Venezuela to Devalue AGAIN!

from WSJ:

CARACAS—Venezuela will devalue its "strong bolívar" currency on New Year's Day, the government said Thursday, the second such devaluation within a year and at least the fifth major devaluation during the decade-long populist government of President Hugo Chávez.
News of the devaluation came just after the central bank said the Venezuelan economy contracted 1.9% in 2010, the second consecutive year of declining output in the oil-rich nation after a 3.3% decline in 2009.
Both pieces of news suggest Mr. Chávez is having an increasingly difficult time balancing his populist policies with economic reality, according to economists.

Chavez Says He And Castro Are More Conservative Than "Comrade" Obama

from Reuters:

Venezuela's President Hugo Chavez said on Tuesday that he and Cuban ally Fidel Castro risk being more conservative than U.S. President Barack Obama as Washington prepares to take control of General Motors Corp.

During one of Chavez's customary lectures on the "curse" of capitalism and the bonanzas of socialism, the Venezuelan leader made reference to GM's bankruptcy filing, which is expected to give the U.S. government a 60 percent stake in the 100-year-old former symbol of American might.

"Hey, Obama has just nationalized nothing more and nothing less than General Motors. Comrade Obama! Fidel, careful or we are going to end up to his right," Chavez joked on a live television broadcast.

During a decade in government, Chavez has nationalized most of Venezuela's key economic sectors, including multibillion dollar oil projects, often via joint ventures with the private sector that give the state a 60 percent controlling stake.

Soybean Sell-Off, Sure Enough!

More than 10,000 bid contract orders were filled in less than 10 minutes. Who would want to sell into such a strong buying sentiment? Farmers, perhaps! They may be locking in profits by selling old crop soybeans while prices are strong. They saw prices plunge as recently as last week, and many will want to lock in prices while they are higher.

The farmer strike in Argentina is leading to food shortages and is causing soybean sales to be diverted to Brazil and the United States. Argentina is the world's largest exporter of soybean oil and meal, and the third largest exporter of the beans themselves, so the distress in this South American nation has no small impact on global soybean prices. The confrontation between the left-wing government of Argentina (trying to reign in inflation and deal with food shortages), and its farming interests, is becoming more heated by the day. This is keeping sales strong and is supportive of prices, but it is nice to see more balanced trading between buyers and sellers for a change. This is the first day I've seen this kind of balanced give and take for a few weeks!

Hint to Cristina Fernandez in Argentina and Hugo Chavez in Venezuela:
Cristina Fernandez, (new president of Argentina and spouse of the former president, Nestor Kirchner), you are stealing from the middle class farmers that produce your country's primary exports and economic prosperity. A tax increase of 45% will cripple your exports and your economy! You would think you would have learned from the catastrophe created by Chavez in Venezuela. Stealing from your nations' farmers and taxing them exorbitantly won't increase the food supply. It will decrease it, because you create a disincentive to grow and produce more in the first place! Food will end up costing more, not less! Socialists never seem to learn this lesson, and they always punish their people, doing more harm than good, when they attempt to force their will upon everyone else. It would be far better to increase the incentive for their farmers to produce more food through the profit motive, rather than punish them for being productive by imposing heavy taxes and price limitations. What do you think will happen next season if the farmers can't make money selling their product? The farmers will grow less next year, and prices will go even higher! Will these socialist goons never learn? Will their people continue to suffer?

Meanwhile, Crude Oil Gets Even More Expensive!

Meanwhile, the price of crude oil continues to move higher minute by minute. The tensions in South America between Colombia, Ecuador, and Venezuela have caused greater price pressure on crude oil.

Marxism Taking Control Across Latin America

Here is an excellent article that explains more of what I will discuss following:

Colombia Stands As a Beacon of Hope

Ecuador and Venezuela, both with socialist/marxist presidents who have dissolved their legislatures and befriended Cuba's Castro, are threatening Colombia with military action. They have consistently used their oil wealth to both fund marxist guerillas and provide them with safe haven within their borders. Ecuador and Venezuela are also both members of OPEC, while Colombia is not. Colombia also is an exporter of oil, but has far smaller reserves than its two socialist neighbors.

For decades marxist terrorists have carried out relentless terrorist attacks against Colombia's oil pipelines and murdered thousands of innocent Colombian civilians; they then flee back into the neighboring Ecuadorian/Venezuelan jungles to hide. Once, a group of terrorists shot their way into the Colombian Supreme Court building with machine guns, held the judges and employees hostage for days, and then massacred them all, killing the entire Colombian Supreme Court!

In desperation, Colombia's military carried out a successful attack against these marxist guerillas a few days ago inside Ecuadoran territory, killing one of the marxist terrorist leaders that Hugo Chavez has been funding and supporting. They recovered four laptop computers in the raid that prove the connection to both Chavez and Ecuador's marxist government, including presidential campaign contributions to Rafael Correa, Ecuador's president (who, following his election, dissolved the country's legislative body). Consequently, Venezuela's Hugo Chavez is now threatening Columbia militarily and economically. These tensions are pushing oil prices even higher (at the time of this writing, about $106.50/barrel). There appears to be no end in sight for the price of crude oil.

I have lived in both Ecuador and Colombia, and I have fond affection for both their peoples. Colombia always had a better economy, primarily because of its superior economic freedom. They had more products and higher quality goods in their stores. This was so prevalent that many Ecuadorans made livelihoods just smuggling goods of all kinds from Colombia into Ecuador for resale. These goods were high quality, and it's beyond me why they would be banned in Ecuador. What's so dangerous about a gas camp grill, chocolate Mars candy bars (they sure were good, too) or ceramic plates? Columbia's economy has been so good that they have been net exporters of food to Venezuela and other neighboring countries, while Chavez' Venzuela has now sludged from being a net exporter to a net importer of food under his tyranny. Whatever he can't get through intimidation and tyranny, he simply steals or nationalizes.

I feel particularly for the people of Colombia in this case because these terrorist attacks have taken a heavy and relentless toll on the people of Colombia by Chavez' marxist/terrorist thugs for decades. I was there 25 years ago, and the marxist drug lords have been terrorizing the Colombian people for at least that long.

When I was in Ecuador and Colombia, I remember meeting an American who rode his bicycle along the Panamerican highway through Colombia. He was just a penniless bicyclist traveling through the continent. He survived attempts by these guerillas to capture, kidnap, and shoot him as he rode along the highway. That was in 1978. The Colombian people have endured these conditions for that long, with relentless military attacks, funded by Hugo Chavez' vast oil wealth and the cocaine drug lords, who work together to try to destroy the government of Colombia and force its people into a tyrannical dictatorship. So far, they have courageously resisted.

Hundreds of Colombia's politicians who have had the courage to stand up to these brutal murderers have been killed, and one presidential candidate was kidnapped and is still held hostage nearly 5 years later. Most are too afraid to stand up to these goons for fear that they or their families will be murdered. We all have heard horror stories of the brutality of the Colombian drug cartel! The Colombian people live with it every day!

President Alvaro Uribe of Colombia is one of the few people who have stood up to these brutal marxist drug lords and lived. Many have been killed. He is educated at Columbia and Harvard Universities in the United States and is one of the few free-market leaders in Latin America. While South America has turned almost entirely socialist, he and his people have been the lone voice in the South American wilderness for freedom and free markets. He faced enormous opposition from Marxists both inside and outside his country, and remains firm in his principles of political and economic freedom, even while his neighboring Andean countries -- and all of South America -- have descended like dominoes into Marxism in the past few years.

President Uribe deserves the support and help of the United States at this moment of crisis, not in military troops (Colombia already has the best military in the region), but in moral and perhaps economic support. His country is surrounded by well-funded marxist militarists on the North, East, and South who want to depose his free government and impose marxism on his people. He faces daunting odds and opposition.

Meanwhile, the Democrat Congress in the United States continues to block a free trade agreement with Colombia, one of America's few true-blue friends in Latin America. I urge Americans to contact their Congressmen and urge them to ratify the trade agreement. It will help to solidify America's only ally in the region and make Colombia economically strong so that it can continue the battle for its own freedom on the South American continent.

Unfortunately, there appears to be no quick solution to this problem. These tensions have been simmering for 50 years, and crude oil prices are probably going to go much higher still.

Grains Calm Down, Oil Surges

Fortunately, wheat and other grains prices appear to have calmed down and moderated somewhat mid-session today. It remains to be seen whether the Chicago Mercantile Exchange will return to the 30 cent daily lock limit, if prices remain stable. It would certainly be possible for renewed buying interest to push prices back toward the lock limit of $11.53, also. Both soybeans and corn are trading modestly down today. Here is the mid-session commentary taken verbatim from the CME website:

"Overflow support from Minneapolis is easing and sellers were active in Chicago and Kansas City and the markets quickly moved from sharply higher to sharply lower on the day for many contracts. A lack of new demand news and fears that the market is close to a top sparked increased selling pressures.... An increase in margin requirements added to the long liquidation trend."

Crude Oil Turmoil

Oil, on the other hand, has surged to higher prices, even following a significant jump in prices last Friday. Unfortunately, much of the world's crude oil rests in the hands of the world's dictators, and they have learned that they can talk the price of oil up by issuing threats. Hugo Chavez, Venezuela's socialist dictator, is creating more and more turmoil at home, confiscating more and more private property. His poll numbers are dropping, so he talks foolish rhetoric against the United States. This has driven the price of crude oil higher today.