The Devil's Excrement

–GDP in Venezuela was up 11.2% in the second quarter of 2005 thanks to
heavy spending by the Government, However, oil GDP was barely up 1.5%
in the quarter, despite the fact that it is measured versus the same
quarter a year ago, when the average price of oil averaged just below
$40 a barrel.

–The number of Deputies to be elected to the National Assembly in December is determined on the basis of projections of
population by the National Institute ofr Statistics, rather than actual
census numbers. Curiously, Miranda and Carabobo states both lost a
Deputy. Theses two states are among the top three in which the
opposition has strength (The other one is Zulia). This is teh first
time in decades that either state grows slower than the country, execpt
the other times it was a census, these time it is projections.

–Since 1998, when Chavez became President or later, infant mortality
is up 16%, death by malnutrition is up 40%, malaria is up 50%.

–The “popular car” that will cost around US$ 6,000-8.000 will be
exempt from the Value Added Tax (VAT). Another subsidy by the poor, who
could never afford one of these. Gas, by the way, is still US$ 0.19 per
gallon.

–Imports in the second quarter were up 52.2% making everyone wonder
whatever happened to the “endogenous” development. By the way, the
Government’s food program Mercal, imports 70% of its products. Go
figure!

You have to love the pretty robolution and how fast it brings people
out of poverty. Certain people. Such is the case of former Lieutenant
Arne Chacon. Chacon, who participated in the attempted coup of 1992 and
happens to be brother of the Minister of the Interior and Justice Jesse
Chacon is now President of Baninvest, an investment bank that he
recently purchased with a group of friends and of which he is an
investor. The new owners are asking that the bank be turned into a
universal bank.

Up to the early 90’s in Venezuela, regulators did not allow banks to
act as financial agents in all fields. Thus, a commercial bank could
not give out mortgages and banks could not invest in projects
themselves. For these activities, you had to get an additional license
and have that license act as a savings and loans for mortgages and an
investment bank for investments. With time, the Supeintendent of Banks,
began allowing banks to become “Universal” and perform all activities.
After the financial crisis of 1994, the Superintendency decided that it
would not issue new banking licenses, but there were many around either
as mortgage banks or investment banks, which have been sold by its
owners to others that wanted to turn them into commercial or universal banks.
The last price I heard for one of
these licenses was US$ 15 million, with the premium coming from their
scarcity. So you have to wonder where the
money came from to buy this one in particular. Additionally the law
states that you have to
have banking experience in order to be on the Board of Directors of a
bank. Does Chacon have it?

Asked about thiis the Superintendent of Banks “guaranteed” that they
would check where the funds came from to buy the bank and the whole
transaction would be examined “in depth”. Yeah, sure.