Caracas Gringo

'When the tree falls, the monkeys scatter'

Archive for January 2011

Venezuela in Greek: Eímaste patí̱same

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President Chavez was all over the map today, declaring that the PSUV will “crush” the opposition with the truth, speaking ill of the late President Carlos Andres Perez, brandishing Simon Bolivar’s sword at a rally in Plaza O’Leary, and announcing that he will seek re-election in 2012.

The MUD’s 65 opposition deputies joined the new National Assembly, holding up placards that said “52%” to remind everyone that the opposition won the popular vote in the 26 September 2010 elections, but the regime has more seats in the assembly (98) because it rigged/gerrymandered the system.

It’s unclear what, if anything, the new National Assembly will do besides argue and gridlock.

Chavez doesn’t have sufficient votes to impose his will via the legislature, and MUD’s 65 + PPT’s 2 seats aren’t enough votes to reverse anything the previous all-Chavez assembly approved during December 2010.

But Chavez does have his special powers to rule by decree for 18 months and ignore the assembly. Chavez also has the new Supreme Court in his pocket.

Chavez appears to be in control, but appearances frequently deceive.

It is still Christmas this week in Venezuela. The New Year starts next week when everyone returns to the reality of their respective daily lives, millions of Venezuelans who will encounter harsher days immediately.

Chavez and his Bolivarian gangsters have been threatening violent confrontations with everyone since last September’s elections. Indeed, Chavez appears to be longing for a bloody fight.

But perhaps Chavez should be careful about what he wishes for, because violence could erupt unexpectedly in places and ways that no one anticipates.

I believe that 2011 will be a worse year for Venezuela than 2010, in every way.

Tensions are heating up nationally, more even than in the months before April 2002. But this time there’s no opposition leadership to channel and direct the “arrechera” of the Venezuelan pueblo.

Perhaps I’m engaged in a bit of wishful thinking, but I think that Chavez and gangsters have made some very dangerous strategic and tactical mistakes over the past month – dangerous to the both the regime’s survival and also the stability of Venezuela in the near term.

These mistakes include (1) the passel of laws approved unconstitutionally/illegally by the outgoing almost all-PSUV National Assembly; (2) the special powers that Chavez was granted to rule by presidential decree for the coming 18 months; and (3) Chavez’s latest nationwide offensive aimed at stealing privately-owned homes under the pretext of “resettling” thousands of Venezuelans left homeless by heavy rains/flooding in November/December.

Venezuelans returning to their daily lives as of next week also will quickly confront very substantial rises in the prices of everything they consume, but particularly food and medicines.

The numbers are simple: the multi-tiered BsF exchange rate was unified from BsF.2.60 to BsF.4.30 asof 1 January, and Venezuela nowadays thanks to Chavez’s thieving ways imports over 85% of everything that it consumes (mas o menos).

Higher prices, more shortages of everything, and fewer job openings in the private sector, plus more unemployment/poverty and more violent crime as a result. With private estimates of the homicide rate in Venezuela last year ranging from over 17,000 to some 25,000 killed, it’s not difficult to imagine still greater social mayhem in store for the populace during 2011.

I believe that Venezuela’s economy will remain in a slump this year even if the price of Venezuelan crude oil hits $100/bl. Companies aren’t investing except to maintain capacity and maximize profits; even Pdvsa’s good buddy Chevron admitted in 2009 (in one of the leaked Wikileaks embassy cables) that it was taking profits out of its joint ventures with Pdvsa because it had stopped making fresh investments.

Pdvsa is broken. Even at $100/bl Pdvsa cannot generate the revenues it needs to fund its investment plans, maintain its existing operations and also feed the Chavez regime’s voracious fiscal appetite.

Chavez can’t offset the structural decline in oil revenues by hiking non-oil taxes either. And if Chavez continues stealing privately-owned lands, companies and other productive assets, non-oil tax revenues will of course decline.

But Chavez has already launched his presidential campaign. Today Chavez confirmed he will seek re-election at end-2012. This means that the Chavez regime will continue borrowing as much as it possibly can this year.

In fact, the regime officially plans to borrow at least $8 billion in 2011 on top of the roughly $85 billion of total government/Pdvsa debts currently outstanding.

Who knows? Perhaps the regime will manage to find $8 billion in new debt this year.

But the last two debt bond issues floated by the Chavez regime in 2010 came to market at 16% to maturity, worse than Greece, which is to say “Eímaste patí̱same.”

Bolivarian idiots like Jorge Giordani and Rafael Ramirez claim falsely that the revolution/Pdvsa has very substantial untapped borrowing capacity.

But if one calculates Venezuela’s GDP at end-2009 at an average exchange parity in 2010 of BsF6.50/$, the country’s GDP in US dollar terms work out to about $118 billion – vs total government/Pdvsa indebtedness of about $85 billion at end-2010.

Written by Caracas Gringo

05/01/2011 at 23:36

Posted in Uncategorized

Hugo Chavez XIII

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The 13th year of Hugo Chavez’s misrule has started.

Chavez has ruled longer than any Venezuelan president since the Andean dictator Juan Vicente Gomez.

Chavez also arguably has inflicted more lasting structural damage on Venezuela’s economy, its political institutions and society than any president in the country’s history.

Petroleos de Venezuela, which generates over 90% of the country’s foreign exchange earnings and is literally the fiscal and industrial spine of the Venezuelan economy, has been destroyed.

Pdvsa today produces about 2.2 million b/d of crude oil compared with over 3.4 million b/d in 1998. Its refineries and upgraders are crumbling and were plagued by at least 17 major explosions/fires in 2010 in which four persons were killed and dozens injured.

Pdvsa boasts that it employs almost 100,000 workers and plans to invest $252 billion between 2010 and end-2015. But it’s all BS and lies. Pdvsa has not completed even one of its planned major expansion projects since officially launching its “Siembra Petrolera” plan in the second half of 2005.

Pdvsa’s financial debt is estimated at almost $28 billion, but its real liabilities including compensation claims by foreign companies whose assets were stolen, plus unpaid suppliers/contractors and others, easily totals over $50 billion.

The national power generation/transmission industry also has been destroyed by Chavez’s misrule, as have the “strategic” steel/iron and aluminum/bauxite industries.

Everything Chavez has stolen has collapsed almost immediately. Venezuela now imports over 85% of the food it consumes thanks to Chavez’s theft of millions of hectares of productive land. Construction activity also has collapsed since Chavez stole the cement, rebar and other construction-related industries.

But, despite Venezuela’s numerous and worsening structural problems, Chavez also still appears to have the upper hand as he begins his 13th year in power.

The lame duck National Assembly, which ends its ignominious five-year session no later than 4 January, has granted Chavez special powers to rule Venezuela by presidential decree for 18 months.

The departing assembly also approved a bunch of new laws that push Venezuela towards a centralized Socialist state that consciously ignores the will of a majority of voters who rejected Chavez’s December 2007 referendum to impose Bolivarian socialism by reforming the 1999 Bolivarian Constitution.

The new National Assembly, which includes 65 opposition legislators from the Democratic Unity Table (MUD), begins its sessions officially on 5 January.

A handful of the MUD’s new lawmakers have voiced hopes that the new assembly will debate the issues and laws with dignified democratic discourse.

MUD’s 65 new legislators also called a press conference on 3 January to invite Venezuelans who voted for them to accompany them to the National Assembly early on 5 January to show their support for Venezuela’s democracy.

But will the new MUD lawmakers even be allowed physical access to the assembly?

Some in Chavista officialdom are saying that the new opposition legislators are welcome in the assembly.

But there also has been chatter among hardcore chavistas about how the revolutionary “pueblo” (i.e. paid street thugs) might decide to physically prevent the new MUD legislators from entering the assembly.

Assuming that the new assembly sessions peacefully and democratically, as it ought to…will its 165 members including the 65 MUD legislators, 2 PPT legislators and 98 PSUV members have any real work to do over the coming 18 months?

Chavez doesn’t need the National Assembly, and legally he can ignore the legislature over the coming 18 months as long as the Supreme Court is in his pocket, which it is.

MUD can protest until its leaders are collectively purple-faced, but the facts are that Chavez can do anything he wishes, and he certainly will.

Some MUD leaders still appear to think that Chavez can (will) be voted out of power democratically in the end-2012 presidential elections.

But I suspect that Chavez will do everything in his power to bury the remains of Venezuelan democracy long before those elections.

Chavez and his local/international supporters will never give up power democratically.

If there’s an end to the Chavez regime, it will be violent and bloody.

But it’s also possible that Chavez will remain in power for many years because the “bravo pueblo” of Bolivar is just a myth.

Perhaps for most Venezuelans, it’s a case of “…mejor vivir de rodillas que morir de pie.”

Written by Caracas Gringo

03/01/2011 at 16:17

Posted in Uncategorized

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