End of the Free Market? Let's hope not!

If you love freedom do not flush!

 From Living in Peru 

Opinion: Is it the end of the free market?

In his opinion piece Alfredo Barnechea throws out examples of successful government owned companies like Norwegian Statoil. This is really a misnomer and false representation. Statoil is state own in name only. Statoil is in reality an investor owned company with huge barriers between its operations and government influence. It is much more aligned with privately held companies than government run companies. Gazprom is also investor owned and Sonatach is a 100% owned subsidiary of ‘Sonatrach International Holding Corporation,' which is itself owned by the Sonatrach Group.

Now let's compare the history of a Peruvian government owned company. Here in Perú the one mine I hear brought up over and over again, as an example of an environmental disaster within Perú, is the La Oroya polymetallic smelter (now owned by Doe Run Mining). Nearly 90 years old, the government owned La Oroya mine for 23 years, during which time the pollution grew to unmanageable levels. The mine was then sold in a “too little too late” attempt to clean it up. It was established by the American Cerro de Pasco Corporation in 1922, was nationalized and became the property of Centromin in 1974 and was then privatized in 1997 when Doe Run bought it for US$247 million. It consists of a copper and lead smelter and zinc refinery.

When Doe Run bought La Oroya, it took over Centromin's PAMA, (Programa de Adecuación y Manejo Ambiental or Environmental Remediation and Management Program), an environmental contract requiring environmental remediation measures. The measures required new sulfuric acid plants, elimination of fugitive gases from the coke plant, use of oxygenated gases in the anodic residue plant, a water treatment plant for the copper refinery, a recirculation system for cooling waters at the smelter, management and disposal of acidic solutions at the silver refinery, an industrial wastewater treatment plant for the smelter and refinery, a containment dam for the lead mud near the zileret plant, a granulation process water at the lead smelter, an anode washing system at the zinc refinery, management and disposal of lead and copper slag wastes, domestic waste water treatment, and domestic waste disposal.

Because of the difficulty, and potential impossibility of the task, Doe Run Peru has been indemnified by Centromin (and guaranteed by the Peruvian Government) against any environmental liability arising out of Centromin's prior operation. Doe Run's original commitment to this program was US$107 million but it is now expected that it will cost at least US$244 million. The cleanup process continues today.

SOURCE

We should all fear the end of free markets. What would then ensue, if such an event were to occur, is an explosion of government corruption and totalitarian rule. This occurs anytime that so much power is centralized and competition is removed. Throughout history Government has failed miserably at irradiating poverty and offering equal opportunity to all citizens. Government, by it’s very nature, creates nothing efficiently and can only rob from those that do and give it to those that don’t. That is a huge mistake that only serves to more deeply ingrain poverty. The only way to drastically and permanently reduce poverty and financial inequality is to stop demonizing and start enlisting the expertise of free enterprise businesses, though refundable tax credit incentives, to get involved and tackle these problems directly. Government ego and control is the impediment not the answer. It is insanity to expect the non-producers that occupy the majority of government positions to produce that which they never have accomplished themselves.

Comments posted here may be copied to the Peru-N-English Discussion Group site.

UNFREE TRADERS

COMING AND GOING

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Peru's Humala talks about meeting with Obama

President Obama joked with the newly-elected Humala that “the best phase of a presidency is the election campaign, because afterwords is when the problems come.” 

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That was no joke! That is a reality check on Obama's  egocentric psychological make-up. Both Obama and Humala have at times said publicly they want to kill the hard fought and won (by the previous administrations) "free trade agreement" between the USA and Perú. They have something in common there. I just hope Humala (unlike Obama) at least takes responsibility for any failed policy decisions and is not the miserable leader that Obama has been. Ideally Humala will only have to deal with Obama until the US Presidential election in 2012. Obama is a far left ideologue campaigner that was never up to the breadth nor challenge the US Office of the President presents. America has suffered the consequences. I want to see Perú do better.

July 9, 2011, Additional thoughts sparked by this PHOTO LINK posted by "jorcaryvan" at Peru-N-English Discussion Group:

I fear Ollanta for the same reason I feared Obama. They both make unbelievably big promises. That alone demonstrates
their deep lack of understanding of job of president and the structural economic barriers that must be overcome to institute effective change that does not harm the economy. I, along with many others that have common sense and a pragmatic intellect, predicted Obama's failure. Obama was never really prepared to govern. He just wanted to get elected and would promise the Moon on a stick if that’s what would get the votes. Obama is a theorist, a professor, not a pragmatist. Theorists can write books with good intent about how it should be, pragmatists do not over promise and get the job done effectively. It’s a huge difference. How many times has Ollanta changed his platform? That by itself is an enormous red flag that boosts the odds of his failure. It reveals his weakness. My practice is to never trust anyone who keeps offering me a plan until they find one I like. Because they obviously have not thought through any of the plans. And, I expect results not the Moon on a stick!

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Local Loca Motion

LocaMotion

Lima Mayor Susana Villarán, who has not one substantive accomplishment to her credit that will benefit the majority of Limenians (30% approval rating) and who has stopped construction on or renamed and reprioritized all the beneficial infrastructure projects set in motion by the very popular and effective previous mayor Castañeda, never fails to dumbfound. She does so with her penchant for an excruciating lack of common sense, profound disconnect from reality, her delusional self-aggrandized image and her elitist ideological disdain for the majority’s desires and preferences. Her absurdness is nearly comedic if not for the reality that Lima is in the hands of a fool. 

Mayor Susana Villarán: The recently completed Electric train damages society and divides the communities like the Berlin Wall.

The upshot here is that the new electric train, which was approved in every district before its construction, is now about to be inaugurated by outgoing president Alan Garcia. Mayor Susana Villarán, a Catholic, is still angry about the statue of Christ on Morro Solar that a Brazilian company donated and President Alan Garcia partially funded. Currently she is spitefully using the power of the mayor's office to push legislation that would have a gay pride plaque posted on the statue. But that’s not enough. She wants to exact revenge by robbing from Garcia the leading role in the inauguration of the new electric train constructed under his watch. Though there was exhaustive district and public input, Villarán now calls it the Berlin Wall? The train is in operation but she says that some handrails and access points are not completely finished. She adds that there should be no inauguration until all the work, which is already scheduled, is finished. Translation: That means she wants Humala (who has had absolutely nothing to do with the train) to take the leading role in the inauguration. This is one unpleasant and bitter lady!  

One more comment on the mishmash of cerebral misconnections present in this woman’s head.

She called the statue of Christ on Morro Solar exclusionary expression. Then she is publicly thrilled by leading the gay rights parade (which is fine if that is her propensity) that represents less than 10% of the population of Lima saying this, “I won this election cleanly, I won with my personal convictions, and my conviction is that everyone has a right to be in Lima and express themselves,” she said. “Nobody is going to dissuade me from serving the people of Lima.”

So ostensibly she is looking out for the rights of minority gays “to be in Lima and express themselves,” but did not (as a Catholic or the people’s representative) attend nor support the inauguration of a statue of Christ that represents the rights of the majority faithful “to be in Lima and express themselves.” Is that “serving the people of Lima?”


Now I know much of this is buffoonish and painfully hilarious. But meanwhile as she is chasing this irrelevance and fighting vindictive moonbat ideological battles the work of the people is not getting done. And that’s a big problem because there is much that seriously needs to be addressed in this city. Let’s hope that Villarán is not a Peruvian presage of a dreadful period of failed leadership descending on all of Perú. 

Moonbat Serenade: Duet

Question: Since Mayor Villarán has called a halt to many of ex-Mayor Castañeda’s badly needed infrastructure projects for Lima, where’s all the money that was to be allocated for those projects going? What is it being spent on? Because Villarán is doing nothing visibly tangible.   

Comic Relief 

Is Villarán “Chilindrina?”

 Villarán orgullosa de ser ‘Chilindrina’ Cardinal Juan Luis Cipriani, calls Susana Villarán “Chilindrina” and she’s proud of it!? Sometimes the truth provides the best comedy.  

Sadly Lima’s Mayor Susana Villarán isn’t even marginally capable of performing the duties of mayor. She is an abject failure. 30% approval in 6 mos. says it all.

Comments posted here may be copied to the Peru-N-English Discussion Group site.

Strange Bedfellows Indeed!

Update July 16, 2011
The Peru Posible political party, led by former President Alejandro Toledo, has quit talks with President-elect Ollanta Humala over a role in his future government, Peru.21 said, without identifying where it obtained the information. Toledo’s party won’t accept ministerial posts in Humala’s government, which takes office July 28, the Lima-based newspaper said on its website. Peru Posible will back Humala on some issues in Congress, the newspaper said. Read More Here

 ♫♪ I Hate Everything About You! ♫♪

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 June 29, 2011. Ex-president Alejandro Toledo who campaigned strongly for President-elect Ollanta Humala, and against highly educated business friendly congresswoman Keiko Fujimori, told a Chilean media outlet that he still has doubts today about President-elect Ollanta Humala. Ex-President Alejandro Toledo originally said that voting for Humala was to jump into an abyss. Then after losing his presidential bid in the first round of Perú’s 2011 presidential campaign, he did a 180 and bowed at Ollanta Humala’s feet during the latter part of the second round of the presidential campaign. It is my belief he was looking to salvage political power and position by helping Humala's team. But now that Humala has won, and after some meetings with President-elect Humala, Toledo is now having second thoughts.  
Source

(2002, 2003 and 2004) Readers of  the “Ollanta” were called on to make a coup and overthrow President Alejandro Toledo’s administration. It was repeated every two weeks that Toledo’s government had lost democratic legitimacy. Violence was justified in despicable and frightening terrorist terminology. At that time, during his stay in Paris and Seoul, lieutenant colonel Ollanta Humala was on the payroll of Alejandro Toledo’s administration. He permitted and encouraged the “Ollanta’s” demands for a military coup against Toledo’s government in hostile slanderous language. In what could be easily interpreted as a bi-weekly anti-democratic attack.
Source

I DON'T THINK THESE GUYS REALLY LIKE EACH OTHER

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Neophyte Navigators

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Peru’s Stocks Fall for a Sixth Day on Concern Growth to Slow With Humala

Excerpts:

“The signs the government’s been giving haven’t been very encouraging, which is why investors are in wait-and-see mode,” Arispe said. “Investors like market-friendly people and Humala isn’t free-market.”

Humala, who takes office July 28, will expand government- run companies including Petroleos del Peru SA, Vice President- elect Marisol Espinoza said yesterday in an interview with Lima- based newspaper El Comercio.
Read more from Bloomberg

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Peru's president blames deadly clashes on 'dark political interests'

Excerpts:

Cabinet chief Rosario Fernandez said, while she regretted the deaths of the protesters in Puno, she said the government would act as needed to restore peace.

The mining of metals is one of Peru's leading industries, and a major revenue source for Peruvian departments with such natural resources.

According to the mine ministry, Puno receives 700 million soles ($250 million) annually from the government, of which about 40% is from mining royalties.

The canceling of the Santa Ana mine could cost Puno some 25 million soles ($9 million) in royalties, Gala said.

Read More From CNNI

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Peru's Airport Siege: A Bad Omen for the New President

Excerpts:

The losses from the series of strikes and shut-downs is estimated at close to $100 million and, apart from the violence, are sending shudders through an economy already nervous about Humala's left-leaning proclivities.

Humala, for his part, has refused demands from members of García's APRA party that he get involved in the conflict. "I call on the central government and leaders in Puno to put aside violent actions and look for a peaceful solution," Humala said on Saturday even as he refused to get into the direct negotiations with any party in the Puno conflict. Most analysts agree that any solution reached between the García government and the protesters will likely be temporary; and that Humala will inherit the mess upon his inauguration, facing intense pressure not only from the protesters but from corporations, both local and global, with huge investments in Peru.

Rolando Luque, of the Peruvian government's human rights ombudsman's office says such conflicts will likely increase when Humala takes office, with Peruvians expecting him to make good on campaign promises to better distribute the wealth generated by the country's decade-long economic boom. "We are talking about economic growth between 6% and 10% annually for the past few years, which has created expectation in the population," says Luque.

Hernando de Soto, Peru's best known economist, told TIME in an interview several weeks earlier that his Democracy and Liberty Institute estimates around 1,000 social conflicts simmering in the country.
Read more from Time

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You may also find this article from "Living in Peru" useful:

Puno loses more than $117 million in tourism earnings during protests

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Opinion from Peru-N-English

In reading these four articles (above) I was reminded of some investment advice that I have been given repeatedly. I suppose like everyone, I have been given lots of advice. Some good and some not so good. And, I would never presume to tell others what to do. But these two pieces of advice, that would seem to apply here in Perú, I have found to be consistently very good for me.

1. When one of the companies you are investing in has a change of leadership, “SELL!”

2. Know the leadership and history of a company’s management before you invest. You are investing as much (or more), in the leadership’s integrity, as you are in their company's resources. No matter how good the company’s past performance, if you don’t like, trust and respect the management, “DO NOT BUY!!”

I suppose there are some, as with every rule, exceptions to these pieces of advice. But in my experience not many.

I have been very bullish on Perú’s investment attractiveness and I have invested money here. Yes, I know Perú is not a company, but it has been a glorious investment vehicle, and I think the same rules apply. I’m very cautious on Perú now. I think this is a time to pullback and just wait and see. I will grant you, I’m not a big risk guy. In my investment life I have witnessed precipitous investment losses that the most respected analysts said could never happen. I like to feel reasonably secure and I like to know why I am investing my money. I just can’t justify any reason right now to invest in Perú or in Perú’s incoming neophyte leadership.

There is just too much murky water ahead. I’m willing to let others navigate the path to the high risk rewards if that’s what lie ahead. I will stand ready to rejoin the voyage when there is soundness and clarity that the leadership has a firm grasp at the financial helm, and has charted a prosperous course that will fill the economic sails with the winds of prosperity. I think Perú may be about to find out what it’s like to have a pollywog commander in charge of the fleet. 
  

Comments posted here may be copied to the Peru-N-English Discussion Group site.

Protesters take over Juliaca airport in southern Peru

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Protesters take over Juliaca airport in southern Peru

From Living in Peru:

Read the above article from Living in Peru HERE

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Opinion from Peru-N-English: 

Headline correction: “Terrorists” take over Juliaca airport in southern Peru. Protests are peaceful. My protesting on this blog is peaceful. What these terrorist leaders are inciting is the antithesis of peaceful. It is evil! In these riots people are dying at the behest and pleasure their own leaders.

As someone by the name of  AlexC commented on this article  about the same subject, the radical terrorist leaders love it when one of theirs get killed. It helps the cause! I believe most of these poor folks are just blind ignorant followers who are being used to serve the evil purpose of their radical leadership. It’s a shame really. But it is also tragedy the way Bear Creek Mining is being treated by Perú’s government. They have done nothing wrong. Actually Bear Creek Mining has done everything right. I’m sure they will not stand still for this. They have a lot on the table and there is no truth to the allegations being waved around.

I’m a big fan of fair play and I'm pretty unhappy about this situation. I’m alerting as many investors as I can possibly contact, through all avenues available to me, about the corruption that is being allowed to rule the day here. I truly want the world and the investment community to know the truth. I sincerely hope all decent and honest observers of this travesty do the same.

The Supreme Decree prohibiting mining in the Santa Ana project area includes artisanal (informal) mining. But, since the government of Perú can't police nor control the artisanal mining that has been polluting the Ramis River Basin and Lake Titicaca in Puno for many years, it would appear to be a toothless restriction. As the wildcat miners know very well.

Additionally

In my opinion when facing these types of volatile and dangerous riots; government officials should use both police and military troops in overwhelming numbers to subdue the participants. Then attempt to capture and remove the main agitators and leaders to stop the destruction and preserve the peace. Too few enforcement personnel only serve to agitate the rioters and guarantees a greater chance of unnecessary deaths.   

Comments posted here may be copied to the Peru-N-English Discussion Group site.

Update: Peru cancels mine after 4 killed in clash

Can we now call this what it is? Because it's not about the environment. It's about extortion, corruption and theft of Bear Creek Mining's legal rights to the Puno Santa Ana project area. Achieved through mob rule and terrorist actions.

 "There are dark political interests here that are demanding power," Garcia told reporters. "What they are trying to do is pressure the next government of Ollanta Humala by issuing threats and forcefully demonstrating," Garcia said without providing further details.

Some 5,000 protesters, mostly Aymara Indians, have descended on Puno over the past few weeks to demand concessions be revoked for all mining companies, not just Bear Creek's Santa Ana project, ostensibly over concerns about potential pollution.

Magazine Caretas reported this week, however, that wildcat miners are interested in Bear Creek's concession and are working alongside protesters. Locals think the land has valuable gold deposits in addition to silver.

Often times they (the Puno terrorists) also demand direct economic benefits from mining and oil projects.  SOURCE

Isn't that how criminal territorial monopolies and protection money has always worked? Is this the corruption President-elect Ollanta Humala has sworn to stop? I think Alan Garcia is rightfully washing his hands of this and just passing the baton, because this isn't over. Bear Creek has invested nearly $100 million. And notoriously environmentally unfriendly wildcat miners want to take it away. This really stinks bad.

Read on:

Bear Creek's director, Andrew Swarthout, told The Associated Press that the company had not received formal notification of the decree's revocation.

He said any government attempt to cancel the project would be illegal and amount to "expropriation."

"We followed all the rules. We got public consent. We're in the middle of an environmental impact statement. It was due process. Everything was within the letter of the law," Swarthout said.

The company has said it already spent $96 million on the Santa Ana project.

Swarthout has warned previously that any attempt to end the project would give pause to international investors who have announced their intention to plow more than $40 billion into Peru's mining sector in the coming decade.

Click Here to Read the Whole AP Article 

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The Company has followed all required processes to earn approvals in the ESIA process and the ESIA is based on a project design that takes into account the highest quality of environmental safeguards and standards as well as strong commitments to social  sustainability and benefits to local communities including job training, agricultural, educational and health improvement programs.  The Santa Ana project will provide 1,000 direct jobs, 1,500 indirect jobs, and provide over US$330 million in royalties and taxes for the Peruvian people and our surrounding communities. Mr. Andrew Swarthout, Bear Creek CEO, stated "We continue to believe that these protests and government responses are the result of the pre-election political climate. We remain confident that the protests will be successfully resolved allowing companies like Bear Creek to return to the normal, well-established permitting and other procedures under which all mining companies in Peru have operated for decades.  I emphasize again that Bear Creek has received strong local community support for our Santa Ana project as demonstrated by the formal public hearing successfully completed in our local community at Santa Ana in February, 2011 in which the community officially ratified its strong support for the Santa Ana mine development. It is important to recognize that the protests in southern Puno are occurring distant from the Santa Ana project and involve participants far removed from the communities in which we work. We will continue, as always, to work with local and federal authorities to assist in resolving the regional issues even as we pursue our legal alternatives." 

SOURCE

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