The best to everyone in 2010 and that all your New Year Wishes become reality
Thanks for reading!
Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.
Talking to young people at work, I was confronted with the reality of the impact on them of the shutdown of shopping centers and malls at 9 PM daily, which begins tomorrow. They are all dismayed, sad, mad and surprised that their quality of life is going to deteriorate further overnight.
Given the crime rate, malls have become refuges for young people to go to bars, restaurants or simply to the movies. But with no power to shopping centers after 9 PM, you can rule out bars and movies and most restaurants may not even bother to open given the hours that Venezuelans like to eat at.
The impact on movie going will be particularly strong, as stand alone movie theaters have disappeared in the last decade, as malls installed fancy theaters with more comfortable chairs, reserved and assigned tickets and other amenities.
While some malls may install their own power generators, the process of importing and installing them may take more than a year so that it will be a while before this normalizes.
I guess this will make Caracas a more socialist city, as people will go home earlier and bar and restaurants that are housed in single units, will benefit from the new decree.
As with so many things, this translates into fewer jobs, less economic activity, but it will probably pale with the impact that the electricity savings measures will have in the steel and aluminum industries of Guayana. There, workers will be sent home with pay, so that the already large losses of the CVG (Corporación Venezolana de Guayana) will widen.
Meanwhile Chávez said we are closing the year on good footing, as the economy stagnates and there are new and further problems ahead. Not exactly a cheerful way to the end the year. He must be seeing something I am not, or he may be blind to the problems.
But to the younger generation, he is a nightmare that will not go away.
-“We have to fight regional caudillismos. It hurts a lot, they surround themselves with inconditionals and create personal projects over the hopes of the people”
-“We have to return safety to the streets! It is a life of death commitment!”
-“They (the opposition) are inundated by hate, while we continue with our love. The Kingdom of the heavens on Earth is Socialism”
-“If the opposition reaches power there will be war, that is why we have to guarantee the continuity of the revolutionary process”
-“Starting today the Cuban flag will wave in the Panteón, because Cuba is part of this Nation. We are ready to die fighting for Cuba”
-“If it were not for the attacks. the lies and the exagerations about the errors of the Governmnet, we would have 80% popularity”
-“Why do there have to be potholes in the streets if we export asphalt”
-“In the face of the poisounous message of Gobovision, Prosecutor, President of the Supreme Court, fulfill your obligations and if not, resign!”
Add your own in the comments, I will move it up to the post if it is good.
Rafael Caldera, Venezuelan President for two periods (69-73, 94-99) died on Christmas day. Anything you say about him can be controversial. He was a love him/hate him type of personality, because as is characteristic of so many Venezuelan political leaders, his ambition drove him and he put that above everything, as demonstrated that after being the leader of the so called “right” in Venezuela for over 40 years, he became the candidate of the “left” in 1994, when he was elected for his second term.
A lot has been said in the last few days and, I must say, I have disagreed with a lot of it, which is in part the reason for this post. But in any case, how can a blog about Venezuela not have at least some discussion of Caldera and his life?
Let me start by saying very clearly that I never liked the guy. He was simply too arrogant and his belief that he knew everything is what eventually led him to make many mistakes. In fact, I think that his second term arose from this arrogance. He thought he could be the savior, even worse, he thought he was the only possible savior. Thus his failure. But I am getting ahead of myself in describing my view of the man. So, I will mostly talk about what I disagree with in the evaluation of Caldera’s legacy.
Caldera ran for President six times. Everyone said he was a Democrat, but he never promoted internal democracy in his social-christian party, but this is a characteristic of Venezuela’s limited democracy, parties are formed to promote the messiah who founded it. In 1987, Caldera realized that he would lose to Eduardo Fernandez in the party’s convention, so he stepped aside. In 1994 he realized that he would lose again at the party’s convention, thus he left his party when he saw the possibility of becoming the candidate of a large fraction of the country’s left. As easy as that, a founder of our democracy, but not a full democrat at heart.
Caldera first term in office was not that bad. World conditions were tough, Congress was controlled by the opposition, but in general Caldera had a Cabinet of professionals which managed to execute well and impose a vision of development, which continued the work of Betancourt and Leoni on the infrastructure side, together with appeasement internally and integration of the country internationally by reapproachment to the radical countries that AD had broken relations with.
Had Caldera set aside his ambition to be reelected, history would have judged him well. But Caldera, a masterful speaker, could not stand aside, and as soon as the required two terms went by after his first Presidential term, he ran again. And he won the nomination pushing aside the younger generation of his party. But he lost. He lost, because he was the candidate for the party in office, his own party COPEI, after the disastrous Luis Herrera Presidency. But he was never that popular anyway (He won his first and second terms with only 30% of the vote) and lost.
And then…he tried to run again against his arch enemy Carlos Andres Perez, but Eduardo Fernandez had been grinding around the country supporting his party leaders and Caldera stepped aside. Fernandez lost badly agaisnt CAP, he was not as charismatic as Carlos Andres Perez and everyone wanted CAP’s first term to return.
And then comes Caldera’s most controversial moments. First, on the day of the 92 coup, he did not back it, but justified it. Curiously, Eduardo Fernandez went to join Carlos Andres Perez at the TV station where he had fled, in order to defend democracy. That was the end of Fernandez’ political career.
Even if Fernandez tried again to be candidate in the next election in 1994, he opened the party to too much democracy, allowing non-members to vote in a primary, except that surprisingly, people chose Oswaldo Alvarez Paz, the Governor of Zulia and not him. Caldera did not even try to participate, he was outside the country. He returned two months later and announced he would be the candidate of a coalition of left wing parties, including MAS (Socialists), PCV (Communists), MEP and URD, creating the Convergencia party. He won thanks to these parties, the people from COPEI who voted for him and those that thought Caldera represented their dissatisfaction with the way the country was going. And it was that speech in 1992 that gained him that reputation and was key in his win. In some sense he was the first beneficiary of the coup. Caldera really thought he could be the one to run the country peaceful for five years, even if he only got 30% of the vote.
I really don’t assign much importance to Caldera pardoning Chavez. It was the natural thing for him to do, the continuation of his “pacification” policies of his first term. They worked in the late 60’s, it is typical to think that the same trick will work twice. It back lashed, but I think every other candidate would have done the same and if Chavez had not been pardoned, another group of military leaders would have overthrown the Government and freed Chavez anyway. Chavez would have gotten to the top by elections or by force anyway.
Caldera’s second term reflected his arrogance. While there was going to be a financial crisis created in the years before him, the whole crisis unraveled when he decided to remove the President of the Central Bank. The whole crisis was mismanaged, taking the currency from around Bs. 50 per dollar to Bs. 120 in a couple of months, as people fled the currency and Caldera threatened to nationalize the banking system. He then established exchange controls, and monthly inflation reached an annualized 120% level in January 1995 which led him to overhaul his Cabinet and bring in Petkoff. Petkoff tried to reform things completing the privatization of CANTV, changing severance pay, opening the oil sector and reforming the local pension system, which was never implemented. It was a completely different second part to the Caldera Government. But then, oil prices collapsed and people felt it hard and the perception of the Government was that it was simply terrible. Chavez came and won.
The rest, as they say is history.
This is my very brief personal view of what Caldera meant to Venezuela, emphasizing the parts that I disagree with that I have read about the last few days. He did participate in establishing the country’s basic modern democracy, but he failed to see the need for opening the political process to younger generations. Perhaps if Caldera had been elected in 1989, the opposition would have swallowed better the same reforms that Carlos Andres Perez enacted but is not given recognition for. Governors were elected thanks to these and a new generation of young politicians was supposed to come from that. Caldera stopped their development, Chavez crushed it.
(OK, take it apart)
Today’s El Nacional (A-6, by subscription) has an article about Ecoanalitica’s calculation of how much the Chavez administration had in the parallel funds in October 2009, as well as how much money the Government has available in both Bolivars and US dollars in various accounts. The article compares this to what was available a year earlier.
This is, of course, a lot of guesswork on the part of Ecoanalitica, as there are no periodic reports on how much is available, but this is interesting, because it shows whether the Government can really manage to hold the swap rate down.
According to the report, neither Bandes, nor Banco del Tesoro, nor the National Treasury have any foreign currency, a total drop of US$ 10.1 billion from a year earlier. The rest in US$ is as follows:
Fonden US$ 4.8 billion (down from US$ 9.3 billion)
Chinese Fund US$ 4.5 billion (same as the previous year)
PDVSA US$ 0.3 billion (down from US$ 0.9 billion the previous year)
Thus, there is a total drop in these funds and PDVSA of US$ 10.2 billion, for a combined drop of US$ 20.3 billion. This does not mean that the Government spent this amount, it actually spent much more from the funds in 2009, because Fonden received US$ 12 billion from the so called “excess” international reserves in 2009, the Chinese added to the Fund some US$ 4 billion and PDVSA and the Republic issued US$ 11.3 billion in debt during the year. Thus, between all these the Government drew down like US$ 40.6 billion from the funds and new debt (plus however many billions PDVSA generated that were also spent)
Which means that for 2010, the inventory of financial weapons is significantly reduced for the Government to be able to keep the swap rate down as it will like. First of all, it will not be able to give Fonden US$ 12 billion like it did in January, but more like US$ 6 billion. Second the Chinese fund is not money freely available to intervene in the swap market. Finally, under current conditions, it will be difficult for the country or PDVSA to go back to issue new debt in the first few months of the year. On top of it US$ 1.5 billion come due in August 2010, when the Venezuela 2010 bond matures.
Additionally, not all the money left in Fonden can necessarily be used, as some of it may be in investments or money already committed but not spent. We assume all of it can be used.
Then, the Government needs to spend around US 3.4 billion a month to sustain the current level of economic activity and maintain the swap rate down. Average oil prices will likely be higher in 2010, which should help the Government. This means that things will be tight, as in more or less three months, the Government will run down what is available in Fonden now plus the US$ 6 billion it is likely to transfer to Fonden in January. (Yes, higher oil prices help, but it is not a huge difference) A very limited arsenal indeed to keep the swap rate down unless there is spike in oil prices.
In Bolivars, the Government has around US$ 31.5 billion, the largest fraction coming from official deposits of the Government in the banking system. Since this calculation is for the end of October, some of those deposits have been wiped out by the banking crisis, but in any case these funds can’t be used to fight the swap rate and their magnitude is roughly equal to that of a year earlier.
Given that economic activity has contracted significantly and that despite all the efforts the swap rate rose in 2009, it is difficult to envision that it will not rise in 2010. In fact, these numbers suggest that it may rise sharply in the first half of 2010.
The Government has two choices. The first one is to devalue the official rate, which will alleviate some of the pressure from the swap rate as consumption of imported items goes down, or to cut down sharply on dollar expenses, like travel allowances and the like. Of course, the optimum solution would be a combination of both.
I would tend to believe that the Government will devalue, except that Chavez has refused to do so in the last three years. But give it four months and unless something unexpected happens in oil markets, reality will simply force him to do it. Politically in fact, the sooner he does it the better as the inflationary impact will slow down as the November elections arrive.
Working up to today the 24th. which is the day that most Venezuelans really celebrate, having dinner together in the evening, has delayed me getting into the Christmas spirit of wishing people a Merry Christmas. So here we are.
One of the most fantastic aspects of having a blog has been to me the amazing number of people that come read me everyday and care for my well being and that of other bloggers as Daniel’s case recently demonstrated
Things are not well in Venezuela, but Daniel is much better and tonight and tomorrow we try to forget about politics, ignore the bad things and enjoy the good ones.Tonight, enjoy your family and have a peaceful moment with them. Hope everyone out there has a wonderful Christmas wherever you may be in the world and that you enjoy tonight and tomorrow and find many reasons to smile, laugh and love those around you. You can be sure I will do the same!
Merry Christmas everyone! And many thanks for reading me!
Churum Meru: Another great Chavez project
This is the slow season of the year. Politicians go away and not much happens in Venezuela, except that Chavez does stay. But if he can merge together three failed banks due to the negligence of his administration, put them together with another Government Bank, rename it Bicentenario and have a nationwide televised address to hail the opening of the new Government bank, I can write a Seinfeld post, a post about nothing. Or is it?
I mean, he had another “Cadena” today, because the Government bought a storefront from a fast food chicken franchise, they repainted it and opened a “Socialist Arepera” whatever the Hell that means other than arepas are cheap, for now…Because in a couple of months the Government is going to forget that Chavez liked this project and these guys are going to either have to increase prices or shut down. Of course nobody noted that the “cheap” Bs. 5 arepa, buys you over 50 liters of gasoline in revolutionary Venezuela, but who was asking anyway? Now, that gas is really cheap!!! Ask anyone in the world, even in Nigeria. Pass the arepas…
But the best news was that the Head of the Consumer Protection Agency (Indepabis) Saman, said he would work for free four hours a week at the Socialist Arepera. Well, good for him, Saman is another one of these Chavez fanatics, who before Chavez discovered him who knows where, paid no income or social security taxes, so now, at last he will do an honest day’s work, even if only four hours a week. Well, he has to start somewhere like everyone even if he is past forty, no?
And in another Chavista strategy of let’s attack the effect, rather than the cause, shopping centers will only be provided with electricity from 11 AM to 9 PM to save energy, killing movie theaters late at night. I do wonder what will happen to my place of work, which is in a shopping mall, how do you distinguish electrons going to the shopping area or to the offices? At the same time, being a night owl, would love to get in at 11 AM every day, but I bet this is just wishful thinking.
And I am sure than in a couple of months we will see Chavez inaugurating the military bridge to replace that one between Merida and Tachira that collapsed today. It will be another wonderful testimony to the inability of the revolution to plan anything or do anything before there is a problem.
But, of course, the Minister of Public Works and Housing is more concerned about establishing rules such that RCTV, whose license was illegally revoked in 2007, will be forced to carry Chavez’ nationwide speeches like today with its limited cable programming, rather than being concerned with falling bridges or housing or public works. The new rule is simple, if you carry more than 70% of programming made in Venezuela, you have to provide Chavez’ speeches I am sure that if RCTV had 60% of its programming made in Venezuela, the rule would be different. Or 45%.
Oh yeah, and according to today’s El Nacional, if you had money in any of the “refloated” banks, Confederado, Bolivar or Central, you could not take more than Bs. 2,000 out yesterday (About US$ 300 at the parallel rate). I have not been able to confirm this information, fortunately I only had Bs. 1,000 at one of these intervened banks and owed more than that in my credit card, which I promptly paid today.
But to give you some good news and make the post about something, Daniel of Venezuelan News and Views is back! Read his story carefully, he made it, he survived, but he could have easily have not, because he happens to be middle class and informed, he was transported to Caracas and given some of the best care available in the land. He is in the minority. He made it. But dengue fever is here to stay and to kill many Venezuelans every month, but it is given the same priority as crime: as long as Globovision does not report on it, nobody will know what is happening. Just the way Chavez wants it. Same as the strikes that take place daily, the protests that take place daily, the press conferences that take place daily. Soon, none of it will be happening, as the Government shuts down Globovision and thus, no dengue, no strikes, no protests.
And soon RCTV will be forced to carry Chavez live, direct from the top of Angel’s Falls as he announces the reopening and renaming of the waterfall to its rightful Indian name Churum Meru.
Thanks God there is a water shortage, otherwise he may decide to add water to Angel Falls to make it look prettier.
A post about nothing, just another boring day in the Chavez revolution.
Yesterday, President Chavez in his customary un-Presidential style, accused someone and asked the General Prosecutor to investigate him, in this strange concept Chavez has of division of power. The target this time around was banker Nelson Mezerhane who also happens to be one of the owners of Globovision, the only TV station that still dares show the daily protests around Venezuela.
Of course, there is no separation of powers in Venezuela. Chavez has made sure that nobody moves unless he tells them to. The Bolibourgeois bankers could do what they wanted until something happened, Raul Baduel was his main general and savior, until he opposed him, Miquilena was his putative father until he was no longer Chavez decided to be a putative orphan.
Thus, on Saturday Chavez ordered the General Prosecutor to investigate Nelson Mezerhane, much like he ordered the Judge in the Eligio Cedeño case to get a 30 year sentence for letting the banker go. He is in charge of everything as long as it is convenient for him, if not, it is somebody else’s fault, as in the case of his friendly revolutionary bankers that raped the banks they owned for years, but somehow Chavez who knows who is being wire-tapped, followed and who is conspiring in Venezuela, was not aware that billions were being robbed by his robolutionary buddies right in front of his nose. He should read this blog or at least get a summary every week, let’s not get presumptous.
I any case, Chavez seems to have been irked by his arch enemy Mezerhane saying something in local newspaper El Mundo last week. Specifically Chavez accuses Mezerhane of saying that the campaign against his bank was “created and organized by people related to the Government. Except…
Mezerhane never said what Chavez said he did…
You can read what Mezerhane said right here in Spanish:
Reporter: Is the Government included in this attack (to his bank)?
Mezerhane: I can not say it is the Government, there are people linked to it who have done their job.
Reporter: Laboratories involved?
Mezerhane:There are active laboratories that have created rumors and banks are places of confidence. If people start creating rumors, it is understandable that people will say “something is happening here”…
As to the first question, it is no secret that Jose Vicente Rangel, alias “Marciano” has been after Mezerhane’s bank for quite a while. And Rangel was Vice-President, Foreign Minister and Minsiter of Defense under Hugo Chavez, so he can definitely be “linked” to the Government.
In fact, Jose Vicente has been “rumoring” about Mezerhane’s bank for quite a while. Last June he wrote: “In the banking sector there is increased worries about what is happening in a bank with serious problems, whose owner appears involved in destabilizing adventures”
Funny that Rangel was only worried about banks which can be considered to be more on the side of the opposition, but failed to mention a single Bolibourgeois bank in that note, despite all of them being bankrupt already.
Interesting also, that when Petkoff says something about bank runs in general, he gets a formal letter from the Prosecutors Office about creating panic, but Rangel seems to be immune to such threats. Oh well! such is the life in a Dictatorship!
In fact, Rangel, once again last week said that “soon a bank that has been having problems and the sale of which was frustrated recently would be intervened soon”. Everyone knows which bank Rangel is referring to.
That is precisely what Mezerhane is also referring to, we all read it and Petkoff noted it. And so did Jose Guerra in today’s La Razon, who said that Rangel wants to drive Mezezrhane’s bank into bankruptcy, now that the forced sale of the financial institution has been aborted by the crisis.
So, Mezerhane said what everyone knew and you can bet that Chavez made no mistake when he made his accusation. Basically, the autocrat/Dictator has set his sights on Mezerhane and his bank. And any attempt by Mezerhane to clarify the situation is simply useless.
I mean, can it be more clear than this, Chavez said:
“This is grave and irresponsible…more so when it happens to be the President of a bank, which besides this, has had grave problems”
Talk about irresponsible! The President of a country, in the middle of a banking crisis, saying a bank with 3% of the market has been having “grave problems”. This is simply changing the name of the bank to Banco Doomed!
Sorry, Mr. Mezerhane, no matter what you say, argue or implore, Hugo is out to get you and so is Rangel. Given the state of law and order in Venezuela, there is simply nothing you can do. Your days and those of your bank are numbered.
And I imagine the fanatics and PSF’s will come and say I am the one responsible for creating the run on the bank.
Do you mean more people read me than watch Alo Presidente? Or more than read Rangel’s Marciano column
Until then, there is only one reckless, irresponsible and ignorant person in Venezuela:
Mr. Destruction himself: Hugo Chavez!
You have to wonder how stupid people can be to cheer Hugo Chavez in Copenhagen telling them about saving the planet. If any Government has been completely negligent about the environment it has been the Chavez revolution, which has subsidized both gasoline prices and cheap cars for the rich. Gasoline remains at 4.4 US$ cents per liter at the official rate of exchange, 1.6 US$ cents at the swap parallel rate(For those that use gallons, we are talking 6.1 US$ cents at the parallel rate per gallon or 16.6 US$ cents at the impossible to get official rate), a suicidal subsidy to the well to do, which only encourages waste, emissions and more damage to the environment.
But give credit to the silly and idiotic left, that can make heroes out of Chavez in an environmental conference or Mugabe at a Human Rights Forum.
As Juan in Caracas Chronicles put it (or in the new website)
“This gasp-inducing pileup of ironies and contradictions can only be interpreted as a joke. Hugo Chávez came into the global warming summit and made a big hot mess of it. Thankfully, at least some of the world’s newspapers took note and shunned him.
The rest of the delegates – at least the ones looking for progress on this issue – should do the same.”
And Juan almost covered everything when he published the data showing how Venezuela happens to be the largest emitter per capita of CO2 in Latin America, just so that there are now doubts about Hugo’s non-green credentials. Because this was not always this way. In the 70’s physicist Freeman Dyson’s studies on CO2 emissions in the world (looking for a link) showed Venezuela to be one of the few countries reducing net emissions via the CONARE project, a reforestation project which planted billions of pine trees, which in some cases covered 60-70% of some states (I had not even heard of CONARE recently)
And to complete the demonstration of the non-green nature of the Chavez non-revolution, this data taken from here (Thanks to @jesuspi for providing it via Twitter):
Venezuela’s emissions are not only increasing, but the country had the HIGHEST rate of increase not only in the region, but in the whole world, with a 14.2% increase between 2006 and 2007. In the region Venezuela almost TRIPLES the increase of Argentina which was second.
So, add the environment to Venezuela’s record breaking statistics in crime. In the case of crime, it is suffered mostly by the poor, where homicides concentrate, in the case of emissions, it is suffered equally by all via pollution, but it is all done to subsidize the well to do, in another bizarre and contradictory aspect of this strange revolution.
And the fanatics and idolizers cheer on, as the Venezuelan people suffer the consequences of the abysmal environmental record of the Chavez revolution.