I don’t know why today I feel like rambling. I guess I feel
like the country must feel. Venezuela
has become a hodge podge of nutiness and inconsistencies where irrationality
has taken over. But somehow irrationality sells. While the esteemed autocratic
leader is in China praising a communism that no longer exists, in the country
that to me has come to really give new meaning to the term “savage
capitalism” (even if I am still fascinated by this movie of
what must be XXth. Century socialism, which Chavez is trying to improve on) the
country seems to be riding a wave of unreality, simply riding on high oil
But everything else seems to be a mess. Despite billions of dollars poured into
development banks that seem to get more things accomplished abroad, even if very little, or in
cooperatives that do not have the size or the know how to get anything done,
the country’s economic statististics are truly absurd.
Yes, you have all heard
about that wonderful GDP growth in the first half of the year, but if it takes
an increase of 83.5% in Government spending in order to obtain 9% growth,
something is really rotten somewhere. and Holland is a long way from here. Just
imagine, in the first six month of the year, the Government increased spending
by 83.5%, but revenues were only up by 40%. Curiously, taxes derived from oil
dropped 20%, which is simply due the changes in royalties and the fact that believe
it or not, PDVSA has yet to pay taxes this year, despite the continued pressure
by SENIAT to do so. Hats off Vielma Mora! You are fighting against the powers
that be and you will likely lose, but I have to give you credit for your effort
against a Government you support. Rosales should keep you on board when he wins.
Meanwhile, in the middle of this oil windfall, the fiscal deficit reached in
the first half 1% of GDP. Thus, the voracity of the Chavez administration is unparalleled
in our history and watch out should oil drop by a mere 5% as this Government
will simply have no way of surviving it (And neither will we!). Meanwhile, imports reached an obscene
US$ 7.8 billion in the second quarter alone, with the country on track to reaching
US$ 30 billion in imports for 2006, as Mercal buys anything it needs abroad and
I suspect CADIVI gives money to some unreal things. Yes, when you drink that
nice imported wine or ride your friend’s BMW (I assume few readers actually own
one) it is all purchased with those wonderful CADIVI dollars, as is all of that
sugar which is now imported, despite the Chavez Government having spent
billions, yes, billions in developing the sugar sector in another Castro-led
rip off of the Venezuelan treasury. But much like Fidel’s efforts with sugar in
the 60’s, we are now net importers thanks to the Government’s efficiency.
But of course, non traditional exports are just flat. In fact, in 1998 these
exports were roughly at the same level as last year and what is being projected
for 2006 which is around US$ 5.2 billion. Thus, you may wonder where all the
development money is? I wish I knew, but I do see a lot newfound wealth around
and it makes me wonder. Of course, the Government may claim this is a victory,
since in 1998 Venezuela
had 12,000 productive companies and only 6,000 are left. Talk about salvage
But the Government continues to operate like it does not matter. Chavez makes
announcements from China,
much like those he made a year ago, or two years ago, but remember that late
last year the Chinese Ambassador said that country had yet to buy a barrel of
oil from Venezuela.
Or how about the 18 tankers to be purchased from Argentina announced in 2004? Or CVG
Telecom taking over 10% of the telecom market in its first year? That was what,
three years ago?
But yesterday the Government dropped mortgage rates for the third time in a
year, so that the cheapest housing pays less than six percent and the next
level, less than 10%, while inflation will reach 14-16%. Cool, no? Of course,
such incongruences are noticed and last week a bank issued BolŪvar notes at 9%
backed by a dollar denominated note. This is simply borrowing Bolivars to wait
until the next devaluation which is coming, unless oil goes above 100 bucks,
which looks unlikely. Oil never goes up when the world economies are slwoing down.
The rich get richer and Chavez in China or Angola, or as todayís
joke went, he will make an unexpected call in Caracas to talk to Barreto,
except that Barreto is in London at his concert, eating the nice Chinese food
that he can’t get in Caracas. But Chavez took care to explain (nobody asked!)
that he was not in China
looking for votes for the UN. Of course not, that vote is now guaranteed after
all of the purchases made with the Chinese capitalists.
Meanwhile daily protests continue around the country.
Sometimes the issue is murder, sometimes housing, or other times it is a strike
at the Iranian tractor factory, as those Iranian capitalists donít want to
increase salaries, because profits would simply evaporate. Profits? Profits!
These guys must be nuts, In fact, they are, coming to Venezuela to
build tractors just to be friendly to Chavez. This is another interesting experiment
on defending sovereignty: Venezuela
put up most of the money, buys the tractors and supplies cheap labor and the
company is run by Iranians. You have to love to the revolution!
And speaking of profits, the Government said it will buy up
to 51% of all heavy crude operations at a cost of at least US$ 2 billion, also
to defend sovereignty and such crap (pardon
my French). So now Venezuela
will be a heaven for heavy oil investors: 33% royalties, 50% income taxes and
the Government runs the project and has a majority. These terms are clearly
much better than those of the tar sands of Alberta,
1-16% royalty, 25% income tax and you own 100% of the project. Of course, you
have to deal with the political instability of Canada, as well as all those
engineers fired from PDVSA who live and work there for the competition, under
another ďdefend the sovereigntyĒ program.
But hey, crime and inflation are under control, the rise
must simply be that Chavistas keep better statistics. As for housing, we are
going to import houses from China,
I guess Fedex will bring them, in order to save money. They will come in the same
airplane with the iPods the CNE will give away to encourage new voters. Unfortunately,
the additional fingerprint machines tocounteract this and discourage voting will not come in the
same plane, as the order appears to be on hold. Shucks! Maybe we could have
gotten a wholesale deal!
Actually I wonder at which stage we lost the know how
to build housing given that we used to build yearly what the current Government builds
in four or five years.Maybe the Chinese will tell us!
But donít worry, things will be fine soon. Just think of the
amount of money saved by shutting down the golf courses. No more golf club
imports! We will re-export the clubs
already in the country. I guess more jets will leave the La Carlota airport
every Friday as the Chavistas go play golf in Aruba.
As it should be, they have electric cars there, not like in Country Club where
you exploit a caddy to carry your clubs.
But things are indeed better, as Manuel Rosales said, if it
is true that Chavez will visit Zulia soon, it is just about time. He hasnít been
seen there for quite a while and when he has shown up, it has always been
hopping in his helicopter. Chavez no longer walks among his people, the suit
may get dirty or the fancy watch stolen, or God forbid, someone may try to kill
him, like Mr. Danger, the CIA, the FBI or the MVR.
And yes, Rosales should remove that subliminal advertising,
like when he says that Chavez should get his shoes dirty. That is unfair. Chavez is
traveling in his modern Airbus. Everywhere he goes, a red carpet is laid out for him,
so there is no way that he can get his shoes dirty. This is a lie, subliminal
terrorism on the part of this right wing oligarch from Zulia state, that pretends to run against
him. For God’s sake, how can anyone trust him, he has ten kids, including triplets and a stable family life!
But rest assured, Chavez will win, because between now and the
December election, he will build enough virtual housing units to convince the same
virtual voters to vote for him. Except that four people will occupy each house, so multiply by four! And those my friend, are not afraid of any
fingerprint machines. They are as fearless, as they are virtual.