Tuesday, May 19, 2020

The end arriveth

Milton Friedman said something of the kind that were the Sahara to be ruled by communist the desert would run out of sand within a few years.

Well, it just happened in Venezuela, perhaps the first mega oil producer in history that has run out of gasoline.

And at the very possible worst time as we ran out of money, when Coronavirus stroke, when an ailing production is least able to suffer such a disaster.

Admittedly, referring to Friedman we are not sure anymore what is ruling in Venezuela. Communists? Socialists? Fascists of the XXI century?  For sure narcos. For that matter, we do not even know if someone is in charge, besides those organizing repression of course.

The political consequences were quickly seen.

First, Venezuela installed the earliest and, on paper, strictest of quarantines as to Covid19 in LatAm. For a rarest once I will admit that the regime was right in closing up everything: the shot health system could not handle even a mild health crisis.  But the true reason as to the early stern closing up of the country was the end of fuel, to make it less noticeable, to avoid massive protests, while the repression went up a notch, in case of.  But of course, as the regime is bereft of ideas as how to solve the problem discontent is rising fast and showing (1).

Second, trying to hide the mess through some tall tale.  There was a supposed invasion to Venezuela. I am not going into the details here (2).  Suffice to say that it gave a golden opportunity for propaganda for the regime though it is not clear whether it is working this time around. The clumsy show and oncoming information seems to point out to a very amateurish operation that was cancelled but that the regime took over as an attempt to create its own "Bay of Pigs" narrative.  Apparently there was at least as many double agents than actual plotters.

And thirdly, of course, as usual, it goes without saying, it was an opportunity to repress a little bit more, to flush out dissent among the rank and file of chavismo.

But the end is here.

The regime is bereft of ideas, besides novel techniques of repression and torture. Economic solutions according to its model do not exist. What seemed like solutions under Chavez were only due to sky high oil prices. Now it seems that the cost of extraction in Venezuela may not be covered by the sale price of oil. Never mind that we do not produce a third of what was produced when Chavez was elected in 1998.

Nor has he regime the human resources to create a recovery. If these people existed in the structure, we would already know of them. The narco state Venezuela only needs people with gang/thug mentality. Of these, it can find a lot.

The siege mentality has also taken over the regime.  So bent it is on survival (they would go to jail if they lose power) that they have become inured to the plight of the people. That mind set has actually created a very cruel state, an amazing cruel state.

And if we consider the general situation of the country. Without gas o money what are seeing? What can we expect? This:

Production lines are collapsing.

Crops cannot be harvested, or reach Caracas.

The lack of money, the refusal to open up to the private sector, stops the countryside to start the new crop cycle.

There is no chlorine for tap water. The aqueducts are falling apart. The water that reaches Caracas seems like dirty pond water. When it reaches Caracas (or the main cities for that matter).

Hyperinflation has restarted. Prices in dollars are now double of what you could find in Miami or even France (but the nominal minimum wage hovers around 5$ A MONTH!).

And this just in two months. Soon a hunger crisis. And compounded with the rest we are looking forward a major health crisis in the horizon.  Unless China and Russia do not send large amounts of cash, I cannot see how the dictaotrship can solve these issues on its own.  Then again, the current situation may be what the regime wants since begging for food is a good way to control the masses.

1) The solution of course is to reach a deal with the opposition, call for real competitive elections within a year. As soon as this is done Venezuela will be able to borrow fast and heavy to buy gasoline and repair refineries with real technology instead of the patches hat Iran is trying to put up in the wrecked installations, a wreck due to an absolute lack of maintenance, investments, modernisation. In short, the result of 20 years of corruption.

2) I twitted a lot on "Gedeon", the alledged invasion.  An example here:


  1. Depressing to say the least, but China keeps supporting Maduro as can be seen by the water trucks most recently...

  2. The solution is obvious. Free up the economy, return to a free market. They could even do this without freeing up the government (China?) but they won't. It is obvious that they have no imagination for this.


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