Archive for March 1st, 2009

Chavez cashes in his victory, Atlas shrugging Venezuela

March 1, 2009

Gone a week, but it feels like eons. Despite the week having two days off for the non-existent Carnival holidays, Chavez managed in a day to “cash in” his referendum victory by “intervening” all rice processing factories and bringing back “The Monk” Jorge Giordani to the Ministry of Planning. The first one not significant in the sense that it continues the destructive path that Chavez has set. Not significant in the long run of things, but it certainly does matter because Chavista management will as, as usual, manage to destroy what’s there and there will be rice shortages in the end, more so now that money will become scarce.They are simply Atlas shrugging Venezuela.

But the second, Giordani’s return, is in the end the most significant factor. This will be Giordani’s third tour at the Planning Ministry and never has such an ignorant man on economic matters had so much power over the country’s economy. And believe me, there has been a lot of ignorance in the ineffective halls of the country’s Planning Ministry.

Because in his first tour of duty, Giordani set up a time bomb with his strategy of holding the currency constant and issuing boatloads of Bolivar denominated debt at 20+% interest rates in one of the most idiotic combinations of policies ever. He kept talking about the country’s piggy bank (The FIEM) being full, but then he allowed Chavez to go through it in a few months setting up the 2002 economic crisis that your favorite PSD’s continue to blame on politics and not on the mediocre and frustrated geniuses like Giordani whose academic careers went bust (if they ever existed), but had the foresight to go visit Chavez in jail in 1992-1993, making them the oracles of Chavez’ economic failures.

But even worse, these brainiacs became the Venezuela’s Presidents economic mentors, teaching our President a potpourri of feelings, North Korean economic theory, Cuban Management techniques and Maoist Marxist models, which have led to nothing but failure in the last ten years.

So, Giordani is back, maybe to hold the currency constant for a while longer that even I expected, because it was he who taught Chavez how good things were in Venezuela in the 60’s when the currency was kept constant, but in his ignorance he did not tell the autocrat that monetary liquidity was also kept constant at that time.So Chavez understood part I, but never understood the second.

Expect little from the change in Ministry other than more exotic financial management, which will only lead to more poverty and wealth destruction.

And just to make sure this happens, Chavez takes over the rice processing companies, warning that this time he will not even pay for them in cash, but with “paper”, as if he had paid any of the recent nationalizations and expropriations with either of them.

And now he affects the interests of Venezuela’s largest private conglomerate, which has tried to stay low key, hoping things will turn out for the best, as well as the US’s largest private company, also a low key player as long as things were going well.

But you harvest what you sow, and a decade of silence and obedience from the Venezuelan private sector is coming home to roost. Tomorrow, most people will be asking what this all means, rather than questioning who will be next. Chavez followed his 2006 victory with some new “revolutionary” moves, what else could anyone have expected this time around?

As the money runs low, there will be similar “grandiose” moves, playing to the gallery of the 50+% that voted for Chavez two weeks ago. At that time Chavez said he had shielded Venezuela with his good economic policies from the world credit crisis. He now says get ready for the difficult times ahead. One hundred dollar per barrel oil is no longer a “fair” level, but an autocrat’s fantasy. And since Obama does not want to meet with him, he sent the newly elected President to Hell, using the well known local phrase of telling him to go clean his coat (Vaya a lavarse el palto…), not precisely a polite or diplomatic way to address the man you were fantasizing about meeting three months ago.

And then there was the kidnapping of “the good guy” that I just don’t want to mention, but have to. It’s meaning unclear, but the threat very real. Whether part of the daily Venezuelan reality or a Government message, there is simply no place to hide. There is no authority to appeal to. Much like those near the rice companies, or the daily Venezuelans in the barrios, those near him probably find themselves trapped in the anguish of a country gone absurd. No rule, no law, no order.

And this is what some people call a revolution.