The Devil's Excrement

The Electric Comedy by Teodoro Petkoff in Tal Cual

That’s the way they have ruled for eleven years.

Pure improvisation. Shooting arrows without knowing where they are going to fall.

Groping. Blindly trying to hit the piñata. Measures that defy common sense, and then have to rectify in haste. The comedy they performed with the shopping centers has been one for the record books. Forwrads and backwards. They provoked the   power shortfall by sheer incompetence and now not even know how to manage forced rationing which is the inevitable consequence. The arguments justify themselves are not even cynical because of their absolute stupidity. First it was the person responsible for planning, Giordani, who had no other idea but blame previous governments for the lack of investment in the sector. When hey realized that after eleven years (ie, two governments of the their predecessors plus the fifth of another one),  one had to laugh at the excuse of  “previous administrations” , then they changed to “El Niño”. Now global warming is responsible, the summer drought, the declining water mass of the Guri dam.

Nonsense. The simple truth is that the country has experienced the infinite inability of Chacumbele and his government team.

Any planner except for Giordani and  any president other than Chavez knows that if the population grows, demand for electricity grows and therefore it becomes necessary to invest permamnently  and continuously to ensure that power generation will always be ahead of population growth.

Nobody with half a brain would not realize that after five consecutive years of the oil boom, with an economic policy that encouraged excess imports and with it the growth of trade and construction that accompanies it, should have contributed as an additional reason to pay attention to investment in the electric sector. The worst thing is they can not even argue the lack of resources. There was excess of funds.

But the inability and ineffectiveness of the government of Hugo Chávez are unbeatable. Not even years of frequent power outages throughout the interior of the country managed to sensitize the herd of useless bureaucrats who govern us.

They did none of the things they had to.

Giordani ruled that hydroelectric capacity had reached its limit and backed down dfrom the construction of four dams on the Upper Caroni. Of the 29 power plants, which  had to be operationalsince 2007, only five have been built , of which two are still inoperable and three are operating at one third of its capacity. Out of sheer laziness Planta Centro was allowed to collapse and nationalized  Electricidad de Caracas suspended its investment plan. Of the investment in transmission lines  only a quarter of the budget has been executed that would have financed work thats houdl ahve been completed in 2007. Under these conditions of a gap in alternate generation gap, Guri is overused and therefore its level falls beyond what a dry summer would cause. We come then to El Niño and other similar trifles. The government is to blame and nobody else. The country will not forgive him.

Waited for the New Year in Plaza Altamira with my wife, good music, awesome fireworks overhead and people in good spirits. Above you can see the stage as a group played gaitas before the New Year and the iconic obelisk of the square.

If anyone has been humiliated, abused and cheated by the Chavez Government, it has been Franklin Brito. But at the same time, Mr. Brito has responded with amazing strength and dignity, going on hunger strikes in front of the Supreme Court and the OAS, asking for something very simple: Justice.

Mr. Brito first incited the wrath of the Mayor of his municipality in Bolivar State, where he was a teacher and a farmer, when he suggested that rather than using pesticides, they could simply change the strain of “ñame” (yam) they were growing. Mr. Brito was fired, together with is wife (They are still owed salary and severance from their teaching jobs) and his farm was taken over.

Mr. Brito went on a hunger strike and the Government relented, his salary would be paid and his land returned…

It was never done.

Then Mr. Brito went on another hunger strike. The Land Institute signed an eleven point agreement with him….

It was never complied with.

Then Mr. Brito went on a 150 day hunger strike in fron of the OAS that left him in really bad shape and ended with the Government agreeing to return his land. Mr. Brito gave up his hunger strike, spent a few days in intensive care, but..

the agreement was not complied with and two days ago, Mr. Brito went back on his hunger strike at the OAS.

Then, last night at 1:30 AM, Mr. Brito was kidnapped by the Metropolitan Police and the Fire Department and was taken while he refused to go to the Military Hospital, where he is now being held against his will according to his lawyer. The Government claims they are protecting Mr. Brito’s life, but the truth is he has been officially kidnapped by the Government in an attempt to block his right to protest and denounce the abuses of his rights and the lies by the Chavez Government.

Mr. Brito’s protest was getting too inconvenient and visible.

His wife has now gone on a hunger strike at the OAS, but Mr.Brito remains held against his will at this time.

Such is the state of Injustice and abuse of power under Hugo Chavez, you can be held against your will, in violation of the laws of the Land and the Constitution.

If you thought the recent bond issue was confusing, the story became even more turbulent and confusing over the weekend.

First, Chief Economist Hugo Chavez announced that orders had been received totaling US$ 19.2 billion, announcing it as a triumph of his Government, as if the only reason for the demand was investor interest and not everyone wanting to get your Bolivars out of the country as fast as possible and buy them on the cheap at the same time.

The number seems outrageous at first sight, given that investors were required to pay by last Friday and US$ 19.2 billion represents depositing close to Bs. 58 billion in the bank by last Friday, a full 27% of all the Bolivars in the Venezuelan financial system today. For this to happen without overnight rates jumping up was certainly a miracle.

But then financial website Venepiramides enlightened us by explaining how brokers had managed to “create” internally the Bolivars, so that they could comply with the Government’s requirements, without really having them. Essentially, for those of you who are not experts, the brokers “lent” their clients internally the required money without having the Bolivars, registering the loan and the liability in the company’s books, which for the broker gives you a net of zero Bolivars. Thus, the broker created Bolivars out of nothing, something they are certainly not allowed to do.

The reason for requiring the deposit, was so that there would not be phantom orders, nor speculators, asking for a certain amount in the belief that they would get only a fraction. But I guess honesty has become a rare quality in our country, which has been irreparably damaged by Chavez, both materially and morally.

And the swap market went up this morning, because people figured they would get much less than they requested, giving the large demand for the bond.

Then, midday, the Agencia Bolivariana de Noticias published this work of art of a press release

Which you may not be able to read completely, but just look at the title, it says the Government sold “19 mil 400 millones de Bolivares fuertes“.

The text is even worse, iot starts by saying “superó las expectativas del gobierno nacional, al ser solicitados 19 mil 400 millones de dólares respecto a 3 mil millones que era lo ofertado.” (The expectations of the Government were surpassed when 19.4 billion Bs. were requested compared to the 3 billion offered).

Uups!! The Government offered 3 billion dollars. As if this were not enough, later it says:

“Para llegar a la meta establecida en dicha ley el gobierno ofertó 3 mil millones de dólares en papeles. Sin embargo, con esta excesiva demanda posiblemente se ajuste a unos 4 mil millones de bolívares” (To reach the goal established in that law the Government offered 3 billion in bonds. However, with this excess demand it is possible that it may be adjusted to 4 billion Bs.)

This completely threw the market off, which by now had no clue whether the 19.4 billion were Bs. or US$, or what was going on.

The question is why the Ministry of Finance lets ABN write its press releases. Clearly whomever wrote that press release has no financial knowledge and did not even have it clear whether the Government was selling US$ or Bs. or rubles for that matter as sometimes it did not even give units.

By now, the press release has been corrected twice (They did not fix it right the first time), but this is revolutionary Venezuela, Bs. can be US$, 2,000 medical doctors leave their posts and nobody notices and Chavez says he needs ten more years to get rid of poverty in Venezuela, erroneously claiming he cut it in half. In fact, he bet his life that he would accomplish this goal. I guess Chavez will thus be responsible for his own magnicidio (assasination) or is it magnisuicide?

After wondering, arguing, discussing and waiting, we finally have Chavez’ Economic plan…only six months late

or do we…

Let’s see:

There will be 40 measures, but Chavez could not keep his own secret and leaked some of them, among them:

Already implemented: Six Ministers of the Cabinet have received an upgrade and have become Vice-Presidents, so that in Chavez’ words “We can have a more political Cabinet than administrative one”

Is he kidding us? Does he think that 2,000 Barrio Adentro modules have no Doctor because of political rather than administrative matters? And on top of that the people are the same ones that have been incapable of doing anything!

But let’s not get hung up on this, after all, this is the “easy” measure. already decreed, sworn in, more assistants, higher salaries and the like. Meaningless…

The next measure:

An employment program..

Jeez, Chavez got frustrated in 2004 with about eight employemnet programs that never panned out, I guess he is willing to give a try to another failure.

Next:

We will sell a bond to lower the lowered “parallel” market

I guess the most significant part of this, was that Chavez not only acknowledged the existence of that “other” market (which is legal), but that he admitted that the Government had lowered it. According to El Nacional, the Government injected US$ 300 million this week, I hear it was US$ 350 million. It does not matter, that rate is simply not sustainable, either you give CADIVI money or the swap market. Both it is simply not possible.

As to the bond, most previous issues have been atomized in such fashion that they have only lowered the swap rate “psychologically” up to the date of the bond allocation. And given international markets, US$ 3-4 billion may give markets indigestion.

In any case, issuing a bond is not a plan, it is like giving aspirin to someone that has swine flu. Monetary liquidity stands at US$ 103 billion, reserves at US$ 33 billion. See the problem,? Liquidity keeps going up, reserves stay around US$ 30 billion. What happens when liquidity reaches US$ 200 billion, or US$ 300 billion. I don’t know when this bubble explodes, but it will and the result will be ugly, very ugly. While it doesn’t, inflation is at 30%, I wonder if anyone has explained to Hugo what this mean to the “people”.

Next:

CADIVI will give more money to importers.

Jeez, this is like the doctors in Barrio Adentro, we have been hearing about CADIVI giving more money to importers for months, but nothing happens. Is this an administrative or a political decision?

And the final part of the “plan” that we know about is that the “Misiones” will be revived. Which actually depends more on the “administrative” than on the “political” Cabinet. But Chavez seems to think the second one is more important.

In the end, this is an economic non-plan. These are so far just a bunch of measures, all disjoint, aimed at trying to reduce some distortions in the economy, but they are not part of a plan that attacks the problems of the distortions in the Venezuelan economy.

In the end, it is all political for Chavez. Unfortunately for him, if oil stays at current levels, a year from now, none of these “measures” would make a difference. On the contrary, these are all superficial and temporary measures whose effects will dissipate even before the end of 2009.

(To the Chavez cheerleaders I tell them: Try living on minimum wage with 30% inflation and tell me the Venezuelan economy is doing fine. As for oil, the chart looks positive, it seems ready to break 75 bucks, if it does not, watch out Hugo!!)