Archive for March 4th, 2007

Scandal Du Jour: Venezuelan Ambassador to Colombia video

March 4, 2007

Globovision is showing a video of Venezuela’s Ambassador to Colombia Pavel Rondon, criticizing Uribe’s liberal party and clearly intervening in that country’s affairs. In the video, some of the Colombians present shout against President Uribe and they are told not to worry about the possible death of Fidel Castro as the revolution will continue and Rondon calls for the socialist revolution to continue.

Another scandal from the not so diplomatic revolutionary diplomatic core of Hugo Chavez. This from the Government of a man that calls any mention of Venezuela an intromission in the country’s affairs.

Stay tuned to the scandal du jour!

Economist Gustavo Garcia on the economy: It’s the economy s…

March 4, 2007

There is a good interview with economist Gustavo Garcia in today’s El Universal, who has just returned from a year and a half at Oxford. Garcia simply blasts the Government in all fronts and tells you pretty much what Ihave been saying in these pages for months.

Garcia blasts inflation indicators and how the Government hailed the February numbers, which showed inflation rising more slowly going from the 2% in January to 1.4% in February. Garcia points out that the Central Bank did not publish the percentage of food items not available in February as is customary. I might also note that in every month’s report, the Central Bank notes which food items went up or down, but this month that statistic was curiously missing from the press release. I wonder why?

Even worse, the Central Bank says that one reason for the drop in inflation in February, was the drop in the VAT tax. Well, that is truly a miracle, given that the tax went into effect March 1st.

Garcia calls the drop in the VAT unsustainable, because the Government ended 2006 with a 4% deficit and the price of oil is below 2006 prices. Thus, only a jump in oil prices can save the Government from a deficit that can blow up in its face.

The most interesting part, to me, of the interview is that Garcia thinks that Chavez will use the removal of the three digits from the Bolivar as a way of “packaging” , in his own words, a devaluation, by taking three digits off, but making it Bs. 3 per dollar or something like that. What I find amazing about this prediction, is that I don’t think that given the current numbers, the Government can last until then. With the cut in the VAT and if spending continues, we will see huge pressures in the parallel exchange market and the difference between the official and parallel rate may become too big to ignore until the end of the year. Either the Government slows down spending or its going to get truly scary.

Garcia notes what I predicted here, that the Bono del Sur would not help at lowering the parallel rate. In fact, when it was announced that rate went down, but as you can see here, all that rate has done this week is go up and up. I am not too optimistic that it will even go down with the much promised (since June!) supposedly upcoming PDVSA issue.

Unfortunately, Garcia is one of those true experts, which is disliked by the Government, but whose advice would do wonders towards avoiding or at least reducing what is likely to be a very bad crisis for the Venezuelan economy.

Marketing gimmick or patriotism?

March 4, 2007

This gas station in Nebraska is the first one to offer gas from only either the US or Canada and call it “Terror free”. Of course, if all gas stations in the US did this, cars would not run, so it is unlikely to spread. widely The question is whether this is a marketing gimmick or true patriotism.

The beginning of rationing?

March 4, 2007

The wonderful people of Mercal in Tachira state announced with great fanfare a new system for the distribution of scarce goods such as chicken, meat and milk from now on. The will give tickets to the communities that entitle people to receive a limited number or quantity of each item. These tickets will given to the communal councils so they can not only assign them, but also so they can oversee the food distribution network and the sale of products.

I guess the revolution has now discovered rationing and they think it’s good management!