Saturday, April 11, 2015

The money is mine and I'll do what I want to do with it (and, by the way, there is none left)

When I wrote this morning post I did not realize that tonight I would be writing the same one but from a different angle. That is, materially not the same at all, but philosophically, so to speak, they are like two drops.
He is taking away your credit card

My point this morning was that the presence of CNE's head Tibisay at a political event Wednesday to "validate" 10 million signatures obtained though coercion meant that the opposition could dream on winning future legislative elections, the regime could not care less. There are alternative ways to legislate or annul newly elected representatives through, say, popular will expression through "certified" signatures of the "El Pueblo". After all, if Obama and the OAS have nothing to object of the signatures this week end, why should they object to future signatures?

Strong with that success, the regime forged ahead and announced today that travel money would be reduced to almost nothing, and that in addition it would be reserved only to those that are already in agreement with the regime.  It may not look quite like it on the surface but that is the way it is heading. Again, as is the case this morning, the point is not whether there are elections. Today is not whether there is money in the coffers: whatever is there is for the regime. Period.

Let's rewind a little. In what is perhaps the second worst aspect of Chavez populism (the top being, of course, gas subsidies) travel has been heavily subsidized by the regime since currency control was established in 2003. I suppose that it was not the intention at first. I suppose that for a while the regime thought it was a way it could win the good graces of enough middle class voters to make a difference, It probably became a way to quiet down the middle class, away from street protest. Eventually the regime became hostage of its own system when its own bureaucratically created middle class got used to travel and trade currency for profit, the infamous "raspa cupos". What was the amount of the subsidy? No way to tell for sure, but it started to go down three years ago. Subsidized airline tickets were the first to go. The regime defaulted on the money owed the airlines and now we have less than half of the offering of two years ago, and tickets have to be bought in foreign currency, your Venezuelan Bs. are not good, even for Venezuelan airlines.

The current subsidy? A tweet exchange I had with my colleague Miguel is as good as anything you can find: 20 billion for gas, 4 billion for travel expense.

Today by reducing the allocated travel expenses (3000 USD a year to travel to Europe to 2000, much less to the Americas) and making it more difficult to get the regime may save an extra 2-3 billion dollars. At what cost?

With that amount the regime does not solve anything, it gains maybe a month or two before default. The regime would solve more problems by increasing gas price just enough so that demands decreases enough to stop expensive imports (note: just forcing people to tune up their engines and drive in more useful ways could lower import gas bills by 10% just like that).

People that need to travel more than once a year have long ago organized themselves to travel in foreign currency. The middle class that cannot travel anymore had long ago stopped voting for chavismo if they ever did. The political cost here comes from the chavista bureaucratic middle class that was led to believe that foreign travel had become a right. Note: this particular aspect had always irked me a lot and got me very nasty looks when I reminded folks that before Chavez, as it is still the case in other countries around the world, if you wanted to travel you needed to save for a few years, that few were those that could afford yearly travels and fewer were those who could afford yearly shopping sprees in a foreign country. But I suppose that the Venezuelan middle class got the government it deserved...

But all of these in the ends are mere details. What really matters today is not whether you get 300 or 700 bahts to travel to Podunk.

What matters here is the brashness of the whole thing.

First, the announcement was rather unexpected. No rumors, for once, occurred. Which proves you that most rumors are deliberately seeded by the regime....

Second, the brutality of the measure, even for someone like me who had advocated for years that if travel control expenses should exist it should not be on the quantity but on the exchange rate. That is, it makes more sense for business people to have 20,000 travel money at 190 than 2,000 at 15. From my last business trip in Europe last fall, I know that you cannot travel for business in Germany for less than 200 USD a day. You just cannot. Unless you do not even treat your customer to a cup of coffee, you stay in flea bag hotels, eat german sausages from seedy street carts, hitch hike to the banhoff stations, and the like. In other words, unless you look like a pauper and then no one will want to do business with you. In short, the extremity of the measure is so ridiculous that we would actually be better off by eliminating it and legalizing black market. Because that is what is going to happen, we are all going to have to go to the black market for all our serious travel needs. By the way, this one has already digested it all, SIMADI and whatever, thus basically unmoved today.

Third the cynicism of the agent. The minister,  Marco Torres, that announces that 30% of our meager travel allotment is taken away is none other than the one that presided the bank that deposited 12 billion dollars in a Switzerland account of the HSBC in 2007. Maybe there was no wrongdoing but to date I am not aware of the publication of any statement account justifying when were these funds deposited and where did they go before these accounts were closed a year later. The guy goes as far as saying that these new measures ensure "the correct use" of currency. So, the regime was not able to ensure correct use before? Orwell...

And fourth, and the worst, is the added brutality that if you want to have access to the remaining 2000 dollars you have left to go to Europe you will need to open an account in a state bank and ask for the state to grant you a credit card. That is, the credit card that you earned with your good name, your good credit habits, your prompt payments, in real bank of the private sector, is worthless outside of Venezuela. Now your credit is worthy only of a state bank, a bank owned and directed by the regime, decides that you are worthy of it. And what about if the Tascon list is used? What about if the sales representative decides to ask you whether you signed against Obama?

This is what today's announcement really means. Now, you only get to travel if you play nice, if you cozy tot he regime. That is that. Forget about elections, Forget about Human Rights, If you want anything you better join fast the ranks of Maduro,

Oh, and by the way, we are broke, we had to do that. So from now on whatever little bit of money becomes available here and there is only for corrupt military who are going to take turns in front of Marco Torres office. You know, fascism style, the state money is my money.

PS: written while I was listening over and over to Faure's Requiem and drinking from my one before last bottle of Creme de Cassis.


  1. Daniel, the short term outlook for you guys is between grim and awful. But I just figured out what Obama is up to, and it's brilliant.

    1. Anonymous3:47 PM

      You figured it out, tell us! If it comes from Obama it must be brilliant, after all he didn't win the Nobel peace prize for nothing...oh wait.

  2. Anonymous3:25 PM

    So Venezuelans can no longer get cadivi essentially. Cuba sounding better by the day.

  3. Anonymous9:01 PM

    Yes, I would also like to know of the "brilliant" plan.

  4. I am sorry, there is no discussion of Obama's plan in this post. He is only mentioned twice in an absolutely neutral situation. Please, just in case, check out your knee jerk anti Obamism at the door.

    1. Anonymous2:14 AM

      Lameme is the one bringing Obama up, everyone else is just reacting to his idiotic adoration of Obama. The guy is not much different than any good-ol Chavista seal.

  5. Daniel off topic but do you know of a translation of Maduro's OAS rant today? I only understood toscanos and obama obama obama

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