The Devil's Excrement

“Only” four days after the BCV foreign exchange began operating, the Central Bank published, not the regulations, but the “guidelines” for its operation.

What does this mean? A regulation fixes things and how they can be done, a guideline is a suggestion, an orientation. But I doubt you can ask to buy one dollar more than the “guidelines” sugeest.

It’s just revolutionary flexiblity, it may come in handy at some point (For them)

So, without much furrther ado, here is the final version of the “guidelines”:

-It only applies to Venezuelan companies or Venezuelan citizens, not to residents or foreign companies that operate here through a subsidiary for example.

-Companies will be able to buy up to US$50,000 per day and  no more than US$ 350,000 a month (cash value, not bond value), as long as: i) you are not in Lists 1 and 2 or ii) if you are in Lisst 1 and 2, that you have not received any money from CADIVI for the last 90 days and iii) To buy capital equipment.

-Individuals will be able to ask for US$ 1,000 a month and up to $ 6,000 a year in order to send to family members abroad.

-Individuals will be able to buy US$ 5,000 a year for: i) Studies abroad, ii) Travel abroad and iii) To pay for goods required to provide professional services.

-Up to $10,00 for special cases of health, cultural and sports nature.

That’s it, on your marks, set, go…place your order,  soon…

(BCV band system. Another devaluation!!!)

The new foreign exchange system went into “operation” on Wednesday, despite the fact that the regulations have yet to be issued, people have just seen some drafts for them, but this did not stop the Government from opening that “market” in order to stop the criticism that it was being delayed. Even today regulations have yet to be seen.

The draft of the regulations says that companies will only be able to ask for US$ 300,000 a month, but no more than US$5 50,000 a day, something many big manufacturers will laugh at. El Nacional said today that this amount would be raised to a million dollars, still insufficient, but definitely an improvement for medium size industries.

However, there are other limitations for this. A company will only be able to participate in this market if it does not qualify for the so called “Lists 1 and 2” of items that CADIVI has. If your product or raw material is in any of those lists, you will only be able to participate in that market if it has been 90 days since the last CADIVI approval.

Individuals will be able to buy up to $1,000 a month to send to relatives abroad and buy up to $5,000 a year for educational expenses or for travel expenses abroad.. Individuals may also request up to $10,000 a year for health, education, sports and cultural reasons, whatever this may mean.

The Government claims that trading was done in the amount of US$ 17 million or so the first day at the upper side of the range at Bs. 5.3 per US$ , who knows who participated in that market. One has to wonder how this could all work without regulations, how did those participating decide how much they could ask for if regulations did not exist?

Get your quota as soon as you can, it will never be cheaper than this. Ever.

Clearly, the whole system is CADIVI version 2.0, another restricted, difficult way to have access to foreign currency. Companies and individuals will learn in time how to use it, but it will be inefficient in providing fluidity to manufacturing and commerce in Venezuela. The now banned swap market provided such fluidity as anyone could buy even large amounts if the operation required it. This will no longer be the case.

Thus, another level of improvisation and control by this incapable and inefficient Government has been reached. This will result in shortages, inflation and lower economic activity, but Chavez himself says these are capitalistic concepts that are irrelevant in a socialist economy.

I wonder if the “people” agree with him when all sorts of things are missing from every day life.

Of course, it will never be the fault of the Government and Chavez’ cronies, there will always be someone else to blame. They are all doing a wonderful job with 30%+ inflation, -5%+ GDP contraction and wasting 10% of the food the Government imports. Who says they are not incredibly incompetent and that their XXIst. Century Socialism model is not a gigantic failure?

When will they notice it? When they can no longer steal enough?

(To those that complain, I remind them that there is Justice here)

A few days ago, Hugo Chavez said in no uncertain terms:

“Guillermo Zuloaga (The President of TV station Globovision) said that I ordered the killing of people and he is still free. This only happens in this country…This should not stay this way…I will not sue against a bourgeois, but there is a system that should put things in their place.”

Never mind that Zuloaga was referring to a true fact, when Chavez tried to unleash Plan Avila against a peaceful march in April 2002, which has been ratified by the Generals that refused to accept that order. Plan Avila was the same plan activated in 1989 by Carlos Andres Perez, a military plan sharply criticized by international organizations as repressive and designed to violate human rights. The activation of the plan in 1989 led to over 200 people being killed. There were over 20 killed and almost 200 injured on that day even if the Chavez’ order was never followed.

Never mind that Zuloaga made the statement outside of Venezuela, where Venezuelan law does not apply. He was investigated and freed on those charges after the Prosecutor barred him from leaving the country in early April.

So, yesterday, the ineffable Prosecutor Luisa Ortega revives charges against Zuloaga and his son for usury and “conspiracy” in the case of a car distributor that Zuloaga is part owner of and in which the Government accused him of “hoarding” the cars because they were being held in the parking lot of a house owned by Zuloaga.

Thus, the Prosecutor, a figure supposed to be independent, but who nobody believes is by now, orders Zuloaga captured, with which Globovision is left with no visible head after Alberto Federico Ravell was let go under pressure by the Government, closing in this way another chapter of censorship and limitation of the right to free speech.

Chavez should be obviously very pleased and Oswaldo Alvarez Paz quite worried, as Chavez made a similar request against him a few days ago.

Another chapter in the consolidation of this Dictatorship, which persecutes anyone that opposes it at its convenience, from butchers to the media.

Who will be next? Well, my bet is that when the new foreign exchange “market” fails in a couple of months and shortages become widespread, the banking system and the food division of Polar will be nationalized for blocking the path of the revolution.

And the stupid cheerleaders of the robolution will celebrate the continued destruction of Venezuela by this band of ignorant and resentful revolutionaries who still have no clue as to dimension of the destruction taking place.

Today’s headlines said something like: “Rules for new foreign exchange market published”. Everyone gets excited, as El Nacional says the Minister of Finance wants the new exchange rate capped at Bs. 6 per US$. However, no such rules were published.

What was published was Foreign Exchange Agreement #18 (Yes, 18 times the relationship between the Central Bank and the Government has been changed on foreign exchange markets) and the regulations, but you will find little telling you how to do it, what you can do, when you can do it or where you can do it, which is what people want to know.

But rules? Nothing of the sort, some general principles that will guide the new exchange market mechanism, but if you wanted to read them to see how you go about getting cheap dollars (Venezuela’s most important export!), you are out of luck.

Because the “rules” defined by the 18th. Foreign Exchange agreement and the associated regulations are:

–Only banks, savings banks and exchange houses will be able to participate in the market to sell and buy bonds via the Venezuelan Central Bank.

-They will charge a commission which will have to be published.

-Exchange houses will only be able to deal with cash of Colombian Pesos or Brazilian Reals.

-Banks can send money transfers

-Banks will have to provide all information requested from them by the Central Bank.

-You can only trade bonds issued by the Republic and related entities via the Central Bank and only banks and similar financial institutions can do it (You knew that!)

-The Central Bank will say which bonds can be used.

-If you don’t comply with any of the above you will be punished and you can be inspected by the Central Bank, as often, as necessary and as in detail as the Central Bank desires.

There you have it. You have read my post, but learned absolutely nothing about how to to get a dollar out of the Central Bank. You know you will have to go to a bank, that’s about it!

Thus, the market that was going to start last week. (Chavez said it will be hours or days before it starts, well it maybe a group of days, called a week). My bet is, this will not start this week either, so that Venezuela would have saved one month of imports, which maybe Minister Giordani believes means that the money will be saved and people can go hungry, diaper-less, cellphone-less, or whatever for a full month without any significant impact.

Jeez, I wish , I would charge a dollar for each person that reads a post…I would get more foreign currency that way that I am likely to get out of the new system…even if it is at Bs. 6 per $, ta’ barato dame dos (It’s cheap, gimme two*)

*Famous phrase from the 70’s when Venezuelans would go to Aruba, Miami and Curacao and when told the price would answer that way)

(The putrid leaders are still alive and well…)

I like numbers. I was educated to believe that anything and everything can be understood if you can reduce it to numbers. Thus, I decided to look at the numbers of the foodstuffs found in a state of putrefaction and ask a very simple question: is this irrelevant in the size of imports to Venezuela or is this a significant amount?

According to Chavez, this is 1% of what the Government imports in food. This means that if we assume that the Government imports these days half of the food and the private sector the other half, then the 60,000 Tons (70,000 Tons according to other sources) represent 0.5% of all imported food. Of course, Venezuela also produces some food. Let’s say it’s not too much. Assume 70% of all food we eat is imported, then the rotten food is 0.35% of all the food Venezuelans eat every year. The Minister for Feeding dismissed the importance of this amount of food rotting, as did President Chavez.

Well, 60,000 Metric Tons is 60 million kilos or 2.3 Kilos per inhabitant of Venezuela. If this is 0.35% of all food consumed in Venezuela then Venezuelans eat 657 Kilos of food per year. In pounds, this is about 1,440 pounds per person per year.

According to various calculations I have seen, world food consumption varies from about 500 pounds per year per person to 1,700 pounds per year per person in the US. The 1,440 pounds then would put Venezuelans among the best fed people in the world.(Recall I underestimated, there are reportedly 70,000 Tons so far, there may be more and I exaggerated the estimate for imports)

Which suggests the ever present shortages of food in the stores, hunger, malnutrition and poverty are a thing of the past in our country.

But are they?

(This Government has given us freedom)

This so called revolution is truly remarkable, beyond the limitations that it wants to impose on freedom of expression and/or speech, it now seems to want to impose a limit, in something we may call Freedom of Stating Facts. Yeap, in the vein of totalitarian Governments past and present, the Chavista goons  want to make sure you only talk about the facts that they want, not the ones you want.

The victim in this case is a scientist Antonio Morocoima, a researcher at the Medicine Faculty of the Universidad de Oriente, who will be investigated by the Legislature of that State for creating panic in the population.

Morocaima’s crime?

He released the information that out of the 500 bugs (triatomina or “chipos” in Spanish) he had sampled in the wild, 300 of them or 60% were carriers of Chaga’s disease via the agent Trypanosoma Cruzi. According to the genius accusing him, this created panic in the population.

You have to understand that the person denouncing Morocaima is the very Chavista Head of the Health Institute of Anzoategui State. According to the report from this Institute, there are 341 cases of Chagas’ disease in the State, all dating back 20 years. None new, through the magic of hiding the facts and not attacking or solving problems. For example, last year a six year old died of Chagas’ disease in that state and many cases reported around the country including Caracas in recent weeks.

I guess that the hope is that just like economic problems, they will go away, or disappear until after the 2012 elections, or maybe even blame it on El Niño. But until then, they will prohibit not only you from expressing your opinion, but from stating facts.

It’s all for the “common” good, i.e. Hugo Chavez staying in power, you know…