Inflation and Venezuela’s structurally irresponsible politicians

September 3, 2008

It never ceases to amaze me how politicians seldom seem to assume responsibility for the things they do wrong. But the leaders of this fake revolution have to be the worst ones at never assuming responsibility for the destruction they have brought on this poor country and how they are never critical of the bad job they are doing, even internally.

A couple of weeks ago, Hugo Chavez recognized publicly that his Land Bill has not shown a single success and he is getting impatient. Funny, that Bill is eight years old and among others, his wonderful and genius brother Adam, was in charge of its implementation at one time or another. Same with cooperatives, the one time wet dream of the autocrat, turned into absolute failures, but good money keeps been thrown after bad, just because nobody dares pull the plug on one of the autocrat’s pet projects. Imagine, he might get mad and fire them!

But the ultimate insult to anyone’s intelligence was last week’s press conference by the Minister of Finance Ali Rodriguez, where among other pearls, he suggested that Venezuelan inflation is a structural problem due to speculators and “thieves”.

However, if you look at the CPI over the last ten years, as you can see it looks anything but structural, as it has jumped from 10% to 30% twice in that time after flirting with the 10% level. Thus, if anything, it looks like structural inflation is about 10% and the remainder is due to the incompetent and irresponsible policies of the Chavez Government, no? In fact, it is hard to call the latest rise structural, when it keeps going up and up! (In the plot I have been generous, extrapolating end of the year CPI to 30%, it is likely to be higher 33-35%)

But if that graph looks irresponsible, Venezuela has the highest inflation by far in Latin America, the next graph below shows accumulated inflation since Chavez came to power.

It is an almost 800% rise in these long ten years. I guess this must be part of the revolution. What is amazing, is that people have taken it and Chavez remains popular. Because salaries have not gone up 800% in the last ten years and if I showed food inflation, it would be even worse. But nothing like blaming others for your incompetence.

The worst part is, we haven’t seen anything yet, things are so distorted that something has to give and todays’ inflation will seem low when things unravel in the face of such stupid and irresponsible economic policies.

(Love those Excel Mac graphs!)

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