THE THIRD LARGEST DRUG CARTEL IN MEXICO IS STRUGGLING:

Sarah,

The top three drug cartels in Mexico are the Gulf Cartel, the Sinaloa Cartel, and the Zetas.  This week, the boss of the Gulf Cartel was arrested.  This event signals major changes ahead.  Here is a breakdown:

Quick History:

In the 1980’s, American authorities shut down drug smuggling routes through the Caribbean and Florida.  This forced Colombian suppliers to use Mexican middlemen to get their drugs into America.  One of these middlemen, the Guadalajara Cartel, began investing in their own operation and soon became the most dominant cartel in Mexico.

When the leader of the Guadalajara Cartel died, the Sinaloa Cartel, the Tijuana Cartel, and the Gulf Cartel split the smuggling routes of the original operation and grew to be their own powerful entities. 

In 1999, elite soldiers in a special unit of the Mexican Army deserted and were hired by the Gulf Cartel as bodyguards and assassins.  In 2010, the soldiers broke away from the Gulf Cartel and started their own operation.  They call themselves the Zetas.

Since 2010, these three major players have dominated the Mexico’s drug trade.  The Sinaloa Cartel is the largest and most powerful.  The Zetas are the newest, most aggressive, and most violent.  The Gulf Cartel is still powerful, but seems to be rapidly disintegrating.

Recent Arrests:

The arrest of the Gulf Cartel’s leader, Jorge Eduardo Costilla Sanchez, signals only the most recent struggle for the organization.  The leadership has been decimated in recent years: one captain is in jail in Texas, one captain was arrested the week before, and one captain was killed in a 2010 shootout with the Mexican Army.

With their top leadership eliminated, it will be tough for the Gulf Cartel to continue fighting off the cartels.

Power Vacuum:

The Gulf Cartel controls prime assets and smuggling routes.  People are definitely going to fight over them.

First, there will likely be infighting among the second tier of Gulf Cartel leadership to obtain the top spots.

Second, the Zetas and the Sinaloa Cartel will be fighting to take over Gulf territory.

The Zetas have been expanding rapidly but lately there has been evidence of dissension in their ranks.  The more organized Sinaloa Cartel might have the advantage.

Politics:

Mexico has recently elected a new President.  There is a question as to how he will handle Mexico’s drug violence.  Mexico’s last administration focused on pursuing the top leadership in each cartel.  This strategy was criticized as ineffective because it did not focus on the source of drug cartel power and merely replaced one drug lord with another.  We will see if Pena Nieto (the new president) does anything different.

(click here for more detailed information on Mexican Drug Cartels)

THREE RECENT EXAMPLES OF MEXICO’S POLICE FORCE COMMITTING HORRIBLE ACTS:

Sarah,

For the last 6 years Felipe Calderon, Mexico’s outgoing president, spent most of his time trying to clean up Mexico’s police force.  Unfortunately, drug cartels still pay better than the state and corruption remains omnipresent.  Here are three recent incidents in which the “Federales” have committed horrible acts:

1.  This month, an SUV with a United States diplomatic license plate was attacked by plain clothes policemen wielding machine guns.  The car was traveling to a Mexican army base south of Mexico City.  Inside the SUV were two CIA agents; both were injured but survived.  The Mexican Police maintain that the SUV did not stop at a police checkpoint.  Even if that were true, it is unclear if police procedure is to pursue the car and riddle it with bullets from an AK-47, which coincidentally, is not even the gun the Mexican Police use.  Further, ambushing cars at police checkpoints is a common gangland strategy in Mexico. Supposedly, the driver, A CIA agent, saved his passenger’s lives with impressive evasive maneuvers.

2.  Two months ago, two different groups of Mexican police officers engaged in a running shootout against each other in Mexico City’s airport.  One group of officers was trying to arrest the other group of officers for their involvement in a cocaine smuggling operation.  Three officers were killed and after a subsequent investigation revealed the level of corruption at the airport, the entire police unit attached to the airport was fired.

3.  Last September, a businessman in Ciudad Juarez accused police officers of kidnapping him and extorting money from him.  Recently, he was stabbed to death and his corpse was covered with gasoline and set aflame.

In a recent poll, only 8% of Mexicans said they felt confident in the police.

Bottom line: The airport story is blowing my mind.  I just imagine waiting for my Southwest flight and seeing a gunfight erupt between rival airport police in front of a CPK Express.

SOME THEORIES AS TO WHY AMERICA'S CRIME RATE IS DROPPING:

Sarah,

Most of the news these days seems to be negative.  There is one big exception: crime has been steadily dropping nationwide since 1992.  This drop has continued throughout the recession.  To learn why, I read articles from The Atlantic, the Wall Street Journal, and The Economist.  The three publications offered an absurd amount of reasons but no real definitive conclusions.  Therefore, I’m just going to list every theory in no particular order because no one is really sure why the crime rate is dropping.

The Theories:

1. The police have better technology.  Computer systems organize vast amounts of data, show where crimes are concentrated and predict trends.  This has allowed police departments to allocate their resources more efficiently.  It also increases accountability because numbers do not lie. (Unless you’re a cop on The Wire)

2. Officers are working closer with the communities.  The police are more trusted than they were twenty years ago.

3.  America’s absurdly high incarceration rate, fueled by strict drug laws, has removed criminals from the street.  Evidence for this is mixed and usually depends on if your source leans conservative or liberal.  Since I lean liberal in this department, I’ll mention that New York has experienced one of the largest drops in crime but has not incarcerated nearly as many people per capita as the rest of the nation.

2.  Prescriptions of psychiatric drugs have increased.  Less crazy people commit less crime.

3.  Lead has been removed from gas.  Tests show that levels of lead in the average American’s blood dropped dramatically from 1975 to 1992.

4.  The legalization of abortion in the 1970’s reduced the amount of “unwanted children” and these children were more prone to commit crime.  (this very controversial theory is from the book Freakonomics.)

5.  America is aging and an aging population necessarily lowers the crime rate.

6.  Video games have provided young men with an alternative way to spend their time.

7.  The percentage of immigrants in cities has increased.  Studies show that cities with higher proportions of immigrants have lower crime rates.

8.  Aggressive stop and frisk strategies, such as the one employed in New York, have taken guns off the street.

9. More individuals are buying burglar alarms for their homes and LoJack for their cars.

10.  Harder economic times lead people to practice more self-control and rely on family.  The Great Depression also experienced a drop in crime, while crime grew rapidly in the strong economy of the 1960’s.

Which theory is right?  I have no idea.

CHINESE GANGS IN AFRICA:

Sarah,

I write a lot about China, I write a lot about Africa, and I write a lot about crime.  So I definitely can’t pass up a story about Chinese gangsters in Africa.  Last week, 37 people were extradited from Angola to China to face charges of kidnapping, armed robbery, human trafficking, and extortion.  Let’s start the story with Angola:

 

Angola:

Angola lies on the Atlantic Coast in Southern Africa.  Portugal arrived in Angola as early as 1500 because Angola was on the way to India and the Portuguese were some of the first explorers.  You might remember from 4^th grade that Bartolomeu Dias, a Portuguese explorer, was the first to round the Cape of Africa.

Portugal ruled Angola for about 500 years and engaged in the slave trade enthusiastically.  Portugal spent most of this time near the coast, but around 1900 they attempted to consolidate their hold on the whole country.  In 1961, a war for independence broke out and lasted until 1974.  Immediately after Portugal left, a far more brutal internal civil war erupted and lasted until 2002.  So basically, the country was at war from the time of JFK’s presidency all the way to the attacks on 9/11.

Since the end of the civil war, Angola’s economy has grown incredibly fast.  This is because the country has an extraordinary amount of oil, diamonds, copper, and gold.  Almost all of Angola’s economic growth stems for the export of these commodities.

Unfortunately, the wealth from these exports has remained in the hands the elite.  A handful of powerful government officials and insiders have managed to enrich themselves at the expense of the rest of the population.  As a result, Angola suffers from staggering social inequality.  The differences between the cities and the countryside are arguably more dramatic than anywhere else in the world.  This rural poverty is compounded by the fact that the countryside is still littered with landmines from 40 years of war.

China:

When peace came, the Chinese entered and brokered deals with Angola’s corrupt government.  Since 2002, China has loaned Angola billions of dollars and managed to become Angola’s main trading partner.  As a result, most of Angola’s oil, gold, and copper end up in China. 

Because of this trade, many Chinese have migrated to the country and thousands of Chinese citizens currently live there.  However, not all of these migrants are successful Chinese businessmen.  Many are poorer, uneducated Chinese citizens that have roots in Chinese gang culture.

These gangsters thrive in Africa because of a general lack of security and political instability.  It’s much easier to kidnap and ransom a wealthy businessman in Angola than in Beijing.  Accordingly, many businessmen operating in Angola are forced to hire bodyguards and buy bullet proof cars.  Some have even abandoned their businesses.  Further, the gangsters allegedly operate human trafficking schemes in which young women are promised jobs in Africa but are immediately sold into prostitution once they arrive.

Now China is taking steps to fight back and defend its image.  It sent a special police force to Angola to target 12 different gangs and rescue victims.  As a result of their efforts, 14 victims were freed and 37 Chinese gangsters are now back in China and awaiting trial.

Bottom line: Exporting crime to Africa?  That seems really messed up.  Also, I bet the officers in that special Chinese police force were total bad asses.  This story would make a great action movie.

CALIFORNIA’S METAL THIEVES OPERATE IN A GLOBAL MARKET:

Sarah,

I read something pretty ridiculous today.  Thieves in California are stealing metal.  This metal ends up being sold to factories in China.  The Chinese factories then manufacture metal products with this metal and sell it back to California.  Here is a step by step breakdown:

1. California buys metal from China.  Cities buy copper wiring.  Churches buy church bells.  Farmers buy metal pipe for their irrigation systems.

2.  Thieves steal this metal.  Last year, ¼ of all Sacramento street lights went dark as a result of thieves stealing copper wiring.  A church in Pico Rivera had to replace a 200 pound church bell and farmers throughout the state had to replace their irrigation systems.

3.  The thieves sell this metal to local scrap yards and local scrap yards sell their metal to scrap yards in Los Angeles.  These Los Angeles scrap yards are close to the port of Los Angeles and the port of Long Beach.

4.  The Los Angeles scrap yards then load the metal on ships destined for China and other Asian countries.

5.  The Chinese factories receive the metal and make copper wire, church bells, and irrigation pipes.

6.  California buys back these metal products from China.

Bottom line: Wait a second, cheap Chinese labor is causing our homeless population to steal church bells and sell them overseas?  This is getting ridiculous.

Source: Los Angeles Times, “Illegal Scrap Yards Heaping Up” 8/22/2012

MEXICO’S RICHEST CITY IS SUFFERING HUGE INCREASES IN CRIME:

Sarah,

Oh man, there are a lot of horrible stories about Mexico’s drug war.  This one is particularly depressing. 

The city of Monterrey is Mexico’s most successful city.  Here are some details:

- The city’s GDP per capita is $20,000 per year.  This is the highest rate in the country and is nearly double Mexico’s GDP per capita.  As a point of reference, America’s GDP per capita is $48,000 per year.  Mississippi, America’s poorest state, has a GDP per capita of about $33,000 per year

(GDP stands for Gross Domestic Product.  Gross Domestic Product means the total economic output of an area.  GDP per capita takes the total economic output of an area and divides it by the number of people in area.  Thus it is a rough calculation of an area’s standard of living.)

- Monterrey is the industrial heart of Mexico and hosts many of Mexico’s most important companies.

- Monterrey has Mexico’s second highest rate of foreign investment.  (The rate at which foreigners invest money into a certain area)

- Monterrey has a great education system and impressive infrastructure.

- Monterrey is the third largest city in the country.

What Has Happened?

Crime has exploded.  The statistics are absolutely staggering:

-From 2010 to 2011 to murder rate increased 300%.  Let’s put that number in perspective.  Last year 300 people were murdered in Los Angeles.  A 300% increase would bring L.A.’s murder rate to 900 murders in only one year.

-Media outlets that report on crime have been attacked.  Last month, drug gangs torched the offices of a Monterrey newspaper named El Norte. (More than 80 Mexican journalists have been killed this year.)

- In May, 49 bodies were dumped near a roadside on the outskirts of the city.  The heads, hands, and feet were hacked off of each body.  (As another point of reference, there were only 38 murders in the entire city in San Diego last year.)

- Last August, 52 people were killed when drug gangs attacked a crowded casino.

- The historic center of the city, which used to be a center for nightlife, has been more or less abandoned.  Only one restaurant remains open.

Why Has This Happened?

All drug cartels are bad, but the Zetas are the worst.  They are by far the most violent drug gang in Mexico and are more prone to engage in other crimes such as kidnapping and extortion.  

The Zeta’s used to be the bodyguards of the larger Gulf Cartel.  They broke away from the Gulf Cartel in 2010 and have since been fighting Mexico’s more established gangs for control of Monterrey. 

Bottom line: The crazy part is that Monterrey is not even Mexico’s most violent city.  It is merely the latest casualty in a long, tragic war.

RIOTING IN FRANCE:

Sarah,

France is struggling to control certain areas of the country.  On the outskirts of many French cities, impoverished communities are becoming increasingly lawless.  High crime and high unemployment have led to intense riots.  Youth gangs barricade streets with burning cars and garbage and hit arriving officers with stones, bottles, and even gunfire.  There are some areas that the police will not even enter.

There are two main causes for this unrest.  First, France’s economy is struggling generally and this can lead to discontent.  Second, France has had a difficult time integrating its minorities.  Most of these areas are populated by immigrants who feel disconnected from French society.

The new president of France has declared security as his number one issue.

PFIZER, THE DRUG COMPANY, GOT BUSTED FOR BRIBING FOREIGN DOCTORS

Sarah,

Pfizer is a large pharmaceutical company.  Recently, Pfizer reached a $45,000,000 settlement with the Securities and Exchange Commission to resolve charges of bribing doctors overseas to write prescriptions for Pfizer medicines.

The Law:

In 1977, the United States passed the Foreign Corrupt Practices Act.  This law prohibits companies from bribing foreign officials.

The Offense:

The offenses are pretty egregious and were committed in countries around the globe.  In China, a Pfizer subsidiary created a “point program” in which points were given each time a doctor prescribed Pfizer drugs.  The points could then be exchanged for cellphones or tea sets.  I call this the Chuck E. Cheese business model.  In other parts of China, Indonesia, and Pakistan, Pfizer dispensed with formalities and made cash payments to government doctors.

In case you were wondering, other drug companies are doing this as well and are currently cooperating with investigations.

Bottom line: Drug companies do what they want.

Source: “Pfizer Settles U.S. Charges Of Bribing Doctors Abroad." New York Times, 8/8/2012

CHINA IS ABOUT TO CHANGE LEADERSHIP; HERE ARE SOME PROBLEMS CHINA FACES:

Sarah,

China has dominated the last decade economically.  However, China has problems too.  Here are some of them:

Drama Within The Communist Party:

China is ruled by top officials in the Communist Party.  Top officials become top officials by being promoted from within the party.

China’s top leadership has decided that Xi Jinping will succeed Hu Jintao as president of China.  The transition should go smoothly.  However, there have been several political hiccups in the last year.

First, Bo Xilai, the ex-governor of Chongqing, an absurdly large Chinese city, has recently been purged from the party.  This is significant because he was enormously popular and once thought to be in contention for a top leadership position.  The drama started when a British acquaintance of Mr. Bo named Neil Heywood was found dead in a hotel room.  Now, Mr. Bo’s wife is now on trial for murdering Mr. Heywood. (given China’s 98% conviction rate she will surely be imprisoned or executed.)   Additionally, Mr. Bo loudly campaigned against China's growing economic inequality and this caused a rift with other party members.  In a system that values consensus, his dramatic expulsion is a big deal.

Second, China’s military is seeking greater influence over political decision making.  Many generals are grumbling that China’s military should be more assertive.  For now, Mr. Hu (the current president) serves as chairman of the Military Commission and may continue to do so even after he steps down.  This may create tension between Mr. Hu and the incoming Mr. Xi once he is president.

Economic Slowdown:

China’s economy is slowing down.  Its property prices have fallen and local government debt has grown.  Imports and exports are down and the government is taking steps to encourage banks to extend more loans.  Does this mean anything?  Maybe, I don’t know, I’m not an economist.  I do know that the overall economy is still growing at around 7.5%, more than three times faster than America’s economy

Rising Discontent In The Middle Class:

In the past decade, the number of people in China’s middle class has exploded.  This group of people is now connected to the internet and they are starting to complain about food safety, product safety, pollution, and corruption.  Thus far, protests have been manageable, but they seem to be growing.

Migrant Workers In The Cities:

At least 225 million people have left China’s countryside to find work in China’s wealthier coastal cities. (the total population of the United States is 314 million)  These migrant workers are not afforded the same rights as permanent residents and struggle to find housing, medical care, and education for their children.  As a result, there is a widening wealth gap between incoming workers and China’s emerging middle class.  Over the last year, migrant workers have rioted several times.

An Aging Population:

In 1978, China adopted a one-child policy restricting married, urban couples to one child.  Although it is not universally enforced, the policy has slowed down the birth rate.  Accordingly the percentage of the population that is over 65 is rising rapidly.

Pollution:

There is a consequence to having most of the world's factories.  Air and water pollution in China is bordering on ridiculous.  This will catch up with them sooner or later.

Bottom line: China is still growing, but it is facing more problems.

THE SINALOA DRUG CARTEL IS FIRMLY IN CONTROL OF THE NORTH AMERICAN DRUG TRADE

Sarah,

Over the last six years, Mexican authorities have waged a war on the drug cartels that dominate Mexico.  50,000 people have been killed and depressingly little has changed.  The Sinaloa Cartel, Mexico’s biggest and most powerful cartel, remains firmly in control.  Here is some background on the organization.

A Very Quick History:

In the 1970’s, Colombian drug cartels dominated the drug trade.  They shipped drugs through the Caribbean and up through Florida.  After the United States authorities beefed up security along the Caribbean route, the Colombians started using Mexican gangs as middlemen.  They would fly the drugs into Northern Mexico and employ the Mexicans to bring drugs over the border into California, Arizona, New Mexico, and Texas.

With this new income, the Mexican gangs began investing in their own operations.  By the 1980’s, the Guadalajara Cartel began to rival the power of the original Colombian cartels.  When the leader of the Guadalajara Cartel died, the organization splintered into three rival cartels: the Tijuana Cartel, Juarez Cartel and the Sinaloa Cartel.

The Sinaloa Cartel has since risen to prominence and is headed by Joaquin “El Chapo” Guzman.  El Chapo is now 55 and worth over a billion dollars, making him one of the richest men in the world.

Scope:

The scope of the El Chapo’s operation is breathtaking.  The Sinaloa Cartel and their allies account for about half of all drugs brought into America.  Although estimates as to the Cartel’s yearly income vary greatly, authorities figure that the Cartel can buy a kilo of cocaine in Peru for $2,000 and sell it in the United States for over $100,000 once it is broken down into grams.  In terms of volume, the figures are equally incredible.  Recently, 252 TONS (504,000 pounds) of the chemical used to manufacture meth were found on a Chinese ship that was impounded at a Mexican port.

Methods:

The cartel’s methods can be grouped into innovation and bribery.

Innovation: The cartel uses submarines, tunnels, and even catapults to bring drugs into the country.  They grow marijuana in National Forests in the US and import heroin by hiding it inside individual chili peppers.

Bribery: Bribery is present in all levels of Mexican government.  Although El Chapo was briefly incarcerated, most of the prison was on his payroll and when the time was right, he was smuggled out of jail in a laundry basket.  In 2008, a top Mexican drug official was charged with accepting $450,000 in bribes per month.

Rivals:

Most of the violence plaguing Mexico can be traced to rivalries between the Sinaloa Cartel and its rivals.  In addition to fighting the Juarez and Tijuana Cartels that formed after the dissolution of the Guadalajara Cartel, El Chapo is also up against a new group of psychopaths called the Zetas.  The Zetas are former cartel bodyguards that struck out on their own and operate in extortion and kidnapping as well as drug trafficking.  It was this extraordinarily violent group that dumped 49 mutilated bodies on the side of a highway last year.  Currently, there is conspiracy that the Mexican government favors the Sinaloa Cartel because they are slightly less violent and their emerging dominance is the only thing that can bring relative calm back to Mexican cities.

Bottom Line: Don’t buy drugs.

source: http://www.nytimes.com/2012/06/17/magazine/how-a-mexican-drug-cartel-makes-its-billions.html?_r=1&pagewanted=all  (this article is unreal)

SOME QUICK GUN RELATED FACTS

Sarah,

Today the Economist provided me with some fun facts about guns in America:

1.  If you live in America you are:

• four times more likely to be murdered than if you live in Britain
• six times more likely to be murdered than if you live in Germany
• thirteen times more likely to be murdered than if you live in Japan

2.  Two-thirds of murders in America involve guns.  Only 10% of murders in Britain involve guns.

3.  From 1999 to 2004, assault weapons (guns with magazines that hold more than ten bullets) were outlawed.  The Bush Administration allowed the ban to expire.  The Colorado shooter used a legally purchased AR-15 machine gun with a magazine that held over 100 bullets.

4.  In the wake of the Colorado shooting, the Democrats are still too afraid to re-introduce the assault weapon ban because the measure is not popular with the majority of American voters.

Bottom Line: I need to know who is hunting with a gun that can shoot over 100 bullets without reloading.

CALIFORNIA JAILS AND PRISONS ARE INSANELY OVERCROWDED

Sarah,

There are major developments going on in the California penal system.  Before we get started it’s important to know that difference between jails and prisons.  Prisons are typically reserved for people serving longer sentences; jails are typically reserved for shorter (under a year) sentences and people waiting to be tried in court.  The overall story can best be analogized by a falling chain of dominos.

The first domino fell earlier this year when Supreme Court of the United States ruled that California must immediately reduce its prison populations because the overcrowding amounted to cruel and unusual punishment.

As a result, California began transferring prisoners from prisons back into jails.  Now the jails are so overcrowded that many jails are forced to release offenders early every single day.  Further, the crowding is leading to increased violence within the jails and more lawsuits that allege abuse of prisoners.

Different parts of California are dealing with this situation in different ways.  Liberal counties are focusing on expanding alternatives to jail such as drug rehabilitation.  Conservative counties are rushing to expand their jails.  Many counties are turning to “private jails” to house their prisoners.

Bottom Line: Jails will continue to become more crowded.  There is little government money for additional facilities and the incarceration rate in California continues to rise.