It's Decentralized Bro, That Means It's Safer Bro, Please Believe Me Bro!!!

 CNBC  |  The two biggest banking institutions serving crypto businesses in the U.S. have shut down in the last four days. Investors have worried that the collapse of Signature Bank, whose assets were seized Sunday evening by regulators, was inevitable following the impending liquidation of Silvergate Bank and given the increasing regulatory hostility toward crypto companies. Now that event is past us, and has left young U.S.-based crypto startups with few options for banking relationships. 

 “There’s kind of a black mark on crypto deposits for the next few weeks,” said Conor Ryder, research analyst at Kaiko. “It could be that one of the smaller banks decides to raise their hand and take on the deposits but I don’t think they’ll be jumping on that opportunity after everything was done over the weekend.” The biggest priorities for the industry now are around diversifying on-ramps into crypto and focusing on policymaker education. 

 Before the end of Silvergate and Signature, the regulatory crackdown on crypto had already started. The days before the industry had crypto-forward banks to turn to were some of the darkest for the industry. The inability to form banking relationships was a big obstacle to growth. At the end of February, three major banking regulators issued a joint statement warning banks of the liquidity risks associated with banking crypto companies. In January, the Wyoming-chartered special purpose depository institution and famously unleveraged Custodia Bank set off the de-banking wave when its application to become a member institution of the Federal Reserve was denied. “Banks and law firms are getting a clear message from regulators: distance yourselves from crypto companies,” said Ric Edelman, founder of the Digital Assets Council of Financial Professionals. “This is blatant bias without legal standing, and if sustained, it will harm U.S. innovation for decades to come,” he said of the Signature closure. “But for the moment, crypto companies are increasingly finding themselves where cannabis companies were a decade ago.” 

Stablecoins in focus Stablecoin regulation is set to take center stage with the industry scrambling for banking alternatives, according to various crypto market participants who are skeptical the remaining banking institutions will welcome crypto with open arms. One of the most clear paths forward is for crypto firms to transact in stablecoins. “We’ve seen stablecoins crypto-pairs rise to an all-time high 90% of trading volume on exchanges, up from 79% a year ago, at the expense of the dollar,” Ryder said. “The industry has become less and less reliant on the U.S. dollar and crypto firms are familiar with stablecoins, so this could be a smoother transition than people expect.” Stablecoins also satisfy the need for 24/7 payment rails, he added. 

Both Silvergate and Signature offered a service that allowed fiat money to easily flow into crypto assets. Even if another bank opened its arms to crypto companies, the industry is still feeling the loss of the Silvergate Exchange Network and Signature’s Signet platform. Kaiko reported Monday that liquidity is already suffering at U.S. exchanges. Gemini’s was down 74% in for the month, while Coinbase’s fell 50% and liquidity at Binance.US dropped 29%. Binance, however, suffered a smaller, 13% impact. The problem with the stablecoin route is it concentrates trust in a handful of stablecoin issuers, who would likely need to be more heavily regulated, Ryder said. Over the weekend Circle’s USDC stablecoin broke its peg to the U.S. dollar, dropping below 87 cents. The frenzy came after Circle said it has about $3.3 billion in SVB. It regained its peg Monday.

Uninsured Bank Depositor Bailouts Make A Mockery Of "Too Big To Fail"

 nationalreview |  The 2008 financial collapse and resulting Wall Street bailout popularized the concept of “too big to fail” — the idea that certain institutions were so massive, and so intertwined with the rest of the financial system, that their failure could trigger a complete meltdown of the economy. 

Kinda insane that this entire debacle was potentially caused by @ByrneHobart's newsletter. Here's how the butterfly effect happened.

1) Byrne posts this article/Tweet calling out SVB's risk.
2) Pretty much every VC I know reads this newsletter
3) They all start to pay very,… https://t.co/zUSKF1ZW4J

— Evan Armstrong 📧 (@itsurboyevan) March 11, 2023

While I opposed that bailout on ideological grounds, I at least recognized the tremendous risk that the implosion of the nation’s major investment banks would pose for the broader financial system. But Sunday’s decision by regulators to bail out uninsured depositors of the failed Silicon Valley Bank would dramatically lower the threshold for federal intervention in financial markets. 

To be sure, there are reasons to believe the collapse of SVB carries broader consequences. While the FDIC guarantees deposits up to $250,000, the overwhelming majority of SVB deposits exceeded that amount. It was the bank of choice for many tech start-ups. Without access to their cash, those companies would have difficulty meeting payroll. Additionally, the sudden collapse of SVB could lead companies and individuals who have deposits in other similar financial institutions to withdraw their money starting on Monday, triggering more bank runs, and more bank collapses. 

While regulators are not stepping in to rescue SVB as an institution, the Treasury Department, Federal Reserve, and FDIC have announced that they will make sure that all depositors at SVB as well as another failed institution, Signature Bank, will have access to their money on Monday even if those deposits exceed the $250,000 threshold. In a statement, regulators promise, “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”  

Defenders of this decision will try to make it seem as if it’s an extraordinary, one-off decision by regulators, but in practice, it has created a huge moral hazard by signaling that the $250,000 FDIC limit on deposit insurance does not exist in practice. The clear signal it sends is that when financial institutions make poor decisions, the government will swoop in to clean up the mess. There are plenty of ways in which poor decisions made by financial institutions could have larger implications. But in 2008, the justification for intervention was systemic risk. 

This was not a case in which the whole economy would be threatened if an intervention were not taken. There would be disruption to a number of companies in the tech sector and their employees, as well as potential problems for similarly situated financial institutions. But the vast majority of banks are well capitalized right now, and there is no credible risk of this causing a complete financial meltdown. 

In fact, it isn’t even clear that depositors were going to be wiped out, absent federal intervention. When SVB was shut down, it still had real assets that were worth money, which can be sold to pay back investors. Due to poor risk management, what they were not able to do is avoid a panic in which a large number of depositors tried to withdraw their money at the same time, which is what happened last week. Under one estimate from a Jefferies analyst, when liquidated, SVB has the assets to pay off 95 percent of deposits. This is no doubt one reason why regulators are stating so confidently that they don’t expect this to cost taxpayers money. Another reason is that they claim any losses incurred would be repaid by “a special assessment on banks” which will inevitably end up being passed on to their customers. 

Anybody who considers themselves a free-market conservative should be especially concerned about this action. Regardless of the particulars, it will just add to the talking point that when Wall Street or well-connected tech companies are in trouble, the government swoops in to the rescue. And yet lawmakers won’t eliminate student debt, give away free health care, pay for child care, guarantee affordable housing . . . and insert whatever cause you like. If you support socialism for tech companies, don’t be surprised when you get it for everything else.

Democrat Overreach On Civil Liberties As Bad As Banking Dependency On Derivatives

racket  |  The campaign against “disinformation” in this way has become the proxy for a war against civil liberties that probably began in 2016, when the reality of Donald Trump winning the Republican nomination first began to spread through the intellectual class. There was a crucial moment in May of that year, when Andrew Sullivan published “Democracies End When They Are Too Democratic.”

This piece was a cri de coeur for the educated set. I read it on the way to covering Trump’s clinching victory in the Indiana primary, and though I disagreed with its premise, I recognized right away that Andrew’s argument was brilliant and would have legs. Sullivan described Plato’s paradoxical observation that “tyranny is probably established out of no other regime than democracy,” explaining that as freedoms spread and deference to authority withered, the state would become ungovernable:

The very rich come under attack, as inequality becomes increasingly intolerable. Patriarchy is also dismantled: “We almost forgot to mention the extent of the law of equality and of freedom in the relations of women with men and men with women.” Family hierarchies are inverted: “A father habituates himself to be like his child and fear his sons, and a son habituates himself to be like his father and to have no shame before or fear of his parents.” In classrooms, “as the teacher ... is frightened of the pupils and fawns on them, so the students make light of their teachers.” Animals are regarded as equal to humans; the rich mingle freely with the poor in the streets and try to blend in. The foreigner is equal to the citizen.

And it is when a democracy has ripened as fully as this, Plato argues, that a would-be tyrant will often seize his moment.

It was already patently obvious to anyone covering politics in America that respect for politicians and institutions was vanishing at warp speed. I thought it was a consequence of official lies like WMD, failed policies like the Iraq War or the financial crisis response, and the increasingly insufferable fakery of presidential politics. People like author Martin Gurri pointed at a free Internet, which allowed the public to see these warts in more hideous technicolor than before.

Sullivan saw many of the same things, but his idea about a possible solution was to rouse to action the country’s elites, who “still matter” and “provide the critical ingredient to save democracy from itself.” Look, Andrew’s English, a crime for which I think people may in some cases be excused (even if I found myself reaching for something sharp when he described Bernie Sanders as a “demagogue of the left”). Also, his essay was subtle and had multiple layers, one of which was an exhortation to those same elites to wake up and listen to the anger in the population.

Unfortunately, post-election, each successive version of what was originally a careful and subtle “Too Much Democracy” idea became more simplistic and self-serving. By 2019 the shipwreck of the Weekly Standard, the Bulwark, was publishing “Too Much Democracy is Killing Democracy,” an article which insisted it wasn’t an argument for the vote to be restricted, but “it is an argument for a political, social, and cultural compact that makes participation by many unnecessary.” Soon we had people like Joan Donovan of Harvard’s Shorenstein Center leading the charge for “de-platforming,” not as a general principle of course, but merely as a “short-term” solution. In its own way it was very Trumpian thinking: we just need to clamp down on speech until we can “figure out what is going on.”

Still, as far back as 2016, the RAND Corporation conducted a study showing the phrase most predictive of Trump support was “people like me don’t have any say.” This was a problem of corporate and financial concentration invisible to people of a certain class. As fewer and fewer people were needed to run the giant banking or retail delivery or communications machines of society, there were more and more going straight from college back to their parents’ houses, where they spent their days fighting voice-mail programs just to find out where to send their (inevitably unanswered) job applications. This was going to inspire some angry tweets, and frankly, allowing all of them was the least the system could do.

Instead of facing the boiling-ever-hotter problem underneath, the managerial types decided — in the short term only, of course — to mechanically deamplify the discontent, papering things over with an expanding new bureaucracy of “polarization mitigation,” what Michael calls the Censorship-Industrial Complex. Instead of opening society’s doors and giving people roles and a voice, those doors are being closed more tightly, creating an endless cycle of anger and reaction.

Making a furious public less visible doesn’t make it go away. Moreover, as we saw at the hearing, clamping down on civil liberties makes obnoxious leaders more conspicuous, not less. Democrats used to understand this, but now they’re betting everything on the blinders they refuse to take off, a plan everyone but them can see won’t end well.

Old Cornpop To The Rescue!!! Don't You Feel Better Now?

kunstler  |  Since banks today exist in a vast matrix of interconnected obligations — promises to pay this-and-that — fear grows that the rot from one bank, such as SVB, will infect many other banks that are no longer able to keep their promises about paying this-and-that, leading to a daisy-chain of things not getting paid. For an economy, that’s about the same as the blood ceasing to circulate in a body.

      The practice in situations such as this (say, as in 2008-09) is for the governing authorities — who supposedly rule over the banking world like gods — to rush to rescue these outfits with “liquidity,” money (or representations of it) as required to re-balance things, or, maybe provide the impression of re-balancing until something else can be figured out. The Jupiter and Minerva of American banking, Jay Powell and Janet Yellen, were faced with just that sort of call for divine intervention over the weekend as fear seeped into every nook and crevice of the money world that wealth was flaring away in the long-feared-of conflagration out of the dumpster banking had become.

      Sunday morning, Ms. Yellen told CBS News “bailouts, no way” but by the afternoon Mr. Powell cried “bailouts, way,” and they had to get their story straight. They offered up $25-billion to bail out depositors for a smoldering system that will arguably require a trillion dollars or more of liquidity to quench the spreading fires. One thing looks for sure: the interest rate hikes that Mr. Powell spoke of so confidently only days ago just got stashed into his folder labeled “Fuggeddabowdit.” So, the campaign to control inflation must now yield to the urgent need to create a whole lot of money to spray over those fires.

      You may have noticed that the value of your money has been slip-sliding away the past year or so. Peanut butter at five bucks a jar, and all. The situation at hand kind of guarantees that we’ll be seeing a whole ole lot more of that. And then the gods of money will have lost control of the interest rate console altogether. No more tweaking the broken knobs. More inflation will prompt US treasury paper holders to dump what they can while there’s still some value to retrieve. But the US has to issue more debt for all the bail-outs and theoretical buyers of new debt will perforce bid up the rates to keep up with inflation… and yet the US can’t possibly bear the burden of paying higher interest on its debt. Looks like the business model for running the USA is breaking down before our eyes.

      Luckily, Cap’n “Joe Biden” is at the helm of this steaming garbage barge. His conference room full of geniuses is ready with the solution to our predicament: the long-mythologized Central Bank Digital Currency — a dream-come-true for would be tyrants… the Godzilla of unicorns whinnying atop the biggest rainbow of all: the promise of endless magic money for everybody, forever. All you have to do to get it is: surrender your decision-making power over your own life. The government will amalgamate your few remaining assets in a CBDC account, tell you exactly what to spend it on, and shut off your little card if you show any contrary impulses.

     Well, they can try it. I doubt it will work. Instead, the government will melt down in its own rancid puddle of insolvency, the meta-grift will grind to an end, and it will be everyone for his / her / they self in the broke-down Palace of Chaos for a while… until things emergently reconstruct. But I get a little ahead of myself. It’s not even ten o’clock on Monday morning.

     Oh, and then there’s Ukraine….

The FBI Found No Evidence Of January 6th Planning Or Coordination Outside Of Its Own

reuters  |  The FBI has found scant evidence that the Jan. 6 attack on the U.S. Capitol was the result of an organized plot to overturn the presidential election result, according to four current and former law enforcement officials.

Though federal officials have arrested more than 570 alleged participants, the FBI at this point believes the violence was not centrally coordinated by far-right groups or prominent supporters of then-President Donald Trump, according to the sources, who have been either directly involved in or briefed regularly on the wide-ranging investigations.

Kash Patel calls on Tucker Carlson to release footage of undercover feds:

"Ray Epps was on FBI's most wanted list one day, and the next day he was off. There are only two ways that happens: you die, or you are an informant. Jill Sanborn, the head of the FBI counterintelligence… https://t.co/RALaXMKxX3 pic.twitter.com/8DJXX5JN1z

— kanekoa.substack.com (@KanekoaTheGreat) March 8, 2023

"Ninety to ninety-five percent of these are one-off cases," said a former senior law enforcement official with knowledge of the investigation. "Then you have five percent, maybe, of these militia groups that were more closely organized. But there was no grand scheme with Roger Stone and Alex Jones and all of these people to storm the Capitol and take hostages."

Stone, a veteran Republican operative and self-described "dirty trickster", and Jones, founder of a conspiracy-driven radio show and webcast, are both allies of Trump and had been involved in pro-Trump events in Washington on Jan. 5, the day before the riot.

FBI investigators did find that cells of protesters, including followers of the far-right Oath Keepers and Proud Boys groups, had aimed to break into the Capitol. But they found no evidence that the groups had serious plans about what to do if they made it inside, the sources said.

Prosecutors have filed conspiracy charges against 40 of those defendants, alleging that they engaged in some degree of planning before the attack.

They alleged that one Proud Boy leader recruited members and urged them to stockpile bulletproof vests and other military-style equipment in the weeks before the attack and on Jan. 6 sent members forward with a plan to split into groups and make multiple entries to the Capitol.

But so far prosecutors have steered clear of more serious, politically-loaded charges that the sources said had been initially discussed by prosecutors, such as seditious conspiracy or racketeering.

The FBI's assessment could prove relevant for a congressional investigation that also aims to determine how that day's events were organized and by whom.

Senior lawmakers have been briefed in detail on the results of the FBI's investigation so far and find them credible, a Democratic congressional source said.

The chaos on Jan. 6 erupted as the U.S. Senate and House of Representatives met to certify Joe Biden's victory in November's presidential election.

 

Why Didn't The House Select Committee Interview Officer Tarik Johnson?

Slate |  Carlson also made a big show of his “exclusive” interview with Tarik Johnson, a former Capitol officer who has actually been interviewed before by NPR. The House’s select committee on Jan. 6 did a fine job of connecting larger dots, drawing a straight line from the Stop the Steal rhetoric through to the insurrection. But though it interviewed Capitol police officers, it skipped an interview with Johnson, who was pictured that day wearing a MAGA hat. “The frontline officers and supervisors were not prepared at all,” Johnson said on the air. He told Carlson he asked leadership for direction after the Capitol was breached. “I got no response,” he said. (He said that he used the MAGA hat to avoid being assaulted by the crowds of rioters himself; the Capitol police have denied no one responded to Johnson.) Johnson offered seemingly sincere answers to Carlson’s leading and partisan questions, and gave Carlson’s audience a fair representation of the riot: “They focused on Donald Trump, not the failures of the Capitol police,” he said of the committee. “Some people there had planned on being violent. Some people may have turned violent after what they were going through. I think people wanted to support their president. Some of those people just wanted to support him, and some of those people didn’t commit violence, and some of those people didn’t plan on it.”

On This Day 90 Years Ago - FDR Demonstrated American People Centric Leadership

History  |  On March 12, 1933, eight days after his inauguration, President Franklin D. Roosevelt gives his first national radio address—or “fireside chat”—broadcast directly from the White House.

Roosevelt began that first address simply: “I want to talk for a few minutes with the people of the United States about banking.” He went on to explain his recent decision to close the nation’s banks in order to stop a surge in mass withdrawals by panicked investors worried about possible bank failures. The banks would be reopening the next day, Roosevelt said, and he thanked the public for their “fortitude and good temper” during the “banking holiday.”

READ MORE: How FDR's 'Fireside Chats' Helped Calm a Nation in Crisis

At the time, the U.S. was at the lowest point of the Great Depression, with between 25 and 33 percent of the workforce unemployed. The nation was worried, and Roosevelt’s address was designed to ease fears and to inspire confidence in his leadership. Roosevelt went on to deliver 30 more of these broadcasts between March 1933 and June 1944. They reached an astonishing number of American households, 90 percent of which owned a radio at the time.

Journalist Robert Trout coined the phrase “fireside chat” to describe Roosevelt’s radio addresses, invoking an image of the president sitting by a fire in a living room, speaking earnestly to the American people about his hopes and dreams for the nation. In fact, Roosevelt took great care to make sure each address was accessible and understandable to ordinary Americans, regardless of their level of education. He used simple vocabulary and relied on folksy anecdotes or analogies to explain the often complex issues facing the country.

Over the course of his historic 12-year presidency, Roosevelt used the chats to build popular support for his groundbreaking New Deal policies, in the face of stiff opposition from big business and other groups. After World War II began, he used them to explain his administration’s wartime policies to the American people. The success of Roosevelt’s chats was evident not only in his victory in three elections, but also in the millions of letters that flooded the White House. Farmers, business owners, men, women, rich, poor—most of them expressed the feeling that the president had entered their home and spoken directly to them. In an era when presidents had previously communicated with their citizens almost exclusively through spokespeople and journalists, it was an unprecedented step.

What Un-Parasitized People-Centric Leadership Can Do

gzeromedia  |  With so many other international stories dominating the news these days – Russia’s war in Ukraine, US-China tensions, Iran’s nuclear program, etc. – it’s easy to lose track of more positive stories. And when it comes to Mexico, the headlines suggest the country is struggling.

And I could write that story too. In most media, today’s Mexico conjures images of violent drug cartels and other organized crime groups, trouble at the US border, or large-scale protests led by an opposition that accuses the country’s president of a power grab that threatens democracy.

Mexico has its share of problems. But today, I want to give you three reasons for optimism that, politically and economically, Mexico is strong and getting stronger.

The China substitute

First, Mexico’s economic success remains closely tied to economic growth in the United States. (In 2022, Mexico’s total trade with the state of Texas was five times higher than its total trade with all of Latin America.) Over the years, that’s been a mixed blessing. When the US economy weakens, Mexico’s export revenue takes a hit. There are fewer remittances flowing south from Mexicans working in the United States. There are few American tourists pumping dollars into Mexican cities, towns, and businesses.

But over the decades, the US economy has remained strong and is currently running hot. Even with high inflation and rising interest rates, the US job market is strong, consumers are spending, and pandemic-weary tourists are traveling.

Mexico’s exports are surging. The country’s consumer confidence is close to its highest point in a generation. Add the reality is that the war in Ukraine has put strong upward pressure on global energy prices, boosting Mexico’s oil revenue. As the war grinds on, that advantage is likely to continue.

But the factor that matters most for coming years is souring US sentiment on relations with China. The Biden administration, both Democratic and Republican members of Congress, and many US governors are pushing for a significant national security and strategic decoupling from China and Chinese companies. US businesses are increasingly less confident they can navigate complicated US-China politics, abrupt changes inside China like the 180-degree turn on COVID policy, and other factors to continue to do profitable business in China.

Who benefits? Mexico. Particularly as “nearshoring” becomes a much more familiar word for many Americans. Nearshoring is the practice of shifting investment in manufacturing, production, and business operations closer to home to avoid the problems that come with both political risk and dangerously long supply chains.

Mexico already has the world’s 15th largest economy. While China, much of Europe, and Japan are aging, Mexico also has excellent demographics. Its population tops 130 million; its median age is 29.

A cost-conscious populist

Then there’s the country’s president. Andrés Manuel López Obrador has his fans and his detractors. But overall, he’s remarkably popular. After four years in office, his approval rating stands at 63%. How has he accomplished that? Mexico’s chief executive has crisscrossed the country by car and commercial airlines, visiting people and places, particularly in southern states, where national politicians are rarely seen.

But, talented populist though he is, he hasn’t bought support by launching a state spending spree. Even after the pandemic, Mexico’s debt-to-GDP ratio still stands at a healthy 50%, because the leftist López Obrador, aka AMLO, has confounded critics by both expanding the country’s tax base and keeping government spending in check.

Nor does Mexico’s president face the problem of balancing relations with multiple other countries. AMLO understands that his country’s giant neighbor is its primary source of both opportunities and challenges, and he’s invested in pragmatic relations with both Donald Trump and Joe Biden. His economic ambitions center on strengthening and expanding the USMCA trade agreement (NAFTA 2.0) rather than on hedging bets on Europe and Asia.

Strong institutions

The one area where AMLO is picking a fight that won’t help Mexico is on the question of judicial oversight of government. At the moment, he’s going after Mexico’s National Electoral Institute, which administers elections, by trying to cut 80% of its funding. This plan has filled Mexico City streets with hundreds of thousands of angry protesters, who warn that if he succeeds, AMLO would undermine Mexico’s ability to hold free and fair elections.

But the president isn’t going to succeed. The country’s Supreme Court is going to rule against him, and though AMLO can (and probably will) call on his own protesters to block traffic, Mexico’s governing institutions are plenty strong enough to keep the country moving forward.

In fact, that’s the lesson from Mexico’s presidential election of 2006, which AMLO lost by the smallest of margins and then rallied his supporters to occupy the center of Mexico’s capital for many weeks. But as I wrote in September 2006, the country’s political institutions absorbed that shock with no great difficulty. Politics continued. The currency remained stable. The economy moved forward.

AMLO has continued to wage war on a political elite he believes is plagued with corruption and cost him victory 17 years ago. But now, as then, Mexico is politically mature enough to handle challenges even larger than we now see in the president’s standoff with courts.

Finally, AMLO has given no indication he wants to remove presidential term limits from the country’s constitution, and unlike former US President Donald Trump and Brazil’s former President Jair Bolsonaro, he and his party are genuinely popular and have no need to contest the next election outcome with violence. And all of AMLO’s likely successors agree with the merits of nearshoring and deeper integration with the US, reinforcing the country’s long-term economic stability.

Make no mistake: Mexico will continue to face major challenges in the years ahead. Mexico must continue to develop its infrastructure, energy, and water supplies to fully benefit from nearshoring opportunities. Crime, corruption, and the need to manage shifting US border politics will remain formidable obstacles to progress. But advantages both external and internal provide a solid foundation for progress.

Everywhere You Look U.S. Foreigner Policy Infested By Name-Stealers....,

theatlantic |   “In the past two years, democracies have become stronger, not weaker. Autocracies have grown weaker, not stronger.” So President Joe Biden declared in his 2023 State of the Union address. His proud words fall short of the truth in at least one place. Unfortunately, that place is right next door: Mexico.

Mexico’s erratic and authoritarian president, Andrés Manuel López Obrador, is scheming to end the country’s quarter-century commitment to multiparty liberal democracy. He is subverting the institutions that have upheld Mexico’s democratic achievement—above all, the country’s admired and independent elections system. On López Obrador’s present trajectory, the Mexican federal elections scheduled for the summer of 2024 may be less than free and far from fair.

Mexico is already bloodied by disorder and violence. The country records more than 30,000 homicides a year, which is about triple the murder rate of the United States. Of those homicides, only about 2 percent are effectively prosecuted, according to a recent report from the Brookings Institution (in the U.S., roughly half of all murder cases are solved).

Americans talk a lot about “the border,” as if to wall themselves off from events on the other side. But Mexico and the United States are joined by geography and demography. People, products, and capital flow back and forth on a huge scale, in ways both legal and clandestine. Mexico exports car and machine parts at prices that keep North American manufacturing competitive. It also sends over people who build American homes, grow American food, and drive American trucks. America, in turn, exports farm products, finished goods, technology, and entertainment.

Each country also shares its troubles with the other. Drugs flow north because Americans buy them. Guns flow south because Americans sell them. If López Obrador succeeds in manipulating the next elections in his party’s favor, he will do more damage to the legitimacy of the Mexican government and open even more space for criminal cartels to assert their power.

We are already getting glimpses of what such a future might look like. Days before President Biden and Canadian Prime Minister Justin Trudeau arrived in Mexico City for a trilateral summit with López Obrador in early January, cartel criminals assaulted the Culiacán airport, one of the 10 largest in Mexico. They opened fire on military and civilian planes, some still in the air. Bullets pierced a civilian plane, wounding a passenger. The criminals also attacked targets in the city of Culiacán, the capital of the state of Sinaloa.

By the end of the day, a total of 10 soldiers were dead, along with 19 suspected cartel members. Another 52 police and soldiers were wounded, as were an undetermined number of civilians.

The violence was sparked when, earlier in the day, Mexican troops had arrested one of Mexico’s most-wanted men, Ovidio Guzmán López, the son of the notorious cartel boss known as “El Chapo.” The criminals apparently hoped that by shutting down the airport, they could prevent the authorities from flying Guzmán López out of the state—and ultimately causing him to face a U.S. arrest warrant.

The criminals failed. But the point is: They dared to try. If the Mexican state decays further, the criminals will dare more.

WaPo Breathless About 550 Americans Missing In Mexico

WaPo  |  Lisa Torres was glued to her phone, watching news reports on the kidnapping last week of four Americans in the Mexican city of Matamoros. She lived in the Houston suburbs, hundreds of miles away, but knew well the pain of having a relative snatched on the other side of the border. Her son, Robert, was just 21 when he vanished in 2017.

As Torres flicked through social media posts describing the Biden administration’s rapid response to the abductions, she grew increasingly upset. Finally, after the Americans were found on Tuesday — two alive, two dead — she took to Twitter.

“I’m so angry I couldn’t sleep, thinking about how my U.S. government acted in Matamoros with the kidnappings,” she wrote in Spanish. What happened to the Americans was sad, she wrote. But at least they were recovered. “This only confirms that my U.S. government can help, and they didn’t, in the case of my son. WHY?”

More than 550 Americans are reported as missing in Mexico, a little-known facet of a broader tragedy that has honeycombed this country with mass graves. Soaring violence and government dysfunction have fueled a crisis that’s left at least 112,150 people missing, according to government records here.

Americans make up a small part of that ghastly toll. And they are a tiny percentage of the millions of U.S. citizens who travel to Mexico every year for tourism, work and family visits. But just as there’s been an uproar in Mexico over the government’s all-out effort to find the four Americans, compared with its far more limited search for its own abducted citizens, relatives of the Americans still missing are asking why their loved ones haven’t been a higher priority for Washington.

Mexico's Gulf Cartel delivers 'kidnappers' — and an apology

“We see that when the U.S. government makes strong statements, there are results,” said Geovanni Barrios, a lawyer whose 17-year-old son, a U.S. citizen, was abducted in the border city of Reynosa in 2008. “But there aren’t only four Americans disappeared in Mexico. We don’t see [the U.S. government] making these statements about the hundreds of other missing Americans.”

The kidnappings on March 3 in Matamoros, across the border from Brownsville, Tex., drew attention in part because a passerby recorded men in bulletproof vests dragging three of the victims into a truck a few blocks from the Rio Grande in broad daylight. The video quickly went viral, and the abductions were swept up in a turbocharged American political debate. Lawmakers in Washington were already expressing alarm about Mexican cartels’ exports of fentanyl, which accounts for two-thirds of overdose deaths in the United States. Some Republicans have called for military strikes on the armed gangs.

 

Nice Little Country You've Got There AMLO, Shame If Something Happened To It....,

NC  |  “We will not allow any foreign government to intervene in our territory, much less with armed forces,” AMLO told US neocons. 

Relations between US and Mexican lawmakers plumbed new lows this week, as a coterie of Republican senators, congressmen and a former attorney general called for direct US military intervention against Mexico’s drug cartels. They included Lindsey Graham, who has lent his support to every single US military intervention and regime change operation since becoming senator in 2003. Together with John McCain, he helped lay some of the ground work for the NATO-Russia proxy war in Ukraine, famously telling Ukrainian soldiers: “your fight is our fight”.

Setting the Stage for US Military Intervention

Now, Graham wants to introduce legislation to “set the stage” for U.S. military force in Mexico, saying it is time to “get tough” on the southern neighbour’s drug cartels and prevent them from bringing fentanyl across the border. The senator’s intervention came just days after four US citizens were kidnapped in the northern Mexican city of Matamoros, two of whom were killed. It is not yet clear why the kidnapping took place, but all four of the victims had lengthy rap sheets, including for drug offences. Whether that has any bearing on the crime has not been confirmed.

Graham added he would “introduce legislation to make certain Mexican drug cartels foreign terrorist organizations under U.S. law and set the stage to use military force if necessary.” Graham escalated tensions on Thursday by describing Mexico as a “narcostate”. His  words elicited a furious response from Mexico’s President Andrés Manuel Lopéz Obrador (AMLO for short), who said (translated by yours truly):

Once and for all, let’s set our position straight. We will not allow any foreign government to intervene in our territory, much less with armed forces. And from today we will begin an information campaign for Mexicans and Hispanics that live and work in the United States to inform them of what we are doing in Mexico and how this initiative of the Republicans, besides being irresponsible, is an insult to the Mexican people and a lack of respect to our independence and sovereignty. And if they do not change their attitude and continue using Mexico for electoral propaganda… we are going to recommend not voting for this party.

This would be no small matter, given that 34.5 million Hispanic Americans were eligible to vote in 2022’s mid-terms, making Latinos the fastest-growing racial and ethnic group in the U.S. electorate. According to Pew Research, the number of Hispanic eligible voters increased by 4.7 million between 2018 and 2022, accounting for 62% of the total growth in U.S. eligible voters during that time. And AMLO has significant influence over this demographic. But that is unlikely to have much of an effect on the Republican neocons pushing for direct US intervention against Mexican drug cartels.

They include, all too predictably, Senators Ted Cruz and Marco Rubio. Also on board are Reps. Dan Crenshaw and Stephen Walts, who in January presented a joint resolution in Congress seeking authorisation for the “use of United States Armed Forces against those responsible for trafficking fentanyl or a fentanyl-related substance into the United States or carrying out other related activities that cause regional destabilization in the Western Hemisphere.”

Mexico’s “Narco-Terrorists”

Also along for the ride is former Attorney General (under both George HW Bush and Donald Trump), whom the late New York Times columnist William Safire used to refer to as “Coverup-General Barr” for his role in burying evidence of then-President George H.W. Bush’s role in “Iraqgate” and “Iron-Contra.” In an op-ed for the Wall Street Journal, Barr likened Mexico’s “narco-terrorists” to Isis and calls Reps. Crenshaw and Waltz’s joint resolution a “necessary step”:

What will it take to defeat the Mexican cartels? First, a far more aggressive American effort inside Mexico than ever before, including a significant U.S. law-enforcement and intelligence presence, as well as select military capabilities. Optimally, the Mexican government will support and participate in this effort, and it is likely to do so once they understand that the U.S. is committed to do whatever is necessary to cripple the cartels, whether or not the Mexican government participates.

Barr called AMLO the cartel’s “chief enabler” for refusing to wage war against the cartels with quite the same zeal as his predecessors:

“In reality, AMLO is unwilling to take action that would seriously challenge the cartels. He shields them by consistently invoking Mexico’s sovereignty to block the U.S. from taking effective action.”

Bizarrely, Barr makes this claim even as the US and Mexico are quietly intensifying their military cooperation. As the investigative journalism website Contralinea reports, one of the millions of documents leaked in a massive cyberattack on the Mexican Secretariat of National Defense (Sedena), in October revealed the extent to which the US and Mexican armed forces are deepening their collaboration on “shared security challenges” such as combating organised crime, arms, drugs and people trafficking.

According to the leaked GANSEG document, the objective going forward of the Armed Forces of Mexico and the United States is to interact (emphasis my own) “closely, efficiently and in an orderly manner to strengthen bilateral military cooperation in matters of protection and regional security, evaluating existing bilateral mechanisms in order to work with a common strategic vision.”

The tactical-strategic bilateral military cooperation framework will also involve trilateral meetings between the defence ministers of Mexico, the United States and Canada. But that apparently isn’t enough for certain Republican neocons, who want the US government and military to take matters into their own hands.

While the growing influence of Mexico’s drug cartels is clearly a matter of vital import, not just for Mexico and the US but for the entire American continent, direct, overt US intervention on Mexican soil will make things a darn sight worse. If US citizens are worried about migrants amassing at the border, just wait until the US army begins ramping up the chaos and bloodshed in Mexico.

Also, conspicuously (albeit not surprisingly) absent from the debate in Washington is the central role US arms manufacturers and dealers play in facilitating a large part of the drugs-related violence on both sides of the border. Nor, of course, is their any reckoning with the now-indisputable failure of the US War on Drugs in stemming the flow of narcotics to the US. Even the NY Times recently ran an op-ed declaring that the global war on drugs had been a “staggering failure”.

Mexican Cartel Apologizes For Taking And Killing American Hostages

 

RT  |  A faction of the drug-trafficking Gulf Cartel on Thursday apologized for what they called a rogue operation, which resulted in the deaths of one Mexican and two US citizens near the city of Matamoros. Mexican police found five handcuffed men in a vehicle, along with a note explaining the situation.

“We have decided to turn over those who were directly involved and responsible in the events, who at all times acted under their own decision-making and lack of discipline,” said the note, provided to media by a police source in the Mexican state of Tamaulipas. The five men broke the cartel’s rules, which included “respecting the life and well-being of the innocent,” it added.

The letter was signed by the ‘Scorpions’ cartel faction, which controls drug distribution in Matamoros, right across the Rio Grande from the US state of Texas.

Four Americans who traveled to Matamoros last Friday were taken captive by the cartel, after a firefight that killed a local woman. They were identified as Latavia McGee, Zindell Brown, Eric Williams, and Shaeed Woodard. Another woman, Cheryl Orange, was denied entry because she did not have the proper documents, according to local media reports.

Orange told AP that the group traveled from South Carolina to Mexico so that McGee could have a “tummy tuck” cosmetic surgery procedure. However the Daily Mail reported on Thursday that the four who entered Mexico had a history of drug charges. 

When Tamaulipas authorities tracked them down on Tuesday morning, in the nearby town of El Tecolote, Brown and Woodard were dead, McGee was “barefoot and covered in dirt,” while Williams had a gunshot wound in the left leg. 

Police arrested a 24-year-old Mexican they say was guarding the prisoners. He was identified only as “Jose N.”

Tamaulipas Attorney General Irving Barrios thanked the public for sharing the images of the abduction online, saying that they helped with the investigation. He added that the authorities initially did not know the victims were Americans, but reached out to the US once they identified the license plates on their minivan.