The Devil's Excrement

If Venezuelan and PDVSA bonds are worth some US$ 60 billion, then today a computer virus made them gain about US$ 1.2 billion, just like that, as the virus was embedded in an email with a headline mourning the death of none other than Hugo Chavez.

The whole thing was bizarre. Venezuela and PDVSA bonds were sort of mixed in the morning and all of a sudden, around noon, I noticed they were up strongly, but there was no news explaining it. Then, a friend calls and tells me New York is full of rumors suggesting that Chavez may have died. I got a dozen calls or cahts on the topic within minutes. Given that he supposedly signed some documents mid-morning, it was hard to believe this could be true.

But the rally kept going. It was only later, that another friend sent me this denial by La Prensa:

You can read it better in the original, but basically it says that this email purportedly showing a page from Panama’s La Prensa was circulating, saying “All of Venezuela in Mourning” because of Chavez’ death. But the whole thing turned out to be a virus, as if you clicked in the video of Chavez, it would download a virus which supposedly takes over your PC.

Well, some people did not even click, they believed the news and it spread all the way to debt markets, where it had a not insignificant effect. Even Panama’s Police felt it had to issue a warning.

Go figure!

Some people speculated the virus came out of the Presidential Palace. Others joked it had to be fake, how could it say “All of Venezuela in Mourning”. But in the end, the underlying truth is that debt markets would have an incredible rally if there wa the possibility of political change in Venezuela. And I understand why. What I don’t understand is how not knowing how orderly or disorderly that transition may be, does not make a difference. Just think, if the news had been right, Venezuela’s President would be Elias Jaua, a lightweight politically. Jaua just happens to be in Russia today, I wonder what his enemies would have done about that if the news had been true.

But the effect is there, an orderly political transition in 2012 will lead to the rally of a lifetime in Venezuelan paper. In fact, the possibility of such a transition should n itself provide a rally for the books.

Unfortunately, I was unable to watch the debate among opposition politicians due to travel. But I have watched clips and read impressions from all sides. My conclusion: It is unlikely that the race will change much between now and February.

The format did not help, asking different questions to each candidate is simply useless in terms of being able to evaluate the field. It is clear that Maria Corina Machado was the best performer, but that type of performance is not what wins debates or changes a race. She started too far back and maybe we should start understanding that the average Venezuelan prefers a gray populist than a sharp visionary. It is, after all our history: Populism sells well. Chavez promised the world, but only delivered on the populism, he forgot about crime, democracy and corruption, but through over promising, remains popular despite his failed decade in power.

Those in Diego Arria’s camp had high hopes that he would once again win the day, but he failed to have the same spark he did the first time around. He had no big announcements and continued to sell his experience as the salient point. Diego’s run is valiant, he is making lots of good points, but my gut feeling all along is that Venezuelans do want new faces, even Chavismo does not seem to get that.

Leopoldo Lopez emphasized fighting crime too much. I did expect him to do much better, he did well, but not enough to move the numbers which is what he needed. Leopoldo should follow his instincts more, he got to where he is on his own, maybe he thought too much about what to say. I still think he should have made more out of the box proposals if he wanted to gain ground.

I think Pablo Perez did well, he was more relaxed than the first time and did not blow it, staying in second place behind Capriles. He needs this, as Venezuelans don’t like to waste their votes and any bad vies surrounding Perez could drop him like a stone. He avoided that.

Finally, there is Henrique Capriles, who won by not shaking the boat, which is what front runners are all about. Ever non-confrontational, Capriles seems to think he is ahead and does not want to offend the former Chavista voters he wants to attract in the Presidential race. So far, HCR has played every step of the way right. He is stiff, non-ideological and non-confrontational, which I would have thought was a sure recipe for disaster, but it seems to work. His CHACACA (Chavistas Con CApriles) joke, obviously prepared became amazingly one of the high points of the night. Maybe it was the realization he may have a sense of humor. I still don’t get him.

Debates are funny events. The format on Sunday did not help, but typically those in the lead try not to screw up and those behind try to catch up. Diego Arria managed in the first debate to create a bigger impression on the electorate. So far, he seems to be unique. Maria Corina did well this time, but there was nothing dramatic in her performance, she was uniformly better. Pablo Perez and Henrique Capriles did not blow it. That is a victory for both. Barring surprises, on primary day voters will all think about those two. Capriles seems ahead, but Perez has more traditional party machineries backing him, he has a chance

Oh yes, there was Pablo Medina ranting every fifth question. That is all he has done in his life, including backing Chavez’ coup in 1992. He has never been electable, but give him credit, he has a point he wants to make and does it.