The Devil's Excrement

Using the very royal and regal “I” Hugo Chavez announced
today that when he found out that Banco de Venezuela, part of Grupo
Santander, was for sale, then in his own words “I say, I
am interested in buying it and we are going to nationalize Banco de
Venezuela”.

According to today’s El Nacional, the Government has now extended the period for local banks to sell their structured notes for an additional 60 days, as the deadline of August 14th. is fast approaching. I understand that the El Nacional news is not precisely correct, but rather the Government is looking at banks on a case by case basis and has given extensions to specific banks of 60 and 90 days.

Thus, what the Government ignorantly decided in May, ordering banks to sell these notes that had been in the balance sheets for months under the eyes of the Superintendent of Banks, has been delayed and postponed, as the Government realized the implications of what it was doing.

Recall that banks had these notes denominated in Bolivars, but which were backed with dollars and dollar denominated instruments, bought in the parallel swap market when the rate was much higher. Banks had been doing this to hide their foreign currency positions, which were essentially illegal, since the law limits banks to having 30% of their equity in foreign currency.

If the Government had forced the banks to sell the notes, losses would have been significant and in some cases some banks would have gone bankrupt. Furthermore, the Government did not realize initially that some of these notes were backed by Venezuelan Sovereign bonds, which would force prices of these bonds down at a time when the Government wanted then to firm up.

Thus, we have fallen into the limbo that I was afraid the Government would lead us to: The tough decisions have been postponed, some banks will limp along and the possibility of things getting worse is still there.

Let me explain myself:

There is definitely a problem, as some banks, if forced to sell the notes would not survive, unless their owners put up the money to recapitalize them.The solution is simple, you have to figure out which banks survive and which ones don’t and simply go to the owners and ask whether they are willing or not to put up their money. If the answer is yes, they survive, if not the Government has to take them over, but it is all resolved speedily, no rumors can start swirling around and the system will be ok.

Instead we are now going to delay action, looking at cases individually and opening the way for rumors to affect the financial system. Such rumors may arise from the fact that the Government itself forced the banks to quantify their losses as of June 30th. and those numbers will be available before the next 60 days are over.

But what is most ridiculous is how the whole affair has been handled. The Government allowed the notes to be set up, then it decides to force their sale and then, uups, it backtracks when it realizes the possible consequences. Which simply confirms that the country is being run by a bunch of amateurs.

Even more ironically, the extension of the period is reportedly the result of the technical advise of the Government’s archenemy the International Monetary Fund, which was called in to give technical advise on the subject. I think the IMF should have made a more forceful recommendation and hopefully it will not turn into a crisis.

In the end, the losses are currently manageable as the country’s financial system is small compared to GDP, the whole system is worth around US$ 10 billion based on their sale value. But such financial crisis have an important psychological factor and an impact that goes beyond the numbers. In the end, the banks that will not survive today will only survive if the parallel swap rate jumped sharply to the levels where they bought, an unlikely event in the next few months. Otherwise, their critical situation is as bad today as it will be in sixty or ninety days.

Maybe the Government simply would like to push the resolution beyond the November regional elections, proving once again that politics is above everything in this administration.On the other hand this may have had a different purpose in mind, like taking over the financial system and the Government has had a change of mind. For now…

Thus, the same Government that giveth the order to sell the notes, taketh it away to protect itself, in another almost comical chapter in the way the Chavez Government manages the country’s financial system.

I have been quite disappointed at the so-called “mainstream
media” for not covering the press conference today on the final results of the
Aragua primary. Here we have a
truly democratic, transparent and efficient process with final results less
than 48 hours before the polls closed and only Noticiero
Digital managed to have coverage of it. It is now 9:30 PM in Caracas as I
write this and I can’t find anything in either El Universal, Globovision,
Unionradio, ABN, El Nacional or Tal Cual.

Noticiero Digital posted it before 3 PM (The press
conference was supposed to have started at 11 AM) picture of Maria Corina
Machado and all included.(You can read and find out all about the primaries you wanted to know (or not!) including the final tally as well as a look at the round ballot, probably a first in the world, at www.primariasaragua.com. The post with the final tally was up right after 1 PM)

Maybe they were afraid to show how easily Aragua resolved
its problem while Chacao is mired in a confusing mess of candidates,
bickering, accusations and confusion.

Maybe that is also why Ismael Garcia’s speech in the
National Assembly telling Deputies that this is no revolution or socialism and the
Government is full of corruption, is also nowhere to be seen in the regular media.(Disclaimer: I don’t particularly like Garcia)

Oh yeah! And the Venezuelan Supreme Court ruled on one
request for an injunction against the resolution by the Comptroller
disqualifying the person that presented  from holding public office. Had it gone the other way it would have been messy.

At least Tal Cual did
report on Minister of Energy and Oil Rafael Ramirez’s statements that when
electric service has been interrupted recently. it was not a blackout or a power
cut, because it was done only for maintenance purposes.Get it? I certainly don’t

I guess next time the lights go out, I will have to call
Electricidad de Caracas to ask if they really went out or they are doing
maintenance and they disconnected them for my convenience..

This explanation must be like the one about crimes we don’t
care about if they happen, like when hoodlums are killing each other. Or
maybe it is like
the discussion in the Mercosur Parliament by Paraguay’s Partido Nacional,
which the President of our Parliament says was not  discussed because
only one Deputy brought the subject up and nobody paid attention to him anyway (Nadie le paro!). This must be
like whether the trees fall or not if nobody is in the forest to see them do it.

What do I know? I don’t even haggle when I go shopping to
help the Government stop inflation. Maybe the CNE did report the rest of the votes in the December referendum, but they did not tell anyone and did it quietly and secretly.

This is a revolution after all…just a bizarre one…

One should not minimize the importance of the primary that took place on Sunday to select the opposition candidate for the upcoming Gubernatorial race in Aragua State: It took place, it was festive, attendance was quite adequate and it provided a democratically-elected candidate by the direct participation of the people.

Isn’t democracy sweet?

It clearly wasn’t easy, it required agreements, some money, some volunteers, but the end result is impeccable, one hundred thousand voters from Aragua State (about 15% of the number that usually votes in that State) showed up to vote Henry Rosales (no relationship to Manuel) as their candidate.Even more remarkable, Rosales obtained over 81% of the preferences, way over what any poll gave me. You can question the polls, but you can not question yesterday’s vote.

It was a victory for Podemos, not so much because their candidate won, but because they executed it, sat the candidates in a room and called on Sumate to help organize it.It was also a victory for Sumate, as they clearly worked for democracy’s sake, as they had no partiality in this race.

But hopefully, it will set a path for future selections of candidates, less bickering, more transparency and more participation.

It will also be interesting to see if the victory allows Rosales to gain additional support across the State, proving the beneficial effect of a clean primary  on the winners. Moreover, you can be sure none of the losers will even dare suggest that they will run.

It’s very simple once you try it

One of the failures of the Chavista revolution is to attempt
to create a system, which so little resembles what the average Venezuelan wants
out of life or believes in. In fact, Chavez has taken advantage of that buying
his popularity using the billions of Bolivars he has had at his disposal. Some
Misiones were simply that, pay people to do nothing instead of work, but have
them attend his rallies at will. No money, no attendance, as the average
Venezuelan has such a hard time making ends meet, that there is little time to
volunteer for party duty.

Thus, today the autocrat looked out of touch and detached when he
snapped at the very workers that help produce and broadcast his Sunday variety
show Alo Presidente.

He first told an engineer working to produce the program that he could
volunteer for the show, rather than charge for it. Later, he complained
about the union contract of the cameramen of VTV, that paid them the equivalent
of eight hours for each hour worked, which he called degenerate, perverse and
vagrants.

Chavez went as far as suggesting that he may do something about it if VTV
workers don’t want to renegotiate the contract, reminding the workers of what
he did with PDVSA.

I find the whole display absurd given the reality of Venezuela and the fact
that those that surround Chavez make orders of magnitude more than these people
and that the difference between the salary of a Minister or Supreme Court
Justice has increased dramatically since Chavez took over.

But either Chavez is out of touch and disengaged, or the PDVSA example is
simply extremely inappropriateand obscene.. PDVSA workers make today, on
average, more than they did in November 2002, before the oil strike, and the
number of workers has increased by almost three quarters, going from 44,000 to
70,000, so PDVSA is not precisely an example of sacrifice for the revolution,
as they also enjoy what is certainly the best benefits in Venezuela’s labor
markets.

But beyond that Chavez seems to be living a reality that is much different
than what most Venezuelans have to deal with daily. Most union contracts have
been delayed in their renegotiations and certain regions, like Guayana, where
Chavismo claims to be leading in, depend strongly on such contracts. In fact,
Chavez took over Sidor when the union could not agree on terms with management
that would have made steel workers make every month, as much as full professors
at Venezuelan university. Is he willing to give them that now?

In fact, I find it hard to believe that calling workingmen perverse and
suggesting they should charge less will sell well in whatever the local version
of Peoria is. It is Chavez himself that travels around the Globe giving gifts
and telling us how rich we are. How can he really not expect the average
Venezuelan to participate in the wealth that they have yet to see?

Because these cameramen and engineers are not that well to do. They probably
don’t own their own home, use public transportation and are struggling to make
ends meet in the face of 30-40% inflation for their cost of living. They
probably have more than one job and the idea of volunteering has not even
crossed their mind as they are trying to figure out how to make extra money for
whatever they lack.

And today’s’ complaints by the autocrat indicate a degree of isolation much
larger than I could have imagined. At a time when corruption cases in the multi
million dollar range are the norm, when scandals show how Chavista Governors
and Managers buy and use airplanes to travel regularly in luxury, asking the
less well to do would seem to be the worst possible thing to do in an electoral
year.

Because in the end people are getting tired of promises and revolutions and
sacrifices, as things start getting worse, not better and they hear daily that
the price of oil has been soaring. It has been ten years now, the IVth.
Republic is long forgotten and the US seems like a virtual threat to Venezuela.
Crime, inflation and unemployment seem to be the real enemies of the people at
this time.

And
even Chavez’ threats and ultimatum to his former allies PPT, PCV and MEP
seem somewhat detached. His attempt at a single unified party, simply did not
work. He has to deal with them now, if he truly wants unity. And threatening to
set them aside will in the end only favor the opposition, as any party that
feels left out, will likely look for help in the other side. Because they all
know that institutionality is very weak on both sides. PSUV was born with lots
of members, some forced to register and others induced to register because
there was something at the end of the socialist rainbow. But the rainbow seems
getting dimmer and the promises fuzzier.

And even the issues seem irrelevant. Does Chavez really think that the use
of the Telesur logo constitutes a crime? Does he think that people will find
something in it, when the operation “Jaque Mate” yielded the promise of Ingrid
Betancourt’s release that he could never deliver on?

Chavez has become detached an isolated and it is only his control over the
system that allows him to do what he does. People don’t care about his visit
with the King or whether Russia is on our side or not, or selling us weapons or
not. People care about their day to day, which Chavez seems to be ignoring more
and more.

To most Venezuelans geopolitics are as important or relevant as the latest
Paris fashion show, something remote and mysterious, which they may or not read
about in the newspapers. But irrelevant either way.

The great communicator of the revolution can no longer walk in the streets
with his “people” and seems further and further away from them. He does not
understand (or know?) the impact of 48% food inflation in the last twelve
months. Or the fear of being robbed everyday after two hours getting back and
forth from work. Or why it takes so long to get back and forth. And if he does
not understand the significance of these anytime soon, it will be him that will
be asking these parties to come back and join him. Without them, it is PSUV
that may not survive.

A friend and former student Efrain, sends me this somewhat mystifying picture taken near Carupano in the Eastern part of Venezuela. It is a ¨Bolivarian Educational Unit¨that goes by the name, I kid you not, of ¨Costilla de Vaca¨, literally Cow´s Rib. Amazing they could not think of a historical figure, battle, regional theme or accomplishment to name the ¨Ünit¨.

But even more mystifying are the drawings of ¨Before¨and ¨Äfter¨. It seems as if all the revolution has done is change one rudimentary tool for another, a scarf over the head here and there, but that’s it. I fail to see any real significant change in the before and after pictures.

Which only goes to show how slippery the revolution, its accomplishments and its goals have become even to the hardcore supporters of Chavismo.

While I can be critical of the opposition, I am rejoicing as to the way
Hugo Chavez has so far managed his “unity” candidates for the upcoming
regional elections. In fact, if you look for a trend, it seems as if
the opposition is converging day after day in more candidacies, while
Chavismo seems to diverge more and more.

This is obviously very good for the opposition, but once again, one
should try to rely on the potential of your strategy and not on the
failures of the enemy. Much like in the December referendum. We want
the opposition to win, not Chavez to lose, even if I will take either
of them with a smile. I would just seem too easy to coordinate a
successful strategy, but I digress.

By now, it is clear that the “unity” parties are not very happy. Chavez
created the PSUV to eliminate them and instead has found an inordinate
amount of resistance and a huge split in candidacies. This without even
considering the impact of Podemos completely separating itself from
Chavez’ PSUV party a few months ago and becoming part of the extremely
heterogeneous Venezuelan opposition.

Beyond these divisions, Chavez trying to impose his will has also
created splinters within his own PSUV party, leading to multiple
candidacies in states like Carabobo, which are certainly going to
threaten and damage the chances of the official candidate versus the
opposition.

Unfortunately, Chavez watches closely what polls are saying and may
decide to be more “democratic” accepting dissenting candidacies that
have a better chance or simply finding a way to “buyout” the will of
those candidates that know have little chance but may be the cause of
the PSUV’s defeat on Nov. 23d.

Because people should not forget that while Aug. 5th. Is the deadline
for registering to be a candidate, people can withdraw until days
before the regional elections and/or throw the support of their votes
towards the candidate of their choice in November. Thus, what we are
seeing today, may have little to do with the perspectives on Nov.
20th., as Chavez will negotiate, bribe and use all of the powers of his
Government to get his way.

For the opposition, the downside is that it may be too much in the
daily headlines, particularly its candidates, as they try to decant
their number before Aug. 5th. Thus, decisions like that of William
Ojeda to quit the race in Ocariz’ favor are simply music to my ears.

Meanwhile, Chavez divisive act may not only split the vote, but also
keep people away from the polls, as the beloved “people” are getting
fed up with his lack of accomplishments. And this represents a huge
advantage for the opposition, as Chavez has done extremely well in
elections when he is a candidate, but whenever he hasn’t been a
candidate, abstention has been huge, giving him a smaller fraction of
the votes than if he were running directly. Unfortunately (for Chavez),
Venezuelans are extremely unreliable when you poll whether they will go
to vote or not, which will make Chavez intelligence on the possible
results of November quite difficult, even if they can measure well the
likely outcome.

Thus, the opposition has to walk a fine line, trying to resolve its
conflicts quietly and making sure it does not burn out its candidates
in the noise of the internal fights. Meanwhile, it has to hope that
PSUV continues to divide officialdom, while Chavez travels and attempts
to prop up his damaged international image.

The opposition also has to take advantage of the fact that Chavez’
biggest advantage, high oil prices providing him with an ample supply
of funds, is really not playing a major role as Minister El Troudi has
imposed a policy of restraint in spending (which is good!) which has
slowed down the economy, making the average Venezuelan feel like things
are worse than they used to be a year ago. Such a policy can only hurt
the President, making you wonder whether Chavez fully understands what
is going on in the economy (or whether he has been told about it by El
Troudi!).

Hopefully, we will see more Ojeda-like acts in the next couple of weeks
that promote true unity in the opposition and that even in the likely
event that the bans or disqualifications stand for the regional
elections, the opposition will be able to score a victory in November
from which the autocrat will never recover.

Tomorrow, the company where I work will be moving. It is not a huge
move, barely 840 meters away from where we currently are in a straight line, but such a small distance is going to make a
huge difference in my life.

You see, traffic in Caracas has become simply unbearable. Measured in
Google Earth, I live exactly 2.13 Kilometers away from my office. But
in the morning it may take me as little as 25 minutes and as long as 45
to get there.

If you think that is awful (it is!). Consider my drive home in the
afternoon, which may take me from 40 minutes to an hour. In fact, at
least six times this year, I have stepped out of my office and seeing
traffic within the parking lot reach the 4th. floor, I simply decided,
suit and all, to walk home.

But starting tomorrow, the office will be 840 meters as the crow flies
closer to my home. But in terms of time the difference is incredible,
There will be no traffic lights in the way and if I pick my streets
correctly, I can get there in about four or five minutes in the morning
and come back in about ten in the afternoon. In fact, even with a suit
on, it will take me about thirteen to fourteen minutes to walk the
distance. A truly life-changing experience in my mind. I will have over
an hour more of leisure, blogging, orchiding, reading, what have you. I
will gain 6% more time everyday to do something I like.

And yes, the current horrible state of traffic is the Government’s
fault. From free gas (gas is about 8 cents a gallon at the parallel
swap exchange rate), t the heavy subsidy on imported cars; this
Government has done little, if anything, to improve the traffic
situation in Caracas. In fact, he publicly stated that he had not built
anything in Caracas during his tenure in office because it was not a
priority. Of course, Bolivian highways seem to be more important to him
and he appears to think that traffic in Caracas is mainly oligarchs, as
if the subway system managed to take care of the transportation needs
of the less well to do.

But think about it, after four years of cars being imported at the same
rate of exchange and over 20% inflation per year, anyone with a job has
more purchasing power for an automobile than he or she did four years
ago. More importantly at these inflation levels it makes little sense
to have money in the banks when interest rates are negative which
drives car buying even further.

And the Chavez administration can be blamed directly not only because
it ahs failed to find solutions by building new roads, bridges or
highways, but also by showing the most absurd ideological neglect to
possible solutions.

The first one was the decision by the Chavez Government to do away in
2000 with the natural gas project that PDVSA had had in effect for
about eight years. No reason was given for cancelling the project in
2000 but it was likely due to the fact that it was conceived and driven
by the oligarchic, capitalistic PDVSA and that as unacceptable, but
then in 2007 it was revived out of necessity. And in typical Chavista
fashion, a decree was issued forcing car manufacturers to sell dual
gasoline/natural gas by June of this year, an impossible goal to meet,
which has forced car companies to stop selling cars now until the
Government does something about it.

The second unbelievable approach by the Chavez Government was to simply
boycott the plans by opposition Mayors to introduce hours every day I
which cars can not drive according to the number of their license
plate. The Chavez Government opposed these plans and the Courts quickly
approved request for injunctions against them by Chavista groups,
killing the plans, which in my humble opinion were quite helpful.

Problems like this are not restricted to Caracas. Anyone that has to
travel for business either flying or driving is doing it much less
simply because it is so time consuming. Going from Caracas to Maracay
or Valencia has become a full day occupation, with half the time, if
not more spent in the car wasting gas and smelling the fumes.

Meanwhile, there is no aggressive plan to improve traffic or introduce
measures that will help Venezuelans spend less time stuck in traffic or
helping improve the environment, save oil or foreign currency used for
importing cars.

But in my case, I will benefit tremendously from the solution my
company found. Just think, I may even use part of my new free time
blogging more, just to bore you to death!!!

I feel so good today. From Moscow, I not only learn that
Chavez wants
to spend some more money on buying weapons from Russia to complement the
billions of dollars already spent, but he has also invited the Russians to
establish military bases in Venezuela. This is making me feel so safe now. I
have no worries now, unless Chavez decides, for example, to start a war. He
almost did on March, but once the mobilization of soldiers and tanks began, he
realized that Colombia could probably take care of the Venezuelan armed
forces in a couple of days.