Latin American currency: Colombia goes bananas

A good way to monitor Latin American currencies is against the Canadian dollar, rather than the US dollar. The USD, as world reserve currency, is mostly a measure of risk tolerance around the world. People fearing instability (still and despite it all) buy greenbacks. But the CAD, as the currency of a stable, developed, but resource-dependent country, is a nice comparison point for the Latin American currencies, as it cuts out a lot of the USD’s noise.

Against the CAD, the Colombian peso long tracked other currencies in the region, particularly the Peruvian nuevo sol and the Chilean peso. 

This first chart shows currencies against the CAD from 1 Jan 2010 to 1 Oct 2014. The Colombian peso (COP) is the red dotted line, green is Peru, navy blue is the Mexican peso, and fucsia is Chile. Up top, you see the Brazilian real and the Argentine peso doing their wacky and devaluatory deeds in red (solid line) and purple.

Here’s what the same currencies have looked like over the past calendar year:

This time, Argentina is down there with Peru and Chile, actually appreciating against the Canadian dollar. Mexico is drifting weaker, and Colombia is suddenly tracking Brazil in a big, painful devaluation. The are both big oil producers whose state-controlled companies were once stock market darlings. They are both economies that were overhyped circa 2011, and are now probably in an excessive backlash.

The upshot:

Here’s the 5-year chart. Colombia has detached from its usual peers and is devaluing mightily.

The upshot for me, as a consumer of Colombian Harina P.A.N. precooked corn flour in Canada, is that a kilogram of this white powder has dropped from CAD 4 to CAD 3.3 over the past year.

Given what we already saw in 2014, I suspect Colombia will get a competitive advantage in the production of other white powders. Next year’s coca production reports will likely show Colombian output surging.

 

Galt’s Gulch Chile update with more soap opera

Just go read PanAm Post, it’s too much for me to deal with right now.

“The restoration of Galt’s Gulch Chile has started!” reads the statement released viaFacebook on Friday, April 25.* After over six months of falling off the radar, the development project inspired by Ayn Rand’s dystopian novel Atlas Shrugged appears to be making a comeback, but not without new controversy and grave implications.

In the reboot statement, Galt’s Gulch Chile (GGC) condemns a confrontation and robbery on the property that allegedly took place in October 2014: “a handful of short-sighted and self-serving individuals took illegal possession of the GGC offices, clubhouse, farm and land.” The release asserts the presence of a “small band of thieves” headed by Thomas Baker, “a crooked military cop,” and Edward J. Lashlee, who “was convicted and sentenced to federal prison in 2003 for his role in an $80,000,000 ponzi scheme.”

Full story.

ADDING: Looks like Ken Johnson is back in charge. You can read a bit about him in my Galt’s Gulch story from a year ago. Interesting cat.

Couldn’t happen to a nicer guy

Chile detained Cristian Labbé, the former mayor of the Providencia borough, for allegedly conspiring to kidnap and kill people during the military dictatorship led by General Agusto Pinochet. Labbé was Pinochet’s bodyguard and allegedly served at Tejas Verdes, a major torture and execution center. After the dictatorship, the diverse, but majority upper-middle-class, voters of the Providencia borough repeatedly elected Labbé to be their mayor.

As mayor, he was known for maintaining the symbols of the dictatorship. He resisted to the end the proposed renaming of September 11 Avenue, one of the main streets through the borough. The dictatorship named the street for the date of the coup that brought Pinochet to power. Locals frequently corrected the street signs to say things like “Mal Día” or “Terrible” instead of 11 Septiembre.

But beyond the symbolic, Labbé also persisted in committing acts that should be considered human rights violations. When students — many as young as 14 — nonviolently occupied high schools across the country to demand educational reform, Providencia was the only place I heard about where police fired tear gas into the buildings to evict them. The use of gas in enclosed spaces continued even when elementary school children were present. Labbé unilaterally closed down schools and tried to expel any students who didn’t live in the borough, despite a supposed national policy allowing students to attend any schools they pleased. In short, he supported the use of extrajudicial punishments, including the brutal corporal punishment of tear gas, against children. When questioned, he scoffed at constituents.

His bullying attitude and a gradual shift in the demographics of Providencia (hardcore dictatorship supporters moving further uptown or just dying off) brought him an electoral defeat in 2012. He was so bitter at the loss that he stopped going to work during his lame duck period. The first meeting of the city council under the new mayor turned into a jubilation by the new regime, who promptly returned September 11 Avenue to its old title, New Providencia.

I don’t know what he did at Tejas Verdes, if anything. It’s now up to the courts to figure it out. In any case, this is another example of Chile showing the more “developed” world how to deal with rights violators.

Another few cents on Latin American memory museums

Lillie, Colin and Otto have commented about how the Econo missed on Latin American memory museums. A year ago, as I was putting together an article about the 40th anniversary of the coup d’état in Chile, I had the chance to interview Ricardo Brodsky, executive director of the Museo de la Memoria, Santiago de Chile’s spectacular museum that the Economist says presents a biased version of history.

I understand The Economist’s concern. I had it myself before I learned what the Museum of Memory was. Like the Economist, I thought it was supposed to be a history museum. But it makes no sense to study a coup that was supported by, at least, a sizable minority of the population while ignoring why so many people sided with such a thing. I thought it was bad history-telling.

But as Brodsky explains in this interview, the Museum of Memory isn’t a history museum. For the record, here is my interview with Brodsky, translated by me. Let me know if you want a copy of the tape.

The problem with collaborators (Galt’s Gulch Chile, Argentine dictators, and Derwick Associates, oh my)

Ken Johnson, head of Galt’s Gulch Chile, looks at proposed subdivision map at Curacaví city hall.

I’ve been thinking about collaborators: people who go along with situations where they aren’t comfortable. Resisting or opposing would be hard, or cause legal inconveniences, or burn bridges, or ruin the chance of making big bucks. Some are just afraid. Collaborating with misbehavior, from a petty lie up to a major human rights violation, is normal and human. I probably go along to get along 99% of the time. But anyone who counts on reluctant collaborators is taking chances.

One example is Galt’s Gulch Chile (GGC). This is a proposed real estate development in the suburbs of Santiago, Chile, marketed toward libertarians and others who think the US, Canada and Western Europe are likely to collapse. Among its problems are that its managing partner, Ken Johnson, alienated a lot of workers, investors and buyers. By last November, when I visited the place for a Spring Celebration, some of the big names that were promoting the project were already feuding with Johnson over money and employment conditions. I sensed there were some odd personal dynamics but I figured they were the usual things one would get between a bunch of lone wolves trying to work together. Turns out it was worse. A few people have privately complained about Johnson; then a couple weeks ago, an early buyer went public alleging financial malfeasance. That broke the dam.

Suddenly, the interpipes were flooded with people who had been suspicious, those who claim to have warned buyers against the project, and even promoter-in-chief Jeff Berwick, saying that he was hoodwinked. He now claims he was already disillusioned with the project last August but chose to keep going along to get along so as not to cause other people any problems. Lawyer Erin Gallagly (who has never returned my calls seeking comment), in a now-deleted comment on Facebook, said she “witnessed a plethora of horror” in three months at GGC: failure to pay vendors, withholding pay from employees, threatening employees, financial mismanagement, and demanding that salespeople not share information. 

El Niño: A destabilizing force in N. South America

El Niño causes droughts in northern South America, killing cattle, harming water-dependent wildlife and forests, and slashing hydroelectricity output. It is often followed by La Niña. That’s not to say that floods only happen in La Niña years or droughts only happen with El Niño, but rather that the converse is true: La Niña years almost always bring floods and El Niño almost always brings drought to northern South America, and other disruptive effects elsewhere.

1988 La Niña Hurricanes Joan and Gilbert both affected northern South America, as did August flooding from the Magdalena river in Colombia to Ciudad Guayana, Venezuela.

1997-98 El Niño drought throughout northern Andes, cutting Peru’s growth by 2.8 percentage points and causing damages in Ecuador equal to 15 percent of GDP. Foreknowledge helped little.

1999 La Niña Caused the Vargas Tragedy, which may have killed 20,000 people in Venezuela, in December 1999.

2007-10 El Niño  drought that slashed power production in Venezuela, forcing the country to import fuel oil and food, slow output from the steel and aluminum industries, and start water and power rationing that never went away. Caracas reservoirs almost dried up.

2011 La Niña Catastrophic flooding in Colombia.

Click for interactive chart

El Niño may well break the lengthy drought in Chile which would be mostly a good thing for humans, cattle, sheep, lettuce, glaciers and mining projects. (Click that link if you want to learn some good Chilean Spanish.) But further north, it could start another 2- or 3-year cycle of climatic instability. I hope the region is better-prepared now than it was a few years ago for this predictable chaos.

======UPDATE April 28=====

Thomas O’Donnell writes in with the following, which is so substantive that I am just going to put it here in the post as I don’t want it to be missed.

Colombia announced they are shutting off the gas pipeline to Venezuela, citing expected upcoming El Niño shortages of water for hydroelectric production; so, they have to save their gas (the contract allows this in the face of ‘acts of God’). Meanwhile, the contract is ending (June?) and the pipeline is scheduled to be reversed in Sept. after a new contract is negotiated. Of course, this won’t happen as Venezuela has no gas to send to Colombia However, although people say the cutoff is because Venezuela might not be paying for the gas (which is of course likely), meanwhile, I am told by people who know the gas sector and Zulia well that in fact the El Niño explanation Colombia gives is a very real issue.

So, on top of all the other deep troubles in the west of Venezuela (Zulia and Tachira) face, presages serious shortages of gas for cooking and for electrical generation there. So, as you say, many effects of the swings in weather cycles… but esp. on top of a totally dysfunctional Venezuelan state that’s certainly not prepared whatsoever. Recall all the preoccupation with exactly how many meters and centimeters behind the damn at Guri a few years back? Here we go again!

Guri, as it happens, is in much better shape than it was in the 2010 El Niño, which followed showed up while Venezuela was still in a drought that started with the 2007 El Niño. But this is a great illustration of the kind of disruption that happens even with the kind of climate variability that is well within the historic norm.

Now think about how this bodes for climate changes that exceed historic norms.

Chile going renewable

This is what we like to see. Here is January’s power mix in Chile, with year-over-year change in the right-hand column:

The power generation mix in Chile’s main electrical grid, the SIC, has changed a bit over the past year: Solar generation up 22-fold, wind generation up 3.5-fold, hydro generation up 10%, and thermal — meaning fossil fuels — down 6%. Source here.

Add to that what happened in February. Note that solar power quadrupled month-over-month.

According to Business News Americas, the upshot is that February’s solar energy output in the SIC grid increased more than 100-fold over a year earlier. 

Much more solar and wind power has been approved for construction in the country, so next year the GWh from solar should be even higher.

Chile census may be binned

Remember how a few months ago I pointed out that the Chile census had some rather dubious statistics? Turns out that was just the tip of the iceberg. The more important problem was that the census was under so much political pressure to be the best ever that the people running the show made up some of the numbers. They failed to reach residents in a bunch of occupied homes and also failed to survey entire housing complexes, falsely marking them as unoccupied.

According to a post-mortem out today, the conservative estimate is that about 9% of the population was missed by the census. The solution: Trash it. (Here’s the executive summary.)

That said, major congratulations to Chile for a prompt and honest evaluation of this scandal. How many governments are willing to face facts like this?

The public release of census results in August 2012 and April 2013 provided information about total population and housing at the national and subnational level. However, it didn’t reveal that the totals included both directly surveyed population and estimated population in homes where no interview could be conducted. In the opinion of this commission, the communication omits essential information and fails to fulfill the standards of transparency required of a public office. This course of action was followed by the National Statistics Institute leadership, ignoring opinions of the institution’s professional staff.

So, boo hiss and bravo. Congratulations to CIPER for breaking this story and driving the government to be so transparent about its failures.

Odd items in Chile census

With apologies to those who might have seen this earlier on my Twitter feed, at @guacamayan, here are a few oddities of the new Chile census figures.

Religion: Fewer than half the people 15-29 in the Bio Bio region declare themselves Roman Catholic. That is the only group in the country where Catholicism fails to make a majority. The bulk of those who aren’t Catholic are Protestant/Evangelical.

Migration: More than 60% of the immigrants from the Dominican Republic, Poland, the Philippines and Russia were female, while more than 60% of those from Pakistan, Iran, Morocco, Saudi Arabia, Turkey, Haiti, Egypt, Lebanon, India and Portugal were male. I don’t see much of a pattern there, except that the Middle East-North Africa group tends to be quite male.

Chile census immigration notes

Unsurprisingly, Chile’s 2012 census showed a big increase in immigrants over the 2002 count — an increase of 86 percent to 339,536. That follows a 61 percent increase in the prior 10-year period.

Here is what happened in the last 10 years, in chart form:

These are just the top 10 sources of immigrants — you want the whole list, click here to download. Long story short: Peru, Colombia and Bolivia are sending lots of migrants to Chile, each of those countries more than doubling its migrant populations in Chile. Venezuela also increasing its numbers, but keeping its same rank. The previously dominant Argentine-Chilean population grew more slowly. For all the hype about Spanish immigration to the New World, the numbers don’t reflect any major change in the number of Spaniards in Chile. That is quite different from the number of US-Americans, now over 11,000. The number of Germans fell off a bit, probably because a lot of those immigrants are old and are dying off. And at least one escaped. As a result, El Salvador knocked Germany out of the top 10. As far as movement in the rankings, the big move is from Colombia, up from #10 to #3, with a more than 6-fold rise in population. I am still eagerly awaiting the arrival of a single decent bandeja paisa in Santiago Centro.

UPDATE: Here is a chart of the how many immigrants are in Chile, normalized for the population of their birth countries.