The Devil's Excrement

Even form afar, it is very exciting to watch today’s rally in which Capriles is closing his campaign in Caracas. Gigantic crowd! Capriles speaking well! Very emotional, very exciting! Wish I could be there! (I will be there to vote next Sunday!)
More here.

So, today, the Venezuelan Electoral Board announces that votes that go for the “Unidad Democratica” party, which as you can see in the “tarjetón electoral” above, has the picture of Henrique Capriles (red circle) will go to little known candidate Reina Sequera, the same one that is offering a cool US$ 1 million to each Venezuelan if she wins. You may think nobody will fall for this, but given that it has Capriles’ picture, that the opposition coalition is the “Mesa de Unidad Demócratica” and that Capriles is the candidate of the “Unidad”, the Electoral Board should have never allowed this change in the interests of fairness and democratic values. Except clearly, they are a bunch of hoodlum and have no scruples.

This is Chavista electoral dirty trick #3,457 and it simply shows these guys are worried…

For the last two months, Wall Street has been skeptical of a Capriles victory. In fact, at the beginning of the summer, it seemed as if the Wall Street bet, had more to do with a bet on Chavez’ demise than on Capriles pulling off a victory. As recent as two weeks ago, only one major Wall Street firm was suggesting that the probability of a Capriles victory was significant, with all ther saying that Chavez would win.

Thus, the “standard” view was that a Chavez victory would have a small impact on bond prices, because “nobody expects him to lose”, while a Capriles victory would yield huge gains.

I disagreed on all counts. First, I have believed that Capriles’ chances were larger than expected by Wall Street, while on the other hand I know that Venezuelans are so positive that if Chavez won they would sell all their bond holdings, pushing prices down.

But in investments all things are dynamic and this week, there seems to have been a change of heart and all of a sudden bond price shave started to soar. This is mostly due to the new polls and weaker conviction on the part of Datanalisis, a Wall street darling.

For example, below you can see the so called benchmark for Venezuelan bonds, the Global 2027, and how in the last few days it has gone up and up and now is pushing its recent high, after weak oil prices pushed prices lower from Sept. 14th to Sept. 20th. :

since then, all bond prices have risen and the Global 2027 went from 85.5% to 90% in barely five days which is a strong move, to say the least, historically.

What this says is that Wall Street is beginning to buy the probability of a Capriles victory, something that it was not even close to admitting a few weeks ago.

What this means is that foreign investors were somewhat underrepresented in this trade and now want to try to take advantage of what may be a very asymmetric gamble: If Chavez wins, bonds will drop a reasonably small amount, but if Capriles wins they may rise triple the same amount, if not more.

Of course, nothing is sure in this world. Th road to a Capriles victory may be easier than the road to a Capriles Presidency, if Chavismo decides to create trouble or simply to spend all of the reserves before Capriles takes over.

But for now, Wall Street and international investors are putting their money into Venezuela and PDVSA bonds, which is no guarantee of victory, but given that they do have something to lose, their money,  indicates a higher conviction and a much higher probability that Capriles may pull this off on October 7th.

While I have no problem with a Central Bank selling gold from its reserves if it deems that this is the correct investment decision, the news that Venezuela had sold about 1% of its gold reserves is another example of how this Government does not have any accountability and how the move to bring the reserves to Venezuela was simply political grandstanding by Hugo Chavez.

First of all, we would have never found out about this, if the much hated International Monetary Fund had not published its annual financial statistics, showing that Venezuela sold about 3.6 Tons of gold. Since we don’t know when this happened, we don’t know how much money it was, but it is roughly US$ 180-190 million, pocket change for a Government that has thrown away billions in Chavez’ petty cash fund, called Fonden.

But the fact that the gold was sold after it was brought back to Venezuela purportedly to “protect” the gold reserves shows how cynical Merentes, Chávez and Giordani can be. Somehow, on the way back, or before the reserves came to Venezuela, they sold “only” 3.633 Tons of gold. Interesting that it was the old Venezuelan leaders that never sold gold and this Government that fills its mouth with words such as “sovereignty” and the “people’s gold” in defense of the gold reserves that went out and sold some for the first time in 30 or 40 years.

Gold reserves have saved the day for the Chávez administration. As gold prices went up, reserves dropped, but remained at a high level. Very recently, the Central Bank even changed how it accounted for the gold in order to make reserves look better. As I said, the whole show of moving the reserves was a signal that we should be worried, this is proof that I was right and it make get worse if Chavez wins on October 7th. As Chavez says, this was all for show, but not they have begun selling the family jewels in secrecy. The Faja, the mining projects, the concessions can all be reversed, but gold sold and money spent is simply no longer there (or here).

So much for caring about the people and sovereignty from a Government without scruples!

I really take offense at Jimmy Carter coming out today, two weeks before the Venezuelan Presidential election and saying that “As a matter of fact, of the 92 elections that we’ve monitored, I would say the election process in Venezuela is the best in the world”

First of all, he is talking about a process that took place eight years ago, for which he gave his blessing when there multiple evidences of fraud and wrong doing and for which his foundation tried to railroad the accusations and technical proof of fraud by holding a sham seminar on them.

I mean this is the same Jimmy Carter that after praising Chavez, came out and said he was disappointed with him, but then proceeded to give a stupid version of the 2002 events.

And I have to question his timing, given that he and his foundation are not observing the upcoming election, have not seen the changes that have been made to the system used in 2004 and has not been in Venezuela since that time. Why now? What is his motive? What basis does he have to say what he is saying? What prompted him to make that silly and false statement?

After all, he said nothing about the fascist Tascon/Chavez list when it was used to discriminate against thousands of Venezuelans. He has said nothing abut the fact that the “best electoral system in the world” includes fingerprint machines which are only used to intimidate the population into believing that the Government may know how they voted.

Again, why now? Why try to give his blessing on the system two weeks before the election? What is his motive? Why give an opinion about something he is so out of touch with?

I suggest the former US President stop meddling with Venezuelan affairs and perhaps find sometime to read these papers or read this whole section of my blog, which shows that what he is saying is just a bunch of crap and that electoral process that he praises so much was tainted and he was partially responsible for the fact that the irregularities were not investigated right after the election, but were the effort of scientists and mathematician who did care about Venezuela and not just showing off.

Jimmy, please find something better to do and if you or any of your collaborators read this, please explain why you all of a sudden have to give an opinion without any recent contact with our electoral system. Once again, it makes you look dumb, tainted and I find it extremely fishy after your inconsistent previous record in Venezuela.

But should you want to reply, maybe you can clarify or try to clarify again if the Chavez Government ever gave the Carter foundation a donation. that was never answered properly (The denial went something like: “The Carter Center has never received a donation in connection with its role …”). But more importantly, please stop anyone from your foundation fromsaying things which are not true about Venezuela, you have played a very sad role in Venezuela, you should be ashamed.

While President Hugo Chavez has made a valiant effort to campaign or appear to be campaigning as much as opposition candidate Henrique Capriles, his efforts to appear more in public seem to be having the opposite effect. Every time Chavez appears in public, it seems to take a toll on him, forcing him to cancel rallies that had been announced previously.

Last week, President Chavez was not that visible until his Apure appearance, which in itself was a surprise as he should have no problem winning that state. In that appearance he left some doubts about both his health and his emotional state that left many questions lingering in the air.

The next day Chavez was supposed to appear in Los Teques to inaugurate four subway stations, but he failed to show up, sending his Vice-President instead in a city that is likely to go for Capriles.

Then yesterday, Chavez went to his traditional stronghold of Catia in Western Caracas in his Chavezmobile, but once he arrived at where he was supposed to give his speech, it was cancelled and the live transmission on the Government’s TV channel was suspended.  Some said that Chavez was mad at the low attendance, with former Mayor of the Libertador District Freddy Bernal justifying the low attendance by saying that the most important mobilization will be on October 7th. But a second version also said that Chavez showed his discomfort throughout the short 2 Km. ride. In any case, Chavez could surely not escape thinking that Capriles walked through Catia a month ago, with huge crowds following among a route which was larger than Chavez yesterday.

And then today Chavez suspended his visit to Portuguesa State, which will only send more wrong signals to the electorate. Portuguesa is a very pro-Chavez State, where not showing up may actually hurt the Venezuelan President after the visit was announced.

While I continue to be very cautious about the outcome of the Presidential election on October 7th. such signals, combined with the infrastructure accidents in August, which are not yet reflected in the polls and Chavez’ best “new” friend, Colombian President Juan Manuel Santos inviting Henrique Capriles to in Bogota, make me wonder if people know more than I know and I should be more positive at this time.