Hugo Looney Tunes

President Hugo Chavez is certifiably mad with power.

Chavez is living, breathing proof that absolute power corrupts absolutely, as Lord Acton, the historian and moralist, wrote in a letter to Bishop Mandell Creighton in 1887.

Chavez also is completely ignorant about economic issues.

The president’s ignorance was abundantly clear during the nationally televised Cabinet session on 21 March, which was held to announce his regime’s policies for dealing with the worst economic crisis the country has suffered in over a decade.

Chavez rambled for over three hours, yet managed to say practically nothing. His economic adjustment policies could have been published as double-spaced bullet points on a single page of pager. But Chavez thinks the world of himself and seizes every opportunity to share his narcissistic lunacy with a captive audience.

In his own mind, Chavez “es la ultima Pepsi en el desierto.” He is Fidel’s anointed heir to the mantle of grand global leader of the revolution, the inheritor of the Liberator Simon Bolivar, a heroic figure who communes with the ghosts of past Venezuelan presidents whose portraits in Miraflores, it’s said, “speak” to Chavez. In fact, Chavez believes everyone hangs breathlessly on every word he utters, no matter how idiotic, insane, ignorant or simply stupid that he sounds.

At one point during the televised Cabinet session, while shuffling between papers and folders piled on the conference table before him, Chavez muttered “Don’t confuse me.” (“No me confundan, no me confundan….”)

After several weeks of official announcements that the president soon would announce adjustment measures to deal with the collapse in the price of Venezuela’s oil, which fell from over $122/bl in mid-2008 to just above $30/bl at the start of 2009, Chavez served the nation the analogous equivalent of a small bowl of cold dry pasta…watery gruel.

Chavez acknowledged that Venezuela might face economic difficulties in 2009-2010, but barely…”La crisis tocara uno o dos pelos, pero no mas….”

Another obvious truth about Chavez during his March 21 televised Cabinet meeting: He is a scared man.

Chavez is justifiably scared of what could happen in the streets of Venezuela’s cities if he were to implement orthodox economic policies to rein in his regime’s reckless, corrupt spending practices. Orthodoxy in economic policy would collapse the regime’s house of cards.

Fear is the main reason why President Chavez discarded raising gasoline prices frozen over 13 years now, and/or devaluing the “Bolivar Fuerte” – the new “strong” currency which has already lost over a quarter of its original value in less than two years.

Higher domestic fuel prices and a currency devaluation would launch Venezuela’s inflation into deep space during 2009 – easily over 50% and perhaps as high as 70% depending on the degree of “adjustment.”

Orthodoxy will sink the Bolivarian Titanic, which is doomed to founder eventually anyway. As a friend observed recently: “Esta revolucion no tiene vida en el tiempo, pero todavia le queda tiempo por correr.”

So, Chavez is tacking sharply to the left. His economic adjustment “package” is an inch deep and a foot wide. Draconian adjustments were rejected across-the-board. There will not be any steep spending cuts, the price of gasoline and other public services (telecommunications, electricity, etc.) will not be raised, there won’t be a new bank debit tax, and none of the government’s social spending programs will be reduced, according to Chavez.

Instead:

*The VAT will rise from 9% to 12%, an increase of only three percentage points.

*The salaries of all senior-level executive branch officials will be slashed by an unspecified amount via presidential decree. Chavez also “exhorted” other branches of government to cut salaries, saying he does not have the authority to interfere with other branches of government although, oddly, he interferes directly with everything else in the country.

*All “luxury” and extraneous government spending will be cut immediately, though Chavez did not explain how the government will monitor every municipal, state and national “chavista” entity to ensure his Bolivarian thieves actually cut back their reckless spending habits, corruption, nepotism, etc. But Chavez did explicitly order National assembly President Cilia Flores, the Queen of Bolivarian Nepotism who employs over 50 of her blood relatives and in-laws at the assembly, to immediately pass a “draconian” law to cut senior-level salaries and extraneous/luxury spending.

*The 2009 budget was reformulated. The average price of oil is now at $40/bl (was $60/bl) and average crude oil production is estimated at 3,172,000 b/d to “reflect the fact that Venezuela has cut production by over 300,000 b/d in compliance with its Opec obligations.” As a result, central government spending is now reduced by 6.7% for 2009, from BsF 164,474 million to BsF 156,388 million, a reduction of BsF 11,000 million, according to Chavez. Amazingly, these reformulated budget numbers are internally consistent: The bogus math adds up. But the reality is the numbers are completely fabricated because the most important figure – Pdvsa’s real production level – is a figment of the Bolivarian imagination. The new average oil price estimate is much closer to reality, but the official crude production figures are still wildly inflated and unrealistic. Venezuela’s real production level – not counting the 300,000 b/d of Opec-related cuts supposedly made – is probably under 2.1 million b/d now – at least 1 million b/d less than the regime claims officially.

*The minimum wage will be increased 20% in two stages: 10% on May 1 and 10% of the increased wage (i.e. 10% of 110%) on September 1. However, this wage increase is less than half of the inflation projected for 2009, which means the real minimum wage will decline by at least 20% in real terms this year. Chavez did not mention the regime’s pending disputes with the oil/gas, power, CVG industries, health care and other public sector unions; about 68% of public sector workers currently are laboring without collective contracts for 2009-2010. However, it’s doubtful that Chavez’s advance offer of a 20% hike in the minimum wage will appease the unions, the majority of which believe the president’s real agenda is to dismantle the independent labor movement and turn the unions into obedient serfs of the revolution.

*President Chavez also said the government has a great deal of unused borrowing capacity since central government debt (external + internal) was only 13.6% of GDP as of end-2008. As a result, he said, the government now will borrow BsF 34,000 million from local banks in 2009. This sum includes BsF 12,000 million in planned borrowing already included in the original 2009 budget, plus a further BsF 22,000 million to compensate for the revenue shortfall anticipated by the Finance Ministry. Chavez also confirmed that Banco de Venezuela will be nationalized, but warned the Spanish owners that the bank is now worth “much less” than a year ago.

However, Chavez is lying again, or else he simply can’t add numbers, or just doesn’t give a damn what he says. The lower domestic debt levels claimed by Chavez imply the regime has paid off about BsF 12,000 million of its debt in the past two months, a period in which Pdvsa was not paying any of its creditors and was also falling behind on its debt obligations to unionized oil workers.

Chavez also declared that none of the government’s planned infrastructure investments will be reduced including $100 billion of non-oil projects and $125 billion of oil/gas projects which the regime plans to spend over the coming four years (2009-2012). Of these planned investments totaling $225 billion, $100 billion will be made in 2009-2010 including $40 billion of non-oil investments and $60 billion of oil investments.

Predictably, Chavez took advantage of the televised Cabinet session to insult his opponents and warn against what he called a “terrorist conspiracy to spread panic among the populace.” If the people erupt in anger, he added, the government will “not defend the banks.”

Chavez has been drumming on this theme for several weeks now: There won’t be a popular revolt, no “caracazos” are possible…but if a popular revolt does erupt, the people will go after the bourgeoisie, not the regime. According to Chavez, the revolution’s followers will target the “escualidos,” the middle class populace in eastern Caracas, before it ever considers marching against Miraflores with pitchforks, lit torches and enough rope to lynch Chavez and his entire Cabinet.

Chavez also ordered his ministers to follow “apply the classic axioms of Lenin, who said that in circumstances like these, revolutions must deepen efforts to organize and instill revolutionary conscience in the proletariat….there is no solution in capitalism, the only solution is socialism…organize the proletariat…free the exploited and dominated classed from the neoliberal policies of the last 30 years.”

It’s not clear if President Chavez understands the severity of the crisis Venezuela confronts, or if he simply doesn’t care because he is focused on a political agenda of consolidating/centralizing all power in his hands. Indeed, Chavez’s more ideological/political remarks during his televised Cabinet session on 21 March suggest the president believes this year of economic crisis is a perfect opportunity to accelerate the revolutionary “process” (i.e. seize more power, more quickly).

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About Caracas Gringo

Representing less than 0.00000000001515152% of the world population as of 31 December 2011.
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2 Responses to Hugo Looney Tunes

  1. Charly says:

    On the very same subject, another voice worth listening for those who read Spanish.

    Like

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