The Devil's Excrement

The hats are all new, some don’t even know how to hold their guns, but these peasant militias are another sign that Venezuela is well in its road backwards into the XIXth. Century

Hugo Chavez confiscating buildings by whim yesterday at Plaza Bolivar in downtown Caracas (He says expropriate them, but people don’t get paid for it as the word requires)

Sound:

Chavez: And this building?

JR: This building  private businesses, jewelry stores

Chavez Expropriate it!

Chavez: And that building there?

JR: Those have stores

Chavez: Jacqueline told me that in that little house over there lived Simon Bolivar when he was recently married and now its some storefronts. Expropriate it!

Chavez And this building over here?

JR: It has storefronts owned by the private sector.

Chavez: Expropriate it!

Chavez: We have to convert this into a great historic project, we have to retake a historical and architectural project. (Read there is no project I just had this whim. But people were forced to move out today!)

Thus, Chavez continues to run Venezuela as his personal fiefdom or hacienda. Not happy with the many hours he spends on radio and TV, he started a new radio program today called : “De Repente con Chavez” (Suddenly with Chavez, the word says it all,short term just like his Government).

And his request to approve a law to “sanction” those Deputies that are elected under a slate and then jump sides, will receive immediate attention from his servile Deputies in another proof that this is very far from being a democracy. I guess “jump sides” will be defined as not voting how Chavez wants it!

Oh yeah! He also decreed an electrical emergency and created an Electrical Chiefs of Staff, which includes all of the busy Ministers who have screwed up the economy, the oil sector and the Guayana companies, but none of which has a clue about the problems of the electric sector (or the time to really work on this, with so many other problems in their hands)

In a couple of months, he will then appoint an Electric Czar or something like that.

Today Tal Cual published it’s usual Friday “Serious Humor” column by Laureano Marquez, which was entitled “Venezuela Sin Esteban. Tonight the Ministry of Information and Communication announced that it would ask the Prosecutor to open an investigation and sanction the newspaper for the Editorial.

In a clear sign that Chavez and his cronies are really getting edgy and thin skinned. The Ministry said that:

“The newspaper committed a flagrant violation of the Constitution and the laws, publishing a text which is and aggression and a disrespect to Venezuela’s democracy”

“The text is a flagrant invitation to not recognize Constitutional order and an an attempt to incite violence as a way to get rid of the Government by means different than elections…it is an invitation to a coup plan, genocide and terrorist, which is masked with the use of humor. Nevertheless it was published in the front page of this newspaper, in a place devoted to Editorials. All of this is added to the permanent criminalization that the coupster media executes against the security agencies of the State, as a strategy to incite violence and incite war”

Over the years I have translated many articles, but I simply find it next to impossible to translate this one (If anyone tries I will publish it). Thus, for those that speak Spanish I have placed it here, not only for your enjoyment, but also because I am sure that at some point the Prosecutor’s office or the corresponding Judge will order Tal Cual to remove the article from it’s web page.

People who study countries that suffer from an abundance of resources, whether you call it The Dutch Disease, The Devil’s Excrement or the curse of abundant resources, spend a lot of time trying to compare countries which sometimes have many social, cultural or even religious differences that lead some to question whether a comparison is appropriate. A couple of Professors at the London School of Economics have done a very ingenious study in Brazil, which appears to show that The Devil’s Excrement is at work at a more micro level in a single country, where cultural and social differences are limited.

What they did was go to Brazil where municipalities apparently benefit directly from their oil wealth (I was not aware of this), creating municipalities with different levels of oil income, but despite these they do not show any significant differences with other municipal characteristics.

What is available on-line does not talk much about methodology, but the authors conclude that oil production has no impact on non-oil activities and more remarkably, when onshore oil contributes to the economy of the municipality, the manufacturing sector shrinks and the service sector expands in that municipality (Sound Familiar?)

While the authors do find that richer municipalities spend more and build more infrastructure, when they look at actual quality of life increases, there are few. For example, there are minimal increases in household income, but this has nothing to do with increased population, for example.

However, the study finds where some of this money may have gone, such as the homes of municipal worker houses increasing in size, more news about corruption cases from the municipality, a higher number of Federal poliec actions in the area and anecdotal cases of corruption involving the Mayors of oil rich areas.

The authors also find that other sources of revenues do have a larger impact and less “missing money”.The only thing I was not clear about is how municipalities with more infrastructure thanks to oil don’t ahev a higher standard of living, but overall I found the paper and many of the references aboyt Venezuela’s disease, quite interesting. I hope you do too.

I guess the curse is hard to get rid off. Maybe this is our solution as a country and I am not kidding.

Protests continued today in Venezuela as the student movement took a life of its own, staging demonstrations in different parts of the country and trying to fight repression with pacifism. The results were not pretty, as two students were killed in the student scity of Merida in the Venezuelan Andes, as both sides accused each other of the deaths and the violence. But it was clear that the para-military groups in Merida, where the worst violence has taken place, were protected by the authorities. I refuse to label the two deaths students as being part of either side, they were both Venezuelans.

Meanwhile the pro-Chavze Governor of Merida State said that things were calm today, but the protest and the fighting continued as the urban guerrilla Tupamaros took the violence into residential areas where dozens of cars were burnt.

In Caracas, it was a whole different story, as students went to the Government’s TV station to protest and despite the presence of pro-Chavez violent groups, things were quiet as neighbors from the surrounding buildings came down banging pots to aid the students forcing Lina Ron and her thugs to stay back. The students were actually met by the officials of RCTV, but it is not clear anybody but Globovision was watching, such is the state of freedom of speech in Venezuela.

Everywhere where there are universities, students protested today, as the movement was incensed by the deaths yesterday. The Government tried to blame the protests on the opposition leadership, but the truth is that these are very spontaneous protests with no clear leadership other than a fiery student movement, tired of the Government’s repression.

But even the policemen looked tired (not so the National Guard) as they also have to endure the water and electricity shortages and the daily fight with uncontrollable crime.

Caracas is set to start rationing of electricity again as Chavez keeps trying to fight an external fight, which is not the right battlefront, and avoid dealing with the internal deterioration of the country. Venezuela has yet to feel the effects of the recent devaluation, commerce is still at a standstill because of the uncertainty in rules and while Chavez accelerates the signing of oil deals, like today’s with Italy’s ENI, the truth is that none of these will pan out, or help him much, until at least four years from now.

But rumors, protests and the reality of shortages continue to plague a Government that is used to throwing money to solve problems, but with oil down, the parallel funds drawn down and an incompetent military in charge of a civilian administration, there seemed to be no quick solutions and too many problems to solve for the beleaguered Chavez administration.

Even worse, those trying to solve the problems are the same recycled officials that mismanaged Venezuela in the last eleven years, but were given a reprieve by high oil prices in 2006-2008. Right now, the sense you get is that of a country with little direction and few quick fixes even before inflation doubles in the upcoming months.

Not a pretty picture, but let Hugo enjoy be blamed for the results of his destruction and irresponsibility.

Today Hugo Chavez “invented” another wonderful concept that will turn Venezuela into a country of parasites and subsidies that will bankrupt the country in no time. Said the ignoramus:

“In the model  that I envision, public companies will not depend to survive on their installed capacity, nor the quality of its articles, nor their costs, nor their sales, because their continuity would be assured by the State”

Thus, according to this ignorant man that unfortunately is the President of Venezuela, the company will turn its production over to another Government entity that will sell it without any added value. Thus, he claims, thinks, imagines or dreamt, products will be much cheaper and will have the same quality (???) as those produced by capitalist companies. (Not clear how the last part follows)

here you have it, Chavez wants to add to The Devil’s Excrement a model of Venezuelans becoming inefficient parasites, living off the overall subisdy of the State, which according to this “vision” by Chavez will subsidize everything and kill the capiatlist system.

Sounds like the Soviet Union, with the inefficiencies built in to insure the failure of the whole system and the impoverishment of the population.

Way to go Hugo, hard to imagine a worst system than that!!

(Hat tip @lozanomoreno57!)

The economic  and electricity crisis were announced years ago. In both areas a lot of people got tired of noting that the course set by Chacumbele led inexorably to this disaster we are experiencing today.

But the inept one did not to hear. Drunk with petrodollars, he thought he had invented a new type of economy. But the country itself had learned from its previous crises and many people (including pro-Chavez ones that whispered privately in cowardly fashion, afraid to sing the truth to the inept one) noted that Chacumbele’s economic policy was unsustainable. Unfortunately, the facts have been proved right.

But the inept one does not learn the lesson. Now he is trying to skirt his responsibility. It’s the worst possible behavior. It has been shown that when in a crisis, governments that say the truth, as harsh as it may be, people react positively and sympathetically and are willing to sacrifice. But when you lie, people get pissed. When people hear the inept one say “¿Who manages the dollars? ¿Do the people manage them? ¿No, they are manage by the bourgeoisie, which is  accustomed to cheap dollars,” people know that he is lying and they are being manipulated.

The dollars are managed between PDVSA, the Central Bank, Fonden and the government.

After eleven years of “revolution” now the inept one attempts to convince the “people” that the dollars are handled by the bourgeoisie. If so, what is this revolution which puts its fundamental resource in the hands of the bourgeoisie? “The dollars are produced by the bourgeoisie? No, PDVSA produces them. ¿Does PDVSA give them to the people? No, they are sold to the Central Bank and with the Bolivars it pays taxes to the government, who handles these Bs and the dollars that now passes directly the Central Bank.

The money, therefore, is managed by the government. The exchange controls, to control the management of dollars, was established by the government, not the “bourgeoisie.” The “very cheap dollar” was established by the Inept one and he maintained it that way for five years while, incidentally, from the productive sectors of the bourgeoisie, he was warned that it was destroying the productive apparatus and causing and overflow of imports. The naive ones who still believe that Mr. Saman can possibly control the rapid increase in the cost of living by closing businesses, will soon face reality.

Just for the record, we anticipate the inept one what’s coming up in the future with his current economic policies. You’ll have plenty of Bs,between those produced by your devaluation and that produced by the 7 billion dollars you took from the Central Bank. You are going to spend that excess money  electoral excesses.

A temporary joy only. There will be more inflation this year than last, because there will be more Bolivars chasing goods and services and the bolivar will continue to lose value, so in reality the relationship between the bolivar and the dollar will be higher, which is measured at the parallel market . This will result in higher inflation and in a while you will face the panorama of having  to devalue again. Sooner or later there will be more zeros on the notes of the  “strong” Bolivar. By the way, there will be neither economic recovery nor a significant improvement in exports. Continue, thus, inept one on this course and in a while he himself will understand the Chacumbele syndrome.

So, a group of students in the middle of the deciding game to see who goes to the next stage pull out a billboard that says:

“Three strikes, crime, water and lights, Mr. President, you struck out!”

The National Guard arrests them, takes their sign even if no law was violated.

They have been released, but their protest was violently stopped, even if no crime was committed other than show the country the truth.

Since people are still not clear about whether rain has anything to do with the water problem, here is a six year proof that it is ALL the Chavez’ Government fault:

1) 2003 report by Veneconomia entitled “Guri at the edge of collapse”.

Some highlights:

a) The water level was at 246.71 meters, last report it is at 264 meters, 18 meters above that “critical” level that required no rationing. Why?

b) On an equivalent date (end of the year) in 2003, the water level was a few meters lower as can be seen in this plot published by Corpoelec on Xmas:

c) The report says that experts suggest starting a savings and rationing program in 2001, it is now 2009

d) The article quantifies the delay in investments up to that point: BEFORE THE OIL BOOM.

2) In October 2009, THREE MONTHS AGO,  Caracas Gringo said in no uncertain terms:

“It matters because officials at the Guri hydropower plant/dam operated by Corpoelec subsidiary Edelca report that turbine unit No.2 – which is currently shut down for maintenance – vibrates abnormally when in operation.

The Edelca officials also report that the concrete spillway that funnels water into turbine unit No. 2 has suffered structural damage (“perforations”) about 93 meters above the turbine unit, which make it increasingly difficult to control the volume/flow of water running through the power generation turbine.

However, turbine unit No.2 is only one of seven turbine units currently out of service at Guri, which has 20 turbine units with a combined power generation capacity of 10,000 MW. The other turbine units offline at present include Nos. 5, 6, 8, 10, 12 and 16.

Regional newspaper Correo del Caroni reports that turbine unit No.8 is almost ready to be restarted.

But Edelca officials at Guri complain that Corpoelec’s insistence that the repairs be accelerated is creating a dangerously unsafe situation in the turbine hall.

One attempt to restart turbine unit No. 8 earlier in October had to be suspended when the turbine’s rotation speed red-lined.

Turbine unit No. 16 has unspecified operational/technical problems which Edelca officials decline to disclose, even off the record. But a union official at Guri tells Caracas Gringo that turbine unit No. 16 is also, like turbine unit No. 2, a prime candidate for a catastrophic failure.

The other inoperative turbine units – Nos. 5, 6, 10 and 12 – are in the process of being maintained/repaired and soon will be restarted, according to Edelca and Corpoelec managers.

But union officials at Guri warn that these inoperative units also have unspecified problems which technicians are having problems repairing.”

So, don’t let Chavez fool you, it is not El Niño and it is not the IVth., it is the ignorance, incompetence and negligence of Chavez and his own Government! And its shows day after day

And by canceling the rationing plan imposed yesterday in Caracas and firingthe very improvised Minister of Electricity tonight, the Venezuelan President is showing, once again, the level of incompetence and improvisation in his administration.

(And today Caracas Gringo is out with another article on Guri that is not exactly very positive)

People do not need  brainy and technical economic analysis. The huge queues at appliance stores were more than eloquent this weekend. Everyone knows that devaluation is synonymous with outrageous price increases, so the army of fire nts went out to buy what they could at old prices. We are veterans of devaluations. This is not our first Black Friday. We also know what’s coming: a cost of living increase that will make us sweat oil in order to cover our expenses.

Chavez has no excuses. It was his crazy economic policies that forced him to devalue. Devalue after five years of the greatest oil boom of the century, during which billions of dollars entered the country,  but they were poorly managed. You can not hide behind an inherited fiscal crisis created by “previous administrations”. The two previous administrations are his and a bit of a third one too. He gave birth to his own fiscal problems.

He can not argue that he was left with no international reserves, because there are 35 billion of them. The economic downturn is yours-your own. The Great Charlatan was saying we were “shielded” from the international crisis. But the armor could not withstand the impact of National Destruction Plan put forward by Chacumbele. The Venezuelan economy fell 2.9% in 2009 but the world’s only by 1.1% and 1.8% in Latin America. Our economic performance was much worse than the global average and the average of the continent. All the nonsense that led to this brutal devaluation are therefore their exclusive brand. This devaluation is made in Miraflores. Inflation, recession and now devaluation, will bring more inflation and more recession.

Experts call this stagflation. Stagnation plus inflation. ¡What a beautiful revolution! They devalued late and did it badly. Why did do it then? They have not deceived anyoneN. The government needs the money and it will draw it from our pocket, driving into us the worst possible tax, inflation.

Each oil dollar will produce now Bs. 4.30 and not Bs. 2.15.

He doubles his revenues. More money to waste and to finance his campaign.

Additional pressures on prices. The fallacy that our minimum wage was the highest in Latin America became shit.  St Bs.  2.15 it clearly was  but not at the  or 7 per dollar of the swap rate or the Bs.  4.30 we have now. We will have a year of strong wage pressures because the high cost of living, already intolerable, will be even worse. Costs more expensive, therefore, more fuel to inflation. But do not even dare tell the truth. Deceive the people with pure lies. Now tehy say thos is to  stimulate exports. Please! Do you believe we are stupid? After eleven years of preaching “endogenous growth” (import substitution), suddenly they discover that what matters is to export, or “exogenous growth. The ineffable Professor Giordani says that they “seek to make Venezuela’s economy more competitive by promoting exports.” Too late baby!. Eleven years destroying the productive sector, with non-oil exports which last year barely reached a little over 3 billion dollars, and now we come with the story that the mere devaluation is going to take you out of the hole. This is not enough to overcome the disaster of exporting state enterprises ruined nor the private schools which are broke.

They allowed the currency to be  overvalued to demential extremes , a typical manifestation of the rentist, and spent a wad of dollars to crush the parallel rate to no avail, and now Chacumbele lectures  us on overcoming the “rentist economy”. Go to hell!