You would think that with a an inflation rate edging 30%, with a crime rate offering no relief, with oil prices for the Venezuela variety looking to 20 USD as a goal, with worries about how to pay for all the food that needs to be imported next year, and more, much more worries, chavismo would be very busy to have time for sensationalism. Think again.

Apparently chavismo has time on its hands to do or say stupid things.

The mall that would not be.

Chavez in his Alo Presidente decided to expropriate a soon to be inaugurated mall not too far from downtown Caracas. The San Bernardino Sambil was designed in the hope of revitalizing a depressed area and in the hope of bringing much needed safe retail space to the Western area of Caracas. It is all built on private capital and in such a location it has got to have had all the legally required building permits. It has absolutely no strategic value for the country, and even the lame excuse of Chavez to stop the growth of traffic downtown is ridiculous because in fact it could actually help by allowing denizens of the West not to trek to the malls of the East anymore. Besides the mall is already built, it has been under construction for two years and it is a little bit hypocrite that suddenly Chavez cares about these urbanism issues when he has been unable to force his underlings to even pick up the trash of Caracas on time.

That it was a whim of Chavez is clear in that he does not know what he will be do with the San Bernardino mall "a hospital, an university or a school". As if retail space could easily be transformed in the type of space that such organizations require. The San Bernardino mall could only be transformed in office space if you really wanted to void its original function. It is probably cheaper to tear down most of the mall and build a hospital than to condition the mall into a hospital.

But I am not going to go into the whims of Chavez desperately trying to get attention to garner his voters for his latest referendum (he announces that he should get at least the total he got in 2006, as if the last two years of his rule had been that stellar with inflation and crime! Unbelievable!) What I can tell you for sure is that this is a very serious blow to private investment in Venezuela. No one anymore will undertake a major building project, from mall, to housing, to factories, knowing now that a single presidential whim can void years of effort. Or does anyone thing that with oil at 30 USD Chavez is going to pay the investors of the Sambil a just compensation?

With such stupid moves the economic crisis next year is suddenly appearing at getting much worse than expected.

The seditious editorial.

In my preceding post I commented on the latest Washington Post editorial on Venezuela. Apparently that editorial is bringing enough unease in the government that it brought foreign minister Maduro to make one of the most stupid declarations of his career, already rich in nincompooperies. According to Maduro the Washington Post is the organism that transmits to Venezuelan opposition the lines it should use during the campaign against the in vita aeternam reelection.

That is right, the Washington Post, the paper of Watergate, is now the chosen conduit of a Republican administration to give orders to the Venezuelan opposition. Apparently this blogger is not the only one who every morning reads the Post to make sure he knows what to write in his blog.

One does not know if we should cry or laugh at this.

Apparently the portion that irked Maduro so much is this one which I reproduce in full:

The problem is that elections in Venezuela are no longer free and fair. Mr. Chávez has turned national television into a state propaganda outlet, and the Miami Herald reported Sunday that the government spent tens of millions of dollars to buy votes in the recent state and local elections. The state election authority, which is controlled by Mr. Chávez's loyalists, delayed the announcement of his defeat in last year's referendum; reliable sources say the president conceded only after he was told by military commanders that they would not put down protests against a falsified result. The official results, showing the margin of Mr. Chávez's loss, have not been released.

Now, what part of the above is untrue?

I know that Maduro is paid to make a fool of himself, but if there was an occasion to remain silent it was that one. Now more people than ever are going to read that editorial and learn more than what they wanted to learn about Venezuela. I love it!!!! I do not know who advises Maduro (I am not sure his English is good enough to read the WaPo himself) but that person ill advised poor Nicolas who would have been better off doing his late Xmas shopping.

-The end-

OK, now I have the final proof that Chavez knows he lost the election: he pulled out of his ass a new currency for the ALBA countries. A brilliant way to distract political analysts by bringing in economic analysts!

Of course, this will never work. The problem is not the currency of these countries, it that they produce nothing of significant value for the rest of the world, except for Venezuela's oil. In fact I suspect that Correa of Ecuador is trying to use this as a way to escape the dollarization of Ecuador which is a road block in his wishes to seize power the way Chavez did. After all, how can you create a punitive currency exchange system like Chavez did if your money is the US dollar? Of course Chavez loves the idea because Venezuela will be subsidizing it and with that he hopes to control further his client states, a group of miserly country that is not able to contribute to any currency scheme anywhere: Cuba, Honduras, Dominica, Nicaragua and Cuba (Ecuador is just an observer, the only one that could contribute anything if it were not so busy ruining its international credit by not willing to pay its debts). And in this time of crisis as the Moscow stock market gyrates wildly, he invites visiting Medvedev to join in.

I do not know if I should cry or laugh at this latest silliness of Chavez. No one in his entourage is going to tell him that he does not have the money for that toy? Does he know, I mean as in biblically know if necessary, that oil prices are around 50 USD?

Bonus point if you read this far. If Thanksgiving turkey weighs you down on the couch you can read the adventures of Sean Penn in Venezuela and Cuba and see how skilfully he has been manipulated to promote the agenda of Chavez and Cuba. Fascinating reading if you can stomach so much self serving prose that belongs way more to a blog than the pages of any publication. Then again The Nation is kind of a blog, is it not?

-The end-

[Updated] Haiman El Troudi, our director of national economy, affectionately known in this blog as Haiman el Trou-du-cul ('true duh kuh') for his naiveté and for ideologically simplistic mental make up had provided us yesterday with one of those rare but precious comic reliefs from the government. Well, let's say that I decided to laugh at his antics because in reality we should cry over such people directing the future of our wallets....

The guy yesterday was at some sort of event where he declared some of the following:

The IMF is the cause of everything and if it were not for Venezuela getting out of the IMF on time we would be in trouble. Well, the first part might be partially true although I fail to see what the IMF has to do with the fall of Lehman Brothers and the Fanie/Fredie combo. However the second part is just ridiculous. Countries with a steady income without the need to do much work about it have no need of the IMF to begin with. The last time Venezuela had dealings of any magnitude with the IMF was during the Caldera years when oil price went for a while below the 10 USD per barrel. In fact Chavez carried for a long time a very small debt with the IMF that he could have paid long ago but that he paid when it was politically convenient for him. Since at least 2003 Venezuela has had absolutely no need whatsoever of the IMF financial assistance though its budgetary advice should have been sought as we will learn soon at our expense.

So what is the goal of El Trou-du-cul with such blatant misinformation? Endear himself to the great leader before this one uses him as a scape goat when the going gets rough. After all El Trou-du-cul has been in office long enough to have figured out what was coming our way and taken some preliminary measures. But ideology has a way to put blinders on people that should know much better.

He stated that Venezuela today is safe from the crisis because of its financial policies, including currency exchange control, and that we refused FTA like treaties, we are in better shape and we can weather the crisis. Strictly on a numerological approach some might agree with El Trou-du cul. Except that dear Haiman has no concept that the only reason that a country has to get into some FTA arrangement is that it has manufactured goods and agricultural surpluses that it needs to place in the US or European markets. Venezuela only produces oil, a fungible by excellence that will always find a client, trade barrier or not. Venezuela has nothing to sell otherwise, not even tourism. In fact, Venezuela could have allowed itself the luxury to have a protectionist economy and today instead of the 40 billion USD in reserves that Trou-du-cul claims we have, we could easily have two or three times that amount and be called by Washington with their hat in hand to help them solve the crisis. Imagine Chavez buying a US bank "in solidarity with the financial world crisis"!!!

He added, for good measure, that the third world countries demanded that the IMF be dissolved and that tall debt should erased. Just like that, as if you had a bad mortgage, because people obliged these countries to go into debt and to join the IMF once they were not able to pay them. Ah! You gotta love that! Socialist irresponsibility! Capitalists forced me to go into debt, in the US or in Venezuela, same difference, and thus it is not my fault that my credit cards are maxed!

To be of such bad faith reflects either ignorance or ideological "gringolas" or both. Astounding! The only charitable thing to say about it is that Haiman knows the Supremo is going to get after his ass when he realizes the coffers are emptying fast.

He told Venezuelans who have USD accounts in the US to repatriate their funds to Venezuela because here their money will be safe. I mean, this is so unbelievably ridiculous that one must wonder if Trou-du-cul was high on something. Then again he was attending some international "socialist" bash and maybe the hot air generated by these international nincompoops leeching on Venezuelan funds got to him. How should we start with this one? That people specialized in fraud, extortion, kidnapping and the like in Venezuela will have better knowledge of your worth? Or by a dry calculation of how much you will be worth once you bring your money back?

Yours truly from his years as a student in the US kept a little saving account where today he has 10,000 USD. Just in case he wants to get a nice vacation or something; it is far from being a nest egg of any value. Well, let's see what would happen in one year were I to leave my money there or bring it back to Venezuela.

In the US. I somewhat manage to place it at 5%. I get at the end 10,500. Inflation is 6%. In reality at constant dollars I get 9870 at the end. I lost in fact 130 USD. Normal for a time of crisis.

In Venezuela. I bring the money back and I have now 21,500 VB. I place them at 17%. I get 25,155 at the end of the year. But inflation has been at least 25% so in real purchasing power I have now 18,866. At current exchange rate that means 8,775 USD. My net loss is 1,225 USD when in fact it would have been only 130 USD had I left my money in a secured FDIC. And if in the mean time there has been a devaluation, say a modest 2.15 to 2.5, my real USD value is now 7,546 for a net loss of 2,454 USD!!!!!!!!!!!!!!!

And this guy is the one that controls the nation's balance sheets? Who is he kidding?

Oh dear! I am afraid that with such Mickey Mouse characters at the helm our economic crisis will end up being much worse than what we anticipated at first!!!! If you ever needed a reason to send your savings away at any cost out, Haiman gave it to you yesterday!

Update: I have to add the words of another of those luminaries that preside over the Venezuelan mess. The name is Victor Alvarez and he used to be one of the many ministers that went through the musical chairs that are Chavez ministerial cabinet. Well, yesterday at that same silly socialist event he said without any shame that the nationalization of CANTV and EDC/EAS were ways into which Venezuela had protected itself against the crisis. That if it were not for the nationalization of these companies (along SIDOR and CEMEX) their stock values would have plummeted.

Where to start, dear, oh dear? That the poor deluded man confuses finances and production? That he might not be aware that viable production concerns are significantly less affected than the financial sector? That even if nationalized these companies lost value anyway, in case Venezuela decide to sell them tomorrow?

Or should we just point out to him that the noticeable decrease in service quality by CANTV (the telecom) in one year has been noteworthy and that since EDC/EAS (Caracas electric utility) has been taken over by the government the power outages have become more frequent, and last longer? Should we let him know that the nationalization and pillaging of these companies for political purposes cost them a much greater loss of value than any Wall Street Crash?

No. Let's not waste time enlightening such individual as Victor Alvarez, because what he said, he said it in the hope that his words will reach Chavez ears like a balm and thus effect his return to the ministry.

-The end-

I think that the world crisis is now here to stay and thus it might be time to speculate a little bit on how it will affect Venezuela. But before the leftist peanut gallery cheers even though the lion has not been skinned or even killed, it is important to remember that capitalism has always managed to reinvent itself because, simply put, it is the system that best fit basic human nature: the wish to improve your lot and the lot of your family based on your work and your values. Socio-communism has always failed because it has always tried to impose values on people without allowing people to exert at least some of their own values on the side. Thus as a first conclusion to this post, no matter what Chavez is saying these days, history is against him. If you disagree with this paragraph then you are off the hook, stop here and go read other blogs.

The Venezuelan reality today

We import most of our food. We are in no position to develop food production fast for several reasons:
Many of the candidates that have the skills or the desire to develop food production in large scale are either out of the country or have nothing to do anymore with food production.
The countryside is in chaos, from crime to landless peasants, to peasants with land but nothing else, skills or finances or even a property certificate, not forgetting the wreck of our road system and the unaccountable delays of rail road building.
Any new development in the next two years will be tied to credit that has become this past month scarce and expensive.
As a consequence, even though food imports will lower some in the next months it will be due to lower consumption of the people more than any significant production increase of food stuff.

We import most of our manufactured items. Comparable situation as in agriculture. We have the workers, we have the managers, but we do not have the finances nor the will to produce. Today the industrial park of Venezuela is roughly half of what it was in 1999. Even if many were willing to reopen they need to retool, they need credit, they need a decent work environment with less harassment from the state. And forget about foreign investors interested in Venezuela for the time being: they are either out of cash or scared of Chavez, or both.
As a consequence Venezuela imports will continue as long as consumption levels and income persist. But they will go down and will not recover as long as other economic equilibrium does not return, in particular as long as Venezuela does not produce at least 80% of the food it eats. We can expect even a decrease of local production before production starts again. The commerce and financial sectors which have driven the growth these past few years upon their ability to import whatever will be now unable to sustain themselves as they cannot rely on internal production to pick up where imports drop.

The government has spending out of control. Chavismo has spend liberally on social programs, some good but with too many dead ends financed for electoral purposes. In addition for political reasons sustained by Chavez ego Venezuela supports Cuba and props Bolivia, Nicaragua and helps a few other people. And I will not discuss the cost of corruption, mismanagement and inefficiency.
At 80 USD a barrel it is clear that this level of spending cannot be sustained over time. The current crisis has accelerated the decrease of oil prices and today the 80 USD level has been reached, which implies an even lower price for Venezuelan crude. If to this you add that all reports point out to a stalled oil production in Venezuela and a lack of financial muscle to expand production, it is clear that the government is facing a very serious crisis, no matter how many denials we are hearing these recent days. Obviously nobody has told Chavez the truth yet.

What Venezuela has

In face of the coming crisis we still do have some advantages, no matter what lack of reserves we might have.

The follies of Chavez have somewhat isolated us from world markets. In a way that is good as we are not as affected as the major financial places, but is is also bad because at a time when we will need financing to overcome the errors of these past 10 years there will be no fresh capital available to us, except perhaps for oil production, and with lots of strings attached.

We do have oil. Even at 80 USD a barrel and even with lower production we will have a steady source of income that can help us weather with reasonable sacrifices a world recession.

We have many budgetary options to improve our financial balances. For example an increase in the price of gas at the level of production cost in Venezuela, an increase in the price of electricity at the level of cost will free enough funds for the government to improve quickly public transportation and electrical services, and thus productivity of the population and business. There might be even enough funds released to offset some of the social cuts that are unavoidable. And of course we can call off all of these expensive weapons purchases since with a world recession and oil below 80 USD it is unlikely that anyone will be in any position to invade us for the next 3-4 years.

In other words with a medium quality management of the country we could avoid a deep recession and get a more solid economy in 2 to 5 years. But we will not avoid some rough waters ahead.

What will happen

First we must agree on a likely outcome to the present world crisis. Personally I think that a global depression will be avoided. However a recession is now unavoidable. How strong and how long it will be it is any one's guess. However we can assume that unless there is major Middle East blow up or a nuclear conflict in India/Pakistan, the price of oil will not go back to 100 for at least a couple of years. I do not think it will go much lower than 80. As low as 60 perhaps at the end of the Northern winter 2009 if this one is mild. But oil is disappearing and the general tendency is for up, up and up until alternative energies becomes wide spread.

On a practical level for Venezuela this means 2 years of oil at 70-80 average, and little access to credit. International credit will be more difficult to get now as investors will be much more conservative and less credit will be available. An economy like Venezuela with its corruption, unpredictability and mismanagement is an awful credit candidate in the new financial world. At least whatever oil we produce we will be able to sell, which is not the case of the trinkets produced by China or India.

What will be the possible scenarios?

Chavez gets told and decides to take care of Venezuela. The November result is 10 states for the opposition while his budget plans sink with the crisis. Chavez decides to 1) cut 70% of his foreign aid, 2) start an increase in gas prices, 3) cut spending to about half of his misiones, retaining only those on health, subsidized food for the poor and some educational program 4) devalue the currency from 2.15 to 3 VB to 1 USD, 5) start a protectionist program to reboot Venezuelan production. Inflation will by hard for a few months but social programs targeted to the very poor only will mitigate the shock some and by the end of 2009 we might be looking toward much lower inflation and more industrial production. That the opposition directs 10 states will force enough political compromise and social peace for such a transition plan. For 2010 a recovery of oil prices, an improved agricultural production and a controlled spending restart general economic growth in Venezuela.

Yet, this probably mean that Chavez will accept an expiration date of 2012 and will work on improving things enough to have his chosen successor elected.
ODDS: less than 5%

Chavez tries to escape reality but still does take some measures. No matter what the November results are, Chavez decides to continue supporting Cuba and Bolivia even if it is at lower levels. And he does not renounce his lifelong reelection scheme. He needs money for that. Understanding that in Venezuela increasing further taxes means the end of private sector he settles for postponing weapons purchases, a devaluation and an increase in gas prices, betting that oil prices will recover faster than they will. If inflation reaches 50% he might even think he can survive that with a few devaluated cash grants. And if oil prices return to 90 by spring 2009 he might apparently succeed. But none of the basic problems of the Venezuelan economy are solved and the crisis is just postponed making this one probably worse when it finally comes. In addition this allows for a mercurial Chavez that can go anytime against his already meager crisis control plan, undoing any good he might have done with a single speech or program.
Basically it will be a dangerous game between what the opposition gains, how the crisis develops, how Chavez popularity with the poor survives, what legal expedient he can manage to get his constitution changes. The consequence is a systematic instability as we have had these past ten years with unpredictable outcomes. Life at the edge but even more so.
ODDS: maybe 25%?

Chavez speaks loudly, blaming others, but changes nothing to his ways.
The reality is that Chavez will not stop from supporting Cuba which will ask even more money from Venezuela as it suffers from the world crisis: less tourists, you know....
The reality is that in ten years Chavez has made a new promise every Sunday and now he simply cannot stop making promises.
The reality is that he only cares about him retaining power forever; the rest is immaterial.
As such he will decide to believe that he can fudge his way out of the tight spot and that he can manage somehow to rush oil back to 100 a barrel. Sure, he might still devaluate some, he might suspend the purchase of some weapons, he might cut off Ecuador and the tiny Caribbean islands. But that will not solve the problem at all. Two possible outcomes:

Chavez rushes forward and radicalizes the country. Taxes go up, the private sector is further nationalized in an orgy of Venezuelan companies takeover without the compensations accorded to foreign companies. Workers are sent to occupy industries, not to take them over but to have them forget for a while about the other problems of the country. A referendum to "address the crisis" is quickly called pretending that by more centralization, the repartition of private sector and the participation of workers in state companies the crisis is solved. In that referendum of course he tries to get his reelection ad infinitum. It can all end in some "fujimorazo" on any lame excuse.

Chavez waits to react to the crisis and keeps his current radicalization pace. The crisis hits us anyway and is felt no matter what isolated measures are undertaken. Social unrest grows. Two things can then happen: 1) fearful chavistas decide to remove Chavez from office before things reach a no-return point or 2) Chavez decides to radicalize faster, as above, but the momentum is lost, people now associate the crisis to Chavez and major civil unrest results. In such conditions if he is tempted by a "fujimorazo" it will be a bloodshed.
ODDS for each one: 30-40% each, but probably more for the first option

So there you have, Venezuela News and Views Crystal Ball. The answers in less than a year.

-The end-

I have lived the start of the crisis while I was traveling and paid little attention to it. First, there was nothing I could do about. Second, who knows when I will be able to indulge myself in leisure travel again. And third I know that Venezuela will be hit particularly hard, so why worry in advance? Thus my surprise returning to see that irresponsible of Chavez saying that we are safe, "blindado" is the word he used, an expression that can be added as of now to the catalogue of famous last words.

Anyway, I will not bore further the readers of this blog with my own version of the coming Venezuelan crisis since the editorial of Veneconomy says it all clear and loud. As such it is worth reposting here in its integrity:

The crisis that originated in the north has not only become entrenched in the United States, but has also extended worldwide.

A brief explanation of the origin of this crisis would be that successive US governments allowed the economy to be sustained for too long on consumption and not on investment that generates productive capacity. So, in order to promote consumption, policies based on excessively low interest rates, surplus liquidity, and a lack of supervision and transparency were promoted, and, above all, excesses were permitted in the financial system.

The present crisis in the United States is so deep-rooted that the rescue package approved last week by Congress will only suffice to avoid a collapse of the financial system, but not the recession that is in the making in the United States, Europe, Latin America, and the rest of the world.

Spokespersons of the Venezuelan Government -starting with the President himself- cut sorry figures when they insist on denying the obvious and are not only bent on making political hay out of the crisis to further their obsolete political project but extol their financial “strategies,” saying that they are preventing the country from being affected by the crisis. That is a cock-and-bull story.

The fact is that, in Venezuela, Hugo Chávez has implemented the same wrong-headed policy based on consumption and not on investment in production that was implemented in the north, including low interest rates, excess liquidity, and a lack of supervision and transparency in the handling of public and private funds. In short, the local model is the same as the model used in the north. The only difference is that the means of support of Venezuela’s model is the price of oil. And now the times of high prices have come to an end.

According to unofficial data, on Friday, October 3, the price of Venezuelan oil had dropped to $83/bbl; and according to a Merrill Lynch report, the price of WTI will fall to $50/bbl by mid-2009, which means that the price of Venezuelan barrel would be around $40. Even with the barrel of oil at $80, the Chávez administration would no longer be able to continue with its oil-diplomacy and its system of handouts via the “missions” or social programs, and it would also find it uphill work to maintain its astronomical level of public spending.

Faced with this situation, the government has two alternatives: either to maintain spending at current levels, which would lead to hyperinflation, or cut back spending and unleash a sudden contraction of the economy, both of which would lead inevitably to an unprecedented economic crisis in Venezuela.

At the risk of adding insult to injury, VenEconomy insists that, if, in this past decade, the government had respected the rule of law, promoted investment, encouraged production, and generated productive employment, today, the country would be in a position to cope with this world recession.

So, instead of boasting about successes that are no more than mirages, the Chávez administration should be designing corrective measures to mitigate the crisis, which is already hitting Venezuelans.

-The end-

One wonderful thing about Venezuela lately is that I do not need to write much on economics. After all it has become quite clear that things are not going well, and that it is plastered on all papers around the world, thus I need not to convince anyone.

Doubt me?

Should I mention that outside of oil industry private investment in Venezuela is lower than what some Central American countries receive? That the perception of mess, disorder and insecurity coupled to corruption had made Venezuela as one of the least desirable places where to invest?

And what about the increasing cost of doing business in Venezuela? Should we include inflation as a business cost? Heck, in May it was a stunning 3.2% in spite of an inflation control agenda set up earlier this year which is on its way to halve the growth rate. But when you look at the numbers from May 2007 to May 2008 we are told, with the already "improved" numbers of the Central Bank, that the wealthier part of the country suffered a total inflation of 29.6% and that the poorer part of the country suffered an inflation of 35.9%. That is right, in this socialistic wonderful revolution the poor suffer more than the rich. You gotta love the irony! And how come? Because food inflation was 47.3% in one year and of course lower incomes are the ones who spend relatively the most on food. Chavismo has dilapidated our oil fortune in massive food plans like Mercal and PDVAL, in food subsidies, in massive importations, and all for nothing.

No wonder that last night Chavez did again a marathon cadena to offer yet again a new economical plan. The only positive highlight would be a flexibilization of CADIVI requirements for some people (which probably will fire up corruption). The other alleged highlight was the elimination of the business transaction tax, but that effect has already been integrated in inflation and folks are not going to lower prices for that, much less after the disastrous May number. Unfortunately all the negatives remained, such as only helping business linked with the state: the same cronies who have been sucking as leeches from the state for the past 3 years will be the ones allowed in and we have seen how efficient they were, at leeching, not producing. Neither were words to offer people to have a little bit more security with their property. Electoral band aids all, and of dubious value. Expect no improvement from this plan except perhaps a little bit more stuff on the shelves, but at higher prices, and only until November....

No, the reasons why the economy keeps floundering are mismanagement and total lack of understanding of which are the factors that move the economy of a country. For that you can listen to Miguel's interview at NPR which will tell you, through the example of the stupid gasoline subsidy, why things are not going well in Venezuela, and why if if it were not for a barrel at 130 we would have collapsed long ago. If the government would have at least the courage the sell gas at cost, then maybe we would have a more realistic price structure and a better chance to bring down inflation at more reasonable figures.

All in all, do I need to translate this Weil cartoon today?



-The end-

This Sunday morning is full of surprises. Now I come across the latest opus of Rory Carroll at the Guardian. It is a long review of Chavez tenure and a meditation on whether Chavez lost his political touch, whether he can come back to his past electoral glories. We can guess that Rory is skeptical.

He has a rather very accurate view on how things unfolded in Venezuela under Chavez, a praiseworthy thing considering that the Guardian represents a certain democratic left that supported and forgave Chavez for only too long. That probably explains some minor errors and can account for this major one when he parrots the "massive demonstrations" that supposedly returned Chavez to office in 2002. Demonstrations existed but were not massive, and even dismal when compared to the truly massive one that took place against Chavez two days earlier. I suppose he is of the school of "the revolution shall not been televised", those that are not aware of the extensive rebuttal of that propaganda video. Nevertheless Rory Carroll has been long enough in Venezuela and now he does not buy it, so we can let him indulge in some revolutionary romanticism which after the December referendum failure is now just that, romanticism.

One interesting aspect of his article is that he finally talks about his feelings and thoughts that famous day when on a Santa Fe beach Chavez used him to attack the West. I had defended him then, embarrassed that "mi presidente" would be so rude and vulgar with Rory Carroll. Apparently Rory was less upset than I was for him (or at least he is protecting any meager access he still has to chavismo). He dryly, very English humor like, writes:

In the absence of US marines storming the beach, a reporter for a British newspaper could fill in as the villain. Nothing personal.

Precious.

A must read article.

-The end-

The latest opus of NYT's Simon Romero could just be another run of the mill set of observations of all that is wrong in Chavez's Venezuela, as we are now getting used to see everywhere: the world knows and it is catching up, so we can be pleased, those of us who have been writing such criticism for half a decade. However what makes this article worth noting is that it writes straight that all in Venezuela is about Chavez amassing more power, not about the country long term interests. With the added bonus that even some high profile Chavez sycophants agree with it.

The title of the article says it all: "Chávez Seizes Greater Economic Power". Mas claro no canta un gallo. This complemented with a lapidary single sentence paragraph:

One significant measure is foreign investment, which has hit record levels in several other Latin American countries but has fallen in Venezuela.

Next we can read these numbers that Romero refers too, where we learn that Peru, with a comparable population and not much oil receives TEN times more foreign investment than Venezuela. Not to mention that now many studies rank Venezuela close to last, if not last, in parameters such as transparency and climate for business. Whatever Chavez is doing he is not attracting real business investors, the real ones, those that do create real jobs. The only investors Chavez attracts are folks that want to have a colonial type access to raw materials, such as China Cuba and Iran. Tanto nadar para ahogarse a la orilla.

There is thus no need to discuss further this article, the sustained point is clear. But there is another very nice moment in it. See, Simom Romero, God bless him, is still trying to find some objective way to present his articles (as I noted in my previous "press review" on the Reyes laptop.) I do not know why he bothers at this point but it does pay some dividends though, not necessarily those that chavismo will expect.

His "balance" here was presenting Mark Weisbrot point of view. Mark Weisbrot is a paid lobbyist of Chavez in the US, which is an OK job over there. Sometimes when I get tired of blogging I just wish that I could find a sponsor myself to at least treat me to a couple of days at the beach :)

Mark Weisbrot, a Washington-based economist who is broadly supportive of Mr. Chávez’s economic policies, estimates that the public sector accounts for less than a third of the economy even after the latest nationalization wave. “The present government is so far mainly just reversing some of the privatization that took place in the 1990s,” Mr. Weisbrot said.

Let's see. First, how come that Mr. Romero does not quote some minister to defend such policies? That answer I know: the government ONLY speaks to supportive media, in Venezuela and abroad, the type of media that leave their declarations up without any "balance" from somebody else included. Thus poor Simon must resort to paid Chavez lobbyist for an "official" point of view.

Second, considering that Weisbrot is talking to the NYT and not to some local rag, look at his argument, or rather lack of argument: the government is mainly reversing previous privatizations; the public sector accounts of less than a third.

Either Mr. Weisbrot is an ignoramus, or he is a liar, your choice. The "both" is also allowed in the poll.

I am not going to offend the intelligence of the reader by rebating the painfully obvious silliness and lies of Weisbrot. Pena ajena. No, it is much more interesting to observe the very lameness of the Weisbrot argument, that even a long term noted supporter of Chavez cannot come up with a better argument such as "comprehensive energy policy" "comprehensive means to allow for subsidized housing" "the comprehensive tools to ensure access to food to the lowest population sectors".

See, even Mr. Weisbrot knows very well what the truth is: Chavez need to control EVERYTHING and he needs desperately new patronage systems to shore up his popularity, such as doubling or trebling the payroll of the newly nationalized industries, and the hell with notions of competence and competitiveness. He knows that so well that he does not have the heart to come up with a better justification which he knows will be trashed soon by Chavez next actions. So Mr. Weisbrot cut his losses and went straight to the lameness that he knows will be his lot from now on. After all, he is paid the same for brilliance or for stupidity.

--- --- --- --- --- --- --- --- --- ---

PS: translation of Venezuela saying used in this article: clearer does not sing the rooster; so much swimming just to drown reaching shore; embarrassed for others missteps.

-The end-

Ah! One good thing about chavismo is that there is never a dull moment and even 10 years into office we can still be astounded by the latest "barbaridad".

It all started this week end through a few articles form El Nacional (subscription only). In one article we learned that out of 97 Venezuelan embassies only 15 are served by professional diplomats, that is, trained staff with a career record which justifies them to become ambassador at some point. In other words 84% of Venezuelan embassies are directed by a political appointee of some chargé d'affaires that might or might not be a political employee. Now, let's not be more Catholic than the Pope here: an embassy is always a nice reward for a big political benefactor and the US is certainly a country used to such type of rewards. However no matter what political appointee is sent to the Court of St. James's, the second in command is always a career diplomat.

So, what is a career diplomat? A legal spy, something invented long ago to allow countries to do reasonable spying on each other. Overtime embassies and diplomacy became also an extension of the local chamber of commerce wanting to buy or place goods. Thus the training is easy to guess: languages, table manners, ability to mimic native customs, a certain ability to do market surveys, demonstrated capacity to write complete reports, and many more, but one above all: professional discretion. This last one is not learned quickly and that is why there is such a thing as career diplomats: they are the ones that can pass out drunk if needed for the sake of their country without spilling a single bean.

OK, I did exaggerate some for effect but I trust the point is clear: someone fresh out from some ministry post or some army barrack IS NOT a born diplomat. Which is exactly what is happening in Venezuela today. You are a Chavez minister and your failure was particularly galling? no problem, you are dismissed during an Alo Presidente and a few weeks after your name is proposed for the embassy at Podunkonia. There your only real obligation will be to promote the glories of the Bolivarian revolution, create a groupie association to welcome Chavez were he ever to visit Podunkonia, identify possible recipients of payments to ensure votes at the UN that favor Chavez and such activities. Not for you of course to hold boring meetings where trade is promoted: this is done directly in Caracas with the local embassies, once juicy commissions are decided though discrete intermediaries.

In short, since you are not put there to defend Venezuela interests but to defend Chavez interests alone, you need no stinking diploma to justify your entry into the diplomatic career. Chavismo through the voice of Ali Rodriguez was not embarrassed to confirm this (1). From that interview published in EL Nacional last Monday we can read the following pearls:

- The wanna-be diplomats are sent to Cuba to study what they need for their career. [since when is Castro's Cuba a reference to make diplomats?]

- "Diplomacy has to be politics" "To diplomacy to project internal politics". [Quite clear, no? Venezuelan diplomats role is to promote the image of Chaevz since all that is done inside Venezuela is to promote the image of Chavez]

- "A college degree does not make a diplomat" [we know, we know, devotion to Chavez is the ONLY credential required if you want to get a state job in Venezuela]

- "The need for academics and of career diplomats is a silly prejudice" [Well, I suppose that we should thank him for his frankness]

- "[Cuba] has more embassies in Africa than Europe" [a new meaning for 'mine is bigger than yours']

Of course the results of such a diplomatic corps eventually become a disaster for the country who holds such values. We have two examples kindly provided as soon as these El Nacional articles were published.

Angela Merkel, German chancellor, a victim of the Stasi, had the misfortune to state an elemental truth: Chavez was not the voice, the spokesperson of South America. Of course, Yo, El Supremo was deeply offended in his silly pride and could not resist himself to insult Merkel publicly in the most outrageous terms we can think of. If Chavez had someone like me working for him he would have received the following memo:

Dear Comandante Presidente

The words of the Merkel woman must be countered. We suggest that you stress her links with the devil president of the US. You should suggest that she is too close from Bush to have any valid opinion as to whom is a leader anywhere in the world.

Under no circumstances mention her name in the same sentence as the words Nazi, Hitler, or fascism: this would only result in Germans rallying behind her and a possible reaction of support from the European Union.

Patria, Socialismo O Muerte.

Obviously either no one was able to write such a memorandum or worse, was unwilling to mail it to Chavez. Thus sure enough Merkel benefited from a supportive opinion at home and the president of the EU went one further deploring all forms of populism in particular the leftist brand now seen in Latin America. (2)

That the president of the EU is right now held by a Portuguese, Jose Barroso, is a delicious coincidence as I present the second evidence as to why such organization of foreign policy can only result in trouble and public humiliation for Venezuela. With great fanfare the government has announced a deal to buy lots of food from tiny Portugal in exchange for oil. For this, the prime minister of Portugal, Socrates, made an official visit to sign for the juicy contracts. In all of this charade nobody in the diplomatic corps of Venezuela seems to have noticed how humiliating was the show.

See, first we should explain how come that after 10 years of glorious bolibanana revolution we need to knock Portugal's door to buy its agricultural surplus. And I am not talking olive oil or canned fish here, we are talking pasta! soy oil! powdered milk! Things that we would never associate a priori as great Portuguese exports!!!!!

Second we would like to know how come Venezuela is spending its oil money in food that, after a brief transit, will end up in the sewers instead of buying development high technology items such as trains from Germany. With those imports Portugal will get more money to finance its agro-industrial complex (since it has one and apparently Venezuela as a lesser one than Portugal) while Venezuela will get food which will last, well, you know, a few hours. With these exports, bought to private capitalistic companies in Portugal, that country might be able to produce even more food while in Venezuela private food producers will face yet a new unfair, subsidized competitor and thus lose money, and thus invest even less in Venezuelan agricultural production and thus eventually force the government to import yet more food.

Hard working, business savvy Portuguese will be laughing all the way to the bank... But in Venezuela the government is clueless about its admission of failed agricultural policies when a small country, half the people of Venezuela, a fraction of Venezuela area, is able to rescue it form some of its food shortages! I suppose that among the chavista hardcore some will find the news wonderful, but I am pretty sure that among the very few remaining chavista with some sort of a brain there must be a realization that we used to depend on the local Portuguese grocer for our food and now we must ALSO depend on the country itself....... that has got to be sobering for a few folks.

But I suppose that I should not be so hard on the present Venezuelan diplomacy: after all they did manage the deal with Portugal. Just as they are scouring all around the globe for the food not produced at home. Why Socrates allowed himself to be convinced to go to Caracas to sign is puzzling as many other countries sell food to Chavez without accepting to have their picture taken next to Chavez. So score one for the cheap political acts turned diplomats through a Cuban crash course.

And score all sorts of minuses for them in helping Chavez turning oil into human waste.


--- --- --- --- --- --- --- ---

1) Ali Rodriguez is a former guerilla who never lost his extreme leftist views, even though he projected moderation through his speech ways. He got them fulfilled under Chavez. After serving in many critical positions (read: those where money circulated) he ended up as ambassador to Cuba where he was also treated for diverse ills. Considering that the Havana job is today the main foreign post for Venezuela, where Chaevz dispatched his own brother for years, you know that Ali Rodriguez knows of all subventions, legal or illegal, all stolen monies, all secret accounts, etc... Ali Rodriguez is someone who will end up in jail if Chavez eventually leaves office, even if he never stole a coin for himself.

2) Mirjam Gehrke at DW of Germany even writes "To compare Angela Merkel to Adolf Hitler was disrespectful and ignorant. The reference was so stupid in fact, that the chancellor herself wouldn't respond to it." Yeah well, they are all finding out eventually how ignorant Chavez is. They could have saved lots of time had they be reading this blog :)


-The end-

Since Chavez is in office, April 30 or May first has received a new ritual: Chavez announces, or rather in his munificence grants us, the new minimum wage. Yesterday was no exception as he decreed that the new wage would be 30% higher than the current one. Considering that last year official inflation was above 20% and that the one this year is headed toward a possible 30%, clearly this is not great improvement.... Which does not stop the government to proclaim that it is the highest minimum wage in LatAm. The highest , that is, at the official exchange rate: if you take the real exchange rate it is a weak average. The official would be 371 USD a month, the real one is a much more modest 240 something............

But the real perversion is not the amount of the minimum wage, it is the long term effects of systematic knee jerk increases on the wage spread among Venezuelan workers over the last ten years. What happens is that the folks who make more than the minimum wage do get an increase too, but not a 30%. Eventually there is a compression of the wage mass toward the bottom half where there is less and less incentive for workers to seek personal betterment since any effort they make will be swallowed by a Chavez decree. The result is that the wage distribution in Venezuela tends to be more and more a J curve where the really high wages get everyday higher. In Venezuela the spread of wages has become even more obscene in governmental sector than private sector!!! High wages in government (courts, executive) are now routinely 20 to 80 times the minimum wage, something that would be totally unacceptable in Western democracies, and even the US... Venezuelan socialism at work, with the future consequences easy to predict.

-The end-