Archive for January, 2007

A picture is worth 10,000 words #24: Volume sales of food at Mercal

January 27, 2007

This one is somewhat of a puzzle. In two articles yesterday and today in El Universal, we are told that the Government’s chain of popular supermarkets Mercal has not imported any food for a month and a half. Moreover, the graph below taken from El Universal shows how since June sales of food (in thousands of Tons) have dropped significantly. 70% of the food sold at Mercal is imported, so either funds for Mercal have been reduced, people are buying less there due to either prices being less competitive or shortages at Mercal stores or management of Mercal has become more inefficient. (Currently Mercal has no sugar, black beans and milk). The article also says that the number of people who have been to Mercal to shop has dropped by 41.5%.

Curiously, the President of the Venezuelan Federation of Medical Doctors reported on Thursday that 45% of the Barrio Adentro modules are now closed.

Note: The data in El Universal only went to Nov. 21, so I simply assumed that sales during the last week in November were equal to one third of the sales of the first three weeks of November to plot the graph.


Gioconda Cunto de San Blas and the “dark clouds that are looming” against freedom of speech and academic freedom in Venezuela

January 26, 2007

Last Tuesday, mycologist Gioconda Cunto de San Blas, was incorporated as a numbered member of the Venezuelan Academy of Physical Sciences, Mathematics and Natural Sciences, a fact that I pointed out earlier in a “good news” post. Dr. San Blas is the first woman to become such a member of the Academy. I was unable to attend, but Dr. San Blas sent me a link to her presentation, as well as the text accompanying it, which I will attempt to upload and link to later.

I thought it was worth translating her words in slides 39 and 40 of her presentation, which in Gioconda-‘s customary principled style, speaks out for women in science, freedom of speech and against the attempt by Chavez’ revolution to redefine with ignorance the concept of what science is or should be. These words alone should tell you, why Dr. San Blas deserved to be a member of the Academy, not only because of her distinguished scientific career, but because of the certainty that she will not only fight, but she will never be silenced. At times like this, Venezuela and the Academy require more women and men like Dr. San Blas. Indirectly, Dr. San Blas is referring to the case of Claudio Mendoza referred to earlier, where the ugly clouds of fascism and intolerance have become a reality in recent days.

Dr. San Blas’ words:

“My incorporation comes signed with the commitment to support my fellow academics in achieving greater visibility, directed towards the incorporation of new female members in the Academy, in the certainty that all of us will be up to the new challenges that are posed by a society evolving as fast as the present one. I make my own, the words of Irène Curie, not only a Nobel prize winner – as we already saw- but a distinguished fighter for the rights of the women, who said at some occasion: “I am not one of those that think that a woman scientist can lose interest in her role as a woman, in either her private life or in her public one”. It is in that interest for the public cause, which is nothing but the meaning of the word Republic, that I am concerned about the dark clouds that are looming against the indispensable and enriching freedoms of expression and lecturing, a fog that slowly, but without pause, seems to be penetrating these academic and university corners, to prevent that there may freely arise from them, diverse ideas and thoughts, to be freely contrasted with aid of only reason. We are already being threatened explicitly and without scruples from the highest spheres of power with a future conflict with the centers of knowledge. We talk about the necessity to make science pertinent, that is to say, that which is oriented towards the immediate needs of the country, as long as the cold experimental data are not politically impertinent, that is to say, opposed to the content of official speech and under the assumption, denied by the facts, that researchers have been working with their backs turned against our national reality and that it is only now, that we will dedicate our efforts to it. We are being told today about popular science, to be generated by supposedly spontaneous creators without any academic training, in apparent contrast to formal science. But they deceptively obviate, that the latter is the only one capable able of creating universal valid knowledge, starting from criteria rigorously verified and poured off throughout centuries of experimentation, that all the modern advances, from electricity to fertilizers, from aeronautics to computers, from vaccines and medicines to cellular phones, that today improve our possibilities for comfort, have not been products of an improbable popular science, but of the indispensable and rigorous formal science made by scientists of high professional qualification and transmitted to the people in the form of applied technologies. We now want to quickly educate thousands of scientists and technologists without the appropriate maturity of knowledge, so that they help in the construction of a modern country, denying the high level contributions that in the last 49 years have helped, even if in insufficient form, in that direction. But one thing is true; they want scientists who will silence their own opinions about the specialized subjects that are their own, whenever they may brush up with political interests that it is not convenient to stir up from academic and university podiums. In short, with veiled threats and others which are not so veiled, it seems that times have arrived in which every one will have to reframe his/her position with respect to the State. If this ever happened, we can only hope that such individual decisions do not take us in the future to deserve a collective condemnation similar (although, without a doubt, in a different context) to which General Telford Taylor, in the trials of Nuremberg, launched towards the German academics, when he reprimanded them for their lack of decision to oppose Nazi pseudo-science: “… They are the men who absolutely failed their country and their profession, that did not show any courage, nor wisdom, nor any vestige of moral character….”


A picture is worth 10,000 words #23: How relevant is the parallel market?

January 25, 2007

Government officials, from the new Minister of Finance to members of the Financial Commission of the National Assembly have been arguing that the “parallel” or “swap” rate is irrelevant for setting the price of imports because 95% of all imports are made at the official rate of Bs. 2,150 per US$.

Is this true? The answer is no and it comes from official sources.

Unfortunately for the Government control is not yet total over information, so you can find the plot below in the CADIVI (the Foreign Exchange Office) website of dollars approved on average each month by that office. Then you can go to the Central Bank website (under External Sector) and find that for the first nine months of 2006, a total of US$ 24.2 billion were imported. Well, from the plot below, you can add month by month (including taking account holidays) and you come up with the fact that CADIVI approved in those nine months a total of US$ 18.38 billion.

What this means is that the difference implies that at least 25% of the imports, not the 5% claimed by the Government, went through the parallel market. Why at least? Because the amount given by CADIVI is for everything, travel, dividend and repatriation and the like, so not all of the US$ 18.38 billion is for imports. Thus, the percentage is even larger.

Thus, these guys are either ignorant or are trying to deceive us with their 95%. You can even calculate the inflationary impact of the spike in the parallel market recently (It reached Bs. 4,450 today):

Last year, the average parallel rate was approximately Bs. 2,700 to the US$ , thus the weighted average cost of imports was Bs. 2287, given the 25% that was purcchased at the parallel rate. If we assume a parallel rate of Bs.4,000 to the US$, this weighted average would become Bs. 2,612, an increase of 14% over 2006. Of course, not everything is imported, but neither are products stamped with a label saying “Bought with CADIVI dollars”, which allows merchants to increase prices pretty much at will. As I said in October: The seams are beginning to show some rips…much faster that some people expected.

And the parallel market is indeed quite significant, despite all of the Government’s claims to the contrary.

From the CADIVI website on Jan. 24th. In blue: The total amount of foreign currency approved daily on average each month since 2004. In red: The total amount actually purchased or given out by the Venezuelan Central Bank. Days are banking days in a month.

Of fools, the Politician’s Trap and exchange controls or wishing will not make it so

January 24, 2007

(Versión en español aqui)

Politicians are certainly a different breed. They can lie, pretend to be stupid, be stupid as well as cynical and they keep a straight and even a smiling face all along. This applies to all politicians in Venezuela from IVth the Vth. Republics, this is nothing new and not exclusive to the Chavez Government, but the spectacle of the last few days with respect to the parallel market and exchange controls has certainly been one of the most pathetic ones I have ever seen.

The first thing that is amazing about politicians, and I repeat this applies to those in the past as well as the present, is their naiveté in believing that if there is a problem you just legislate and magically it will go away. Venezuela has had a judicial system which is almost inoperative and corrupt, for years. Despite this, the emphasis in Venezuela by politicians is always on creating new laws, rather than the enforcement of them. You can just go to any street light in Caracas and watch to see how irrelevant laws can be for both the authorities and the citizens.

But a better example is corruption. Venezuela has one of the most strict and modern ant-corruption laws in the world, the “Ley de Salvarguarda del Patrimonio Publico” which was approved in the early 80’s. Despite this, and the fact that there has always been huge levels of corruption and that corruption is rampant today, only one person in history has ever been jailed under this Law and he was let go.

In February 2003, the Chavez administration established exchange controls in Venezuela. Exchange controls have always proven to be a losing proposition for Venezuelan and Latin American Governments, due to the lack of discipline in spending as well as the many distortions they create. They can be short-term tools, but very, very seldom have they been used that way in Latin America and certainly never in Venezuela. In fact, each and every one of the controls imposed in Venezuela has lasted too long and ended up badly and the current one does not seem to be any different as distortions have surfaced and by now this is the longest lasting exchange control in the country’s history by far.

To begin with, when the Chavez Government imposed exchange controls in February 2003, all it did was to limit access to Government foreign currency. While it forbid operations with foreign currencies, there was no legislation that forbid it, thus, you could not do it, but if you did, there was no punishment for it.

But additionally, the decrees did not and could not forbid certain type of transaction such as the conversion of local shares of companies to those that trade abroad, essentially creating a possible mechanism for getting money out or bringing it in. A second possibility was to do a “swap”, simply purchasing a bond in Bolivars and swapping it for one in US$ once again converting from one currency to another.

Soon after the exchange controls were imposed, the Government introduced a Bill in the Assembly in April 2003 to declare certain operations with foreign currency illegal, but the Bill was curiously not approved until October 2005 and then explicitly allowing both the share conversion and the swaps, by saying that all capital market securities were exempt from that Bill.

At the same time, a parallel legal market to trade foreign currency developed, which used both the conversion of shares and swaps. As this market became more organized, its volumes expanded. Since the net flow is out, pressure on the parallel exchange rate got stronger and the value in this parallel market for the dollar increased. At this point, some clever Wall St. adviser to the Government (Yes, they use them!) suggested to the Government in July 2004 that one way to reduce this pressure would be to issue a Venezuelan Sovereign bond in dollars, but sell it to local investors in Bolivars, as a legal and one time shot for getting money out and at a cheaper price than the parallel market.

And it worked! It worked so well, that the Government did this many times, relieving the pressure in the parallel market and keeping that second rate down. Basically, these issues remove or “sterilize” monetary liquidity, thus there are fewer Bolivars available for buying dollars.

Then the Development Fund Fonden was created by law and given part of the international reserves with the mandate that it could only spend it in foreign currency. Another clever fellow then suggested that Fonden could buy bonds from Argentina, which could not place them directly in the international markets and turn around and sell them to local banks, which would then sell the dollars in the local parallel market. This then accomplished three things at once: It helped Argentina politically (good for Chavez!), it allowed Fonden to get local currency without violating the law and finally, it provided US$ to the parallel market, thus the Government was directly intervening in the parallel market to keep that rate down.

But there was a fourth reason to make this interesting: it became a racket in which only certain “friendly” and paying institutions would get the bonds, with both sides making a bundle. Remarkably, except in Tal Cual or here, you read very little about this huge corruption racket in the media.

The government sold in this manner some US$ 3.6 billion in Argentinean bonds in the parallel market and later it came up with another scheme using structured notes that accomplished almost the same purpose.

The problem was, that 2006 was an electoral year and the Government refused to devalue the currency and spent like crazy to keep its popularity. Thus, monetary liquidity increased by more than 70% in 2006, while reserves barely went up by 16% creating extraordinary pressure on the parallel market, which I predicted would go up, only up! While the parallel currency stood at Bs. 2700 to the US$ in August, it jumped to Bs. 3,000 by November, Bs. 3,400 by Christmas and is currently around Bs. 4,100 to the US$.

Which brings us to our story.

After weeks of saying this is irrelevant, because the parallel market is too small, the Government is clearly concerned by now. The main reason is that the parallel market is not that small and merchants mark prices up using the parallel rate. To makes things worse, since December the Government has not provided any foreign currency to the market and interest rates are so negative that people want to buy foreign currency to preserve their savings.

So yesterday, the National Assembly held a hearing to discuss the issue. The first thing they talked about was the fact that after they wrote the law, they somehow did no put anyone in charge of enforcing it. The police apparently has not been told to do it and the Tax Office says it has not tools to fight it. So, the law is only as good as the paper it was written on, because nobody even thought of connecting the dots from law to enforcement. Some Government!

The second thing they discussed yesterday was the fact that the parallel rate should not be where it is, that it is all “speculation” as CADIVI, the Foreign Exchange Control Office is giving plenty of dollars to all importers. Well, this may be true, but not all imports are given dollars to begin with and right after the election, 3,500 items were placed in a special list, which requires that you provide a certification that a specific item on that list is not manufactured in Venezuela.

But more importantly, it has been quiet a while since the Government has given many companies foreign currency at the official rate to repatriate dividends, which is making these companies nervous as the currency depreciates either in the parallel market or simply because inflations closed 2006 at 17
%, the highest in Latin America and they fear a devaluation or two this year.

And that in itself creates a problem. The Government has been promoting an artificial drop in interest rates, with a 90 day Treasury Bill rate currently below 4%, below the equivalent rate in the US$, while inflation is running at 17%, well above the US CPI. Thus, savings rates in Venezuela are deeply negative, which makes people want to….buy foreign currency.

And that is where the so-called “speculation” comes from.

But they blamed the “opposition” and the “speculators”, but obviously, it never occurred to them to blame the incoherent and stupid economic policies of the Government. Incredibly they will continue the “show” in the next few days asking a bunch of people to come to the National Assembly to be “interrogated”. Among them, the Assembly will invite the President of Banco Venezolano de Credito to inquire why it occurred to him to go to the Supreme Court to ask that they nullify some of the articles in the Exchange Control illegalities Bill. Once again, it did not occur to the illustrious Deputies that Mr. Garcia Mendoza, one of the few outspoken men in the private sector, thought somebody’s rights were being violated by the Law or that the law had too many discretional penalties, which is really what that suit is all about. Or even that he had the right to go to Court if he thought something was illegal. That’s what teh rule of law is all about. But they will harass him anyway.

But today, it even got more bizarre when the new Head of the Finance Committee of the National Assembly as well as none other that Deputy Amoroso, the same man that proposed the first foreign exchange bill, said they wanted to investigate “where” the dollars to the parallel market are coming from, as if the US$ 3.6 billion in Argentinean bonds came out of nowhere, together with some US$ 6 billion in structured notes. In fact, the problem is that the Government has not sold anything since about Dec. 10th. leading to the sharp rise of the last few days and not all of the spurious reasons they want to come up with. Maybe they should investigate themselves or stop grandstanding.

The truth is that they are caught in another corollary of the Devils’ Excrement: The Politician’s Trap, which I defined in this blog last September:

“But it may more properly be named the Politician’s Trap, because it allows them to postpone important decisions in order to boost their short term popularity, but somehow it always ends up blowing up on their faces, with dire consequences which are always paid first by the people via devaluations, unemployment and inflation.”

And it is a trap, because damn if you do it and damn if you don’t. If they allow the rate to devalue it fires up inflation, if you hold it back, the decision will have to come later down the line at an even higher exchange rate, fueling inflation even more.

And thus, they all wish it will go away, but it won’t, they are trapped by their foolish economic policies, which violated basic principles of economics, which can be done, but only for so long. It has now come to haunt them and there is just no easy way out.

The proposals are the usual, the first, change the law to maybe even make the parallel market illegal, which will push the rate even higher, the second one is more bizarre or fascist, but so typical of their mindset: Ban the media from publishing where the parallel rate is at, as a way of limiting speculation. Of course, you may have El Nacional, El Universal, or even RCTV, stop publishing the parallel rate, but can they really stop internet media like Veneconomia or this US-based website from doing it?

I doubt it, so that maybe the Politician’s Trap should be renamed and called the Fool’s Trap, but I could get into trouble for that under the muzzle law, I would be insulting the so-called “majesty” of Parliament. Or some equally strange concept like that.

CANTV reminiscences

January 23, 2007

CANTV was first privatized in 1992. As a first step, the Government sold 40% of the company to a GTE-led consortium (GTE was later bought by Verizon) at an implied price for the whole company of US$ 4.2 billion. GTE was given a monopoly in fixed lines until 2,000 and CANTV did not have a cellular concession at the time and slightly less than 2.0 million fixed lines.

In 1996, the Caldera Government decided to float some of the remaining shares of CANTV in the local stock market and listing it in the NYSE. A bit more than 40% of the company was sold at an implied total price of US$ 3.8 billion.

Today at the close the total value of CANTV stood at US$ 1.3 billion, thus disproving Chavez’ statement that it was sold “cheap”. In fact, investment by CANTV alone is worth three four times that. On the contrary, if the Government took it over near this price it would be the Government that would be making a great deal by selling high and buying it back cheap. On top of that CANTV, in its Movilnet subsidiary, has about 6 million cellular subscribers, something that did not exist in 1992.

As a Government company, CANTV was simply terrible. You could only get through in one out of every three phone calls, it would take years to get a telephone and the company lost money. Here is a description by a reporter from the US who lived here then.

Why was this the case? Easy, politics, corruption and Government regulation. First, being President of CANTV was a juicy political position to which many incompetent people were named. (There were some good ones too!). Two, the company was badly run, there was corruption, too many employees, equipment diversity and decision-making was simply too slow. The company not only lost money, but it did not invest sufficiently to keep the service technically up to the required levels.

Of course, the Government argues that it will run it well. Hard to believe and if you are skeptical, remember three years ago Chavez created a telecom company to compete with CANTV called CVG Telecom. After 270 million dollars and four or five Presidents CVG Telecom is not close to even begin competing with CANTV. What can make anyone think that CANTV will be run efficiently and without politics. Being its President or on its Board will become one of the most desired by politicians.

Everyone has his/her horror story about the Government owned CANTV. I have many too, but just as an anecdote, on February 4th. 1992, the night Chavez staged his first coup, my first instinct on hraring the news was to connect by modem to the then nascent Internet. There was a network of Venezuelans called Atarraya (hosted at MIT) and I connected and started telling people what was happening, what was being said and the many rumors that were reaching me. I started at about 1 AM and because I was not sure if I would be able to connect again, I stayed connected all night essentially providing a “live” text broadcast of the news. This was not a cheap proposition, more so given that I did not live in Caracas and the call was considered a national long distance call. In the morning, Chavez surrendered, news died down and I decided it was time to go to sleep at about 8 AM and finally disconnected the call. Ten minutes later someone called me to tell me something that I deemed important enough to tell the people in Atarraya, I tried to connect for half an hour and between the bad CANTV network and all the gossipy Venezuelans on the phone it was impossible, I gave up after an hour.

Maybe somehow my blog was born that day, even if it started ten years later…and I certainly don’t want service to get that bad ever again…

Tax Superintendent calls for calm and coherence. Who was he adressing?

January 23, 2007

Strange statements today by the Superintendent of Taxes Jose Gregorio Vielma Mora.

He told people to “stay calm in the face of the uncertainty caused by the changes announced by the President” among them a possible tax to luxury, and he advanced that any increase in gasoline would be exonerated of the VAT.

He added that

 “Seniat next week is going to actively participate in the public debates of the Enabling Law, and we mean to generate much confidence, much tranquility, to eliminate the uncertainty”

He explained that “the tax on luxury is an idea with has as it bases the year 1992 “that is not an idea of this Government and the Seniat (Tax Office)”

On the tax on luxury he said “I want to be coherent with my words, we are reviewing the laws, is not settled what rate we will charge, it is no the creation of a new tax”

At the end, he closed: “I believe one has to handle to this with a more coherent language, so as not to create greater uncertainty, that stimulates inflation, also to look for a mechanism of connection and coordination with the productive sectors of the country because we want that an endogenous development with the participation of all the citizens, where the private sector grows, the small and medium industry, the cooperatives, the co-managed companies, where we can make a country with a high yield and where the State can unload for job creation to the private sector”.

My take:

Does this guy talk to the Big Boss who is the one that creates the uncertainty? Where was he on Sunday? Where was he the other days that Chavez made the announcements that created the unrest and rattled the country? Chavez said the luxury tax was his idea, was he lying? Was he adressing Chavez or the public?

Yes, we certainly need coherence and it should start at the top. As for certainty, forget it, when laws are ignored and/or bypassed and the same Government makes contradictory decisions, there can be no certainty.

Top Venezuela headlines today

January 22, 2007

The country’s headlines are enough to make you sick:

—Chavista lawyer Carlos Escarra, member of the Constitutional Reform Committee: If it were for me I would go straight to Communism

I guess he thinks we are in a detour or is that what the people voted for in December?

—Bloomberg: Venezuela’s Arms Purchases Since 2005 Top China, Iran, Pakistan

You have to understand peacefull revolutions need lots of weapons and the poor wanted this first.

—Washingtom Times: Collapsing Venezuela

Lots about corruption which you have read here before…makes me wonder if almost everyone in Government and the private sector do it, is it still considered to be corruption?

—Vice President Jorge Rodriguez using the same impecable Goebelian logic he used when he was President of the Electoral Board: Without Chavez the middle class would be living in poverty

He did overdo the Goebbelian spot later in the same article when he said that the Caracas Stock Exchange was not affected by the decision to nationalize. Oh yeah! The Caracas stock index closed today 7.7% down for the day, thanks to Chavez’ wonderful statements yesterday, the index is down only 27% since its peak on Jan. 8th. the same day Chavez announced the nationalizations. I guess it must be an emerging market thing.

—Investors Business Daily on the Hitler-Chavez parallels: Dictatorship Rises

Where is the mustache? Who is Eva (See first comment, Chavez has Eva and maybe Evo)? But seriously, I liked the part about tolerating dictatorships under facades of democracy being something that has not been tried before.

The price of gas is a disgrace

January 22, 2007

Picture too good to pass up: Deja vu all over again!

Chavez yesterday: The price of gas is a disgrace!

I wonder who the Hell (not Cipote) held it back…he should be punished!!!

Picture from Tal Cual

Some good and provocative reading in Sundays papers

January 21, 2007

Good and provocative reading in today’s papers, I thought of translating some of it, but there is so much, that I can just point out to those that speak Spanish where the good or interesting stuff is:

—Historian Manuel Caballero talks about how behind the call for “popular power” Chavez is simply concentrating more power and how Chavez misunderstands the Russian revolution, where the workers were not asking to own the factories, they already owned them, but they wanted peace. Some quotes:

“In my book “Why I am not Bolivarian” I write and analise Umberto Eco’s thesis about fascism, because there has never been a whole group of people with a single way of thinking “I interpret it because I am the people”. And Eco says that in that case “the people” become a theatrical fiction that is only good for applauding. The people that go to Chavez’ rallies are not there to listen to him, only to watch him. Is the same as Sabado Sensacional” (A marathonic TV program all Saturday’s that has been on for decades)…the people that voted for Chavez in 98 and a large fraction of those that have continued voting for him do not do it to go against corruption, out of anger or frustration or because they wanted a good Government, but because they wanted a dictatorship. “

—Psychoanalyst Adrain Lieberman talks about Venezuelans, their envy, their values and violence in Venezuela. An excerpt:

“More than democrats in Venezuela, what we have is a libertarian spirit, we do not trust regulating institutions, we want to do whatever we want. We have a democratic vocation only in its formal aspects”

—Telecom analyst Victor Suarez asks what controls will the anti-monopoly regulator impose on the Government once it owns CANTV and questions the Government’s argument for nationalizing CANTV:

“In front of the verbal and administrative firing squad should be the Government officials that promised that the people would have more access to communications. Those that offered and did not fulfill their promises that the citizens would have more access to communications. Those that offered and did not fulfill their promises in eight years of Government”

—Pro-Chavez historian Margrita Lopez Maya expresses her concerns about what has been happening in the last two weeks, in particular, how Chavez seems uninterested in anybody’s opinion but his:

“Based on some of the things proposed, a process has begun of slowly weakening liberal democracy. I think we are going towards an institutional weakening of the National Assembly as a space for deliberation and the depositor of popular sovereignty. Equality and autonomy of powers rule the 99 Constitution, but I think there is the intention of inducing a modification to go towards the subordination of all powers to the Presidency”

—Alberto Barrera writes on Chavez’ vision of society (can’t find it online):

“Hugo Chavez never had that very Venezuelan need to go out in the streets and get a quick job. The State, bourgeois and liberal, always gave him everything…I suspect that XXIst. Century Socialism has a great problem: Its main manager is the “new man” from the IVth. Republic”

And yes, there have been some good announcements, but the spinning is incredible

January 21, 2007

In the last week there have been some good announcements on the part of the Government. What is remarkable is how the Government has spun these announcements as if it had not been the result of its own policies to begin with:

—After eight year’s of providing those that are better off with a gigantic subsidy, Hugo Chavez announced today that gasoline prices are going up (A gallon costs 16 US dollar cents today). This is great news as it did not make sense to give the middle class a subsidy five times that of the poor. However, Chavez held firm to not increasing the price of gas for eight long years of a senseless subsidy. Not only that, but it was his Government that ended the natural gas program for automobiles in 2000, which was recently revived. The size of the increase has not been announced, but I surely hope measures are taken to limit the impact on the poor. I have always argued (I posted on this in 2004) that the Government could pay for all public transportation to convert to natural gas with one year’s subsidy and thus prices would not have to go up for public transportation.

—The President also announced last week that he will cap Government salaries at $1,400 a month. A cap had always existed and under the second Caldera Government the “Ley de Emolumentos” was issued and has been largely ignored under the disorganization of this Government. People have been retiring with obscene salaries, in particular those at the Electoral Board, the Supreme Court and the Venezuelan Central Bank. Reportedly the Supreme Court Justices who make US$ 13,000 a month and get paid a bonus of six months at the end of the year have discussed the issue and decided this does not apply to them because they are an “independent” body. It’s almost funny for them to argue that now. Remember the case of the Vice Minister of Finance caught entering the US with US$ 45,000 in cash and telling the US Court that he made close to US$ 150,000 in 2002 alone? You have to love these revolutionaries.

—And despite the announcement that Chavez would nationalize everything that was privatized, he also said he would not revert the privatization of steel company Sidor, which is good news. Could it be because it is owned by an Argentinean consortium and his buddy Kirchner asked him not to do it?

I worry that they may be getting ideas from my blog…