Archive for May 7th, 2007

Is all hope lost when people don’t even defend themselves?

May 7, 2007

Timidus se vocat
cautum, parcum sordidus (The coward calls himself cautious, the miser thrifty)
(Roman saying)

I have been dismayed by the reaction by the banking system
to President Chavez’ threat that he would nationalize the whole private
financial system if they did not obey a decree that he has not even published.
Dismayed, because it shows a basic fear to respond to Chavez’ threat, as if
like an ostrich with its head in a hole, replying t the autocrat in a nice way
would somehow protect them for the whims of the dictator. They are stupid or
foolish enough to believe that by not saying much, they will not suffer the
fate that clearly awaits the whole private financial sector in the medium term.
Even worse, with one very honorable exception, they not only remain silent in
the face of the threat, but also respond that they do not feel threatened and
they will collaborate in the growth and development of Venezuela, as
if there was not a very explicit threat to do away with them altogether.

Thus, they appear to have given up without a fight, they do
not defend their property, but even worse, they fear defending their
principles, which may be the reason why we are where we are today. The threat
to nationalize the banking system by a State which is incapable of running the
banks it currently owns, under incredibly favorable conditions for the banking
system, represents another crazy idea by the autocrat, who still believes that
his Government can actually run anything efficiently, when the opposite is
precisely the truth. Banco Industrial de Venezuela, Banco del Tesoro,
Banfoandes, Banco de la Mujer and Banco del Pueblo show why the Government
should stay out of banking altogether. These institutions credit portfolios are
amazingly enough smaller, percentage wise, than those of the private banking
system, but their bad loans clearly top those of the private system, their
profits lag and corruption rules and service is absolutely the pits. But in this
upside down world of the Chavez revolution, all of this represents an
opportunity to make things worse or destroy, which, is what the revolution
seems to love.

already lived partially through this during the financial crisis of the
mid-90’s. The Government took over some of the best banking franchises in the
country, many of which were shut down, and others simply deteriorated in time
but were fortunately sold to private investors. This was actually good for the
surviving banks, many of which grew fast during those years at the expense of
the Government banks. It was only when some of the Government banks were
privatized that more competition came into the system.

But competition has never applied to the state banking
sector. Despite having the advantage of being able to direct Government
deposits to their coffers, they have always been mired in corruption, cronyism
and incompetence. Seldom have Governments appointed anyone with real banking
experience to run these banks and in some cases, like Banco Industrial de
Venezuela, the Government has had to capitalize the bank at least twice that I
can recall, probably more and the financial indices are so shameful that
sometime months can go by without any financial statements from them being

Thus, there is no rational reason to propose the
nationalization of the banking system, other than the goal of controlling and
obtaining even more power. In fact, the banking system has been nationalized
already in the sense that financial institutions are overtly dependant on the
State, with over five times their equity invested in Government paper that
could one day become worthless.

But when the “Banking Association” is incapable of fighting
for itself or their property, after four years of obscene profits. When they
are silent in the face of threats against their own living and beliefs, maybe
they deserve what is coming to them. If they do not believe in their own
institutions and activities sufficiently to defend them, fight for them and
tell the country the consequences of the Government taking the whole system
under its wings, then good riddance, maybe they don’t even deserve the
privilege of running or owning their institutions.

Perhaps that is the reason why we have reached the level of
absurdity and Government control we have reached in Venezuela, there are too many
cowards among us. Yes, I understand why there is fear, self-censorship and
silence in the face of a powerful autocrat and Government that not only
controls everything but also can squash you at will. But in the end, if there
were nobody left to stand, to speak out in defense of our rights, we will end
up not having rights at all anyway. 

Nothing says this autocratic Government in the end will not
squash us anyway, but at least we should be able to say we put up a fight with
dignity and honor, which is exactly what we are not seeing today. 

What a shame!