My good friend Maruja dedicates this video to Venezuela’s Political prisoners, those persecuted and those in exile
Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.
My good friend Maruja dedicates this video to Venezuela’s Political prisoners, those persecuted and those in exile
Venezuelans crowd the Simon Bolivar bridge in the border with Colombia waiting for its opening to go buy food and supplies there.
I have been fascinated by the events at the Venezuela-Colombia border for the last two weekends, as the Government decided to open a relief valve and let Venezuelans go over to Colombia for the day to shop. The scenes have been fascinating, but more importantly, the political, social and most of all, economic significance of what we have seen is simply riveting.
Start with the fact that the Government shut down the border a year ago in order to supposedly stop contraband from Venezuela to Colombia. An explanation which was simply grandstanding, as the contraband flows through the hundreds of unpaved paths (trochas) that criss-cross the border under the watchful eye (and sponsorship) of the Venezuelan military. Thus it was simply a remarkably sight, as well as lesson to the Government, to see an estimated 135,000 Venezuelans cross the border this weekend alone, in order to purchase the food, medicines and supplies that they can no longer buy in their own country.
This is exactly the opposite of what the Government had shut down the border for.
But the more important lesson is how Colombia´s distribution system is so much more superior to the Venezuelan one by allowing markets to run things. Not only can Colombia feed Colombians, but border supermarkets did quite a good job in providing food for 135,000 Venezuelans overnight. Yes, they did run out of some stuff, which was not unexpected, but there was also a transportation strike which influenced the fact that some supermarkets actually run out.
And imagine how many Venezuelans had to feel to have to go to Colombia to buy that very Venezuelan product Harina Pan, which was not only fully stocked on the other side, but to the surprise of many that were not aware of it, it was actually made in Colombia and was made there by the Venezuelan company that the Chavista Government has demonized so much: Industrias Polar. Not only do markets work, but companies can move from one country to another looking for the best conditions to operate in. A lesson Maduro and his cronies simply will not understand.
Venezuelans buy Colombian’made Harina Pan in Colombia at roughly a dollar a package
And Colombia´s distribution system is better because it is orders of magnitude more efficient than Venezuela´s. Whether a product is imported or made there, companies can buy foreign currency and then proceed to deal with the their processes to deliver the product to the consumer. In contrast, the Venezuelan manufacturer has to deal with a supply chain, a control chain and a corruption chain.
Because at every step in Venezuela, from the request for foreign currency, to the request for certificates of having paid taxes, to a certificate of non-production in Venezuela, to requesting the foreign currency, to receiving approval, to having the stuff arrive, to have the stuff be brought out of the port, to have the stuff trucked to the factory of distribution point, etc, etc, etc.; at each of these steps there will be an official to get through, an office to stamp a seal or give approval, an official asking for money, a gestor (agent) that needs to be paid, a peaje (toll) to be complied with.
And each step adds costs and time to the process to the delivery of goods.
And it is not much different for the Government. Each ship of meat, grains or whatever needs to be accompanied by the approval of the appropriate General that decides how many Tons of each should be bought, which then jumps to the next step so that another General approves the payment. and once the boat arrives, it takes days to unload, to truck it out of the port and begin a distribution chain that has all of the same problems that the private one has, as stuff is deviated, stolen, smuggled out of the country and given to those that can pay money to to those in charge of the distribution system
But Chavismo refuses to see reality. Each time their Rube Goldbergeresque distribution and supply system fails to deliver, they decide to add a layer, assign a General to the new position and simply ignore economic reality and their own failure.
And the crowds going across the bridge were politically charged. An image for the rest of Venezuela and Venezuelans of over a hundred thousand people voting with their feet, taking their hard earned savings to buy their food in Colombia, food that not only they can´t buy in Venezuela, but that many were surprised as to how many items were actually cheaper on the other side of the border.
How can any Government use this image for its advantage? How can it possible erase it from people´minds come election time?
And at the same time, the images were broadcast around the world, clearly demonstrating the opposite of what the Government contends: There is indeed a crisis in Venezuela and Venezuelans are not being fed by a fairly wealthy but inefficient and corrupt Government.
And as I watched the scenes, I could not help but wonder about the economic implications of the shopping spree outside the country. How much did each person spend? How did they pay? How much was it for personal consumption, how much for bachaqueo? How do the merchants turn the Bolivars into pesos or dollars?
I confess I don´t have all the answers. I do know that people paid largely in Bolivars. I also know human nature. I am sure that people that waited hours to cross that bridge did not do so just to spend Bs. 10,000 (US$10 at the parallel rate) or to find a single item like toilet paper or toothpaste.
Look at this man for example:
Man crosses back into Venezuela with a bike full of goods
The man may be an outlier (or a bachaquero), but he is certainly carrying a lot of goods in that bike. My guess is a few hundred dollars. But let´s assume it is much less on average. Let´s say the average Venezuelan carried US$100 in Bolivars across the border. This turns out to be US$ 13.5 million. Believe it or not, this is a large amount in Venezuela these days for the black market. Thus, I have no idea how the Colombian merchants could possible hope to convert this money back into Pesos or US$ swiftly. Moreover, I don´t see how they could have done so without the paralell rate of exchange increasing significantly.
But there has been little movement on the black market rate so far.
So, what gives? How did they do it? Because these border people are sophisticated when it comes to taking currency risks. They just don´t do it!
My guess at this time, absent any other theory, is that it may have been the Venezuelan Government that provided the hard currency. Since the Government planned the opening, prepared this sort of relief valve, it must have been aware of the possible pressure on the black market and excess liquidity and provided funds to the money exchangers at the border. This not only make sense, but lest you think that they are too dumb for that, remember that when it comes to guisos and graft, these guys are the best there is. I welcome any other alternate explanation.
Meanwhile, while this scenes were visibly reported, it is less well known that in Zulia State, just north of the pictures above, the Governor has promoted contraband from Colombia to Venezuela, purposedly looking the other way as the stuff is smuggled. Maracaibo and Zulia supermarkets are full of Colombian products at Colombian prices, a clear indication that at least some in Government have realized that allowing markets to work may be the best thing for Chavismo at this time.
Meanwhile, the Governor of Tachira State said that he would not open the border this week, giving him arbitrary power over the border, arguing he does not want to disturb the effort by both Governments to have a peaceful border. The reality is that the Colombian Foreign Minister said that the border will not be opened until it this becomes a permanent status. Nothing could be more logical than that.
For now, reopening the border will likely lead to much better supplies in Venezuela, but will certainly put pressure on the black market rate. As soon as the reopening is formally announced, many new businesses will set up on the other side of the border, where markets function and there is the rule of law.
Meanwhile, Maduro and his Government have been completely exposed as a total farce and failure. It is Colombia that can provide us with food and supplies. And Venezuelans are desperate enough to wait for hours to get to the other side…
While everyone was watching one “God” in Venezuela, Dios-dado, a different one seemed to ascend to power, Padrino (Godfather), as Maduro designated his Minister of Defense Vladimir Padrino, as his all power Czar of food supply and distribution. In Maduro´s words: “All the Ministers, all of the Institutions of Government will be under orders and in absolute subordination to the Great Supply Mission under the orders of the President and General Padrino Lopez”
I have been pondering over this ever since it happened, trying to understand what it really means. Not only did Maduro make the General his equal, but the General did not waste much time in making the statement that his objective was “To govern…”
A strange statement from a man that has been deeply involved with a “Government” that has ruled Venezuela for sixteen years, with the tight involvement of the Venezuelan military of which he has been a leader. Or did Padrino mean “To Govern well”, something which has definitely not happened since Chávez took power in 1999.
But while many saw this as a resolution of the power struggle between civilians and the Venezuelan military, one has to see it first as a victory of General Padrino Lopez over General Marco Torres, a more subtle Cszar over Venezuela’s Food distribution and Supply for quite a while, who also presided over the finances of the country during the same time.In fact, Maduro did not say what the naming of Padrino Lopez implies for Torres’ Ministry for Feeding, as well as his total, albeit remote control, over both the Ministry of Finance and the Venezuelan Central Bank.
But Padrino may have moved too soon for his own good. He clearly believes in the “model” that the Government can buy and distribute all of the food for the country and eliminate shortages while holding inflation back. Which means that he has no clue, like his predecessors, that it is not the distribution model, but the economic model that needs to be changed. And since there seems to be no economists in the Cabinet, nor in Padrino’s team, Padrino’s effort will meet the same failure that Marco Torres’ did. And there is plenty of time before the end of the year for the same infighting to point out that Padrino’s all-powerful mission has been a total total and complete failure: Shortages will increase and inflation will not abate.
Because as was reported today, from the same Government that took the the Simadi/Dicom rate to close to Bs. 700 per dollar, somebody has now realized that this was a mistake and the plan now, without telling or consulting the Cabinet, is to now lower that rate.
This may simply be General Torres trying to show he still has some power.
What’s next? Changing the exchange rate’s name again? How about Godmadi or Godcom? (In Spansih: Diosmadi or Dioscom)
As I noted two posts ago, this rate is irrelevant to the scheme of things, as it is the Bs. 10 per US$ rate that needs to be urgently modified. Someone should ask these “Supply-Side-experts”, including Torres and Padrino, why not simply give away the food for free and eliminate shortages, after all, the difference between Bs. and Bs. 600 (Or Bs. 1000) is so large, that making it zero for distribution purposes will make no difference.
Meanwhile Maduro wants to extend his Emergency Economic Powers, despite the fact that under the previous two, both not approved by the National Assembly, shortages grew, international reserves went down, inflation increased sharply and the country’s oil production dropped by more than 10%.
Thus, this battle of the multiple Gods in Venezuela, seems more like a brawl among empty headed buddies at a bar, to decide who will play better billiards when they are no longer drunk.
And the winner may be somebody else…
I was in Caracas two weeks ago, but kept traveling afterwards, thus I am late in reporting the price increase of the June arepa, which by now does not surprise anybody. Despite the Government’s efforts to limit monetary liquidity, as a way of stopping the parallel dollar, you can see from the graph above that the slope is essentially the same.
The price of the arepa rose from Bs. 1,400 to Bs. 1,600, a 14.7% increase in four weeks, comparable per month to increases in recent months. The one year increase was 400%, roughly in line with values since December.
One interesting fact was that I actually go to two different arepa places and this one has been the most expensive one since I began keeping tabs in late 2014. Not this time, as the same arepa de queso de mano cost much more at the second location. This to me indicates the difficulty people have in setting prices, a characteristic of hyperinflation. I noticed this also in restaurants. By now, supermarkets are crowded at all times. I was told that the supermarket I have been going to since I was like 17 will be shutting down. The owners are simply scared now to handle crowds or risk looting.
The disconnect between Maduro and those that surround him is simply staggering. The party of the “people” no lonegr recognizes who the “people” are. Or what they want…
In the beginning ,,,
Chavismo tried to expropriate land and agricultural companies. It did not work…
It then tried to get into the production business. It failed…
Then came exchange controls. One lower rate for essentials, another higher rate for non-essentials. A third parallel, and legal rate, the swap rate, sprouted spontaneously.
Except the difference between the first two rates became wider in time, the subsidies became gigantic (including dumb subsidies for travel abroad) and the third rate soared.
Thus, the Government made the third rate illegal. Which did not stop it, it simply became the black market rate, which continued to go up…
Price controls were then introduced…
In parallel, the Government became importer of goods at the lowest rate, expropriated whole industries and began to distribute products without the private sector. Shortages began.
Profit controls were then introduced…even larger shortages became daily events, as inflation soared…
By then, the official rate stood at Bs. 10 per US$, the second rate at Bs. 200 per US$ and the black market rate around US$ 1,000.
Just imagine getting your hands on anything imported at Bs. 10, export to Colombia or sell it to those desperate for acquiring for it. We are talking profits of 10,000%…
If you sell it locally, profits are less, but there is less work, Bachaquerismo became a profession. Arbitrage at its best!
This was the picture three or four months ago when the Maduro Government supposedly decided to do “something” about the distorted Venezuelan economy.
This would be the picture for the exchange rates at the time:
If you want to “get” the size of the distortions, think about this picture: At Bs. 10 per US$ monetary liquidity (M2) is about US$ 500 billion, a large amount for the Venezuelan economy. At Bs. 1,000 per US$ it is barely US$ 5 billion, peanuts for an economy of a couple of hundred billion dollars of GDP.
It does not take a genius to realize that the first rate, Bs. 10 per US$ is simply too low and should be moved first closer to the second rate which is “only” twenty times larger.
Instead the Government, in its ignorance, decided to:
Today we thus have:
The result is that today, the Government has moved prices up, fueled inflation, barely affected the black rate and done little about shortages. It “adjusted” the Venezuelan economy, without the benefits of an adjustment.
And the Government, for example, has yet to issue the Dicom regulations. That’s how efficient they are!
Why can’t the Government solve the problem with shortages or just improve supplies?
Easy, at Bs. 10 the main importer and distributor is the Government, some importers of essential goods are given some dollars, but it is a small fraction of the overall amount.
The Government is not only inefficient, but there is wholesale corruption, over-charging and a lot of the stuff imported is taken to Colombia and other bordering countries.
And the private sector can do very little to help, because it has been minimized, it has become for lack of a better word, miniscule. There were over 600,000 employers in Venezuela in 1998, there are around 260,000 now.
That’s how bad it has been decimated…
But to understand why shortages can not be reduced by the private sector let me give you an example: Assume for a second, that you are a private meat importer/distributor. A meat cargo ship carries somewhere around 15,000 Tons of meat. (About a two day supply for the whole country). Depending on the type of meat, this would cost around US$ 25 million to US$ 35 million to import.
Let’s say it costs US$ 30 million, simply as an example.
There is NOT A SINGLE COMPANY IN VENEZUELA that has enough Bolivars in the bank to pay for this ship at the Dicom rate of Bs. 600 per US$., as this would be Bs. 18 billion. (0.36% of M2)
In fact, not a single private or public bank could lend any company this amount, as the largest banks have capital of about Bs. 50 billion and they are not allowed to lend more than 10% of their capital to a single customer (Which mostly don’t do anyway, it is just too risky, suppose the Government nationalizes that company). It would take a syndicated loan of all banks to bring a ship that carries all of two days of meat for the whole country.
Get the picture?: Even if the Government gave a company dollars to import meat at the Dicom rate, no company could pay for a single ship (two days supply). This applies to wheat, corn, rice and many of the basic staples needed for the population. And the Government is not willing to give foreign currency at any other rate to the private sector. It reserves the Bs. 10 rate for itself
This simply shows how hyper-distorted the Venezuelan economy is today.
At Bs. 600, the largest private bank in the country has capital of around US$ 90 million, ridiculous for the size of the economy. No company can receive dollars at the Dicom rate and bring any sizable import that would make a difference.
The economy is simply trapped in the hands of an incompetent, inefficient and corrupt Government that has tried to control everything.
The whole thing is so distorted, you practically have to start from scratch to fix things…Eliminate all the rules, controls, regulations, start over…
By now, news about shortages, hunger and protests in Venezuela have become quite fashionable in the international press. It is a crisis that is difficult to understand: How did such a wealthy country get into such a state that it can’t even feed it’s people? How could the one time appealing Chávez revolution stray from its supposedly heroic course? What went wrong in Venezuela?
For those of us chronicling the fake revolution, this is no surprise. We have been recording the inefficiencies, the corruption, the waste and the incompetence of Chavez and his cronies, to say nothing of the hare brained policies and controls of the last seventeen years.
Despite this, people want to be simplistic about what is going on in Venezuela. They think it can be understood simply as the “fall in oil prices” or “Things went wrong after Chávez died”, ignoring the fact that the origins of the crisis, as well as its most symptoms, such as shortages and inflation, began appearing in Venezuela long before Chávez died and way before the the downturn in oil prices began in July 2014.
The biggest myth is that the fall in oil prices is at the root of the current problems. Nothing can be further from the truth. As shown in the graph below from Econoanalitica, the Venezuelan economy was in trouble long before that:
As oil prices hovered around US$ 100 per barrel in 2012, the Venezuelan economy began sputtering under the weight of irresponsible policies and ever increasing Government controls. In the first quarter of 2013, when Chávez died, oil was at a hundred, but the Venezuelan economy could barely manage less than 1% growth in GDP. And by the first quarter of 2014, with oil still above US$ 90 per barrel, the economy began contracting by 5-6%.
And long before the fall in oil prices, inflation, which was already running high, began soaring:
jumping from 21% in 2012, to 40.6% in 2013 and increasing to 62.2% in 2014 as oil prices finally began their decline. No direct effect of the oil price drop there either.
And as oil prices began dropping in the summer of 2014, scarcity levels had already reached absurd levels, as shown in this graph:
As by the time oil prices began dropping, Venezuela (the plot is only for Caracas) was showing shortages for 50% of the items considered to be basic.
Of course oil prices exacerbated the situation, increasing it to the near 90% levels seen today, but the root causes were sowed during many years by the absurd policies, widespread controls and increasing domination of the Government in the Venzuelan economy.
So, PLEASE, don’t blame the drop in oil prices for Maduro’s and Venezuela’s problems. You don’t see the same thing happening in say, Ecuador, an oil-dependent country with an equally populist Government, but where policies have not had the level of improvisation and ignorance that Venezuela has had.
What happened and is happening in Venezuela has its roots in policies that began in 2002-2003, when Hugo Chávez decided to involve the Government in producing foodstuffs, as well as controlling prices and the rate of exchange. The Government got involved initially in sugar, farming and milk production and distribution. Grandiose projects were started, most of which were never finished and produce very little today. Today, even some of the more emblematic products in which the Government got involved, are mostly imported with heavily subsidized dollars. Thus, not only was the Government a failure in producing these products, but it also destroyed the ability of the private sector to compete, as it began limiting their access to foreign currency, while importing products at the lowest possible available rate of exchange.
Since this was not working, the Government began then controlling prices, later extended to controlling profits of companies, a true recipe for disaster. And as the Government did this, it spent more on importing less, as the inefficiency and corruption, as well as over-pricing, began dominating the whole food chain from importing to distribution, leading to where we are today.
And as the Government did this, it created ever increasing and intertwined distortions, most of which are not only still in place, but are part of a complex and convoluted economy, which will be discussed in Part II, and which needs to be fully overhauled from scratch in order for the Venezuelan economy to begin a new path to normalcy.
But in the end, the fall of oil prices had little to do with most of it, in the same way the rise of oil prices did not create the value or the wealth that it should have.
People line up somewhere in Venezuela to ratify their signatures
The Maduro Government, via the Electoral Board the CNE, has tried by all means to block the possibility of a recall referendum. These attempts have been abusive of the Rights of Venezuelans, as the Venezuelan Constitution establishes this as a basic political right of Venezuelans.
The CNE has pulled all of the stops, creating first unnecessary delays, to finally end up violating the rights of thousands of Venezuelans by voiding their signatures using excuses as lame as saying that the petition form did not have Maduro’s complete name (Shouldn’t it have been printed on it?). To make matters worse, people could withdraw their signature (about 5,000 people out of 2 million did it!), but could not revalidate their signature if the CNE had voided it. A somewhat biased principle if you ask me.
Additionally, the Electoral Board has made ridiculous interpretations of the laws, such as requiring 1% of all voters in each State, rather than 1% of all national voters, since the position is not a State position, but a national one.
Finally, since people have to go and ratify with their fingerprint that they signed the petition, the CNE assigned only 300 fingerprint machines NATIONWIDE, while everyone knows they own thousands of them (40,000 of them to be a lil more precise), distributing them in such a way as to make the process really difficult for everyone.
But as if this was not enough, yesterday, Electoral Board workers began a slow down process in the few states where it is very tight to gather the required 1%. The CNE seem to concentrate its effort by now in Nueva Esparta State, the State where Margarita Island is.
Here is a first hand account by long time reader Island Canuck in Nueva Esparta:
“Here’s our story of trying to confirm 3 signatures with my family.
After hearing horror stories about Juan Griego & La Asuncion we decided to try and go to El Maco which is almost in the exact middle of Isla Margarita. A very small pueblo where no one would expect a confirmation point.
We arrived at around 10 AM and registered with the MUD table that was there. We were given wrist bands with a number and asked to join the line.
It appeared fairly short so we were really surprised when someone indicated the the line went around the corner of the next block.
After a check we discovered that there were hundreds of people ahead of us – maybe 400 / 500.
After waiting almost an hour the line had only moved maybe 20 mts.
We returned to the check-in counter to ask how many people an hour they were processing. The lady shrugged and said that ideally 60 persons per hour. There was only 1 finger print machine. She admitted that the number was much less.
We decided that waiting further was a waste of time as we would never be processed and left with the idea to return another day much earlier. Even this idea is without much merit as they can’t possibly process the number of people that show up under current conditions.
This is definitely a planned exercise by the CNE to prevent at least 1 state from getting their 1%. That’s all they need to destroy the whole process.
As of 1.30 it was announced that the El Maco site had only processed 120 voters in 4½ hours – approx. 27 per hour.
They are going to do everything in their power to block at least 1 state. Then for sure the revocatorio will not occur in 2016.
I’m depressed as the MUD has no power to change anything.”
The only number that matters here is 27 voters processed per hour. This is absolutely ridiculous as the process takes no more than 15 seconds and in a regular election a single machine processes up to 2 and 3 thousand voters in eight hours.
But fascism acts like this, while assholes like Zapatero defend them as poor souls who have not adjusted to having lost the December election.
The four ladies in the Board of CNE should be prosecuted for this one day.Thousands of Venezuelans have had their rights violated in order to preserve a fascist Government which can not even provide the basic needs of the people.
I do hope that someone points this out today at the OAS meeting on whether to invoke or not the Democratic Charter on Venezuela. It may make no difference, but it will show the true nature of these for-rent left wing former Presidents, whose principles can be bought with a few meals, some nice hotels and the chance to believe that you may be once again important.
It has been difficult to write about what is going on in Venezuela. I wish I could be the bearer of good news, but most of the time, news coming out of Caracas is simply negative and may I say, simply depressing. Things get worse and the Government continues to pay little attention to what is going on, continuing its “economic war” cry to blame their incompetence, their negligence, their corruption and their indolence in the face of hunger, illness and insecurity. (This from a Government that lost 120,000 barrels per day in oil production only in May!)
About the only positive news is that, as measured by the PCNI (Puerto Cabello Non-Baltic Index) imports appear to have picked up in the last few weeks as shown below:
As you can see, the number of boats arriving daily to the main port in Venezuela for food imports, has increased significantly from the lows that I reported in April reaching levels between 8 and ten ships per day, something not seen since January.
This is welcome news, even if it is clearly insufficient. Recall that last year, the average number of ships in Puerto Cabello was typically 14 to 15 each day. Moreover, you have to understand that there is a new mindset in Venezuela: that of extreme scarcity. Even those that have little money for purchases are hoarding something at home. Everyone has something in life that you feel you need no matter what. Thus, whether it is soda, toothpaste, sanitary napkins or simply milk for your baby, the scarcity mindset drives people to hoard their favorite foods. The results is that the cabinets and closets of the people are full of many of these items and it will take over-importing, something we are not even close to, in order to make this mindset disappear.
The consequence is that as the scarcity levels have increased, higher imports are simply not felt by the population.Meanwhile, the Government remains in control of what may be or not imported, while at the same time increasing its power over distribution channels. Its latest invention, ironically called the CLAPs, are committees to distribute food to only Government sympathizers, thus creating an apartheid in which if you don’t sympathize with the Maduro administration, there will be no food for you.
It does not get more fascist than that!
Meanwhile, scarcity is so bad, that the Government now has to resort to accompanying food trucks with security, lest they be looted by hungry people when trucks stop. Sometimes they don’t even have to stop, they are ambushed by people at the entrance of towns as they head to supermarkets and quickly emptied from their goods. In places like Cumana, stores have been looted and many of them have no plans to re-open, aggravating the problem.
Meanwhile at the OAS, Venezuelans became hopeful that some international pressure could be applied on the Maduro Government, something that has not worked in the last seventeen years. The Maduro Government masterfully played the diplomatic game, proving once again that countries have no principles, only interests.
Even recently elected Mauricio Macri of Argentina, found his personal interest in having his Foreign Minister become Head of the OAS more important than the fate of Venezuelans, backing out of strong statements made in the exuberance of his Presidential victory. To say nothing of the US, which decided to push for the mediation route, a path that is only meant to delay the feasibility of a recall vote against Maduro in 2016, thus guaranteeing that Chavismo, even if it has to get rid of its current bus driver, will rule over Venezuela until 2019.
And the opposition was partially to blame. It really was not playing international diplomacy at the same level, but it also accepted some initial gambit for negotiations, led by a bunch of former Presidents, who are not only pro-Chavistas and which have little significance in their own countries, but whose role as mediators is financed, funded and toasted by Maduro.
Of course, the OAS’s task was difficult from the beginning given the large number of fairly wealthy Caribbean countries that receive cheap oil from the Maduro administration and have sold their soul to the Chavismo Devil (not related) for years.
As for the recall, the many manuevers by the Electoral Board are so incredibly biased that their pro-Chávez members should one day be tried for the wholesale violation of the people´s rights (and their pensions rescinded). Not only have the timetables established in the law not been respected, but rules have been made up on the fly to make the recall even vote more difficult. From requiring 1% of the voters for each State, rather than 1% of the voters nationwide, as clearly stated by the law, to arbitrarily voiding 600,000 signatures for the recall, to allowing people to withdraw their signature (something that less than 6,000 people out of 2.1 million took advantage of), the whole process has been shameful and should be enough justification for the OAS to do something.
The latest ruse? After signing the petition for recall, people have five days to go to the Electoral Board and ratify that they signed the petition using their fingerprint. Now, in a country where all supermarkets are now armed with fingerprint machines to restrict the purchase of price – goods, the Electoral Board came up with three hundred machines to have the remaining 1.352 million people ratify their signatures.
Even more shameful, the distribution of machines is as efficient and biased as the Government’s food distribution network. For 241 municipalities with 600,000 people who signed the petition, there will be zero machines to ratify their signatures. At the same time, 64 municipalities with 21,000 signatures will have all of 100 machines for people to ratify their signatures. The most ridiculous case is the town of Ocumare de la Costa, where there will be all of four machines to service the 264 people who signed the petitions. Of course, municipalities like Chacao, Baruta and El Hatillo, with thousands of signatures will have none, zilch, zero.
Only around 200,000 people are needed to ratify the recall petition, but each state will need 1% of its voting population. Thus, the task is made quite difficult by restricting the number of fingerprint machines. Fascist hoodlums is what the four pro-Chavez ladies at the Electoral Board are!
And so it goes…as this happens, Venezuelans get distracted by stories about cemeteries where the tombs of former Presidents are desecrated, which has been happening since even before Chávez took power in 1998, but which creates and outcry and diverts attention from the rapid, vertigo-inducing deterioration of the quality of life in Venezuela. As the Minister for jails, released prisoners to protest in favor of Maduro, there were two kidnappings very close to my family, including one nephew. But the police is too occupied guarding food trucks and protesting prisoners.
And so it goes…
I have been back a few days from my most recent visit to Caracas and I have been trying to put my thoughts together, without being able to form a single image of what is going on. What is clear though, is that things seem to be changing at a fast pace now in all aspects of Venezuelan life.
Despite the fact that I was only gone five weeks, longer than normal, there was a significant change in shortages, lines and general food availability.
Take lines, for example. Lines at large supermarkets, like Bicententario, have been around for a while. But now it seems as if there are lines anywhere where something useful may be bought, from supermarkets, bodegas or from drugstores to bakeries. And as shortages have become more acute, people displace themselves across the city in the hope of finding something. (These movement is not restricted to bachaqueros, just anyone looking for something they need)
The change for bakeries, as an example, has been dramatic. I found few that actually had bread and since it was known that they had none, there were no lines in front. Some, like my favorite bakery in Los Palos Grandes, did not even open for the whole week I was there. And the one closest to where I stay, had lines all the time I went by, but I did not bother to check what they were selling.
It was good for dieting, particularly if you are trying to avoid carbohydrates. Last time I was there, restaurants always had bread. This time, at one restaurant they apologized for not having any bread, at another one they had Swedish bread, the flat bread that is hard, made of wheat, whole wheat and rye and which you can still find at some supermarkets. While Polar has said that it is running out of corn flour and indeed, it has become hard to find it, areperas seem to have enough stock, with all of them open, even if some fillings are not necessarily available.
Milk is a different matter. People in my office report not having had cereal for weeks, unless they want to pay up for almond milk, available in some supermarkets at what is an outrageous price given salaries down there. After dinners, the first question I would ask was whether they had milk or not to make a marroncito for me. Half the time the answer was negative, but at least one time I could taste the undesirable flavor of powdered milk in the coffee. I simply prefer to avoid drinking it that way. But I understand that even powdered milk is becoming a problem, one of the upsetting aspect of shortages for families with small kids.
You can find eggs now, at a new much higher price, while meat exhibits some scarcity, but prices are simply out of control and you can find some good quality cuts if you are willing to pay.
One of the biggest sources of social conflict is the dynamics of lines. Much like the riots that took place last week near the Presidential Palace, when a bunch of pro-Government supporters tried to divert a truck heading to a market where people were lining up to take over the distribution of the goods, I heard at least three reports of the dynamics of lines producing confrontations between groups, not necessarily aligned along political lines.
In one case, in a lower middle class neighborhood of Caracas, a line formed at a Bicentenario supermarket at 7 AM. You have to understand that people by now get in line at random, just in the hope that they will get something to eat, trade, barter or sell. In this case, the person I talked to got in just hoping to get something and the National Guard organizing the line gave him a printed paper with the number 100 on it. Just across the street, there was a Farmatodo (Sort of Walgreens, Rite Aide or CVS) where a long line formed even if with less organization or supervision. Except that around 8 AM, the Farmatodo closed its doors. The people in that line all moved across the street to the Supermarket line, overwhelming the people, the guards and simply massively cutting in line. The guy I know, went from being number 100 to about 300 in a minute. He waited in line till 10:20 AM, but had to leave since he had to be at work at 11 AM.
A wasted morning, nothing to show for it.
By the end of my week there, the Government began organizing the so called CLAP’s, (Local Committees for Supply and Production) as the only possible source for regulated products, banning their sale at markets and supermarkets and therefore creating a system that favors those that support or claim to support the Maduro administration, a double standard and discriminating method, which is simply another form of fascism exhibited by the Maduro Government. (The picture at the top if when a CLAP tried to take over a food truck at a supermarket near the Miraflores Palace, by the end of it, people marched to the Palace in protest and the police had to use tear gas. )
And with increased lines and shortages, the conflicts seem to be increasing in intensity and size. What worries me the most, is that at some point, the military will lose control of the situation and there could be an escalation of the conflict beyond the capability of the Government.
And while all of this was happening, Maduro was acting like Nero in burning Rome. Two days he danced and sang on Nationwide TV, another he ranted against the economic war and by the end of the week, he left the country to visit Cuba, where he meekly asked Caribbean and Latin American countries to support his Government.
Meanwhile the opposition concentrated on the recall vote, which is currently paralyzed and frozen in the virtual world of some form of mediation by pro-Chavismo ex-Presidents.
Paralyzed. That seems to the word that best described politics down there. Both sides paralyzed in place, the Government because it can’t find a way of disentangling itself from the economic mess it created and the opposition, because it has a one track plan, which it wants to move forward via international pressure. There seems to be little consensus on the opposition on everything else, with Capriles apparently disagreeing with the only RR strategy and others, like Falcón, starting to organize looking towards the 2019 Presidential election.
Meanwhile, people are puzzled by the weakening black rate, a fleeting phenomenon, as the Dicom rate continues to soar (You can download my friend’s Girish’s App here to have this info on your cell phone or tablet). To me, this is nothing more than noise. While it is true that at Bs. 1,000, M2 is barely US$ 5 billion, it is also true that at the official rate, where the Government imports all of the regulated goods, the number is closer to US$ 500 billion. For the Government to unify the rate and truly lower the black rate, it would have to do too many things it has refused to do, like moving the stuff imported at Bs. 10 per US$ to something like ten or twenty times more, make the black market legal and raise interest rates and have some funds ready to sell in a new open market.
I don’t believe the Government will do all of the above at once. Without all of them, it simply will not work. The only reason the black rate has been moving down is that the excess liquidity in the financial system is mostly in the Government-run banks, which are precisely those that are not lending much (Grab your average Pendejo Sin Fronteras (PSF) who calls for the nationalization of the banking system and explain this simple fact to them…).
And on that technical note, I stop for today, promising at least a post on Puerto Cabello in the next few days…
It was only a matter of time, but the Hyperinflated Arepa Index crossed the factor of ten increase in price with ease, as this week I went and had another delicious arepa at my favorite joint and I paid a price of Bs. 1,400 for my queso de mano arepa. This whole story began on Nov. 17th. 2014, at a price of Bs. 120. It took one year six months and four days for the price to increase by a factor of ten. This represents a 27% increase since the last report on April 9th. and a 409% increase since twelve months ago. The price has increase 1066% since I started logging it.
Of course, the increase is actually higher because as I reported last time, there has been a bit of Soviet style inflation, with the arepas getting smaller. Above I post a picture taken on Nov. 15th. 2015 and the arepa I ate this week. I don’t know if the plates are the same size, but you can easily see that the filling is much less generous now. On the top one there are four generous slabs of queso de mano, on the botttom one there are three not so generous ones. The arepas to me are clearly smaller (I suspect the plate on the right is bigger, but I wonder about how the paper around the arepa seems to be the same size)
The taste was as delicious as ever…