The Devil's Excrement

Before the Chavez Government states its position on the CANTV purchase of Digitel, let me state mine, to make sure some of the fanatics don’t accuse me of always taking an anti-Chavez position.Very simply, I would not allow the transaction as proposed. In a country with 9 million cell phones, more than one in every three Venezuelans has a cell phone, it can not be good for the consumer to eliminate one competitor. This is what Government’s are for, to regulate the economy, not to participate in it. They should stop it. The only solution I see is for CANTV to sell Movilnet. If CANTV sells its residential telephony to the Government as a way to allow the transaction, I would also disagree with it. Competition is good, as simple as that.

Venezuela’s largest telecom operator CANTV has just announced an agreemnet to purchase Digitel, the country’s third largest cellular operator for US$ 450 million from Teelecom Italia. CANTV is currently the second largest operator via its Movilnet subsidiary with close to three million subscribers. Digitel had around one million subscribers. As long as the regulators approve the transaction. Will CANTV now turn around and sell Movilnet with three million CDMA subscribers to America Moviles to allow the regulators to approve the transaction? Or will it sell its fixed line operations to the Government? Stay tuned… The company also announced a dividend of 43 cents (US) per ADR, which will be paid at the official exchange rate, in another perverse act of discrimination of local investors. Locals will get the bolivars…

In 1997 when Hugo Chavez was elected, my feeling was that he would have some degree of success because he would fight crime, attack corruption and devote most of his time to politics and populism, rather than worrying about the economy which is the real problem in Venezuela. I was wrong ion two out of three. Chavez could have cared less about crime, has done nothing about corruption which has bloomed a thousand times during his reign. Despite this, even with cheating in the elections Chavez remains popular thanks to his charisma. Even if the results of the RR had been backwards, that is if the opposition had obtained 60% and Chavez 40%, it still would have been too high given the accomplishments, or rather the non-accomplishments of his administration. The truth is that after five years in power Chavez still continues to have no plan on how to improve the lot of Venezuelans. No matter how many “misiones” you may have, all you are doing in the end is taking money form one program to another. When “Barrio Adentro” is successful, what they really have done is take money away from under funded and dysfunctional hospitals. Barrio Adentro may take care of the poorest population, but at the expense of the less poor and not even the lower middle class. In the end, the problem is that the Chavez administration (or the opposition politicians!) has no plan on how to improve GDP per capita. When GDP per capita stands at $3,500 per person, the only way to improve the life of the average Venezuelan is not only to focus on improving the quality of life of the average Venezuelan, but to make the economy grow. And this is where there is no plan. Whether you believe in a more or less powerful role for the state, the road to growth can not be for the Government to start up telecommunications, banks and airlines for the sake of patriotism. Such ventures in the past have been filled with corruption, mismanagement and inefficiency and there is nothing to suggest that this time around things will be any different. In fact, everything points out that the they will even worse as the absence of checks and a balance is allowing corruption and waste to be worse than ever. PDVSA is probably the best example of the lack of a vision that growth is essential to the future. It has always been my feeling that PDVSA management in the past was too conservative. They restricted their scope to a local PDVSA, without looking for a worldwide PDVSA. PDVSA had little debt (has none today!) and except for CITGO and some ventures in Europe with Veba Oil and a Swedish lubricant company, PDVSA was mostly only in Venezuela. Contrast that with Malaysia’s Petronas, a company that operates in close to thirty countries. Why didn’t PDVSA bid for YPF, allowing a non-oil country Spain, to take over that company via Repsol? Current PDVSA strategy is even worse than it was before Chavez. Orimulsion has been discarded under Mommer’s arguments that it is not profitable enough. Makes me think of the steel projects of the CEPAL 60’s in which the statist Government’s argued that those projects were not profitable but provided jobs. Now the argument is that they are only marginably profitable, even if they provide US$ 1 billion in foreign reserves per year. But in a country with over US$ 30 billion in foreign income from oil, we can afford to throw one billion away. The same way that we threw away US$200 million in the electoral machines purchased less than ten years ago to spend close to US$ 400 million to “prove” the new elections were clean, useless fingerprint capture machines included. But this is probably Venezuela’s tragedy, that most politicians have their very own economic ideas and are fairly ignorant about even simple concepts like orders of magnitude. Case in point is the current Minister of Industry and Commerce who a week ago demonstrated his ignorance by saying that in five years the country’s income from tourism would be larger than that of oil, a scenario possible only if oil falls below one dollar a barrel (probably less!). And this is the guy in charge of industrial and commercial policy! Eight years from now, and I am assuming Chavez get reelected in 2006, I bet the arguments will continue to be about the law and democracy and the poor. God knows where the price of oil will be then, but what is clear is that if this or any other Government does not propose a real plan for sustained economic growth and stability, the issues will not change in 2013. Most opposition politicians can’t do much better either. Their advantage is that there are serious economists on the opposition side that do understand most of these issues quite well. To me these are not such complicated issues. We need to double income per capita if we are to improve the standard of living of the average Venezuelan by a factor of two. Only economic policy that leads to growth will achieve this. Whether one likes it or not it would all have to start with oil. Only the Venezuelan oil industry can leverage growth in the next ten to twenty years in order to improve the life of all Venezuelans. The much maligned policies of the Giusti PDVSA administration under Caldera were right. Under those policies the country would have been producing 5 million of barrels a day this year on its way to six million barrels a day in 2006. At current oil prices that would have been a better place to start an economic plan to improve the life of Venezuelans than where we are starting today. In fact, the unfortunate part is that nothing really new is starting today with the Chavista sweep in the regional elections. It will be more circus than bread going forward and people don’t live off a circus, they need bread too. But a “social” PDVSA without debt, a national airline, a state telecom company, a women’s bank and the most artificial financial system on earth do not form the cornerstone for a growth economic policy going forward.

Some stories before I go:

-Chavez cancels his trip to see Uribe and Torrijos because of the lame excuse of the fire in Parque Central on October 27^th. The excuse is that’s some of the Ministers that had to accompany him had their offices in that building. I hope the Minister of Commerce and Production did, he is so dumb that he actually said that within a few years (a few is a few, not many) tourism will be as important to Venezuela as oil. I imagine he means the price of oil is going to less than a buck; it would be the only way that his prediction may become true.

-A friend sends me this press release telling me that Cogent the “fingerprint capture machine” company has been awarded a US$ 20 million follow on contract by the Venezuelan Electoral Board. I imagine a “follow on” contract mean a contract smaller than the previous one, since I don’t remember how much the previous contract was. So, I look around and find a reference in El Universal to a US$ 53 million contract with Cogent. But the problem is, according to Cogent’s financials, the company had revenues of only US$ 15.39 million in the first quarter of the year and US$ 17.02 million in the June quarter, for a total of US$ 32 million, so my guess is that on Nov. 1st. Cogent will have to report at least US$ 21 million in revenues or somebody is on the take, no?

So, here you have it, this is either a stock tip or a corruption tip, if Cogent does not report spectacularly on Nov. 1st. somebody made a lot of money of this no-bid contract awarded by the CNE. Of course, the number will show if Cogent’s “only” client is the CNE, so it should report even more.

Digging a little further into the issue I find that Cogent went public only in September and this will be the first time it ever reports earnings. So, this might be a one time shot of the company going public thanks to a one time revenue infusion thanks to the no-bid contract of the CNE. Even more interesting, if you look at Cogent’s website or the S-1 filed with the SEC when the IPO came out, the word Venezuela never appears. Interesting, no?

I guess anywhere else this will raise eyebrows, but this is the country where the most important company in the country PDVSA, assured everyone that it would file its financials in October and guess what? Monday will be November and we are still waiting for them, but who cares, a billion here or a billion there…

-The final suit/injunction against the regional elections was rejected by the Venezuelan Supreme Court, (surprise, surprise!). Once again, the Court avoids a ruling on the legality of the elections by not admitting it due to procedural reasons and not the elections themselves. These guys are good.

-Kerry asks Chavez to stop political persecutions, ending Chavez’ dream that a Bush loss would be to his advantage.

So, I send my laptop to be fixed tomorrow and go away for a few days, I will update once in a while via e-mail which does not allow me to do great formatting, basically because to do it I would have had to call CANTV and have my IP number be fixed and a lot of techie mumbo jumbo that would have probably never worked anyway. I am worried about violence on Sunday. There has never been much violence in Venezuelan elections before, but when the polls close this Sunday, many will try to count all the ballots and they will not be allowed to do so and tempers will flare and then…?

Note added: Actually, looking at the numbers of the Cogent contract from El Universal and the dates involved, the contract was awarded in June, threfore it could not have contributed to the company’s revenues in March. In the July quarter Cogent reported US$ 17 million in revenues. If we assume that ALL of this was from the CNE contract (unlikely), then Cogent should report on Monday at least US$ 36 million in revenues, unless something fishy is going on with this contract. That would be a blowout quarter for the company. Which will it be? Stay tuned…

Some stories before I go:

-Chavez cancels his trip to see Uribe and Torrijos because of the lame excuse of the fire in Parque Central on October 27^th. The excuse is that’s some of the Ministers that had to accompany him had their offices in that building. I hope the Minister of Commerce and Production did, he is so dumb that he actually said that within a few years (a few is a few, not many) tourism will be as important to Venezuela as oil. I imagine he means the price of oil is going to less than a buck; it would be the only way that his prediction may become true.

-A friend sends me this press release telling me that Cogent the “fingerprint capture machine” company has been awarded a US$ 20 million follow on contract by the Venezuelan Electoral Board. I imagine a “follow on” contract mean a contract smaller than the previous one, since I don’t remember how much the previous contract was. So, I look around and find a reference in El Universal to a US$ 53 million contract with Cogent. But the problem is, according to Cogent’s financials, the company had revenues of only US$ 15.39 million in the first quarter of the year and US$ 17.02 million in the June quarter, for a total of US$ 32 million, so my guess is that on Nov. 1st. Cogent will have to report at least US$ 21 million in revenues or somebody is on the take, no?

So, here you have it, this is either a stock tip or a corruption tip, if Cogent does not report spectacularly on Nov. 1st. somebody made a lot of money of this no-bid contract awarded by the CNE. Of course, the number will show if Cogent’s “only” client is the CNE, so it should report even more.

Digging a little further into the issue I find that Cogent went public only in September and this will be the first time it ever reports earnings. So, this might be a one time shot of the company going public thanks to a one time revenue infusion thanks to the no-bid contract of the CNE. Even more interesting, if you look at Cogent’s website or the S-1 filed with the SEC when the IPO came out, the word Venezuela never appears. Interesting, no?

I guess anywhere else this will raise eyebrows, but this is the country where the most important company in the country PDVSA, assured everyone that it would file its financials in October and guess what? Monday will be November and we are still waiting for them, but who cares, a billion here or a billion there…

-The final suit/injunction against the regional elections was rejected by the Venezuelan Supreme Court, (surprise, surprise!). Once again, the Court avoids a ruling on the legality of the elections by not admitting it due to procedural reasons and not the elections themselves. These guys are good.

-Kerry asks Chavez to stop political persecutions, ending Chavez’ dream that a Bush loss would be to his advantage.

So, I send my laptop to be fixed tomorrow and go away for a few days, I will update once in a while via e-mail which does not allow me to do great formatting, basically because to do it I would have had to call CANTV and have my IP number be fixed and a lot of techie mumbo jumbo that would have probably never worked anyway. I am worried about violence on Sunday. There has never been much violence in Venezuelan elections before, but when the polls close this Sunday, many will try to count all the ballots and they will not be allowed to do so and tempers will flare and then…?

Note added: Actually, looking at the numbers of the Cogent contract from El Universal and the dates involved, the contract was awarded in June, threfore it could not have contributed to the company’s revenues in March. In the July quarter Cogent reported US$ 17 million in revenues. If we assume that ALL of this was from the CNE contract (unlikely), then Cogent should report on Monday at least US$ 36 million in revenues, unless something fishy is going on with this contract. That would be a blowout quarter for the company. Which will it be? Stay tuned…

Some stories before I go:

-Chavez cancels his trip to see Uribe and Torrijos because of the lame excuse of the fire in Parque Central on October 27^th. The excuse is that’s some of the Ministers that had to accompany him had their offices in that building. I hope the Minister of Commerce and Production did, he is so dumb that he actually said that within a few years (a few is a few, not many) tourism will be as important to Venezuela as oil. I imagine he means the price of oil is going to less than a buck; it would be the only way that his prediction may become true.

-A friend sends me this press release telling me that Cogent the “fingerprint capture machine” company has been awarded a US$ 20 million follow on contract by the Venezuelan Electoral Board. I imagine a “follow on” contract mean a contract smaller than the previous one, since I don’t remember how much the previous contract was. So, I look around and find a reference in El Universal to a US$ 53 million contract with Cogent. But the problem is, according to Cogent’s financials, the company had revenues of only US$ 15.39 million in the first quarter of the year and US$ 17.02 million in the June quarter, for a total of US$ 32 million, so my guess is that on Nov. 1st. Cogent will have to report at least US$ 21 million in revenues or somebody is on the take, no?

So, here you have it, this is either a stock tip or a corruption tip, if Cogent does not report spectacularly on Nov. 1st. somebody made a lot of money of this no-bid contract awarded by the CNE. Of course, the number will show if Cogent’s “only” client is the CNE, so it should report even more.

Digging a little further into the issue I find that Cogent went public only in September and this will be the first time it ever reports earnings. So, this might be a one time shot of the company going public thanks to a one time revenue infusion thanks to the no-bid contract of the CNE. Even more interesting, if you look at Cogent’s website or the S-1 filed with the SEC when the IPO came out, the word Venezuela never appears. Interesting, no?

I guess anywhere else this will raise eyebrows, but this is the country where the most important company in the country PDVSA, assured everyone that it would file its financials in October and guess what? Monday will be November and we are still waiting for them, but who cares, a billion here or a billion there…

-The final suit/injunction against the regional elections was rejected by the Venezuelan Supreme Court, (surprise, surprise!). Once again, the Court avoids a ruling on the legality of the elections by not admitting it due to procedural reasons and not the elections themselves. These guys are good.

-Kerry asks Chavez to stop political persecutions, ending Chavez’ dream that a Bush loss would be to his advantage.

So, I send my laptop to be fixed tomorrow and go away for a few days, I will update once in a while via e-mail which does not allow me to do great formatting, basically because to do it I would have had to call CANTV and have my IP number be fixed and a lot of techie mumbo jumbo that would have probably never worked anyway. I am worried about violence on Sunday. There has never been much violence in Venezuelan elections before, but when the polls close this Sunday, many will try to count all the ballots and they will not be allowed to do so and tempers will flare and then…?

Note added: Actually, looking at the numbers of the Cogent contract from El Universal and the dates involved, the contract was awarded in June, threfore it could not have contributed to the company’s revenues in March. In the July quarter Cogent reported US$ 17 million in revenues. If we assume that ALL of this was from the CNE contract (unlikely), then Cogent should report on Monday at least US$ 36 million in revenues, unless something fishy is going on with this contract. That would be a blowout quarter for the company. Which will it be? Stay tuned…

Trick Number 1:

Yesterday Governor of Yaracuy Lapi claimed one of the great achievements of the negotiations with the CNE, besides having the results be printed first (yeah!, yeah!), was the fact that the position of Coordinator for each voting center had been eliminated. Well, this achievement lasted less than twenty four hours with these statements from CNE alternate Director Carlos Castillo:

“Despite the need to giving backing to a significant portion of Venezuelans, there exist conditions that the CNE in an incomprehensible manner refuses to modify, as an example, that of the coordinators. Apparently, they were eliminated, but what it did was to change their name, these coordinators are all of the political commissars for officialdom”

Adding:

”the CNE belongs to all Venezuelans, it can not continue being the executive arm of the policies of the official sector”

Trick Number 2:

The Venezuelan Supreme Court rejected the injunction against the Electoral Registry introduced by the Primero Justicia party. The reason was not illegality, but: “it should be an ordinary request and not an injunction’. Oh, I see when the law is right; you invoke procedural matters, because they know that the current registry is simply illegal. Oh Well! What else is new?

Trick Number Three:

The CNE generated the 118 random machine that will be audited in the upcoming regional elections, making us all wonder about how the number of audited machines tends to zero with time. 199 in the “hot” audit on August 15^th. 150 in the ”live” audit August 18^th. and now 118 in the “hot audit” on the 31^st. We are talking none in the Presidential election in 2006!

Trick Number Four:

CNE Director Jorge Rodriguez meekly “insisted” that President Chavez “violated” the regulations for electoral advertising last Sunday “insisted” he should follow them.

“It is not possible for the President to violate the regulations like he did on Sunday’

Come on Jorge! Relax! You violate the law weekly, what is an electoral regulation for the almighty Chavez? You never stopped him before, you will not stop him now! Stop the grandstanding, he is your idol!

Trick Number 1:

Yesterday Governor of Yaracuy Lapi claimed one of the great achievements of the negotiations with the CNE, besides having the results be printed first (yeah!, yeah!), was the fact that the position of Coordinator for each voting center had been eliminated. Well, this achievement lasted less than twenty four hours with these statements from CNE alternate Director Carlos Castillo:

“Despite the need to giving backing to a significant portion of Venezuelans, there exist conditions that the CNE in an incomprehensible manner refuses to modify, as an example, that of the coordinators. Apparently, they were eliminated, but what it did was to change their name, these coordinators are all of the political commissars for officialdom”

Adding:

”the CNE belongs to all Venezuelans, it can not continue being the executive arm of the policies of the official sector”

Trick Number 2:

The Venezuelan Supreme Court rejected the injunction against the Electoral Registry introduced by the Primero Justicia party. The reason was not illegality, but: “it should be an ordinary request and not an injunction’. Oh, I see when the law is right; you invoke procedural matters, because they know that the current registry is simply illegal. Oh Well! What else is new?

Trick Number Three:

The CNE generated the 118 random machine that will be audited in the upcoming regional elections, making us all wonder about how the number of audited machines tends to zero with time. 199 in the “hot” audit on August 15^th. 150 in the ”live” audit August 18^th. and now 118 in the “hot audit” on the 31^st. We are talking none in the Presidential election in 2006!

Trick Number Four:

CNE Director Jorge Rodriguez meekly “insisted” that President Chavez “violated” the regulations for electoral advertising last Sunday “insisted” he should follow them.

“It is not possible for the President to violate the regulations like he did on Sunday’

Come on Jorge! Relax! You violate the law weekly, what is an electoral regulation for the almighty Chavez? You never stopped him before, you will not stop him now! Stop the grandstanding, he is your idol!

Trick Number 1:

Yesterday Governor of Yaracuy Lapi claimed one of the great achievements of the negotiations with the CNE, besides having the results be printed first (yeah!, yeah!), was the fact that the position of Coordinator for each voting center had been eliminated. Well, this achievement lasted less than twenty four hours with these statements from CNE alternate Director Carlos Castillo:

“Despite the need to giving backing to a significant portion of Venezuelans, there exist conditions that the CNE in an incomprehensible manner refuses to modify, as an example, that of the coordinators. Apparently, they were eliminated, but what it did was to change their name, these coordinators are all of the political commissars for officialdom”

Adding:

”the CNE belongs to all Venezuelans, it can not continue being the executive arm of the policies of the official sector”

Trick Number 2:

The Venezuelan Supreme Court rejected the injunction against the Electoral Registry introduced by the Primero Justicia party. The reason was not illegality, but: “it should be an ordinary request and not an injunction’. Oh, I see when the law is right; you invoke procedural matters, because they know that the current registry is simply illegal. Oh Well! What else is new?

Trick Number Three:

The CNE generated the 118 random machine that will be audited in the upcoming regional elections, making us all wonder about how the number of audited machines tends to zero with time. 199 in the “hot” audit on August 15^th. 150 in the ”live” audit August 18^th. and now 118 in the “hot audit” on the 31^st. We are talking none in the Presidential election in 2006!

Trick Number Four:

CNE Director Jorge Rodriguez meekly “insisted” that President Chavez “violated” the regulations for electoral advertising last Sunday “insisted” he should follow them.

“It is not possible for the President to violate the regulations like he did on Sunday’

Come on Jorge! Relax! You violate the law weekly, what is an electoral regulation for the almighty Chavez? You never stopped him before, you will not stop him now! Stop the grandstanding, he is your idol!

The Cynical Electoral Board continues its magic act, this time telling the Governor of Yaracuy Lapi, that not to worry, that this time around the transmission will not take place until after the votes have been added. Of course, there is no mention of how this will be monitored or guaranteed, maybe in a month I will be showing again plots of data transmitted before the votes were added arguing that there was fraud and somebody will make a comment that this was not data but handshaking between machines. As somebody said (Yogi Berra?,Bush?) this is Déjà vu all over again!

But let’s see how our well meaning and fair authorities have been behaving in the last few weeks to see whether something may be up or not:

-The CNE has promised (Notice the difference, it has promised, not approved!) that one box will be audited at each center. Now, if you are trying to be transparent and fair, what is the difference between opening one or three boxes? The answer is simply none. So, why the reluctance to count all of the ballots? Think about it, all of those statistical arguments that worked so well in the recall vote will be irrelevant for hundreds of local races where “coincidentally” the audited box will favor the opposition by “only” a one or two percent difference over the other two or three boxes. But add it up, and tampering with two will be as effective as tampering with all of them.

It takes maybe fifteen to twenty minutes to add up all of the ballots in a box. This can be done in parallel by the witnesses and people who show up. Why object it? We have never heard any argument for this absurdity. This from the man that when it came time to test the signatures by the opposition actually said that perfectly valid statistical tests could not be trusted.

-It used to be in the “old days” right after the Supreme Court named the new Electoral Board, that there was supposed to be a two to two balance with “oil digger” Carrasquero the deciding vote if things got too partisan. In time, Carrasquero showed his true colors and it was a clear pro-Chavze majority of three to two. About a month ago, CNE Director Zamora resigned, which should have been no problem since he had an alternate named by the Supreme Court. Mysteriously, the alternate has never been invited to a Board meeting and has been given no official responsibilities, just when a big vote is coming up. Do I hear fair play?

-The Electoral Hall of the Supreme Court, now purified and in the hands of the revolution, “Loaizad” the injunction against the Electoral Registry by arguing that those asking for the injunction had not provided any proof of illegalities in the registry, but had simply provided lists of voters of their own without any addresses or any other data required to register.

Of course, lawyers for the CNE diligently argued against the granting of the injunction using words like “preclusive”, “prima facie” and “illusiority” , some of which are not even in any legal dictionary, least of all in that of the Spanish language but sound good when trying to make a case. Curiously, to this blogger turned amateur lawyer, the CNE did not provide the equivalent list of voters with addresses or other data that would have Perry Masoned the case out of the Electoral Hall in a flash. But what do I know.

-But no other mystery is larger than the functionality of the Cynical Electoral Board than the fact that there have been few and precious meetings of its Board in the last three weeks. Meeting after meeting is cancelled, despite the fact that they could approve the agenda in second by a three to one vote. Nothing is discussed. In the best style of Saddam Hussein’s Electoral Board, everything is decided in informal meeting in the halls of the Electoral Board, where CNE Director Rodriguez tells Carrasquero and Battaglini what the messages in the t-motions (RIMM’s in the US) from the Presidential Palace are telling them to do.

Thus, despite charge to the contrary, the CNE is not run like the totalitarian Government but by the totalitarian Government itself. But maybe I am just caught in the “illusiority” of the moment.

-But some believe there is still hope as more evidence was handed in to the Constitutional Hall of the Supreme Court asking to postpone the regional elections. That same Hall who got rid of the Justice that declared the signatures valid. The same one that said the Electoral Hall was not in charge of Electoral decisions. The same one that delivered the illustrious nose picking Carrasquero to preside over our electoral processes. The same one that failed to defend the rights of those that signed the petition to recall Hugo Chavez. The same one that has failed to look into the fraud on August 15^th. The President of which promised Linda Loaiza a “quick” solution to her case. The same one that declared the session of the National Assembly outside Congress and without a quorum valid.

Oh yeah, there is hope, I can really see it coming this time on the side of justice…it is indeed electoral Déjà vu all over again!