Archive for August 20th, 2008

The Venezuelan Central Bank is fudging the country’s balance of payments numbers

August 20, 2008

The other day, I presented a back of the
envelope calculation
showing at what price of oil does the country start
having problems in its balance of payments. I am still reviewing those numbers,
my main small mistake was only that imports are higher than I assumed.

Today, I paid attention to
this Central Bank press release
on the same subject. The first thing it
says is that the balance of payments was positive to the tune of US$ 2.93
billion in the second quarter of 2008. That sounds ok at first sight.

However, the report says that oil exports in the quarter, in
which the average price of the Venezuelan oil basket was US$ 109.9, was US$ 28
billion. Of course, such a number only makes sense if Venezuela exported 2.7
million barrels of oil a day. This does not even fit with official numbers!

The problem is that all of this data is simply fudged. They
talk about exports, but don’t mention imports of oil. Venezuela consumes at
least 800,000 barrels of gasoline a day, but Venezuela does not produce such a
large amount. Thus, the reality is that Venezuela may be “exporting” 2.7
million barrels of oil, but Venezuela is not getting paid for that many and in
the end it has to also import to satisfy the local market.

In fact, that the numbers are fudged, can be seen in the
next paragraph on the “financial account”. After telling us the country exports
US$ 28 billion, the Central Bank tells us that there was a full US$ 11.1 billion
in a financial deficit, a full 39% of the “income” from imports, which
corresponds to “the increase in the oil credits given to foreign clients which
are not related to PDVSA

What than means in plain language is that PDVSA is not
charging for a full 39% of its exports or 1.05 million barrels of oil a day.
Which I don’t believe either, it is simply too large a number. The fudging is
simply getting too absurd. We don’t give away so much. As simple as that.

But let’s look at this from a different point of view:

The Government claims Venezuela produces 3.3 million barrels
a day

The country consumes 800,000 barrels a day.

That only leaves 2.5 barrels a day for import, so the 2.7
million number given in the BCV report and calculated on the basis of the average
price of the Venezuelan oil basket in the second quarter has to be fake.

And so has to be the 11 billion in credits, we just don’t
give away so much oil.

It is just creative accounting. I am sure that these “credits”
hide the value of a lot of the gasoline imports of the country.

But we can “redo” my calculation using the final fudged numbers
given out by the Central Bank. The final numbers should be fine, they are harder to fake:

The Central Bank says that the surplus in the current
account was US$ 2.9 billion

The total for oil imports was US$ 28 billion. Thus, the “net”
surplus, including everything is only 10% of the amount from oil imports. Since
the average price for the quarter was US$ 109.9, then ten percent of this is
US$ 11, which says that if the price of oil dropped to US$ 98.9 per barrel, the
balance of payments will be negative!

Think about it, my very approximate number was too low!

A Chavez video with an incredible historical value: His ignorance and his lack of interest in democratic principles

August 20, 2008

This may be one of the most relevant videos of an Hugo Chavez tirade.
First he has his world fight and claims the revolution starts here in
Latin America.

Chávez y la oligarquía pitiyanqui
Cargado por noticias24

But, oops, here is the leader of a supposedly XXist. Century
Revolution, after calling Marx and Engels the leaders of “scientific
socialism”, Then he calls Simon Bolivar a socialist. He also talks
(minute 1:20 or so) about the “pages” and the “windows” and the
“Internet” clearly showing he has no clue about the difference between
a computer and the Internet

Then he just says what he always wanted to say, after calling a local
newspaper a pro-US paper, people with no country, because the laws he
issued allowed him to confiscate 1600 Kilos of rice, he threatens that
freedoms for some sectors will be finished and that people will have
fewer freedoms. Of course, it will be the oligarchs whose freedoms will
be restricted. Can it be clearer than that?

Some leader! He then praises the same guy I criticized last week for
saying that price increases will not lead to inflation. Another
“scientific” hero of the revolution I guess. Has anybody asked what
happened to the money he got from selling the rice at the subway
station? Is Mr. Saman depositing it in his personal account?

Such are the ways of the stupid revolution!

All recent expropriations and nationalizations are simply unconstitutional

August 20, 2008

Just a reminder in the face of the wave of nationalizations
and confiscations:

Art 115.
of the Venezuelan Constitution

Artículo 115. Se garantiza el derecho de propiedad. Toda
persona tiene derecho al uso, goce, disfrute y disposición de sus bienes. La
propiedad estará sometida a las condiciones, restricciones y obligaciones que
establezca la ley con fines de utilidad pública o de interés general. Sólo por
causa de utilidad pública o interés social, mediante sentencia firme y pago
oportuno de justa indemnización, podrá ser declarada la expropiación de
cualquier clase de bienes.

Art. 115. The right to property is guaranteed. All person have the
right to the use, possession, enjoyment and disposition of its goods. Property
will only be the subject to the conditions of restriction and obligations that
the law establishes with the public good or general interest as its end . Only
die to the public good or social interest, via a firm sentence and opportune payment
of just indemnization, can the expropriation of any type of good be declared.

Can it be any clearer than that? Each and everyone of the
steps in the nationalization and expropriation of Sidor, Cemex, Fabrica
Nacional de Cementos and Cementos Caribe are simply illegal.

Apparently, many people don’t want to defend their rights.