There are no words to describe this, from the Majesty of the Presidency to Hugo Chavez on National TV during his Variety Show Alo Presidente remembering in vivid detail his diarrhea moment:
Archive for August 3rd, 2008
Pretty remarkable the amount of stupid, ignorant or cowardly
stuff one had to hear (or not) yesterday about Chavez’ announcement of the future
nationalization of Banco de Venezuela. Remarkably, there was very little in the
headlines from the few people who were saying the right things.
In fact, there was clearly a news blackout on the part of
the media to anything that could portray the whole affair as a negative. We
were not shown the long lines in front of many offices of Banco de Venezuela.
We were not told that the Central Bank called the Presidents of the country’s
largest banks to ask that they provide liquidity to the overnight market so
that Banco de Venezuela could borrow money as people took it out and we did not
hear in the media how they also called on the largest corporations with
large deposits in Banco de Venezuela, asking them not to take the money away. (They
obeyed, they will probably do it slowly however)
First we had a
catastrophic statement by Manuel Rosales. Why did he bring so any ideas into the
statement? Probably because he had no clue, no advise about what to say. There
is no “guiso” (he called it “chanchullo”) or funny shenanigans involved in the
Banco de Venezuela case, it is just another case of Chavez’ voracity for
control of the private sector. Very poor.
Then, the President of Banesco Juan Carlos Escotet gave us his wishful
thinking view that the banking sector will remain mostly in private hands and
that this is simply a “normal” transaction. I wonder how many transactions like
this will require for Mr. Escotet to change his mind? Or why he does not tell
us that he feels threatened by it? Or why he is not willing to defend the
private sector in Venezuela against its rampant nationalization by the Hugo Chavez
Government? With leaders of the private sector like that, Chavez will
eventually take the whole thing over.
Then there are two puzzling ones from Spain, which simply
show ignorance and the need or desire to say something. The
first one is from the President of something called the “Spanish
Association of Financial Services” who “applauds” the decision by Chavez.
According to this guy, Chavez transaction will “allow him to preserve a symbol
of the country”. Hello? Preserve it from what? First of all, it was a symbol of
the private sector. But even worse, the nationalization threatens to do exactly
the opposite, as the Government will likely destroy Banco de Venezuela as a
solid and well run financial institution.
Then there is the clueless Minister of Industry, Tourism and
Commerce of Spain who
comes up with the truly crazy idea that “he does not believe that there
will be nationalization of Banco de Venezuela” and he knows Santander wants to
stay. He also clarifies that Chavez did not even talk about it while visiting
Spain last week. That should have given him a clue of what he is up against.Or is he reading Chavez’ horoscope?
there is the statement released by the National association to defend
consumers that urges the Government to face the challenge of keeping the bank
with the current levels of service (not very good ones by the way) and to “make
decisions affecting the process carefully”. Well, the way the process has been
handled so far leaves a lot to be desired.
Away from the headlines however, I find statements from two
people who dared to say what they were thinking. No surprise, given their track
First, the President of Banco Venezolano de Crédito Oscar
Garcia Mendoza told us with his customary straightforward manner in Globovision
that “the announcement is part of the destruction of the private sector of
Venezuela”. Separately in
El Nacional he said that “From now on, the private banking sector is
against the wall…With this decision you create uncertainty because why invest
if the State can come and take it all”. I wonder what Escotet thinks about this
Similar ideas were expressed by Economist Orlando Ochoa in
the same article who said: “With this, the plan of having banks that sell the structured
notes and have losses capitalize their institution collapses, because this
purchase is seen as the beginning of a plan that may nationalize the whole
Two people that speak their minds without the fear exhibited
by most of the people in the private sector. Even if they probably are worried
What most people don’t realize is what a waste of money this
transaction will be. A bank is not like a telephone company or an electric
company that deteriorate slowly over time. (CANTV’s profits dropped 60% in the
first nine months under Government management and Electricidad de Caracas’
dropped by 37% during the first year). Money flows very easily and capitals are very coward and this already
began on Thursday evening when Banco de Venezuela’ efficient and effective
webpage became its worst enemy, as people got home and moved money away from it.
And the bleeding will continue for too many reasons.
Beginning with the fact that most Venezuelans have never liked the Government’s
banking system to begin with. But then, what happens to banking secrecy when
the Government owns the bank you do business with? Then there is management as
the revolution places its workers and managers in place and the well-trained
managers of Banco de Venezuela leave. Then there is investments, as Government
run institutions are typically bad about thinking ahead and tend to be reactive
rather than proactive.
All of this will make the purchase of Banco de Venezuela a
gigantic waste of the people’s money. He is buying 12% of the banking system
and in a few months not only will he only have about 5% or so, but he will have
to move resources from the rest of the “official” banking system to prop it up.
And if there are no intentions of taking other financial
institutions today, which I doubt, at that time Chavez will order the takeover
of others or all of them. And the history
of bank nationalizations is a cemetery of inefficiency, corruption and wishful
All of it paid with the “people’s” money.