Addison Wiggin – May 25, 2011
- A "historic day" in one frontier market… and the opportunity it underscores
- Prediction fail: Internet still flows freely without government interference… Leading politician undeterred
- Missed opportunity? Patrick Cox on underestimating "the rate of innovation taking place in numerous emerging technologies"
- Bailout era gets weird… A booming homebuilding enterprise in one of the most busted markets
- Hydropower letdown… portable toilets… and a rugby lesson… in another multifarious mailbag
"Today is a frankly historic day!" exclaimed German Vargas Lleras, the interior and justice minister in Colombia, this morning
Ordinarily, we take blather from politicians with a 40-pound bag of water softener salt.
But this time, as we have taken a more intense interest in Colombia of late, caught our attention… enough so, in fact, we'd like to pause our musings over Southeast Asia and consider the implications.
The "Victims Law," the passage of which Mr. Vargas Lleras refers to, aims to compensate people victimized by four decades of violence.
For millions of Colombian, it could mean the return of ancestral lands they were forced to flee. The United Nations refugee agency estimates 3.4 million Colombians — among a population of 46 million — are "internally displaced."
Drug gangs, the left-wing guerrillas, the right-wing paramilitaries… they're still around, but we saw firsthand in March, they're not as omnipresent as they once were.
Of course, sorting out the rightful ownership of 10 million acres of land will take years. But we daresay for Colombians, the passage of the "Victims Law" to which Mr. Vargas Lleras was referring is as big a deal as the end of apartheid was for South Africans.
The Victims Law marks a decisive break with the past.
By way of contrast, we continue to witness the dithering in Washington over a U.S.-Colombia "free trade" agreement.
Today and tomorrow the Senate Finance Committee hears testimony about trade agreements for South Korea and Panama. Somehow, these two have gotten tied up with the Colombia agreement as a package deal in the minds of many Republican lawmakers.
Meanwhile, the White House is holding off on submitting the treaty to the Senate until lawmakers agree to fund a "job training" program for people who would supposedly be thrown out of work by this agreement.
Oy. We have our own qualms about a "free trade" agreement codified in hundreds of pages of documents; the section on "intellectual property" alone runs 33 pages, for example.
But really, what's so bad about a deal that allows the textile maker we met in Medellin to ship his jeans to the United States tariff free in exchange for getting American cotton tariff free?
Seems like a good deal for everyone.
Why else has the U.S. government spent billions trying to help the Colombians fight the FARC? What other interest would the gringos have in a motley gang that started out as a left-wing guerrilla force and morphed into drug-running thugs?
"Plan Colombia" started as a key front in President Clinton's prosecution of the "War on Drugs." The U.S. sent in planes to spray coca crops and U.S. Special Forces to work alongside Colombian police and soldiers.
Among the program's illustrious accomplishments…
- Coca cultivation largely fled Colombia… only to shift to Peru
- U.S. street prices of cocaine were nearly unchanged
- Colombia became the No. 3 recipient of U.S. foreign aid, after Israel and Egypt.
The authors of Freakonomics examined the evidence and wondered aloud if Plan Colombia amounted to "a $5 billion failure."
But folks on the ground in Colombia attribute the military aid given them by the U.S. and intelligence handed over by the CIA and Mossad, the Israeli intel outfit, with helping to rout the guerillas and restore relative calm after nearly 40 years of fear.
Yesterday, the Colombian military rescued 100 people the FARC had taken hostage three days before. The hostages, it turned out, were guarded by all of three guerillas.
When we were in Bogota in March, the FARC kidnapped 23 oil workers. Twenty-one escaped on their own within hours… the two others were rescued by the end of the next day.
Developments like these give the folks we've met along the way confidence that the security situation is increasingly in hand. And the passage of the "Victims Law," redistributive as it is, Colombians are getting their rebuild on right quick.
[Ed Note: At the Phnom Penh shareholders meeting of Leopard Capital last Thursday, the firm laid out plans for the first-ever agriculture fund in Colombia, targeting, to begin, palm oil production in the rich valley south of Cartagena before the northern spur of the Andes rises toward Medellin. The idea is new enough their plan hasn't even graced the pages of the Leopard website yet.
In the meantime, we recommend you check out the two Colombian plays — both easily available to U.S. investors – we discuss in the most recent issue of Apogee Advisory. Get your copy (along with Ron Paul's "lost" gold bible) right here.]
Back in the U.S. markets, there's little movement to speak of in any of the major asset classes today. The only thing that jumps out at us is a 2% increase in silver, up to $37.48 per ounce… and a nearly 3% jump in copper to $4.11 per pound.
We did, however, find another DNA sampling of a stalling U.S. recovery. Durable goods orders fell 3.6% in April — the most in six months, according to the Commerce Department.
Often this number is skewed by volatile orders for military equipment. Not this time; back out defense and the number is still down 3.6%.
"My Internet access moved from the old to the new address yesterday," writes Patrick Cox with an astute observation he had while moving. "My bill remains the same, but I've gone from 5 mbs to 20 mbs. That's fast. I can download a high-definition movie in 10-15 minutes.
"It's a nice upgrade, and it made me remember how many times since the emergence of the Web that the experts have predicted 'peak bandwidth.' All the new users and media on the Web, analysts warned, would overload the system. Shortly, they prophesied, the entire network will slow to a crawl and freeze.
"Capitalism and technology, however, raced ahead of the doomsayers. You'd think people would learn, but intellectuals and media gatekeepers continue to tell us that urgent government intervention is needed to avoid Internet chaos."
Sure enough, French President Nicolas Sarkozy is demanding more regulation of the Internet.
Somehow, the Gaul managed to corral executives from Google and other Internet giants at a conference in France, where he delivered a stern lecture: "We won't take steps that would damage growth in your industry. But you can't escape a minimum set of rules."
"If you want the Internet to look like the housing market," Patrick says, citing an example of decades-long government intervention, "give government more control over the Web. There's a lesson comparing the uncontrolled and successful Internet and overcontrolled and disastrous house and mortgage industries.
"Judging from current opinion polls about government, a lot more of us commoners seem to have developed a bit of skepticism about the politician's ability to improve on markets. Nevertheless, most people continue to underestimate the rate of innovation taking place in numerous emerging technologies."
Example: the battle against "inflammaging." That's a term researchers have given to the inflammation that accompanies many of the diseases of aging.
"Chronic inflammation increases as you age," says Patrick. "Eventually, it creates a problem serious enough to trigger a cascade effect. This can lead to cancers, heart attacks, lupus, IBS, macular degeneration, stroke, obesity, ED, allergies, psoriasis, Crohn's disease, endometriosis, rheumatoid arthritis, hair loss, diseases of the organs such as the thyroid and liver as well as… well, you name it.
"If we could stop chronic low-level inflammation, our bodies could heal naturally, just as they did before inflammaging kicked in. We would even see cells damaged by past inflammation-related diseases heal normally."
For several weeks now, Patrick has been hot on the trail of researchers who've set out to do exactly that. He started as a skeptic — as he always does — but now he's a believer. He's amassed an incredible array of supporting evidence behind a treatment whose potential market is "so big it is nearly incomprehensible," as he writes.
Let Patrick make his case for why this could be, literally, the last stock you'll ever need. We're making it easy, too — with a 55% discount on our most-expensive microcap stock advisory. But only now through next Monday.
As long as we have housing on the brain, we see no sign of recovery in one of the nation's worst-hit markets for homebuilders. The Southern Nevada Home Builders Association says closings on new construction could fall to as few as 4,000 this year — down from the 2006 peak of 35,000.
No doubt the Vegas housing market is still hurting because of overcapacity. But one homebuilder appears to be doing gangbusters business…
Habitat for Humanity Las Vegas ranks No. 3 on a list of rapidly growing charities ranked by Charity Navigator — the website that tracks what percentage of your donations actually help people, instead of going for overhead. Programs and services by Habitat's Vegas division have grown 90% in the last three years.
So let's see if we have this straight. The banks refuse to unload foreclosed houses because they don't want to book a loss… and Habitat is building new houses for the people who've lose their homes to foreclosure. There's no way a big glut in empty houses can form in this environment.
"I have just returned from Laos," writes a reader commenting on yesterday's Southeast Asian observations. "I rode the Mekong from near Chang Rai, Thailand, to Luang Prabang, Laos, and then north on the Ou River to Nong Kiew and then farther upriver to Muang Ngoi.
"The Ou is scheduled to get five dams, which will end river traffic, the only transportation for the tribes who live on this river. The locals were vocal in condemning these dams and the Chinese who were funding them and who would get the power. I have not attempted to verify if what they think to be true is, in fact, so.
"The dams only last 100 years on average before they silt in. Fishing is also disrupted.
"These tribes, who live all over the country in areas without roads, which will not soon have roads, will on the Ou be rewarded by a new road along the river to service the dams. Yes, many people in Laos may benefit from the nation becoming a hydropower exporter. Many natives will get screwed, just as they did here in our past.
"Having met these people, I think they are happier than most. It is a tough call and not easy to stomach. I know that there is a better way, but the best ways are not getting much attention in a world lead by U.S. memes that call for more, more and faster more. We will all be learning some very convincing facts about the meaning of unsustainability, as your e-paper frequently points out.
"Our government no longer pays even lip service to sustainability, as they know that every plan they make is doomed because it isn't viable long term. They have now gotten us to the point where the short term is all we have left. This hydro plan is more of the same stupid shortsighted planning that we are using. To build a dam, you must condemn the land and take away a lot of rights.
"I thought you might be interested in this take. In further conversations that you have with Doug [Clayton], you both might be mindful of the small things you can do to sculpt this future as best it can be shaped.
"What a crazy world for everybody."
The 5: Indeed. Leopard's strategy in the hydro space is actually very mindful of the local tribes. During the trip to Nam Mang 3, we met and talked with a Lao entrepreneur who's developing mini-dams where the locals who live in the vicinity are brought into the planning of the projects. He has three such projects under way. Leopard hopes to unify the three of them and help the new company list on the new Lao exchange.
It's worth pointing out the U.S. government has very little interest or presence in Laos. We heard horror stories of the Chinese strip mining areas and leaving a mess behind. Likewise, the Chinese hydro strategy in the country appears to leave no prisoners. The Laos, or so we were told, are looking for alternatives to doing business with the Chinese, but in many respects, the juggernaut to their north calls the shots in the entire region, for better or worse.
"What?! No accommodation at Ground Zero?" a reader writes about the new Sept. 11 memorial. "I was there two years ago and I vividly recall the militarily aligned latrines.
"Thanks to the name of the enterprise operating these latrines, I'll never forget it. There was a big sign on top of the row of latrines: 'Royal Flush'!"
"When an early pope examined the plans for the Vatican," another reader adds, "he left a note saying, 'We are not angels.' After much puzzling, the architects noted that they had not included any water closets."
The 5: According to the New York Post, portable toilets were deemed unsightly for the completed memorial. Wait until the crowd disperses; we suspect what's left will be a tad more unsightly.
"Don't worry about the spelling!" a reader writes about Wiggin/Wigan. "1630 was a long time ago. Many of those early British settlers were not well educated and that's probably why Americans developed their own English.
"Pronunciation, also, of the language has changed with the passing of time, such as the word 'route,' which we pronounce 'R-O-O-T' and you say 'R-O-W-T,' meaning road or path. To us 'rowt' means soundly beaten, as in the enemy being routed."
The 5: In New England, we still say "R-O-O-T" for road or path.
"I will not forget on one occasion in the Hilton Hotel lobby in Miami asking a porter where the 'gents toilet' was," our reader goes on. "He had absolutely no idea what I was asking. After some gesticulation from me, he said, 'Oh, you mean the restroom?' That's where I found relief, but can assure you I was not seeking a room for a rest. If so, I would have headed for my bedroom.
"I don't think we'll agree on English, but that won't prevent my enjoying your letter."
"Wigan has a kick-ass rugby League side," a reader points out, "not Union. Different game mate — LOL."
The 5: Ugh. We thought we got that one right.
"The difference may well be lost on your U.S. readership," another reader explains, "but League effectively started in the early 20th century as a result of some Union players becoming disaffected because they wanted to turn professional, so they formed their own league.
"The rules of Union and League differ in a lot of respects, not least the fact that a League team has 13 members, whilst a Union team has 15. League is concentrated in the north of England, whereas Union is ubiquitous.
"Hope that's clear, and keep up the good work."
The 5: It is, and we will.
The 5 Min. Forecast
P.S. When we began writing The 5 this morning, the number of seats left in Vancouver was 12. Now… it's only five. We will sell out today, so if you've been diddling… diddle no more! Last chance, check it out here.