Venezuela: Another Marginal fx System?

February 11, 2015

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I waited until today to write about yesterday’s announcements about the “new” fx system, because we were promised for today some decrees relating to the rules that would oversee these supposedly new fx system.  But much like everything that has happened so far in 2015, there are new delays and who knows when these new rules will come out. And in any case, they may be irrelevant anyway, or to use a word that is en vogue, the details of the rule may be marginal to the whole subject and its future.

Maduro took three weeks in January traveling around the world begging for money. Then he took four days after coming back to give a speech in which he announced that “in the next few days” we would know the details about this newfangled, state of the art new system for doing what people have been doing for centuries: Exchanging one currency for another. But the few days for this complex task, took three weeks and it was not until yesterday that we heard some details details.

The new system has three parts. The first two are a rate for Cencoex (same name) of Bs. 6.3 (same number) per US$ and a rate for Sicad (same name) which will start at Bs. 12 (same number again) per US$. Thus, so far 66% of the “new” three part system is identical to what has been in place since April 2014.  In fact, it is so identical that even the percentages of foreign currency indicated by the Minister that will be sold in each market are practically the same as estimates of how foreign currency was distributed last year in the two systems.

And then there is the new and marginal third fx system, which will be called the Sistema Marginal de Divisas (SIMADI) (Marginal system for Foreign currency)

Really, you can’t make this stuff up.

Now, about the only thing we know about this “new” system for real is that it will have a price higher than the old Sicad 2 system and that it will be called SIMADI, which is the subject of numerous jokes including SIstema de MAduro y DIosdado.

The rest, is having to take at face value what the Minister of Finance and the President of the Central Bank said about it:

i) It will be a system subject to “market” forces. Free Floating.

ii) It will have no limitations or restrictions.

iii) It will operate via banks, brokers and exchange companies, but there will be a limit in the latter.

However, to participate in the “market”, the rules will be the same as for Sicad 2: You have to register, open an account in US$ in a bank in Venezuela and provide your last Venezuelan tax return.

Now, according to Maduro today, from 3-5% of all foreign currency will flow through this system. At today’s oil prices that is about US$ 1.5 billion at the top range of 5%. Of course, Merentes and Torres talked about “anyone” can sell in this market and that it would start “near” the parallel market rate and then go down. Yeah, everyone is waiting to sell…

Well, pardon me for being so skeptical. Let’s assume that the parallel rate is Bs. 200 (it has never reached that, but makes calculations easier). If the Government plans to sell only US$ 1.5 billion in this market during the whole year, that would take barely Bs. 300 billion out of the monetary liquidity which stands at Bs. 2 trillion today. That means, that only 15% of the monetary liquidity has to go to the SIMADI, in order to wipe out the US$ 1.5 billion. That is peanuts, more so, when M2 has been growing steadily at a rate of 65% per year, which means that another Bs. 300 billion would go into the system in just one quarter and a lot of it will also be looking to leave the country.

Why?

Easy, let’s look at the other side of the equation: Demand. There is lots of pent up demand, because essentially the parallel market has been illegal for the last four years. Many corporations refuse to participate if it is illegal, but now they have a way of doing it if its is legal, free-floating and unlimited. Additionally, given the shortages in the country, companies, people, will use this new market to obtain foreign currency, either to import, to complete supplies or raw materials to produce stuff in Venezuela or buy widgets to sell locally. Finally, the market has been dry lately,  savers, companies,  everyone with any sense of self-protection will look to take its savings abroad via this market at a a time of increasing political instability and uncertianity.

Given all this, I expect much more than 15% of the monetary liquidity to go to this market and at this time, it does not seem the Government is making an effort to have more foreign currency (by devaluing the other two rates), nor to reduce the deficit which is financed by money printing.

Thus, I can only conclude that this market is unlikely to be free, unlimited and market driven, for the simple reason that the Government does not want the rate to rise without control. And if it tries, it will eventually shut down the market, much like it did in 2010, as the parallel rate will drive inflation, no matter how marginal the Government wants you to believe it is.

As we say in Venezuela, we have seen this movie before, which means there will be limits, regulations, etc. and in the end the system will look a lot like Sicad 2, but at a higher price. Making it the same as that in place in most of 2014, but at a higher and controlled price.

And thus, truly marginal.

P.D. PDVSA issued a 2022 bond without telling the market, which it can use to supply the system. It is a US$ 3 billion issue, but its price will be around 34% at current levels, so that it could contribute US$ one billion to this market. I still think its not enough.


Venezuelan Government Flip Flops Between Pragmatism And Radicalism, But…

February 8, 2015

biceLines at a Government owned supermarket in the middle of Caracas, almost daily now

Some people have written to me, asking why I have been so quiet, when so much has been going on in Venezuela with the takeover of Farmatodo and Dia Dia and the jailing of its owners.The reason is simple, yes, there is a lot going on, but to me what happened to Farmatodo and Dia Dia is more of the same, going back to the takeover of the Coca Cola warehouse way back in 2003 and going thru the nationalization (and destruction) of Agroisleña, or the Dakazo, or so many takeovers, nationalizations and jailings that have taken place under the Chavismo Dictatorship.

After all, Chavismo took over Dia Dia, a company founded in 2005 only to serve the lower strata of the population, the sort of project the Government should back and promote and not destroy, which is all it is doing by taking it over. After all, it is merging it with the Abastos Bicentenario (and stealing its inventory) , which was created when the Government forcefully took a majority stake in Cativen and its Exito hypermarkets.

They have not been the same since and have lines as long or longer than those of the private sector.

Thus, there is really nothing much different happening with the events of the last few days or weeks. What is puzzling, and I don’t have the answer for it, is why Chavismo (or Maduro) takes this self-destruction route. If I knew, I would have written a post about it.

Because what the Government is doing is sending very mixed signals. On the one hand, it dollarizes airline tickets, airline cargo and talks about a new “market” (I doubt it!) for foreign currency at a higher price than Sicad 2, but on the other, Maduro keeps confronting, threatening and acting like a Dictator, despite the fact that his popularity is in the low teens, according to the latest polls.

So, what gives?

I don’t know. The Comandante Eterno used to do the same thing when things got tough, but he was Chávez and Maduro ain’t. So, either Maduro is getting bad advice or he is full of himself. Personally, I don’t think Maduro can last this way until the Parliamentary elections. He can last, but he will have to repress a lot of people in order to survive.

But we don’t even know whether Maduro is completely in charge or whether others are telling him what to do, including his wife Cilia.

But I am sorry to tell you, the Government is not acting as stupidly as many lead you to believe. To start, they got US 1.9 billion from the Dominican Republic, which purchased  its Petrocaribe debt at less than half price. Then Citgo sold US$ 1.5 billion in a 2022 bond at a yield to maturity with a coupon of 11.5% and borrowed an additional US$1 billion from banks by pledging terminals and its shares. Not bad, US$ 4.5 billion at the blink of an eye in Maduro’s coffers. Jamaica could do the same and then Maduro may decide to close his eyes and send the gold to London and problem solved for 2015. Yeap, just like that, we are thinking 2016 and not 2015.

Oil is a many splendored thing indeed! Except Venezuelans are in charge…

My guess is that Maduro is betting (hoping?) that oil bounces from here and PSUV can keep control of the National Assembly. A tough and balancing act, given that the country will only feel the under-50 oil prices in March and April. Lines could indeed be long by the time Easter week comes around.

Yes, they are likely to become longer…

But things are really paralyzed right now, as the private sector awaits a foreign exchange system that I don’t believe will be functioning before Easter. Yeap! Think about it. You need to change the Illicit Controls Bill to allow the new market to function. This is at least two weeks from the time of he proposal, since it has to be approved by the National Assembly. Then, you need to issue the new foreign exchange agreement between the Government and the Central Bank, which is just a decree, but it has to follow the the Bill approved by the Assembly. After that, you need to issue the regulations for the market to function. Given that in one week Venezuela and its Government will be paralyzed by the Carnival holidays, even Easter may seem optimistic for this indecisive Government.

Which in the end is the biggest handicap of the Maduro administration. It is not only indecisive, but it has no clear view that a really free floating fx system will be any better. Except someone has told them to stick with it. And they want to try it out, but not everyone agrees.

So, we enter a very uncertain period, with many surprises possible. It is truly uncertain territory with a very indecisive and flip flopping Government. But it is clear there is a short term strategy in place, hoping for the best in the long term. And it will likely fail, leading to uncertainty, chaos and social unrest.

Not a pretty picture…

 

 


The Maduro Dictatorship “Legalizes” Military Repression

January 29, 2015

Venezuela’s Constitution has an article that is very explicit and clear:

Artículo 68. Los ciudadanos y ciudadanas tienen derecho a manifestar, pacíficamente y sin armas, sin otros requisitos que los que establezca la ley.

Se prohíbe el uso de armas de fuego y sustancias tóxicas en el control de manifestaciones pacíficas. La ley regulará la actuación de los cuerpos policiales y de seguridad en el control del orden público.

Translated

Article 68: The citizens have the right to protest peacefully and without weapons, without any other requirements than those established by law.

The use of firearms and toxic substances in the control of peaceful demonstrations is forbidden. The law will regulate the conduct of police and security bodies in the control of public order.

The bold in the translation is mine. What the article says is very clear: People can protest and there are laws that limitwhat the police bad security bodies can do.

But the armed forces are not a security body and a law can only be approved by the National.

Despite this, the Minister of Defense Padrino Lopez (Yes, we have Godfather Lopez and Godgiven Cabello, go figure!) issued today this “resolution” (page 6):

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from the comfort of his office, entitled “Regulations for the behavior of the Bolivarian National Armed Forces acting in order to control public order, social peace and the coexistence of citizens in public meetings and protests”

These regulations clearly violate the Constitution, it is not a law, because the Minister of Defense does not approve laws, even if his name is Godfather and because according to the Venezuelan Constitution, the Armed Forces are not part of the security forces.

And it gets worse…

The Interamerican Commission on Human Rights has explicitly banned the use of the Armed Forces on matters of internal security, explicitly stating that the military should only participate when national security matters are involved.

And it gets even worse:

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The first part says: “The acting unit will warn the people that participate in a public meeting or protest about the progressive and differentiated use of force..

So, this “resolution” allows the use of force (!!) and explicitly violates the Constitution, allowing the Armed Forces to participate in the control of precisely what the Constitution bans them from doing…

And then it states that the armed forces should go to “extremes” not to use force against pregnant women, boys, girls, adolescents, older people,  people with special needs or other “vulnerable” people… Note it does not say they can not use force against them, just go to extremes not do so…after the extremes, repress…

But, hey! If you have to, you have to, use the force, that is what Dictatorships do after all…

Should I go on…the fascism goes on too…

ffaa3“The Armed Forces will have methods and means that will allow the equipment and permanent training of the military personnel for the progressive and differentiated use of force…and the use of force as situational punishment .

You have to love how clueless these guys are about what human rights are…or how fascist they are.,,

I could go on, but I would throw up. The Maduro Government just created the “legal” instrument to keep using the same force in repressing protests. Because once the Government begins getting less than US$ 50 per barrel, the “people” are going to be very pissed and force (no limits! It’s legal!) will be used..

There is nothing “disguised” about this Dictatorship…now that oil does not guarantee their survival, repression will. Or might?


Maduro Government Sends Wrong Signals To Investors

January 28, 2015

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It has now been a week since Maduro’s “announcements” and we have heard little about the supposed details of the new foreign exchange regime. It is as if the Government had no sense of the crisis that is coming, taking its time, Maduro traveling and not a single positive sign in the horizon.

This morning, I heard a conference call by a small country, in which its Minister of Finance and some representatives of its Central Bank participated. The presentation was concise, to the point, using numbers and then the whole thing was open to discussion. Very professional, very informative, it certainly improved my opinion about that country’s bonds.

This is in contrast with the attitude of the Venezuelan Government. Even when it had professionals handling the Government finances, Giordani set the tone that the Government would not meet with investors and markets should be surprised, not informed.

But now that the Government is in a crisis (and has no economics professionals), it continues with its attitude, not only not talking to investors, but sending the worst possible signals to them, at a time that the Government should be trying to reach out to markets.

But Chavismo thinks it is beyond that and that the market owes it something. Case in point is two transactions “revealed” this week by PDVSA and Citgo:

1) The stealth PDVSA 2022 bond

PDVSA has to publish before the 15th. of January a report on its consolidated debt. It did so this year and surprise, surprise, it turns out that PDVSA issued a new bond three months ago, without telling anyone about it…until now.

Yeap, in page 12 of the report, it says that on Oct. 28th. it issued US$ 3 billion of a bond with a 6% coupon and a maturity in the year 2022. The bond has not hit the markets yet, but the company’s debt did increase and investors took three months to find out about it. Not precisely a friendly gesture. In fact, it looks like this transaction was made in order to pay the maturity of the PDVSA 2014 issue. That is, PDVSA did not have all the money it needed to pay that issue.

Not a nice thing to do to investors.

2) The “fool old investors” Citgo issue and loan

Citgo Petroleum issued last year  a bond in the amount of US$ 650 million with a  coupon of 6.25% and at 100% of its face value. This bond had covenants (conditions) that limited that the company could issue more debt.

But last week we learned that Citgo is not only issuing new debt, but also issuing a loan. Except it is not Citgo Petroleum that is doing so, but Citgo Holdings, a newly  created (Did not exist on Dec. 31st) affiliate that now owns the shares of Citgo and some property that was transferred to it. The new bond and loan will be guaranteed with this property as well as 49% of the shares of Citgo.

Well, those holding the old Citgo bonds issued in 2014, found themselves losing close to ten points overnight when this was announced. The new notes are expected to yield more than the old ones. Investors must not be happy, they were essentially blindsided.

Thus, rather than trying to improve relations with investors at a time that the Government may need them, when and if there is a default, the Government takes the opposite road. It does not tell them what it is doing and it makes them lose money.

I would really like to listen in to these talks Maduro had in China, Saudi Arabia and the like in his last trip. I just wonder what is their attitude when they talk to those investors. If it is anything like the entitlement attitude they have with current bond investors, I don’t believe for a minute that Maduro got much in his trip.

And then they go and criticize capitalism…


Maduro’s Announcements: The Devil Sees Few Details

January 24, 2015

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After postponing his “announcements” for a while due to his Magical Mystery Tour, President Maduro finally had time to come back to Venezuela and give his also twice postponed State of the Union address, where we were supposed to hear his new “program” for the economy. In the end, there were few details on what he plans to do with the foreign exchange, while very specific plans to spend even more.

Maduro announced that he would keep a three tier foreign exchange system (Four if you include the black market, which will not necessarily disappear). This is clearly a negative, as it has failed over and over again, but Chavismo is stuck in this model. Here are the three parts of the new system:

-Food and medicines will be kept at Bs. 6.3 per US$. This is obviously a #FAIL, as the implicit exchange rate stands at Bs. 97 per US$ and the Government will devalue the other two rates to factors of even more than ten times this level, which opens up for corruption, arbitrage and smuggling to Colombia everything imported to Venezuela at this price.

-A second rate, lets call it Sicad, will merge the old Sicad 1 (Around Bs. 12 per US$) and Sicad 2 (Around Bs. 50 per US$) into a single auction mechanism. This is impossible to judge at this time. First, we don’t know the level, it could be Bs. 12, it could be Bs. 40 or whatever. Somehow, I think it will be closer to Bs. 12 than to Bs. 40, as President Maduro said yesterday that the oligarchy thought he was going to devalue to Bs. 40, but “he was driving them crazy”. Well, he is also driving himself deeply into a hole with his ignorance about these matters. In the end, for this rate, anything below Bs. 30-40 per US$ will do nothing to help in having more currency available overall, which should be the point of any new policy. Seems like a #FAIL, but until the Devil knows the details he will hold judgement and give the Government the benefit of the doubt.

-The final one, which got everyone excited is that the Government plans to have a legal parallel system in which the price will somewhat determined by the laws of supply and demand in which people, companies, brokers, the Public Bolsa can participate and supervised by the Governemnt.

Ummm, Where have I heard this before? Ahh! Yes! This is how Sicad 2 started, in the words of Rafael Ramirez, exactly one year ago and when implementation came around, it all became a Sitme-like system at a rate of Bs. 50 per US$ and subject to arbitrary criteria, unknown forces and preferential treatment. A waste of foreign currency in the end.

But let’s assume and suppose that it will be almost free, the Government will impose lots of rules and regulations. It will impose daily limits etc. Then, the current parallel market will not disappear, there will be four rates of exchange with the “Dolar Today” rate surviving. This would be a #FAIL.

Let us then assume that it will really be free, supply and demand, market forces and all of that. Will the current parallel exchange rate increase or decrease?

Here is what I think: Initially, just like when Sicad 2 was announced the rate will  go down. Because people truly think (and argue) that in a free market it will go down.

First of all, it will take a while to set up this system. From what the Government has said, it will be a swap (permuta)-like system involving bonds . (What is this fixation with involving bonds, whatever happened to currency trading using currencies?) But it so happens that currently local brokers can not hold dollar denominated bonds. Thus, the Securities Law needs to be changed. Then, the Government has to decide how the market will function, hours, the like. This could take at least two or three months to be implemented. The parallel exchange rate is likely to move up as people lose patience.

Then the market starts and this is where I have a few doubts that it will go down. How much money does the Government have to supply this “free” market? Given the shortage of currency, I don’t believe it has much. Additionally, there are many multinationals, that have not purchased a single dollar in the illegal market since May 2010. There were others that were not even buying then in the innocent belief that they would get their dollars at Bs. 4.3 per US$. Most of them in the face of a free and legal exchange will decide to repatriate at least some of the Monopoly money they have in Venezuela today. That is a lot of Monopoly money even at Bs. 200 per US$.

People argue that the cash held by some companies becomes peanuts at Bs. 200. It may be so. But the cash held by many people and many companies, which have found it impossible to get their money out of the country for almost five years, can become a lot of money.

Let me give you an example: Suppose the Government decides to sell US$ 2 billion at Bs. 150 (They will surely try to push the parallel rate down) right off the bat to “cool” off the market. At that price, this only suctions out of the system only 15% of M2 (Monetary Liquidity which is 2 trillion Bolivars today). Will the Government have or want to use another US$ 2 billion to keep it down at that time?

I doubt it.

Thus, the rate will go up.

Thus, I am skeptical of how well it will work, more so since the Government has to provide lots of foreign currency at the other two lower rates. But, while this legal and free system may not help solving the problem of fewer dollars and may exacerbate other problems like inflation, I would welcome and approve this system. That’s the way it should always be. Ask the Swiss.

If they do implement it would be an incredible irony and inconsistency that Chavismo destroyed Venezuela’s Capital markets in 2010, blaming them for the rate being at Bs. 8 per US in May 2010 and will now try to replicate that system, when the parallel rate is now over TWENTY times higher. Of course, there is no remorse or apology to those whose lives were destroyed, those that were jailed and those that lost their jobs. For Chavismo, it is always somebody else’s fault

But Maduro still thinks that there is something “modern” about the system he is planning to implement and that there is nothing less modern than controls. I actually wonder if he has realized that if there is legal and free system, then anyone importing at that rate can increase prices proportionately. What ever happened to controlling prices too?

But multinationals are likely worrying already about taking the loss from Bs. 50 to the new parallel market. Ouch!

The rest of the announcements did have specifics: Maduro plans to spend like a bandit and gave many specifics of new programs that add up to a significant fraction (6-7%?) of GDP. Go figure.

Maduro did not mention a single number of all the funding that he claims he obtained in the trip.

And given that 90 days ago Venezuela’s oil basket was close to US$ 80 per barrel, I wonder if a new economic plan will be needed at the time, since today’s cash flow is coming from those barrels sold three months ago. In April, it will be at a price below US$ 40 per barrel. And appealing to Maduro’s own speech: If God does not provide, who will he call upon to help? The pajarito*?

*Little bird


Hyperinflated Arepa Index part III

January 21, 2015

arepa

I was not planning to eat an arepa early in my visit to Caracas, but last night things did not work out and had a couple of arepas. Here is the record so far for the price of an arepa with queso de mano at my favorite arepera:

Nov. 17th. Bs 120

Dec. 7th. Bs. 156 Increase of 30% in three weeks

Jan. 21st. Bs. 178.6 increase of 14.7% in six weeks

Total increase 49.1% in nine weeks, I don’t even want to annualize it!

The optimists would say inflation is slowing down. I imagine a Government official would even make a plot and show it. For now I keep measuring it and it does not look pretty.

But, they are still delicious!


The Connection Between The Swiss Franc And The Bolívar

January 18, 2015

swiss

Last week, the Swiss National Bank (SNB) a truly independent Central Bank, made the surprising decision to stop the “peg” it had with the euro at 1.2 euros per Swiss Franc. Essentially, in 2011, the Swiss Franc was appreciating very fast with respect to other currencies, which makes Swiss industry less competitive, and the SNB decided to establish a form of exchange control. In some sense, Switzerland “joined” the European Monetary Union by agreeing to have its currency pegged to the euro.

Except that it did not work very well. As everyone expects some form of quantitative easing in the weeks ahead and some European may leave the Monetary Union, the Euro has been getting weaker against most currencies and in order to keep the peg, the SNB has been buying more and more euros, as nervous Europeans sought the safety of the Swiss Franc, as well as took advantage of the cheap interest rates for borrowing Swiss Francs. The topic also became a political issue, as a referendum was proposed (and defeated) by which the SNB would have had to increase the percentage of reserves it held in gold to 20%, as a way of protecting the value of the Swiss currency.

Additionally, the Swiss economy was healthier than the European ones, growing faster and attracting even more money to Switzerland. There was little room to use interest rates to influence this, as interest rates were already negative (and are more negative now). Thus, the peg was removed and this rattled a lot of things, as the Swiss Franc exchange rate went from 1.2 to the euro to one to one with the Euro overnight, as the Swiss Franc revalued 16.7% with respect to the Euro…in minutes.

First, it rattled speculators that were betting that the Swiss Franc would remain at the peg. It also rattled those that had borrowed in Swiss Francs and now owe more money due to its revaluation. And it rattled Swiss banks, many of which have property and investments outside of Switzerland, all of which will now have to register these properties and investments at the lower rate of exchange. But more importantly, it rattled Swiss industry, which will now find it harder to export (its main market) as well as seeing tourism diminished as it will be much more expensive for tourists to go to Switzerland.

And what is the connection between this and the Bolívar?

Simple, what the Swiss did was impose an artificial control on its foreign exchange markets in order to stop the revaluation of its currency, because it was bad for its industry. Except that the policy failed and the distortions became worse and worse as time went by. But rather than be afraid by not solving the problem and removing the control, the Swiss decided to swallow the bitter pill and let the currency float again. There will be pain now, but it will be eased in time. It would have been worse to keep the artificial policy on and wait a few years. This would have actually been bad for the Swiss Franc as it would have had even more euros in its balance sheet, some of which it would have had to invest in a currency that would be weaker and even in bonds that would change in currency in the future.

It is the reverse problem Venezuela has: It imposed controls to stop the currency from devaluing, but the effects are the same, distortions and future problems when and if the controls are removed. The point and the connection is that these type of controls have never worked and even the Swiss Central Bank made the mistake of imposing them with known consequences.

Some day the controls will be lifted in Venezuela and everything will be rattled for years to come. It used to be that a devaluation like that which will be necessary would benefit local production. Unfortunately, the destruction of local producers and manufacturers will make it difficult to have an impact right away. Years of distortions will take years of rebuilding, proving once again that such controls don’t work anywhere even in the short term. They did not work in Switzerland and do not work here.

And as a famous Venezuelan politician said (Gonzalo Barrios?): No somos suizos (We are not Swiss) implying we don’t do most things well. But in this case, both Central Banks erred, the Swiss were just capable of correcting their mistake.


An Example Of The Mood in Caracas

January 13, 2015

I am not in Caracas, but the mood of the people is very clear from this video at the Tiburones de La Guaira versus Tigres de Aragua playoff baseball game last night. A fan starts shouting against the Government and the regular cops (yellow shirts with cross) come to get him and take him out of the game:

The people start saying “¡Fuera!”¡ Fuera!” (Out!, out!). People throw beer and other stuff at the cops, but then in minute 0:59, people start shouting: ¡Y va a caer! ¡Y va a caer! Este Gobierno va a caer. (It’s going to fall, it’s going to fall, this Government is going to fall). Everybody joins and even if the heavily helmeted anti-riot cops show up (the ones with the bubble helmets in min 1:30 or so) they continue. At 2:15 people get mad again, the cops decide to leave. Yes, this is Caracas, but a few months ago, they would not have continued..The mood is turning ugly…

Looting of a drugstore in Maracaibo (including the fingerprint machines) here and looting of a truck here. And the arrival of chicken to a supermarket in Maracaibo here. (From the comments)

(Some people say that the fan that created the incident was not making anti-Government slogans, I am told by the friend who sent it and was there, that this is not true, but I am not sure it changes what happened anyway)


Venezuela Goes From Bizarre To Bizarro

January 10, 2015

The word bizarre is no longer enough to describe what has been going n in Venezuela in the last few days. As the country was expecting for the much needed economic measures to be announced, instead, President Maduro announces that he is going on a trip. As he leaves, the usual shortages seeing in the country in the last two years intensify to the level of being widespread with long lines everywhere.

The solution? In a country with the second highest homicide rate, the Government sends the military and the police to supermarkets and stores, as there are threats of looting reported by social media, while stores ban picture taking in their locales, under pressure by Government officials. This only increases tensions, as people are arrested for protesting and complaining in lines. Meanwhile, it turns out that Maduro took his family sightseeing to China on Government planes, which only irks people more.

As tensions rise, with the threat of social unrest quite real and explosive, Maduro does not return to Venezuela but continues to Teheran, where he made this statement, talking about Iranian pharmaceuticals, tourism between the two countries and saying that everything in Venezuela is normal and this is all the fault of the opposition trying to make a big deal out of nothing

This simply echoes what his Ministers have been saying in Caracas for days. The leader of the farce is the Minister for Feeding Carlos Osorio who went as far as saying that the lines are there because people have stuff to buy in the stores. Then why do they create a rule that people must have a Venezuelan ID card to buy stuff?

This is Osorio in a store trying to calm the people down, as you can see there are not that many chickens left and the people just overwhelm him, rushing to get the last chickens.

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And lest you think that the lines are localized, the website http://www.runrun.es did an interactive map showing how the huge lines were widespread from West to East in Caracas, independent of the standard of living of the people in the neighborhood.

In Maracaibo the best idea is to write numbers of people on their arms to certify your location in the line.

B7A3Ur5CYAADRt7And people put up with it, as long as they can have some hope of getting the food they are seeking. Of course, the People’s Ombudsman, called the People’s Defender, says nothing about this, Human Rights be damned, they have been suspended in Venezuela for too long already.

And the lines are not only widespread, but also huge. This was the Government’s Bicentenario Supermarket in Plaza Venezuela this morning:

B66l3p7IQAAyRAmThis was taken from afar, not only to attempt to get the magnitude of the line, something never seen in Venezuela EVER (before or after Chavismo), but also because if you take pictures up close you can be detained. Like this reporter in Valencia (Andres Abreu @Andresabreu) being searched by the glorious Bolivarian National Guard for taking pictures of the lines in Valencia.

reporter

And Abreu showed us how, when the lines became embarrassingly long, they moved the people inside:

B7A8ovNIgAEEAHFThe whole thing has become so ridiculous that this guy (His name is Rafael, he builds kites with anti-Government sayings all the time) was detained for going to the line with a kite saying: “I will get in line like a “pendejo” (idiot) so I can find food”

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Never mind the guarantees of free speech in the 2000 Venezuelan Constitution written by Chavismo. As if this was not enough, the Vice-President, who has the charisma of a featureless rock, says on TV that there are plenty of empty cells in Ramo Verde, where Leopoldo Lopez is being held, for those that dare to use political violence to upset the peace of the Republic. When pressured these guys can’t hide their fascists streak. Fascist is, fascist says.

The result is that people are really pissed in Venezuela today. At Maduro, at the military, at the cops, at the supermarkets and their owners, at scarcity and at all the lies they keep feeding them in Government media.

But Chavismo thinks that a President with 20% popularity can continue getting away with blaming the opposition for all the problems. Because this is not going away anytime soon. Price controls, exchange controls, absurd economic policies are coming home to roost. What is going on, is a reflection of the lack of foreign currency, for a Government used to solving supply problems with massive imports of scarce items. Except that the too many items are now scarce, national production has been decimated and the biggest scarcity is that of foreign currency. And neither the Chinese, nor the Russians, nor the Iranians, will give Maduro much at this time.

And Maduro was really wasting his time in Saudi Arabia, rather than being in Venezuela facing and dealing with the real problems. He was not only undiplomatic, but also stupid, making this statement right before going to visit the Saudis. You don’t make a statement against your host, right before arriving to visit him. The Saudis have been repeatedly been very clear as to their intent to let the price of oil fall, come what may. I am sure the Saudis were nor precisely happy with Maduro aligning himself with their enemy to object the Saudi stance on oil production cuts. Maduro learned little while being Chavez’ Foreign Minister for seven years.

And you really have to wonder if Maduro is so out of touch, or somebody or a group of somebodies is setting a trap up for him, telling him things are normal. Very few times have i felt Venezuela so close to turmoil and social unrest. Maduro is playing with fire and now reportedly he will not be back until Wednesday, as he continues touring OPEC countries in a hopeless cause. Who advised him to do it? How can he hope to get anything out of this, while things are almost out of control in Venezuela?

In November I said that I feared we may be going into a period of chaos, unless the Government wants to use brutal repression to stop it. All signs point to that concern becoming a reality, but I would hate it to be the case. By now, even if the Maduro Government were to make the right decisions, it could take weeks for things to go back to normal. But either Maduro is more limited than I thought, or someone has been setting a trap for him ever since he was elected in 2013.

And thus Venezuela has gone from being bizarre to bizarro, but where this all leads to is quite tricky and dangerous. With millions (yes, millions) of guns floating around the country and a disgruntled and hungry population, civil unrest and chaos could break out at any time.

After that, it is anybody’s guess.

(And dont forget to think of contributions to the previous post)


Killer Facts About Chavismo In 140 Characters

January 9, 2015

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Today there were two Tweets that were both clever, quantitative and, more importantly, completely true. Thus, I thought I would ask my readers to contribute tweets, that is, you have to say it in 140 characters, that are true, quantitative and describe some failure of the revolution. Better if they are clever and original in the sense that it is not a fact that is stated that often.  The whole point is to get a collection of facts that people can easily remember and that are BS-proof.

The first Tweet was by Carlos Blohm

En 1999 un sueldo mínimo eran 20 barriles de a $10, ahora no llega a medio barril de a $50.

(In 1999 the minimum salary was 20 barrels of oil at $20, now its not even half a barrel at $50

The Second one by ProFinanciero

en 1999 la calificacion de PDVSA era A3, 15 años de socialismo despues es CCC+.

In 1999 the credit rating of PDVSA was A3, after 15 years of socialism is now CCC+

The third one is mine:

En ninguno los primeros diez años del Chavismo se logró construir mas viviendas que en cualquier año de 1990 a 1998

In none of the first ten years of Chavismo, did they manage to build more housing units than in any yeaar from 1990 to 1998

Now is your turn…Tweet with my name on it or send it to devilexcrement@gmail.com and I will include it.

En la 4ta NUNCA falto el pollo, nunca hubo escenas como esta del ministro Hasta se exporto.

En la 4ta NUNCA falto el pollo, nunca hubo escenas como esta del ministro Hasta se exporto.

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In the Fourth Republic, chicken was NEVER scarce, there were never scenes like this of Minister Osorio @czosorio We even exported it.

La inflación durante el chavismo también ha sido burocrática: 14 ministerios en ’99 a 28 ministerios y 107 viceministerios en ’15

Inflation during Chavismo has also been bureaucratic: 14 Ministries in ’99 to 28 Ministries and 107 Vice-Ministries in ’15

Boludo Tejano via comments

GNI per capita, PPP (constant 2011 international $)
1998-2012 increase
Latin America 28%
Venezuela 13%

Boludo tejano

1998 :Venezuela 6th in Infant Mortality in Latin America & Caribbean
2013 Venezuela 8th in Infant Mortality in Latin America & Caribbean

Boludo Tejano

Death rate associated with Tuberculosis
1998 Venezuela 9th in Latin America & Caribbean
2012 Venezuela 12th in Latin America & Caribbean

Boludo Tejano

Total expenditure on health as a percentage of gross domestic product
1998 Venezuela 20th in Latin America & Caribbean
2007 Venezuela 15th in Latin America & Caribbean
2012 Venezuela 25th in Latin America & Caribbean


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