Watch Out America, Venezuela a Failed State

Venezuela Is About to Go Bust

Nagel/ForeignPolicy: Venezuela’s economy is facing a tsunami of bad news. The country is suffering from the world’s deepest recession, highest inflation rate, and highest credit risk — all problems aggravated by plunging oil prices. Despite all its troubles, though, until now Venezuela has kept making payments on its $100-billion-plus foreign debt.

That is about to end. In recent days a consensus has emerged among market analysts:

Venezuela will have to default. The only question is when.

Venezuela will have to default. The only question is when.

A Venezuela meltdown could rock financial markets, and people around the world will lose a lot of money. But we should all save our collective sympathy — both the government in Caracas and the investors who enabled it had it coming.

In the last few years, the Venezuelan government has been steadfast about staying in good graces with its lenders. It has paid arrears on its debt religiously, and has constantly asserted that it will continue paying.

But it has neglected to implement the reforms Venezuela would need to improve the fundamentals of its economy. Its commitment to socialist “populism” and the complicated internal dynamics within the governing coalition have paralyzed the government. It has repeatedly postponed important reforms like eliminating its absurd exchange rate controls (the country has at least four exchange rates) or raising the domestic price of gasoline (the cheapest in the world by far). Instead, the government has “adjusted” by shutting off imports, leaving store shelves all over the country barren.

This strategy now seems unsustainable. According to various estimates, in 2015 Venezuela imported about $32 billion worth of goods. This was a marked drop from the previous year. This year, given current oil prices and dwindling foreign reserves, if Venezuela were to pay off its obligations — at least $10 billion — and maintain government spending, it would have to import close to nothing. In a country that imports most of what it consumes, this would ensure mayhem. That is why all analysts predict default in the coming months.

The Economist has joined the chorus, saying that “the government has run out of dollars.” In the words of Harvard professor Ricardo Hausmann, this will be “the largest and messiest emerging market sovereign default since the Argentine crisis of 2001.”

One of the reasons the coming default will be so messy is the many instruments involved, all issued under widely varying conditions. Part of the stock of debt was issued by PDVSA, Venezuela’s state-owned oil company, which owns significant assets overseas (For example, Citgo is 100 percent owned by the Venezuelan government). Another part of the debt was issued by the national government directly, while another big chunk is owed to China, under secretive terms.

The Chinese issue looms large. China’s loans to Venezuela — close to about $18 billion, according to Barclay’s – consist of short-term financing payable via oil shipments. As the price of oil collapses, Venezuela needs to ship more oil to China in order to pay them back. Barclay’s estimates that right now this is close to 800,000 barrels per day, leaving little more than a million barrels per day Venezuela can sell for cash.

A default will send ripples beyond Wall Street. Many people have been buying high-risk, high-return Venezuelan debt for years — from pension funds in far-off countries to small banks in developing ones. Most stand to lose their shirts. Yet the signs that this was unsustainable were there for all to see.

For years, Venezuela has had a massive budget deficit, sustained only by exorbitant oil prices. For years, analysts have been warning that the Venezuelan government would rather chew nails that allow the private sector to grow. And yes, a lot of that borrowed money was used to help establish a narco-military kleptocracy.

It is impossible to untangle the ethical implications of all of this. Lending Venezuela money is what business ethics professors talk about when they question “winning at someone else’s expense.” Losing money from investing in Venezuela is akin to losing it from, say, funding a company that engages in morally reprehensible acts. (Insert the name of your favorite evil corporate villain here).

Investors in companies with “tainted profits” from, say, engaging in child labor or violating human rights should not get the world’s sympathy, nor should they be bailed out. Similarly, investors in Venezuelan debt have only their hubris to blame.

In a few months, once the rubble of the Bolivarian revolution is cleared, the discussion will turn to how Venezuela can be helped. It would be smart to remember that aid should come to the Venezuelan people first. As the scarcity of food and medicine grows,

Venezuela may become the first petro-state to face a humanitarian disaster.

Venezuela may become the first petro-state to face a humanitarian disaster.

If and when a responsible government in Caracas asks for foreign assistance, solving this urgent issue should be at the top of the agenda. Conditions on financial assistance should privilege the interests of Venezuelans caught in the debacle above the interests of angry hedge fun managers or international bankers.

In other words, the Venezuelan people should come first. The folks who enabled this catastrophe? They can wait.

 

Hey Janet and Jeh, How do you Square This?

May 2015, speech in part: DHS Secretary Jeh Johnson, “The FBI continues to identify, investigate, interdict and help the Department of Justice prosecute attempted terrorist plots to the homeland. With the help of DHS, the FBI has also made a number of arrests of those who attempt to become foreign fighters, before they can get on an airplane and leave the country.

In reaction to terrorist groups’ public calls for attacks on government installations in the West, and following the attack last fall in Ottawa, I directed that our Federal Protective Service enhance its security and presence at federal office buildings around the country. This enhanced security remains in place.

In reaction to terrorists’ public calls for attacks on U.S. military installations and personnel, the Department of Defense has enhanced its security at bases in the U.S.

Given the new reality of the global terrorist threat — which involves the potential for small-scale homegrown attacks by those who could strike with little or no notice, we are working in closer collaboration with state and local law enforcement. Given the nature of the evolving threat, the local cop on the beat may actually be the first to detect a terrorist attack on the homeland.

So, as often as several times a week, the Department of Homeland Security and the FBI share terrorist threat information and intelligence with Joint Terrorism Task Forces, state fusion centers, and local police chiefs and sheriffs.” Full speech here and note the some of the attendees.

Maybe we should be seeking a subpoena of Janet Napolitano and Jeh Johnson.

***

Enter Philip Haney, again:

DHS Official: I Was Ordered to Purge Records of Islamic Terror Ties
A veteran official with the Department of Homeland Security claims he and other staff were ordered to destroy records on a federal database that showed links between possible jihadists and Islamic terrorist groups.

“After leaving my 15-year career at DHS, I can no longer be silent about the dangerous state of America’s counter-terror strategy, our leaders’ willingness to compromise the security of citizens for the ideological rigidity of political correctness—and, consequently, our vulnerability to devastating, mass-casualty attack,” the former employee, Patrick Haney, wrote in an explosive column that was published late Friday on The Hill website.

Haney alleges that the Obama administration has been “engaged in a bureaucratic effort” to destroy the raw material and intelligence the Department of Homeland Security has been collecting for years, leaving the United States open to mass-casualty attacks.

His story starts in 2009, when during the holiday travel season, a 23-year-old Nigerian Muslim,  Umar Farouk Abdulmutallab, boarded Northwest Airlines Flight 253, with explosives packed in his underwear and the hopes of slaughtering 290 travelers flying on Christmas Day from the Netherlands to Detroit, Michigan. Passengers subdued the jihadist and he was arrested, thwarting the plot.

After the attempt, Haney writes, President Barack Obama “threw the intelligence community under the bus for its failure to ‘connect the dots,’ saying that it was not a failure to collect the intelligence that could have stopped the attack, but rather “‘a failure to integrate and understand the intelligence that we already had.'”

But most Americans were not aware that the Department of Homeland Security’s employees suffered enormous damage to their morale from Obama’s words, Haney said.

Further, many were infuriated “because we knew his administration had been engaged in a bureaucratic effort to destroy the raw material — the actual intelligence we had collected for years, and erase those dots. The dots constitute the intelligence needed to keep Americans safe, and the Obama administration was ordering they be wiped away.”

Just one month before the attempted attack, Haney said, his DHS supervisors ordered him to either delete or modify the records for several hundred people tied to Islamist terror organizations, including Hamas, from the Treasury Enforcement Communications System, the federal database.

Those records give DHS the ability to “connect dots,” explained Haney, and every day, the agency’s Custom and Border Protection officials use the database while watching people who are associated with known terrorist affiliations seeking patterns that could indicate a pending attack.

“Enforcing a political scrubbing of records of Muslims greatly affected our ability to do that,” said Haney.

“Even worse, going forward, my colleagues and I were prohibited from entering pertinent information into the database,” he wrote.

And even weeks after the attempted Christmas Day attack, Haney said, he was still being ordered to delete and scrub terrorists’ records, making it more difficult to connect dots in the future.

The number of attempted and successful Islamic terrorist attacks kept increasing, notes Haney, including the 2013 Boston Marathon bombing, conducted by Dzhokhar and Tamerlan Tsarnaev; Muhammad Youssef Abdulazeez’ shooting of two military installations in Chattanooga, Tennessee last year; the attack conducted by Faisal Shahzad in May 2010; Detroit “honor” killer Rahim Alfatlawi in 2011; Amine El Khalifi, who plotted to blow up the U.S. Capitol in 2012; and Oklahoma beheading suspect Alton Nolen in 2014.

He believes it is “very plausible” that one or more of those homeland incidents could have been prevented, if DHS subject matter experts had been allowed to keep doing their jobs.

“It is demoralizing — and infuriating — that today, those elusive dots are even harder to find, and harder to connect, than they were during the winter of 2009,” Haney concluded.

 

 

 

 

 

 

SCOTUS to Rule on Obama’s Executive Order

Primer: This is the White House official Fact sheet and Executive Order being challenged.

The Supreme Court has often dealt a big blow to presidents in their second term.

LATimes: Harry Truman was rebuked for claiming the power to seize strike-bound steel mills during the Korean War. Richard Nixon resigned shortly after the court ruled unanimously he must turn over the Watergate tapes.

Bill Clinton’s impeachment was triggered by the court’s decision that he must answer questions under oath in the Paula Jones sexual harassment case. And George W. Bush lost before the court when he claimed his power as commander in chief gave him almost unfettered authority over prisoners held at the Guantanamo Bay prison.

Now, as President Obama begins his last year in office, the court is set to render a verdict on his use of his executive authority. The justices will decide whether he violated the law by authorizing more than 4 million immigrants living in the U.S. illegally to come out of the shadows without fear of deportation and obtain work permits.

There are signs that at least some of the justices are ready to rein in the president’s ability to take such bold action without the approval of Congress.

Never before has the high court ruled that a president violated his constitutional duty to “take care” that laws are “faithfully executed.” Yet when justices agreed to hear the immigration case, they surprised many by asking both sides to present arguments on whether Obama’s actions violated the rarely invoked “take care” provision. That question had not even been at issue when lower courts blocked Obama’s plan from taking effect.

In a separate pending case this term, the court also will rule on whether the president and his healthcare advisors went too far by requiring Catholic charities and other faith-based employers to formally opt out of providing a full range of contraceptives to their female employees by citing their religious objections.

The faith-based entities argued that by notifying the government of their decision to opt out — which triggers a process under which employees would get contraceptive coverage by other means — they would be “complicit” in supplying “abortion-inducing drugs.”

The decisions, both due by summer, will help answer a question that looms over Obama’s presidency. Has he properly used his power as chief executive to circumvent congressional gridlock on issues such as immigration, climate change and healthcare, or has he gone too far and violated his duty to enforce the laws as set by Congress?

The cases come before the court with a backdrop of Republican claims that the president has overreached and abused his power. Former House Speaker John A. Boehner said Obama was “acting like a king” and “damaging the presidency” when he announced the deportation-relief plan now before the high court.

On the campaign trail, Sen. Ted Cruz of Texas promises GOP voters that, if he is elected president, his first task on his first day in the White House will be to “rescind every illegal and unconstitutional executive action of Barack Obama.”

White House officials and supporters of the president counter that Obama’s actions are not only legal and well within his discretionary authority, but that Congress has left him no choice by refusing to take action on pressing national problems.

Conservative scholars think Obama has left himself vulnerable by announcing broad executive actions on policies that had been considered and rejected by Congress, and which even he once said were beyond his authority.

In his first term, Obama told Latino activists who were pushing him to take unilateral action that he could not “waive away the laws Congress put in place” regarding the removal of immigrants who entered the country illegally. But later the president decided he did have the power to suspend deportation and offer “lawful presence” and work permits to as many as 5 million of those immigrants.

So far conservatives have mostly failed to derail Obama in the Supreme Court. Twice, the justices upheld the president’s healthcare law against conservative attacks, with Chief Justice John G. Roberts Jr. casting his vote with the court’s four liberals.

Four years ago, in a key test of state-versus-federal power, the court ruled for Obama after his administration sued to block Arizona from enforcing a law to crack down on immigrants in the country illegally.

In 2011, Obama and then-Atty. Gen. Eric H. Holder Jr. raised ruffles on the right when they announced the administration would not defend in court the Defense of Marriage Act, which recognized only marriages between a man and a woman. House Republicans took up the cause, but two years later the high court agreed with the administration and struck down key parts of the law as unconstitutional.

But the new immigration and contraceptive cases pose a tough test for Obama’s lawyers. In last year’s healthcare case, they were defending a law that had won approval in Congress, when both chambers were controlled by Democrats. “We must respect the role of the legislature and take care not to undo what it has done,” Roberts said in upholding its system of insurance subsidies.

This year, by contrast, Obama is defending an executive action on immigration that was taken without the approval of Congress and in the face of fierce Republican criticism.

Similarly, the “contraceptive mandate” was not spelled out in the Affordable Care Act, as lawyers for Catholic bishops often point out. It was adopted later in a regulation issued by Obama’s healthcare advisors.

But Obama’s defenders, including immigration law experts, say the critics are missing the crucial point that the deportation laws give the chief executive a free hand to decide how or whether to deport those living here illegally. Contrary to what many assume, the law does not say federal officials must arrest and deport such people. Rather, it says they are “subject” to removal, based on policies and priorities set by the executive branch.

Obama’s administration says it wants to focus on deporting criminals, security threats, gang members and drug traffickers, not parents and grandparents who have children in the United States legally.

The administration can quote a powerful voice to back up its view of the matter. “Aliens may be removed” if they entered the country illegally and committed crimes, said Justice Anthony M. Kennedy, but “a principal feature of the removal system is the broad discretion exercised by immigration officials…. Federal officials, as an initial matter, must decide whether it makes sense to pursue removal at all. As a general rule, it is not a crime for a removable alien to remain present in the United States.”

Kennedy spoke for the court four years ago in rejecting Arizona’s claim that immigrants who could not prove their citizenship should be arrested, and Roberts agreed. Kennedy’s explanation of the deportation system may also defeat any claims that Obama is violating his duty to “faithfully execute” the law.

“The president is not claiming a constitutional authority to not enforce the law. He’s claiming authority based on the immigration statute,” said Walter Dellinger, a White House lawyer under President Clinton. “And if the court says he is wrong, then he will comply with that.”

El Chapo’s America: Flooded with Heroin-Fentanyl

The DEA operation, called “Project Cassandra,” is meant to disrupt and dismantle Hezbollah’s global network that supplies drugs to the U.S. and Europe as well as cut into the terror organization’s ability to fund its activities through drug trafficking.

In the investigation, authorities uncovered a network of money couriers who collect and transport millions of euros in drug proceeds from Europe to the Middle East. The currency is then paid in Colombia to drug traffickers using the Hawala disbursement system, which makes it difficult to track. ***

Last spring, Brazil’s Civil Police arrested Hamzi Ahmad Barakat in the city of Curitiba under allegations that he had connections to a network of front companies that fleeced Lebanese immigrants who had recently moved to Brazil.

Barakat, who allegedly has ties to the infamous Triple Frontier region, is listed in the United States as a member of Hezbollah and is suspected of trafficking arms, drugs, explosives and counterfeit bills.

“He was preying on his own countrymen, using their identities to create companies to carry out schemes,” said Cassiano Aufiero, the police investigator in charge of the case.

Aufiero added that while he knew of Barakat’s purported ties to the Islamic militant group, he said that he was under arrest for different matters, including embezzlement and the creation of false documents.

Barakat’s arrest shed more light on the Triple Border region, which has become a hotspot for smugglers and drawn the attention of the U.S., Israel and governments throughout South America.

The region has drawn a number of immigrants for the Middle East, particularly from Lebanon, and is believed to be one of Hezbollah’s major areas of operation outside of the Islamic world, due to its seclusion, loose borders, rampant political corruption and weak judicial system. Brazil has one of the largest Lebanese population’s outside of Lebanon with at least 7 million people from that country residing there and some estimates claiming closer to 13 million.

In 2004, Barakat’s brother, Assad Ahmad Barakat, was named by the Treasury Department as one of Hezbollah’s “most prominent and influential members” and was believed to have used an electronics wholesale store in the Triple Frontier as a cover for raising funds for Hezbollah. The Brazilian police arrested him in 2002 and deported him to Paraguay, where he went to prison for tax evasion.

The Department of Justice National Drug Threat Assessment report.

Fentanyl: drug 50 times more potent than heroin ravages New Hampshire

Of 69 fatal overdose victims last year, 68% had taken the synthetic opioid, which Mexican cartels have learned to make and smuggle to interstate highways. The drug ‘is what is killing our citizens,’ says Manchester’s police chief

Guardian: to the Drug Enforcement Administration, fentanyl is a synthetic opioid 100 times more powerful than morphine, and 30-50 times more powerful than heroin.

“Fentanyl is what is killing our citizens,” said Manchester’s chief of police, Nick Willard, in testimony before Congress last week.

In 2013, the city of Manchester had 14 fatal overdoses, one of which (7%) involved a victim with fentanyl in their system, according to Willard. In 2015, 69 people fatally overdosed, 68% of whom had taken fentanyl. The state statistics are no more cheery. Officials at the office of the chief medical examiner in New Hampshire say they have yet to receive testing results from 36 suspected overdoses, but they’ve counted 399 fatal overdose victims so far, more than two-thirds of whom died with fentanyl in their system.

“It’s not like Mario Batali,” said Willard from his office in Manchester, comparing heroin dealers cutting their supply with the famed chef. “These guys are just throwing it in a mixer. You could get a bag that’s perfect and no one is going to die from it. You could also get a bag [that’s] straight fentanyl and that would kill you.”

Willard said that during a recent raid in Manchester, he found a dealer mixing fentanyl with whey protein. In another sting that led to a seizure in Lawrence, Massachusetts, the dealer was allegedly mixing heroin and fentanyl in a kitchen blender.

For the most part, said Willard, the story of opiate use in Manchester follows the same patterns as the rest of the country. The crisis was ushered in by the rise of prescription painkillers like OxyContin. Addicts looking for a cheaper high frequently turned to the more dangerous, yet significantly cheaper, heroin.

The turning point, he says, happened sometime after 2010, when Purdue Pharma altered the medication to make it more difficult to tamper with and get high. Suppliers in Mexico were quick to keep up with the burgeoning market, and addicts in Manchester, which sits near Interstate 93, Route 3, Route 81, and Route 9, had no problem tapping into the supply. More here.

Chicago:

“What Al Capone was to beer and whiskey, Guzmán is to narcotics,” Art Bilek, the commission’s executive vice president, said at the time. Except, Bilek added, Guzmán “is clearly more dangerous than Al Capone was at his height.” (Zambada is plenty dangerous, too: Prosecutors say he commanded logistics and security for the cartel, including assassinations. He is suspected in a number of slayings, including the murders of government officials.)

The cartel’s scope is staggering. About half of the estimated $65 billion worth of illegal cocaine, heroin, and other narcotics that Americans buy each year enters the United States via Mexico, according to law enforcement experts (though the drugs often originate in South or Central America). More than half of that is believed to be supplied by Sinaloa. Drug enforcement experts estimate, conservatively, that the cartel’s annual revenues exceed $3 billion: more than those of the Chicago Mercantile Exchange Group.

In Chicago, the cartel has a near monopoly. “I’d say 70 to 80 percent of the narcotics here are controlled by Sinaloa and Chapo Guzmán,” says Jack Riley, director of the DEA’s Chicago office. “Virtually all of our major investigations at some point lead back to other investigations tied to Sinaloa.”

In August 2009, five months after Zambada’s capture, a federal grand jury in Chicago indicted him and 45 others tied to a Sinaloa-led drug ring in the city. Patrick Fitzgerald, the U.S. attorney at the time, called the indictments “the most significant drug importation conspiracies ever charged in Chicago,” claiming that the cartel imported and distributed nearly $6 billion worth of illegal narcotics mostly to the Chicago area between 1990 and 2008.

Immigration: Senator Sessions Just Released Shocking Report

The Senate Judiciary Committee’s subcommittee on Immigration and the National Interest released a new chart on Thursday exclusively to Breitbart News that shows that the number of fugitive criminal aliens in America outnumbers the populations of every city in New Hampshire.

Fugitive Criminal Aliens Outnumber Populations Of All New Hampshire Cities

The release accompanying the chart shows:

Breitbart: According to data provided to the Subcommittee by U.S. Immigration and Customs Enforcement (ICE), there are at least 179,027 aliens in the United States who not only have been ordered to leave the country for violating our immigration laws, but who have also been convicted of a criminal offense, and have not left as required or been removed by ICE. Because of the Obama Administration’s lax enforcement policies, ICE removed only 63,539 of these criminal aliens from the interior of the United States in Fiscal Year 2015. At that rate, it would take nearly three years to remove just the existing criminal aliens who have been ordered removed from the United States (not future criminal aliens who will be ordered removed). While the ICE data includes only criminal aliens who have already been ordered removed, Jessica Vaughan, Director of Policy Studies for the Center for Immigration Studies, estimates there are more than 2 million total criminal aliens in the United States.

The chart shows that the at-least-179,027 fugitive criminal aliens in the United States outnumber the populations of every single New Hampshire city. Manchester, New Hampshire, the most populous city, has 110,000 people — about 70,000 less people than fugitive criminal aliens in America — while Nashua has 87,000 people. Concord, New Hamsphire’s capital city, has 42,000 people and Dover has 31,000, while Rochester has 30,000.

The subcommittee, which is chaired by Sen. Jeff Sessions (R-AL) — the intellectual leader of the modern conservative movement — has essentially proved that no matter where anyone in the first-in-the-nation primary state of New Hampshire lives, there are well more fugitive criminal aliens in the United States than the entire population of their home city. It will be interesting to see how this plays on the campaign trail in the final days.

Feb. 3, 2016

Refugee and Visa Programs

Homeland Security and State Department officials testified at a hearing on security concerns related to U.S. refugee and visa… read more

Homeland Security and State Department officials testified at a hearing on security concerns related to U.S. refugee and visa policy. Francis Taylor told committee members that the Department of Homeland Security was now looking at the social media accounts of refugees coming from “high risk” nations. The change was in response to the mass shooting by a husband and wife team in San Bernadino, California. The wife was a Pakistani immigrant in the U.S. on a visa