Fausta's Blog

American and Latin American Politics, Society, and Culture

May 31, 2017 By Fausta

Back from Orlando

You can stay away from the headlines but sometimes the headlines stay with you: Read my post, Back from Orlando.

Goldman's investment in #Venezuela is very visible. GS should have considered this when they bet on regime change. https://t.co/tcvuSWYyXI

— Prof. Steve Hanke (@steve_hanke) May 31, 2017



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Filed Under: Communism, Fausta's blog, Venezuela Tagged With: Da Tech Guy Blog, Goldman Sachs, SeaWorld, Steve Hanke

April 14, 2017 By Fausta

Venezuela hacks Hanke

Johns Hopkins professor Steve Hanke has been studying the Venezuelan economy for years as part of his Troubled Currencies Project. Last January Hanke ranked Venezuela as #1 in the world misery index for two years in a row,

Venezuela holds the inglorious spot of most miserable country for 2016, as it did in 2015. The failures of President Nicolas Maduro’s socialist, corrupt petroleum state have been well documented over the past year, including when Venezuela became the 57th instance of hyperinflation in the world.

Venezuela’s government oil monopoly company PDVSA is mortgaging its jewel in the crown, Citgo, which means the country is in big trouble.

How big?

Hanke’s team got hacked while researching PDVSA’s numbers. Monica Showalter reports,

A Johns Hopkins University professor found that Venezuela’s ruling Chavistas really, really don’t want anyone with knowledge of economics doing that.

On Thursday, they dispatched a cyberthug team to deny acess to the PDVSA state oil company website to all of Johns Hopkins University’s computers, after Steve Hanke, a professor of applied economics there, wrote extensively about the country’s failing currency and its economic mismanagement at PDVSA. Hanke told American Thinker in a phone conversation that his academic assistant had been burrowing through the muddy and obscure details of PDVSA’s financials for hours recently. For him, the ACCESS DENIED code to the page came with a rider not seen on the rest of the university’s blocked-off computers: REPEAT OFFENDER.

Hanke tweeted a screenshot,

Access forbidden to #PDVSA website for users of Johns Hopkins wifi. Venez response to so called ‘economic war’: Stop them from digging deep pic.twitter.com/oXxTKCVzE3

— Prof. Steve Hanke (@steve_hanke) April 13, 2017

Chavismo tries but can’t hide the facts. And the facts show the ruinous reality of 21st Century Socialism.

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Filed Under: Fausta's blog, oil, Venezuela Tagged With: CITGO, PDVSA, Steve Hanke

July 22, 2016 By Fausta

Ecuador: Correa was not pleased

Prof. Steve Hanke, who masterminded Ecuador’s dollarization several years ago before Rafael Correa came to power, recently visited the country. During his stay, Hanke criticized the electronic currency Correa is imposing on the country:
Ecuador’s Dollarization Architect Doubts Correa’s Pledge

With the country facing a record budget shortfall, a new currency may undermine confidence in the monetary system, said Steve Hanke, a professor of applied economics at Johns Hopkins University, who advised Ecuador on adopting the dollar in the late 1990s and early 2000s. His concerns were echoed by Ruth Arregui, a former general manager at the central bank, and the University of Georgia’s Myriam Quispe-Agnoli, who wrote about dollarization as an economist at the Federal Reserve Bank of Atlanta.

Correa was not amused and took to Twitter:

“Young people: avoid mediocrity like the plague. They bring us Steve Hanke to insult our intelligence . . .”

..https://t.co/17OXYkiAXk
Jóvenes: a huir de la mediocridad como de la peste.
Insultando a nuestra inteligencia, nos traen a Steve Hanke,..

— Visita Ecuador (@MashiRafael) July 19, 2016

“. . . the “gringo Cavallo” (with apologies to Cavallo). His CV: advisor to Abdalá Bucaram, Carlos Menen [sic] and a number of former Soviet republics that . . .”

…el “Cavallo gringo” (con perdón de Cavallo).
Su CV: asesor de Abdalá Bucaram, Carlos Menen y una serie de ex repúblicas soviéticas que…

— Visita Ecuador (@MashiRafael) July 19, 2016

“. . . brutally embraced neoliberalism. His “pearls of wisdom”: “inflation would have been worse if it weren’t for dollarization.” That is, Colombia . . . .”

..brutalmente abrazaron el neoliberalismo.
Sus “genialidades”: “sin la dolarización la recesión hubiera sido peor”. Es decir, Colombia por..

— Visita Ecuador (@MashiRafael) July 19, 2016

“. . . devalues when it feels like it.
It’s really embarrassing.
But this is just the beginning. Let’s strengthen the stomach.
To victory always!
”

…gusto deprecia.
Realmente causa vergüenza ajena.
Pero esto recién empieza. A fortalecer el estómago.
¡Hasta la victoria siempre!

— Visita Ecuador (@MashiRafael) July 19, 2016

About that last tweet, I can’t say that I understand what, if anything, Colombia has to do with Ecuador’s new electronic currency, what Correa is embarrassed about, or what is “just the beginning.”
“A fortalecer el estómago” (Let’s strengthen the stomach) may (or may not) be the equivalent of “gird one’s loins,” but again, what about?

But I do know that ¡Hasta la victoria siempre! is the motto of the Cuban communists, and of Che Guevara.

Related:
Steve H. Hanke: ‘La dolarización funciona en Ecuador, pero el dinero electrónico no’

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Filed Under: economics, Ecuador, Rafael Correa Tagged With: Fausta's blog, Steve Hanke

May 6, 2016 By Fausta

Venezuela: Tweet of the week

Stop listening to the nonsense that is put out by @NicolasMaduro. Here's what's actually going on in #Venezuela. pic.twitter.com/30h8gyjlAC

— Prof. Steve Hanke (@steve_hanke) May 6, 2016

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Filed Under: Communism, Venezuela Tagged With: Fausta's blog, Steve Hanke

February 8, 2016 By Fausta

Venezuela’s upcoming default

Some were predicting default by Sept. of 2015; it’s a matter of when, not if.

Steve Hanke posts on Ricardo Hausmann Versus Nicolas Maduro

Prof. Ricardo Hausmann, a native of Venezuela and professor at Harvard, concluded in a Financial Times op-ed last week that Venezuela will go down the tubes. Indeed, Hausmann wrote that “It is probably too late to avoid a Venezuelan catastrophe altogether. But to reduce its length and intensity, the country needs to adopt a sound economic plan that can garner ample international financial support. This is unlikely to happen while Mr. Maduro remains in power.”

As Hanke points out, the country is going down the tubes, while,

I doubt if Maduro knows what the word “strategy” means.

Dawn Kissi looks at how
Venezuela flirts with default, could be worse than Argentina (emphasis added)

Students take part in a rally against President Nicolas Maduro's government in Caracas on Nov. 21, 2015.

With inflation logging near triple-digit gains and crude oil — the lifeblood of the Bolivarian Republic’s economy — deeply entrenched in a bear market, market observers are bracing themselves for the prospect of a calamitous debt default sometime this year. Last month, Venezuelan president Nicolas Maduro used his national address on Jan. 15 to declare an “economic emergency,” augmented by a political stalemate with the country’s congress. The International Monetary Fund estimated Venezuela’s economy contracted by at least 7 percent in 2015.

More than a decade ago, Argentina’s messy collapse triggered the largest sovereign debt default in history. Venezuela’s external debt, estimated to be $185 billion, according to central bank data, is considerably more than Argentina’s 2001 default on more than $100 billion of its obligations.

Though Venezuelan debt is not widely held by private institutions, it could yet ricochet across the region. Writing in the Financial Times last week, Harvard Economist Ricardo Hausmann said that Venezuela’s political instability, a fact of life since the death of former president Hugo Chavez, could make its potential default eclipse Argentina’s 2001 debacle.

Insane inflation stories abound, in times when ration cards are an economic best option.

One thing is clear: Venezuela Is About to Go Bust

For years, Venezuela has had a massive budget deficit, sustained only by exorbitant oil prices. For years, analysts have been warning that the Venezuelan government would rather chew nails that allow the private sector to grow. And yes, a lot of that borrowed money was used to help establish a narco-military kleptocracy.

It is impossible to untangle the ethical implications of all of this. Lending Venezuela money is what business ethics professors talk about when they question “winning at someone else’s expense.” Losing money from investing in Venezuela is akin to losing it from, say, funding a company that engages in morally reprehensible acts. (Insert the name of your favorite evil corporate villain here).

Maduro, low international reserves, profligate spending, entrenched corruption, all the other sympyoms of the disaster boil down to ideology.

Until that changes, nothing changes.

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Filed Under: Communism, Venezuela Tagged With: Fausta' blog, Steve Hanke

June 2, 2015 By Fausta

Ecuador: Hasta la vista, dollars!

Dollarization brought great benefits to the Ecuadorian people, as Steve Hanke (who 14 years ago was the chief intellectual architect of Ecuador’s switch to the dollar) points out,

Ecuadorians know that dollarization has allowed them to import a vital element of the rule of law — one that protects them from the grabbing hand of the State. That’s why recent polling results show that dollarization is embraced by 85% of the population.

Prof. Hanke also knows that going off the dollar will have dire consequences for Ecuador’s economy:

“If you go off, the fiscal deficit gets bigger, the level of debt gets bigger, inflation goes up and economic growth goes down. All the economic indicators just go south.”

So pres. Rafael Correa is attempting to de-dollarize, but not blatantly. How so?

Ecuador Mandates Bank Participation in National E-Money Initiative

Ecuador’s e-money initiative, which kicked off earlier this year after the country outlawed bitcoin, is about to see wider institutional involvement following a government directive.

The country’s banks were ordered late last month to adopt the payment system within the next year, according to a report by Pan-Am Post’s Belén Marty. The pace at which the banks are required to add support for the initiative, which is a digital representation of the US dollar – Ecuador’s official currency – depends on their size.

So it’s not even bit-coin, but it’s compulsory:

The nation’s central bank has given them 360 days to get on board, with a mandate inResolution 064-2015-M, released on May 25 in the official register.
. . .
The resolution gives a sweeping and vague definition of “macroagents” for adoption: “companies, organizations, and public or private institutions; financial institutions of the popular and cooperative system; that maintain a network of establishments available for clients and are capable of acquiring mobile money, distributing it, or converting it into varieties of money.”

Additionally, the Central Bank of Ecuador (BCE)’s crypto-currency transactions carry no privacy.

The dollar is taken out of the picture, and protection from “the grabbing hand of the State” is erased. Hasta la vista, baby!

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Filed Under: business, economics, Ecuador, Rafael Correa Tagged With: dollar, Fausta's blog, Steve Hanke

October 23, 2014 By Fausta

Argentina: Creeping to the edge

Chris Noon interviews Prof. Steve Hanke on Argentina creeping closer to the edge. You must read the interview in full,

Argentina’s bleak fiscal situation could deteriorate further over the next year, with a prominent economist telling Interfax on Monday the Latin American country’s foreign reserves could shrink to “near $10 billion” by October 2015. It would leave Buenos Aires struggling to meet payments for dollar-denominated LNG imports, which are essential to the country’s energy matrix.
…
“To get there [$10 billion], we would see monthly declines in reserves that were roughly similar to those of Q1 2014. It could come about through macroeconomic factors, such as the combination of a strong US dollar, weak commodity prices, and decreasing oil prices. The Saudis are squeezing their competition – especially Canadian tar sands producers – as they push for more market share. This may push down Brent crude further to $60-70 per barrel,” said Hanke.
“It’s difficult to say what will be the ‘straw to break the camel’s back’, but if you keep piling up economic problems, you create a ‘tipping-point’ situation. There’s just too much weight on everything and it gives way,” said the economist.

Trying to put a band-aid on a gashing wound, the government is trying to bring dollars into the country by forcing farmers to export soybeans held in storage even when the price of soybeans has plummeted by around 30% since April, and

Buenos Aires has resorted to making deals with friendly foreign lenders to replenish its coffers. A multibillion-dollar currency swap between Argentina and China will be launched in November, the Latin American country’s central bank chief was quoted as saying in a local paper on Sunday.

That will probably help remedy Argentina’s deeply-ingrained structural problems as well as Venezuela’s oil deals with China have in solving that country’s problems, which is to say, not at all.

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Filed Under: Argentina, business, economics Tagged With: Fausta's blog, Steve Hanke

September 17, 2014 By Fausta

Ecuador: If Correa ain’t happy . . .

. . . he hires Putin’s PR people.

Two items from Ecuador,

First:

I’ve been hesitating to review Paul M. Barrett’s new book, Law of the Jungle: The $19 Billion Legal Battle Over Oil in the Rain Forest and the Lawyer Who’d Stop at Nothing to Win about fraudster Steven Donziger.

While the book is interesting, I find statements like “While not a materialistic person driven by financial rewards, Donziger sometimes groused about the cost of his career choices” (page 134) exasperating. Paul Barrett may believe that Donziger was not “driven by financial rewards” while setting up a Gibraltar corporation to hold proceeds of the judgment, but readers of Law of the Jungle should read Judge Kaplan’s 497-page decision, which quotes Donziger’s personal notebook on April 4, 2007:

. . . I sit back and dream. I cannot believe what we have accomplished. Important people interested in us. A new paradigm of not only a case, but how to do a case. Chevron wanting to settle. Billions of dollars on the table. A movie, a possible book.I cannot keep up with it all.

That said, Barrett is now under attack by the Republic of Ecuador’s U.S. public relations advisers, New York-based Ketchum. His article, What It’s Like to Be Attacked by Putin’s American Flack explains the latest,

Ketchum’s memo about my book connects the dots regarding why Ecuador cares so passionately about the case. Among the “difficult questions” Law of the Jungle raises, according to Ketchum:

Barrett’s book does raise many questions, among them,

• “Ecuador took the biggest part of the income obtained from petroleum extracted from the Amazon, approximately $23.5 billion against $1.6 billion for Texaco-Chevron.” The precise figures are subject to dispute, but according to government records, the split was roughly 90-10 in favor of Ecuador. This contradicts a central theme of the plaintiffs’ (and Correa’s) narrative: that Texaco derived all the benefit from industrializing the rain forest and left the host country with only the nasty side effects. The Ketchum memo warns the embassy that my reporting raises additional questions: How did Ecuador spend its majority proceeds from oil exploitation? Why wasn’t this money spent on environmental controls? Why was the money not used to help those harmed by the drilling?

Make sure to read Barrett’s full article. You can find all of his very interesting Business Week/Bloomberg articles here.

Ecuador engages in “widespread repression of the media”; now they try to export the repression to our shores via a public relations firm.

The second item:

As you may recall, president Rafael Correa has come up with a fake currency to cover up a fiscal deficit, including debt service, of some $9.2 billion.

Correa claims there’s no plan to replace the dollar. Steve Hanke, who 14 years ago was the chief intellectual architect of the nation’s switch to the dollar, is skeptical,
Ecuador’s Dollarization Architect Doubts Correa’s Pledge

“What Correa’s trying to do is kind of loosen the straitjacket that dollarization has him in,” Hanke said. “If you go off, the fiscal deficit gets bigger, the level of debt gets bigger, inflation goes up and economic growth goes down. All the economic indicators just go south.”

Correa is expected to run for a fourth presidential term in 2017, having changed the law on presidential term limits.

Ketchum may be looking forward to it.

RELATED:
For Ecuador’s PR Firm, Celebrity Backing Carries Hefty Price Tag
MCSquared paid more than $500,000 for Mia Farrow, Danny Glover junkets

UPDATE,
Linked to by Bad Blue. Thanks!


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Filed Under: books, Communism, Condoleezza Rice, Ecuador, Rafael Correa, Vladimir Putin Tagged With: Fausta's blog, Law of the Jungle: The $19 Billion Legal Battle Over Oil in the Rain Forest and the Lawyer Who'd Stop at Nothing to Win, Steve Hanke, Steven Donziger

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