Wednesday, May 13, 2015

My heart is breaking for Venezuela

If you read my posts both here and in my retired blog Please don't vomit in the taxi you know that I am connected to Venezuela, where there are kids who call me "abuello" (Grampa) and where my wife is from. I spent the months of November, December and January there and I love the place.

Venezuela has a government that describes itself as socialist. I call it populist/nationalist. Most of Venezuela's income comes from petroleum and while it may have the world's largest known reserves, its petroleum is mainly of a sort that is most challenging to extract and refine into useful products. Nevertheless it was doing quite well as the price of petroleum was high. It didn't seem to matter that the nationalized oil company was not competently managed. Anti Chavez staffers had shut down the company in an attempt to overthrow the government and they were fired en masse. That left the company with a lot of staffers who wear red shirts and know the right slogans. What they're not too good at is getting the gooey mess up out of the ground and making it into stuff you can sell. So production never recovered and foreign companies are taking defacto control. . There was enough though to virtually give shiploads away to Cuba and other countries for almost nothing, which endeared the government to some people all over the world, but in Venezuela, maybe not so much.

Gas is almost free in Venezuela, and while the government has been shouting about charging for it, they haven't yet got the nerve to try doing it. Now, in the U.S., biggest gas consuming nation on earth, we've been fracking our little brains out mainly as an economic warfare policy targetting Russia. Venezuela has taken a beating from the United States campaign against petroleum imports. In spite of much rhetoric Venezuela didn't prepare for this predictable turn of events. Now the fan blades are spinning and putting a nasty mess all over the walls.

Inflation is out of hand. The government is raising the minimum wage but that's not good enough for most Venezuelans. Food inflation is off the charts, the government has not been publishing figures.

Pretty bad, but it gets worse.  The government has been practically giving dollars away to entities that supposedly use the dollars to import food and items like razor blades, medicine, condoms, sanitary napkins to get sold cheap in government stores. Well, it seems to make more sense to sell the subsidized dollars on that black market and sell what little that gets imported at black market prices or smuggle it out, maybe on the same ships used to smuggle out gasoline.

So, as of now the government still condones the arbitrage of Venezuela's currency sold to apparently insider so called importers who turn over the dollars that cost them 6.3 bolivares for today's black market rate of three hundred bolivares!

Sure, the United States government has taken steps to hurt Venezuela (and Russia). What a competent government would do is prepare for this predictable turn of events.

The Venezuelan movement Marrea Socialista will be fielding candidates in the Assembly elections at the end of the year. Many Venezuelans are planning to punish the so called Socialist Party by holding their noses and voting for the opposition. I hope Marrea Socialista is able to make themselves heard and ally with honest patriots who can be found in the Socialist Party, its allied parties and the legitimate patriotic opposition to lead the way out of today's mess.

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