The Devil's Excrement

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!

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.

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 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!

Yeap! We saw it too down here, great show!

—Minister of Interior and Justice Carreño accused the US Drug Enforcement Agency of being a new drug cartel yesterday.

I guess the CIA must have lent him the Direct TV controls through which we are spied on daily according to the Minister and he discovered this new cartel. Watching Carreño is going to be an interesting sport going forward.

—Day before yesterday President Chavez was speaking about why it was good to be poor for about ten twenty minutes, he then went on to his next story and said: “When I was poor…”

Uups!!

—Pro-Chavez party “Podemos” decided not to dissolve itself and join Chavez’ “Unique” party for now.

Wait until Chavez fires them all from their Government jobs.

—Two women in Ciudad Bolivar denounced that a local Mercal market, when you buy a chicken, they stamp your belly with ink to indicate you already got one.

I don’t know what the scandal is all about, at least they did not use numbers.

—Four years ago I wrote about Judge Mikael Moreno, a convicted murdered that Chavismo named as a judge. Well, this week the honorable judge was suspended for “grave conduct” and disobeying and order from the Supreme Court.

I feel sorry when someone like that “suddenly” goes stray of the law.

—President Chavez said that the CIA was infiltarting his communal councils.

Never had the CIA been as efficient as in it is in Chavez’ Venezuela, I guess all opposition members of the councils will be labelled CIA and jailed. they deserve it!

—President Chavez assured us that taking three digits off the Bolivar will make the currency stronger. “Just think-he said-a dollar will now be worth Bs. 2.1 instead of Bs. 2,150”

Umm, I wonder why they don’t just take four digits off, make it twenty Bs. cents to the US$ and a Bolivar would be worth more than the British pound and much more than the currency of the Evil Empire!

There is this intriguing article in Argentinean news site total news, which also appeared in in an Argentinean investigative reporting site called “Tribuna de Periodistas” here, which contends that an Argentinean -made nuclear reactor arrived in Iran via a triangulation in which the Venezuelan Government participated.

The article says that it is not clear whether Argentina’s President Kirchner knew the true destiny of the reactor, stating that it was taken to Iran in a Venezuelan ship which was being repaired in Rio Santiago, Argentina.

Venezuela is known to have expressed interest in buying an Argentinean nuclear reactor in 2005, when meetings between the Ministry of Energy and Argentina’s INVAP took place both in Caracas and Buenos Aires.

If this news is confirmed, which should happen shortly given the fact that so many people would have participated in it, it is significant for the case of Physicist Claudio Mendoza, who is still under the threat of being fired from his tenured position at IVIC. This is because supposedly, Claudio injured the prestige of IVIC, where “all” nuclear activities of Venezuela supposedly take place. If it can be proven that the Ministry of Energy purchased a nuclear reactor from Argentina, to send to Iran, IVIC’s claim to centralized nuclear activities in Venezuela would be proven incorrect and Claudio could not be fired for the reasons given.

Of course, if this story proved out to be true, which the author has assured fa friend of mine that it is, it would have important repercussions for the three countries involved in the triangulation, which I will discuss when we have more information on the matter..

It’s the economy stupid! By Teodoro Petkoff in Tal Cual

The Government and its cronies are boasting about the “enormous success” that the placement of the so called Bono del Sur has been, for which the demand exceeded by far the offer. They see a sign of economic health in what is nothing but a symptom of disease. The great demand the “Chak” bond had simply brings out the following things: 1) The wonderful deal which signifies buying dollars at preferential prices, that can then be sold in the parallel market, at a considerably larger price, making a nice speculative gain without any risk at all. I am sure there will be some shenanigans too, for sure. 2) The desperate search for dollars on the part of sectors that really need them for their imports and that are banging themselves against an incontinent foreign exchange control office (CADIVI). 3) CADIVI’s constipation has provoked grave difficulties to those industries that depend on imported raw materials, which in turn generates shortages of the goods they produce. We are told of shortages in car parts and medicines, besides the log list of consumer products, which have disappeared from markets and mercales.

As is well known, nobody learns using someone else’s head and least of all these fake revolutionaries, because in their petulance they think that it is them that invented the wheel and ignore everything that is happening now with inflation and shortages is a subject n which they will have to take a make up test, a subject in which prior Governments prior to this one had flunked.

Nothing new under the sun

They begin by establishing price controls. It is the great panacea blessed by the conventional wisdom of a country that during decades has lived through them and that still believes that is the way to go. But inflation, that old cadaver, revived by the exchange and fiscal policy of this Government, pushes production prices up, and controls becomes a trap that commercial logic begins to break, because nobody can sell below the cost of a product. The controls start to become fictitious, until the threats, the anti-inflationary pacts and laws against hoarding attempt to make them work: then, the produce ceases to produce for the same reason: nobody ca produce at a loss.

Shortages begin; products begin to disappear from markets and mercales. That is not explained by the “Wiseman” Heinz Dietterich nor are the answers in the Soviet manuals. Neither are they in the Cuban advisors, true experts on matters of shortages and fake recipes to face them, but unable to provide the argument of the economic sanctions as the alibi, because it does not work in this case. I, the Supreme must bemoan not being able to appeal to that line, but we, in contrast with the Cubans, are over invaded by gringo products. Now the Government wants to self impose economic sanctions, reducing almost by force.

How can we not remember Clinton: It’s the economy, stupid!