The Devil's Excrement

After visiting Venezuela for a few days, there was a very clear message: Chavez is ready to pull all of the stops in order to win the 2012 Presidential race. If you thought the last twelve years were filled with cheap populism and undelivered promises, you ain’t seen anything yet. For the next eighteen months, Chavez will borrow, promise, give away and spend like there is no future. But he will not spend on anything productive, he will not build roads, or houses, or infrastructure. That is not the priority, the priority is to increase salaries, increase benefits, give away money, import food so that shelves are stocked, hold prices back as much as possible and promise and then over promise, just in case. The prioriti ys to convince people to vote for him.

There are two possibilities, that the strategy will work and he will be reelected, or that it will not and the opposition will be left holding the bag of a distorted economy, a Pdvsa without resources and in need of billions for investments and a gloomy future, that Chavismo will blame on the newly elected administration. If reelected, Chavez will then resolve some of the distortions and hope that things will somehow improve, pray for higher oil prices, so that he can then pull it off once again. Other than getting reelected Chavez, has never been very good on long term planning. He lives for the promise and the announcement, not the delivery. He lives for his whims and ideas, not for execution.

Nothing exemplifies this better than anything that the new “Mision Vivienda” Chavez’ promise that he will build 1.5 million homes for the poor in the next six years after being unable to build one third of that in his first twelve years. Everyone knows this will be impossible, that essentially nothing can even be accomplished before the 2012 election, but we are about to witness the Greatest Housing Promise Show on Earth.

To begin with, everyone in Venezuela with a cell phone (recall cell phone penetration exceeds 100% in Venezuela) received on May 6th. the following SMS from the Popular Ministry for Housing and Habitat:

“Bring your crib sheet with all of the data of your family group to register in the “Gran Mision Vivienda”. And go live enjoying life. Visit http://www.mvh.gob.ve”

There you have it, massive advertising, massive populism, massive illusion with a single SMS. Everyone that registers will think that there is a house at the of the Chavista rainbow. Never mind that, optimistically, only maybe 10-15% of those registering is likely to receive a housing unit in the next seven years. It is too tantalizing, too appealing to ignore, it works. It is the hope to get out of your personal hell with crime, unhealthy conditions and monthly rent in the barrio where you live.

Because in talking to experts you learn that it takes six to seven years to finish a housing project from the day it begins. Not from the day you think about it, but from the day you start, i.e. You have the land, you have a design, you now need to get the permits, get electricity, get water. Oh yeah! Now comes the tough part, getting the houses built. The best Chavez year in housing is worse than any of Caldera’s, one of the worst Presidents of the IVth. At least Caldera could have used the excuse that oil was near ten dollars a barrel.

As part of the show, The Chavez administration issued this week a decree exonerating builders from the VAT, from import duties and from income taxes. (Recall these same people were the enemies three months ago). It also placed a cap on who may get a mortgage from the mandatory credit portfolio of banks. If your family group makes more than five minimum salaries a month, it will come out of the bank’s portfolio, not the 12% obligatory obligatory mortgages.This will, of course, not generate any housing units soon, but it will generate interest, will generate activity, will generate investment, it will provide fire for the great housing illusion.

And it will work, like so many of the revolutionary illusions of the las twelve years. In four or five years, maybe a couple of hundred thousand houses will have been built, slightly more than without the Mision Vivienda and if there is a new election, Chavez will talk about something else, ignoring the failure of the housing illusion.

Maybe by then, it will be time for a real revolution in Venezuela.

(Only socialism saves!)

I know, I know, it’s been a while. Between Easter in Mexico, a birthday, my dog’s rough encounter with a Bufo toad and a visit to Venezuela which included packing the orchids, it has been rather hard to sit down and write. As usual, there are lots of stories to tell, but I thought I would start with my impressions during my visit.

The first thing that shocked me was the number of politicians who aspire to be candidates for President and plan to enter their names into the race. I mean, when even Eduardo Fernandez, once know as “El Tigre”, thinks he is relevant, you realize how out of touch many Venezuelan politicians are. I mean, I love democracy and everyone has a right to enter their name in the race, but being involved with politics is not an “on” and “off” button you turn on whenever you feel like it, least of all, when you have a track record of failures that proved you are not what the Venezuelan people wanted ten years ago, least of all ten years into the new century.

Then there is the excessive optimism of many in the opposition. It is as if they can’t wait to hold the election because they are soooo sure Chavez will lose. Hey guys! Remember 2003? Remember 2009? Have you noticed that oil is above US$ 100 and that the opposition has little money and  a front runner whose charisma is measured in microcharms?

And then, Chavez comes up with his new Bill to control prices and protect salaries. Once again, a Bill which is illegal under the Enabling Bill, but I guess legality is not a useful concept any more around here. The worst part is not that Chavez is proposing this Bill, including a “Maximum Price for Sale” that will be determined by the Government, but that the same unions that are being ignored by the Government in their salary demands, back the Bill.

Does anyone remember the word “Conacopresa”. This is the same thing, except with no talks, the Government decides everything. This solution is sooo Cuarta Republica!

But in the end, the problem is that these are just useless measures. Price controls have never worked, all you do is delay adjustments, insuring the permanence of inflation or generate shortages. I guess Chavismo’s goals is to maintain a balance so that the two coexist.

But now there will be a “Monitoring room for production costs in order to establish maximum profit rates which will be adjusted quarterly”. I guess the rate will always go down, this is after all, a revolution, with little sympathy for profits, unless they come from exorbitant oil prices.

The problem in the end is too much monetary liquidity, so the Government goes and reduces bank’s legal reserves, freeing a couple of billion dollars in additional liquidity to give inflation another push.

Way to go! Samuelson and Friedman must be turning over in their graves!

Finally, an airport without water is not precisely pleasant, thanks God for flights that are on time!

While this will make little difference, using BCV statistics, Hugo Chavez’ lies are simply exposed. Below, I show a plot a graph of inflation (Blue Line) normalized to when Hugo Chavez took over in 1999 and I compare it to the minimum salary, also normalized,  at exactly the same time (red line):

In fact, despite the oil windfall, accumulated inflation has been higher than the growth in the minimun salary, which does not even take into account how the inflation numbers are being manipulated. In the boom days of 2008, salaries managed to stay ahead, but right now, there is no “redistribution”, no gain by the average Venezuelan via the minimum salary, despite Chavez outrageous, unethical and lying claims today.

Of course, few people will see this graph, compared to Chavez’ big lie on nationwide TV (previous post). What a farce!

Hugo, you big liar!

Amazing video in which Chavez shows how he has incrased minimum salary without adjusting for inflation. Salary has not kept up with inflation. He even shows it from way before he became President to insure he will look even better.

He says he is distributing things better.

He then proceeds to say that there were more resources before he got to power. Never mind oil from $12 to $100.

Then the usual BS about oligarchy, the gringoes, etc.

Then he talks about how wonderful things are with his pension increases and salary increases and how bad things are abroad.

Just lie, after lie. Count them!

Well, fine thank you.

Enough of you have you asked that I feel I have to make a post. Other titles:

Hey, Devil, what are you doing?

or

What the Hell Is the Devil Doing?

Well, the Devil is doing ok. Ok, because moving is indeed Hell, the last three times I moved I said I would never move again. I swear by this now, until next time…Never say never.

Life is good, quiet, simple, lots of time for reading, but rather than reading “stuff” I am reading “junk”, lots of books in my Kindle/iPad combination, but I read mostly instantpulp. Kidding aside, I make a disclaimer, the author has an interest in that trashy website, but it’s not my business plans and it works!

Oh yeah! Lost some weight.

No regrets. I always look forward, I chose to be here and so I am , looking ahead. I gets lots of Venezuela news, gossip and the like, but somehow it gets harder, the news more irrelevant in the distance.

It’s Easter week, so Venezuelans are off on holiday and you even see them here. They come with their CADIVI dollars and you recognize them by their shopping carts full of diapers and sanitary napkins. I saw a couple today and felt like walking up to them, hugging them and saying: ” Hola, yo tambien soy venezolano!”

But even if everyone says I am outgoing I am in the end shy. So I said nothing.

But I do miss queso de mano. You can fake arepas, but it’s hard to fake a good queso de mano.

You want to know how bad this Government is doing?

Look at this press conference by Comandante Fausto :”Corpoelece will do maintenance during Holy Week”

Jesus, when you have to announce you are doing maintenance, things must really be bad. You would think a Minister would have better things to do than announcing normality. Except that maintenance is not normal here (or is it there?), ask the Metro (Subway) people, they forgot about it and it shows.

Meanwhie Aristobulo Isturiz seems to have lost any shame, if he ever had any, or smoked his bosses egg roll, using hyperbole at any turn, like saying April 2002 was as big as the 19th. of April or the Government will build 150,000 housing units. Sure Aritobulo, go smoke your lumpia (egg roll), because you are so far behind already and it just begun raining, so you will have go build them all in six months. But you like Ramos Allup, should just retire to a “Mansion”, for those politicians that will never get elected on their own, so stop trying, you are making a fool of yourself.

Meanwhile Venezuela is off for the week. You can’t find an airline ticket to go abroad, as CADIVI “cupos” are all being used and who can pass up $2,000 or $3,000 per person at Bs. 4.3 per $, including kids to go to Bogota, Miami and/or Buenos Aires. It is simply irresistible, like cheap gas.

And I take advantage of it to say last night I saw Atlas Shrugged Part I, the movie, enjoyed it, everyone should see it, even if there were some things that seemed out of place. I wonder what a Chavista would think about it, maybe he would not even get the subtitles. Or think it’s fiction.

In  solidarity with all of them, the Devil will not stay put either and tomorrow will go to another catholic, lazy country, where he at least expects good service, as he basks under the sun and catches up with his real reading.

Thanks for caring, thanks for asking!