Monthly Archives: March 2018

They are pursuing counterproductive and immoral policies against all available evidence.

Central Americans continue to make the perilous trek through Mexico in hopes of finding security and opportunity in the United States. On Friday, Mexican authorities rescued 136 migrants, from Honduras, Guatemala, El Salvador and Nicaragua, inside a truck where the outside temperature exceeded 100 degrees. Authorities heard the cries of those inside after the trailer had been abandoned by the side of the road.

At the same time, hundreds of Central Americans are marching through Mexico on their way to the United States. Organized by Pueblos Sin Fronteras, the caravan seeks to "help migrants safely reach the United States, bypassing not only authorities who would seek to deport them, but gangs and cartels who are known to assault vulnerable migrants." Some plan to seek asylum at the border, while others say that the will look to cross illegally.

No matter the migrant horror stories in Mexico or the United States, conditions in Central America's Northern Triangle continue to push citizens from their home countries. About 80 percent of those traveling with the caravan have left Honduras, where they say that political violence in the wake of Juan Orlando Hernandez's controversial elections have made life even more difficult. According to one Honduran woman traveling north, “After the president [was sworn in] it got worse. There were deaths, mobs, robbed homes, adults and kids were beaten up.”

It is criminal that the administration's default is that these people coming to the US are rapists and bad hombres; that they are looking to game the asylum system; and they that are responsible for much of what ails our society. They are pursuing counterproductive and immoral policies against all available evidence.

Argentina on the front lines of Guatemala’s Cold War

Jo-Marie Burt continues to provide updates on the Molina Theissen Trial in Guatemala. In her latest installment, Jo-Marie recounts the testimony of Julieta Carla Rostica, an Argentine sociologist who specializes in Central America. In her court testimony, Rostica provides some fascinating details about the involvement of the Argentine military in supporting the Guatemalan regime's reign of terror.
The expert testified that Argentina’s involvement in military affairs in Guatemala began after U.S. President Jimmy Carter ceased military and other forms of assistance to countries accused of serious human rights violations. In 1979, Otto Spiegeler Noriega, the minister of defense under former Guatemalan President Romeo Lucas García (1978-1982), arrived in Argentina and a year later was appointed ambassador to that country. This provided the opportunity for the creation of a scientific-technical collaboration agreement, which was finalized when the former Guatemalan director of military intelligence, Manuel Callejas y Callejas, visited Argentina in August 1980. The agreement included scholarships for training in military intelligence.
At least 14 Guatemalan military personnel received this training, the expert testified, including retired General José Mauricio Rodríguez Sánchez, the head of military intelligence during the government of Efraín Ríos Montt, both of whom are is currently on trial for genocide in the Ixil region, though in separate proceedings, and Byron Humberto Barrientos, who is awaiting trial on charges of enforced disappearance and crimes against humanity in the CREOMPAZ case. Of the foreign military officials trained by “Battalion 601” of the Argentine military intelligence system, 15 percent were Guatemalan.
The Argentines recognized that they had a responsibility to eradicate the cancer of communism wherever it had spread. They were on the front lines of Western Christianity's battle against godless communism in the Western Hemisphere and, unlike the Americans, had no qualms about doing what was necessary. They helped train the Guatemalan military. They trained Nicaraguans after the fall of Somoza. These individuals would go on to form the Contras and carry out their war against the Sandinistas. They also developed strong ties with the Salvadorans.

As far as I know, Ariel Armony has carried out the most detailed English-language research on Argentina's role in Central America but that was from 20 years ago.

29/3/18: Credit downgrades and the sunny horizons of peak growth


The global economy is picking up steam. The U.S. economy is roaring to strength. 2018 is going to be another 'peak year'. Tax cuts are driving equity valuations up. Corporate balance sheets are getting healthier by a day... and so on.

The positivity of recent headline has been contrasted by the realities of the gargantuan bubble in corporate debt. A bubble that is not going to get any healthier any time soon. In fact, based on the latest data (through 4Q 2017) from the S&P Global Market Intelligence, H1 2017 trend toward relatively balanced (or rather relatively moderately negative skew) credit ratings has turned decisively negative in 2H 2017. Worse, 4Q 2017 dynamics were markedly worse than 3Q 2017 dynamics:


Which brings up the following question: if things are getting downgraded that fast, what's likely to happen with the Fed policy 'normalization' impact on the corporate credit markets? Answers on tears-proof napkins, please.

29/3/18: Matthew Rojansky on U.S.-Russia relations


It is rather rare that an occasion comes up on which I comment on political issues directly (absent the prism of economics or finance). A rarer, yet, are the occasions when such comments involve a positive assessment of the power-broker or 'power elite' analysts contributions on the topic of the U.S.-Russia relations.

This is an occasion to do both. Here is an interview that is a must-watch: https://www.youtube.com/watch?time_continue=7&v=oiOrU5_JWao&utm_content=buffer011ee&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer.

In it, Matthew Rojansky, Director of the Wilson Center’s Kenan Institute, discusses US-Russia relations in the Trump-Putin era and makes several pivotal points, some of which I have raised before, but I have not heard being raised by an analyst who is, like Rojansky, is wired into Washington elite. At just over 5 minutes, is is a MUST-watch.


Loss of TPS might move El Salvador to the left

Jesse Acevedo published a post in the Monkey Cage several weeks ago that asked What will happen to El Salvador when the U.S. ends the protected status of Salvadoran immigrants? Acevedo argues that Salvadorans and citizens of other countries who lose remittances with the loss of TPS are likely to demand greater public services from their government.

Historically, remittance recipients used the cash inflows to satisfy their family's basic needs. As a result, they did not put much pressure on the government to redistribute resources. Governments also used remittances to their advantage as they could use it as an excuse to under-invest in their people. However, the Great Recession caused a change in citizen attitudes.
Before 2009, remittance recipients were 2 percent less likely to support redistribution than non-recipients. During the period of decline, remittance recipients began to show slightly greater support for redistribution than non-recipients.
By the time remittances recovered to pre-crisis levels in 2012, recipients became nearly 5 percent more likely to support redistribution. Even in 2014, five years after the recession, recipients continued to favor redistribution. The effect was strongest among remittance recipients without employment — those whose finances would be more sensitive to the drop in remittances from the United States.
Overall, it's tough to see how the loss of $1-2 billion in remittances will be good for El Salvador. However, with the people behind them, perhaps the FMLN will be more successful pressuring other political parties to support increased health and education investment. That, combined with other research that indicates Salvadorans who receive remittances tend to be more conservative could change future political preferences in the country.