Archive for March, 2010

The recurring theme of Venezuela issuing a bond “backed” by gold

March 31, 2010

Periodically, the geniuses that manage Venezuela’s finances return to the idea that they can somehow issue a bond “backed” by gold production and that this will make it different, special and the country would have to pay less because of such guarantee. The idea was being kicked around last year, so that the Corporacion Venezolana de Guayana (CVG) could issue gold bonds, without having to pay an outrageous coupon on the bond. Since Venezuela yields like 12-13% and PDVSA 13-15%, imagine if CVG which loses money issues a bond. Thus, Minister Sanz has floated the idea of a gold bond many times, he did it again today.

Except it would make no difference whether it is backed or not by gold.

After all, aren’t all PDVSA or even Venezuela bonds backed by oil? Certainly not by the hard work of Venezuelans, no?

The problem is that if Venezuela ever had a crunch time in terms of money, such as the one being predicted by Morgan Stanley yesterday as soon as maybe the end of this year, the fact that the bonds are “backed” by oil, or gold would be simply useless.

Because the oil or the gold is here in Venezuela.

Thus, if CVG or the Central Bank (It is not clear who would be the issuer) “backed” a bond with gold production, the gold is in Venezuela. You would still have to go through Venezuelan Courts to get it. The risk is as good (or as bad) as the recently issued PDVSA “local law” bonds which foreign investors like less than the PDVSA bonds issued internationally. (I disagree with this interpretation, but that is a different story)

What Sanz or Merentes don’t understand is that for the gold “guarantee” to give the Government an advantage, it would have to be deposited abroad in an escrow account, something which I doubt Chavez is ready to do now, or ever.

I actually wrote about this already in August of last year when it was first floated. later Sanz himself said Chavez had approved the idea.

But, forget it. As long as the gold is here, or it will come from future local production, what matters most is who will issue it. CVG will have to pay more than the Republic or the Central Bank. A lot more.

That’s what happens when a country is run by amateurs.

Superficial observations about things happening in a Venezuela largely on vacation

March 30, 2010

Not much news here, as we are all taking a “Mega-Bridge”, the mother of all puentes*, as decreed by Hugo who apparently went to Cuba to enjoy Varadero beach or talk to the bearded one or both.

But there is always something going on here no matter what. For example:

–Chávez decreed a National Holiday for Monday, Tuesday and Wednesday. On National Holidays, malls have been opened in recent years, there is no law that says otherwise. In fact, when you buy or rent a storefront in Sambil, you are obliged to open all year, except Christmas, Good Friday and New Year’s.

So, what do we get? The National Guard going around shutting down stores which are regularly open on National Holidays. I guess some holiday are more “National” than others. If  it is a Chávez whim, everyones shuts down, if it is a regular holiday, it’s flexible.

–And how about those Government statistics. According to the Chief of Government of the Distrito capital, the city has been able to reduce electric consumption by 60%.

Funny, given the percentage of consumption by each sector, it is truly amazing that such a high number was achieved. Maybe the calculator or the algorithm was the same used to tell us that 95% of the fire in the Avila mountain (now Wararirarepano) is  under control. Particularly because a few days ago it was 100% controlled. Maybe the electric savings will drop too.

–And you can’t even quit the revolution with some dignity. The former VP and honorary President of Chávez’ PSUV political party, retired General Alberto Müller, had some harsh words for their revolution when he quit yesterday from the party. Said Müller: “The revolutionaty process is dreadful, the President rarely ehars me..we are chaging an international policy for bourgeois naionalism that does not meet the expectations of the people…there are lots of bourgeois in the part, their lifestyle proves it…those of us from PPT that were true revolutionaries joined PSUV, the rest just want money, moollah, coins…”

Well, this is how that was interpreted by the party: “Relations with general Müller are intact, his decision to withdraw from the part is due to health reason”

Oh, I see, his health, or that of the revolution?

–Finally, remember the “resounding” sucess of the sale of the Carabobo heavy oli field? Two of three fields were sold and “contracts would be signed before the end of March” in what was the first new oil project after Chávez came to power in 1998.

Well, tomorrow is the very end of March and there is no signing, adding to the delay of the projects, auctioned 16 months late to start with. This means that there will be no new oil until …your guess is better than mine.

* A “Puente” or bridge refers to taking a vacation day when a holiday takes place right before or after a weekend wit a day in between.

El Niño is over, does the Government know?

March 29, 2010

While the Government keeps blaming El Niño for the electric crisis, according to Tal Cual, José Gregorio Sottolano, head of the Government’s National Institute for Metereology and Hydrology has announced that the phenomenon has now weakened.

According to this gentleman, El Niño has now gone from moderate to weak and we should get ready for rains.

This guy should be fired inmediately for a number of reasons. First of all, he is giving a technical opinion, something which is really not welcomed in the Chávez adminsitartion. second, he is saying that this El Niño was “moderate”, which goes against the official line of the worst El Niño since Bolívar died in Santa Marta. Finally, he is implicitly saying that the electric crisis should be over soon since El Niño is almost over.

I think both the Prosecutor and the TSJ should act on this case, accusing Mr. Sottolano of technical negligence. He clearly has no idea what he is talking about.

Or does he?

The daunting task of providing for half a million new Venezuelans per year

March 28, 2010

Forget for a moment what is happening in Venezuela today. Concentrate on a single fact, a single number looking towards the future, Venezuela’s population grew last year by 480,000 people (The net of 580,000 births and 120,000 deaths). it is a daunting task to think about how to provide for these newly arrived Venezuelans in the years ahead, without even worrying of solving the problems that already exist.

I try to think about it in three different dimensions: When you read what the average Venezuelan wants out of life or expects out of its Government, there are three general priorities that motivate them politically: Hope, purchasing power and quality of life. Hugo Chavez has been able to provide lots of hope, a slight improvement in purchasing power which is now going to go below what it was when he became President, but he has failed miserably on improving quality of life.

It looks as if, with or without Chavez, it is only hope that can once again improve for the average Venezuelan in the next ten years. Improving the rest, even if you just focus in the newly born, represents a daunting task.

Take housing as an example. Providing housing to those 500,000 kids per year in the next four years will require half a million new homes if we assume two kids per family and two parents. Half a million homes is half the homes built in Venezuela by the Government ever since such programs exist. There are only 3.7 million formally built homes in Venezuela.

Well, building 125,000 homes per year, which I reiterate, would only provide homes for the newly born and their parents, is far above the maximum number Chavez has been able to build in any of his eleven years (27,000 housing units) and even above the maximum  (98,000 units) built in any of the ten years preceding him.

Thus, providing housing to these new Venezuelans is way above the organizational capabilities this country has had in the recent decades and the ability to even build them may been seriously compromised by the nationalization of the cement companies (to say nothing of the lack of electricity to generate the steel beams used in Venezuelan construction.

But note that there is already a shortage of 2.5 million housing units in the country,thus, even beginning to attack the problem is quite a task.

But is it? Coincidentally, there is an interview with one of the architects from a group that proposed to Chavez how to remedy the housing problem with a ten year US$ 30 billion program which seemed impossible to finance in 2000. They lasted two years in the constant shuffle that Chavez applies to his Cabinet and managers, as well as the fact that their program was completely decentralized. Add to that economic interests from the Capitalist, the socialists and the Bolibourgeois and the program went away faster than Chavista Justice acts on cases involving their enemies.

So, housing looks really tough.

Let’s consider purchasing power. Despite the biggest oil boom in the country’s history with oil prices increasing eight fold in the last eleven years, purchasing power improvements in the first ten years were only marginal and economists are predicting that the average Venezuelan will actually lose all those gains before the end of the year. Back to 1998 in a puff! Not pretty!

So, simple rules about growth in income break down in Venezuela because of The Devil’s Excrement. It is not a problem that the Venezuelan economy or oil prices would have to grow by 2% to accommodate the 480,000 new Venezuelans, the problem is that in the absence of a National Plan, with sound priorities like getting rid of military spending to benefit the people and the need for oil production to increase, Venezuelans will be poorer and poorer in the next few years. Politicians will be able to offer hope, but not much more which is real.

Unless, you could agree on four or five National priorities, a pact among political contenders that Housing, Oil, Education and infrastructure have to be taken out of the political diatribe.

Which simply sounds far fetched, if not impossible.

I could go on and on. You could take the electric problem, which takes knowledge, planning and money, or the crime problem, which takes knowledge, planning and money, or the education problem which takes ditto. Those half a million Venezuelans represent a daunting task and a challenge, which politicians in either side of the spectrum seem to be far from even attempting to address.

But ever since I realized that there will be half a million new Venezuelans every year going forward, that number has been giving me nightmares.

Speedy Venezuelan (In)Justice removes immunity of Deputy over a common crime

March 27, 2010

(Giving an opinion in Venezuela is a common crime, because nobody gives an opinion in favor of the regime)

The Venezuelan Supreme Court, the same one that has yet to respond to important human rights and electoral cases and injunctions after years, acted very swiftly, faster than Nazi Justice, to eliminate the immunity of Deputy William Azuaje so that he can be detained for a common crime. And the Venezuelan National Assembly acted even faster ratifying the decision by the Venezuelan Supreme Court less than six hours after receiving it and after a debate in which Azuaje was not allowed to defend himself. Azuaje was replaced in his seat in the National Assembly by a member of Chavze’ PSUV party.

The merits of the case are not the point. In the end it is Azuaje’s statement versus that of a policewoman that claims Azuaje abused her verbally and physically, while Azuaje says he did not abuse her physically and she asked for a bribe in order not to detain him.

The point is that Chavez has been going after Azuaje for quite a while, ever since he dared become a candidate for Governor in Barinas State, running against Chavez’ brother. Azuaje’s main campaign theme: That Chavez’ relatives have become large farm owners during the years of the robolution, growing their land and cattle holding by huge numbers. Azuaje went as far as presenting supporting documentation and presenting a formal accusation in the National Assembly.

Azuaje’s main accusation is that the Chavez family used their foreman in he family’s 50 Hectare farm La Chavera, to acquire an additional 600,000 Hectares and 5,000 heads of cattle, Azuaje’s main proof is that while the foreman is very well known to have been the family’s employee for years, he now owns the adjacent farm, without ever having had more than US$ 2,000 in his bank account, which Azuaje presented.

The National Assembly ignored the charges and decided instead to investigate Azuaje and even tried to remove Azuaje’s immunity, turning the case completely against him. Since then Azuaje became an independent Deputy continuing to accuse Chavez’ family of corruption and promoting his political career in Chavez’ home State of Barinas.

But now, the same Justice that is incapable of resolving cases in years or sentencing thousands of prisoners, in less than four days has jailed this enemy of the Dictator. As noted by Daniel, a rabid pro-Chavez Deputy Iris Valera was taped in a physical attack much more violent than the one that Azuaje is even accused of and no procedure was even started against her.

Such is the state of persecution, injustice and powers joined at the hip under the Chavez Dictatorship. This must clearly be another warning in Ramiro Valdes’ playbook: The media has been warned with Zuloaga, the opposition with Alvarez Paz, now the politicians have been warned. The question is simply who will be next?

If found guilty, Azuaje will not be able to run for reelection. All of those aspiring to be members of the National Assembly have been warned: The robolution will not tolerate anyone campaigning with accusations against Chavez and his Government.

The screws get tighter and tighter…

Zuloaga arrested: Ramiro Valdes’ repression plan fully in effect in Venezuela

March 25, 2010

The consulting that Cuban murderer and Chief repressor Ramiro Valdes did for President Hugo Chávez one month ago under the disguise of advising Venezuela on elctric matters, finally generated a plan that is being implemenetd as the arrest of Oswaldo Alvarez paz for giving an opinion is now followed with that of the President of Globovision Guillermo Zuloaga.

Zuloaga will supposedly being accused of “disrepescing the majesty of the first authority fo the country and conspiring agsint Venezuelan institutions”

Jeez, half the world would be in jail for this in any country, Zuloaga simply gave his opinion on teh Chávez Government, an opinio now held by around 60% of the Venezuelan population, including this blogger.

But even worse, Zuloaga’s statements took place last weekend. Thus, it is simply impossible for the Prosecutor to ahve built  a case, called witnesses and their testimony in order to have a legal order for Zuloaga’s capture. Moreover, Zuloaga had to be called to give his testimony and yes, defend himself.

But in fact, Zuloaga’s lawyer said on TV that his client has not been shown any order by any judge, he this is being detained illegally  for expressing his opionion.

This is characteristic of the Dictatorship that has now been imposed in Venezuela as Chávez popularity and hold on the system weakens through the ineptitude of his Government.

This is clearly on purpose, This is the advise of Cuban esbirro Ramiro Valdes. The Chávez Governemnt will no longer walk the fine line between legality or illegality nor act in the middle of the night, it will now do it in broad daylight, it needs to repress, block delete and one day even mutilate the enemies of the State as defined by Chávez and Ramiro´s book.

Funny, Zuloaga said this abroad, so there is even a problem of jurisdiction involved. Even Quico may be now accused for having an opinion! Just kidding!

Venezuela: Where everything is truly backwards

March 24, 2010

(Comrade, sorry to interrupt you activities, can you tell me where Oswaldo Alvarez Paz´house is?)

In another demonstration of long term planning, responsibility and caring for productivity and the values of hard work, President Hugo Chávez has just announced that Monday, Tuesday and Wednesday of Easter week (next week) will also be holidays next week in order to save electricity. We have an eight day holiday for the whole country starting Saturday.

Everything is backwards these days in Venezuela.

Note added: After Hugo had his whim, the Government realized the announced “Feriado Nacional” could not be “Nacional”, it is end of the month, tax payments are due on Wednesday and a country can’t function like that for eight days, so we get the exceptions:

Electric companies, telephone, hospitals (??), banks, drugstores, Foods, Hotels (obvious), Restaurants (holidays don’t apply to them anyway), public transporation.

Revolutionary Management Strategy: Ask everyone to resign in the middle of the electric crisis

March 24, 2010

The letter above, shows a very peculiar style of management, ask everyone to resign from Corpoelec in the middle of a huge electric crisis.

This will do wonders for morale and hard work, capable people will simply quit and tell Rodriguez to stuff his electric problem and deal with it himself. Then we will see a bunch of Capitancitos and Tenienticos con “estudios” in engineering replace them.

I guess that is how you run a guerrilla troop, the only experience Rodriguez has in management. Oh! I am wrong, I forgot he fired 20,000 people from PDVSA and we all know how that turned out…

Chavez Government jails opposition leader, just because…

March 23, 2010

(That guy is CIA, Judge: Bravo!, That guy is ETA, Judge: Jailed!)

Oswaldo Alvarez Paz, the one time Governor of Zulia State and 1993 Presidential candidate for COPEI, was jailed today because…

I am not so sure.

You see, Alvarez Paz is supposed to be in jail for saying things like:

“Venezuela  has turned into an operations center that facilitates the business of  drug-trafficking”

live on much hated Globovision.

But, Alvarez Paz did not make this up, in fact, I wrote not long ago about a report by none other than the United Nations in which the UN said that Venezuela had become the “the largest transit country for cocaine in the world”.

He also said that “the Chavez  government has links to illegal, armed groups in Latin America”

once again, this is not new, the Spanish Audiencia Nacional accused the Venezuelan Government of precisely that recently, when Judge Velazco accused the Venezuelan Government of supporting ETA and FARC and setting up some explosives training exercizes using Venezuelan military and an ETA operative to train the FARC to blow up some Colombian Presidents or something like that.

So, Alvarez Paz did not invent the wheel in what he said, much like General Uson, who was jailed for five years for suggesting some Army soldiers were burned by a flame thrower. So, what’s up?

Because Minister of (In)Justice El Aissami said that Alvarez was imprisoned “because he lied” is as stupid as it gets. If we jailed Venezuelans who lie, the whole Cabinet would be in jail, from Chavez and his constant reinterpretation of the electric problem and the possible Guri collapse, which started with it is going to collapse if you don’t stop using energy, to it is the oligarchs who invented that it could collapse, to Giordani’s claim that the “Mutuos” created an avalanche of inflation, to El Assiami’s claim that crime is down, the Government lies, distorts and mutilates the truth daily without blinking. Just El Assiami’s claim that it was not Chavez but the “independent” Judiciary that jailed Alvarez Paz, should make Pinocchio’s nose pale in comparison.

Because in the end, Alvarez Paz was fairly irrelevant in Venezuela’s politics by now. He is not running for the National Assembly, is not that visible or even controversial.

So, what’s the grudge?

My feeling is the Government, yes Hugo Chavez himslef, wanted to intimidate and choose someone that was not a key leader of the opposition so that the message would get across without affecting someone involved in the upcoming elections or the Mesa de Unidad.

It is a warning to everyone to be careful, anyone can be arrested on the spot: Be careful what you say, nobody is untouchable, we are looking at you, this Dictatorship will not tolerate much!

As simple as that. Ramiro and Hugo are watching!

Because, among other things, Alvarez Paz is being accused of promoting hate, defamation and “conspiracy”. A conspiracy of one, which at least in Spanish makes little sense, but the robolution has never been a big one about making sense anyway.

But it is a scary step. The Chavez Government has decided to jail someone just because…To set an example. It is a new direction, overt, clear and direct intimidation.

Be ready!

Some interesting slides on Guri and the Corpoelec plan for new electric generation in Venezuela

March 23, 2010

I receive every month a very interesting report from the Venezuelan Academy for Engineering. It always has interesting facts, I particularly enjoy the pictures of unfinished public works by the Chávez Government.

In the latest report, which I got yesterday, there is this graph of the position of the turbines in Guri

As shown, eight of the Guri turbines (two of which are down) that generate 5,600 MW are at level of 238 meters, thus it would be impossible to operate at that height as said publicly by at least two Government officials. One of them actually said that it could operate at 236 meters. Note that there are six additional turbines at the lower level which are down.

The problem is that there is a phenomenon known as cavitation which damages the turbines. As the water level goes down, air bubble can gon in the turbines. These bubbles themselves are not the problem, the way I understnd is that as they collapse inside the trubine they create pressure waves which are at high frequency which lowers the efficiency and damages the turbines. The Guri dam specifications say that it should never be operated below 240 meters, but more importantly the specs say operation should be stopped even above that level.

An additional plot form the same presenttaion, not in the Bulletin of the Academy is shown below:

This plot shows the scheduled “new” capacity to come online in the next three years. As you can see Corpoelec projects new capacity in the next three years slightly above 4,000 MW, the same amount the Government claims it will install in the next 12 months. Note that this includes 400 MW of Planta Centro, which were scheduled to come online last October, then last February and now who knows when. Hopefully, the rest of the schedule will be more on time that repairing 400 MW of Planta Centro.

Today, the OPSIS website reports that inflow into the Guri dam jumped to 919 cubic meters per second, a sharp increase over the previous days. The water level dropped 14 centimeters, but it indicates there is significant rainfall in the Caroni basin. This is good news.