sunset from behind the wire

sunset from behind the wire

Saturday, January 14, 2017

Thoughts - The Mexican Drug Trade

When I report on the murder rate in Tijuana exceeding 700 (reported) in 2016, and the murder rate in Juarez at 528, you need to balance that against 768 murders in Chicago during the same period From January-December 2016. America (land of the free, home of the brave) needs to keep all this in perspective.

There are differences between the Mexican Border and the City of Chicago, but it's mostly in semantics. 

Huge profits and little value placed on human life leads to trouble no matter where you are.

Let's outline how the drug business works. Each significant city along the US-Mexican Border has a "Plaza". The Plaza is an interactive hub where narcotics move north and currency moves south.  Each cartel wants dominance in each city because control of the Plaza  means control of the action.

One possible scenario

Let's say that you were interested in going into the drug business and that you lived in Guadalajara, Jalisco. You run a non-narco business but it's just not turning the sort of profit that you would like to see and you have a couple million dollars (in pesos) in the local bank. Maybe you inherited? There is nothing stopping you from becoming an entrepreneur and becoming a trafficker. The cartels won't stop you (because they will demand a tax - part of your profit).

For the sake of brevity on this blog, you have a friend who lives in Colombia with access to cocaine and you have another friend who works for a Mexican television network. You know through your friend that TV semi-tractor trailers (usually 5 or 6) are driving from Mexico to Colombia with equipment to film an important football/soccer match. After the big game, they will return. You pay all concerned: The contact in Colombia and the friend who works at the TV station. You know that TV trucks are not stopped by customs between Colombia and Mexico so you're comfortable that the dope won't go missing. 

You pay your Colombian for the narcotics product - let's say that it's 1,000 kg (one metric ton). The friend from the network pays drivers and grips to look the other way and in due time, 1,000 kg of cocaine arrives in Guadalajara where you stash it. 

Word leaks out that you have 1,000 kg of cocaine hidden locally and want to sell it in the USA. The Guadalajara Plaza staff from Cártel de Jalisco Nueva Generación (CJNG) meets with you and says that's fine but you need to pay the tax since drugs are flowing through their turf.  In exchange for the payment, they will keep the police (who are on their payroll) off your back and will allow the shipment to go through. 
CJNG has considerable overhead to protect the drug trade in Guadalajara and you, the trafficker, need to pay for that. There is also the issue of who the boss is. In this case, El Mencho loses face if people run drugs through his area without paying for the privilege.
At this point, you have several options. You have made a sizable investment in cocaine ($1,500 per kilo for a total investment of $1.5 million) and another couple hundred thousand dollars to secure shipment to Guadalajara. However, now your cocaine is worth $13,000 per kilo, and so long as it's not stolen by other narcos (or the police, which is sort of the same thing), you are sitting on $13 million in value. 

Comparative value by location:
1 kilogram of cocaine
  • Australia - $230K per kg.
  • Austria - $100K per kg.
  • France - $80K per kg.
  • USA - $60K per kg.
  • Netherlands - $50 per kg.
By moving your kilogram of cocaine across the US/Mexican border, you move its value from $13K per kilogram to $60K. You're now faced with a problem, having paid the tax to the Guadalajara Plaza/CJNG. Your investment needs to be smuggled into the US. You're not a cartel member, you're an independent - and it's allowed in Mexico so long as you pay the tax. Naturally it would be safer for you if you were affiliated with a "roof" to keep the rain off, but we're offering a different scenario, one that's not often considered.

If you want to make sure that your ton of cocaine arrives at the Port of Long Beach, San Antonio, or Bayonne, New Jersey, you can get a hold of one of a few cartel members and they will sell you load insurance. Normally it's 10% by weight, so you're going to give up 100 kg of cocaine with a US street value of $600,000 to get it through US Border security. They take the product (10% of total) not cash, and deliver your 900 kg of cocaine across the border.

Congratulations. You've turned a roughly $2.5 million investment (including transportation charges) into $54 million in value. All you need to do is to distribute it (which has overhead involved) and bring the money back across the border to Mexico (which has overhead involved) and you're home free!

However, without a distribution network and the capacity to move money back home, you're likely to sell the load short, for say, $50 million, payable in Guadalajara.

I've seen this happen, and it's not uncommon. There are pitfalls between the point of sale in Colombia and the arrival of a ton of cocaine in New Jersey, and you could lose that $2.5 million you invested. THAT is why heroin is so much better for narcos than cocaine. There are no precursor chemicals to worry about, no lab to blow up (as with meth) and you haven't invested $2.5 million that you could lose. Your overhead consists of subsistence level farmers who grow and tap the poppies for sap, a few chemicals and transportation. Instead of risking $2.5 million to make $50 million, you can risk less than $20K to make $140K per kg (US street price). A ton of heroin is the same weight as a ton of cocaine and it's worth 4x as much on the street.

That's the situation.


30 comments:

  1. How much has the increase in opiate pain med prescription generated increased demand for heroin from those addicted to the former, I wonder?

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    1. I have no idea.

      My sense is that they're apples and oranges. Heroin scratches that opioid itch (pun intended) in a very different way than Oxys would.

      There may be some who read this blog who can offer some thoughts that are more on point to that then I can.

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    2. My county has become the heroin overdose capital of Upstate NY. The death rate for heroin overdoses was triple that of Buffalo and Rochester. We're not sure exactly why, but we know that prescriptions for opiate based pain killers Has been increasing for years. This may have developed a taste for the real thing.

      WASHINGTON (March 14, 2014) —George Washington University (GW) researchers report dramatic increases in prescriptions of opioid analgesics, such as Percocet, Vicodin, oxycodone and Dilaudid, during U.S. emergency department visits from 2001 to 2010. These findings were not explained by higher visit rates for painful conditions, which only increased modestly during the time period. This report was published today in the journal Academic Emergency Medicine.

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    3. I don't doubt that those doctors who prescribe these drugs have been offered financial incentives by the big pharmas for doing so.

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    4. Yes, prescriptions for opiates are through the roof. I don't know why or what drama has caused the exponential use of opiates medicinally.

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  2. And how would this process change if the US legalized heroin or cocaine? Other than having official "offices" south of the boarder, everything else getting to the offices seems like it would be the same for Mexico.

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    1. If you make cocaine, meth and heroin legal and the government provides it to the population free, on demand, you should also look at expanding welfare and medical benefits to those people you're doping - and do it for alcoholics as well. You can argue that we do that now, and you wouldn't be wrong (except for the free/legal aspect).

      I think that welfare recipients need to pass drug tests to receive taxpayer hand-outs but I'm conservative that way. Offer treatment options but a check requires a clean test.

      Yeah, I know. I'm not very progressive.

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    2. A better solution than what we now have.

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  3. Oxy abuse in the upper classes is one of the leading causes of heroin addiction. Younger peeps are swiping there parents oxy and when that runs out, all you need is one high school kid to introduce heroin at the behest of a wiley drug pusher. Bingo - you have another 50 - 100 customers. There is no kid on earth who doesn't believe that he won't get hooked. To them it's just another weekend fun time.

    Heroin abuse in the upper strata of society is also rampant and most of them started with Oxy and its cousins. As it became harder to acquire Oxy from their doctor, heroin became the lower cost alternative.

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    1. I don't know that it's a lower cost alternative so much that the supply is there. Oxys came from drug manufacturers and I don't even think that they make it anymore. You can get opiates on prescription. Don't get me wrong. I don't think that the Oxy label is on them anymore.

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  4. That, LL, is a very unfortunate situation. Thanks for the clear breakdown.

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    1. The problem we have now is all around us. Nothing was done during the ObamaNation other than having Barack commute the sentences of violent negro crack dealers and return them to the inner cities to sell more dope. Great idea, Barack.

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  5. 164k people killed in Mexico since 07? That must be for all reasons, not just drug trade, but still, that's the equivalent of a good sized city, up in smoke! Amazing.

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    1. No, those are drug trade numbers, and they are low. I'd put the number at roughly twice that. That number is the number of BODIES that were discovered (including beheadings) there are at least 100,000 more that either were buried, burned, dissolved in lye pits, fed to fish, etc.

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  6. I had college buddies who made quite a nice living doing similar things with marijuana.

    In the early to late 1970's, everybody smoked pot in the area I grew up in.

    One of the people bringing it in was an older gentleman and his wife, who drove a big Cadillac pulling a spotless Airstream trailer. They passed themselves off as snowbirds, and would move TONS of pot between Arizona, New Mexico, and the Chicago area. Being older, and very respectable looking, they never got hassled or stopped by the police or border patrol.

    They were genuinely nice people, and were among the earliest people around who touted cannabis for medical use.

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    1. I'm opposed to narcotics of all sorts. It's part of who I am. I see nothing good coming out of them. The medical use of marijuana may be legit for cancer patients, but I see it as an excuse for potheads to get high.

      Human beings like doing that to themselves, always have and always will. Anything that stimulates the pleasure centers, right? But street narcotics are so heavily addictive that once on - you are essentially a ward of the state either in prison or sucking down welfare and medical costs. And they rely on people who work to support them. I object to that.

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  7. That explains so much. Funny how, in this high-tech pharm age, we're in the same boat as we were 150 years ago, with the same old narcotics being prevalent. Might as well go natural, though, right?

    I avoid Chicago like the plague, and usually make it a point to piss on the ground at some point when passing through Illinois, but it bugs me that my kids have been spending time in Chicago recently, where it's more dangerous than Tijuana and Juarez combined. Meanwhile, our Marine private can't venture into Tijuana or he'll be court-martialed.

    Speaking of the Marine, he's wrapping up field work for infantry training at Pendleton, and it sounds like it's mostly involving getting vehicles unstuck from the massive mud pits and trying to not drown while sleeping during bivouacs. Hypothermia city in SoCal. Who'd a thunk it?

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    1. The infantry training school is arduous. Tell the Grunt's grunt that we all wish the best for him in his new career.

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    2. Thank you, LL. I passed that along (being on the phone now on his Sunday off), and he appreciated it very much coming from a Navy SEAL. He has a lot of respect for the Coronado crowd, of course, as we all do.

      He also (sheepishly) admits that his platoon passed a milestone yesterday when one of their guys picked up a tranny at a club in Oceanside and started making out in her/his car before discovery. "Marines may be more stupid than I thought," he says. I'm sure he wouldn't want me passing that along. But, seriously, they are doing some serious shit. The live-fire room clearing training seems pretty serious to me. It'll be more serious when he's doing it in Afghanistan. Thank God, that won't happen until after the inauguration.

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    3. The USN uses a killing house in La Posta (inland San Diego County) that is pretty cool. Sometimes the Force Recon guys came and played with us. Better to learn under controlled conditions than in combat. Watch the doors and corners, Grunt.

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    4. I was in Thailand with an FBI Special Agent (and others) once and the FBI fell in love with a lady boy on Patpong Street (to be fair, he was well into his cups). He was swapping spit and feeling above the equator when we pulled them apart -- after taking pictures. I saw him about three years ago and smiled. He had a few semi-kind words for me and I reminded him that I still had the photos from Soi Cowboy. It shut him up and made him friendlier in an FBI sort of way.

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    5. Parting shot to the Grunt's grunt. We used "Simunition" in CQB so the targets shot back at those making entry. They will cycle in an MP-5. And they hurt when you're hit and leave a bruise. Naturally it's not as bad as getting hit by a bullet. After pollywog trainees do a couple of entries against paper targets loaded with simunition, they're always shocked when they go through a door and the targets are people who shoot them. I don't know if USMC is doing that but they need to.

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    6. Not familiar with La Posta, and I can't be sure of the CQB level they're training these guys. After all, this is rifleman/sniper/infantry school but NOT Force Recon stuff, though he aspires to that eventually. I hope they're using simunition and active targets, but he's only talked about storming the cinder block living rooms with combinations of shotguns, M4s and M9 Berettas loaded with live lead, working on teamwork and not shooting each other, mostly.

      Love your story about the FBI-SA. I didn't know the Bureau could be that friendly, even in Thailand! LMAO!

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    7. As I recall the cinder block buildings were area 25 on Camp Pendleton. They were building a second area (some time ago). There is also the wooden building combat town in the Pendleton complex. That's very different from a CQB killing house.

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  8. Yep, the true body count down there is in the 300-400K range since 07... And totally ignored north of the border by the current administration (wonder who their supplier is???).

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    1. I'm sure that they rely on somebody in USGOV to manage their needs.

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  9. Hell Dust!

    The sloppy trainer on his right foot kept slipping off because the lace was missing and the movement was agitating the blister on his heel. Mickey was cold in just the long sleeved t shirt he’d worn for the past 3 days and he felt edgy. His mouth was dry and the half bottle of tepid water couldn’t sate the baked feeling in his mouth. He kept his head down as he walked furtively through the streets, watching his right foot curl up on every tread in an attempt to keep his shoe on his foot. His breathing was hard . He couldn’t seem to get enough air into his lungs but he could smell the grime and disgrace seeping from his clothes. His mobile buzzed in his jeans pocket and as he pulled it out he saw on the screen it was Chantelle. Not what he was hoping for. He pressed decline. It rang again and he continued to ignore it. The texts shortly followed.

    “Answer your phone Mickey.”

    “ Answer me or I’ll come find u ”

    Again, the buzz reverberated in his pocket. Fuck.

    “What? what’s your deal Chan, you fuckin’ stalker.” The fingers of his free hand subconsciously stroked his back pocket, feeling the crumpled paper inside. Safe.

    “Where’s my money, Mickey? WHERE’S MY MONEY?!” She screamed down the phone.

    He wanted to reach through the mobile and grab her by the throat. The pitch in her voice was enough to send a saint into a sociopathic killing spree.

    “ Shut your whore mouth. I ‘aint got your money.”

    Mickey could feel the sweat prickling his forehead like tiny insect bites and his nose was running. He wiped it on his sleeve and his forearm felt tender from the bruising.

    Chantelle was crying now; a mixture of despair and anger coming through her sobs. He felt the background sensation of self loathing but not enough to do the right thing.

    “Babe. I swear I don’t have it. You’ve put it somewhere. Stop givin’ me grief girl, don’t need the drama.”

    She called him a lying prick and hung up. He stared at the screen and gave a derisive snort. Fuck her. What was the point? What was the point in anything, it all turns to shit anyway.

    He turned down Jacko’s alley without looking up from the gum splattered pavement. His body knew where to go without thinking about it. Big H was already there, leaning his bulk against the graffitied door. Mickey walked up and fist bumped him and slid his scrawny length beside him, kicking the burnt foil and debris away from his feet as he reached into his back pocket and handed over the moolah; the fistful of twenty’s he’d taken earlier from Chantelle’s vintage sugar bowl. The one that she’d kept as an heirloom from her Gran and used as a savings pot. Sugar money.

    Big H was already heating up.

    Mickey rolled up his sleeve. The faded green ink of Chantelle’s name wrapped around his forearm, intermixed with scabs and contusions, bore the sickening representation of his reality. He leaned forward and pulled the other lace from his trainer, catching the sullied string on the eyelets as he yanked it in haste with trembling fingers. All that mattered now was the freedom. Freedom and borrowing some fun from the future.

    JS

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    1. Thus writes JS, art philosopher.

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    2. "Grime and Disgrace" That's the name of the Ska band I was trying to remember seeing down at the Chapultapec! Thanks, Jules! :)

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