Parsing the DOJ's Drug Report

As to the causes of cocaine shortages, we see lots of uncertainty. It seems to be primarily a combination of rising demand in Europe diverting the supply and government policies in Mexico, which led to some enormous busts in recent months. 

There's also some interesting data surrounding meth in the United States. Crackdowns on ephedrine imports in Mexico have forced that nation's cartels to shift production abroad, principally to South America and California. That fits with all the recent reports about Mexicans being caught in Argentina, Australia, Italy, Central America, and Peru, and it's also a pretty clear illustration of the law of unintended consequences: the Mexican government responsibly cracks down on ephedrine imports to tamp down on meth production, which forces the cartels abroad, which makes doing away with them all the more complicated. 

The whole report is here.