Friday, December 27, 2013

2013 in review: the year we learned we were bankrupt

I have never really quite indulged in "end of year reviews". But even if this blog is written to be read all through the year, 2013 has been momentous enough that for once it may be worth our time to rethink a little bit about some of the past events. Also, this time of year is when the blog gets least visitors for the year, and probably the hits come from the most hard core lot. I suppose it is a homage to you guys to write some short and to the point posts as to the salient events of the year about to end. We can comment those among ourselves.

The first thing in this series is to look at how we went bankrupt. Well, officially, as it is my reckoning that we were in trouble as soon as Chavez started borrowing heavily with the Chinese, exchanging subservience to one empire to subservience to another one, much worse in its manners.

The need to pay for the reelection of the wanna-be corpse in October 2012 forced the regime to launch it most ruinous and corrupt social program, Mision, that did us in: Mision Vivienda. I stressed the word corrupt because the speed at which the Mision was required to build housing allowed for an absolute lack of control, financial as well as social. And that last one we are going to pay for it for long time. I mean, the indiscriminate construction anywhere in Caracas, on any vacant lot, without any due construction permit or environment study, promises us tragedies sooner than later. In addition social classes have been mixed by force creating already all sorts of problems. That by itself will deserve more than one post next year.

The price tag was huge and forced a devaluation on February 8. Then we got the start of a second one last Monday as a Christmas present. The end result is that the currency went, in not even 11 months, from 4.3 to the dollar to 11.3. Or a depreciation of the currency of (11.3-4.3)/11.3 = 62%. This is the official rate, the black market is now stable above 60.....

In short, this year all Venezuelans lost at least 62% of their property, when they had any. Which is the point because those that have little lost little but suffered most of the inflation, a scourge that hovers around 70% officially just for food items.  The regime is managing equality for most, by bringing everyone down, except, of course, the corrupt in the regime. We are told they are been investigated but we rarely see a name, and when we see one the amounts stolen are not that big, and certainly not enough to explain the 20 billion dollars "lost" according to official voices inside the regime.

And the bankruptcy indicators will keep going apace. We are December 26 and inflation for November has yet to be published. Rumors are that next year they will announce it at 4,8%, unable to massage it lower than that. Shelves are bare these days in many stores. The organized looting of large sectors of commerce last November is starting to show its consequences, e.g. from hardware stores closed down, to those still open but who do not even carry light bulbs anymore (my own multiple observations).

Even if you have money you are bankrupt anyway as you do not know where to spend it. Even the little bit the poor still have from this or that government stipend is highly priced through the huge lines they must endure for basic staples. Let me put it this way, Venezuela in 2011 had the second worst "misery index" in an Economist table. Today with unemployment statistics and inflation numbers "official" I am sure we would be at the head of the table of any "misery index".

A way out of our bankruptcy? Sure, there is a way, we have plenty of black cash underground. But to obtain it we have no funds and must get into more debt before we can start paying the one we have. I think that if by miracle good management came tomorrow to Miraflores palace, it would still take about half a decade just to find an equilibrium to allow us to grow in stable way, a grow ht that can actually start decreasing poverty with real numbers. That is, we are screwed for at least another decade...


  1. Right. Okay. I'll buy you a plane ticket to Venezuela. You tell me how you like third world countries.

    1. Anonymous11:26 AM

      Buy who a ticket to Venezuela?

      The writer LIVES there.

      ANON 242

    2. 242

      It is spam. However it is a funny weird spam that we,ll let it stand ;)

  2. charly2:29 PM

    La longue descente aux enfers.

  3. Daniel you are the eternal optimist. Half a decade? Really? ;)


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