic town an hour south of London, Emergent employs 15 people to scour global debt, equity and currency markets for pricing that's gone out of whack with long-term trends.

One of those trends is the "supercycle" of growing global demand for scarce resources, which will drive their prices to previously unthinkable heights. He has a lot of company in that view, going back to Thomas Malthus. A lot of like-minded investors got crushed last year betting oil would go to $200 a barrel. Murrin claims to have escaped this fate by taking weakening stock prices as a sign of temporary weakness and going short crude oil.

"Why would you be long oil when you're bearish on equities?" he asks, as if the question answers itself.

These days Murrin thinks inflation will be fueled by a combination of U.S. fiscal abandon and rising Asian demand, making everything more expensive in dollar terms. Price increases of 5% a year are manageable in China, where the economy is growing 8% annually, Murrin says. But when China exports 5% inflation to the U.S. and the economy here is growing at only 3% a year, the result will be a decline in real U.S. output, living standards and international clout.

As China's economic might increases, it will project greater military power as well, he figures. The U.S. will become stretched in defending its far-flung economic and political interests, just like the Roman and British empires before it.

"Name me a huge economic power that did not militarize," Murrin says. "There's a naval arms race in Asia as countries look to defend their commodity trade routes."

One beneficiary of the tension in Asia will be South Africa, with its wealth of gold and other commodities. Murrin formed a fund that will own 370,000 acres of South African farmland by midyear, with plans to increase productivity through improved farming methods. Eventually it will make a nice asset for a sovereign-wealth fund or Middle East nation worried about its food supply.

Tuesday, April 28, 2009

A Special Song FOr My Wife At A Moment Of Great Triumph


"The magic of believing is this: if we really believe in ourselves, our heart will take us to the highest plateau of personal success. Nothing will stop us as long as we have faith in our hearts."

It’s been a long road - Getting from there to here.
It’s been a long time, but my time is finally near.

And I can feel the change in the wind right now
Nothing’s in my way
And they’re not gonna hold me down no more
No, they’re not gonna hold me now

Cause I got faith of the heart
I’m going where my heart will take me
I got faith to believe. I can do anything.
I got strength of the soul
And no one’s gonna bend or break me
I can reach any star. I got faith. Faith of the heart.

It’s been a long night, trying to find my way.
Been through the darkness now I finally have my day.

And I will see my dream come alive at last
I will touch the sky
And they’re not gonna hold me down no more
No, they’re not gonna change my mind

I’ve known a wind so cold. I’ve seen the darkest days.
But now the winds I feel are only winds of change.
I’ve been through the fire and I’ve been through the rain.
But I’ll be fine

‘Cause I got faith of the heart
I’m going’ where my heart will take me
I got faith to believe
And no one’s gonna bend or break me
I can reach any star. I got faith - faith of the heart.
It’s been a long road

Monday, April 27, 2009

Elena With Copernicus And Eloisa At A Miner's Shelter/Black Diamond Gold Mine

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Another Terrorist Attack In New York City Coming?

I was fortunate to have spent part of my US Navy career in military intelligence. The training and mental discipline prepared you for many things in life. One thing you learned to do was to look at some subtle event and movement as a predictor of something much bigger to come. Why did the US authorities spend all of that money to do the mission over New York City on a Sunday? Did they spend a lot of money for a routine photo mission when they could get all the same details from satellites of Google earth? I think not. I suspect they see another attack coming.

Military ‘Photo Mission’ Over Hudson Gives Wall Street Jitters
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By Peter S. Green and John Hughes

April 27 (Bloomberg) -- A jumbo airplane swooping over New York Harbor escorted by fighter jets for a Pentagon photo opportunity sent Wall Street workers running from windows.

Three military planes, two F-16s and a VC-25, the military version of theBoeing Co. 747, flew over the New York metropolitan area from 10 a.m. to 10:30 a.m. on a photo mission, Jim Peters, a Federal Aviation Administration spokesman, said in an interview.

The planes flew along the Hudson River, near the site of the terror attacks on the World Trade Center on Sept. 11, 2001.

The mission was coordinated in advance with the FAA and New York City Police Department, and other agencies were notified, Peters said in an interview.

New York City’s Office of Emergency Management said the planes were part of an “approved federal activity,” Chris Gilbride, a spokesman, said. He said he didn’t know which city agencies had been informed of the event beforehand.

A spokesman for the North American Air Defense Command and the U.S. military’s Northern Command said they couldn’t answer questions and referred calls to the FAA.

To contact the reporters on this story: Peter S. Green in New York; John Hughes in Washington

Saturday, April 25, 2009

Time Magzine Blasts Conditions In Zimbabwe

Even with a New Government, Conditions in Zimbabwe Worsen
Anderson Moyo sells bread at busy market in the Harare surburb of Mabvuku.
Aaron Ufumeli / EPA / Corbis
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Tatenda Majiri, 22, hoists a calabash of home-brewed beer with some authority while discussing news of the day. But he has no confidence in the future. The social work student says he has lost hope of going back to school because the government-owned University of Zimbabwe (UZ) has been closed since last year. "Drinking is the only constructive activity I have," he says, as he passes the time in Nzvimbo rural township in Chiweshe, about 150 km north of the capital Harare. "What else can I do?"


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The UZ has been closed for over six months now. It ran on tuition fees and government subsidies. But both have vanished. Most of the college's students are the children of civil servants, who have to live on salaries of $100 a month. The government is too broke to inject funds into the institution, which was once the envy students all over Africa. Justifying his beer, Majiri says, "At least I am not into thievery like most of my colleagues who are subsidizing their income that way." (See pictures from the long reign of Robert Mugabe in Zimbabwe.)

Zimbabweans cheered when the government of national unity was formed in February by President Robert Mugabe and his erstwhile foe Morgan Tsvangirai, who is now the country's prime minister. But ordinary folks say they are not happy with what has happened since. Half the population of about 13 million is facing hunger; a raging cholera epidemic has claimed more than 4,000 lives since last year; and the economy has continued to be inert, as it has been for almost a decade now. The world economic crunch has not helped the situation. "We are yet to see results of this so-called government; rates are too high, unemployment is alarming and cholera is still claiming lives," says Mazvita Gonde a vegetable vendor in Harare. She was once a government clerk. (See how the Mugabe regime tried to bully the opposition into submission.)

Life is expensive and unbearable for the unemployed — who constitute more than 85% of the working age population — yet they are "expected to pay bills at the end of the month," says Gonde. Residents in the crowded suburbs of the capital shell out between $40 to $65 per month for rent. Additionally, water and electricity bills can be as high as $20 despite the fact that at least half the time there is no water and electricity. "It defies logic that we pay for electricity we do not have, refuse they do not collect and water that is dirty and frequently unavailable," Majiri rails. Meanwhile, he says, "our sick deteriorate at home and [the politicians] celebrated their 'marriage' in Victoria Falls using the very few resources we have at our disposal."

"Marriage" is a reference to the strategic planning meeting held by the government of former foes earlier this month. Mugabe and Tsvangirai, along with all ministers, gathered in the resort town of Victoria Falls to decide on how to improve government services in the next 100 days. "The country is cash-strapped but we hear they had gone to wine and dine," says Majiri. "We read that the ministers went on boat cruising, helicopter rides and stayed in a five-star hotel."

It all plays into the Zimbabweans' belief they live in a version of George Orwell's Animal Farm, where some animals are more equal than others. Just a day after the new government was sworn-in, all the ministers — almost 40 of them — were driving around in luxury Mercedes Benzes. They were allocated an all-terrain vehicle each. Their deputies were each assigned a luxury car as well.

All this happens at a time when Harare cannot supply safe water to its citizens. Had it not been for international relief organizations, many fear the death toll from the cholera outbreak would have been much higher, perhaps into the five digits. Cholera related deaths per day have since gone down but Oxfam's chief executive Barbara Stocking said the crisis has not ended. Said Stocking during a recent visit to Zimbabwe: "We have to expect a cholera epidemic and outbreak to happen again at the end of this year given that the water and sewage system is not working well. It's not going to be quick and easy to get an efficient water and sewage system fully working, so all the things that we did in the fight against cholera will certainly be needed again next year."

Cholera is confined to mostly urban areas; in rural areas hunger and HIV are wreaking havoc. "We have not had a decent harvest for years now," says a government official in the rural Chirumanzu district about 250 km south of Harare. "A number of deaths of people starving have been recorded here." The official adds, "Had it not been for donor organizations, the situation could have gone out of hand. The other problem is that with the high prevalence of HIV in this country, hunger has to be fought. Those taking [Anti-retroviral medications (ARVs)] need to have nutritious food otherwise the ARVs will not achieve anything. In fact they will worsen the situation."

Living High With Investor's Money

I saw this article this morning. It is fascinating to see how the rich and mighty live. We rarely get such an intimate glimpse of the inner sanctum of the very powerful

What is frightening here is that we hear nothing about Citi Bank, Bank of America, Merrill Lynch, Country Wide Home Loans, and other major financial institutions that caused billions and billions of dollars in losses to investors. They are "too big to fail." Bringing criminal charges against them would panic the financial markets, so goes the conventional logic.

When my wife and I were in Hong Kong, the big news was the $2 billion dollar loss investors in Hong Kong had suffered as a result of bonds they had bought in Lehman Brothers under false pretenses.

One could start to believe that Sir Allen is a scape goat and sacrificial lamb.

Stanford's inner sanctum had bar, bathroom exit
Fri Apr 24, 2009 9:15pm EDT Email | Print | Share | Reprints | Single Page [-] Text [+]

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By Chris Baltimore

HOUSTON (Reuters) - If Texas billionaire Allen Stanford ever wanted to make a low-profile departure from the inner sanctum within his lavish Houston headquarters, there was a private exit through his personal bathroom.

Lawyers for the court-appointed receiver overseeing Stanford's corporate empire gave Reuters a tour of the Houston headquarters of Stanford Financial Group, a mass of marble and mahogany that once boasted a 5-star dining room, movie theater, professional kitchen and wine bar.

Every part of the building is grandiose, which speaks to the larger-than-life image Stanford created as a jet-setting financier, sports promoter and philanthropist.

But the richness of his first-floor labyrinth of personal rooms, accessible only with a magnetic card, speaks volumes about how he lived.

A huge mahogany sculpture of an eagle, Stanford's corporate symbol, stands watch at the entrance to the private suite.

Nearby, a white stone bears the message: "HARD WORK, CLEAR VISION, VALUE for the CLIENT". The main security desk is a few feet away.

"Only a couple of people had cards that would get them through that door," an attorney working for receiver Ralph Janvey said, sliding the key-card across the magnetic detector box.

A large atrium with white columns, massive mahogany double doors and a bronze of Stanford's corporate insignia embedded in an inlaid floor lead to his private office.

With another swipe of the card, the lawyer, who declined to be named, opens the double doors to Stanford's office.

The room is massive.

At first, it is hard to see Stanford's belongings behind stacks of legal boxes that Janvey's staff has crammed into the office.

Mahogany covers the walls. There is a boardroom table, a sea of Oriental rugs, a large bar off to one side.

Stanford's desk is situated in a corner of the cavernous space beside floor-to-ceiling windows that look onto a manicured lawn, flowering bushes and palm tree, perhaps in deference to his affinity for the Caribbean and the islands of Antigua and St. Croix, where he had a home and property.

Stanford frequently visited those islands before the U.S. Securities and Exchange Commission charged him, two aides and three of his companies with an $8 billion fraud involving certificates of deposit issued by his Antigua bank.

In an interview on Monday at the law offices of Houston criminal attorney Dick DeGuerin, Stanford denied any improper behavior and asserted that his companies were well-run until the SEC "disemboweled" them in February.

From the look of his desk, Stanford might have just stepped away for a moment. Lawyers have left it as he left it.

Relatively uncluttered, the desk is appointed with an old-fashioned Rolodex for contacts, a pen-holder, and tape dispenser. Water in a bottle stagnates.

A coffee-table bears a book titled "The Worlds of Thomas Jefferson at Monticello," a CD of music from Cirque du Soleil's show "O," and a DVD of a $1 million-per-player cricket tournament Stanford sponsored. The desk faces a built-in saltwater tank once filled with exotic fish.

U.S. marshals raided this office on February 17, and Janvey's staff is treating it as a kind of crime scene -- cautioning people not to leave fingerprints. It is easy to just gawk because of the grandeur of the place.

Among several framed certificates hung on a wall is one with the gold seal of Antigua and Barbuda pronouncing Stanford Knight Commander, which allowed him to use the title Sir Allen Stanford, and a letter on White House stationery dated January 25, 2006, signed by then-President George W. Bush.

Then on to the bathroom -- a chamber of black granite and mahogany, with a gigantic mirror and granite countertop, flanked with shelves of fluffy white towels and toiletries, including a bottle of "Brilliant Brunette" shampoo.

On the sink is a copy of the book "Wild at Heart: Discovering the Secret of a Man's Soul" by John Eldredge, and a Father's Day card signed by one of Stanford's sons.

In a separate room for a black commode, a rack holds a magazine from Christie's auction house, a copy of "Forbes" and an issue of "Islands." The walk-in shower is huge.

A closet contains a fold-up massage table and a box containing four custom-made suits from Martinez Custom Clothier in Baton Rouge, La., still in their plastic wrapping.

Perhaps the most unusual thing about the bathroom is a nondescript door to the left of the shower. This was Stanford's separate entrance and exit off the parking deck, where he could arrive and depart in privacy.

(Reporting by Chris Baltimore; Additional reporting by Anna Driver; Editing by Toni Reinhold)
Posted by ohomen171 at 4/25/2009 09:46:00 AM 0 comments

Our Dear Dog Eloisa Went Missing

In all of this concern about elections and worries about jobs, savings the recession, etc., small good things in life slip by. Last Saturday afternoon, we let our dear dog of almost 10 years, Eloisa, out. At best she would go to our large back yard, bark and got to the bathroom. At worst, she would go under the hole in the fence and go around the neighborhood to her doggie friends.

After we let her out, we had our Saturday afternoon nap. Two hours passed and we did not hear Eloisa scratching at the door and begging to get back in, We knew something was wrong. We got up and did a local search. We found nothing. We got in the car and went around the area where Eloisa normally goes, we found nothing. We went to the beach. Elena walked the beach and found no sign of her. We were sad and desperate. We had to come back and tell Eloisa's son Copernicus that his mother was gone.

The saddest part of the whole thing was not losing a member of the family of ten years. It was the idea that Eloisa was gone and we did not know what happened to her. Had she been hit by a car? Had some angry person killed her. Had her death been quick and painless or slow and very painful? Had someone picked her up and taken her far away in their car? We called the police and the animal shelter. There was no report of a missing dog being sighted or brought in.

We had a sad and an empty night. I went to church the next morning. I prayed for some help. After church, I drove up and down Highway 1. Perhaps she had wondered out on the highway and been hit by a car. I expected to see a broken body. At least then I would know what happened to her. No sign of her was seen.

I came home and did another search in the area around the house. I feared that she had wondered into the hills above the house. Perhaps a pack of Coyotes or a mountain lion had found her and eaten her?

After lunch, Elena and I made the long drive to San Mateo, California to the Mid-Peninsula Humane Society. Thankfully they were open. We went in and found the desk that handled missing animals. We looked at the book of animals brought in dead on arrival. Thankfully our dog was not on the list of dead animals brought in. We looked at the book of dogs reported picked up. The first report was a description of a dog that was a German Shepherd/Boston Terrier. The estimated weight was 45 lbs. The estimated age was 5 years old. I was sure it was Eloisa despite the inconsistencies. Elena was very skeptical. We took a tour of the facility and looked at all of the animals brought in. We did not see Eloisa. We got the phone number of a lady named Karen who had reported picking up a stray dog that I was sure was Eloisa. Later in the afternoon I called Karen. We talked and she described the animal she had found wondering on the beach the day before. I was sure it was Eloisa. Elena was still very frightened.

We drove over to the house where the dog was staying. It was in an upscale neighborhood with all houses worth over $1 million US. We found the house and talked to the husband. He took us inside the house. Much to our relief, our dog Eloisa was safe and in good spirits. She had found her way to a mansion. We were so relieved! We thanked the husband. We put Eloisa's harness on her. We took her to our car and loaded her in the back. She came home. She was greeted by her son Copernicus.

It was a beautiful and sunny day. Elena and I went to a Mexican restaurant we love. We ate out on the patio.We had Margaritas and great Mexican food. We were so relieved and happy!

Two days later I was up in the hills above the house. I always take the dogs there for their morning walk. It is one of the few places in the area where the dogs can legally be off leash. A lady pulled up in a car. She posted a picture of her missing cat. I talked to her at length. I told her about our experience with Eloisa. I felt so sad for her.

Thursday, April 23, 2009

Chile Produces An Economic Super Star!

Harvard’s Peso Doctor Vindicated as Chile Currency Evades Slump
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By Sebastian Boyd

April 23 (Bloomberg) -- Thousands of government workers marched on downtown Santiago last November, burning an effigy of Chilean Finance Minister Andres Velasco and calling him “disgusting” as a strike for higher wages paralyzed public services.

Five months later, polls show that Velasco is President Michelle Bachelet’s most popular minister. During a three-year copper boom he and central bank President Jose De Gregorio set aside $48.6 billion, more than 30 percent of the country’s gross domestic product, that he is now using for tax cuts, subsidies and cash handouts to poor families.

The Chilean peso has risen almost 10 percent against the dollar this year to become the best-performing currency among emerging markets. The country’s economy is expected to grow 0.1 percent in 2009, as the region contracts 1.5 percent, according to the International Monetary Fund. While Chile stashed away copper profits, neighboring Argentina boosted spending when revenue from soybean exports rose, leaving it short on cash to stimulate the economy this year.

Velasco, 48, applied the lessons learned from decades of economic failure in Latin America -- ones he said could also help the U.S. The current crisis followed “a massive regulatory failure in many advanced financial markets over the last decade or so,” Velasco said in an interview April 21 in his office overlooking the presidential palace in downtown Santiago.

30 Miles a Week

“This is a movie that may be novel to some Americans, but this is a movie that people in other places of the world, Chile included, know we have seen,” said Velasco, who is scheduled to meet April 25 with Federal Reserve Chairman Ben S. Bernanke in Washington. “We know how it begins, how it unfolds and how it ends.”

Velasco, who runs 30 miles (48.3 kilometers) a week, is the son and grandson of national politicians. He received his higher education while living in the U.S. after Augusto Pinochet’s military dictatorship exiled his father from Chile in 1976 for criticizing the regime. Velasco earned a bachelor’s degree in philosophy and economics in 1982 and a master’s in international relations in 1984 at Yale University in New Haven, Connecticut, according to his resume. He received a doctorate in economics from Columbia University in New York in 1989.

“He knew about politics before he knew about economics,” said Patricio Navia, a Chilean political scientist who met Velasco at New York University and still works there.

‘Policy Implications’

Velasco taught economics for most of the 1990s at NYU, according to his resume. From 2000 to 2006 he was a professor at Harvard University in Cambridge, Massachusetts, where he worked with Lawrence Summers, now U.S. President Barack Obama’s National Economic Council director.

“In this world, there are some people who are smart. There are some that are practical,” said Summers. “Andres Velasco is both.”

Before Summers joined the Obama administration, Velasco said, the two men would meet several times a year in Washington and Cambridge.

Velasco “was always looking for the policy implications of what he was doing, which is very unique,” said Guillermo Calvo, a Columbia macroeconomist who hired Velasco as a teaching assistant. “He was one of the best, but you always sensed that he was going to eventually converge to politics.”

Summers, Calvo and Velasco will be panelists tomorrow at a seminar in Washington examining the effects of the global economic meltdown on Latin America.

Pinochet Exiled Family

Critics of the finance minister’s policies include the man who took in a 15-year-old Velasco on the night Pinochet expelled his father in August 1976.

“He acted like an accountant,” said Adolfo Zaldivar, a Chilean senator and presidential candidate who clashed repeatedly with Velasco. “With that amount of excess revenue, he could have stimulated domestic production. He could have been more creative.”

Chile had about $5.9 billion in treasury holdings when Velasco took a leave from Harvard to become minister in March 2006. By the end of last year, he and the central bank had $48.6 billion to ease the impact of the slump on Chile’s 17 million people. The economy shrank in February by the most since 1999 as industrial production tumbled 11.5 percent.

Commodity-driven swings of boom and bust have defined Latin America’s economic history for the past 100 years.

“That is a cycle that needs to be ended,” Velasco said. “We have been out to show that a Latin American country can manage properly, and not mismanage, a commodity cycle. You save in times of abundance, and you invest in lean times.”

Andean Counterpoint

Across the Andes in Argentina, President Cristina Fernandez de Kirchner’s popularity plummeted after she tried to increase taxes on soybean exports. Unresolved lawsuits with investors closed access to international credit markets since the country defaulted in 2001. Middle-class and wealthy families stash thousands of U.S. dollars in home safes in case there is another economic crisis like the one eight years ago.

When Velasco joined Bachelet’s new cabinet in March 2006, the price of copper had risen by more than half in 12 months to $2.25 a pound. Taxes and profits from state-owned Codelco, the world’s largest copper producer, provide about 15 percent of government revenue. Bachelet, 57, Chile’s second consecutive socialist president, came under almost immediate pressure to start spending the revenue.

Students went on strike in May of that year, demanding more money for education. More than 800,000 people protested at high schools and universities, and police with water cannons and tear gas arrested more than 1,000. Velasco reiterated his commitment to “prudent fiscal policies” as politicians from the governing coalition demanded he resign.

‘A Tough Fight’

“He knew at the time that he was getting into a tough fight,” said Ricardo Hausmann, who worked with Velasco at Harvard and runs the university’s Center for International Development. “He was very conscious that he was going to hold his ground because expansionary policies usually end in tears.”

Velasco set up funds to invest the copper windfall abroad, mostly in government bonds. He announced plans to spend the interest from savings on scholarships and helped Bachelet extend social security to 1.3 million people.

In his first three years in office, Velasco posted the biggest budget surpluses since the country returned to democracy in 1990. In 2007, Chile became a net creditor for the first time since independence from Spain in 1810.

Last July, copper reached a record of $4.08 a pound. By year-end, the central bank had built $23.2 billion of reserves. The government had $22.7 billion in offshore funds and about $2.8 billion in its own holdings.

Copper Price Decline

After Lehman Brothers Holdings Inc.’s Sept. 15 bankruptcy sparked a global credit freeze, Velasco and De Gregorio had the equivalent of more than 30 percent of GDP available if needed to shore up Chile’s banks and defend the peso.

The price of copper plummeted 52 percent from Sept. 30 to year-end, and Velasco dusted off his checkbook. In the first week of January, he and Bachelet unveiled a $4 billion package of tax cuts and subsidies.

“He has been vindicated,” said Luis Oganes, head of Latin American research at JPMorgan Chase & Co. in New York, who studied under Velasco.

As well as teaching economics, Velasco ran NYU’s Latin American and Caribbean Studies Center, which allowed him to meet with politicians and writers from around the region. He has published two novels, including a satire about U.S. environmentalists trying to stop a dam in Chile, “Lugares Comunes (Common Places)” (Editorial Planeta), and “Vox Populi” (Editorial Sudamericana).

Political Dividends

Velasco’s stimulus spending, including 40,000-peso ($68.41) handouts to 1.7 million poor families, has paid off politically. His approval rating almost doubled to 57 percent in March from a low of 31 percent in August, according to Adimark GfK, a Santiago-based polling company. He is now the most well-liked member of the government, second only to the president at 62 percent.

“People finally understood what was behind his ‘stinginess’ of early years,” said Sebastian Edwards, a Chilean economist at the University of California, Los Angeles. “That explains the rise in his popularity.”

To contact the reporter on this story: Sebastian Boyd in Santiago at

Last Updated: April 23, 2009 00:01 EDT

Wednesday, April 22, 2009

A Magical Moment 15 Years Ago Today

Today South Africa is democratically electing a new president. Fifteen years ago today I was staying outside of Port Elizabeth in the small town of Saint Albans. It was the day of South Africa's first fully-democratic election. I was not a citizen but I was being allowed to vote thanks to the courage of the African National Congress. They had insisted that some non-citizens being given the right to vote in the first election. President F. W. de Klerk and the Nationalist Party had disagreed at first. The ANC took to the streets with demonstrations and riots all over South Africa. President de Klerk (who is a wonderful man and a friend of mine,by the way) changed his mind. A number of non-citizens like me were given the right to vote.

My employer, Lt. Col Barnard, was kind enough to see to it that I was driven to the election polls in style. A captain from the South African Army pulled up in a three-series BMW. It was a sunny and cool fall day without a cloud in the sky. I climbed in the BMW and watched as we made our way to the polls. Soldiers were stationed all over the place with impressive-looking weapons. Many people were expecting the worst and hoping for the best. There was some violence in parts of South Africa. Fortunately Saint Albans was spared any troubles.

We drove some five miles before getting to the polling place. It appeared to be the auditorium of a school. I got out of the car and went in with the captain. I was expecting a huge line stretching for blocks. Instead we went quickly to the person checking identities. I presented my South African identity book. My name was checked against the list. I signed a voting book. I was given a long ballot. Because so many people did not read and write, the candidate's pictures were shown. I went to a private booth where I marked my preferences. I placed my vote in the ballot box. The captain then took me back to my residence.

The rest of the day passed without much incidents. In the evenings when it was confirmed that Nelson Mandela had won, there was happiness and celebrations all over the place. What sticks in my mind after all of these years is an interview I saw on the South African Broadcasting Commission with an African woman. She said the following: "At last we will no longer be treated as children."

We all stayed up late. It was such an incredible feeling to be part of such a special moment in history.

Friday, April 17, 2009

US Government Corruption Involved In Epidemic Of Illegal Drugs In The USA

Please copy and paste the link below to your browser. Please scroll down to the Lou Dobbs video and play it. He and President Felipe Calderon have some important information for you.

Thursday, April 16, 2009

Mexican Drug Cartels And The US Border

April 15, 2009

By Fred Burton and Ben West

For several years now, STRATFOR has been closely monitoring the growing violence in Mexico and its links to the drug trade. In December, our cartel report assessed the situation in Mexico, and two weeks ago we looked closely at the networks that control the flow of drugs through Central America. This week, we turn our attention to the border to see the dynamics at work there and how U.S. gangs are involved in the action.

The nature of narcotics trafficking changes as shipments near the border. As in any supply chain, shipments become smaller as they reach the retail level, requiring more people to be involved in the operation. While Mexican cartels do have representatives in cities across the United States to oversee networks there, local gangs get involved in the actual distribution of the narcotics.

While there are still many gaps in the understanding of how U.S. gangs interface with Mexican cartels to move drugs around the United States and finally sell them on the retail market, we do know some of the details of gang involvement.

Trafficking vs. Distribution

Though the drug trade as a whole is highly complex, the underlying concept is as simple as getting narcotics from South America to the consuming markets — chief among them the United States, which is the world’s largest drug market. Traffickers use Central America and Mexico as a pipeline to move their goods north. The objective of the Latin American smuggler is to get as much tonnage as possible from Colombia, Peru and Bolivia to the lucrative American market and avoid interdictions by authorities along the way.

However, as narcotic shipments near the U.S.-Mexican border, wholesale trafficking turns into the more micro process of retail distribution. In southern Mexico, drug traffickers move product north in bulk, but as shipments cross the U.S. border, wholesale shipments are broken down into smaller parcels in order to hedge against interdiction and prepare the product for the end user. One way to think about the difference in tactics between trafficking drugs in Central America and Mexico and distributing drugs in the United States is to imagine a company like UPS or FedEx. Shipping air cargo from, say, New York to Los Angeles requires different resources than delivering packages to individual homes in southern California. Several tons of freight from the New York area can be quickly flown to the Los Angeles area. But as the cargo gets closer to its final destination, it is broken up into smaller loads that are shipped via tractor trailer to distribution centers around the region, and finally divided further into discrete packages carried in parcel trucks to individual homes.

Click to enlarge

As products move through the supply chain, they require more specific handling and detailed knowledge of an area, which requires more manpower. The same, more or less, can be said for drug shipments. This can be seen in interdiction reports. When narcotics are intercepted traversing South America into Mexico, they can be measured in tons; as they cross the border into the United States, seizures are reported in kilograms; and by the time products are picked up on the streets of U.S. cities, the narcotics have been divided into packages measured in grams. To reflect this difference, we will refer to the movement of drugs south of the border as trafficking and the movement of drugs north of the border as distributing.

As narcotics approach the border, law enforcement scrutiny and the risk of interdiction also increase, so drug traffickers have to be creative when it comes to moving their products. The constant game of cat-and-mouse makes drug trafficking a very dynamic business, with tactics and specific routes constantly changing to take advantage of any angle that presents itself.

The only certainties are that drugs and people will move from south to north, and that money and weapons will move from north to south. But the specific nature and corridors of those movements are constantly in flux as traffickers innovate in their attempts to stay ahead of the police in a very Darwinian environment. The traffickers employ all forms of movement imaginable, including:

· Tunneling under border fences into safe houses on the U.S. side.
· Traversing the desert on foot with 50-pound packs of narcotics. (Dirt bikes, ATVs and pack mules are also used.)
· Driving across the border by fording the Rio Grande, using ramps to get over fences, cutting through fences or driving through open areas.
· Using densely vegetated portions of the riverbank as dead drops.
· Floating narcotics across isolated stretches of the river.
· Flying small aircraft near the ground to avoid radar.
· Concealing narcotics in private vehicles, personal possessions and in or on the bodies of persons who are crossing legally at ports of entry.
· Bribing border officials in order to pass through checkpoints.
· Hiding narcotics on cross-border trains.
· Hiding narcotics in tractor trailers carrying otherwise legitimate loads.
· Using boats along the Gulf coast.
· Using human “mules” to smuggle narcotics aboard commercial aircraft in their luggage or bodies.
· Shipping narcotics via mail or parcel service.
These methods are not mutually exclusive, and organizations may use any combination at the same time. New ways to move the product are constantly emerging.

Once the narcotics are moved into the United States, drug distributors use networks of safe houses, which are sometimes operated by people with direct connections to the Mexican cartels, sometimes by local or regional gang members, and sometimes by individual entrepreneurs. North of the border, distributors still must maneuver around checkpoints, either by avoiding them or by bribing the officials who work there. While these checkpoints certainly result in seizures, they can only slow or reroute the flow of drugs. Hub cities like Atlanta service a large region of smaller drug dealers who act as individual couriers in delivering small amounts of narcotics to their customers.

It is a numbers game for drug traffickers and distributors alike, since it is inevitable that smugglers and shipments will be intercepted by law enforcement somewhere along the supply chain. Those whose loads are interdicted more often struggle to keep prices low and stay competitive. On the other hand, paying heavy corruption fees or taking extra precautions to ensure that more of your product makes it through also raises the cost of moving the product. Successful traffickers and distributors must be able to strike a balance between protecting their shipments and accepting losses. This requires a high degree of pragmatism and rationality.

Local Gangs

While the Mexican cartels do have people in the United States, they do not have enough people so positioned to handle the increased workload of distributing narcotics at the retail level. A wide range of skill sets is required. Some of the tactics involved in moving shipments across the border require skilled workers, such as pilots, while U.S. gang members along the border serve as middlemen and retail distributors. Other aspects of the operation call for people with expertise in manipulating corrupt officials and recruiting human intelligence sources, while a large part of the process simply involves saturating the system with massive numbers of expendable, low-skilled smugglers who are desperate for the money.

The U.S. gangs are crucial in filling the cartel gap north of the border. Members of these border gangs typically are young men who are willing to break the law, looking for quick cash and already plugged in to a network of similar young men, which enables them to recruit others to meet the manpower demand. They are also typically tied to Mexico through family connections, dual citizenship and the simple geographic fact that they live so close to the border. However, the U.S. gangs do not constitute formal extensions of the Mexican drug-trafficking organizations. Border gangs developed on their own, have their own histories, traditions, structures and turf, and they remain independent. They are also involved in more than just drug trafficking and distribution, including property crime, racketeering and kidnapping. Their involvement in narcotics is similar to that of a contractor who can provide certain services, such as labor and protection, while drugs move across gang territory, but drug money is not usually their sole source of income.

Click to enlarge

These gangs come in many shapes and sizes. Motorcycle gangs like the Mongols and Bandidos have chapters all along the southwestern U.S. border and, while not known to actually carry narcotics across the border into the United States, they are frequently involved in distributing smaller loads to various markets across the country to supplement their income from other illegal activities.

Street gangs are present in virtually every U.S. city and town of significant size along the border and are obvious pools of labor for distributing narcotics once they hit the United States. The largest of these street gangs are MS-13 and the Mexican Mafia. MS-13 has an estimated 30,000 to 50,000 members worldwide, about 25 percent of whom are in the United States. MS-13 is unique among U.S. gangs in that it is involved in trafficking narcotics through Central America and Mexico as well as in distributing narcotics in the United States. The Mexican Mafia works with allied gangs in the American Southwest to control large swaths of territory along both sides of the U.S.-Mexican border. These gangs are organized to interact directly with traffickers in Mexico and oversee transborder shipments as well as distribution inside the United States.

Prison gangs such as the Barrio Azteca and the Texas Syndicate reach far beyond the prison fence. Membership in a prison gang typically means that, at one point, the member was in prison, where he joined the gang. But there is a wide network of ex-prisoner gang members on the outside involved in criminal activities, including drug smuggling, which is one of the most accessible ways for a gang member to make money when he is released from prison.

Operating underneath the big gang players are hundreds of smaller city gangs in neighborhoods all along the border. These gangs are typically involved in property theft, drug dealing, turf battles and other forms of street crime that can be handled by local police. However, even these gangs can become involved in cross-border smuggling; for example, the Wonderboys in San Luis, Ariz., are known to smuggle marijuana, methamphetamine and cocaine across the border.

Gangs like the Wonderboys also target illegal immigrants coming across the border and steal any valuable personal items or cash they may have on them. The targeting of illegal immigrants coming into the United States is common all across the border, with many gangs specializing in kidnapping newly arrived immigrants and demanding ransoms from their families. These gangs are responsible for the record level of kidnapping reported in places like Phoenix, where 368 abductions were reported in 2008. Afraid to notify law enforcement out of a fear of being deported, many families of abducted immigrants somehow come up with the money to secure their family member’s release.

Drug distribution is by far the most lucrative illicit business along the border, and the competition for money leads to a very pragmatic interface between the U.S. border gangs and the drug cartels in Mexico. Handoffs from Mexican traffickers to U.S. distributors are made based upon reliability and price. While territorial rivalries between drug traffickers have led to thousands of deaths in Mexico, these Mexican rivalries do not appear to be spilling over into the U.S. border gangs, who are engaged in their own rivalries, feuds and acts of violence. Nor do the more gruesome aspects of violence in Mexico, such as torture and beheadings, although there are indications that grenades that were once part of cartel arsenals are finding their way to U.S. gangs. In dealing with the Mexican cartels, U.S. gangs — and cartels in turn — exhibit no small amount of business pragmatism. U.S. gangs can serve more than one cartel, which appears to be fine with the cartels, who really have no choice in the matter. They need these retail distribution services north of the border in order to make a profit.

Likewise, U.S. gangs are in the drug business to make money, not to enhance the power of any particular cartel in Mexico. As such, U.S. gangs do not want to limit their business opportunities by aligning themselves to any one cartel. Smaller city gangs that control less territory are more limited geographically in terms of which cartels they can work with. The Wonderboys in Arizona, for example, must deal exclusively with the Sinaloa cartel because the cartel’s turf south of the border encompasses the gang’s relative sliver of turf to the north. However, larger gangs like the Mexican Mafia control much broader swaths of territory and can deal with more than one cartel.

The expanse of geography controlled by the handful of cartels in Mexico simply does not match up with the territory controlled by the many gangs on the U.S. side. Stricter law enforcement is one reason U.S. border gangs have not consolidated to gain control over more turf. While corruption is a growing problem along the U.S. side of the border, it still has not risen to the level that it has in northern Mexico. Another reason for the asymmetry is the different nature of drug movements north of the border. As discussed earlier, moving narcotics in the United States has everything to do with distributing retail quantities of drugs to consumers spread over a broad geographic area, a model that requires more feet on the ground than the trafficking that takes place in Mexico.

Assassins’ Gate

Because the drug distribution network in the United States is so large, it is impossible for any one criminal organization to control all of it. U.S. gangs fill the role of middleman to move drugs around, and they are entrusted with large shipments of narcotics worth millions of dollars. Obviously, the cartels need a way to keep these gangs honest.

One effective way is to have an enforcement arm in place. This is where U.S.-based assassins come in. More tightly connected to the cartels than the gangs are, these assassins are not usually members of a gang. In fact, the cartels prefer that their assassins not be in a gang so that their loyalties will be to the cartels, and so they will be less likely to have criminal records or attract law enforcement attention because of everyday gang activity.

Cartels invest quite a bit in training these hit men to operate in the United States. Often they are trained in Mexico, then sent back across to serve as a kind of “sleeper cell” until they are tapped to take out a delinquent U.S. drug dealer. The frequency and ease with which Americans travel to and from Mexico covers any suspicion that might be raised.

The Gaps

The U.S.-Mexican border is a dynamic place, with competition over drug routes and the quest for cash destabilizing northern Mexico and straining local and state law enforcement on the U.S. side. Putting pressure on the people who are active in the border drug trade has so far only inspired others to innovate and adapt to the challenging environment by becoming more innovative and pragmatic.

And there is still so much we do not know. The exact nature of the relationship between Mexican cartels and U.S. gangs is very murky, and it appears to be handled on such an individual basis that making generalizations is difficult. Another intelligence gap is how deeply involved the cartels are in the U.S. distribution network. As mentioned earlier, the network expands as it becomes more retail in nature, but the profit margins also expand, making it an attractive target for cartel takeover. Finally, while we know that gangs are instrumental in distributing narcotics in the United States, it is unclear how much of the cross-border smuggling they control. Is this vital, risky endeavor completely controlled by cartels and gatekeeper organizations based in Mexico, or do U.S. gangs on the distribution side have more say? STRATFOR will continue to monitor these issues as Mexico’s dynamic cartels continue to evolve.

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If You Want To Find Out Something About A Person's Character..Give Them Power

Stanford Coaxed $5 Billion From Investors as SEC Weighed Powers
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By Alison Fitzgerald and Michael Forsythe

April 16 (Bloomberg) -- In the summer of 2005, Stanford Group Co. Executive Director Jay Comeaux sought to calm more than a dozen financial advisers gathered in his mahogany-walled, oriental-carpeted Houston office.

The U.S. Securities and Exchange Commission had sent their clients questionnaires on certificates of deposit issued by Stanford’s offshore bank in Antigua. The probe was nothing to worry about, Comeaux said, according to Charles Rawl and Mark Tidwell, advisers who attended the meeting.

Comeaux called it “a routine inquiry,” says Rawl, who sued the company last year for wrongful dismissal. “Then it all seemed to go away.”

Almost four more years passed and Bernard Madoff’s $65 billion fraud came to light before the U.S. took action against Stanford. The offshore bank’s assets swelled from $3.8 billion to $8.5 billion by the time the SEC filed suit in February accusing the company and its leader, R. Allen Stanford, of running a “massive Ponzi scheme.” Stanford and his company deny the allegations.

As in the Madoff fraud, investigators failed to act on early warning signs, including public claims by two former employees that Stanford was running a Ponzi scheme, a review of the case shows. The SEC and the Financial Industry Regulatory Authority, the self-regulator for brokers then led by Mary Schapiro, the new SEC chairman, were also slowed by doubts concerning jurisdiction.

‘Tough New Rules’

Congress plans to examine gaps in surveillance of the financial industry and the competence of regulators this year as lawmakers rewrite the rules governing Wall Street. President Barack Obama said this week that he wanted to sign into law “tough new rules” by the end of this year.

The alleged Stanford fraud centers on CDs from Antigua- based Stanford International Bank Ltd. Such deposits normally are overseen by bank regulators, not securities watchdogs. While the SEC had jurisdiction over activities of Stanford’s brokerages in the U.S., the agency says it doesn’t have authority over offshore banks.

“That alone presents a challenge,” said SEC spokesman John Nester in Washington.

From 2003 to 2008, at least five former Stanford employees publicly accused the company of wrongdoing, including the two who alleged a Ponzi scheme. During that period, Schapiro, now 53, held various senior positions at Finra, based in Washington, and its predecessor, the National Association of Securities Dealers, ultimately becoming chief executive.

‘Shocking Failure’

“With Finra, that’s a shocking failure,” said Solomon Wisenberg, a former federal prosecutor who is co-chairman of the white collar crime group at Barnes & Thornburg LLP law firm in Washington. “The SEC also fell short.”

Schapiro turned down interview requests for this story. She told a Senate committee in a hearing last month that she asked an outside group to review how the SEC processes the more than 700,000 tips and complaints it receives each year so it “can mine those that are the most productive.”

“Finra’s investigation pushed to the limits of its jurisdiction,” said Herb Perone, the organization’s spokesman, in an e-mail. “The CD product in question was not a security product, and the institution selling the CD was a bank headquartered offshore. A non-U.S., non-broker-dealer selling non-securities is about as far away from Finra’s jurisdiction as you can get.”

Allen Stanford, 59, says he’s innocent.

“I would die and go to hell if it’s a Ponzi scheme,” he said in an interview with ABC News aired April 6. “I’m fighting for my survival and for my integrity.” In a Ponzi scheme, named for the 1920s-era criminal Charles Ponzi, money from new investors is used to pay off earlier depositors.

IRS Probe

Allen Stanford’s business practices had attracted the attention of the U.S. government for years. In 1993 the Internal Revenue Service told Stanford and his now-estranged wife, Susan Stanford, to pay more than $420,000 in back taxes on income earned offshore.

The Stanfords contested the IRS determination, setting off public countersuits and appeals that extended over a decade and a half. Last month the IRS said it was seeking $226.6 million in unpaid taxes from Stanford.

Stanford, who became a citizen of Antigua in 1999, participated that year in rewriting the island’s offshore banking laws, according to Jonathan Winer, a State Department official at the time. That led the U.S. Treasury to label Antigua a money laundering risk, Winer said. The designation was lifted in 2001.

Then as now, the SEC was poorly equipped to probe U.S. companies conducting business from offshore units, said Winer, who is now a senior vice president at APCO Worldwide, a public affairs company based in Washington.

‘Supremo Indicator’

Being located in Antigua should be a “supremo indicator” of fraud, Winer said. “There’s no reason for somebody to be located there” except to take advantage of bank secrecy laws and lax regulation, he said.

On its Web site, the Antiguan government cites its bank secrecy laws and compliance with financial service standards, based on a finding by the Financial Action Task Force, an international organization to combat money laundering.

2003 Complaint

Leyla Basagoitia, a Stanford financial adviser in Houston, filed a complaint with the NASD in 2003, alleging the company “is engaged in a Ponzi scheme to defraud its clients.” She said she was fired because she refused to push her clients to buy the CDs, which she believed to be “risky in nature,” according to a summary of her arbitration case on the Finra Web site.

Basagoitia, who remarried and is now named Leyla Wydler, lost her case and was told to pay back more than $100,000 in signing bonuses, according to the arbitration summary. She declined to discuss the case for this story.

By 2005, Stanford’s offshore bank reported assets of $3.8 billion.

In March 2006, a second former employee accused Stanford of running a Ponzi scheme. Lawrence De Maria, hired in late 2003 to be Stanford’s director of corporate communications, researched the company’s operations in the course of putting together an in-house magazine, according to a civil complaint he filed in state court in Florida.

He was concerned that Stanford Financial was using “fraudulent and misleading claims to attract new money from investors into the company,” was “falsifying its financial disclosures” and was operating a Ponzi scheme, attracting clients with “artificially high yields on certificates of deposits,” he alleged in the suit.

2007 Allegations

The civil suit was settled early last year for an undisclosed sum without Stanford admitting any wrongdoing, said Dana Gallup, De Maria’s Hollywood, Florida-based lawyer.

In July 2007, the Stanford offshore bank reported on its Web site that assets had reached $6 billion.

Another former Stanford employee, Charles Satterfield, a former fixed-income strategist, filed an arbitration complaint with Finra in October that year seeking to have a negative employee record altered. He also accused the company’s U.S. arm of being “essentially a sales conduit” for the offshore bank and not an independent, viable brokerage.

‘Utter Contempt’

The company “held the SEC and NASD in utter contempt,” refusing to file required documents, hiding information and destroying files, Satterfield said in his complaint. Stanford permitted “activities that appeared to constitute violations of federal securities laws,” he alleged. Finra agreed to alter the wording on Satterfield’s securities record and declined to award him any monetary damages.

Finra levied a $10,000 fine against Stanford in November 2007 for using “misleading, unfair and unbalanced information” in the marketing of its CDs, according to a summary of the case on Finra’s Web site. Perone, the Finra spokesman, declined to say what prompted the penalty. The action didn’t address the validity of the CD returns, the heart of the SEC’s February lawsuit against the company.

Stanford agreed to the fine and said it would change its marketing literature, without admitting or denying the findings, according to a letter of consent.

‘Abject Failure’

Bernerd Young, the Stanford compliance officer who signed the letter, had been district director of the NASD’s Dallas office, which oversaw Stanford, before joining the company in 2006. Reached at his home in Fulshear, Texas, Young declined to comment.

“This is an abject failure of anything akin to self- regulation,” said William Black, a University of Missouri law and economics professor in Kansas City and a former U.S. bank regulator. “These are people from the industry who cannot see their brethren as crooks.”

In December 2007, financial advisers Rawl and Tidwell decided to leave the company because, they said, they thought there were illegal activities going on.

Stanford filed an arbitration claim with Finra seeking to force Rawl and Tidwell to repay their signing bonuses. In January 2008 the two advisers sued Stanford Group Co. in Texas for wrongful dismissal, and, like Satterfield, alleged the company destroyed files, including those related to the SEC’s investigation. In December, a Texas appeals court said Finra should arbitrate the case, which is still outstanding.

Rawl, Tidwell

Rawl and Tidwell also said Stanford reported false data on historical returns and forced employees to participate in illegal activities, including prohibiting financial advisers from filing what they alleged were required forms for clients holding the CDs in retirement accounts, according to the suit.

As for the SEC’s 2005 letters to clients described by Rawl and Tidwell, agency spokesman Nester said he couldn’t comment on them.

Comeaux, the Stanford executive director, doesn’t recall the meeting that Rawl and Tidwell describe, according to his lawyer, Daniel Hedges of Houston.

“He remembers clients being surprised,” Hedges said. “And he remembers that nothing seemed to come of it. It just seemed to go away and it went away for long enough that they thought it was just over with.”

The SEC and Finra receive thousands of complaints each year. SEC enforcement offices were evaluated on the number of cases, or “stats,” they brought in, rather than on the seriousness or difficulty of action, said Walter Ricciardi, the agency’s deputy chief of enforcement from 2005 through 2008, in a speech April 1 in New York.

Enforcement Accounting

“So if you brought an Enron, that’s one,” Ricciardi said. “If you brought a WorldCom, that’s two.” Delisting 135 defunct companies in a week for failing to file annual reports gave an enforcer 135 cases to count, he said.

“Maybe certain investigations would have gotten put in the right place and in the right posture” with a different evaluation system, he said. He declined to discuss the Stanford case specifically.

Multiple accusations of fraud by employees are a red flag, said Joelle Scott, director of business intelligence at Corporate Resolutions, a New York-based business investigations and consulting firm. “Allegations of fraud are always a big deal,” she said.

“Finra was just a bunch of robots,” said Rawl, the former Stanford employee, his voice shaking, in an interview in his Houston office. “All they would do was set a date for the next hearing, but no one would look at our documents.”

SEC Roadblocks

Stanford’s employees all had access to the Finra’s tip line, said spokesman Perone. “It’s routine to notify the SEC of problems that we see, especially problems that are not within our jurisdiction,” he said.

The SEC probe of the CDs hit roadblocks because regulators and political leaders in Antigua weren’t cooperating, according to SEC officials, who declined to be named. This meant investigators had no detailed information on how much money was actually in Stanford International Bank, or where that money was invested, the officials said.

Justin Simon, Antigua’s attorney general, said in an e-mail that “no such requests” for cooperation were received.

The agency could simply have demanded that Stanford’s U.S. executives tell them where the money was going, said Black, who was a regulator in the savings and loan crisis in the 1980s.

“You can’t allow black boxes,” Black said. “The SEC could say, ‘We won’t accuse you of fraud, but if you don’t answer our questions, you can’t do business in the United States.’”

SEC ‘to Blame’

SEC spokesman Kevin Callahan declined to comment on Black’s assertion.

Investors, meanwhile, continued to pour money into Stanford CDs. Mark Shapley, a Mississippi real estate developer, said he bought his first CD, for $1 million, in May 2007. Two relatives also invested, he said.

“The SEC is largely to blame,” Shapley said in a telephone interview from his home in Richland, Mississippi. “If any of this information that’s being released now had been released then, we would still have our money.”

Shapley read the company’s marketing materials and his Atlanta-based Stanford investment adviser answered all his questions, he said.

“There was not a derogatory thing on the Internet about this guy,” Shapley said. “All you see is how he’s taken Antigua and helped all the people and helped the cricket, whatever the hell that is.” Shapley poured $400,000 more of his savings into Stanford CDs in August 2007, he said.

Bringing in FBI

The SEC sought help from the Federal Bureau of Investigation in early 2008 in hopes of advancing the probe, a person familiar with the inquiry said. The FBI, along with the IRS and the U.S. Postal Inspection Service, began investigating Stanford in June, according to an affidavit submitted by FBI special agent Vanessa Walther.

Last July, the SEC subpoenaed Rawl and Tidwell, seeking documents and information related to the Stanford CDs. Stanford International Bank reported in late November that its assets had swelled to $8.5 billion. On Dec. 11, Madoff was arrested in New York.

The following day, Pershing LLC, Stanford’s clearing company, said it would no longer process wire transfers to Stanford International Bank, citing a lack of “adequate” transparency in its financial statements, John Ward, managing director of Pershing’s Global Securities Services, said in an affidavit accompanying the SEC’s suit against Stanford.

Jurisdiction Issue

SEC officials, stung by accusations they had missed the Madoff fraud, refocused on Stanford, a person familiar with the probe said. Obstacles remained.

An outside analyst hired to look at the annual returns on Stanford’s CDs, which ranged from 11.5 to 16.5 percent from 1992-2006, said some high-yield bonds made similar returns, the person said.

That month, lawyers in the Fort Worth office found a way around the jurisdiction issue, the person said. The SEC learned that Stanford’s advisers were telling clients to sell other securities and buy the CDs. Instead of focusing on the sale of the CDs, the SEC could now base a fraud case on the sale of regulated securities to buy the offshore instruments, the person said.

As the SEC entered Stanford’s Houston headquarters on Jan. 12, Finra officials were there, too, people familiar with the probe said. Finra was told to stay out of the Houston office and concentrate on Stanford branches, where they downloaded computer hard drives and questioned employees, the people said.

SEC Moves

In a series of meetings in the first week of February, according to the FBI affidavit, company executives learned that Stanford had taken a $1.6 billion personal loan from the Antigua bank and that many of the assets were in real estate, not liquid securities. Then Thomas Sjoblom, the company’s attorney, withdrew from the case and disavowed everything he had told the SEC.

The SEC also learned, according to its complaint, that Stanford executives were planning to move $178 million out of Stanford International Bank accounts.

On Feb. 16, enforcement attorneys obtained the commission’s approval to file the fraud suit, according to an agency official. They did so the next morning, asking a judge to freeze all the company’s assets. U.S. Marshals took over the Houston office and told all the employees to go home. The federal judge appointed Dallas lawyer Ralph Janvey to account for investors’ money.

Kevin Sadler, a lawyer with Baker Botts LLP in Austin, who represents the receivership, said in a hearing last month in Dallas that “once the money made its way to the Antiguan bank, I’d say it was dispersed, like an aerosol spray, into tiny atoms that go everywhere.”

To contact the reporters on this story: Alison Fitzgerald in Washington at; Michael Forsythe in Washington at

Last Updated: April 16, 2009 00:01 EDT

Wednesday, April 15, 2009

A Wonderful Day

My dear mother passed away on 26 December,1999. Had she lived, she would have been 96 today.

I started the day with the good news that I had got my tax refund from the State of California.

I also got news from Zimbabwe with respect to my investments there. I made the investment after the first election when it appeared that Mugabe would be put out of office. At one point the Zimbabwe share market froze up and it appeared I had lost all. I wrote the investment off. I got the news this morning that I had recovered 35% of the investment. The future looks good there!

It only got better. I got further good news that a large gold deal my company has been working on in Colombia got board approval in Zurich and we ship the first gold this week. I was relieved. I have invested one year of my life in this deal.

Thursday, April 9, 2009

Italy's Wonderful Response To A Disaster Vs George Bush's Giant Bungle During And After Hurricane Katrina

An earthquake in Italy

Death in the mountains
Apr 8th 2009 | L’AQUILA
From The Economist print edition

Mourning those lost, with bitter memories of past disasters

Getty ImagesIT BEGAN with a roar under the earth and a tremor that lasted for what the mayor of L’Aquila, Massimo Cialente, later called “20 interminable seconds”. The epicentre of the most lethal and destructive earthquake in Italy for almost 30 years lay a few kilometres outside the city.

Its shock waves spread through L’Aquila, shaking to the ground a hotel and several apartment blocks. They wrecked a university residence, trapping many students inside. The earthquake gashed solid 18th-century palazzi and shook the brickwork out of flimsy structures thrown up in the 1960s. Bridges and viaducts in the city, high up in the Apennine mountains that form Italy’s backbone, were left perilously fractured. Beyond L’Aquila, the shock waves ripped through villages, reducing the houses of farmworkers to piles of rubble. They were felt as far away as Naples.

The earthquake that struck the Abruzzo region at 3.32am on April 6th was another grim reminder of how vulnerable Italy is to natural disasters. At least 250 people were killed. Over 1,000 were injured. A single village, Onna, lost 39 inhabitants. As many as 13,000 buildings, including historic and artistic monuments, were damaged.

By April 7th, when most of its population had fled, L’Aquila was like a city that had been extensively shelled: a ghost town in which almost the only sounds were of house alarms, ambulance sirens and the earth-movers of rescue workers. After-shocks, some severe, continued to affect the area, making the rescue workers’ task harder and more dangerous. By April 8th the increased deployment of heavy machinery hinted that, in most places, rescuers had given up hope of finding survivors.

Two questions were immediately raised. One was why some buildings crumbled but others did not. Many of those that collapsed were put up before 1980 when Italy brought in stricter regulations for construction in areas of seismic activity. But others were not. Prosecutors in L’Aquila announced that they would investigate to see if there were grounds for bringing charges against those responsible.

The second question was how Silvio Berlusconi’s government would cope. Disasters can make or break politicians, as Rudy Giuliani and George Bush could both testify. Mr Berlusconi’s initial reaction was both vigorous and sure-footed. He cancelled a trip to Moscow, rushed to the area and toured it in a helicopter. A day later, he returned to announce the dispatch of 14,500 tents for the homeless. But then he made an ill-judged quip that those huddling in tent cities should think of themselves as being on a “weekend of camping”. He also declined offers of foreign help, insisting that Italians were a “proud people” and prosperous. True, yet the magnitude of the damage is daunting. And the government, which is burdened by a public debt that exceeds Italy’s annual GDP, is constrained over how much it can do.

Some 17,000 people who have lost their homes are being cared for by the government in makeshift accommodation. But the number who are unable to return to their homes until they have been thoroughly inspected is much higher, perhaps as many as 70,000. They too have had their lives fractured and will expect (and deserve) some help.

Mr Berlusconi said that he intended to tap European Union funds, as well as spending some of the cash set aside for construction projects as part of Italy’s response to the global economic crisis. In particular, he said he would like to build the first of a batch of British-style new towns alongside L’Aquila. It could be ready in two years, he said.

Locally, this news was greeted with as much scepticism as hope. Italy’s past recovery programmes have a mixed record. The performance of the authorities following the most recent big earthquake, in Umbria and Marche 12 years ago, was slow but steady. By last September, some 92% of the damaged houses had been made habitable again. But what really haunts the survivors of the latest disaster is the Irpinia earthquake that hit Campania and Basilicata in 1980. It was the prelude to a scandalous case of waste and corruption. Some of the money was diverted to the Camorra, the Neapolitan mafia. Even today some victims are still living in what were intended to be only temporary lodgings.

Past Italian governments did not pay for their bungling because they usually fell before its consequences became apparent. Mr Berlusconi and his ministers expect to be in office until 2013. This time they may well be held to account.

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Sunday, April 5, 2009

China's New Death Vans

Daily Mail: China’s hi-tech ‘death van’ where criminals are executed and then their organs are sold
Daily Mail
By Andrew Malone
Death will come soon for Jiang Yong. A corrupt local planning official with a taste for the high life, Yong solicited money from businessmen eager to expand in China’s economic boom.
the unmarried official took more than £1 million in bribes from entrepreneurs wanting permission to build skyscrapers
But Yong, a portly, bespectacled figure, was caught by the Chinese authorities during a purge on corrupt local officials last year.
He confessed and was sentenced to death. China executed 1,715 people last year, so one more death would hardly be remarkable.
But there will be nothing ordinary about Yong’s death by lethal injection. Unless he wins an appeal, he will draw his final breath strapped inside a vehicle that has been specially developed to make executions more cost-effective and efficient.
In chilling echoes of the ‘gas-wagon’ project pioneered by the Nazis to slaughter criminals, the mentally ill and Jews, this former member of the China People’s Party will be handcuffed to a so-called ‘humane’ bed and executed inside a gleaming new, hi-tech, mobile ‘death van.’
After trials of the mobile execution service were launched quietly three years ago - then hushed up to prevent an international row about the abuse of human rights before the Olympics last summer - these vehicles are now being deployed across China.
The number of executions is expected to rise to a staggering 10,000 people this year (not an impossible figure given that at least 68 crimes - including tax evasion and fraud - are punishable by death in China).
They cost £60,000, can reach top speeds of 80mph and look like a police vehicle on patrol. Inside, however, the ‘death vans’ look more like operating theatres.
Executions are monitored by video
the police, judiciary and doctors are all involved in making millions from China’s huge trade in human body parts.
Inside each ‘death van’ there is a dedicated team of doctors to ‘harvest’ the organs of the deceased. The injections leave the body intact and in pristine condition for such lucrative work.
After checking that the victim is dead, the medical team first remove the eyes. Then, wearing surgical gowns and masks, they remove the kidney, liver, pancreas and lungs.
Little goes to waste, though the heart cannot be used, having been poisoned by the drugs.
The organs are dispatched in ice boxes to hospitals in the sprawling cities of Beijing, Shanghai and Guangzhou, which have developed another specialist trade: selling the harvested organs.
At clinics all over China, these organs are transplanted into the ailing bodies of the wealthy - and thousands more who come as ‘organ tourists’ from neighbouring countries such as Japan, South Korea, Singapore and Taiwan.
Chinese hospitals perform up to 20,000 organ transplants each year. A kidney transplant in China costs £5,000, but can rise to £30,000 if the patient is willing to pay more to obtain an organ quickly.
With more than 10,000 kidney transplants carried out each year, fewer than 300 come from voluntary donations. The British Transplantation Society and Amnesty International have condemned China for harvesting prisoners’ organs.
Laws introduced in 2006 make it an offence to remove the organs of people against their will, and banned those under 18 from selling their organs.
But, tellingly, the law does not cover prisoners.
‘Organs can be extracted in a speedier and more effective way using these vans than if the prisoner is shot,’ says Amnesty International.
‘We have gathered strong evidence suggesting the involvement of Chinese police, courts and hospitals in the organ trade.’
The bodies cannot be examined. Corpses are driven to a crematorium and burned before independent witnesses can view them.
A police official, who operates a ‘multi-functional and nationwide, first-class, fixed execution ground’ where prisoners are shot, confirmed to the Mail that it is always a race against time to save the organs of the executed - and that mobile death vans are better equipped for the job.
‘The liver loses its function only five minutes after the human cardiac arrest,’ the officer told our researcher.
‘The kidney will become dysfunctional 30 minutes after cardiac arrest. So the removal of organs must be completed at the execution ground within 15 minutes, then put in an ice box or preservation solution.’
The idea for such a ‘modern’ scheme is rooted in one of the darkest episodes in human history.
The Nazis used adapted vans as mobile gas chambers from 1940 until the end of World War II. In order to make the best use of time spent transporting criminals and Jewish prisoners, Hitler’s scientists developed the vehicles with a hermetically sealed cabin that was filled with carbon monoxide carried by a tube from the exhaust pipes.
The vans were first tested on child patients in a Polish psychiatric hospital in 1940. The Nazis then developed bigger models to carry up to 50 prisoners. They looked like furniture removal vans. Those to be killed were ordered to hand over their valuables, then stripped and locked inside.
As gas was pumped into the container and the van headed towards graves being dug by other prisoners, the muffled cries of those inside could be heard, along with banging on the side.
With the ‘cargo’ dead, all that remained was for gold fillings to be hacked from the victims’ mouths, before the bodies were tipped into the graves.
Now, six decades later, just like the Nazis, China insists these death vans are ‘progress’.
‘This deters others from committing crime and has more impact,’ said one official.
Indeed, a spokesman for the makers of the ‘death vans’ openly touted for trade this week, saying they are the perfect way to ‘efficiently and cleanly’ dispatch convicts with lethal injections. Reporting steady sales throughout China, a spokesman for Jinguan Auto - which is situated in a green valley an hour’s drive from Chongqing in south-western China - said the firm was bucking the economic trend and had sold ten more vans recently.
The exact number in operation is a state secret. But it is known that Yunnan province alone has 18 mobile units, while dozens of others are patrolling in five other sprawling provinces.
‘We have not sold our execution cars to foreign countries yet,’ beamed a proud spokesman. But if they need one, they could contact our company directly.’
Officials say the vehicles are a ‘civilised alternative’ to the traditional single shot to the head (used in 60 per cent of Chinese executions), ending the life of the condemned quickly, clinically and safely - proving that China ‘promotes human rights now,’ says Kang Zhongwen, designer of the ‘death van’.
For the Beijing regime, it is not a question of whether they should execute offenders, but how to do it most efficiently - and make the most money from it.
The existing EU member states have all signed up to Protocol 13 of the European Convention on Human Rights which outlaws the use of the death penalty in all circumstances. The Lisbon Treaty makes the EU a state superior with legal personality and has the post-Lisbon EU signed up to Protocol 6 rather than Protocol 13. Protocol 6 allows the death penalty for acts committed (who decides what acts?) in time of war or threat of war. We are told we’ve been under the war of terrorism since 2001. When reading protocol 6 below ask your self what role is envisaged for a post-Lisbon EU and its collective forces in a time of war or imminent threat of war?
“b) Article 2 of the Protocol No 6 to the ECHR: A State may make provision in its law for the death penalty in respect of acts committed in time of war or of imminent threat of war; such a penalty shall be applied only in the instances laid down in the law and in accordance with its provisions…” - ( is funded by the European Commission)

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