Friday, March 23, 2007

Editorial serendipity on Venezuela

Some coincidences are just too good to be true.

Today the New York Times has an editorial on Venezuela (yet again!). Nothing much new there, the country is circling down the drain and the NYT (and many other papers and blogs such as yours truly) are watching in a strange mix of awe, bewilderment and amusement.

Except that this editorial has a certain je ne sais quel zeitgeist which is truly eerie. The title first, which shows how well folks are catching on Chavez now de-measured silliness: "New Coin of the Realm". That is, making fun of the new "bolivar fuerte" which is supposedly going to cure all of our inflationary woes (see sharp Simon Romero article with picture of locha included). And Venezuela now a "realm" with all the implications that such a qualifying word carries in a for life presidency...

The "new" coin is the old "locha", an numismatic oddity of old Venezuela where to make life easier for a grossly illiterate country coins were divided in half of halves. For example country side peons were paid 1 bolivar wage which was equal to two reales. With one real you paid the rent or some other major big expense. With the other real you got two medios. With one medio you got two lochas (12,5 cents) and with one locha you could actually sort of feed a family of four for one day. A locha had a true meaning since it meant bread for one day in Caracas. They only needed to be able to count 1+1=2. I know, I know, it is a sad referral to Venezuela down to Gomez times, but so it was.

Even when I was a kid a locha still meant something. The "pan de a locha" (Locha bread) allowed you to make a sandwich (if you could afford the cheese or ham to put inside, usually more than a locha). But if you were flat broke you could manage to beg for a locha and at least do not go hungry to bed that night (or park bench as the case might be).

But I digress, the locha for those of us who remember it is in fact not a great memory as more than another coin of Venezuela it reminds us what inflation has done to our lives. There used to be that game show called "la pregunta de las 64 000 lochas" where the top prize was 64 000 lochas if you could answer a given question (8000 bolivares then, enough for a down payment for an apartment).

Back tot he NYT editorial. In addition to the reference to a silly coin whose return makes no sense as even today 1250 bolivares buy you little more than a bus ticket, the editorial refers to how erratic Chavez is becoming. I mean, after yesterday move to fire off at least 7 judges of the high court APPOINTED BY CHAVEZ, and judges who until today showed no sign of fraying from the glorious bolivarian revolution, what other adjective could you apply to Chavez, but erratic?

The editorial is pasted below as their is an expiration date on NYT articles. It needs no further comment as it encapsulates exquisitely, and shortly, the coming economical crisis. It is still time to avoid it but since there is no one to talk to Chavez or put pressure on the mad man.....

March 23, 2007, Editorial
New Coin of the Realm

President Hugo Chávez of Venezuela had an especially good time baiting President Bush during their recent competing tours of Latin America. But demagoguery and showmanship will do nothing to solve Venezuela’s 20 percent inflation rate — now the highest in Latin America — and growing food shortages that are punishing the poor whose interests Mr. Chávez so loudly declaims.

Venezuela’s biggest problem is that there is no one to question Mr. Chávez’s increasingly erratic decisions. The National Assembly has given him the power to rule by decree for 18 months. So instead of seriously addressing Venezuela’s serious problems, the showman has settled for more showmanship.

As Simon Romero reported in The Times, Venezuela’s currency, the bolívar, has lost about a fifth of its value since January. The government has now announced it will introduce a new “bolívar fuerte,” or strong bolívar — worth 1,000 old bolívar, or roughly 25 American cents. It is also reintroducing a coin known as the locha — to be worth one-eighth of a bolívar fuerte — which last circulated in the 1970s.

Mr. Chávez appears to be counting on a psychological boost from a currency with three fewer zeros and a coin that evokes financially happier days. But by drawing attention to the bolívar’s recent weakness and — even worse — to the government’s capricious response, the maneuvers could further undermine confidence, rather than raise it.

Government spending — fueled by the nation’s oil wealth — rose an extraordinary 48 percent last year, and is one of the main forces driving inflation. Private-sector investment, meanwhile, has weakened since Mr. Chávez decided to nationalize utility companies earlier this year.

Price controls intended to help the poor buy food and hold down rising prices have led to a scarcity of staples like beef, chicken and milk. Threats to nationalize grocery stores and jail their owners — whom Mr. Chávez accuses of hoarding — have only made the situation worse.

Venezuela still has billions of dollars in foreign currency reserves. And Mr. Chávez has used some of the oil wealth to push social programs — including for literacy and health clinics — to improve the lives of Venezuela’s poor. But we fear that any good is quickly being undone by the old strongman formula of cronyism, corruption and incompetence.

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