Venezuela: It’s Not About Drugs

Venezuela: It’s Not About Drugs

An American regime-change war in Venezuela, if it comes, will not be about drugs.

Asked yesterday about sending in U.S. troops, the president said, “I don’t rule out that. I don’t rule out anything.”

On the other hand, he said the day before that his administration “may be having some discussions” with Venezuelan President Nicolas Maduro.

Whatever the case, a sizable American armada is massed off Venezuela’s coast, led by the aircraft carrier USS Gerald R. Ford.

Trump and his advisers “have to do something big to justify this massive deployment of forces, and they have to do it SOON,” tweets the military analyst William Schryver.

“As in, within hours or a few days at most. They can't just hang out for weeks blowing up little boats with Reaper drones.

“And if all they planned on doing was launching a few dozen Tomahawks at various targets in Venezuela, they would not have a carrier strike group and an amphibious ready group in the mix.”

The parallels to the Iraq War that began in 2003 are many — and disturbing.

Take it from retired Air Force Lt. Col. Karen Kwiatkowski. She was the Pentagon insider who, weeks after the war began, started blowing the whistle on the officials who peddled the most outrageous lies before the war.

“In a world where government lies may be easily refuted in seconds, Trump’s initiation of war for Venezuelan oil and resources presented as a war on drugs and made-up narco-terror is as illegal as it is embarrassing,” Kwiatkowski tells the Eisenhower Media Network.

Adds the retired but tireless Rep. Ron Paul (R-Texas): “The Saddam Hussein WMD factories of 2002 have become the Nicolas Maduro cocaine and fentanyl factories of 2025 and once again the neocon war lies are amplified by the U.S. mainstream media and transmitted to the American people.

“A new disaster is in the making. The ‘global war on terror’ has been rebranded the ‘hemispheric war on narco-terror’ and the U.S. military industrial complex is rubbing its hands in anticipation of a windfall.”

But not just the military industrial complex. Time to follow the money…

“The nice thing is, they’ve got plenty of natural resources,” says Sen. Rick Scott (R-Florida) — speaking of Venezuela.

In their more candid moments, D.C.’s regime-change crowd is upfront about their aims. Drugs? What drugs?

“In a democracy in Venezuela, their resources are massive,” Scott tells the Semafor site, “so there’ll be a lot of people who want to invest.”

Adds the reliably warmongering Sen. Lindsey Graham (R-South Carolina): “There’ll be a lot of business going to Venezuela, I think, if you had a better business environment.”

Semafor reports that “During last month’s IMF-World Bank meetings in Washington, Barclays organized a private meeting to talk investment opportunities with Venezuelan opposition leader María Corina Machado.”

At the same time, the investment bank UBS assembled an eight-page memo “visualizing the day after tomorrow” in Venezuela. Citing the country’s oil reserves, its “fertile soil” and “severely underutilized economy,” the report says “Venezuela’s transition away from Chavismo could unlock major opportunities.” (Chavismo refers to the socialist platform of Venezuela’s president Hugo Chavez, who died in 2013. Maduro was his chosen successor.)

“Perhaps the most aggressive proponent of regime change in Venezuela has been Exxon Mobil and think tanks funded by the oil company,” writes Harrison Berger for The American Conservative.

Venezuela is home to the world’s biggest oil deposits — the thick and sulfurous kind of crude that American refineries are built to process.

Exxon donates at least $250,000 a year to the Center for Strategic and International Studies — “which frequently hosts conferences with Washington’s various handpicked Venezuelan leaders,” Berger writes. “Such think tanks advocate maximum-pressure sanctions and market regime-change war in Venezuela as ‘democracy promotion.’” Exxon CEO Darren Woods serves on CSIS’ board.

Venezuela is also home to significant deposits of rare earth elements — those minerals with unpronounceable names that are essential to everything from your smartphone to fighter jets. Due in part to decades of poor decision-making in Washington, China presently accounts for 70% of global rare-earth mining.

So there you go. Venezuela is not about drugs. It’s about a resource grab.

And the moneymaking possibilities? They’re highly theoretical at this stage. The investment banks are operating on the assumption that regime change in Venezuela will be — to use that infamous term from Iraq — a “cakewalk.”

As in Iraq, that assumption could be proven catastrophically wrong.

More about that tomorrow, or perhaps later this week. We have other business to tend to…

About the “AI Bubble”...

Here we go again with mainstream nonsense: “AI Bubble Fears Hammer Stocks for Fourth Straight Session” says a Wall Street Journal alert on your editor’s iPad.

In the first place, the part about the “fourth straight session” isn’t even true. The S&P 500 and the Nasdaq were more or less flat on Friday. But they did tumble on Thursday, and again after we hit “send” on yesterday’s edition, and so far today as well.

The “AI bubble” chatter is a convenient narrative the media have latched onto. The reality is that the market was overstretched. A pullback of 5% is a perfectly normal occurrence, and we haven’t had that since the “Liberation Day” scare in April.

In fact, we’re still not there now: The S&P 500 sits a little over 6,600 as we write, down another 1% on the day. The index would have to fall another 55 points to be down 5% from its record close on Oct. 28.

Just some perspective. Nvidia’s earnings release after the close tomorrow could flip the media’s narrative in an instant.

Among the big movers today is Cloudflare Inc. (NET) — a major provider of web-hosting services. If you had trouble accessing ChatGPT or X this morning, that’s because Cloudflare sustained a major outage.

The rumor mill went wild about a massive cyberattack, but the company says the trouble was more pedestrian: A configuration file that looks out for malicious traffic “grew beyond an expected size of entries.”

Whatever the reason, shares of Cloudflare sank badly on the open; as the morning wore on, the loss on the day was trimmed to less than 2%.

Meanwhile, precious metals are rebounding from their own Monday-afternoon sell-off.

At last check, gold is up about 13 bucks to $4,057 and silver has gained 42 cents, sitting at $50.55.

Crude has inched its way back over $60.

Bitcoin sank under $90,000 overnight but has since recovered to nearly $93,600. Ethereum has bounced off the $3,100 level.

Now It Can Be Told (Chinese Gold)

The dam has finally broken: The mainstream is acknowledging China’s gold accumulation is much greater than what shows up in Chinese government figures.

From the Financial Times…

China’s unreported gold purchases could be more than 10 times its official figures as it quietly tries to diversify away from the U.S. dollar, say analysts, highlighting the increasingly opaque sources of demand behind bullion’s record-breaking rally.

Publicly reported buying by China’s central bank has been so low this year — 1.9 tonnes purchased in August, 1.9 tonnes in July and 2.2 tonnes in June — that few in the market believe the official figures.

The French banking giant Societe Generale estimates that Beijing’s total purchases could reach 250 metric tons this year. But officially, the year-to-date total is only about 10% of that figure.

The FT wants to make the story all about Donald Trump. It cites Nicky Shiels, an analyst at the Swiss refinery MKS Pamp: “It makes sense to just report the bare minimum, if need be, for fear of reprisal from the U.S. administration. Gold is seen as a pure USA hedge. In most emerging markets it is in central banks’ interest to not fully disclose purchases.”

But non-mainstream experts, including Paradigm’s own Jim Rickards, have said for over 15 years that Beijing understates its gold reserves. Officially they stand just over 2,300 metric tons.

The real total is likely more than twice as large — and the goal is to accumulate a stash to rival Washington’s 8,133.5 metric tons.

A decade ago, Jim wrote that Beijing’s endgame was to have a “seat at the table” along with the United States, the European Union and Japan whenever the next financial crisis rolled around and the global financial system had to be reset.

But that was when Beijing and Washington were on friendlier terms.

Now the goal is to facilitate easier trade and transactions — bypassing the dollar — with the other BRICS countries like Russia and India.

That means China’s trading partners need to accumulate their own gold — which means central bank gold purchases will continue to keep a floor under the gold price for years to come.

Comic Relief

Really, this one’s too obvious. But it still elicits a chuckle…

Really, worse than rent because the buyer shoulders the maintenance costs, right?

Moving on…

Good Help Is Hard to Find (Continued)

“I have several close friends who own businesses,” a reader writes on the topic of why good help is so hard to find.

“The biggest labor problem they have is that most people they hire have a terrible work ethic. They show up late, do the minimum work necessary, fail to show up without notice, make up lousy excuses for not showing up, etc. In most cases, my friends don't even have to fire anyone because they just quit showing up.

“A secondary problem is the lack of education. I've followed the problems in education since the early 1980s when I decided to go to college after dropping out of high school in 1969. By that time, colleges were testing applicants for their math and English skills to see if they needed remedial teaching. I took the tests with about 30 recent high school graduates. I and one other qualified for college algebra and I and two others qualified for English 101. I've also noted over the years that those with an excellent work ethic are also easy to teach. That's why I wrote that education was a secondary problem.

“As to how a lower labor quality might be related to illegal immigration, I have noted that of the Mexican immigrants I've hired or worked with, almost all of them had an excellent work ethic. So it is possible that illegal immigrants returning home is complicating our labor quality issue.”

“No question there are labor issues — not just with a reduction in the illegal alien workforce, but also in getting educated office workers!” chimes in another.

“The competence of applicants is shockingly bad. The work ethic is also lacking overall. I have had thousands of employees over my 45-year career as a business owner and the lack of education (spelling, grammar, etc.) is at a new low.

“Funny story: My yacht was in the shipyard in Fort Lauderdale, Florida, in July. Ten people were working on its bottom, employed by a subcontractor. One morning ICE showed up, two escaped over the fence and eight were put in the van never to be seen again.... I can imagine that dozens of the other yards in Florida are having similar issues. Not good for inflation…”

“The only surprise to me of the ‘good help is hard to find’ response is that it isn’t HIGHER,” says our final correspondent.

“I’ve observed increasingly over the past 30 years in the U.S. Army and construction trades that the work ETHIC of the entire country has eroded/is eroding, revealing the bedrock of entitlement and sheer laziness.

“I grew up in a farm and entrepreneurial environment where work ethic was a well-attended religion of small operations. As industrial farming and corporate culture replaced these traditional methods, there came employees… people with no incentive to work harder. Moreover, government subsidies and bailouts replaced incentives to ‘work for it.’

“At this point, my business ventures must shift away from relying on quality laborers (and tenants who neglect to pay rent) into individual enterprises, as good help is nearly impossible to find (outside of illegal aliens and the Amish). This boils down to a cultural shift to entitlement and handouts.

“Love the 5! Thanks and blessings!!”

Dave: Thanks to everyone for their input.

We have other topics to tackle in our backlogged mailbox — including the fate of New York City under the incoming Mayor Mamdani. Catch you tomorrow!