• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Cocaine Production Drops To Fresh 21st Century Low

Tyler Durden's picture


Those always on the lookout for alternative indicators of economic activity may be in luck.

Earlier this week, the Office of the National Drug Control Policy released its annual survey of Cocaine production in the Andean region, or the three main Latin American countries where the powdery substance is sourced - Colombia, Peru and Bolivia. The results were disappointing, if only for wannabe drug lords. At a total of 620 metric tons of total potential pure cocaine production, 2012 blow production dropped 10% from 2011 and 41% from the 1055 metric ton record hit in 2001. However, the drop was mostly a function of Colombian production: the one time cocaine capital of the world has seen its potential output plunge from 700 tons a decade ago to just 175 estimated tons in 2012.

Which brings up some interesting questions. According to the White House, the drop in production was due to the usual politically palatable reasons:

These overall reductions in the Andean region can be traced to a variety of factors, including the strengthened U.S.-Colombia partnership forged over the past decade and the increased commitment to counternarcotics cooperation and citizen security from President Ollanta Humala and the Government of Peru. This includes strengthened democratic institutions, greater presence by the governments of Colombia and Peru throughout their territories, focused and persistent eradication, law enforcement efforts targeting drug trafficking organizations, improvements in the judicial system, alternative development, and increased foreign investment as a result of a significantly improved security environment.

The above is merely spin. Peru cocaine production has been not only constant but has been increasing over the years, while one can be certain that Bolivia's Evo Morales, who was grossly humiliated in the aftermath of the Snowden affair when US-influenced Western Europe blocked his air passage, is about to crank up coca plant planting to the max. Or is he?

To assume that Colombia will voluntarily eliminate billions in "current account-boosting" drug money just to be in Obama's good graces is ridiculous. So what is the reason for the drop in production?

One likely possibility is a parallel drop in demand, but not due to a surge in former drug users kicking the habit, but due to a drop in disposable cash for cocaine purchases. Which most certainly also includes Wall Street. And why not: with bankers getting their comp increasingly paid out in future vesting stock, which is hardly a drug dealer accepted currency, or simply paid less, and hedge funds everywhere underperforming Ben Bernanke Capital LP, it stands to reason that there is simply less cash for premium drugs, not only among the 99% but the "1%" as well.

An interest study would be to see if there is a matching "uninspirational consumer" effect, where former cocaine users have to make do with cheaper substitutes. If indeed there is less money available for a hit of the white powder, then it is likely that cheaper drugs are gaining on cocaine, leading to a surge of meth RVs in New Mexico and other.

Until then, and in an environment where increasingly more economic data is cut, pardon the pun, by abnormal political adjustments or is outright manipulated, one may have to resort to such abnormal indicators as cocaine production to get a sense of just how wealthy the global, drug-addicted consumer, truly is.

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Fri, 07/12/2013 - 18:46 | 3746823 urbanelf
urbanelf's picture

All this shows is that the hedge fund industry is doing terrible.

Fri, 07/12/2013 - 19:12 | 3746879 azzhatter
azzhatter's picture

Does this include CIA production?

Fri, 07/12/2013 - 20:12 | 3747026 Isotope
Isotope's picture

People are substituting meth. Not that hard to figure out.

Fri, 07/12/2013 - 20:38 | 3747082 malikai
malikai's picture

Are we witnessing the onset of Peak Cocaine?

Fri, 07/12/2013 - 20:55 | 3747129 pods
pods's picture

People crush an Adderal or Ritalin now.  


Fri, 07/12/2013 - 21:45 | 3747241 General Decline
General Decline's picture

When a Vicodin prescription is so easy to come by, who needs blow?

Sat, 07/13/2013 - 01:48 | 3747652 A Nanny Moose
A Nanny Moose's picture

Statist, who have no ability to obtain shit for themselves.

Sat, 07/13/2013 - 07:29 | 3747861 0z
0z's picture

just to be in Obama's good graces


Here's a better idea:

Obama! Ahahahahah!

Even the Authors at ZH are hypnotized by that Mirage!

Fri, 07/12/2013 - 20:57 | 3747135 Clint Liquor
Clint Liquor's picture

 A decline in production of blow? How will this affect the Hooker market? Will the two markets decouple?

Fri, 07/12/2013 - 21:51 | 3747260 General Decline
General Decline's picture

I don't snort coke. I just really like the way it smells.

Fri, 07/12/2013 - 22:54 | 3747418 ToNYC
ToNYC's picture

Leo's friends like it and it makes pretty tongues wag like beatches. They like that; no soup for you!

Sat, 07/13/2013 - 08:20 | 3747896 Coke and Hookers
Coke and Hookers's picture

I doubt we'll see a decoupling. Nobody in finance with any self respect will replace coke with another drug when doing hookers. My guess is that the demand for high class hookers will follow the demand for coke downwards.

Sat, 07/13/2013 - 00:55 | 3747606 Antifaschistische
Antifaschistische's picture

Feds have been trying hard to squash the cheaper substitute drugs to keep consumers into the high end stuff...but the economy just isn't playing along and small time meth labs are just too hard for them to find.   Of course, the DEA and ATF still get lots of overtime trying, but they're just gov welfare recipients too so they have no incentive to really eliminate the problem.

Fri, 07/12/2013 - 21:12 | 3747165 cynicalskeptic
cynicalskeptic's picture

The CIA's been busy in Afghanistan lately, not as many assets to use in the Americas.   How's Heroin production doing? 

Sat, 07/13/2013 - 06:17 | 3747819 Non-U
Non-U's picture

It's very dangerous for a country to stop producing heroin. Look the production of 2001. This stuff  seem more strategic than oil !!!!!!!!!


Fri, 07/12/2013 - 22:52 | 3747412 ToNYC
ToNYC's picture

Their only product is mind plucking; no stuff to lose.

Fri, 07/12/2013 - 19:15 | 3746889 xtop23
xtop23's picture

There's a shock. The government taking a victory lap for the "successful" drug war.


Fri, 07/12/2013 - 20:00 | 3746995 TheFourthStooge-ing
TheFourthStooge-ing's picture

Mission Accomplished©

Fri, 07/12/2013 - 20:07 | 3747010 Thomas
Thomas's picture

Is anybody sharp enough to see that the drop in cocaine usage correlates with the drop in CNBC viewership? Not sure if it's that the cokeheads on the show suck more or the decreased coke consumption is causing decreased CNBC viewership.

Sat, 07/13/2013 - 05:24 | 3747795 DavidC
DavidC's picture



Sat, 07/13/2013 - 08:50 | 3747918 Papasmurf
Papasmurf's picture

Staff was told to decrease usage after this lunch break got Jeff Macke off the corporate message.


Sat, 07/13/2013 - 23:00 | 3749920 Dingleberry
Dingleberry's picture

Don't need coke.

Google "Adderall" or "Ritalin".

Why risk jail when you can go to your doc and get it for maybe a copay.

Fri, 07/12/2013 - 18:46 | 3746824 DIgnified
DIgnified's picture

Could just be an indicator of new concealment methods. 

Fri, 07/12/2013 - 18:46 | 3746825 darteaus
darteaus's picture

Economy is worse than I thought!

Fri, 07/12/2013 - 18:54 | 3746845 eatthebanksters
eatthebanksters's picture

Naaahhhh....meth is just wy cheaper!

Fri, 07/12/2013 - 19:33 | 3746933 Overfed
Overfed's picture

That would be the one.

Fri, 07/12/2013 - 20:12 | 3747027 SmackDaddy
SmackDaddy's picture

Haha I was takin a shit reading this and I could hear my wife cutting lines and sniffling in the other room.  Gotta wipe my ass and get me a numby.  Gonna get some pussssssayyy this Friday night!!!

Sat, 07/13/2013 - 01:57 | 3747659 SmackDaddy
SmackDaddy's picture

Just in case anyone is keeping score at home...  I'm gettin ready to do dirt on the passed out wifey.  Dont misinterpret.  We on a level.  I love this ZH crowd, but u old and wimpering...

Fri, 07/12/2013 - 19:14 | 3746886 McMolotov
McMolotov's picture

Has anyone considered the Kudlow factor in all of this? Larry Kudlow is roughly half the cocaine market, and he just got canned.

Fri, 07/12/2013 - 19:25 | 3746916 mofreedom
mofreedom's picture

kudlow wouldn't touch the stuff, have you watched cramer or heard of obama...you are OBVIOUSLY a communist...drink molotov and be gayer...

Fri, 07/12/2013 - 19:32 | 3746929 mofreedom
mofreedom's picture

moltov was a perceived gave lover of stalin.  page 128 of The Great Terror.

Fri, 07/12/2013 - 19:40 | 3746955 mofreedom
mofreedom's picture

that's obviously a racist comment and i hope you're reported to the gub for inciting viilence and sent to the same prison i will be...

Fri, 07/12/2013 - 18:47 | 3746826 Haloween1
Haloween1's picture

hedonic adjustment

Fri, 07/12/2013 - 20:11 | 3747024 TheFourthStooge-ing
TheFourthStooge-ing's picture

Remember that, depending on how many times it gets stepped on, that 600 tons can easily be rehypothecated into twice that amount.

Fri, 07/12/2013 - 21:49 | 3747249 General Decline
General Decline's picture

Ain't nothin' better than a baking soda blast.

Fri, 07/12/2013 - 23:34 | 3747497 ersatzteil
ersatzteil's picture

It's cut with Levamisole now. A few bumps of fishscale and you're worm-free.

Fri, 07/12/2013 - 18:47 | 3746827 Chupacabra-322
Chupacabra-322's picture

Dam! I guess the Criminal CIA & State Dept. are going to have a harder time importing the drugs then laundering the money through the Criminal
TBTFBanksters to overthrow Soverign govnmnets around the world.

Fri, 07/12/2013 - 18:47 | 3746828 vote_libertaria...
vote_libertarian_party's picture

Because insurance\gvt paid pharma is legal and paid for!!!

Fri, 07/12/2013 - 18:51 | 3746838 NotApplicable
NotApplicable's picture

It's not what drug you're on, but whose.

Sat, 07/13/2013 - 00:10 | 3747551 e_goldstein
e_goldstein's picture

+1 for the Todd Snyder reference.

Fri, 07/12/2013 - 18:48 | 3746830 One And Only
One And Only's picture

Which brings up some interesting questions.

No it doesn't. Charlie Sheen is sober.

Fri, 07/12/2013 - 18:49 | 3746833 Evil Bugeyes
Evil Bugeyes's picture

Can we see a price chart for that?

Also, how about a graph showing total hooker employment?

Fri, 07/12/2013 - 18:50 | 3746834 Ribeye
Ribeye's picture

@Ribser: Sorry, but WTactualF is this stuff Snowball is saying about Ron being blackmailed by Mossad? Is this true?

Twitter is silent,

Inform me please ladies,

Fri, 07/12/2013 - 18:52 | 3746839 toxic8
toxic8's picture

Air America has shifted its focus from blow to trafficking that heron from Afghanistan, any coincidence of the pharmaceutical OxyContin & Heroin boom and America's occupation of Afghanistan and patrolling of Opium fields?


Nah, that's JACT (Just Another Conspiracy Theory) :-)



Fri, 07/12/2013 - 18:52 | 3746841 Cult of Criminality
Cult of Criminality's picture

About the same price as gold.....

Kinda do need income for the treats yes.

some older generation individuals, fear heart attacks now :-).

Not that I would know...just a feeling.

Fri, 07/12/2013 - 23:51 | 3747523 Freddie
Freddie's picture

Consumption is down because Baby Boomers finally growed up (a little). 

One will be around any minute to tell us how their generation went to Woodstock (snore).  The Who were the only good band at Woodstock.  The rest were shite.

Fri, 07/12/2013 - 19:19 | 3746844 fonzannoon
fonzannoon's picture

This is why I am shorting the cocaine miners. It's obvious that once they are forced into bankruptcy the banks can throw them a lifeline, like the gold miners. This way they have direct access to the physical coke and gold. I am also shorting every hooker miner I can find for the same reason. As I see it the best way to play gold, coke and hookers is the XLF.

Fri, 07/12/2013 - 18:54 | 3746846 NuYawkFrankie
NuYawkFrankie's picture

Re Cocaine production down

600 tons is still nothing to sneeze/sniffle at.

Fri, 07/12/2013 - 19:28 | 3746922 MeelionDollerBogus
Fri, 07/12/2013 - 18:54 | 3746847 fijisailor
fijisailor's picture

I was in Bolivia last year.  Every restaurant has the usual selection of tea bags on the table including coca leaf tea bags.  Not considered unusual or illegal.

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