Economic tales from the Venezuelan revolution

January 28, 2009
  • PDVSA is late in making payments to suppliers and companies that provide services to it. Sorry, I should say PDVSA is very late in making payments to suppliers and companies that provide services to it. How late? So late, that PDVSA today seized a drilling rig owned by ENSCO, after ENSCO decided to stop drilling unless PDVSA paid it the money it is owed.
  • In the first 23 days of the year CADIVI, the foreign exchange control office had paid up US$ 839 million for travelers credit cards almost a quarter of what it paid in 2008 when the travel quota per person was twice as large. Clearly, Venezuelans have become quite adept at playing markets and arbitrage. Oligarco Burguesito lives on!
  • And how about funny man Rodolfo Sanz, President of CVG saying that the aluminum companies are almost collapsed. According to Sanz rhe companies are obsolete, have huge debt with suppliers and need about US$ 3 billion to save them. What is the main problem? That the price of aluminum has fallen 66% and the stuff is being sold below cost. Well, in July 2008 the price of a Ton hit an all time high and we never heard Mr. Sanz talk about investing or anythig like that, no?
  • And another one of the famous Chavez announcements came to nothing, as Brazil’s Petrobras says it will go alone if PDVSA does not participate as it becomes increasingly clear that PDVSA is not that interested in the project.
  • And the shortages of coffee, sugar, milk and toilet paper are of course blamed on a conspiracy to sabotage the upcoming referendum vote. If rather than blaming it on conspiracies they worried about why this is happening maybe they could ease the problem. Additionally, maybe since the whole Government is working on the referendum, nobody is paying attention to unimportant things like importing food. Brace yourself, it will only get worse. I can live without coffee, sugar and milk, but toilet paper? No way…

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