Archive for January 12th, 2013

Venezuela On Autopilot

January 12, 2013


No sooner had the twice destituted Judge and President of the Venezuelan Supreme Court Luisa Estela Morales ruled her absurd sentence allowing for administrative  “continuity” between one Presidential term and the next one, that continuity Vice-President Maduro presided over the non-inauguration and immediately left the country for Cuba. Violating that same administrative continuity, which is below the Constitution, Maduro named his own replacement, something he can’t do legally, but even if he could, it would be absolutely illegal under the same principle of continuity invited by the not so august Chief Justice.

And thus Venezuela continues on autopilot. Nobody is in charge, at a time that there are pressing decisions to be made. But politics and Chavez’ health prevail over insecurity, shortages and the economy.

And just as Maduro was leaving, someone maybe, just maybe,  told him about the magical inflation number for December which came out at “only” 3.3% for the month, corresponding to an annualized level of “only” 47.6%, but more ominously, the highest monthly inflation in almost three years (33 months to be precise). This sudden jump, compromises the goal stated by the President of the Central Bank of reaching single digits in 2014, more so, when the all important Food and Beverages jumped all of 5.7% in December, an annualized level close to the scary 100% per year, for those items for which most people in Venezuela spend over 80% of their budget.

But even more ominously, the “shortage” index reached 16.7% of all products, the highest level in four years. And these are all “official” numbers, massaged and improved to make them look good.

Which makes you wonder how these guys sleep at night.

Because each day that goes by without a devaluation, represents financing needs of roughly US$ 166 million (Assuming a deficit of Bs. 21.5 billion a month at the current rate of exchange, which all serious economists agree on). The twelve days that have gone by represent already US$ 2 billion.

But compound the level of inflation with a much needed devaluation to around Bs. 7.5 per US dollar and you see the problem. Maduro lacks the charisma to explain that away to the people and Chavez told him not to devalue until his Schrodinger’s Cat status is no longer in question.

But the country remains on autopilot.

Maduro seems to think he needs time so that people get to know him better, but the same time the needs to campaign conspires against him (And so does his personality). The more he postpones a devaluation, the less money he will have to throw around to the electorate. The more financing he will need before or after the election. The bigger the distortions. The bigger the hole he will dig the country into.

And then there is the crime problem. Venezuela has just surpassed 20,000 homicides per year, putting the country in a class of its own. This number was only 4,000 homicides in 1999 when Hugo Chavez came to power. What is worse, is that the victims of these homicides, are not the well-to-do, but the poor, as crime rates are much larger in poor neighbourhoods.

To say nothing about the country’s infrastructure, as another bridge collapses on the highway that connects Caracas to the East of the country (the second in three months)

But instead of fighting crime, the National Guard is sent out by someone to stop and harass students, as in the picture above, where a student from the Catholic University of Caracas is stopped for having a sign that says “No to Dictatorship”

But fascism breeds fascism. I don’t know who gave the order to repress students the last two days, but given that nobody is in charge, we get all these mini-Dictators in the military, ready to please the new owners. They might even get a promotion this way! By now, all these military officers have been trained to forget about human rights, particularly of those considered to be “opposition”

Meanwhile Chavez continues “assimilating” his treatment, which we all now is true of any treatment, you assimilate until you stop doing so. But the “treatment” he receives is just to make him survive, have less pain or whatever, but no longer to cure him.

And until this is resolved, the country will simply remain on autopilot