Peru's paranoid revisionism

Today's Spanish lesson: Rechazo = Rejection
(further translation, if needed, available on request)

Unsurprisingly, the world didn't suddenly go Pachakuti on us with the Twobreakfasts mea culpa on Wednesday evening. Just when you think the government of Peru might have learned something about its own people (e.g. can't treat them like slaves any more, can't rob them blind like they could 30 years ago, can't feed them BS propaganda in 21st century) we get the Peruvian Ambassador to the USA coming up with a revisionist history of the Amazonian conflict. And before we look at the crap presented as facts yesterday, it's worth noting that the Peru-US wig right now is none other that failed FinMin Luis Valdivieso, a man who has lived in every other part of the world except Peru for his whole adult life, except for the reent 10 month stint when he was called back to play at FinMin and was about as effective as a chocolate fireguard. Honestly, if you've walked the Inca Trail you'll know more about the issues in question than that guy, birth certificate 'made in Peru' or not.

So on to yesterday's presentation, which you can download and enjoy for yourself (gotta like reading fiction, though) right here. If you move to the paydirt page (slide 26 of 29), you'll read the following (in bold). A few Ottocomments come in between:

We acknowledge that the DL 1090 was not consulted with the principals of the native communities because it was believed that it was not against but in favor of them.

Oh those silly brown people! They just couldn't see that we're only trying to help them! Somehow they managed to misconstrue that by taking away their rights of consultation and approval on any project earmarked for their region they would be in a stronger position, not a weaker one! They didn't realize that by refusing to grant land ownership to the peoples, towns and communites that had applied for and done all the necessary paperwork years and years ago, and then claiming that land as "common ground" and selling it in underhand deals to oil companies, that this isn't like all the other times they'd been robbed of their natural resources in the last 500 years, this time really is different, folks................

It is now clear that the interlocutors for the dialogue were not representative and had a hidden political agenda not consistent with the concerns of the native communities.

WTF? There is no "hidden agenda". From the very moment the presidential decree was pushed through under emergency laws (that came to be simply to appease the US FTA) the indigenous communities affected by DL1090 protested. The protests started in July 2008 and only captured headlines when people got killed, but the protest was always representative of everyone in the region. This is total crap.

There was widespread and concerted misinformation and political interference both domestic (from the nationalist party) and external (particularly from President E. Morales and some ministers from Bolivia and Venezuela) who called for radical measures to destroy the Peruvian development model for the Amazon, to weaken the democracy, and ultimately to bring down the government

Hey guys, I got a great idea! When in trouble, blame Hugo and say it's all Evo's fault. What they saying here, that Evo has more influence over Peruvian affairs than its own President? That in itself is telling testimony of the changes going on in South America, but the fact is that neither Bolivia nor Venezuela interfered in the protests. No financial aid, no food handouts, no nothing. Of course both Venezuela and Bolivia made supportive noises about the Amazonia protest, but then again so did Belgium. And Norway. And Chile, for that matter. But let's not confuse things, eh? Just blame the axis of Evo for all your troubles and retreat into paranoia.

There was also a miscalculation in believing that there were only natives protesting and not criminal elements ready to create chaos and ignite an armed confrontation.

Incredible. "And we would have gotten away with it too, if it weren't for you pesky kids and that dog." Y'see, because WE decide that the protest is illegal and the la (which is now illegal in itself) was just, anyone opposing that must be A CRIMINAL! And we just didnt think the brown people would kick up a fuss.....goddam cottonpickin' miscalculations.

Musical chairs, twobreakfasts style

As his President enters the room, Luis Valdivieso
shields his eyes from the glare of his smile

Remember about a month ago when Peru's FinMin Luis Miguel Valdiveso suddenly and unexpectedly resigned? Remember how his predecessor Luis "luckiest economist in LatAm" Carranza stepped up to take his place? Remember how, in the hasty and brief press conference Valdivieso said he'd been offered an alternative job by President Twobreakfasts?

Well yesterday the episode cleared itself up and Valdivieso was named as Peru's new ambassador of the United States of America, no less. It's all pretty logical on the superficial level, of course. Luismi was an IMF flunkey for years and knows the protocol side of the US backwards. He's also replacing the current Peruvian ambassador, Felipe Ortiz de Zevallos, who strangely and coincidentally handed in his resignation on January 21st, the day after Valdivieso resigned.

But it does shed a little light on the way Twobreakfasts is thinking (if the term is apt) on the Peruvian economy. He clearly wanted Carranza back, as the guy has a higher profile than Valdivieso and is (due to his incredibly lucky timing) credited as being a good hands-on economy manager. In fact he just continued the autopilot that came from the real architect of the Peruvian economy reforms, PPK, and did nothing much....the 'ain't broke don't fix it' rule. But style is far more important than substance in The World According To Twobreakfasts and Carranza's arrival has been an APRA spindoctors dream.

But once again, IKN wonders why Carranza came back and how Twobreakfasts got him to agree. When Carranza first resigned his post, the reason was that he wasn't making enough money as FinMin and wanted to get a nice cushy, highly paid gig in some private consultancy. Yeah, truly, it was said out loud right here by then PM Del Castillo and reported by your diligent IKN. It's kind of intriguing to think about all the recent corruption scandals in this awful Peruvian APRA government and then think that Carranza suddenly finds the FinMin job attractive once again, is it not?

Peru's Finance Minister admits he can't do the job and quits, giving the job back to another quitter

Goodbye overrated lardass, hello overrated lardass.
Valdivieso (left) quits and Carranza (right) is back

So farewell Luis Miguel Valdivieso, best remembered as the fat guy who took over from the other fat guy as Peru's FinMin and talked nonsense about Peru's economy for six months or so. I still have fond memories of his Bistromatics attack on August 21st last year when he claimed Peru's inflation rate (then at 5.7%) would finish the year at 5.8%. The final score was 7.24%, which isn't bad for an ex-IMF lackey who'd never faced reality before but an eight-year old with the inflation chart and a straight-edged ruler could have done better. Word is that Valdivieso is quitting due to illness; he's sick to death of taking orders from his rat-faced new boss Yehude Simon.

The great news is that the fat guy he replaced is coming back to replace him. Luis Carranza, the luckiest economist on the planet who inherited a booming economy, ran it on autopilot for two years and then picked the right time almost to the month to quit and run away is taking the FinMin job back again. Otto finds this very strange, as Carranza's ostensible reason for quitting at the time was that his own funds were low and they just didn't pay him enough at the Ministry. Therefore his reappearance seems to suggest one of three things:

1) He couldn't find a cushy job in the private sector and he couldn't get enough of those paid evening speaker jobs to make ends meet. This is likely because it isn't just Otto who recognizes his mediocrity.

2) Like the rest of us he's noticed the rampant corruption and slush money swirling in and around the Twobreakfasts administration and wants his piece of the action. Wadya expect from the APRA boyz anyway? Justice?

3) He was talking total bollocks. Also highly likely, as he made a specialty of it in his first term of office.

Combinations of the above are acceptable, of course. So now that Peru is in the doo-doo and still won't admit it, we're about to see just how good Carranza really is. Otto has a friend who has constantly stuck up for Carranza and his record over the years. To that person I say "Betcha ten bucks yer man makes a hash of it all and shows just how mediocre he's always been". One thing Carranza was famous for during his last tenure was totally ignoring and despising his counterpart at the Central Bank, Velarde. Let's see if they get all touchy-feely this time around because it's going to be tough to run an anti-crisis plan if Carranza starts his primadonna antics again.

Peru loves financial crises, official

News from the "four legs good, two legs better" whacky world of Peruvian economics. FinMin Luis Miguel Valdivieso (that's him above.......err.........probably) now says that a world economic crisis is good for Peru. In his words (via OttoTrans):

"This crisis has helped us to achieve a more ordered growth."

You cannot make this shit up, really. Who is this joker trying to fool? Seriously, he either trying to impress the great unwashed masses who don't give a damn about his high falutin' economics things or he's trying to convince the chattering class who won't buy this crap in a million years.

What's the point in spouting crap like this? If you consider the alternative, is it possible that the gov't would say "Oh, we don't like all this growth. Wouldn't it be great to have a world crisis to help us out here?" if there were no crisis and Peru kept on whacking out GDP growth figures of 8% and 9% per annum (that help its population 0%, but who's countin' huh?).

Luismi goes on to explain that of the U$35Bn in investments planned for between now and 2011, the gov't expects U$30Bn to go ahead as scheduled. ROFL!!!! I laugh because I checked, and what I found is that U$15Bn of those proposed investments are base metals projects....y'know, copper and iron ore and their friends. I can sit here and confidently predict that previously fast-tracked projects will be deferred and be subjected to "further studies" until the cows come home. There is no way under the good Lord's heaven that Las Bambas (and all the satellite projects around it), Galeno, the Antamina expansion, the iron ore pies-in-sky proposed by Van Alphen and his band of serial pumpers and any and all of the other projects move ahead. The only one that will happen is Toromocho because the unfortunate Chinese involved fully committed just before the bottom fell out of copper. So let's call abut $3Bn of that 15 as in the realms of reality. The rest is in politicoeconomic cloud cuckoo land.


If you ever needed proof that an IMF lackey like Valdivieso is a outright liar that leads whole countries down the garden path on the behest of his controllers, today's the day.

More luck than judgment

When you listen carefully to what LatAm politicos say, sometimes you notice how they inadvertently tell the truth. Today's example is Luis Valdivieso, FinMin of Peru and overpromted IMF-trained mediocrity. This is the same dude that took over the job earlier in the year promising inflation as under control, would be 5.5% at the end of the year (bigtime miss, Luismi) and that Peru would grow 9% in 2009 (errrr...revised down recently, dumbass?).

But the lapse into truth came at yesterday's presser when Valdivieso said (courtesy of OttoTrans™);

"...We are very lucky because the price of imported food is dropping..."

Y'see, these people can plan is prognosticate and pontificate until the cows come home, because the actual effect they have on their economies is between slight and none at all. Peru didn't suddenly grow in the last five years because of a newly found sanity in fiscal management; it grew because the world market decided it would pay more for copper, gold, silver and all their friends. Period.

And the locals kept on telling their citizens how they'd control inflation, but it's taken the onset of a global recession (no less) to curb the price rises felt by Peruvians (most of whom haven't seen a penny of the much vaunted GDP growth hit their own pockets). And note the spin; the world grows, and that's good for Peru. The world stops growing.... yessiree, that's good for Peru, too! Jam tomorrow, anyone?

It's all total BS...pure smoke'n'mirrors from all of them, not just Peru. Once they get past the basics of "build up reserves, tax the hell out of the little guy and leave the rich guys alone" they are then in the lap of the global gods when it comes to the long term health of their nations. It matters not the hue of governmental politics, either. If commods prices stay low, the following South American countries are in the caca:

All of them.

Peru inflation update; Valdivieso already failing

The good news: At 0.31%, the November 2008 number is the lowest monthly increase in inflation since April.

The bad news: Peru's FinMin Valdivieso needs to see a virtual miracle negative 0.47% rate for December 2008, else see his own 5.8% inflation forecast made just three months ago get shot down in flames. A three month forecast from Peru's guiding light missing by a mile, and we're supposed to take these clowns seriously? What's more, remember that the 6.27% inflation figure for the first 11 months of 2008 is only for the Lima+Metro region, and that Lima+Metro has one of the lowest inflation rates in all of Peru. Check Jurgen Schuldt's blog for more details of the provincial breakdown and how inflation is nigh on double in some regions.

However, the PPI number is a little more optimistic, with a 0.13% drop being registered in November. The main beneficiaries of this have been miners and builders, with significant drops in fuels, steel and mining supplies registered (e.g. sulphuric acid has dropped from $480/MT to $150/MT and all of a sudden you don't have to pay double and still wait two month for a drilling crew). All these PPI savings are welcome for miners that have seen prices for their prodcue slashed and burned, of course, but aren't likely to make their way into the pockets of José Publico. He'll have to settle for a S/2 drop (U$0.67) for a month's worth of household gas supply. Like....errr....wow.