The Devil's Excrement

Moody’s is a credit rating agency from the US that gives impendent opinions on the credit risk of private companies and governments. In its July “Bank risk Monitor”, there is an article about the Venezuelan banking system, some highlights:

-The average Venezuelan bank has about five times its capital in government bonds. This is a huge amount of exposure and is one of the reasons why our average bank financial strength rating for Venezuelan banks is an extremely low E+

-At the same time, the average return on equity of Venezuelan banks is, by far, the greatest in Latin America, about 26- to 28 percent.

-Basically, Venezuelan banks have ceased to serve as a normal banking system…The banking system is very weak. The banking system has shrunk by about 60% over the last five years in real terms. This is a banking system that is slowly wasting away.

-The depositor’s money is really just a pool used to make payments. Because the money is mainly in direct demand accounts, the banks use this no-cost funding to purchase up to five times capital in investments in government paper, at relatively high nominal interest rates. …the money never leaves the banking system; it just gets debited and credited to different accounts.

-So, there is a very large and predictable margin there, but it’s not a margin earned by a real banking system, it’s one gained as a payment system or as a transaction system. That is where the impressive profitability is really from, especially when nominal rates are high.

The Venezuelan Government has indeed shown in the recent past…..the ability and willingness to take political action to support the banking system, if necessary. It has even supported weak banks that are not “too big to fail” in a classic sense.

There you have it! The true face of the “pretty” Chavez revolution “for and by” the poor! Please!

My friend and faithful reader Maruja wrote this article in today’s El Universal and I simply could not resist translating it, it combines the seriousness of the situation we are in with the light side that every day should have:

Take advantage of it ladies and gentleman, the 15^th., the 15^th.!

By Maruja Lander de Muci

I can’t stand it! I am counting the days for the famous August 15^th.!That day I am going to have a banquet and I am going to take advantage of it and revoke a lot of people, dead and alive. Beginning obviously with the most obscene assasin of our hopes, thief of the future, compulsive liar, the most perverse personality that has stepped on these lands in the last one thousand years: The un-namable. With him I am going to revoke that bunch of dead people that accompany him, Bolivar and company, we have to return them to their tomb and let them rest in peace, we need to forget about them and understand that those times are nothing like the present we are living and even less like the future we want. The dead ones have no place here today, no more heroic dizziness please!

That day, with my forceful and secret “SI”, I am also going to revoke a bunch of opportunists from the IVth. that lately have been stealing the show and stretching their necks to jump on any podium around. They think that these thousands of anonymous heroes that have marched risking their lives are dumb and we have no memory; they are the ones that are the dumb ones that have yet to understand that the rallying cry that mobilizes us is nor Chavez, nor a jump backwards, I revoke all of those people, Yupii!

As a society we have this golden opportunity to straighten out this terrible mess and we can not waste it, that day the appointment is a date with our future, a sort of new beginning that we can even apply to our own personal life. Take advantage of it Madam, take advantage of it Mister, revoke your couple if you decided you can’t stand it anymore, revoke the butcher that cheats on you, the neighbour that looks at you funny, the mother in law that torments you, the son in law that makes your daughter suffer, take advantage of the 15^th. to put some order in your life and that of Venezuela!

My friend and faithful reader Maruja wrote this article in today’s El Universal and I simply could not resist translating it, it combines the seriousness of the situation we are in with the light side that every day should have:

Take advantage of it ladies and gentleman, the 15^th., the 15^th.!

By Maruja Lander de Muci

I can’t stand it! I am counting the days for the famous August 15^th.!That day I am going to have a banquet and I am going to take advantage of it and revoke a lot of people, dead and alive. Beginning obviously with the most obscene assasin of our hopes, thief of the future, compulsive liar, the most perverse personality that has stepped on these lands in the last one thousand years: The un-namable. With him I am going to revoke that bunch of dead people that accompany him, Bolivar and company, we have to return them to their tomb and let them rest in peace, we need to forget about them and understand that those times are nothing like the present we are living and even less like the future we want. The dead ones have no place here today, no more heroic dizziness please!

That day, with my forceful and secret “SI”, I am also going to revoke a bunch of opportunists from the IVth. that lately have been stealing the show and stretching their necks to jump on any podium around. They think that these thousands of anonymous heroes that have marched risking their lives are dumb and we have no memory; they are the ones that are the dumb ones that have yet to understand that the rallying cry that mobilizes us is nor Chavez, nor a jump backwards, I revoke all of those people, Yupii!

As a society we have this golden opportunity to straighten out this terrible mess and we can not waste it, that day the appointment is a date with our future, a sort of new beginning that we can even apply to our own personal life. Take advantage of it Madam, take advantage of it Mister, revoke your couple if you decided you can’t stand it anymore, revoke the butcher that cheats on you, the neighbour that looks at you funny, the mother in law that torments you, the son in law that makes your daughter suffer, take advantage of the 15^th. to put some order in your life and that of Venezuela!

In one of the most cynical and outrageous statements made by any Chavista recently, MVR Deputy Raul Este said yesterday that now the process of “a revolution within the revolution will begin”. According to Este, after the victory of the “No” on August 15^th. those that are corrupt will leave the Government. Thus, for the Deputy, corrupt votes are good and only after the 15^th will they get rid of those people. Well, I am sure that besides the cynical nature of the statement, this is nothing more than another empty campaign promise by the most corrupt government in the country’s history.

In another cynical statement, Venezuela’s Ambassador to the US Bernardo Alvarez said today that he “guaranteed” the voting of Venezuelans in the US. He failed to say that proof of residence is being requested and that 95% of those that registered do not appear in the Electoral Registry. To close the Ambassador said that “Voting abroad is not for tourists”, simply another perverse interpretation of the law. Venezuelan legislation guarantees the right to vote for Venezuelans abroad irrespective of their status in the country where they live. This is the second “innovation” by the brilliant representatives of the Venezuelan Foreign Service; the Minister had said last week that illegals could not vote either because the country could not promote violating the laws of other countries. He said nothing of violating the laws of Venezuela, but maybe that is irrelevant to him…or them.

More evidence of abuse of power and corruption by the Government, once again thanks to Tal Cual. This is a picture of a sign paid by the equivalent of the IRS called SENIAT in which it says NO to forgetting to askfor a receipt, NO to leave your check blank(??), NO to tax evasion and NO to contraband. These guys are incredible!

This is today’s Editorial by Teodoro Petkoff in Tal Cual on the Government’s abuse of its power in the campaign, with particular concern about the involvement of the military in it

Power without Control by Teodoro Petkoff

While the experts report to the CNE the results of their millimetric measures in space and time of what the media devotes to the information about the two campaigns, with the aim of promoting an “informative equilibrium” (something which, in general terms, has been achieved and which is good), the Government has been advancing an electoral campaign whose bias and disequilibrium has not existed in the recent memory of the country, in the face of the most absolute indifference of the CNE.  Besides a complaint that Director Rodriguez felt obligated to formulate to the President for the use of nationwide obligatory TV addresses, Chavez has continued doing whatever he pleases with the state media, but the CNE no longer takes care of the matter, even if only for appearances sake.

This, without talking about the full blast participation of all the public organizations, which the CNE also tries to ignore.

But there is something much more dangerous: the political use of the Armed Forces, whose specific role has been progressively perverted and each day its behavior is more ostensible as practically a political party by some sectors of the armed forces. Recently, in a ceremony of CORE 5 (A military regional command), that is in the headquarters of the National Guard in El Paraiso, the billboard that was the background of the event contained a huge NO, flanked by the logos of the National Guard and of the CORE 5. At least one active General, also belonging to the National Guard, has a radio program of political nature and is openly campaigning. There have also been political/electoral events in one or another military fort, and, of course, we still have very fresh in our memories the images of the parade on July 5^th, in Los Proceres, and the naval parade on July 24^th. that openly incorporated in them electoral elements of the officialdom. As worrisome as this behavior that is taking place is the collaborative silence of those that are obligated to monitor the legality and constitutionality of the acts of public powers, in particular the Attorney General’s office.

How laughable it sounds today to read Article 328 of the Constitution where it says that the Armed Forces “are at the exclusive service of the Nation and in no case of any person or political partiality”!

Not even because he lives in Tiuna Fort does the President of the CNE acknowledge any of this.

If we have reached today these aberrant levels, even though, they have not yet been generalized, in the politization of the Armed Forces, one has to wonder what could be the evolution of this situation in the immediate future if the President is not revoked: The Armed Forces each day act more like an armed political party at his own personal service. Therein lays a reason for reflection which points directly to the decision that Venezuelans will have to make on August 15^th. It is true that the recall referendum conforms an evaluation of the Government’s conduct in the last five long years, but is also as important to wonder about the near future, in the light of the trends towards the absolute control of institutions, that each day are made more visible in its behavior and which should help to produce definitions.

Man does not live by bread alone

This is today’s Editorial by Teodoro Petkoff in Tal Cual on the Government’s abuse of its power in the campaign, with particular concern about the involvement of the military in it

Power without Control by Teodoro Petkoff

While the experts report to the CNE the results of their millimetric measures in space and time of what the media devotes to the information about the two campaigns, with the aim of promoting an “informative equilibrium” (something which, in general terms, has been achieved and which is good), the Government has been advancing an electoral campaign whose bias and disequilibrium has not existed in the recent memory of the country, in the face of the most absolute indifference of the CNE.  Besides a complaint that Director Rodriguez felt obligated to formulate to the President for the use of nationwide obligatory TV addresses, Chavez has continued doing whatever he pleases with the state media, but the CNE no longer takes care of the matter, even if only for appearances sake.

This, without talking about the full blast participation of all the public organizations, which the CNE also tries to ignore.

But there is something much more dangerous: the political use of the Armed Forces, whose specific role has been progressively perverted and each day its behavior is more ostensible as practically a political party by some sectors of the armed forces. Recently, in a ceremony of CORE 5 (A military regional command), that is in the headquarters of the National Guard in El Paraiso, the billboard that was the background of the event contained a huge NO, flanked by the logos of the National Guard and of the CORE 5. At least one active General, also belonging to the National Guard, has a radio program of political nature and is openly campaigning. There have also been political/electoral events in one or another military fort, and, of course, we still have very fresh in our memories the images of the parade on July 5^th, in Los Proceres, and the naval parade on July 24^th. that openly incorporated in them electoral elements of the officialdom. As worrisome as this behavior that is taking place is the collaborative silence of those that are obligated to monitor the legality and constitutionality of the acts of public powers, in particular the Attorney General’s office.

How laughable it sounds today to read Article 328 of the Constitution where it says that the Armed Forces “are at the exclusive service of the Nation and in no case of any person or political partiality”!

Not even because he lives in Tiuna Fort does the President of the CNE acknowledge any of this.

If we have reached today these aberrant levels, even though, they have not yet been generalized, in the politization of the Armed Forces, one has to wonder what could be the evolution of this situation in the immediate future if the President is not revoked: The Armed Forces each day act more like an armed political party at his own personal service. Therein lays a reason for reflection which points directly to the decision that Venezuelans will have to make on August 15^th. It is true that the recall referendum conforms an evaluation of the Government’s conduct in the last five long years, but is also as important to wonder about the near future, in the light of the trends towards the absolute control of institutions, that each day are made more visible in its behavior and which should help to produce definitions.

Man does not live by bread alone

This is how the Chavez Government takes advantage of its power, with public buildings calling on people to vote NO on August 15th. This building is the main building of the Army’s techincal university and it says “No to interventionism”, “No to the disrespect of our sovereignity”

This is how everyone in the opposition would like it to look like: “For all this on August 15th. Vote SI”

I am not a believer that markets are always right and they predict the future, although I must say they sometime have an uncanny way of reacting ahead of the news. But I would like to find some meaning to the fact that the ADR’s of Venezuela’s premier telephone company CANTV, actually went up today, as shown by its quote:

Notice that the stock closed at $19.97, went up 32 cents and was never below the closing price of last Friday.

What’s weird about this? That President Hugo Chavez spent the weekend threatening to intervene the company if it tampers with the election results, going as far as saying that the decree to intervene the company was essentially ready.

News like this make investors very nervous and in the case of CANTV, its public stock is in the hand of mostly foreign investors led by Verizon, its largest stockholder, Telefonica de España and more than 18,000 stockholders. It is definitely scary to even consider the possibility of the Government running CANTV again. In 1990, it would take on the average three tries to get a dial tone, one year to get a phone and many times your phone was in conference with somebody else’s phone permanently. The company was privatized and it is run fairly efficiently today.

It is puzzling why Chavez picks on CANTV, after all, the company already provided its network for the two elections in which Chavez won in 1998 and 2000 and it is only a partner of the company providing the voting machines, which is a newcomer to the game. But perhaps the reason is that that voting machine company was chosen by the pro-Chavez Electoral Board and Chavez does not want to undermine the credibility of a Board that has favored him at every step. CANTV on the other hand is foreign owned and many who are part of Government today, were against its privatization in 1990 and have failed to see the benefits of having it privatized.

But the remarkable thing was that the markets simply shrugged off the news completely, did not get nervous by the threats and the price of the stock actually went up! Is it because they know Chavez would not deliver on the threat? Or because they know Chavez will be out by the 16^th? If markets are right and truly can predict the future: Watch out Hugo, you should be very nervous!