Wednesday, April 27, 2011

Little signs that things are not well in Venezuela

Reading El Universal today was a depressing exercise.  I counted at least a dozen articles, from economy to the red pages, that related how bad things are turning in Venezuela.  With no hope for improvement in sight.

Chavismo cynicism in plundering

Downtown luxury free if you are pro Chavez
A couple of years ago chavismo decided to take over the Hilton Hotels of Venezuela.  Easy, they did not renew the concession and that was that.  One, the Anauco Hilton, is (was?) the only hotel downtown Caracas where a minimum of comfort and security could be obtained.  Heck, all the sandalistas of the glory bolibanana years used to go there, to be closer from the action, so to speak.  Well, in two years the hotel has gone bankrupt because, hold tight, the government sends over there all of its guests and does not pay the bill.

That is right, in the very same rapport of the Tourism ministry (which means the situation is probably worse) the state OWES the now called ALBA Caracas 36.688.219 bolivares, that is, 8.532.143 USD. More than 8 MILLION of dollars. Even if we get full tariff at, say, 250 USD a night, that means the hotel did not receive payments for a whopping 34.128 nights. Which means that it is as if 94 rooms remained empty for a full year, except that they were not.  By the way, that 36 million figure is roughly a third of what the hotel billed.

I can imagine that, the Libyan delegation, to name one, right now in Caracas.  Guess who will pay for that one....  And are all the Cubans hosted there (or Piedad Cordoba) paying their bills?

No more cheese

If to bad administration and a deadbeat mentality (not enough oil money coming in?) you add the agricultural disaster of the regime, then you get in another item that the cheese production of the country dropped by 8.35% you can start worrying.  this is bad becasue Venezuelans eat a lot of cheese for their arepas, a very basic staple, in particular lower socio-economic classes.

Why did the cheese dropped?  Well, the price control is the main culprit as inflation has been around 30% and the prices have been fixed for more than a year for many type of cheeses.  Since cheese makers are bound to produce 70% of the cheese they make at controlled price, it is clear that by now they cannot compensate the loss with the 30% which is "control free".  Other culprits are the price of milk, the bad state of the roads, the invasions, etc, etc...  For the first few months of the year it seems that production is keeping its down-spiral.  But the regime does not care much, preferring to import cheese for its Mercal, while the Venezuelan local industry goes slowly but surely bankrupt.  yes, that is right, the regime prefers to fiance foreign producers rather than allow for a reasonable cost system in Venezuela.

So there you have, two items that speak volumes of what the priorities of the regime have become and how things are now managed: f..k you to those that lose money becasue of the regime policies.  Do not be surprised as things get worse in coming months.


  1. Simply insane. I swwear government "leaders" in nearly every country right now have no idea how basic economics work.

    Nor do they care.

  2. So they're willing to pay market prices abroad, but not at home?

  3. jsb

    they actually do not mind paying overprice over market abroad so as to pocket commissions....

    but at home they will take your business away withotu any indemnity....

  4. Couldn't that gain traction, showing that the government wants to pay the Colombian oligarchy more than its own local producers? ...or that they'd rather pay the "empire" 1 billion dollars a year (as of 2009) for food imports rather than support a market price for food at home?

  5. Awesome post Daniel.


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