The Devil's Excrement

While it is only Chavista fanatics and fools that still have the audacity to deny the wholesale violation of people’s rights by the Chavez administration in the face of overwhelming evidence including Chavez saying on his variety show Alo President that the Tascon/Chavez fascist list should be buried, more and more compelling evidence surfaces as days go by. Of course, in the absence of the rule of law and independent powers, this evidence is useless, but hopefully, one day the day of reckoning will come and Chavez, Tascon, Ramirez and cohorts will have to face a Judge and account for this massive violations of human rights and the Venezuelan Constitution while in power.

The latest compelling evidence was published by Tal Cual yesterday in a new (and extremely dumb!) letter signed by the Board of PDVSA, entitled “General Policies for hiring personnel or contracting suppliers”. In it the Board “prohibits the use of any selection criteria …which violates the principle of equality participation and transparency privileged in Venezuelan law to disqualify people or companies…”

This is followed by a sentence saying that the letter replaces any previous ones (aja!) and that only the “Verification Criteria” can be used. This “criteria” on the right are clearly in violations of people’s rights. While PDVSA can argue that it should not hire anyone that participated in the 2002/2003 strike, up to today not one case has been processed y Venezuelan Courts to prove that anyone did illegally participate in the strike or caused any damage to PDVSA. Thus, PDVSA would use an arbitrary criteria in establishing this for hiring.

But what is clearly discriminatory and in violation of Venezuela’s legislation is to reject suppliers, either because they are owned or have personnel which is in PDVSA’s database of people that participated in the strike.

This letter clearly demonstrate that discrimination for political reasons continues in PDVSA under Chavez and it admits that other procedures, such as the Tascon/Chavez fascist list have been used in the past to discriminate against those that disagree with the Government.

In fact, such discrimination is widespread, as anyone who worked at PDVSA and was illegally fired in 2003 is in a black list used by most Government institutions and can’t possibly find a job with the Government. This has particularly hit hard people with high academic qualifications, who have had to emigrate as all research institutions in the country and most academic ones are run by the State.

While I haven’t had the time to digest and analyze the PDVSA financials finally published last week, I did look at the production numbers reported with the financials. Below, I post them as reported for 2006 and 2005 and I reconstructed the same type of reporting from the SEC financials for 2004. (For some reason I don’t understand the date on the left column for 2006 moves to the right when I convert it into a picture, thus assume that 2006 is right to the left of the 2005 while I figure out what to do)

PDVSA production in ‘000 barrels a day.

I will only make two comments about these numbers, which are not credible:

1) The Export numbers are funny. PDVSA has been reporting the “production” from the Orinoco oil belt as the amount of oil generated before the oil is processed in the upgraders. Basically, you improve the quality of the heavy crude and then sell it for more. In the process you lose oil, as demonstrated in 2004 in the SEC filing, when production was 601,000 barrels a day, but the barrels out of the upgrader (which is what you can sell) were only 439,000 barrels. But magically, in 2005 and 2006 the numbers are essentially the same for production and exports, despite the fact that in the previous years and as reported to the SEC, the average “loss” in upgrading was 15%. No such loss in 2005 and 2006, which is difficult to understand.

2) The second number which is not believable is that the difference between imports and exports is only 299,000 barrels a day. Supposedly, that would be the daily consumption of gasoline of the country, except that PDVSA also imports oil. And that is where the fudge factor comes in. Nobody knows how much PDVSA imports each day.

During the year PDVSA says it spent US$ 5 billion on importing oil, which would imply 249,000 barrels a day in imports of oil, which still makes no sense as six years earlier, in 2000, gasoline consumption was already above the sum of the difference plus imports and I am not taking into account that you don’t get a barrel of gasoline out of a barrel of oil.

However, I got the US$ 5 billion from the financials where it says “Purchases of Crude and products National Sector”, but under “International Sector” there are some US$ 53.7 billion in purchases,, which correspond to CITGO purchases. However, you can always do intercompany swaps between the international and the national side of PDVSA, which would hide the true reality of the situation, which seems to be what is being done. In fact, using this, PDVSA could claim any number for its total production and/or exports.

What is clear is that the number, as usual, exhibit some serious inconsistencies on the production and export side of things.

More on the financial part later.

It was a sight to see, the autocrat himself acting dumb, failing to understand a simple concept, while he claims to understand very complex economic problems and issues on which he makes decisions and creates new systems without any expert advise, followed by his brother the Minister of Education acting even dumber on the subject of which direction you have to change the time next Monday to implement Venezuela’s new revolutionary and useless time zone.

You may be able to forgive the autocrat, after all, he was poor and could not go to the University, while his brother somehow was rich and managed to get a degree in Physics from the University of Los Andes, which should have prepared him to understand this very simple issue.

But the worst part is that both acted with their usually know-it-all arrogance, as some people in the public attempted to correct them. But no, the revolution and their leaders are never wrong, the Chavez’ are never wrong and the issue was closed by saying that next Monday you should advance your watch half an hour in order to have the sun come out earlier.

Yeah! Sure! Which only shows how improvised and brainless this stupid decision is, like so many things in the robolution.

Things are getting to be quite bizarre in Venezuela these days. The autocrat/dictator is no longer content to threaten and confront everyone in his tropically original interpretation of what a democracy is or should be, but much like his XXIst. Century Socialism, which remains undefined, he threatens those that do not follow his as yet undefined “Bolivarian Educational System”. Much like many of Chavez’ threats, you are warned not do do something which is not defined or he will do what he wants to do anyway: Take your property, kick you out (ask Podemos!) or simply call you a coup monger, the favorite insult of the only man that has actually promoted armed and bloody coups in Venezuela in the last 40-plus years.

But you have to wonder about a man who, after his Sunday variety show yesterday which lasted a few hours, finds the need to come on ranting on nationwide, obligatory broadcast on all TV and radio stations this morning, just because today was supposed to be the first day of the school year for all kids up to high school.

And rant he did in his best style, proving once again what a resentful person Chavez is. Not only did he threaten to take over the private educational system, a system born out of the same inefficiencies that prevail today, but rather than illuminate the real reasons for its existence, Chavez blasted them suggesting theer was some sort of macabre plot to privatize education, rather than a politicized and extremely mediocre educational system which drove people away from it. In fact, to this day, most Chavista leaders, Cabinet members and civil servants send their kids to, you guessed it, the same private schools that the autocrat criticizes. The reason is simple, the public educational system is terribly bad (not that the private one is great, it is simply better and parents always want what is best for their kids, even if it s extremely cynical to talk revolution with one side of your mouth and send your kids to private school with the other).

While Chavez filled his mouth with the “new” 1,000 Bolivarian schools, it was typical and grandiose Chavezspeak, as very few of them were “new”, they were “new Bolivarian”, that is old schools of the public educational system converted to the Bolivarian system. Because while he may boast that he would prefer to build schools over trains, which few of us would disagree with, the fact is that Chavez’ accomplishments in school building are very poor, adding in eight years of his undemocratic rule, less than 10% of the numbers of schools in existence. Not a record to boast about when you realize that 85% of the existing schools were built in the “horrible” 40 years of the IVth. Republic, but he has already been in power for the equivalent of 20% of that period, without similar accomplishments and despite the huge oil windfall in at least half of his Presidential term.

But much like in Hitler’s Germany, Fidel’s Cuba or Franco’s Spain, Venezuela will now have official textbooks for all subjects, guaranteeing no impure ideas get through to the kids and all information gets the imprimatur from Bolivarian officials. I wonder if they will be signed by a Bishop or a General as a sign of approval or by the autocrat himself maybe.

Because according to the autocrat, texts used to preach the theories of the Empire, whether the North-American or Spanish one (Did Chavez look up pre-1724 textbooks?), but then the ranting got better when Chavez truly and really said:

“First, it was an ideologic education, the euro-centric vision, colonial, which taught us to admire the conquerors and then the cult to the animated characters of Superman, Mandrake or the Phantom, denying us the knowledge of Guicapuro, Negra Hipolita or Sucre”

Jeez, I wonder where he heard about these, as I do not recall learning about any of these characters in school, but I do remember learning about Guicaipuro, Negra Hipolita and Sucre, and was always taught a very negative view of the Spanish conquerors which cost me quite a few expulsions from class when I lived in Spain.

But the country is a hostage to the mind of this resentful man, whose view of the world is distorted by his own complexes and misconceptions. He wants a rural country, when 90% of the population lives in cities. He wants a Venezuelan citizen who not only does not exist, but he is barely a representation of. He wants Bolivars’ thoughts to inspire us all, when most are looking for leadership in modern technology and knowledge, which he cares little for. Everything is either “Bolivarian” and/or “popular”, when few of the precepts of Bolivar are ever followed even by the autocrat himself and when power is slowly being removed further away from the people in order to preserve his own autocratic and perennial powers.

But the folly continues in the name of the robolution. Replace what is available independent of whether it is any better, just because Chavez says so. Threaten and scare everyone into following his orders just because he feels like it, even if there is no legal basis or definition for what he wants or desires. It is the same tiring style of confrontation, threats and coercion just so that the Dictator can get his wishes as Venezuela’s democracy withers into oblivion.

–Minister of Finance Cabezas said that the decision to stop lending operations was the Central Bank’s and had nothing to do with Chavez saying that that the Central bank should stop lending to the banks and concentrate on the people.

Yeah, sure!

–My read on the polls is not only that most people are against the Constitutional reform, but that most people care little about it and are asking what teh reform does to them.

—The National Assembly approved Chavez’ proposed Constitutional reform for the second time (three are needed). Political Party Podemos abstained, which in Chavez’ concept of democracy earned it being declared an outcast party and now part of the opposition.

And some people still think Chavez is a democrat…

—And how about Chavez’ grandstanding on the Colombian hostage issue? He is willing to meet and talk with Marulanda, but does not even talk to anyone in the Venezuelan opposition and has never done anything among the more than 70 Venezuelans currently kidnapped.

—And after four years of exchange controls, the Government is concerned about fraudulent requests for foreign currency for travel. Only 20% of passports issued recently have been used to travel, but the foreign exchange control office requires a passport to approve the US$ 5,000 quota for travel.

—The Government plans to make the State’s banking system competitive with the private sector.

I heard that eight years ago…

—ExxonMobil went to arbitration on the expropriation of its Cerro Negro heavy crude oil project, despite Minsiter Ramirez’ claim that an agreement was “close”.

—President Chavez said that he will “gassify” the country, invest US$ 18 billion in the sector but has yet to say where all the gas will come from. Most Venezuelan natural gas is associated with oil production. Since production is down, then how will this grandiose project work?

I tried to post this message before I left a week ago, but the server apparently crashed right after I posted it and left. Thanks to those concerned due to my absence, it was a great family week!

I will be away for about a week on a family vacation. Will post if
something happens that is important.

While the militarization of PDVSA continues in the name of sovereignty,
true sovereignty is being thrown overboard as the company is not
investing, not drilling, production is down, projects are being
rejected even by oil companies from “friendly” nations, nobody (even
OPEC) believes the country’s production numbers and by the way,
whatever happened to the company’s financials? These guys can’t even
come up with them in the name of “sovereignty”. They are over five
months late and there are no excuses after so many years running the
the “sovereign” company. Whatever happened to transparency and
efficiency?

All that really matters is silly military games and
virtual enemies and obeying the autocrat. But they seem to be the enemy
as the Editorial from Veneconomy below clearly describes. They are the
true traitors to the sovereignty of the Nation.

(Note this guy is a financial analyst at PDVSA, maybe if he was not
playing military macho games and was at work, the company’s financials
would have been completed on time)

The grave has been dug by Veneconomy

This
week oil experts agreed on one point: a favorable outcome of the crisis
Venezuela’s state-owned oil company is going through is far from
certain.

It looks as though the absence of trained technical and
management staff, the lack of planning and the politicization of the
business, added to widespread corruption, will push PDVSA into
bankruptcy sooner rather than later.

The symptoms are already
apparent: PDVSA is not meeting its production expectations, the
refineries are in a calamitous state, a large number of wells have been
shut down, there is a deficit of some 120 drilling rigs, and production
barely reaches 3,300,000 b/d (according to inflated official figures),
a far cry from the production goal of 5,800,000 b/d.

Added to
this is the fact that Venezuela is apparently on the threshold of an
international lawsuit with ConocoPhillips and ExxonMobil, if the clear
contradictions between statements by John Lowe, ConocoPhillips’
Exploration and Production Executive Vice-president, and Energy and Oil
Minister Rafael Ramírez are anything to go by.

This Wednesday
Lowe stated that ConocoPhillips had agreed with the Venezuelan
government that compensation for its shares in Petrozuata and Hamaca
would be based on their “market value” and that negotiations were still
being conducted to determine that “value.” Then, on August 30, Minister
Ramírez declared that Venezuela would only pay compensation based on
the “original book value.”

According to estimates by analysts
with investment banks in New York, the difference between the two
values is considerable. The “original book value” of the four upgraders
is around $17 billion, whereas the “fair market value” would be in the
order of $33 billion.

Although ExxonMobil has not said whether
it has reached an agreement similar to ConocoPhillips’, it is to be
assumed that it did.

ConocoPhillips and Exxon have already
declared losses for the second quarter of some $5.25 billion
(ConocoPhillips $4.5 billion and Exxon (Cerro Negro) $750 million). If
these losses reflect the “original book value,” then the “market value”
could be in the order of $10 billion, at least. Venezuela does not have
that amount available and what is most likely is that Chávez will not
accept paying such a high sum to oil companies of the empire.

And
to complicate things still further for PDVSA, the most important of its
deals with China and Brazil are apparently falling through. What is
more, Chávez’ promises to build refineries all over the replace are on
the way to becoming empty words owing to the lack of funds, unless he
sells off other assets, Citgo for example, in order to be able to make
good his promises.

Unfortunately, the only things that do seem
to be functioning at PDVSA are communist proselytism led by Ramírez and
corruption at the highest levels, which has been extensively reported
by journalists who support the regime and revealed in the scandal of
the briefcase with nearly $800,000 confiscated in Buenos Aires.

If it were not so pathetic, it would actually be funny what happened today in monetary markets in Venezuela, when the overnight inter bank rate actually went as high as 120% at one moment due to the stupidity of Central Bank authorities.

As I reported on Monday, the autocrat actually believes he knows everything, which makes him extremely dangerous. In his infinite ignorance, Chavez suggested that the Central Bank should stop “aiding the oligarchs”, lending to banks and begin helping the poor. Even worse, the Board of the Central Bank sucked up to the autocrat and yesterday that institution announced that it was following Chavez’s orders and would no longer do what is locally called as operations of monetary injection, in which it lends money to banks that are short overnight. This is somewhat like the discount window of the Federal Reserve Bank in the US and a mechanism that is used by all Central Banks of the world.

Well, the move took banks, mainly small ones, by surprise and given that they could not go to the Central Bank they began borrowing from other banks driving the overnight rate very quickly to 120% interest rate. By that time, it appears as if the Central Bank realized how much it had screwed up and intervened lending to the banks and driving the rate down to 30% bringing back some semblance of stability to the markets.

The whole thing was almost comical as it turned out that most of the banks requiring help were small financial institutions, with low credit ratings and an inordinate amounts of Government deposits. And the reason they needed money in many cases was even funnier, if you can find the whole thing to have some humor, in that many of them needed Bolivars to pay for the structured notes that the Government sold them earlier in the week with favorable conditions and in many cases leaving many people wondering why those institutions were the beneficiaries of the Government’s largesse.

Of course, the crisis was induced by Chavez himself and precisely because these smaller banks are bad credit risks and do no have credit lines with the more solvent and well run large financial institutions.

More remarkable, some foreign “analysts” tried to find some sort of ominous interpretation to the crisis, thinking that there was indeed a monetary crisis in the works in Venezuela, some sort of liquidity crunch that in the era of derivatives could extend abroad. No such luck, plenty of liquidity here in Venezuela, but it is in the healthy financial institutions and not in the vaults of the novel pro-robolutionary banking institutions. It was just the fact that loyalists who understand monetary matters follow the bumbling directives of the ignorant autocrat.

Remarkably, the Venezuelan currency strengthened as market players and investors decided to play it safe until the extent of the liquidity problem was clear. By the end of the afternoon, it was back up, following the more logical route already set by the excess monetary liquidity in the country.

Anibal Romero, a Professor at Simon Bolivar University published this article yesterday in El Nacional which you can find in his website in Spanish. There are many ideas in it which I agree with, including the disdain for knowledge by most political leaders, as well as the the disdain for the ability of the Venezuelan people to build a first rate country. It may be a consequence of The Devil’s Excrement or perhaps the fact that politicians only seem to learn about politics. The question is why is it that we have not progressed much in 30 years, including the last eight and why is it that models such as Chile’s or some Asian countries are not even considered when our politicians attempt to innovate on economic systems? Why do we always look to copy failures and reject successes?

Commune or Microsoft? by Anibal Romero

In precise terms, the social experiment that is taking place in Venezuela constitutes a historical regression, which is a jump towards the past. All of the proposals of the so called XXIst. Century Socialism have been pre-configured, in a much more serious and elaborate form, in the utopian socialists of the XIXth. Century, in the works of authors like Owen, Fourier, Webb and Saint Simon, among others, who Frederick Engels criticized because they fantasized too much. Perhaps the only original contribution from Venezuela has been the project of the “vertical chicken coops”, which seems also destined to engross the catalog of socialist failures.

It does not fail to cause some pity the efforts that the Venezuelan regime is making to insure that this whole experience, as ruinous as it is a tragicomedy, ends up in an economic collapse of incalculable proportions. While in China and India hundreds of million of people embrace a capitalist economy and generate wealth and prosperity at huge velocities, the Venezuelan President-whose ignorance can only be superseded by his temerity-still believes that China is socialist and that communes and “social production companies ” may have a different destiny than the most ignominious failure. Chinese and Indian families compete with ferocity to educate their kids and send them to the great universities of the United States, so that they later come to their countries and develop academic centers as excellent or even more, but in revolutionary Venezuela the Government decrees the return to the commune and dreams of companies that will advance without profits.

Such primitivism, crude and cave-like, manifests both the infinitely poor mental quality of those that currently have in their hands the destiny of Venezuela , as well as an overlapping even if concealed disdain for the popular sectors of the population. In other words, I am saying that behind the supposed compromise towards the poor and defenseless of the country, the revolutionary regime hides a profound contempt towards the capacity of the people to better themselves and leave behind the pathetic state in which the majority of Venezuelans survive in. In fact, both the Venezuelan Government and the opposition, and I am referring specifically to the political “leaders” on both sides, do not trust the people and their aptitudes to stop being a third world and pre-modern conglomerate.

That is why, on the one hand the Government here urges people to return to communal life, while in China and India, to emphasize these examples, people want to emulate Microsoft. On the other side, and continuing its inexhaustible course of blunders, the opposition can not think of anything better than propose something that they call “social democracy”, attempting as always to compete in that terrain with Chavez, who will always have all of the advantages. The shortage of ideas and the absence of courage to articulate another ideological political message, different to the diverse versions of socialism, is the fundamental cause of its failure.

To tell you the truth, you can rack your brain and find it hard to understand why in Latin America in general- with one or two exceptions- and in Venezuela in particular, we have such a hard time learning the formulas that lead to the prosperity of Nations. We are always avoiding them and take refuge in the consoling fable of “we invent or we err”, a task that has already given us two centuries of disenchantments.

The ability of this Government to lie, manipulate, deceive and cheat is simply incredible, as witnessed by oil production figures. Not only do PDVSA’s figures disagree with OPEC and the IEA, but when PDVSA bickers with the IEA and says that IEA has declined invitations to straighten out the differences, the IEA not only denies that there are errors in its numbers, but says it is not even aware of any such an invitation.

But lying has become a way of life for Chavismo in its accomplishments, its numbers and its announcements.

I was thus intrigued when the Agencia Bolivariana de Noticias bombastically announced that Chavez’ variety show “Alo Presidente” had reached an audience “turn on” of 50%, according to the news Agency run by Minister of Disinformation William Lara. According to the report, half of the TV’s that were on during Chavez’ marathonic program on Sunday were watching the President.

I was intrigued, because when I looked last at such statistics in the past, Chavez’ TV program had a rating of less than 5% and his audience turned on never was above 15%. (Rating is the % of all possible TV’s that can be turned on, while the number given by the ABN referred only to the percentage of TV’s on at the time which were tuned to the program)

Thus, I got in touch with one of the companies that performs such measurements for advertising agencies and broadcast stations, which shall remain unnamed, but you all have heard the name. I am not sure what the error in the measure is, but the numbers are so far from the official announcement that these guys are truly big liars.

The program last Sunday, which lasted close to seven hours, in reality had an average “turn on” of 10.7%, almost a factor of seven below what ABN claims. If the program is split into fifteen minute periods, the highest number achieved last Sunday was 14.2%, during the second fifteen minutes of the program, while the lowest came at the very end and was 8.6% for the last fifteen minute period.

Even worse, the total number of TV’s turned on during the seven hours never was much above 10% of all TV’s being polled (all TV’s in the Nation) since that is one of the worst rating periods of the week. Combining these, the “rating”, the total number of TV”s in the country watching the autocrats antics came out to be on the average 1.3% of all TV’s polled, which is supposed to be a reflection of all TV’s in the country. Thus, the levels of popularity of Chavez’ variety show is as bad as the level of honesty by the Government.

But we knew that, the robolution has no scruples and deceives and lies at every step.