The Devil's Excrement

“Fumarse una lumpia” or smoking an egg roll is a Venezuelan way of saying someone had to smoke something really weird in order to have said something so silly or absurd. Aristobulo Isturiz used that sentence to refer to Hugo Chavez a long time ago, but soon after that he rejoined his Government and even was Minister of Education, which showed his ideological consistency.

But in the video above, Hector Navarro, who has been Minister of a variety of things with Chavez, appears to have smoked a gold dusted egg roll when in min. 4.35 or so he says “It is crazy to pay someone else to custody our gold without getting any interest”

Jeez, a gold bugs dream! You not only speculate with the gold but get interest on it!

I wonder where Minister Navarro thinks this “interest” would be coming from? From the dust that comes off the gold bars?

There are other pearls in the video (Sorry, it is a little long!) like when he says there will be a financial crash because of the money printing by the Obama administration. I wonder if he has noticed that Giordani’s money printing since Chavez took power has been 17 times larger than that of the US in the same period (Factor of 2 for the US, factor of 35 for Venezuela). I guess in that case Venezuela will not suffer a financial crash, but a financial avalanche…

Navarro is the same guy who said the gold report had been leaked by the CIA. I always wonder why these guys never seem to worry about how the CIA obtained the documents.

It must be the gold dust in the egg rolls that limits the thinking…

(Kudos to reader JMA for noting this jewel by Navarro and captainccs for providing the link!)

(The following scene was prompted by a discussion in this post in Quico’s and Juan’s blog)

Miraflores Palace, evening of Monday, February 4th., the day the new Venezuelan President was sworn in. The President asks to be connected to Raul Castro and his side of the conversation goes something like this:

-Hello Sr. Castro, is President O from Venezuela.

-Thank you, thank you. It was a hard campaign and harder now, but ready to start doing things. In any case, I am calling you after the first Cabinet meeting, which ended about half an hour ago. We have looked at what we pay for your Doctors and will unilaterally change the terms starting tomorrow. Basically, we will pay US$ 400 per month per Doctor for sixteen months a year, which amounts to US$ 128 million and we will pay the Cuban Government a 20% outsourcing fee, for a total of 153.6 million a year, which we will pay at the end of each month to each doctor and we will transfer the outsourcing fee to you.

-Oh, yes indeed, US$ 400 per month is less than what a Venezuelan Doctor makes, so you do know what a Venezuelan Doctor makes? How interesting! Well, we provide housing and utilities for your Doctors Sr. Castro, thus the difference. As for transportation charges to and from Cuba, don’t worry, we will take care of that for you from now on, we have to create some jobs and that sounds like a good way to do it.

-I know Sr. Castro, we all have problems, imagine mine with the debt and the holes Hugo left all over the place. But just think, if I send back the Doctors, you will have 20,000 more mouths to feed, I am not sure you want that either.

-No Sr. Castro, I can not add US$ 10 million more to help you out. I mean, Haiti wants only US$ 5 million and I have to wait to decide on that. And they are starving there.

-Ok, good, I am glad you understand, we have a deal on the Doctors then. The second point Sr. Castro, is that we are suspending all oil shipments to Cuba, we have noticed you have yet to make an interest payment since 2003, you had two years grace period, but it has been now ten years without a single penny coming our way.

-I know, I know, don’t get upset. We have problems too, Hugo left US$ 150 billion in debt and we are trying to put the house in order. I know you need the oil, but we also know that Cuba does not use as much oil as Venezuela sends there. We are just asking everyone that is behind on the interest payments to pay, we can negotiate terms, but also all terms will be equal to all countries, except Haiti, of course. Essentially, it’s 50% within thirty days and the remainder in 25 years, but we will charge market rates for the 25 year financing, we have our own load to pay. As for the Cienfuegos refinery, we rebuilt it for free and we have been providing the oil you sell in the international markets for three years, so we really should own it. But don’t worry, we don’t plan to make such a claim.

-Yes, I understand I can not leave Cuba without oil, but we have to negotiate payment for 12 years of oil, if you want us to send some oil, send your Minister of Finance and I am sure we can find 10 o 20 thousand barrels a day to give you a hand temporarily until you can adjust.

-I know, things are hard everywhere, but just think, with these measures Venezuela will save some US$ 16 billion a year, which means we will not incur in any new debt in the upcoming years, except with multilateral organizations. With these loans, we will buy back some debt at cheaper rates and essentially have the macro part fixed, so we can work on the hard parts, the people, reconciliation and the financial mess at every local Government institution.

-Oh yes, your country has done a great service to Venezuela in providing health care. But I am not sure it applies to the case you mention. After all, he is not amongst us now, is he?

-Goodnight Raul.

I found this report about Venezuela moving its international reserves somewhat funny. Really. What’s the problem?

In reality, there isn’t much to move in the end and I would like to see if it is true that Venezuela will move back its 11.76 million Troy ounces of gold. To give you an idea, 11.76 million Troy ounces of gold happens to be some 365 Tons of gold. Since each Ton is about 907 Kilos, that is a lot to move back to Venezuela. About 150 armored trucks at each end. Moreover, strategically, having it abroad is better for the Government, they can sell it and nobody would even know.

I had not looked at Venezuela’s gold reserves in a while, but a comment from a reader made me look and calculate again and lo and behold, Venezuela’s International reserves are roughly at the same level as Jan. 1st of this year, only because gold has gone up a lot this year. The graph below shows the value of the gold in the country’s reserves, where I have used the accounting of the Venezuelan Central Bank, which according to the auditors is that the price used is the average for the last 60 days:

As you can see, gold reserves have gone up from a bit above US$ 16.25 billion on Jan. 1st., to roughly US$ 18.4 billion on August 10th., for a difference of US$ 2.15 billion dollars. Given that reserves were US$ 28.77 billion that same day, this means that reserves have actually dropped US$ 1.47 billion since Jan. 1st (when they stood at US$ 30.24 billion) despite much higher oil prices. But since gold reserves have gone up by US$ 2.15 billion, it turns out that reserves are down even more than it appears at first sight, a total of US$ 3.6 billion.

But more importantly, of the US$ 28.77 billion, US$ 18.4 billion were gold, that represents essentially 64% of all reserves. Thus, the reserves that can really be moved, since I don’t believe the gold will be moved, is “only” US$ 10.37 billion dollars. I think gold reserves should be here anyway.

Except form that you have to subtract about US$ 2.08 billion of “special drawing rights” which Venezuela has at the IMF, which would only leave US$ 8.29 billion to move.

Then, the Central Bank bought US$ 1.7 billion from PDVSA in the PDVSA 2013 bond and was assigned about US$ 1 billion of the Global 2031 bond, that’s US$ 2.7 billion of Venezuelan bonds, which in the end it does not matter whether they are here or in Ruanda, we know the owners and the Central Bank needs them close and handy to sell into the SITME foreign exchange system. Subtract those US$ 2.7 billion and you have US$ 5.59  billion to “move”. Then there is Venezuela’s contribution to the IMF, about US$ 300 million and you have only US$ 5.29 billion.

There could be other things, but we don’t find out about them until its very late. The Central Bank regularly lends money to PDVSA, we don’t know when they do it, we know when it gets paid back. Suppose that’s zero right now and this “newsy” move would apply to about US$ 5 billion in investments.

Five billion? In a country where a US$ 29 billion discrepancy does not even make the news except in obscure blogs one and/or two?

Who cares if they move it?

Note added: Here is the “Punto de Cuenta” for the transfer of reserves. The proposal is indeed to transfer the “operating reserves” within two months. There is a longer term plan to move the gold back to Venezuela (What is not in Venezuela). However, it says this will violate the rules. Now, the reason seems to be to protect them form being frozen by the Federal Reserve. Whether they are in Switzerland (where 60% are) or in the US, if it is part of the compensation system and they are worried the funds can be frozen. This may have to do with the concerns about helping Iran and that the US imposes a financial ban on Venezuela. But it may also have to do with fears that Exxon will sue to freeze Venezuelan assets if it wins the arbitration case. I would bet is the former, not the latter, sovereign nations have protection from such suits.

Now, the US$ 5.25 billion figure is even lower, because there are about US$ 900 million more in there that is not that liquid that I had not counted, so we are talking about US$ 4.3 billion in the end.

The bizarro world that Venezuela has become allows for everything, there are no longer surprises, least of all if our military is involved. The same military that has been talking openly about staging a coup, should Venezuelans choose a leader different than Chavez in the 2012 elections.

But the military does not seem to answer to anyone anymore in Chavezlandia. The latest bizarre episode already has a leading hashtag in Twitter: #narcoavioneta. You see, a small plane was captured in Falcon state full of drug, some 1,400 kilograms of cocaine was found in it.

Website lapatilla.com has raised numerous (here, here, here) questions about this case, including the fact that it is supposedly not registered in Venezuela, despite having a registration number painted on it and freely and liberally flying around the country.

Now, I don’t know much about the case and its details, whether it was or not registered, where the drug was loaded onto it, whether the two people killed were involved or not.

What I do know, is that according to all reports, the plane took off from the La Carlota airport.

Now, it used to be, up to 2005, that private planes could fly in and out of the La Carlota military base in Caracas. This was stopped in 2005, unless, of course, you were a revolutionary or related to one, or had a connection to one, as I showed in 2006.

So, how could this supposedly unregistered plane, take off from the La Carlota military base, with or without drugs last Friday? Who allowed it? Who approved it? Who was involved?

Oh, I know, it was someone high up in the military, but like Makled and so many other cases, we will never know. No wonder these guys are so nervous that the Government could change in 2013 via the ballot box, who do you think will be fired first and investigated?

The same ones that protect and benefit from the mysterious “Narco Avioneta”. Bet on that!