Friday, October 10, 2008

Friday's comic relief: El Troudi on Venezuela's magical finances

[Updated] Haiman El Troudi, our director of national economy, affectionately known in this blog as Haiman el Trou-du-cul ('true duh kuh') for his naiveté and for ideologically simplistic mental make up had provided us yesterday with one of those rare but precious comic reliefs from the government. Well, let's say that I decided to laugh at his antics because in reality we should cry over such people directing the future of our wallets....

The guy yesterday was at some sort of event where he declared some of the following:

The IMF is the cause of everything and if it were not for Venezuela getting out of the IMF on time we would be in trouble. Well, the first part might be partially true although I fail to see what the IMF has to do with the fall of Lehman Brothers and the Fanie/Fredie combo. However the second part is just ridiculous. Countries with a steady income without the need to do much work about it have no need of the IMF to begin with. The last time Venezuela had dealings of any magnitude with the IMF was during the Caldera years when oil price went for a while below the 10 USD per barrel. In fact Chavez carried for a long time a very small debt with the IMF that he could have paid long ago but that he paid when it was politically convenient for him. Since at least 2003 Venezuela has had absolutely no need whatsoever of the IMF financial assistance though its budgetary advice should have been sought as we will learn soon at our expense.

So what is the goal of El Trou-du-cul with such blatant misinformation? Endear himself to the great leader before this one uses him as a scape goat when the going gets rough. After all El Trou-du-cul has been in office long enough to have figured out what was coming our way and taken some preliminary measures. But ideology has a way to put blinders on people that should know much better.

He stated that Venezuela today is safe from the crisis because of its financial policies, including currency exchange control, and that we refused FTA like treaties, we are in better shape and we can weather the crisis. Strictly on a numerological approach some might agree with El Trou-du cul. Except that dear Haiman has no concept that the only reason that a country has to get into some FTA arrangement is that it has manufactured goods and agricultural surpluses that it needs to place in the US or European markets. Venezuela only produces oil, a fungible by excellence that will always find a client, trade barrier or not. Venezuela has nothing to sell otherwise, not even tourism. In fact, Venezuela could have allowed itself the luxury to have a protectionist economy and today instead of the 40 billion USD in reserves that Trou-du-cul claims we have, we could easily have two or three times that amount and be called by Washington with their hat in hand to help them solve the crisis. Imagine Chavez buying a US bank "in solidarity with the financial world crisis"!!!

He added, for good measure, that the third world countries demanded that the IMF be dissolved and that tall debt should erased. Just like that, as if you had a bad mortgage, because people obliged these countries to go into debt and to join the IMF once they were not able to pay them. Ah! You gotta love that! Socialist irresponsibility! Capitalists forced me to go into debt, in the US or in Venezuela, same difference, and thus it is not my fault that my credit cards are maxed!

To be of such bad faith reflects either ignorance or ideological "gringolas" or both. Astounding! The only charitable thing to say about it is that Haiman knows the Supremo is going to get after his ass when he realizes the coffers are emptying fast.

He told Venezuelans who have USD accounts in the US to repatriate their funds to Venezuela because here their money will be safe. I mean, this is so unbelievably ridiculous that one must wonder if Trou-du-cul was high on something. Then again he was attending some international "socialist" bash and maybe the hot air generated by these international nincompoops leeching on Venezuelan funds got to him. How should we start with this one? That people specialized in fraud, extortion, kidnapping and the like in Venezuela will have better knowledge of your worth? Or by a dry calculation of how much you will be worth once you bring your money back?

Yours truly from his years as a student in the US kept a little saving account where today he has 10,000 USD. Just in case he wants to get a nice vacation or something; it is far from being a nest egg of any value. Well, let's see what would happen in one year were I to leave my money there or bring it back to Venezuela.

In the US. I somewhat manage to place it at 5%. I get at the end 10,500. Inflation is 6%. In reality at constant dollars I get 9870 at the end. I lost in fact 130 USD. Normal for a time of crisis.

In Venezuela. I bring the money back and I have now 21,500 VB. I place them at 17%. I get 25,155 at the end of the year. But inflation has been at least 25% so in real purchasing power I have now 18,866. At current exchange rate that means 8,775 USD. My net loss is 1,225 USD when in fact it would have been only 130 USD had I left my money in a secured FDIC. And if in the mean time there has been a devaluation, say a modest 2.15 to 2.5, my real USD value is now 7,546 for a net loss of 2,454 USD!!!!!!!!!!!!!!!

And this guy is the one that controls the nation's balance sheets? Who is he kidding?

Oh dear! I am afraid that with such Mickey Mouse characters at the helm our economic crisis will end up being much worse than what we anticipated at first!!!! If you ever needed a reason to send your savings away at any cost out, Haiman gave it to you yesterday!

Update: I have to add the words of another of those luminaries that preside over the Venezuelan mess. The name is Victor Alvarez and he used to be one of the many ministers that went through the musical chairs that are Chavez ministerial cabinet. Well, yesterday at that same silly socialist event he said without any shame that the nationalization of CANTV and EDC/EAS were ways into which Venezuela had protected itself against the crisis. That if it were not for the nationalization of these companies (along SIDOR and CEMEX) their stock values would have plummeted.

Where to start, dear, oh dear? That the poor deluded man confuses finances and production? That he might not be aware that viable production concerns are significantly less affected than the financial sector? That even if nationalized these companies lost value anyway, in case Venezuela decide to sell them tomorrow?

Or should we just point out to him that the noticeable decrease in service quality by CANTV (the telecom) in one year has been noteworthy and that since EDC/EAS (Caracas electric utility) has been taken over by the government the power outages have become more frequent, and last longer? Should we let him know that the nationalization and pillaging of these companies for political purposes cost them a much greater loss of value than any Wall Street Crash?

No. Let's not waste time enlightening such individual
as Victor Alvarez, because what he said, he said it in the hope that his words will reach Chavez ears like a balm and thus effect his return to the ministry.

-The end-

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