• "God invented war so Americans could learn geography" -- Mark Twain.

Wednesday, November 7, 2007

The Trouble is ...

The News:
Ever the runner for Capital, in an article on oil wealth, the New York Times reports that :

“In Venezuela, President Hugo Chávez is pouring oil proceeds into a socialist revolution, creating free health care, free education and cheap food; enabling heavy public spending that has helped fuel four years of economic growth.
“The trouble, said Theresa Paiz, a Latin American director for the Fitch ratings agency, is that “it’s not really clear how the money is invested.” Mr. Chávez’s government is steering large chunks of money to development funds and state owned companies not subject to audits.”

The trouble is that The Fitch is just another pimp for Big Plunder. Ever hear The Fitch whining about the transparency of the Seven Sisters? How about sub prime lend n’ sell? Well ... let’s hear what The Fitch has to say about that:

" As earlier discussed, Fitch is in the process of reviewing its rating methodology and model assumptions for all new issue CDO ratings.
"For CDOs collateralized by structured finance securities, the review includes a reassessment of subprime vintage performance and associated loss severity and correlation. Also, and more broadly, Fitch is reviewing its core VECTOR modeling assumptions and methodology that could impact ratings of all CDOs, including corporate bond or corporate loan collateral.
In other words, our transparency champion really could give two hoots about clarity when it comes to Big Plunder... at least not until it turns out that what everyone thought was the deep cookie jar turned into a deep end meat grinder and the financial equivalent of blood and bits was splattered all over the damn place.

Of course, The Fitch wasn’t particularly troubled when Chiquita Banana Co. invested monies into hiring gangs of “guards” to murder Indian laborers and farmers. Nor was The Fitch hand wringing for transparency when Presidente Salinas steered large chunks of state owned Teléfonos de México to a pal for a pennies on the peso... making Carlos Slim the richest man in the world.

As recounted by the Arizona Republic (2007/11/7) Slim, “searches for businesses that are undervalued, infuses them with cash and uses the size of his holdings to overwhelm the competition.” (Got that? “undervalued”) "[I]n 1990, Slim made one of his most controversial purchases.

“The Mexican government was auctioning off several state-owned enterprises, including Teléfonos de México, the state-run telephone company, also known as Telmex. Slim and his partners, ... paid $1.76 billion for a 20 percent controlling stake. ...Since then, the market value of Telmex stock has rocketed from $7.39 billion to $41.2 billion. ..."
[Remember ... “undervalued”]

"Members of the opposition Democratic Revolutionary Party alleged that Slim underpaid for Telmex and demanded that then-President Carlos Salinas de Gortari be impeached for negligently selling Telmex at less than market value. A congressional committee, controlled by Salinas' party, later found no evidence of wrongdoing, ... "
No kidding! But where was The Fitch? In fact where was the Times? Transparency was apparently no big deal when the people -- the real people -- of a country were being murdered or ripped off on a colossal scale.

Instead the Times manages to find some “trouble with” a president who is using oil proceeds for “free health care, free education and cheap food” No, No, NO! Much better to have the money go into some oligarch’s off shore sink hole to be spent on keeping his polo ponies and pedicured bitches in style.

I read the Times in the afternoon. I couldn't bear to puke with my morning coffee.

©WCG, 2007