It's a recession - in the illegal drugs market

[0utrider]

WASHINGTON – Here's a recession that's welcome.
The criminal enterprises that sell illegal drugs are seeing less profit, and some are losing money, according to the U.N. Office on Drugs and Crime.
Drug abuse is down dramatically in the United States. It is flat around the world for the third year in a row.
What happened?
The war on drugs has shifted to a public health focus toward users, and a private business focus toward sellers.
Drug trafficking is a business, with weaknesses that can be exploited more effectively than waging war with ever-greater firepower against drug kingpins.
"It may not be the best thing to arrest the most people. It may not be the best thing to focus brute force on them," said John P. Walters, director of the White House Office of National Drug Control Policy. "We're getting better indicators of how their business is working, and once we know how they are doing business, now can we disrupt that."
"It's new – the most promising thing I've seen in 20 years of this effort," he said.
Along the border
Mexican drug gangs continue to commit horrific violence along the border as they seek to hold territory and profits. But much of this violence is a reaction to the success of strategies designed to disrupt and collapse weak spots in their business systems, said Mexican Attorney General Eduardo Medina-Mora Icaza.
"The violence is not a reflection of the strength of these groups. Quite the opposite," Mr. Medina-Mora said last week.
"It reflects the reduction in their total income. ... They have less cash, so they are participating in more types of crime. Extortion, kidnapping."
Local, national and international laws restricting the sale of chemicals used to manufacture the drugs have proved surprisingly effective in disrupting the traffic in methamphetamines, or crystal meth, an illegal stimulant. Local governments were the first to curb sales of cold medicines containing ephedrine and pseudoephedrine, followed in 2006 by national legislation.
The drug makers moved manufacturing to Mexico. As of January, however, Mexico has banned imports of these chemicals.
Pharmaceutical companies in Mexico have until the end of the year to deplete their remaining supplies.
As a result of these disruptions, the U.S. Drug Enforcement Administration reports the price of methamphetamines increased 73 percent last year, while average purity has dropped by 31 percent.
Cocaine disruption
Cocaine supply has also been disrupted. Prices on the street jumped 44 percent last year. Drug traffickers sent an estimated 912 metric tons of cocaine to the U.S. market via Mexico last year, but a third of that was seized before it reached buyers. The seizure target for the current year is 40 percent.
Globally, the U.N. Office of Drugs and Crime estimates half of all cocaine produced is now being intercepted.
Businesslike thinking
Like any business, however, drug traffickers respond to adversity. Mr. Walters said traffickers now tend to operate in networks, where different enterprises handle different parts of the business. One group might take care of the manufacturing, another finances, and another gun running. If one enterprise is rolled up by law enforcement, the rest are likely to stay alive.
Mr. Medina-Mora is particularly concerned about the networks running guns and cash into Mexico from the United States.
More than 12,000 gun dealers do business along the border, primarily in Arizona and Texas. A Mexican government study estimates as many as 2,000 guns a day enter Mexico from the United States.
The U.S. Justice Department has moved resources into this fight in the last few months, and Mexican law enforcement now has access to e-Trace, the U.S. registry of firearms sales.
Weapons count
Mr. Walters wants to know the scope of the problem – how many weapons are moving across the border – to get a sense of how many weapons seizures it will take to damage the traffickers.
"If I'm at 2 percent, that's just the cost of doing business. Do I have to hit them at 30 percent, 40 percent, to take down this enterprise?" he asked.
Banking regulations limit traffickers' access to the U.S. financial system, so most of their revenues move in bricks of cash back to Mexico. The amount is estimated at anywhere between $10 billion and $20 billion.
Not much cash
Not much of this cash is seized, however. Mr. Walters admits, "We've never had an instance where we forced the collapse of a major segment of the drug business [because] we've gone after the money."
So there's lots of work left to do. Still, U.S. workplace drug tests are coming back positive at the lowest rates since 1988, according to the White House drug policy office. And the U.S. government's measure of drug abuse among young people is down 24 percent since 2001.
For drug dealers, that's a recession.WASHINGTON – Here's a recession that's welcome.
The criminal enterprises that sell illegal drugs are seeing less profit, and some are losing money, according to the U.N. Office on Drugs and Crime.
Drug abuse is down dramatically in the United States. It is flat around the world for the third year in a row.
What happened?
The war on drugs has shifted to a public health focus toward users, and a private business focus toward sellers.
Drug trafficking is a business, with weaknesses that can be exploited more effectively than waging war with ever-greater firepower against drug kingpins.
"It may not be the best thing to arrest the most people. It may not be the best thing to focus brute force on them," said John P. Walters, director of the White House Office of National Drug Control Policy. "We're getting better indicators of how their business is working, and once we know how they are doing business, now can we disrupt that."
"It's new – the most promising thing I've seen in 20 years of this effort," he said.
Along the border
Mexican drug gangs continue to commit horrific violence along the border as they seek to hold territory and profits. But much of this violence is a reaction to the success of strategies designed to disrupt and collapse weak spots in their business systems, said Mexican Attorney General Eduardo Medina-Mora Icaza.
"The violence is not a reflection of the strength of these groups. Quite the opposite," Mr. Medina-Mora said last week.
"It reflects the reduction in their total income. ... They have less cash, so they are participating in more types of crime. Extortion, kidnapping."
Local, national and international laws restricting the sale of chemicals used to manufacture the drugs have proved surprisingly effective in disrupting the traffic in methamphetamines, or crystal meth, an illegal stimulant. Local governments were the first to curb sales of cold medicines containing ephedrine and pseudoephedrine, followed in 2006 by national legislation.
The drug makers moved manufacturing to Mexico. As of January, however, Mexico has banned imports of these chemicals.
Pharmaceutical companies in Mexico have until the end of the year to deplete their remaining supplies.
As a result of these disruptions, the U.S. Drug Enforcement Administration reports the price of methamphetamines increased 73 percent last year, while average purity has dropped by 31 percent.
Cocaine disruption
Cocaine supply has also been disrupted. Prices on the street jumped 44 percent last year. Drug traffickers sent an estimated 912 metric tons of cocaine to the U.S. market via Mexico last year, but a third of that was seized before it reached buyers. The seizure target for the current year is 40 percent.
Globally, the U.N. Office of Drugs and Crime estimates half of all cocaine produced is now being intercepted.
Businesslike thinking
Like any business, however, drug traffickers respond to adversity. Mr. Walters said traffickers now tend to operate in networks, where different enterprises handle different parts of the business. One group might take care of the manufacturing, another finances, and another gun running. If one enterprise is rolled up by law enforcement, the rest are likely to stay alive.
Mr. Medina-Mora is particularly concerned about the networks running guns and cash into Mexico from the United States.
More than 12,000 gun dealers do business along the border, primarily in Arizona and Texas. A Mexican government study estimates as many as 2,000 guns a day enter Mexico from the United States.
The U.S. Justice Department has moved resources into this fight in the last few months, and Mexican law enforcement now has access to e-Trace, the U.S. registry of firearms sales.
Weapons count
Mr. Walters wants to know the scope of the problem – how many weapons are moving across the border – to get a sense of how many weapons seizures it will take to damage the traffickers.
"If I'm at 2 percent, that's just the cost of doing business. Do I have to hit them at 30 percent, 40 percent, to take down this enterprise?" he asked.
Banking regulations limit traffickers' access to the U.S. financial system, so most of their revenues move in bricks of cash back to Mexico. The amount is estimated at anywhere between $10 billion and $20 billion.
Not much cash
Not much of this cash is seized, however. Mr. Walters admits, "We've never had an instance where we forced the collapse of a major segment of the drug business [because] we've gone after the money."
So there's lots of work left to do. Still, U.S. workplace drug tests are coming back positive at the lowest rates since 1988, according to the White House drug policy office. And the U.S. government's measure of drug abuse among young people is down 24 percent since 2001.
For drug dealers, that's a recession.

http://www.dallasnews.com/sharedcont...1.39aa1c4.html

Reputation Comments on this post:

Very interesting artical. Thanks for posting.

[cra$h]

whole world's goin to shit....

[lulz]

This has way, way more to do with the collapsing value of the dollar than anything else.

Here's a graph compiled by the Rand corporation, showing how the price of cocaine has steadily fallen in the US over the last two decades (adjusted for inflation):



http://blog.washingtonpost.com/fact-...hortage_1.html

The gradually falling price is a result of more and more cocaine reaching the American market every year. Are we supposed to believe that in the last four or five years they've magically transformed this trend?

I'm sure the DHS has made smuggling somewhat harder, but more importantly the value of the dollar has fallen so much that it's cutting into profits, and drug exporters only care about the bottom line. Pretty shocking indicator of how much the dollar has fallen - America is no longer the largest economy in the world in terms of GDP, the EU became number one last week. http://www.reuters.com/article/idUSL1491971920080314

Reputation Comments on this post:

Very informative post