Archive for May 27th, 2009

When you think you heard enough in Venezuela…

May 27, 2009

–Iris Varela urges the President to name a regional Vice-President for Tachira state and all other states that have an opposition Governor.

Jeez, wouldn’t it be easier to not let them run?

–After Chavez said yesterday Brazilian companies were exempt from nationalization, Aregntina’s Cristina Fernandez complained about the discrimantory treatment between the two buddy countries. Venezuela explained there was no discrimination and Argentina said it was “satisfied” with the explanation.

I guess Cristina was reminded by Canciller Maduro that Venezuela paid Techint for Sidor over twice what Chavez said the company was worth and assured her the recently nationalized Argentinean pipe and briquette companies would be equally overcompensated.

–And the Head of the consumer protection agency is asking for someone to be jailed in the case of the cars owned by Globovision owner Zuluaga. Meanwhile Minsiter Assami assures us that something crooked was going on.

I don’t know if Zuluaga violated some rule or regulation or not, but what these guys don’t seem to understand is that they only go after opposition people. Clearly, if the Government only allows colonoscopies on opposition members, the incidence of colon cancer on Chavistas will drop to zero. I mean, whatever happened to the investigation on the Maletagate cases? The Citibank building? Papi, Papi in Sucre? Shoudl I go on or you get the idea?

–But in any case the problem will be solved next week, when according to Deputy Sanguino the National Assembly will approve a Bill to regulate the price of cars.

Fantastic! Cadivi approves no dollars for making cars, forcing companies to import parts at the swap rate price and companies will be forced to sell the cars as if they had imported parts at one third the price. These guys really get it!

–And in State owned company Bauxilum, Chavismo lost its control over the union to former Causa R leader Morocoima who is now an independent, just when Chavismo has called for an offensive to take over all unions in Guayana.

I wonder if Chavez’ threat last week to the unions to fire them all like he did in PDVSA if they gave him trouble had something to do with this.

–And when a third case of food poisoning took place this week in the Ministry of Education’s food program this week, the Minister immediately came up with an explanation: “Sabotage!”

Fortunately, half of Venezuelans oppose the Government so that they can always find someone to blame for their incompetent management.

–And to celebrate ten years of his program Alo Presidente, Chavez threatens to talk for four days in a row.

Too many questions surrounding this point. Will he go to the bathrrom? Will there be commercials when he does it or just an empty chair? How many nationalziations will he announce in those four days? Does the whole Cabinet have to attend all four days? Who will be running the country? (Sorry, dumb question, nobody, as usual…). If Chavez drinks only coffee for four days, what will he be saying at the end of four days?

Brazil gets the better deal, as Chávez mortgages Venezuela’s future

May 27, 2009

Well, if you thought you had seen and heard it all, now comes the National Assembly and changes the law very quickly to allow Chávez to mortgage the country. It is insufficient for him to receive loans from the Chinese in exchange for oil, which is a different  form of mortgaging the country, but now Venezuela will get a loan from Brazil’s development bank Bndes in the amount of US$ 4.3 billion, guaranteed by Venezuela by fields from the Orinoco Oil Belt. 

Even more clever for the Brazilians, the money will be used to finance projects (and pay debts!)  being built by Brazilian companies in Venezuela and the first beneficiary will be Odebrecht, the Brazilian firm building subways systems around the country and which is owed a lot of money by the Chávez Government. 

So, you can see who is the greater fool here. Certainly not the Brazilians, who take advantage of Chavez’ tightening cash flow to lend him money to pay for their own projects and in the worst case scenario, Petrobras will have (actually own!) a nice chunck of the Orinoco Belt. But, Brazil also gets an added bonus that the Argentineans buddies were denied: Chávez said that he will continue to nationalzie private companies right and left, but Brazilian ones will be exempt from nationalizations

This is thus like a mafia deal, where you not only get the money, but also get protection in exchange for it. Not a bad working day for Lula in meeting with our President.

The deal clearly is bad for Venezuela, as it will allow Chávez to continue his spending spree and the continued destruction of the Venezuelan economy. Because it is clear that there is no plan surrounding the nationalizations either, it is just a matter of Chávez wanting more and more control over the economy. Chávez said yesterday that he still had money to nationalize more companies (now that he got 4.3 billion elsewhere), but gave no hint as to where his voracious appetite will take him this time. 

Chávez actually thinks that he is making money by nationalizing companies and gave the example of CANTV, where he claims he made the purchase price in the three years since the nationalizations. Sure, because he did not buy CANTV, he stole it by forcing Verizon to take his offer, even if there was a higher one on the table.

But if he thinks that Banco de Venezuela will continue making US$ 100 million per quarter as he suggested earlier, he better get off that cloud. He should think more like Banco de Venezuela will be Banco Industrial in three years. 

Because clearly Chávez fails to understand that economic growth and jobs can only be generated if you invest your money in new enterprises and he somehow thinks that by buying these enterprises he is generating profits for his Government. In fact, medium and long term he is destroying them, as the current state of Cemex and PDVSA already attest. 

In the end Chávez is acting like organized crime does, making offers people can not refuse, buying protection and in the end guaranteeing the survival of the capo at the expense of the country.

But he thinks he is being smart, while the Brazilians are laughing all the way to the bank.