Archive for December 14th, 2014

Maduro Keeps Sending The Wrong Messages

December 14, 2014

I have been trying to write other posts, but the news are such that I have to set them aside and write more about very current events. One of my biggest complaints about the Maduro Government (and Chávez before him) is that while they carefully plan what they say to the Venezuelan “people”, they don’t apply the same analysis to what they tell (or not!) to foreign investors. Very simple messages, or simply informative messages would go a long way towards improving the outlook of Venezuela’s debt, mor so in the face of the recent drop in oil prices.

When I heard that José Vicente Rangel was going to have Maduro today in his program in Televen, I thought this would be an effort to do just that. Instead, the opposite was done. The interview did exactly the opposite. Clearly, the interview was going to be friendly, on tape (Maduro was not even in Venezuela today, so that this was not live) and a perfect chance to assure invetsors that he was in control. Instead, Maduro sent the wrong message (s). Start with gas prices:

He suggests that most people agree gas should be increased, but he says the time is not right, it would be like adding fuel to the fire and he has to wait until “speculative forces” in the economy subside.  He also states that there is no rush, even with the fall in oil prices, there is no rush to to do it and he has the funds to do things and the price of gas could be increased in 2015 or 2016. He has to wait until inflation is controlled. #FAIL

Maduro also said that he would “modify” the Sicad 2 market, something that would help, but is only a small problem in the scheme of things. He did not say the Bs. 6.3 rate would be modified (he ratified it would remain), nor Sicad 1, only that Sicad 2 would be modified.

Maduro repeated in the interview his phrase from four months ago: “The money form China is not debt, it is financing” (El dinero de China no es endeudamiento, es financiamiento). Oh yeah, how I would love to get financing that is not debt for myself!

He also said that sometimes he feels he should just break relations with the US, as if relations were normal. The two countries do not have Ambassadors, but worse, does Maduro understand what this could imply? Maybe he should look to Nigeria, a country that used to export one million barrels a day to the US in 2010, but now sends not a single barrel to a country with which it has friendly and normal diplomatic relations.

Nor did this sentence, said earlier helped much:

“There is no possibility that Venezuela will declare a default, unless we decided not to keep paying the debt”

Oh, I see. It’s like me saying I promise to  keep writing this blog, unless I decide to stop. I guess the only positive was that he did say that is what Chávez wanted, to keep paying debt. But the first part certainly was not very reassuring.

Just  another day of Maduro sending the wrong messages to markets and investors, let’s hope that oil does not continue hurting bond prices, as it is, they have been slaughtered in the last week and Maduro seems intent on not helping.