The Devil's Excrement

Last week, General Angel Vivas Perdomo, went to the Venezuelan Supreme
Court and introduced an injunction against the use of the slogan
“Patria, Socialismo o Muerte” (Fatherland, Socialism or Death) within
the military. Venezuelan forts and facilities now have this slogan on
their fronts and soldiers are being forced to say this out loud daily.

The General’s arguments go from the fact that this is a violation of
the Venezuelan Constitution, which says the military is a professional
institution and is not political to the fact that the voters in
December rejected Chavez’ proposal to turn Venezuela into a “socialist”
country.

Vivas should certainly be commended for doing this, he is a braver than
most of his colleagues that mumble “Patria, Socialismo o Muerte” even
if they don’t like him. Vivas Perdomo is actually an active General,
beven if he has not official job function.

Vivas Perdomo has been in the doghouse since 2007, when he became
Director General of Engineering of the Venezuelan Army and decided to
open an investigation of the man that preceded him in the position.
Someone did not like Vivas’ independence and he was soon removed from
his position and never assigned a job since then.

Vivas Perdomo will retire on July 5th. 2008 and while Chavez has never
refused to give any General a pension, that is precisely what Vivas
Perdomo was risking by his daring to go to the Supreme Court.

Even in death, the Head of the FARC, Marulanda, seems to be
playing games with Hugo Chavez. You see, much like in his negotiations with the
FARC, that organization, not know for its clarity or sincerity, has not precisely
played along with Chavez’ interests. When Chavez’ buddy Piedad Cordoba says that neither she,
nor Chavez, knew that Marulanda had died, it shows once again that the FARC has
not dealt Chavez with a clean hand. This is much like when the kid Enmanuel was
said not to be in the hands of the FARC by Uribe, which was laughed at by
Venezuelan authorities, only to find out later that the FARC knew all long,
despite announcing they were about to release the kid, his mother and another
woman.

Mr. O, the man that is running for President against Mrs. C., managed to actually be more hawkish on Hugo Chavez than Mr. B. , which the media has barely reported so far.

In his first significant speech on Latin America at the Cuban American National Foundation, Mr. O. said, without any ambiguity or hesitation:

“No wonder, then, that demagogues like Hugo Chavez have stepped into
this vacuum. His predictable yet perilous mix of anti-American
rhetoric, authoritarian government, and checkbook diplomacy offers the
same false promise as the tried and failed ideologies of the past. But
the United States is so alienated from the rest of the Americas that
this stale vision has gone unchallenged, and has even made inroads from
Bolivia to Nicaragua. And Chavez and his allies are not the only ones
filling the vacuum.”

And just in case someone had any doubt of whether he meant it or not, Mr. O. described Chavez very well:

“In Venezuela, Hugo Chavez is a democratically elected leader. But we
also know that he does not govern democratically. He talks of the
people, but his actions just serve his own power.”

Jeez, has he been reading our blogs?

But the phrase that has not made it much to the headlines, but I managed to catch as I luckily watched the speech live, was when he said:

“We will support Colombia’s right to strike terrorists who seek safe-haven across its borders.”

Which so far has elicited no response from the quick trigger Venezuelan diplomats or even from the man himself.

Maybe Ivan Marquez, the FARC leader purportedly hiding somewhere in Venezuela, should be very nervous of this. After all, he is now supposedly the number one man at that terrorist organization, after Colombia’s Ministry of Defense formally announced Marulanda has been confirmed as dead. .

The Government has spent about US$ 6 billion lowering the parallel swap
market rate and it ahs worked partially, not so much because it has
spent all that money, but because expenditures are down, interest rates
are up and the economy has been cooled down. Basically, the Government
has held the monetary mass constant since December while it sold US$ 6
billion in various instruments to lower the swap market rate.

Unfortunately, when you attack the effects, rather than the causes, you
really don’t resolve anything. The swap market rate is down, but prices
aren’t. Why? Because inventories were imported at a much higher
exchange rate and merchants are not ready to lose money. Additionally,
by moving Government deposits to the official banks all at once,
interest rates went up (more inflation, less credit) and while that
helped push the swap rate down (People were borrowing Bolivars to
speculate in the swap market at cheap rates), the issuing of ne
Venezuelan bonds helped push down the prices of Venezuelan bonds in the
international markets, which means that it will be more costly in the
future to issue new debt.

Essentially, the Government continues to be trapped in its inconsistent
policies, because Chief Economist Chavez has set some rules that go
against economic principles and only high oil prices are able to mask
the distortions.

At this juncture however, the Government faces a dilemma: How do you
explain to the population that the economy is slowing down at a time of
record oil prices? There are elections in November and the Government
ahs to jump start spending if it is to have any hope of winning a
majority of the Governorships and Mayoral races. And winning a majority
would in the end be a defeat, as it would be a remarkable victory by
the opposition just to be able to win more Governorships that last time
around.

Thus, the Government has decided to take a different approach, a clever
one at that, even if as usual there are problems in execution that need
to be resolved.

Yesterday, the Government issued a resolution forbidding local
financial institutions from buying any form of securities denominated
in Bolivars and issued by foreign institutions. Not only that, but it
ordered these institutions to get rid of the ones they already have
within ninety days.

Say what? You may be thinking…

You see, Venezuelan banks are only allowed to have foreign currency up
to 30% of their capital or equity. But Wall Street institutions are
very clever and creative, recall the subprime crisis. So, they invented
a “Structured Note” issued by them, say Bear Stearns, since they almost
don’t exist by now, which is denominated in Bolivars, but has under it
US dollars. Thus, a bank will tell bear Stearns: Have these US$ 100
million I just bought in the swap market, issue me a note in Bolivars
for what I paid for it and I have not violated the law, because I only
have the 30% allowed by law in US$. Oh, by the way, with the US$ 100
million buy me some Venezuelan bonds so that the note can earn some
interest in dollars while you hold it.

Thus, presto! The bank has Bolivars not dollars and it can circumvent the local regulations.

Thus, the resolution was meant to forbid this, but they forgot to put
in a few commas or it was written badly and instead it forbids
financial institutions from having ANY securities, whether in Bolivars
or Dollars.  But that should be fixed before the ninety days are over.

So, the purpose of the resolution, is to have banks and financial
institutions sell these notes and be forced to sell the corresponding
dollars behind them in the parallel swap market, helping to lower it
and making it unnecessary (and cheap!) to have the Government intervene.

How large are these notes? Estimates range from US$ 2 billion to US$ 7
billion, but from the balance sheets of the banks, it appears that it
is at least US$ 5 billion.

So, in a world where things work, US$ 5 billion should be headed to the swap market…

Except that…

–I am sure the same creativity that came up with these structured
notes, will come up with an alternative. Banks may have to simulate
they are selling and the like, but they will not sell it all and may
even buy it all back.

–If you force some banks to sell the dollars now, they will lose all
their capital and more, maybe even creating a banking crisis. Some even
suggest that this is the Government’s plan to have an excuse to
nationalize the banking system.

What this all shows is how complex and distorted the economy has
become. Rules are piled upon rules in order to correct effects of the
original rules. But then, any decision, like the fact that the
Government needs to increase spending fast because there are elections
coming up, forces them to invent new rules.

There is no question in my mind that banks have abused these notes, but
they would not exist if there were not so many controls that make no
sense.

In the end, not all structures will be sold, they will be disguised,
the Government will increase spending, the swap market will go up again
and a new clever guy (This one certainly is) will be hired to help with
the next crisis.

Because in the end, the main problem is that the official rate of
exchange has been held constant at Bs. 2.15 per dollar for four years
with inflation hovering around 20% and that my friends is simply
unsustainable.

Imagine you made something here four years ago and sold it for Bs.
2.15, your profit margin was 25%. Your current cost is Bs. 3.38, but
your foreign competitor has had 3% inflation.

Which is destroying Venezuela’s production little by little… But Chief Economist Chavez knows better…

While in China, I stuck to the local food for lunch and
dinner for most of the three weeks I was there and only had western meals
twice, when I was invited, and for breakfast, when I had a more western fare
even if some dumplings were usually included. Given that I am a big fan of
Chinese fan, this was actually delightful and after three weeks of chopsticks
and Chinese food, I can say I was not tired.

But I was tired of the same stuff for breakfast everyday, my
cholesterol surely went up, eggs every other day, little cheese and, of course,
no arepas, the corn flour
national staple of Venezuela, which I eat regularly

Thus, I was eagerly looking forward to having my first
arepas when I got back, except…

They were a huge disappointment…

You see, one of the few things that changed while I was gone
is that while shortages of certain items disappeared the corn flour used to
make arepas seems to be scarce. However, instead of just not finding the usual
white corn flour, whether the “Pan” brand or not, instead what is now available
is a whole bunch of improvised and newfangled flours which in the end do not a
true arepa make.

I knew something was wrong the first day when I looked at my
first arepa and while toasting them usually gives them a brownish color where it
was hotter, the arepa seemed to have a tone somewhere between grey and brown in
very uniform fashion with some dark brown parts where it toasted he most.

It turns out that now there is an “integral” corn flour,
which is nothing but “whole grain” in Spanish, but truly after so many decades eating the
true, “pure” white corn flour arepa, do you really expect me to find a whole grain
arepa, true to the original?

All of which reminded of one of the worst Presidents of the
IVth. Republic, Luis Herrera Campins, under whose Government there were
shortages of white corn flour, which led Venezuela to import yellow corn from
South Africa and a Government campaign, which clearly failed, to convince us
that the yellow corn arepa tasted the same as the white variety we were used
to.

Which utterly failed, of course and simply added to that
Government’s demise and Luis Herrera becoming extremely unpopular.

So the next day I arrived, I went to the supermarket to find the real
thing, but to my surprise it was nowhere to be found. Amazingly, I did find the
return of the aforementioned yellow corn variety, the “integral” or “whole grain” and finally
a “new” and “improved” white corn flour which is called “extra soft”, whatever that may mean, and which is
white corn flour to which rice has been added.

It turns out that I was lucky to find this, it is actually
quite rare as people snap it up when they see it, over the other types (No hope
for 100% white corn flour apparently)

I have yet to try this “extra soft” flour, it is only
appropriate to finish off the “whole grain” package, before we start the new
ones, but I do find it remarkable that rice is being added to the corn flour at
a time when the price of rice worldwide is
shooting through the roof, due mostly to drought in Australia.

But such are the mysteries of Venezuela’s economy, where
everyday brings surprises.

Areperas, those temples of Venezuelan culinary expertise,
still seem to have the white flour needed to maintain their standards, so there
is always that solution for the quick fix if I need it.

But imagine my surprise this morning, when as I was writing
this article, I find out that this weekend’s Wall Street Journal has
an article by Raymond Sokolov entitled “In pursuit of the Arepa”, subtitled
“Exploring the Venezuelan Food Scene of South Florida”, where it is reported
that over in the greater Miami area, I can also get the white flour arepas, as described in the article “a pure. plain, white crumpled arepa”, yummy. So,
if worst comes to worse, I guess I can always hop over and go to El Arepazo in Miami
and satisfy my desires and have my arepa.

Such are the surprising ways of the revolution.

All of which shows the true meaning of globalization as the article
even mentions that Venezuelan Chef Edgar Leal of Cacao fame, is a consultant to
a restaurant in Beijing.

So, maybe, just maybe, I could have even satisfied my needs
over there…

(Let me know if the article in the WSJ is free or not, if
not, I could reprint it here)

The non-event happened today and Interpol told us that the documents that the material turned over by Colombian authorities that was found in the camp of guerrilla leader Raul Reyes were not manipulated. You can download the whole report here. Of course, even before the report came out Venezuela’s Minister of Defense was saying the documents handed over by the Colombian authorities had no credibility and the Venezuelan “people” would know how to evaluate them. A strange statement given that this was a technical evaluation which according to the Interpol Director Venezuelan authorities did not even want to receive ahead of time.

Chavez at least waited until the report came out and used his customary diplomatic and polite language to call the Head of Interpol a clown, a bandit, not noble (?), a tramp and shameless.The PSF’s began coming out of the woodwork with the Venezuelan Information Office immediately issuing a report discrediting the Interpol report and urging Americans to write their Congressmen, while pro-Chavez computer experts paraded on VTV to explain that it was impossible to do the checks that the Interpol claimed to have done. The level of stupidity should increase in the upcoming days as idiotic arguments are used to discredit the material obtained from the computers found at Reyes’ camp.

Idiotic, because what is it after all that is being discussed? That Chavez sympathizes and backs the FARC guerrilla movement? Do we really need more proof of this or have people forgotten the eulogy Chavez dedicated to Raul Reyes the day he found out he had been killed and the outrage that it caused in the Venezuelan President who mobilize troops and got himself involved in a conflict between Ecuador and Colombia where he played no role? Chavez actually called Reyes, the second in command of the cruel guerrilla group, “a good revolutionary hero”. Reyes was a man accused of hundreds of murders, cocaine trafficking, rape, sexual abuse. kidnappings, extortion and was found guilty in absentia in dozens of murders and kidnappings. In fact, he was sought by Interpol, the same organization that today presented its report at the request of the Colombian Government.

But do we really need more evidence to prove what is out there for everyone to see? Why do the Colombians need to create thousands of new documents to prove that Hugo Chavez backs the FARC? In fact, you can simply look through official Venezuelan Government pictures and find this jewel for example:

On the right is then Minister of Foreign Relations Jose Vicente Rangel, who at some point was Venezuela’s Minister of Defense and also Vice-President. The picture was taken at the Foreign Ministry (called the Casa Amarilla). Notice the man on the left with the badly fitting suit? It happens to be none other than the good revolutionary Raul Reyes officially being greeted by the then Foreign Minister. Do serious law abiding Governments do that? Meet a known criminal, extortionist, drug trafficker, murderer and bomber with pomp and ceremony?

And now that you ask, how did Reyes get to Caracas? How was he contacted? Why was he there?

Of course, the imbeciles may argue that Rangel is not Chavez, but he was the Foreign Minister, later Minister of Defense and Vice President. But in any case, no matter what they may argue, there is this other very public picture and visit by Ivan Marquez to the Miraflores Presidential Palace, with big boss Hugo Chavez himself:

Once again, a known murdered, extortionist, kidnapper, drug trafficker being sougth internationally is received by Chavez at his own residence as if he were a dignitary. Once again, how did Marquez get there, how did Chavez contact him, why wasn’t he detained?

Or I could remind you of the parody when the Venezuelan Government denied the FARC’s Foreign Minister was in Venezuela, was registered in Venezuela and later it turned out he even had Venezuelan papers and none other than current Minister Rodriguez Chacin met him at the Simon Bolivar International Airport when he first arrived.

There is also the now infamous video of Rodriguez Chacin telling the guerrilla members that turned over the Colombian hostages that “keep it up we support you”. Can it be any clearer than that?

So, do the Colombian authorities need to invent some 600 Gigabytes of material? There are over 200 thousand images for God’s sake! Almost 40,000 documents!

Because in the end what has been reiterated is that Chavez sympathizes with the FARc and has been trying to support them. But there is really no proof that anything came to fruition. Would the Colombians make up so much stuff and not include more damming proof that offers of assistance and the desire to work together?

Seems far-fetched to me.

What these images and the papers prove is that Chavez and his Government walk on the wrong side of the law, on the wrong side of terrorism and that they are willing to help these movements if it matches its political goals.

However, the FARC papers also reveal that the guerrilla leaders do not like Chavez style. The papers have evaluations of the trends in Latin America and despite the success of Chavez of holding on to power, they express their concerns over his “Caudillo” style, which proves to me that while the FARC want to use Chavez for their own goals, they do not trust him and their interests are not aligned as Chavez has designs over Colombia too for his Bolivarian revolution.

So all we really have is more evidence of what we already knew: That the Chavez Government openly supports a bloody guerrilla movement and has been in constant contact with it, ignoring international law and acting as the outlaw Government that it has always been.

Not much new there!

The outrageous statements and accusations by Chavez and his buddies against the world may be considered ¨political¨in nature in nature, but they are getting weirder and weirder.

But how do you explain outright lies or hailing projects that simply do not exist?

Such was the case this week when Chavez signed the Sidor nationalization Bill into law and began talking about the area of Matanzas, where Sidor is, as the “City of Steel”. Chavez began talking about a new plant being built to make “specialty” steels and high tech pipes, that will turn the whole area into this apparently virtual City of Steel.

Because as reporters scrambled to find out about the project, it turns out that there is no such project in Matanzas, Ciudad Piar, Puerto Ordaz or Bolivar state. Not even in the planning stage.

Such is the virtual and ever increasing isolated world that Chavez lives in. He still believes he eradicated illiteracy, poverty and soon inflation. All in his own peculiar world, where he is always right and the Hitlerian ghosts of imperialism hover over him.

On Sunday’s El Nacional, the newspaper had a study showing
that Venezuela’s diplomatic service has become totally unprofessional and no
position since 2005 has been filled considering the credentials, trajectory and
qualifications of the candidates. Instead, Venezuela’s diplomatic corps has
become a way station for former military and Cabinet members who have no role
to play within the Chavez administration but to whom Chavez owes some debt for
services and favors rendered.

Took a gizillion pictures in China, here are two which show the spectacular views and the people of China