The Devil's Excrement

This
morning in a TV program, the President of the Venezuelan Supreme Court (see report
in Tal Cual) had the audacity of suggesting that the chanting that took
place the other day in the inaugural session of the Supreme Court for the year
2006, was nothing more than a case of euphoria, the people expressing their
happiness at “the opening of an electoral year”. (Yes, he said
electoral, the event had nothing to do with elections, but that is all these
people think about each day) He said that it was not only the judges that
chanted, but their families and the workers of the highest Court of the land. He
called the event intranscendental and just due to happiness.

I then ask
you Mr. Mora: If the High Court of the land should reflect non-partisanship and
independence, how come such a high percentage of those present expressed that
euphoria and happiness at the President’s presence, while barely 18% of the voters
managed to show up at the recent regional elections? Why weren’t Venezuelans showing
that same euphoria that day, staying home and exhibiting an apathy that has
clearly become a huge cause for concern within the Government?

And then you
contradict yourself and the way you have acted so far in the Supreme Court. You,
Mr. Mora said: “it is not good for judges to be allowed to be carried away by
their emotions that may put in doubt the autonomy of the Judicial Power”

Hello?
Didn’t you just contradict yourself there? Do you follow the same irrational
logic in your decisions? Maybe I now understand most of them Mr. Mora. You come out in defense of the Government regularly;
give opinions in cases that you may be involved, even before they are brought
to you and the Hall you preside has yet to rule against any of the positions of
the Chavez Government. Moreover, whenever an international human rights organization
criticizes the Chavez Government, you claim it is an intromission in the
country’s affairs. In that way, you are simply helping to violate those same
rights. Who are you defending then?

Yes
Justice Mora, justice in Venezuela is not doing very well, not only do most Justices
in the Court that you preside chant and jump in praise of that autocrat called
Hugo Chavez, but one Venezuelan is killed daily in the country’s jails and
after seven years of “cleaning up” the judicial system, close to 40% of the judicial
positions have yet to be filled permanently. While cases against opposition figures,
some of them basically irrelevant in the scale of what is going on in the
country, are prosecuted and persecuted relentlessly, murder, assassination and
corruption cases are not followed up in the most outrageous impunity this country
has even seen. Chavista murderers go free, tried by Judges that have been in
some cases, convicted
murderers themselves. Judges who do not rule according to the Government’s
line of thinking are shamelessly and routinely removed within days of their
decisions. Civilians are tried by military Courts and the Court itself expanded
itself using an unprecedented interpretation of the Constitution. Additionally,
for the first time in Venezuela’s
history, a case tried by your Court, has been admitted for review under the
same arguments rejected before!

Some
Justice!

The truth
is that the grotesque and shameful spectacle that you and most of your
colleagues held in what should have been such a solemn occasion, simply shows
how servile you are to Hugo Chavez, how you have no independent criteria and
how your personal gain, profit and position is above your ethics and
principles.

Your
interview today was as disgusting as the show you presided over the other day
and simply proves that our Justice system is not in good hands. In fact, it is
in the worst of possible hands. You have become part of the autocracy. You no
longer protect the people or defend Justice; you have sold yourself in the name
of power and personal gain.

And everyone should read Quico’s piece on how no idea is too discredited to be revived by the revolution.Excellent reading, particularly for those that may have been born after 1980 and don’t have a historical memory of what happened then.

A couple of
months ago I
wrote a piece on the Argentinean bond swaps the Venezuelan Government was
making, which I accompanied with an Editorial on the subject from Tal Cual. Basically,
in the name of “solidarity” the Venezuelan Government was buying Argentinean
bonds, only to later sell them at the official exchange rate to local banks
without any transparency. These banks then turned around, would sell the bonds
at a slightly lower US$ price in Wall Street; obtain dollars which are worth
much more in the “parallel exchange” market, making the banks a tidy profit.

Today. The
Financial Times has a
nice article by Andy Webb on what a windfall this has become to “certain”
banks in the Venezuelan financial system. I thus have a quiz for my esteemed
readers, particularly those that support the Chavez Government, before I let your read Andy’s article:

1)
Why
would a “revolutionary” Government allow the banks to make the money, rather
than having the Venezuelan Government make it and thus make the “people”
richer.

2)
Why
is there so little transparency to this? When I wrote that piece in November
the numbers were fuzzy and still remain fuzzy. How much of the bonds that Venezuela has
purchased have been sold in this fashion? By whom? At what price?

3)
How
are the banks that benefit from this chosen?

4)
Who
decides who gets the bonds? How much does he charge for favoring you?

5)
Does
Chavez know about this and if he doesn’t, who in Government has convinced him
in the name of solidarity to do these transactions to enrich the banks and whoever
collects the tidy commissions?

Read on
about how the rich (and the “bolibourgeois”) get richer in the name of and in the same bed with “the
revolution” in Venezuela:

Venezuelan banks enjoy treasuries
windfall by Andy Webb-Vidal

A select group of Venezuelan banks is
profiting from opaque government treasury operations involving hundreds of
millions of dollars of Latin American sovereign bonds under a financial
programme fostered by President Hugo Chávez. Backed by record oil revenues, Venezuela has
bought $1.6bn in Argentine debt during the past year – mostly
dollar-denominated Boden bonds maturing in 2012. They were purchased in
auctions that were eschewed, in some cases, by big investment banks, such as
Citigroup and JPMorgan Chase, because the yields offered were considered too
low.

Venezuela, which has been the largest buyer
of Argentine sovereign debt since the country defaulted on itsforeign debt in
2001, has said it is ready to buy up to $2.4bn worth of Argentine bonds.

It has also bought $25m of
Ecuadorean debt and finance minister Nelson Merentes recently said he was
looking at buying Brazilian and Chinese bonds.

Investment banks Morgan
Stanley and Deutsche Bank are reportedly advising on the bond transactions.

Mr Chávez justifies his
virtual “hedge fund” as a benevolent concept that will allow Latin American
nations such as Argentina to “liberate’’ themselves from an international
financial system that, he asserts, is manipulated by the US.

Last year, Venezuela transferred all of its foreign
reserves that were held in US Treasuries or that were on deposit at US banks,
about $20bn in total, to the Bank for International Settlements in Basel, Switzerland.

Venezuela’s bond purchases have helped Argentina
increase its foreign reserves. President Nestor Kirchner’s government last
month paid off its outstanding $9.5bn debt to the International Monetary Fund,
in part thanks to the cash injection from Mr Chávez.

“Whilst the [bond]
purchases are good news for the Argentine government, the benefits for Venezuela are less clear,” said Vitali
Meschoulam, emerging markets strategist at HSBC Securities in New York.

The Financial Times has
learned that significant profits deriving from the bond transactions are being
accumulated by a few private banks, rather than by the Chávez government.

In late November, Mr
Merentes announced that some of the bonds had been liquidated, leaving a profit
of $40m. Mr Merentes said last month that $600m worth of the Boden 12 bonds had
been sold, without elaborating on the method.

Most of the bonds were
sold directly – instead of in an auction – to two local banks, Banco Occidental
de Descuento and Fondo Común, according to two people familiar with the deal
and a senior official at a financial regulatory authority. The banks have since
re-sold the bonds into the open market.

Mr Merentes didn’t respond
to several requests for comment during the past week. Victor Vargas, president
of Banco Occidental de Descuento, and Victor Gil, president of Fondo Común,
also didn’t return messages seeking comment.

But though the chosen
banks are likely to have profited from increases in prices of Argentine bonds,
they have benefited more significantly from Venezuela’s foreign exchange
controls, in place since 2003, and a flourishing but tolerated parallel market.

Venezuela’s treasury sold the Boden 12 bonds
to the banks at the official exchange rate of 2,150 bolívars to the dollar.
But, according to the people familiar with the transactions, the banks re-sold
the bonds at the parallel market dollar rate, which trades at about 2,600
bolívars.

On a re-sale of $100m
worth of bonds, the banks would gain bolivar profits equivalent to about $17m
at the informal market rate, or $21m at the official rate.

Following alleged
complaints from banks that were excluded from the operations, in recent weeks
the finance ministry has also begun selling directly to them some of the bonds
that it still holds, in $40m-$50m tranches every two weeks.

Orlando Ochoa, an
independent economist, said that a lack of transparency has become the hallmark
of the Chávez government’s financial administration.

‘’The ministry of finance
is allocating windfall gains in Argentine bond operations to selected domestic
banks, without bidding rounds and without financial reasons to privilege
them,’’ Mr Ochoa said.

“Autonomy of the Supreme Court Guaranteed”

“Uh Ah Chavez no se va”

Pam Chito from Notitarde strikes again!

I was going to comment on this news about Venezuela’s Scotch Whisky consumption, but this article from American Thinker has largely stolen my thunder. I always say that I always feel Venezuelan, except when it comes to not drinking Scoth and arriving punctually on time. I have never understood the local fascination with Scotch and would love to understand it better. We have great and reasonably priced rhums, so why the Scoth craze? I am the wrong person to ask. I once went to a wedding where after a glass of champagne, all you could drink the rest of the evening was Scotch. I left early, I like Coca Cola, but come on!

But you have to wonder whether Chavez will ban Scotch at official functions, much like he banned the use of Santa Claus and other symbols of foreign influence last Christmas. I doubt it, Scotch is as deeply ingrained in the Venezuelan psyche as baseball, Christmas trees, Panetone, nuggat and one of our national staples:hallacas, which have very foreign raisins and almonds embedded in them. But what I find remarkable is that 2002 is the record, but we are now approaching it, despite the graph I posted two days ago. But this time I do have an economic explanation: First the old oligarchy keeps drinking Scotch as many of them are making money hand over fist with the “robolution” which can’t resist a comission, add to that the new oligarchy, called the “boliburgeois”, who love the 18 year old Scotch and have become the new businessmen of the revolution and the near record consumption of Scotch in 2005 needs no further explanation.

And the poor? Waiting for the VIth. Republic.

A few people have asked me why I have mostly ignored in my blog the World Social Forum which took place in Caracas last week. Well, I am sure that those that came to Caracas had a great time in this beautiful city and that Venezuelans were very nice to them, as Venezuelans are friendly and helpful. But I have no doubt that the event was mostly a non-event in terms of its goals and origins for too many reasons.

The problem was the way on which the Venezuelan Government controlled the event. This not only put off some people, because it went against the very nature of the Forum, but it also meant that all of the organizational details where in the hands of the Venezuelan Government and thus the participants were able to see the managing incapabilities of Chavismo first hand.

The Government tried to hide the dismal failure that the event was by simply trying to ignore it by the end of the week, but let’s take a look about what Government officials told us before the event and what truly happened:

1) The Organizers said that 120,000 would come from abroad. The number was truly outrageous anyway, but it is likely than fewer than 10,000 people actually came from outside the country.

2) The Organizers had said that the La Carlota military airstrip in Caracas would be used as a camp for participants to stay at. Then, we were told, events and conferences would take place in Parque de el Este right across the highway. (Parque del Este had refused to allow people to camp in it). In the end it was unnecessary. La Carlota was only used one day for an event, but nobody stayed there anyway, there was plemty of room elsewhere.

3) We were told that some Latin American leaders like Lula and Kirchner may come, in the end neither showed up, worried that Chavez would upstage them in a street event much like Mar del Plata. In fact, the only event in which Chavez participated was one in Teresa Carreño which must have been fairly exclusive given the size of that theater. In fact, Chavez did not even show up to the closing ceremony, indicating that the Government realized the whole thing was not a success and moved on. The highest ranking participants were from Brazil, inclduing the infamous Mr. Jose Dirceu, who had to resign his Government post when it was revealed that he had been buying votes in Congress.

We were told over and over, that this was not costing Venezuela a cent, but we also saw signs that this was simply an outright lie. Clearly there was coordination as to promoting this party line among Government officials, because that is all they talked about before the meeting began. in a clear sign that that Government polls are registering the unhappiness of Venezuelans over Chavez’ largesse abroad.

But it was hard to hide the truth as attendants were met at the International airport and shown by TV cameras to be given packages (Which supposedly contained money, maps, programs and condoms) at their arrival and taken to Caracas in fancy buses. According to this site, “The Venezuelan government has opened a route specifically for passenger vehicles during specific hours of the day in order to accommodate the large number of WSF participants.” which I don’t think ever really happened.

The presence of numerous musical groups in Caracas especially brought for the Forum also flew in the face of the “no cost” explanation. Which NGO would finance these groups to come and entertain them? Parties there were many and I am sure everyone had a good time, given the quality of the groups from many countries.

Posts in the blog mentioned above tell you enough about how disorganized the whole thing was. This was the most common complaint. language problems, cancelling of events, scheduling of events, transportation between events.

There were four levels of housing: The “Stars” friends of the revolution stayed at the five star hotels of Caracas, other radicals of prominence stayed at lower class hotels, then came those that camped in Los Caobos, followed by those that stayed in Parque Adames. The latter revolted and since attendance was so bad, they were moved to Los Caobos, where there was mud but it was not as bad as in the other site. Finally, there were those that stayed at private homes who were charged US$ 4-8 per person per night, sharing rooms. I heard that some people who had their airfare refunded by the Venezuelan Government upon arrival, moved to hotels with their “savings”.

Venezuelans did benefit from the event. The visitors bought all sorts of trinkets, which our street vendors (“buhoneros”) had plenty of, in all styles,sizes and shapes, including a Chavez/Che/Bolivar watch (above) which I find absolutely obnoxious. On Monday, I know firsthand of someone who was paid Bs. 150,000 to be at the march against imperialism and was handed out a Cuban flag to wave. He was actually given an explanation for this: they needed people because foreigners were all late to the event, due to the problem with the viaduct.

Venezuelans in general were indifferent to the event, some complained about traffic, but the nightmare that was projected from the Youth Festival last fall never materialized. But the week and the activity in the city was dominated by the final week of Venezuela’s Winter Baseball league, more so with the team from Caracas, Los Leones del Caracas, playing the Tigres de Aragua for the title. This contributed to traffic as much as the Forum. The same day that the Forum ended, the Leones won 5-1 their fourth game of the series, sending the people of Caracas into a frenzy. It had been 11 years since their last league victory. And that, in contrast to the Forum, they will never forget.

I have yet to find a great copy of the obscene spectacle given by the Venezuelan Supreme Court last week, this is the best one I have found so far, even if the sound is not great. The main problem is that only the state TV station was allowed in the Hall in another demosntration of the divisive nature of this Government. (Thanks urru)

At a seminar last week, which I was unable to attend, an economist presented some general graphs about the Venezuelan economy in 2005 and 2006. I got the presentation and reviewing it ,was surprised by a header which said that the price of one Venezuelan “Basic Food Basket” was at an all time high in US dollars. This seemed counterintuitive to me, because this should only happen at times of overvaluation of the currency, which is not the case at this time. I then decided to plot in the same graph the minimum salary (in red, scale on the left) in those same years and compare it to the average price for the Venezuelan food basket (in blue, right scale), both in US dollars. This has the advantage of being a fair comparison, as both are numbers generated by the Government and if anything the food basket is underestiamted, since the Government uses only Mercal prices to calculate it. Moreover, below classes C, people who have a job make only minimum salary

The graph is amazing. What it says is that while the minimum salary has yet to recover to the level of the year 2000, in the meantime the price of the food basket (which I think is for one person in this case, but was not defined in the presentation) has gone up by 150%. This is truly perverse, as it implies the purchasing power of those that have a salary has done terribly in the last five years.

Economists in Venezuela are mostly againt the dollarization of the economy, but when I see a graph like the one above, being an amateur economist, I can’t help but disagree. The argument against dollarization is that growth becomes harder to achieve. Well, the argument for dollarization is that people would not get screwed by irresponsible Government policies, like in the last five years (and in 1989 and 1995) when devaluations decimated the purchasing power of the common people without any compensation. If the economy were dollarized, salaries would retain their purchasing power and the availability of imported goods, which are determined in US$ by inflation abroad and not in Venezuela, would keep prices in check. Only politicians benefit from a devaluation in the end.

Not being an economist, I still find the huge increase in the price of the food basket above quite surprising. I knew that inflation in food was much higher bthan the CPI quoted by the Central Bank, but had no idea it was so bad. It also shows how ineffective price controls are as it is precisely foodstuffs which are controlled since 2003. It would seem to me that the graph says that there is too much money going after few goods which is the result of the lack of production locally, which dropped in the last few years. Any alternate explanations would be welcome.

Kudos to Chavista Deputy Earle Herrera, for having principles and the guts to state the obvious and defend the media right to publish the files on the case of the Danilo Anderson assasination. While other Chavista reporters have been wishy washy at best, Herrera, who is a Professor of Journalism sticks to his principles:

“the protection of the case files, procedural confidentiality, all of that corresponds to the offices in charge of administering Justice. If I had access to any of those documents as a journalist, I would publish them”

I guess he is now suspect as a loyal member of Chavez’ MVR which elected him to the National Assembly.