The Devil's Excrement

While most people are talking about Chavez absence since his operation in Cuba on June 10th., the problems began way before that. This blog first noted Chavez’ absence and more suspiciously, his silence, on May 29th.

But the whole story really started on May 9th. when Chavez called TV Network VTV and said he had to cancel his trip to Brazil, Cuba and Ecuador. Chavez said at the time that that he had an inflamed knee, that he had gone running that day and it got worse and had to cancel the trip. He did not appear on the media to make the announcement.

Two days later, on May 12th. via his Twitter account @chavezcandanga, Chavez said that he had a problem with his senovial fluid and that the doctors were recommending an astroscopic procedure. For the next two weeks, mostly via Twitter, Chavez reported improvements, said he was treating his knee with a “magical herb” Evo Morales gave him, that it was going to be a very slow recovery for his taste, but it was not until May 22nd. that he made a public appearance, saying that his knee was still in bad shape. During this time the US announced the sanctions on PDVSA and Chavez said nothing publicly about them.

Then,  Chavez announced on June 2nd that he would visit Brazil, as he met with former President Lula in private and on June 5th. said he would cancel his Sunday program Alo Presidente for the fifth week in a row, this time in order to have time to prepare for the trip. He did go to Brazil and from there to Cuba.

Then, on June 10th, while in Cuba, it was announced that he had an operation there for a “pelvic abscess” something which is typically a sequel to an operation, an infection, appendicitis, diverticulitis, hysterectomies (not applicable) or peritonitis.

On June 11th., the next day, Chavez called TV network Telesur and used the word “malignant”, saying “there is nothing malignant, there is no infection”. But a pelvic abscess is never malignant and it certainly has to be infectious.

Since then, there has been total silence. Cuban newspaper Gramma distributed this picture of the Castro brothers visiting him:

which some claim is a photoshop version of those taken last December.

This Friday is  a National holiday in Venezuela and some expected Chavez to reappear, but the military parade in Carabobo is likely to be cancelled. And I am told the one on July 5th. for Independnce Day, will also be cancelled as we will not see Chavez in Venezuela then either.

Meanwhile, Chavez’ 5 day permit to be absent from the country has expired, the Vice-President has not been appointed to serve for him in the mean time, which is what the Constitution says should have been done. Vice-President Jaua, unloved within his party says that people want him to commit treason. Funny, following the Constitution can be considered “treason”

And the mystery continues, our take: Hugo is very sick, I am told is something debilitating but not fatal, but his ability to run a campaign is being put into question. There may be crazy jockeying and conspiring going on in Caracas, Havana and PSUV, but somehow the opposition has not focused on the illegalities and contradictions of the situation.

Meanwhile it has been 43 days since the first knee problem and 13 days since the operation in Cuba, 12 since we last heard from the once loquacious Constitutional President of Venezuela…

and counting…

(Chavez’ brother says it will be 10 to 12 days before Chavez returns, that is a three week convalescence for a relatively young man. It must not be something simple)

El Mundo published the graph above (click twice on it to see it with good definition) about how the prison population has increased during the Chavez years. As you can see, there was a drop off right off the bat, which arose from the approval of the COPP (Codigo Organico de Ordenamiento Procesal) in 1998 and its changes since then, which essentially made it easier to be tried in freedom or not be held in prison if the trial had not taken place within a certain period of time. This part was fairly easy to understand.

What was not clear though, was the sudden and steady rise in the number of prisoners starting in 2006. After five years in which the prison population remained essentially unchanged, there is a clear and constant uptrend. The only possible explanation for this, is that this was on purpose. Faced with a soaring crime rate, the Chavez Government ordered that COPP rules be tightened and  more criminals be imprisones as they were tried or not to release them, as a way of controlling crime.

Given the control of the Government over the judiciary this is not such a crazy idea, it would have been a fairly easy way to at least slow down the sharp increase in crime which together with inflation is considered to be the worst problem in polls by Venezuelans. In fact, the Government had made plans to build 25 new prisons from 2006 to 2010, only two of which were actually completed. Thus, the Government really was trying to do something about the number one problem for the people, but it got trapped in its own inefficiencies and incompetence.

And the Government continues fumbling the problem today. Rather than investigate how the weapons got into the prisons and the mafias involved in prison security and corruption, the Human Rights division of the Prosecutor’s office announced today that it will look into the role played by Human Rights ONG’s in the violence and events of the El Rodeo prison over the last two weeks.

It truly is the world upside down under Chavez in Venezuela.

El Rodeo prison as it was attacked by the National Guard

Quotes from the fake revolution:

“The prison problem is a reflection of the national rot in many areas, a judiciary riddled with corruption, inefficiency , insensitivity, a prosecutor who for years has not fulfilled its obligation to ensure compliance with human rights, prison gangs that became encroached there, who then took possession over the prisons. ”

“Prisons are like the gates of of the fifth Hell. I am committed to all of you, to your family, with your pain. We already have a plan that was developed before taking office, and I already have a team of military and civilians working on the ‘Dignity Plan’, dignity for prisoners. Dignity for prisons, and that thye become, indeed, in places where people live together, where they live and not die in life, like Venezuela’s prisons currently are, a system, our prison system, of the worst ones and most savages one around the world, even worse than many dictatorial regimes”

Who said this? Hugo Chavez on June 20th. 1999 in Alo Presidente #4

Like all his promises, nothing came of it, noting happened, nothing was being planned. The results are there to see:

-Only 28% of the prison population has been tried and sentenced

-The number of prisoners has almost doubled, while homocides have almost tripled.

-The People’s Ombudsman showed up over a week after the first deaths took place and hours after the attack by the National Guard

-After three days, the National Guard has yet to control the prison.

-We still don’t know the true number of death on the first weekend of the riots at El Rodeo and so far, the Government has not said how many were killed in the El Rodeo take over.

-How does moving the prisoners solve the problems?

-And finally, there is the big question: How did all those weapons get into El Rodeo? Were they brought in as part of the Dignity Plan?

This video was made by some of the National Guardsman participating in the attack of the El Rodeo prison. They even tape themselves at the end as if they were heroes. As you can see they are as unprepared for taking over a prison as for movie making. These are the people that are supposed to defend us. As you watch it, imagine the same scene in 1992 led by Hugo Chavez against the Presidential Palace in the military school where he surrendered. Two our every three words are swear words. It is as if they were using fireworks at Christmas. Total disregard for the prisoners, calling them those bichos “animals”. Relatives say there are 70 prisoners dead, the Government has not released any new numbers after the attack. The movie feels more like war than an attack on a prison. Shameful!

(the title refers to the motto of the National Guard: Honor is their insignia

This morning five thousand National Guardsmen were sent into the El Rodeo jail to restore the law and order that the Government failed to impose over the last few years and as of a few minutes ago, only 45% of the prison (there are 4,000 prisoners in it) was under the control of the guard. Meanwhile, the take over became a battle if not a war, as the prisoners families have refused to leave the surrounding areas and as they were dispersed with tear gas, they began fighting back, as shown in the picture above.

There are now reports of both a fire inside the jail, as well as protests in other jails in solidarity with the events of El Rodeo.

Not a  pretty picture, as the problem seems to be quite serious and the relatives report that the National Guard is killing prisoners, while the Government says there have been no new deaths today, only eight injured National Guardsmen.

Hopefully, there is no additional deaths but the problem  seems far from contained at this time.

I was sent a picture supposedly taken by a prisoner inside the jail, but I decided to remove it, more pictures here.

This is a video a month ago of the prisoners and their weapons in El Rodeo.

No problem shows more the incapacity and indolence of the Chavez administration as the prison problem. The number of prisoners has almost doubled since Chavez took over, as homicides have tripled in the country. But beyond the sheer numbers there is an incredible inhuman tragedy taking place in Venezuela these days and the Government “of the people” has been unable to deal with it.

Despite what you have read in the New York Times a week and a half ago, Venezuelan jails are a far cry from being the Country Club that the Margarita prison is. Most jails are sub-human boxes where prisoners live under conditions that should not be available on the planet. Even animals would live badly like that. Most prisoners are armed, not with knives and sharp objects, but with weapons ranging from pistols to machine guns. There are daily gang fights and within the prisons, the law is enforced by the prisoners and not the jailers.

Prisons are over crowded, very few new ones have been built since Chavez took over. Sanitary conditions are atrocious and food, as you can imagine is not meant for humans. Most prisoners eat what their relatives bring them.

In his never ending shuffle of Ministers of the Interior and Justice  (If my count is correct, there have been eleven Ministers, with one, Jesse Chacon, repeating in the position), Chavez has announced a dozen plans to solve the prison problem, with no significant effect.

The twelfth program was announced today and it is once again proof of how clueless the Government is: The Government will create a Ministry for the Prisons Regime.

It seems as if the Government every time it faces a crisis either it passes a new Law or creates a Ministry, despite the fact that in the most salient cases: Housing and Electricity, there was no impact whatsoever from either of the two solutions. In fact, things seem to get worse as the people in charge became entangled in the complexity of setting up new institutions and absorbing or merging into it existing ones. (When Chavez got to power he reduced the number of Ministries, they have doubled since)

The newest crisis also showed the lack of concern for people’s rights on the part of the Government. There was a riot at the El Rodeo prison, rumors spread that there were nineteen people dead, but the Government would not confirm it and access to the prison was closed. As family members surrounded the prison in a vigil to await the news, the Government took hours to confirm the deaths and over a day in releasing the names of those that died, which included nine evangelical pastors that apparently tried to mediate in the conflict. (I understand they were also prisoners)

Prison conditions are infrahuman in Venezuela and little has been done to improve them since Chavez took over. Because crime has soared, conditions are worse than they ever have been and there it is a free for all within the prisons. As Venezuelans we should all feel ashamed of this. These are human beings we are talking about and they are being allowed to live and die like animals.

Note added: Now there are reports that there are 30 dead, not 19 and at least 27 bodies have reportedly been examined at the Caracas morgue.

Maracaibo En La Noche last weekend and it has nothing to do with the song

The Venezuelan Government continued its attitude of not accepting responsibility for any of the problems of the country, but this time it went from the “Who me?” attitude of most problems to simply saying “It’s your fault!”, blaming the electric crisis on excess consumption and not on the inability and incapacity of the Chavez administration to tackle the problems.

The electric problem is not new. Last year the Government blamed El Niño for the crisis, but it quickly became clear that there was more to it, as it became evident that between the lack of maintenance, improvisation and bad decisions, what was a well run electrical network when Chavez took over as President, was run into the ground by the ignorant revoution. Despite this, the Government declared victory many times over the electrical crisis and blamed problems on sabotage and the weather. I still keep my time daily on announcements from Government officials and the flip-flopping continues. Clueless is the best way to describe them.

Then, after this weekend’s Zulia and neighboring states blackout, it was time to shift the blame and put it on “the people”

How irresponsible can you get?

The reality is different. The Chavez administration put a bunch of incompetent loyal military in front of the electric companies, slowly removing those that knew how to run the system and decide what to invest in and how to do it. Investment and maintenance was postponed, including that of the Guri dam that provides 70% of the electricity in the country.

But the crisis goes back to Minister Giordani deciding in 1999 to cancel five hydroelectric projects, a perfectly valid decision, but one that was not followed up by creating an alternate plan. This was followed by requesting the help from Cuban “experts” who went to a distributed system, like that of Cuba, from the interconnected one that Venezuela had (has?). They built power plants but forgot the transmission lines. Back to the 1930’s you all!

And while the Government blames consumption, which has definitely gone up, it is its actions that have created the current situation. Zulia’s consumption was not particularly high when the blackout took place last week. The five transformers that exploded did not explode because of demand. They exploded at night, when offices are closed, AC’s are off in these buildings and also many stores, it was not “peak” demand. Not even close to it.

But what can you expect from a Government that builds power plants that produces more electricity than nearby consumption but fails to build the required power lines to take power elsewhere? Or how about buying power plants for Sidor last year at the heart of Venezuela’s power consumption,  but failing to build power lines to take all of Guri’s power elsewhere?

So now the show is to make the people believe that it is not the Government’s fault. Blame the “companies” or the “big consumers”. Impose a penalty on anyone that does not reduce consumption by 10% and give discounts to those that do by more than 20%.

Funny, these are capitalistic solutions from a Government that froze rates 10 years ago, encouraging consumption and wants to give away a few million appliances to the “people” that it imported from China. As far as I know they don’t run on solar energy. Yes, making a consumer out of the last Venezuelan is a very desirable goal. But if you do it, you are going to have to generate all of the power required for them.And you better start charging for it.

But none of these connections exist in the Chavista mind. It is the giveaway that matters. The paternalistic, let’s give something for free to the masses so they vote for Hugo, the country be damned.

Let’s also screw the big corporation on the way, let’s force them to buy Diesel plants, which use … Diesel, that way we not only give gasoline away for free, but increase cheap Diesel use, so as to reduce exports at the same time. It’s called criollo Hara Kiri: Include PDVSA in the companies to be screwed. Tell it to buy all the power plants ready to be sold in the Western or Eastern world, overpay, but don’t solve the problem. Imagine the commissions in the middle!

I mean. Can these guys be this ignorant?

Seriously Ali (on the left, above), did you learn nothing in the guerrillas, Congress, Ministry of Foreign Relations, PDVSA, Ministry of Finance and now of Electricity?

Guess not, you also go to Cuba to get your medical treatment.

While the Government wants to make a big electoral fuss about housing, the truth is that it can’t deal with even smaller problems, failing to solve the emergency of refugees fro last December’s floods, while spending all of the resources in a program that wil not yield results for years.

Basically, Ministers scramble to please the Venezuelan President, leaving behind and even ignoring the poor souls that lost their homes last December. Even worse, they occupy properties “temporarily” and these installations are shut down or deteriorate as the problem is not solved.

Case in point is fifty year old “Hipodromo La Rinconada”, as reported by El Nacional a while back, the Caracas horse racetrack that Chavez ordered shut down six or seven years ago. The once beautiful race track:

was turned into temporary housing for some 2,300 families, as you can see in the picture below:

The “homes” of the refugees are divisions made of cardboard along the hallways of the racetrack, except that the Government never even finished that part, thus residents use black garbage bags to complete the “walls” of their residences inside the race track. The residents were promised drywall, but other priorities took Government officials elsewhere.

The temporary housing violates all rules about refugees, from the type of walls and roofs, to the type of facilities, to sanitary conditions. There are flies, garbage and improvised wiring joins the units. Residents use the top of the bunk beds to store stuff. Meanwhile, the once spectacular bleachers of the racetrack are used by the people to dry their clothes, sheets and bedspreads:

while horses still tran down at the track.

It’s bizarro Venezuela at its best.

Tonight we get news that President Hugo Chavez underwent an emergency operation not of his knee, but of a pelvic abscess, an infection of the lowers intestine.

Nothing bizarre or unusual here. An emergency operation and the Venezuelan President was taken to Cuba of all places, just around the corner for an emergency. (Whatever happened to Barrio Adentro?)

Other than his knee problem, there has been no warning of the President having any other problems, other than his unusual silence the last couple of months. Chavez appeared to be better, went to Brazil and then all of a sudden this news. But I heard otherwise then, some debilitating disease, bone related. Pelvic problems, ummm…

Something is not being fully revealed, as I suggested a week or so ago.

Sunday June 12th.: To add to the confusion Hugo Chavez says “is not malignant”. Funny, nobody had talked about cancer or tumors. More like sepsis from the knee operation or osteomyelitis…

(Venezuela’s CDS curve this morning. It costs 12 % (1200 basis points) to insure against default in 5 years)

The big economic news last week in Venezuela was Chavez’ announcement that he needed another Bs. 45 billion (US$ 10.46 billion at the official rate of exchange of Bs. 4.3 per US$) in new debt this year. This amount is on top of the Bs. 40 billion (US$ 9.3 billion) in new debt contemplated originally in the 2011 budget. Thus, Chavez is asking fro an increase of “only” 112% in debt for the year.

Never mind that this is not even legal. Under the Venezuelan Budget Law, debt for the year has to be requested in December of the previous year and only in cases of emergency can it be increased. There is no emergency, other than Hugo wants to be reelected. The money is in fact earmarked for Mision Vivienda, Mision Trabajo and to pay interest in old debt. But Hugo cares little about legality, as he is above the law.

Initially, Government officials said that most of this new debt would be in local currency. However, this was later changed as the Government realized that if it was all issued locally, it would hurt local credit. So, unofficial sources say that it is likely to be half and half, with the Government issuing some US$ 5 billion in new debt abroad (plus whatever PDVSA issues in the rest of the year)

All of this happens as oil prices are still near the US$ 100 per barrel level as measured by Venezuelan oil basket last week. Go figure!

The problem is that Government officials continue to say that Venezuela can issue more debt as its debt to GDP ratio is small. This appears to reflect the assumption that Venezuela is a country with a credit rating of investment grade, which is not the case. In fact, Citibank suggests that the biggest danger now in the face of this news is that rating agencies downgrade Venezuela because of the increased debt.

Any debt issued abroad will be very expensive. In February, PDVSA had to issue bonds paying a coupon of 12.75% and credit conditions are very similar to what they were in February. Even worse, the total debt to be issued this year is close to 25% of the budget, an unheard of number in the country’s history.

The worst part is that some of this issuing will be made in order to maintain an artificially low exchange rate, which implies that it will be more expensive that it needs to be. Even worse, part of the money will be used to pay interest on all debt and most of it in discretionary Misiones, not on investment.

The rate of growth is unsustainable and Chavez is now accelerating it, either oil soars or Chavez stops this if gets reelected. PDVSA has issued US$ 9.1 billion in new debt since last August, while the Republic paid US$ 1.5 billion in the 2011 bond which matured in April. A PDVSA bond matures in July in the amount of US$ 2.4 billion. Analysts were expecting the Republic to issue at most US$ 3 billion in 2011 in foreign currency, it may now be as much as US$ 6.5 billion, but there has been no official announcement of the exact amount.

The problem is that Venezuelan bonds trade in a very specific market, which is quite limited. Since the country is below investment grade, only Emerging Market dedicated funds and hedge funds invest in the country’s and PDVSA’s debt. Since the bonds contained in the EMBI Index are about US$ 400 billion, Venezuela’s outstanding debt is a large fraction of that index, which would require that all funds overweight Venezuela. Thus, Venezuela’s debt yields a lot, not so much because of risk, but because of the excess supply in the markets. Every time a new bond comes to market, the supply increases which affects all bonds. This will only get worse in time as the country continues to issue. Thus, even at a constant rate, this would not be sustainable and certainly too expensive.

Below, Chavez’ request to the Assembly, not even one word about the justification for this new debt. It even says “the excess of oil revenues has to be distributed to the “people”, but this is not the excess, this is “extra”, it is not income, it is debt.  (double click twice to read).