The Devil's Excrement

I received reports today on four different nationwide polls, all of them reaching very similar  and fairly consistent conclusions. Among the highlights:

-Hugo Chavez would resoundly lose a recall referendum in August.

-Hugo Chavez has a chance to win an election in which three candidates participate (Chavez plus two more).

-Hugo Chavez would lose an election one on one with any of the major leaders of the opposition.

-Hugo Chavez is rejected by a majority of the population across all social strata. Clearly, the higher the strata the higher the rejection levels, but even in the lowest social levels, 50 percent-plus of the population rejects him.

-Venezuelan society is highly polarized, with 50-plus percept considering itself anti-Chavez and 30-plus percent being pro-Chavez, with less than three to six percent not taking either side.

-The population rejects anything that has to do with the major political parties of the past.

-Unemployment and crime are considered to be the top two problems by the population. The first of these is not fully blamed on Chavez, while the second one definitely is.

It is quite remarkable how fundamentalists sound alike no matter what the topic. In Baghdad Iraqi Foreign Minsiter Naji Sabri says that “We are determined with God’s help to give the ultimate defeat to the aggressors”, while in Caracas Minister of Planning Felipe Perez tell Venezuelans to read the Bible, specifically Psalm 130. He says “One has to read the Bible and pray to God to get out of the economic crisis”. (Reported Diario de La Economia, page 1. I guess that is why the fate of both is sealed, you need to do other things in order to run a country or defeat someone in a war, besides praying.

Francisco Arias Cardenas, who was one of the for leaders of the1992 failed coup with Hugo Chavez, said today that the Government is resisting an electoral solution to the political crisis. Arias said that his approach to get closer to the Government was meant to create from within the Government an atmosphere that would lead to an electoral solution to the Venezuelan crisis. He said he was looking for a proposal “ to come out from there, ……we made the effort for this….but it is impossible, we are convinced there is no possibility”. Arias Cardenas had been accused of getting closer to Chavez as a way of serving as interim President after a recall referendum or if elections were to be called by Chavez. While Chavez and Arias Cardenas used to be very close, Arias split from Chavez a year and a half after Chavez’ first election to the Presidency and was the opposition  candidate when Chavez ran once again for President after the new Constitution was approved in 2000.

Scott sends in this link from an article from today’s Miami Herald. Fairly accurate in its descriptions, I would not have started it with the example from the hospital since this problem might have occurred last year anyway. But the rest gives a fairly accurate perspective about the difficulties facing companies due to the exchange controls imposed in January and he fact that the Exchange Controls offices has yet to hand out a single dollar for industrial and commercial imports. Despites this, President Chavez actually congratulated the members of the exchange control office for the “great job” they were doing during his Sunday nationwide program. “Alo Presidente”. (Chavez also said ‘Private property is not sacred”…but can’t find a link)

Excellent and somewhat sad farewell article by Alex Dalmady explaining why he decided to leave Venezuela. As usual, Alex is poignant and incisive in his analysis. To those of you who did not know him, Alex started in the 80’s what became the standard reference for the Venezuelan Capital Markets: InvestAnalysis. He was a true pioneer in a thin field that I joined some years later. By himself, Alex produced, collated, organized and published copious amounts of well researched material on the local stock market and its companies and also became somewhat of an “enfant terrible” with his criticism of many of the most important publicly traded companies in Venezuela. He had to shut down his operation when the markets made his by-subscription-newsletter, simply unviable.

Alex is a great person to talk to, he tell is like it is, analyzes things in depth and always looks at all sides of the equation. I always enjoyed meeting him and talking about Venezuela, companies, technology or stock trading in the US markets (I remember Alex telling me about E Trade well before anyone even knew what on-line trading was all about.)

Like him, his farewell is unconventional. He clearly says it is not simply Chavez that he is running away from, he feels alienated from the majority of Venezuelans, not only those that voted for Chavez, but also those that run through red lights just because cars are not coming in the other direction. Obviously, the deterioration in the field of investment plays a role in his decision, but also the way the country is run. In one of my favorite sentences of the article he says : “The problems of Venezuelan macroeconomics is one of Algebra, not of differential equations. Less theory and more back of the envelope calculations”

Alex also talks about the varied reaction from people when he tells them he is leaving. I respect his decision, simply put, that is why I believe in free markets. At the end of the day, economic agents, whether large corporations or inviduals like Alex, make whatever decision they think is best for them and only them. To me, that is what drives the world and markets and is at the heart of economic behavior. Good luck to Alex! I truly believe that in the end, one only regrets those things that one did not do!

<A href="http://online.wsj.com/article/0,,SB104863555461196300-search,00.html?collection=wsjie/30day&vql_string=venezuela(article-body)”>Interesting article by The Wall Street Journal on guerillas cutting accross the border to Venezuela. (I believe it needs subscription to read it). Among the highlights:

“Colombian guerrillas operate at least two training camps in Venezuela and use the country as a launching pad for cross-border attacks”

“The documents offer no evidence that Venezuelan President Hugo Chavez himself ….In June 2000, Jesus Urdaneta, a former comrade-in-arms who had broken with Mr. Chavez, said that when he, Mr. Urdaneta, headed the Venezuelan state security force, Mr. Chavez had suggested backing the Colombian guerrillas with weapons”

“Venezuela’s foreign minister, Roy Chadderton, dismisses the drumbeat of accusations that have accompanied Mr. Chavez’s tenure as just so much speculation in the media. “We don’t see proof or evidence,” he says. He adds that “malicious” accusations are the work of Mr. Chavez’s political foes”

“Victor (also not his real name), who was a bodyguard for a top FARC commander until their December capture, says he was present when his boss worked out a deal with a local Venezuelan National Guard lieutenant allowing guerrillas to travel unmolested on the Venezuelan side of the Arauca River”

“It was the carnage of the Cucuta bomb that caused Colombia’s frustration with Venezuela to boil into the open. “We know [the guerrillas] have fooled the people and government of Venezuela ,” said Colombia’s president, Alvaro Uribe, after the blast. “They disguise themselves as good citizens”

For those that believe that Governments can do the job, the Exchange Control Office, CADIVI, finally handed out yesterday the first dollars under the new control regime. The grand amount of US$ 30,000 was handed out yesterday to students and “special cases”  only 67 days after the country stopped foreign exchange transactions. Of course, this is my biased view of the Governmnt’s icompetence, the Head of the Foreign Exchange Office explained that the delay was due to the fact that they are using “very novel technology”. Oh! that explains it.