Archive for April, 2012

Chavez Signs New Labor Bill, But Details Unkown

April 30, 2012

In a well staged ceremony, up to the point where President Hugo Chavez broke down at the very end (see video above), the Venezuelan President signed into Law one of the most important Bills for the Venezuelan economy: The Labor Bill. A few hours after it was signed, we still know little about it, except for some of the tweets by the President and leaks of drafts of the document, which we still don’t know whether they contain what was approved in the end.and signed into Law by the President.

Despite this, Chavista unions celebrated without knowing the details, and Government officials claimed that no Bill had ever been consulted so much, despite nobody knowing its contents.

This is in contrast with the three way committee of Workers, Government and the Private Sector, which hammered out a new Bill in 1998, led by Teodoro Petkoff.  A Bill that eliminated the retroactivity of severance pay, which studies had shown was the main limitation in creating jobs at the time. But much like the President’s health treatment (and I am not referring to this), Chavismo does not believe in calculations and techniques, they do everything by the seat of their pants, always hoping and asking for miracles, of which they have had a few. But maybe Chavez’ emotions reveal that a huge miracle is needed now.

Curiously, it was only the Government which did not comply with the 1998 Labor Bill, from its mandate to create pension funds with workers contributions, to that of paying off severance for each worker every year into a trust. But, despite this, the Chavez administration passed this new Bill, looking for votes, which reportedly reduces the work week from 44 hours to 40 (reportedly by saying that if you work Saturdays, you no longer do, other workers remain on the same 40 hour work week) and gives two years paid maternity leave, even if you adopt. But the Government is, once again, unlikely to be able to comply with the1 Bill, given its higher demands on the national budget.

But studies show that retroactivity, whereby you get paid severance for all the years you worked at the last salary you made, is simply bad for the Government and companies in an inflationary environment like we have, as shown below:

Basically, the bars show the impact of the law on a worker with 1, 5, 10, 15, 20 and 25 years under the current law or with the new Bill with o% (gray), 10% (blue), 15% (gray) and 25% (black) inflation. The number on top of each bar is the number of paid days that each worker would have to take home if he quits (twice if he is fired). As you can see, it simply gets worse the higher the inflation, which with something like today’s inflation is triple what it would be under “normal” inflation.  But the Chavez Government still believes that inflation is to the lack of supply of goods, not to the excess of money their generous printing has generated.

But the biggest head fake in the law, is that none of this will need to be implemented for one year. A full year to get rid of workers and implement measures, never mind that the elections are in October.

Of course, the whole thing is illegal anyway, as it is being approved under a law to deal with the emergency with the flooding and the housing problem, which is quite a stretch, but laws and rules is not what Chavismo is all about.

Oh yeah! Chavez said the Bill ends what he calls “Tercerizacion”, the local word for outsourcing. I am not sure how it manages to do that, but I have to ask: What will he do with the Cuban workers? After all, that is all he does with the Cubans: hire a Cuban company or the Government directly, and give the workers as little as possible. Once their “tour of duty” is done, they are shipped back home, but their company keeps providing the same service, without the workers getting the direct benefits.

But if it is “socialist” and Cuban outsourcing, it must be all right. The Bill will surely provide for that.

Notes From A Visit To Revolutionary Venezuela

April 28, 2012

After a week in Caracas, where traffic has become absolutely unbearable, here are some things I heard:

-I met with my original “Chavez is sick source” who in May said that Chavez was sick, leading to my completely forgotten post, which was the first one on the matter. Well, turns out my source knew about it since February 2011. One day the whole story will be told and we will find that Chavez’ failing will be the same one that did him in in so many areas: A total disregard for expertise and know-how.

-In Chavez’ absence, the financial part of the Government is sitting there doing nothing. Giordani does not listen to Jaua, Merentes is ignored. The Central Bank needs a bond issue of either PDVSA or Venezuela bonds to supply its SITME foreign exchange system, but absent the All Mighty, nobody dares make the decision and he has paid little attention to the matter.

-Reporters in Caracas are seeing more contacts from high Government officials, curiously all of those with Presidential aspirations, than they have seen in thirteen years. Jaua sends half a dozen press releases every day, Ramirez has been calling reporters that he blacklisted in the past, Jorge Rodriguez thinks he could be anointed successor, while Diosdado has become the traveling President of the National assembly. Even Aristobulo has shown some interest. Only Maduro has been quiet on that front, which may mean absolutely nothing no matter what Bocaranda may say.

-After talking to many people, I came away with a feeling that Chavez may name a new Vice-President, Jaua is simply not liked, but he will not name a successor any time soon. This is better for the opposition and a very dangerous game for the revolution. If Chavez is not seen in public designating someone as the the heir to his revolutionary ideals, there will be a fight to death among various Chavista factions.

-While much has been made over the speech by Portuguesa’s Governor at PSUV’s campaign command meeting, I think the whole thing was overblown. Castro Sotelo is in charge of planning and he presented scenarios, one with a weakened Chavez, one without Chavez and one with no elections. But in his scenario (and in his speech), it is the opposition that does not want the election, not Chavez’ party. Go figure.

-Most local companies refuse to discuss publicly the impact of the new cost and price control Bill on their finances. They are simply paranoid about the Government even getting a hint that they are complaining. But Procter and Gamble guided down its profit forecast for the year, as Venezuela’s controls have chopped prices up by as much as 25%, cutting worldwide profits by 3%.

And yes, tomorrow is my predicted date, it may not happen, but I will not be that far off.

Chavez Government Finds It Hard to Distance Itself From Aponte^2

April 24, 2012

Chavez and Judge Aponte^2 in better times for both

The Government continues to try to distance itself from the Aponte^2 case and make it go away, but it is finding it hard to do and the more things are said, the worse it seems to become. This is the type of issue that Chavez would have coordinated rather well a couple of years back, but his absence and attention to other matters, is now noticable when things like this happen.

The initial reaction seems to have been to depict Aponte^2 as some sort of opposition crook, when Aponte^2 had sterling revolutionary credentials, down to the military uniform he left behind, his unorthodox path to the Supreme Court and the many honors and Presidential hugs he received.

And Chavez may argue that the revolution got rid of Aponte^2, but it really didn’t. Aponte^2’s relationship to Makled has been hanging in the air for a couple of years and all that the revolutionary Government really did was to get rid of him as a member of the Supreme Court, using the seldom convened Moral Council to impeach him.

But the process simply ended there. The General Prosecutor did not charge him with crimes. There was no order to stop him from leaving the country. The DEA did not help Aponte^2 escape like some Government spokesmen want us to believe, he just left.

And Chavez tried to disregard the news as not being very important, calling Aponte^2 a “criminal”, which he is, but it was a criminal that Chavez personally brought to the highest levels of Venezuela’s Supreme Court because he was a loyal former revolutionary and, even more importantly, a former military officer, loyal to the very end. Aponte^2 was really a creature of the revolution, like so many around.

And Chavez really screwed up when he brought up the case of Antonini and Maletagate. This flagrant case was never investigated in Venezuela and the record in the US trial shows that the Head of Intelligence told Antonini that Chavez personally had authorized paying him to keep him silenced.

And Chavez somehow tried to make a parallel between the two cases, saying Antonini was also a crook. Yes, another special purpose crook, made and created for and by the revolution.

But if there is a mystery in all this, is that the only person that attended the supposed meetings at the Presidential Palace on Fridays that has spoken out was Vice President Jaua, who did not address the issue, but simply spoke to disqualify Aponte^2. But we have yet to hear from either the President of the Venezuelan Supreme Court or the General Prosecutor, both of which Aponte^ 2 accused of participating in these meetings. Could it be because they want to make sure Aponte^2 shows no proof of this, as has been reported in the media he will or did?

In fact, the Government would have been better off making noise, calling for a full investigation, instead of calling for a silly proclamation by the Assembly “rejecting” Aponte^s statements or bringing up some vaporous accusation that two opposition Governors have been laundering money.

The circus is not working, because the crooks were created by the owner of the circus, Hugo Chavez, but everyone knows they worked for the circus and they would have never gotten there on their own merits. They had none.

Friday Evening Musings about Venezuela After a Long Day

April 20, 2012

1) News Item:  El Assiami  presents proof that there are links between Makled and Aponte^2:

The Devil presents proof that there is also a link between Adan Chavez and Aponte^2:

What’s stronger link, an envelope you write to someone or a book you dedicate to someone, or a ceremony you hold as Governor to honor a buddy.

You be the judge. (Pun intended)

2) El Assiami: DEA helped the escape of Aponte^2

The Devil: Aponte did not escape. Like so many other Chavistas, he was removed but not accused. It’s how they work, they get rid of them, but never accuse them of corruption, they just let them be. So many cases, Antonini, Illararamendi, Duran, Casas de Bolsa. Where are they now…

Except they went quietly, not like the dishonourable Judge.

3) Finally, the Devil would like to note: Today we had the best or second best daily rally in Venezuela and PDVSA bonds that the Devil has seen in his life. I find it hard to believe that this was coincidental. Within an hour, at around 10:30 AM,  PDVSA bonds went up 5-6% this morning, while Venezuela’s bonds went up like 2.5 to 3%. Since Chavistas are just as good as regular Venezuelans in using privileged information, I can’t help but wonder if something dramatic is afoot. I may be wrong, but if I am right, my prediction of the demise before my birthday, which is in nine days, is doable. We shall see…

The Aponte^2 Interview: Direct From The Cesspool Of The Revolution

April 19, 2012

Let’s see: a former Military Prosecutor, who becomes a Venezuelan Supreme Court Justice, revolutionary at that, placidly goes on TV and reveals that he has the ethics and morals of a Pleistocenic insect, tell us that he is being accused wrongly and impeached and thus he needed to leave the country and “clear his head”. He complains that nobody “defended” him, on either side. He tells us that the man accused of being a drug capo, Walter Makled, was a “”Gran Señor” in his town of Valencia. And he does not recall whether he gave Señor Makled an ID saying that he was an Inspector for the Military Prosecutor’s office, because he just signed so many of them for his friends, for other Prosecutors, for the buddies of military officers. And he wants to clean his name and his reputation.

-Can a bath in hydrochloric acid “clean” this guy’s reputation? Can his name, covered with grime, be mentioned in any positive fashion?

He then says he was a prominent member of the judicial power and he was asked to manipulate justice. (We knew that). He says Chavez called (No surprise there, even if the case was not that relevant) and asked that he “manipulate” the case. He got “an infinite” number of calls from the General Prosecutor to do things the way she wanted, including the infamous Mazuco case, in which a false witness was found to say that Mazuco killed someone. But the only times he shows some emotion (not much) is when he talks about being betrayed. That seems to be his main anger, not that he was part of the cesspool of the revolution, but that he was kicked out of it. The guy even says that they wanted to obliterate his “prestige”.

-What the hell is this guy talking about. What egg roll or drug does he regularly smoke? His “prestige”, gimme a break!

And the President of the Supreme Court would call him to twist Justice. And he says that they surely blackmailed bankers, but shows no proof, he just thinks so. But every Friday morning, at the Vice-President’s office there is a meeting, he went sometimes, between the President of the Supreme Court, the Attorney General and the General Prosecutor and police heads, where the orders for how Justice will be implemented this week are given. case by case, according to the “politics” of each case. He then tells us about his CV, but it appears CV for him means “loyal” to the revolution and the Government, read loyal to Hugo Chavez.

-Strange concept of having a good CV, a “neat” or a “clean” trajectory. No?

We are then told about how drugs went to military facilities and he knew about it. Someone from the President’s office called him to intervene in a case. Minister  Baduell also called, Minister Rangel Silva, General Carvajal. A stellar parade of revolutionary military leaders, past and present ones, all educated at the highest levels of our military. All of them knew that the drugs were kept in the military facility for “protection”. Nothing extraordinary there. That was the only “drug” related case in which he intervened. The case ended there, it was closed. His “only” drug case.

-Only? To me that alone is a CV that says I want nothing to do with Aponte^2.

He then tells us that the Director of the Anti-Drug office is the drug czar in Venezuela, together with General Alcala. He has no proof, but he says it is. Oh yeah, he was told not to touch the FARC. Minor factoid. He then tells us he manipulated the case of General Uson, who was jailed for five years. He got order to do it. If he did not obey, he was out. There goes that CV! Same with Baduel’s case. But hey, he says he is innocent in the Makled case, no remorse on other things, except he was unfairly charged. And yes! if it is to “clean” his name, he would testify.

-This guy has no understanding of his moral and ethical responsibility for what he has done. the only thing he cares about is that he was accused and impeached. Can one even believe all he says?

And now he may write his memoirs! This guy is truly a piece of cake. Who wants to read his “Memoirs”? Finally, at the end, he admits some culpability. He says the whole judicial system is contaminated. All decisions are “consulted” with the Government. But now he wants to fight for Justice and sends messages to Venezuelans about Justice and the future.

This is a glimpse into the cesspool of the Bolivarian revolution. This is a military officer, corrupt and unethical at heart. Who appears to be only mad at the fact that he was impeached.Who shows little remorse for what he did. Who still thinks he has a trajectory or a career to show or be proud of. If this is the military officer that got to the be Military Prosecutor and Supreme Court Justice, imagine the lower ranks! Imagine those with less Education!

This is what Chavez and his cronies have created. This guy should be tried some day in Venezuela for what he did to others. For how he violated the law. For being a traitor to the oath of his offices. This guy shows us why the easy part in the reconstruction of the country will be the economic one. The tough part will be the reeducation of a country filled with people in important and less important positions with this type of mentality. The tough part will be weeding out characters like Aponte^2, most of which will start crying “foul” when a new administration wants to get rid of them.

With moral values like Aponte^2, the task at hand may not only be very difficult. It may simply be impossible.

PDVSA’s Idiotic Financial Strategy

April 18, 2012

I like going through financial statements. I like understanding them, going through things, trying to figure out what is important and what is not. PDVSA’s used to be one of my favorite’s, there was so much to learn and understand there. Nowadays is not the same. While the financial numbers may be “correct” the underlying data is not. You can’t believe oil production or local oil consumption. Investment numbers are almost irrelevant, if credible.

The financials are so simplistic that our good friend Setty has told us that the half a billion dollars lost to the Illaramendi funds,. does not even deserve a mention in the financials, by PDVSA or by the auditors. Go Figure, half a billion dollars ripped-off, the company (we are told) replaced the money and this does not even deserve a note from the auditors!

So, I read the financials, without much interest, sure they generated revenue of US$124 billion, PDVSA now has 121 thousand workers versus 40,000 when Chavez decided to integrate into the Government by firing half the workers. Yadda, Yadda, Yadda!

But one thing did catch my attention, in 2010, PDVSA had “Accounts Receivable” for US$ 14.8 billion. For the uninitiated, this is money owed to PDVSA. Remarkably, this went up a lot from 2010 to 2011, a lot like more than doubled at US$ 30.88 billion.

Where did this doubling come from? Well, about US$ 6 billion of the increase came from “Energy Agreements” read oil shipped to other countries like Argentina, the Caribbean, Bielorussia and the like, which PDVSA sells to these “friendly” countries 50% up front, two or three years grace period and then last we hear, a twenty five year loan at 2-3% per year.

Another US$ 6 billion, came from “related entities”, these are things like Corpoelec and Pequiven, which simply don’t pay their oil bills to PDVSA. So, not only is PDVSA forced to give money to Fonden, which Fonden later gives to Corpoelec to fund projects, but these same projects use up oil, diesel and the like, but Corpoelec has no money to pay for it.

Would you run your family like this? Lend your son money, so he can start a business which runs on oil that you sell to him, but he never pays. Some business!

But the most remarkable thing, is that during 2011, PDVSA’s financial debt went up by US$ 11.1 billion, from US$ 21.3 billion to US$ 32.4 billion. The new debt comes mostly from new bonds issued with coupons as low as 8.5% and as high as 12.75% per year, say an average of 10% per year.

The bottom line is that PDVSA is paying over US$ 1 billion a year in financing, so that our wealthier friends in Argentina, Belaruss and the Caribbean (The exceptions are Cuba and Haiti, which are poorer) can have our cheap oil.

This is an idiotic financial strategy. As idiotic as can be. A country with poverty, a company with immense financial needs to even maintain production, should not, can not fund wealthier countries, so they can drive around further distances at cheaper prices, or stay warm, while Venezuelans die without medical service.

This is absolutely idiotic, this is treason, this is total disregard for your own people.

But these people have lost the notion of scale and magnitudes. To them a billion here a half a billion there is rounding error, while the truth is that each half billion can build a few dozen hospitals or a few thousand housing units.

But the revolution no longer cares. Survival is the name of the game. It is no longer the optimum allocation of scarce resources, but the optimum allocation of resources for reelection  and political gain.


(BTW PDVSA’s financials are in PDVSA’s webpage, however, PDVSA must be the only company with a webpage that when you click on a link, the URL stays the same. Just go, then click on Informes Financieros and then click on them, the URL will not change. I also tried to follow the route of these receivables and found it funny: One note would send me to another, which would send me to three others, which would send me to the original one. Very circular.)

More Than The Future Of Venezuela Is At Stake In The October Presidential Election

April 16, 2012

While Venezuelans assume it is the future of their country which is at stake in the October Presidential elections, much more is at stake than that. The presence of Hugo Chavez in the region not only supports dictatorial and quasi-dictatorial Governments like Cuba, Bolivia and Nicaragua, but allows other countries like Brazil, Argentina and Ecuador to pass as “moderates”, because in comparison they seem more democratic and respectful of human rights.

But the truth is that the region is hitting a new low in terms of human rights and democratic ideals. And the demise of the Bolivarian revolution will go a long way into helping the return of true human right and democratic values to the region.

It has become common to suggest that freedom of speech and freedom of choice are just some of the basic rights that people have and there is no preference for one over the other. Which is true. The problem is that the right to life or to health care or the right to an education are not only costly, but require a coordinated effort to provide them. And lots of hard work and long term planning, something lacking in many regional Governments. Meanwhile, the right to speak out, the right to choose politically have little cost, they just require the will of the Government in charge to be tolerant and understanding of what democratic principles and human rights  are all about.

Unfortunately, the region has gone backwards in the last ten years. When the leaders of the Americas restricted the participation in Summit’s to democratically elected countries in 2000, none of those leaders could have envisioned that we would have had the discussions of last week. Here are the Castro brothers, one a self-appointed Dictator, the other one endorsed by his brother, ruling a country for fifty years and we are supposed to ignore the atrocities and the human right violations, just because the Castro brothers are somehow supposed to be simpatico or spouse some idealistic goals, that they have miserably failed to deliver for more than five decades. When their participation i the Summit becomes a point of contention, you know something is trully rotten in the region.

But somehow, the rise of China and India has generated a commodity boom for Latin America that has given the people of the region some sense of prosperity such that their leaders can ignore not only what is going on in neighboring countries, but also what happens in their own.

And that is why it is so important for the Bolivarian revolution to end this Fall. What is at stake, is not simply the plight of 28 million Venezuelans, but the indirect impact of an amoral regime directly on Cuba, Nicaragua, Bolivia and more indirectly on Argentina, Brazil, Uruguay and others.

The Hugo Chavez autocracy has helped the Castro brothers extend their grip on power in Cuba, propped up Evo in Bolivia and Ortega in Nicaragua and provided billions to Argentina, Brazil an even Colombia in funds that should have stayed in Venezuela, financing our prosperity, not theirs, instead of going elsewhere to buy trinkets that give Venezuelans the illusion that things are well under the revolution.

Which is why Capriles and the unified opposition should understand that what is at stake is not only whether Venezuela will or not be turned around, but whether millions of Latin Americans will be able to enjoy in the future an open society and whether they will have choices and rights with no discrimination.

What is at stake in October is more transcendental than what the Venezuelan people seem to understand. Let us hope that Capriles, his supporters and Venezuela are up to the historic task at hand.

When You thought Chavismo Had Legislated Everything, Family Values Becomes The New Target

April 14, 2012

Chavismo has a remarkable ability to invent and create new concepts and structures that are simply unworkable or are incredibly simplistic. They legislate and legislate, without asking anyone about it and just moving forward, despite their so called belief in “participative” democracy. But only high ranking Chavistas seem to really “participate” in the truly important things. The Constitution be damned.

By now, Chavismo has created a few monsters that the country has become accustomed to. People accept these things as if  they were “normal”, forgetting how perverse the system has become.

For example, the Government imports food without control at the official rate of exchange, destroying local production which “enjoys” 25-30% inflation while the official rate of exchange is held constant. Seems logical? Yeah, sure!

Then there is CADIVI, which magnanimously presides over exchange controls. Huge bureaucracies have been created on both sides. The Government’s to stop you at each instance from importing things, the private sector to weave around the tapestry of requirements in the hope that some official dollars will come your way. If you are out of luck, you can still try SITME, where you deal with the bureaucracy of the private or official banking sector, to see if you can scrape some greenbacks your way.

CADIVI is so perverse, that the President of the Venezuelan Central Bank said this week, without being bashful: “Exchange controls will be removed when the revolution can not be reversed”. Read what he says: I restrict your rights, so that the right to choose will no longer be available in the future. At that point, I will, in my benevolence, return some smaller important rights to you, but you would have lost the freedom to choose.


Then there is price, earnings and everything control, now encompassed under the SUNDECOP (sounds like a suppository or a fungus medicine, no?), a new bureaucracy established to control prices, costs and margins. So, in  a country with unpredictable inflation and soon, retroactive severance pay, a whole bunch of untrained incompetents, will now try to calculate everything that is so hard for you to do in the business you have worked in all your life. All to establish a regime of price controls, which has been shown not to work anywhere in the world. In fact, Venezuela, one of the few countries with price controls today, has the top or one of the three top inflation rates in the world. But they just don’t get it.

But these guys don’t understand the word “evidence”. If inflation jumped to 100% in Venezuela, they would blame everything but their idiocy. They just don’t know better.

So, in the absence of the All Mighty Hugo, who is taking care of more transcendental things, a new Labor Law has been cooked up barely four weeks before Chavez plans to enact it. This Bill not only returns severance pay to the original system, which was shown not to work, but a novel concept is once again created: Severance does not belong to the worker, but to the family.

These guys want to legislate and promote the family. In a country where practically nothing works, they want to set up a system to promote, legislate and control “family values” as a goal of a “socialist” society.

Of course, the story is told from the side of the irresponsible father. If the wife, or the kids are let out…yadda yadda yadda. But in the machista country of “ciudadanos y ciudadanas” I can already imagine what will happen when the working woman is taken to Labour Court by the unemployed, irresponsible husband. As a matter of fact, imagine also the working kid who lives at home, whose severance will now be at the mercy of his or her parents.

Not pretty.

But what Chavismo does or thinks about, has nothing to do with reality. They represent a world of ignorants who have a lot of initiative and power, but who have no clue as to how economies and societies work. Thus, in a country without practically any  functioning institutions, they create new ones to oversee how families values function.

Chavista Family Values. Look at the leaders of the revolution, who spouses them? tell me just one, please…

Chavez Not Going To Cartagena?

April 13, 2012

After giving all indications that he would be there for the Summit, however briefly, President Chavez himself said today that he may not go  due to “his medical leave”, something that is not new. This is a clear indication that the condition of the Venezuelan President has not improved and the opinion of the medical Doctors is finally prevailing for his own good.

This confirms the latest Bocaranda information that says that the Venezuelan President is not getting any better and that traveling is damaging his health. Meanwhile the country plods along without anybody running it and infighting within Chavismo to see who will replace Chavez.

This admission by Chavez proves that he can’t run the country and the conditions given by the Venezuelan Constitution to temporarily replace him are currently present. But Chavez does not dare give up his post for fears that he will never come back to it.

He did not participate in the celebration of the ten years of the 2002 events and now he can’t go to Cartagena, where he wanted to be seen once more as one of the leaders of Latin America.

Clearly, Chavez is not well, he wanted to be the center of attention once more. But he will not be able to.

Is today a tuning point in the whole story?

The First Time For Diosa Canales: Do You Think It works?

April 12, 2012

Diosa Canales is a soft-porn star who did this ad for PanaVota.

Do you think it works?

Do you find it offensive?

I think my answer to both is ironically: Yes!