Archive for February 11th, 2014

Sicad 2: The Sequel, by Nicolas Maduro

February 11, 2014


Tonight, continuing their streak of ever more amazing announcements, Venezuelan President Nicolas Maduro announced with pride that Sicad 2 will be launched soon at a theater or financial institution near you. Now, in Hollywood, people know that you don’t make a sequel of a bad first movie. Your need the first movie to be quite good in fact.

But what can you really say about Sicad, the original movie? Not much really. It has been intermittent, ineffective, irrelevant, unfair, ever-changing and frustrating. There have been many promises around it. Remember, was it in October? President Maduro said Minister Merentes would hold weekly auctions of Sicad (Sicad is not an auction, but that is a different story), they just like to call it that) of US$ 900 million. Then three weeks ago, on January 21st, Minister Ramirez (Merentes is no longer Minister) announced weekly auctions of US$ 220 million for the remainder of the year.

The result?

So far, not much. The first auction which was to take place two weeks later, giving new meaning to the word weekly, was cancelled and now this week we are supposed to have an auction for US$ 440 million to compensate for the cancelled one.

So, what does Nicolas do? Announce a new Sicad 2 mechanism, so that (his words) “There will be dollar offers beyond those of the State”

It would appear as if Sicad 2 would be the permutas (swaps) announced by Minister Ramirez, which are also not swaps, but that, again, is another story.

And I have to apologize. The previous post was somewhat rushed in saying the Government was a self-parody. This really is beyond parody. It is simply incomprehensible.

Maduro acts, as if everything is peachy in Venezuela. I don’t want to abuse the word clueless, but I need to use it again: Maduro is simply clueless.

By now, it appears as if the radicals-radicals have taken over from the radicals. By now, Ramirez is the only member of the radicals (also called pragmatists) left and you can see his increasing frustration. The leader of the radicals Nelson Merentes was removed and to add insult to injury, he was moved to the Central Bank and within a month, the responsibility of the Sicad auctions was taken away from the monetary authority. Again the radical-radicals win.

But he can still preside over the Central Bank, which today released January’s inflation data under the headline: “The trend of inflation has been broken”.

Which is certainly good news. Except this is the graph:


Does anyone see inflationĀ“s trend broken in this graph? I certainly don’t. There is a brief dip in December, but the next data point, this month’s, goes right back into theĀ  trend. And Merentes may not know anything about economics and finance (he doesn’t), but he is a Mathematician and knows no trend has been broken in the graph above. But I guess he needs the job, so he goes along with it.

But much like Maduro and Sicad 2, the promise is in the report, in the future. Chavismo is very good about the future, not so good about the present. It says clearly that by the end of the first quarter of 2014 the “measures taken will positively impact the stability of prices and shortages.

Oh yeah! I forgot about those pesky shortages. According to the same Central Bank report, shortages, as measured by the scarcity index, were actually up, not down, just like inflation in January 2014. No trend broken there either. In December, the scarcity index was ta 22.2% and despite the “war on the economic war”, Central Bank dixit, it jumped to 28% in January. Yeap! As Daniel clearly explains it: “Think about that, 3 common household items out of 10 in your shopping list are going to be missing on any day. And maybe having to fight for the other 7”

But don’t be so concerned about this, because as the monetary authority explains, this was the result of scarcity in non-essential items, like motorcycles and autos, while “the population continues to receive, with the same or superior intensity, the benefits the State brings them, in the whole country, through the public commercialization system in which they can acquire (sic) the basic foodstuffs at supportive prices”

They certainly drink the right Kool Aid at the Central Bank.

The whole thing is so bizarre, so “Cantinflerico” which makes me think of Cantinflas’ history lesson. Maybe some of the readers do not even know who Cantinflas was, but this clip is a good example of how Cantinflas (for those that understand Spanish) would explain something, in this case history. Just imagine Cantinflas telling us why the trend in inflation has been broken. It would sound exactly like this:

That seems to be their inspiration, just picture Merentes saying it.

Soon, Sicad XIII at a theater near you…