Monday, January 19, 2015

Thelma and Louise sponsored by idiot consultants

It seems that we have reached that Thelma & Louise moment, where a regime finds itself on the edge of the cliff, trying to decide whether to jump, while idiot consultants tell them it is nice and sunny, after the fall.
Hoarding, according to Maduro & Co.

I am not going to go much on Maduro trip around three continents. Thinking that he was a foreign minister once (he was not, he was Chavez errands boy), thinking that his skills would make him succeed where Ramirez failed, he went to a whole bunch of countries looking for deals and for higher oil prices. His novice, and incompetent, team accumulated one faux-pas after another, and in the end he looked the part of the guy hat in hand, begging for handouts, and not getting any.

His triumphal return to Venezuela was not a success even though Internet was down for half a day, delaying the pictorial diffusion of his poor reception committee.

So now he is back at Miraflores Palace, nothing to show, rumors of his demise growing fast as the short food shortage lines he left behind early January have become long hunger headlines around the world. Bouts of violence are now routinely recorded, and all the scandals of preceding months (colectivos, violence, chikungunya, what not) have taken a back seat to the population anxious search for diapers and food.

What does he chose to do? Well, he seems to be willing to jump from the cliff. He starts by offering even more "socialism" and issues an ultimatum to, hold to your hats, the food distribution system. As if those could hoard enough stuff, stuff that, to begin with, is not produced in Venezuela. I can vouch personally for it: we do not have enough supplies to produce all of the food needs for Venezuela. FEDECAMARAS, the business association, gives, what I find optimistic, 45 days left of manufacturing. It does not matter whether food distributors want to hoard food and soap, there is nothing to hoard. Anyone that holds a real job in the food industry that looks at the pictures shown by the regime as alleged hoarding will know immediately that what is on the floors represent at best a couple of weeks of the normal distribution schedule. Given the difficulties to operate in Venezuela, even that meager two weeks cannot be dispatched as fast as anyone would want.

Even workers went out against the intervention of the state, defending their jobs against a rapacious regime that could not care less about their livelihood.  Never mind that the accused Fedecamaras replied very simply: with all busienss that are now in hands of the state, where the products that these busienss were supposed to make? From "guayuco" diapers to Diana edible oils. There is that precious 2009 video of Chavez announcing the Venezuelan socialist diaper which I am afraid has never been seen since.

It is that simple, there is no hoarding, there is a lack of production driven by the government policies, from needed currency to import supplies, to a chaotic transportation system for the little bit left to distribute. Again, my business itself is a direct victim of this disaster.

I am reserving the political implications of this debacle for a future post, just wanting here to impress on the reader that the crisis has started in earnest and that the regime has no clue about what to do.

Unfortunately the regime is not helped out by idiotic consultants that write the most senseless things.

I read an interesting article, recommended on Tweet by no one else but Moises Naim, where people from Barclay or a joint called Capital Economics offer mathematical solutions to Venezuela. The one that particularly infuriated me was the expert of Capital Economics, unnamed, that simply says that Venezuela should start by devaluating to a single currency exchange of 100 and the basic problem would be taken care of.

This formula or another will do
for Venezuela economics
I suppose that this consultant had in mind shock therapies such as the ones from Eastern Europe in the 90ies, countries which had nothing left to their name and could afford such a trauma. But if the regime had the bad idea to risk a mere devaluation of that magnitude in Venezuela it would be a disaster. Civil rebellion would be almost instantaneous. Civil war would surely follow close behind. And further more, that Capital Economics jerk is apparently unaware that the debilitated private sector would go belly up with such a devaluation. I wonder how does he think Venezuela will pay its debt to his customer? Or is he actually advocating such a disaster so that his customers will be able to buy for peanuts Venezuelan companies? It has to be that last one or he is a completely misinformed idiot. I would turn towards Iglesias or Tsipras for less than that...

At any rate. We have reached the end of the road. The regime has two choices: either bury the chavista revolution or start shooting people. I am afraid that the second one will be the choice since so many people would face jail terms if the country became more "normal".  Which of course makes the cliff only higher, the crash only more spectacular.


  1. Dr. Faustus4:52 AM

    Reading your reports sends chills up my spine. It has Wagnerian overtones for regular readers such as myself. Ominous. Please be careful with what you're doing and stay safe....

    1. Geee...

      Well, it is true that this is the Venezuelan blog with the most of frequent references to Opera

      And I rein in myself :-)

  2. Anonymous8:53 AM

    Given the choice Chavizmo will likely make, I find the option of devaluation of Bolivar to 100+ per dollar attractive. A bloody revolution is bad, but a bloody regime is worse.

  3. I don't know enough about economics to estimate consequences. But I have met famous economists and experts who gave seminars about Venezuela's economy, and explained the regime was irrational and it had to either change policies or fall.

    I was at one of these meetings and I got so frustrated I stood up and told the famous expert "the problem is that you can't see the regime's ability to inflict pain, the people's ability to withstand it for a long time, and what happens when they eventually explode".

    I got the feeling that people in the Caracas region tend to be softer and more reticent to hit the streets and oppose the repression. But I suspect areas like Tachira and the Guayana steel workers will start rising very soon. But because caraqueños will stay inside hitting pits and pans and launching comments on Twitter the regime will be able to install a Castro style Stalinist dictatorship.

    I suspect the sheer display of stupidity and venality is intended to make you protest in small groups. This will allow them to pick up and if needed murder the worst trouble makers. Maria Corina, Ledezma and Capriles will go to jail, our dear Pope Fracisco will look the other way, and the regime will keep on building their dystopia. I feel sorry for you guys, but collectively you lack the ingredients to free yourselves.

    And don't take it personal...I'm Cuban and we are the world's biggest güevones. We allowed the Castro family to destroy our country, and now we are happy because they released a few prisoners...

  4. Anonymous11:26 AM

    Business opportunity in Caracas:
    We need a company specialising in the manufacture of guillotines.
    We believe there will be a need for these machines in the very near future.
    As Madame La Farage said “one-two-three-----”
    Return investimate in three years or by the head.
    Applications to Miraflores.


  6. Charly3:00 PM

    Rosy glasses are still around:

  7. Anonymous3:10 PM

    I estimate the real quantity of foreign currency that will receive Venezuela in 11 bi and not 30 as many economist are repeating as parrots. Why:
    -1, 4 mil barrels per day export ( I think is less) at 35 (i think will be less) equal to 50 mi per day.
    -Multiply by 365 days in a year (in Venezuela I would l say 320 days) is 18 bi in one year.
    - if you calculate a cost of each barrel around $10 (Saudis not Venezuela) but multiply by 2,4 mi per day (total production supposedly) and then by 365 it give you a cost of 8 bi per year.
    - Therefore I would say that the real amount is between 8 and 14 bi at most.
    Venezuela needs around 11 bi so to pay the foreign debt this year....This give you a whole 45 bi hole for imports and other stuff.

    Good luck

  8. Charles Lemos8:42 PM

    "Or is he actually advocating such a disaster so that his customers will be able to buy for peanuts Venezuelan companies?"

    You nailed it. That is the neo-liberal prescription. Neo-liberalism is, of course, one of the reasons that landed Venezuela in its chavista embrace. Little did Venezuela realize the anaconda's constrictions were worse than its bite.

  9. Charles Lemos9:01 PM

    The regime has two choices: either bury the chavista revolution or start shooting people. I am afraid that the second one will be the choice since so many people would face jail terms if the country became more "normal".

    This too is sadly true. There is a theory in political science on the use of force in authoritarian regimes. Juan Linz and Alfred Stepan wrote extensively on authoritarianism in Latin America as did Richard Morse who was my PhD advisor at Stanford. Morse wrote extensively on "caudilloism" that would describe Venezuela for much of its history. Venezuela did not manage its first peaceful transfer of power from one civilian regime to another until 1963. I believe that it was last South American country to do manage this feat. As a matter of comparison, Colombia accomplished this "feat" in 1832. The reality is that Venezuela from 1958-1999 is the aberration. The rest of Venezuela's history is one sorry dictatorship after another.

    Authoritarian regimes when faced with existential crises more often than resort to repression. I consider it extremely unlikely that the Venezuelan Bolivarian Socialist Republic will acquiesce to own its demise. The question, though, is how far is it willing to go in order to safeguard its permanence?

  10. Anonymous2:17 PM

    Regarding the diapers:

    The following was told to me by the person who made the packaging for the "Socialist Diaper,aka Guayuco"

    It turns out that Chavez was going to on TV to tout the new diaper factory that would turn out the "Guayuco" a Socialist Diaper.

    Since the production line had not yet fabricated even one Socialist Diaper, there was a scramble on to get SOMETHING that Chavez could point to as an "achievement".

    So my acquaintance was approached to make the packaging for the new diaper, and had to do it fast, bump out other clients from the production run, and deliver the packaging in time to be able to fill it with the diapers, that did not yet exist.

    Long story short, burning the midnite oil, rushing like hell to get it done, they get it done.

    When they deliver the packaging to the warehouse to fill with diapers, there are no diapers.

    So the functionary in charge goes to a diaper manufacturer and gets a pallet on diapers (never paid for, BTW).

    The "Capitalist" diapers get packaged into the "Socialist" diaper packaging, gets put on a pallet and the world gets to see the Socialist Diaper in all its glory.

    The packaging created for the event was enough to make several pallets worth of diapers, yet only the pallets you see in the video were ever packaged.

    The packaging spent years moldering away in that warehouse and eventually was stolen to be recycled.

    My acquaintance only got paid the 50% deposit he asked for, which barely covered raw materials, printing and processing.

    Roberto N


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