Archive for the ‘Communism’ Category

Venezuela: $15 smugglers jailed, $3.08 billion a year smugglers go free

Tuesday, November 4th, 2014


Los miserables

Colombians Jailed in Venezuela for $15 Grocery Run

A $15 grocery run has cost two single mothers from Colombia 48 days in jail, along with the threat of a 14-year prison sentence, as a result of a crackdown on smuggling in Venezuela that is ratcheting up tensions and highlighting growing economic distortions between the neighbors.

Jenifer Rojas and Belsy Alvarez were arrested in early September by Venezuela’s national guard walking out of a supermarket in the western city of San Cristobal with bags of rice, pasta, mayonnaise and other staples whose prices are capped in Venezuela and whose sale is restricted to the country’s residents.

Right now they’re out on parole, along with the cashier, who also was arrested.

Back in September crossing the border with foodstuffs may have been profitable, but now, goods are bad,

My first shock was the grocery store when I went to refurbish my refrigerator. The prices went noticeably up in one month for the stuff I buy. There was no imported goods. Of course, among the goods available there is all sorts of imported stuff re-processed in Venezuela. After all we are importing now at the very least 60% of our food (estimates vary, I am giving you the bottom line). What I mean is that you could still find an occasional treat, like some average Italian pasta, or an overpriced jar of raspberry jam. This is now all gone. And it has not been replaced, even by sub-par Venezuelan production.

The real dough is in oil smuggling,

Caracas-based economist Asdrubal Oliveros recently estimated 130,000 barrels of gasoline are now smuggled across the border to Colombia each and every day.

That’s a big number. How big?

Well, assuming our men in uniform are bad at business and only make $65 per barrel sold (they’re wholesalers, after all), that would work out $8.5 million dollarsevery day, $253.5 million dollars a month, $3.08 billion a year.

You could make three thousand milicos millionaires for that kind of money, and still have spare change to cut another 843 of them $100,000 gifts. (Note: the government believes the amount is about $2.2 billion per year)

In some ways, the headline figure is actually quite small. It’s only a fifth of the $14-15 billion a year in foregone sales from subsidizing gasoline in the first place, andmuch less than the $25 billion a year we would be earning from extra oil produced in the Orinoco Belt if Chávez hadn’t muscled out our foreign partners in 2005-2006 and production had risen according to what was then the schedule, but hasn’t cuz, y’know, he did.

Don’t wonder, then, why there is no military coup in Venezuela. All that money is going somewhere.

Meanwhile, Maduro raised the minimum wage by 15%, i.e., the $776 lie

Nicolás Maduro raised the minimum wage by 15% last night, starting December 1st.

Quickly, government news agencies began spewing the lie – there really is no other way to characterize it – that this was the highest minimum wage in Latin America, equivalent to US$ 776. The rub lies in the fact that this conversion is calculated using the official-yet-impossible-to-find exchange rate of BsF 6.3 per dollar – if you were to use the market exchange rate of BsF 102 per dollar, you get a minimum (and I mean really minimum) wage of US$ 48 per month.

He’s also aligning himself with the hardcore Marxists

That’s going to work as all Marxism has so far.

Report on 100% food inflation in Venezuela,

Parting question,
Could Low Oil Prices End Venezuela’s Revolution? The answer to that question may depend on the outcome of Saudi Arabia’s Oil Minister Ali al-Naimi trip this week to Venezuela.

Venezuela: last on property rights

Thursday, October 30th, 2014

Hugo Chavez, who expropriated millions of acres of farmland (along with private properties and businesses) left an enduring legacy:
Venezuela ranks last in Property Rights Index
Lorenzo Montanari, the executive director of the Property Rights Alliance (PRA), said the survey measured the “consistency of property rights in 97 countries” and assessed three aspects: political legal environment, physical property rights and intellectual property rights

The IPRI study, which you can read here, corroborates the fact that

there is a positive, strong, and significant relationship between the strength of property rights protections and a country’s economic performance as measured by GDP per capita.

Mike Birds writes that Venezuela’s Decision To Import Oil Is The Perfect Example Of Just How Screwed The Country Is

In other Venezuelan news, Leopoldo López refused to appear before a court hearing on Tuesday, demanding the government respond to a UN resolution calling for his release.

Judge Susana Barreiros scheduled the hearing while the court was not in session, having suspended proceedings indefinitely on October 14. López’s lawyers regarded the suspension as an attempt to delay the court’s response to the UN Working Group on Arbitrary Detentions, which requested López’s immediate release on October 8.

After Spanish Prime Minister Mariano Rajoy called on the Venezuelan government to free Lopez, Venezuela recalled its ambassador to Spain.

Lilian Tintori, the wife of opposition leader Leopoldo López, learned that he could be transferred from Ramo Verde military prison to another jail.



Venezuela to appeal ICSID Exxon decision

Tuesday, October 28th, 2014

Living up to its reputation as possibly the world’s worst-managed economy, the Venezuela government is appealing the US$1.6billion settlement against Exxon by the World Bank’s International Centre for Settlement of Investment Disputes, or ICSID.

Just to put things in perspective,

Exxon had originally wanted $20 billion out of the deal; arbitrators awarded it just $1.6 billion, $600 million of which had already been paid.

The country must honor ICSID rulings to avoid default of sovereign bonds; by having the ICSID provisionally stay the enforcement of the award, Venezuela buys time.

Francisco Toro speculates,

One of two things is going on here. Either the super-fancy and well-worth-top-dollar New York Law Firm representing Venezuela at ICSID, Curtis Mallet-Prevost, has persuaded Ramírez they can get an even better settlement on appeal or the government is now so strapped for cash they’re willing to try any delaying tactic to avoid having to pay up right away.

I don’t know which one it is.

I don’t either, and considering how Nicolas Maduro opened his campaign by saying he talked to Chavez, who is now a bird , maybe he (and his cohorts) went by Chavez’s 2012 promise that Venezuela will not recognize World Bank ruling in the Exxon case.

All you can be sure of is that law firm Curtis Mallet-Prevost will make money out of this, and, as I said last month, that Venezuela has no intention to pay Exxon.



Venezuela: Mileposts on the highway to hell

Thursday, October 23rd, 2014

Reading news about Venezuela brings to mind AC/DC lyrics,

Dont stop me!

I’m on the highway to hell
On the highway to hell!
Highway to hell!
I’m on the highway to hell

And I’m going down..all the way
I’m on the highway to hell

Fingerprints for food


Venezuela Readies 2015 Budget
Venezuela’s finance minister assured lawmakers that the country was poised to handle sliding oil prices and wouldn’t default on its debt, while proposing a 35% increase in the 2015 budget.

Venezuela, which depends on oil for 96% of its export revenue, has seen the price for its crude slide to $77.65 a barrel, the lowest since late 2010 and a drop of $15 since late September.

A scarcity of dollars has spurred shortages of basic goods in the import-dependent country and made investors increasingly nervous. Oil rich but cash strapped, Venezuela carries a total of $67.4 billion in debt issued by the government and state oil company, Petróleos de Venezuela, also known as PdVSA.

The country’s budget deficit registers at 16.9% of gross domestic product, government figures show, above the mark of countries like Greece and Spain during the eurozone debt crisis. Venezuela’s foreign reserves fell below $20 billion earlier this month for the first time since 2003.

Despite Riches, Venezuela Starts Food Rationing
Government Rolls Out Fingerprint Scanners to Limit Purchases of Basic Goods; ‘How Is it Possible We’ve Gotten to This Extreme’

At the blogs:
Venezuela: Is Default Truly A Four Letter Word?

The pain from the China loans

The situation is quite simple. Because of the loans we signed with China – them paying in advance for future shipments in oil – the drop in oil prices means Venezuela doesn’t just sell each barrel for less money, it also has fewer barrels available to sell to the market. Venezuela’s downturn is therefore made all the worse by the ridiculous conditions the geniuses at PDVSA signed on to.

In other words, a bad situation is made worse, and the hit in our fiscal income is all the larger.

Sing it, guys!



Cuba: NYT goes Duranty on ebola

Tuesday, October 21st, 2014

Walter Duranty, arguably the New York Times’s most [in]famous correspondent, earned his reputation as Stalin’s apologist. In keeping with this tradition, the NYT editorial board is touting Cuba’s Impressive Role on Ebola, actually parroting Cuba’s Communist propaganda (from the mouth of José Luis Di Fabio, the World Health Organization’s man in Havana), ignoring the fact that the embargo does not apply to medical supplies and equipment:

José Luis Di Fabio, the World Health Organization’s representative in Havana, said Cuban medics were uniquely suited for the mission because many had already worked in Africa. “Cuba has very competent medical professionals,” said Mr. Di Fabio, who is Uruguayan. Mr. Di Fabio said Cuba’s efforts to aid in health emergencies abroad are stymied by the embargo the United States imposes on the island, which struggles to acquire modern equipment and keep medical shelves adequately stocked.

In for a penny, in for a pound, the NYT rolls right along, exhorting the USA to

As a matter of good sense and compassion, the American military, which now has about 550 troops in West Africa, should commit to giving any sick Cuban access to the treatment center the Pentagon built in Monrovia and to assisting with evacuation.

For starters

Governments, China’s included, complain they simply don’t have enough experience with Ebola to send in large numbers: “This is a big challenge for our scientists,” said Qian Jun, team leader for the China Center for Disease Control Mobile Laboratory Team in Sierra Leone.

So the question is, Is Cuba Sending Unqualified Health Workers to West Africa? 

The Cuban dictatorship is willing to sacrifice anything — or anyone — for the sake of propaganda.

This appears to be the case of the health workers it has sent to West Africa to work on the Ebola virus.

The details that have been filtering out of Cuba regarding the terms and conditions that the Castro regime has given to these health workers are very concerning.

For example, the Cuban health workers have been compelled to agree that if they contract the Ebola virus, they will not be repatriated to the island.

Moreover, they have been warned of a 90% chance of no return.

As such, there has been a life insurance policy taken out for these health workers with the World Health Organization (WHO).

Surely the families are the beneficiaries of the policies, right?

Nope — the Cuban state is.

(It remains unclear whether the WHO is further paying the Castro regime for these health workers.)

In theory, the deal is that

Those fortunate enough to return have been “promised” nearly $10,000 per month — to be deposited in a Cuban state bank account during their absence — as well as a house and car.

Now, in practice, IF any are allowed to return, would the Cuban government actually pay, because no one outside the regime’s inner circle is allowed to collect.



Venezuela: Happy Halloween! Hugo Chavez M&Ms

Tuesday, October 21st, 2014

The M&Ms w Chavez image the cyanide pills. Savage capitalism. #F*ckThat I believe that coffee thing but this

How appropriate that, in keeping with a country doomed by the ghoulish chavista policies, someone came up with Hugo Chavez M&Ms in time for Halloween. Jaime Bayly had them,

Bayly says they are made in the USA, and calls it “a triumph of capitalism”. I find it vomitive.

As I understand it, Mars Corp. will personalize M&Ms, so apparently it doesn’t matter whose picture you send them as long as they get paid.

On the other hand, a bunch of dictator-themed M&Ms would be perfect for a house of horrors. You could do a Pol-Pot, Stalin, Marx, North Korea Kims, Fidel Castro assortment for a Communist theme.

In Venezuela, only the well-connected chavistas will be able to afford them, though. Everybody else will be standing in line trying to scramble a day’s rations.

Venezuela and the falling oil price UPDATED

Friday, October 17th, 2014

Venezuelan oil revenues prop up not only the Maduro government but also Cuba, and other countries receive Venezuelan oil through Petrocaribe.

Venezuela Vulnerable to Oil’s Fall
Fears among investors grow that Caracas could default its debt, as crude’s decline exacerbates the country’s recession and widespread consumer shortages.

Oil exporters from Russia to Iran are suffering with the lowest crude oil prices since June 2012. But few are as vulnerable as Venezuela, where a free-spending populist government had already been grappling with a recession, widespread shortages, and massive protests earlier this year.

Analysts expect that the Venezuelan barrel—heavier and more expensive to process than Middle East oil—will have fallen below $80 when officials announce this week’s price on Friday, which would be the lowest since late 2010. Last Friday, Venezuelan officials said their country’s crude had fallen to $82.72, nearly a $10 tumble in a little over a month.

Years ago I estimated that the chavistas need a minimum of $75/barrel for their agenda.

We’ll see what happens if it goes down to that number.

UPDATE:
Steve Hanke on Oil Price Blues (Read: Dangers) for Some

If oil prices stay below $90 per barrel for any length of time, we will witness massive fiscal squeezes and regime changes in one or more of the following countries: Iran, Bahrain, Ecuador, Venezuela, Algeria, Nigeria, Iraq, or Libya. It will be a movie we have seen before.



Venezuela wins U.N. Council seat

Thursday, October 16th, 2014

I told you on October 13:

it’s very likely Chavez’s daughter Maria Gabriela Chavez will soon be sitting next to an American diplomat at the United Nations Security Council.

Sure enough, today:

Venezuela, Malaysia, Angola and New Zealand won seats on the United Nations Security Council on Thursday for two years from Jan. 1, 2015, while a run-off vote between Spain and Turkey was taking place to decide who gets the fifth available spot.

The 193-member U.N. General Assembly elected Venezuela with 181 votes in favor

Somewhere in the Kremlin, Vladimir Putin is laughing.

“All communist countries revert to capitalism eventually. Some just get there quicker than others”

Tuesday, October 14th, 2014

Michael J. Totten continues his excellent reporting by going From Havana to Hanoi, and concludes,

Decades of disinformation to the contrary, Cuba never had a kinder and gentler version of communism that works. No, the island is not North Korea or Cambodia under Pol Pot, but it was never any better than Vietnam or East Germany in the 1970s and the 1980s. It just had better PR. The sorry truth is that of all the communist regimes that have ever existed—with the single exception of North Korea’s—Cuba’s is the most stubborn, the most reactionary, and the slowest to figure out how economics actually works.

Read the whole eye-opening thing.

Venezuela: “Underperformance” doesn’t begin to describe it

Tuesday, October 14th, 2014

Even when the Venezuelan government has not allowed its own numbers to be verified for almost a decade, and stopped reporting various standard economoic indicators several years ago (practices which all started during Chavez’s administration), the numbers that it does report confirm The Economist’s appraisal of the country as Probably the world’s worst-managed economy.

Right now the government,

facing deteriorating economic conditions at home, is quietly slashing imports to cover foreign debt payments amid a severe hard-currency crunch.

Carmen Reinhart and Kenneth Rogoff write on Venezuela’s Spectacular Underperformance 

Maduro, of course, rules over a major oil-exporting economy that is so badly mismanaged that real (inflation-adjusted) per capita GDP today is 2% lower than it was in 1970, despite a ten-fold increase in oil prices.

The relevant reality now is the long-term plight and dwindling standard of living of the average Venezuelan citizen. Over the past 45 years, as Venezuela’s real per capita GDP fell, US per capita GDP roughly doubled and Chile’s per capita GDP nearly tripled. And neutral observers project that 2014 will be even worse for Venezuela – not surprising, given the chaos of the country’s policy fundamentals.

Venezuela repeatedly has defaulted on the moneys it owes on pharmaceutical imports, food, airlines, oil suppliers and joint-venture partners; Reinhart and Rogoff ask

historically there have been many external defaults without domestic defaults, the converse is not true: nearly all domestic defaults are “twin defaults” that also involve external creditors. Will the Venezuelan case be different?

In other words, the two things go hand in hand, and it’s only a matter of time before Wall Street bond-holders are treated like foreign airlines.

However, Francisco Toro points out that

in the technical sense that’s relevant in market terms, Venezuela is not in domestic default.
. . .
This is the crux of the Great Venezuela Macro Debate of 2013-2014: to what extent can the government’s patent inability to meet its obligations be ascribed to a basic inability to pay, and to what extent is it just the Nth insane distortion you get when the government makes it illegal to pay a penny more than 77 cents for a $10 bill?

So, while we split hairs on exchange rate misalignments and the like, Venezuela undoubtely becomes a land of political killings and gang turf wars.

Related: Venezuela: The Left vs. reality