The Devil's Excrement

Wow! I was shocked to read the international press today. Apparently, Hugo Chavez is not well. Something to do with his health. Look up Hugo Chávez in Google and the fact that Chávez is not going to Brazil, apparently induced some people to believe that this creates “speculation” and “fears” about his health.

Where have all these guys been?

Let’s see: The most outspoken, unstoppable, self-centered, ego-centric. ego-maniac. media-oriented, superficial, blabber mouth, show-off politician ever to hit Venezuela, all of a sudden:

Disappears from the media. As a matter of fact, his last “live”, “live” appearance was only 59 day ago when he held a press conference with real people present after being reelected. There have been some less “live” appearances since then. The last one was exactly 21 days ago. Except in all of them, he was seen only seated at the Cabinet table, with no outsiders present and even in his lengthiest broadcast, he spoke for less than a third or fourth of the average time of his usual ramblings.

And then, he just fails to make any of these “live”, controlled appearances since November 15th. and on November 27th. he surprisingly says he needs permission to be absent from the country “indefinitely”, in order to go to Cuba to get some sort of mumbo jumbo-hyperbaric-Cuban-tried-and-tested treatment for whatever ails him.

And all of this happens in the middle of a very significant political campaign for Governors, where his presence is essential, because he selected some people like these cone heads below, with his own mind and finger, to be Governors:

and somehow their campaigns are faltering because they are not from, nor do they live in the states that they are running for Governor (and the two on the right are sooo stiff!) and silly Venezuelans seem a little unhappy about that.

So, what makes these reporters think something is wrong with this guy’s health? How do they do their reporting? They call Miraflores and ask Maduro how Hugo is doing? Or do they call Raul in La Habana and ask (He probably knows more)?

Because the only basis these guys had for imagining that all was sort of ok with Hugo in the last few weeks, was the fact that some press guy in Itamarati, Brazil’s Foreign Office, said that Chavez had confirmed he would be present at Venezuela’s first ever Mercosur Summit as a full member, which starts tomorrow. What they failed to note, was that the “confirmation” was received twenty days ago, before Chávez had stopped his “live” appearances and two weeks before his now infamous request for an indefinitely leave for medical treatment in Cuba.

So, today, because he is a no show in Brazil, the international press seems to have deducted Chavez “may be” or is “feared” sick.

Way to go international press! (Except for my buddies at Bloomberg, who seem to be on top of things)

Meanwhile “markets” and “investors” seem to be more on top of it. Below, I show the “benchmark” Global 2027 bond and what it has done ever since Chavez took his “leave”. (Other bonds have done even better) This is the same one that Quico said he would not buy and he is not too dumb a fellow, but he could have made a bundle of yen with it, had he not unbookmarked the Devil on his Japanese sojourn:

As you can see, the price of the Venezuelan Global 2027 bond  was just plodding along, drifting up and then right around Nov. 27th. (Funny, the day before Chavez’ announcement, actually!) the price of this bond starts moving up like crazy and goes up more than 10% since then, closing at 100% today for the first time since 2008.

Bonds usually don’t do this on rumors, only on facts!

So, these market guys seem to be on to something. Yes, they go up because Venezuela should yield sort of like the Ukraine, which would shoot the price of the bond up another 20 points or so. Except that things are not that linear in Venezuela. The road will be bumpy one.

To start with, the bet is that nobody can be as bad a Minister of Finance than Giordani. If Chavez leaves, a “real” economist will come in and will never do as bad as the current Minister of Finance.

Wanna bet?

Until Chávez named Jose Rojas Minister of Finance in 2000 or 2001 (and he was an economic statistician), the number of “real” economists that had held the position was less than the number of engineers, sociologists and mathematicians combined that have held the position in the last twenty years. Economists are considered to be like Astronomers (Or is it astrologists?) in Venezuelan political circles.

But I digress. Because even more dangerous, is the fact that the path, if Chavez is a no-show on Jan. 10th., is filled with uncertainties and possibilities. Just about everyone could be President on Jan. 10th. if Chavez no-shows (not me!), because the new President of the National Assembly will be selected on Jan. 5th. and Chavez and PSUV can truly name anyone they want to the position.

Think absurd: Even the Fosforito.

And yes, the Constitution is clear, elections have to be called within thirty days. But that’s all it says. Really. So, imagine new President Chavez (Adan)/Maduro/Jaua/Rodriguez/Cabello (Did I leave your name out?) on February 10th. calling for elections on say, December 10th. 2013 or 2014. Why not? I am sure the Chavista Supreme Court would go along with it, even if the opposition and all of its mud rejects it.

And BTW, dear international press, now Maduro is the pro-Cuba choice? Have you met or talked to Adan?

So, the road to riches, even if you are smarter than reporters from major international newspapers, is also filled with potholes going forward. The “easy money” will end the day we know the truth about the autocrat’s health, whether good or bad (which depends on which side you are on)

After that, it will be a rocky, stony, bumpy, potholy, spiny, filled with nails, path of uncertainty and the end is almost impossible to guess. My guess is Hugo is not well at this time. They may be trying to prop him up one more time so he can be sworn in on Jan. 10th. and the charade can continue. Or he may be close to done by now. I dont know. But I hope they don’t succeed.

Venezuela deserves better. And I will not miss him.

And now he reappears, talking poetry, calling himself Fidel’s flame (no comment) in a carefully controlled video. His arrival was not shown live, but he is back. The mystery deepens. Something was clearly not well, something happened. Now we have to watch how much he participates in the campaign

A few years ago, when Chavez announced that he would start a national airline again, I wrote a post criticizing the move as another waste of money in a country with limited resources and a lot of more important problems than having a flagship Government airline. My reasons were many, but it included the fact that the airline business is well known to be a very difficult one, as recurrently even the best run airlines in the world go bankrupt or close to it, when conditions are adverse. Add to that the history of Venezuelan airlines, both private and Government run, together with a bunch of inefficient military officers in charge and I could see this was a boondoggle Venezuela did not need. Many of the more pro-Chavez readers jumped on me, saying the country should have an airline and flying in it was more reasonably priced than private airlines.

But in time, Conviasa has shown to be an even bigger failure than I ever dreamed of. I never thought we would see so many accidents. Seven serious accidents in such a short life is unheard of in the world of airlines, no matter where they come from. This shows how this Government is so indifferent to the value of the life of its citizens. Then there is the fact that Conviasa bought a bunch of Brazilian Embraer planes for US$ 90 million, which somehow the Chinese buy for half as much according to Gustavo in the same link as above.  And to top it all off, last April Venezuela was put on the no fly list by the European Community, a ban that was reiterated this week.

But rather than find out about how to get off the list, the Government blasts the European Union and criticizes more the fact that the ban is called a “black list” and thus racist, than the actual reasons for the ban. Even worse, in this Bolivarian revolution world, where profits don’t matter, Conviasa has been using airplanes from Santa Barbara Airlines (A Venezuelan private commercial airline) and ¡Fin de mundo! a US airline called Vision Airlines, in order to continue flying to countries in the European Union. If Conviasa was losing money before, imagine doing it having to pay someone else to do the job!

Economics is about optimizing scarce resources. In a relatively poor country like Venezuela, that optimization is even more important. The worst part, is that Conviasa is still flying, money is still being wasted, without any rationale for it. At least other Chavez boondoggles like Venirauto, stopped being much of a sinkhole. While supposedly the company is still functioning, here is a picture of some vehicles waiting to have the natural gas system installed before the cars are sold:

Not pretty, no? At least nobody died…