Posts Tagged ‘Nicolas Maduro’

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Venezuela’s Economy Burns

Thursday, February 4th, 2016

While one of the two leading Democratic contenders for President openly calls for socialism, let’s check in on how one socialist paradise is doing:

The only question now is whether Venezuela’s government or economy will completely collapse first.

The key word there is “completely.” Both are well into their death throes. Indeed, Venezuela’s ruling party just lost congressional elections that gave the opposition a veto-proof majority, and it’s hard to see that getting any better for them any time soon — or ever. Incumbents, after all, don’t tend to do too well when, according to the International Monetary Fund, their economy shrinks 10 percent one year, an additional 6 percent the next, and inflation explodes to 720 percent. It’s no wonder, then, that markets expect Venezuela to default on its debt in the very near future. The country is basically bankrupt.

Inflation has gotten so bad that Venezuelans are now paying more than 1000 bolivars to the dollar on the black market. Which is why the government is flying in planeloads of money. As P. J. O’Rouke said of similar hyperinflation in Nicaragua’s own socialist paradise economy: “You have to go to Moscow University two or three times to make money worth this little.”

But with the opposition party having defeated the socialists in parliamentary elections, they can turn things around, right? Well…

Socialist president Nicolas Maduro has changed the law so the opposition-controlled National Assembly can’t remove the central bank governor or appoint a new one. Not only that, but Maduro has picked someone who doesn’t even believe there’s such a thing as inflation to be the country’s economic czar. “When a person goes to a shop and finds that prices have gone up,” the new minister wrote, “they are not in the presence of ‘inflation,’ ” but rather “parasitic” businesses that are trying to push up profits as much as possible. According to this — let me be clear — “theory,” printing too much money never causes inflation. And so Venezuela will continue to do so. If past hyperinflations are any guide, this will keep going until Venezuela can’t even afford to run its printing presses anymore — unless Maduro gets kicked out first.

But for now, at least, a specter is haunting Venezuela — the specter of failed economic policies.

Philip K. Dick once noted that reality is that which, if you ignore it, doesn’t go away. Socialists may not believe in hyperinflation, but hyperinflation very much believes in socialism…

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Venezuela Says “No Mas” To Socialism

Tuesday, December 8th, 2015

It turns out that 100% inflation, widespread repression and corruption and endemic shortages of basic consumer goods are not a recipe for electoral success:

Electoral authorities in Venezuela say the opposition coalition won a key two-thirds majority in the National Assembly in legislative voting.

The National Electoral Council has published on its website the final tally of results from Sunday’s elections showing that two previously undecided races had broken in favor of the opposition, giving them 112 out of 167 seats in the incoming National Assembly. The ruling socialist party and its allies got 55 seats.

The supermajority gives the opposition a strong hand in trying to wrest power from President Nicolas Maduro after 17 years of socialist rule. It now has the potential votes to sack Supreme Court justices, initiate a referendum to revoke Maduro’s mandate and even convoke an assembly to rewrite Hugo Chavez’s 1999 constitution.

Sooner or later, socialists always run out of other people’s money.

Though Maduro is still President, there are a lot of things the new government can do to improve the lives of their citizens:

To end food shortages, the new congress can immediately lift price controls so entrepreneurs have an incentive to produce or import. The only way to strengthen the “strong bolivar,” as the late Hugo Chávez named the currency, is to make it valuable enough for people to hold. That means lifting capital controls and ending the central bank’s multiple exchange-rate system so business can get access to dollars. On current course Venezuela will run out of international reserves and face default in 2017. Restructuring debt now with creditors would make that prospect less painful.

Which brings us to oil. Chávez used the country’s energy wealth to buy permission in Latin America—and Massachusetts; remember Joseph Kennedy’s Citgo PR campaign—for his many human-rights violations. As long as governments in the Caribbean were getting low-priced petroleum from Venezuela, they voted with the military government in Caracas at the Organization of American States.

Chávez and Mr. Maduro have also traded oil for security help from Cuba’s intelligence apparatus. Putting an end to these trades would retain more resources inside Venezuela and send a signal that the days of government repression are numbered. Meanwhile, rejoice that one of this hemisphere’s lost countries has a chance at revival.

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Posted in Communism, Economics, Elections, Foreign Policy | No Comments »

Venezuelans Now So Screwed They Can’t Afford to Get Screwed

Wednesday, February 4th, 2015

Thanks to the Magic Power of #Socialism™, in Venezuela a 36-pack of condoms now costs as much as an iPhone:

Venezuelans who already must line up for hours to buy chicken, sugar, medicines and other basic products in short supply now face a new indignity: Condoms are hard to find and nearly impossible to afford….

On the auction website MercadoLibre, used by Venezuelans to obtain scarce goods, a 36-pack of Trojans sells for 4,760 bolivars ($755 at the official exchange rate), close to the country’s minimum monthly wage of 5,600 bolivars.

It take a special kind of socialist magic to make your people too poor to have sex.

In other Venezuela news:

  • The Maduro government has seized a supermarket chain. I’m sure that will do wonders to make more basic goods available to people.
  • They’re also arrested pharmacy owners for “conspiring” to create long lines out their stores. Maybe Maduro thinks business owners can conjure hard currency out of their own asses.
  • Interview with opposition leader Henrique Capriles.

    • One wonders if The Road to Serfdom or Economics in One lesson have ever been translated into Spanish…

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    Venezuela Takes The Express Lane To The Dustheap Of History

    Thursday, December 11th, 2014

    There’s been a lot of talk of how low oil prices are screwing Russia, but Venezuela is, if anything, more screwed thanks to the Magic Power of Socialism™:

    U.S. currency is vital to Venezuela, which imports as much as 80% of what it consumes; 96% of its exports are petroleum products…In effect, the one-third decline in the price of oil means that the state oil company must either raise or divert enough production because Venezuela effectively owes China 67 million barrels of oil, roughly 27 million more than it did before, for this loan alone. And there are billions of dollars in other loans to consider.

    And the outlook for the immediate future is equally grim:

    Venezuela’s economy is expected to contract in 2014 and 2015, and even though it’s already recognized as the 14th least competitive economy in the world (according to the World Economic Forum) and the eighth-worst economy for doing business (according to The World Bank), [President Nicolas] Maduro’s laws seem to discourage private investments even more. The new laws reinforce bureaucracy and the difficulty of doing business in the country, particularly in the area of taxes.

    “Increasing numbers of low-income Venezuelans are souring on Maduro as they suffer a declining economy, the highest inflation in the Americas, chronic shortages of basic goods and one of the world’s highest murder rates.”

    If Venezuela’s economy collapses, they might take Cuba down with them, since the Castro brothers are so heavily dependent on Venezuelan oil subsidies to prop up their own moribund economy.

    Compounding Venezuela’s crises is the fact that it’s probably going to default on its bonds. So they’re finally reaching the point in socialism where the run out of other people’s money. Next to that singular problem, U.S. sanctions on government Venezuelan officials for killing protestors are a trivial irritation…

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    Posted in Budget, Communism, Foreign Policy, Welfare State | 1 Comment »

    Venezuela: A Ray of Light Amidst the Encroaching Darkness?

    Wednesday, April 9th, 2014

    When last we checked, Venezuela had come down with a case of Terminal Socialism. Here’s an update.

    Faced with crippling inflation and a shortage of basic goods due to endemic cronyism, horrible mismanagement and laughable official exchange rates, Nicolas Maduro’s socialist government has finally thrown in the towel and instituted floating exchange rates… sort of:

    A dollar will cost you 6.3 bolívares if you are the government, or if you can persuade Cencoex (the government’s foreign-trade body) that you intend to import vital goods such as food or medicine. Then there’s the Sicad I rate, currently just over 10 bolívares to the dollar, but contingent on irregular, “auctions” (which are nothing of the sort). The new Sicad II process, which is as close to a free market as the government will allow, opened at a whopping 50 bolívares to the dollar. But even that is a bargain compared with the unofficial exchange rate, which at the time of writing stands at almost 68 bolívares.

    Meanwhile, shortages of basic goods mean Venezuelans get to enjoy that classic staple of late stage socialism: waiting in line to get food:

    And the violent crackdown against opposition protesters continues:

    Naturally, as a prelude to cracking down on the opposition, they followed the old socialist playbook by outlawing private ownership of guns. It’s always so much easier to oppress people once they’ve been disarmed. Even so, as the following video (via Legal Insurrection) shows, police don’t always get the upper hand:

    Security forces have also committed dozens of documented instances of torture.

    Are there any rays of home in the grim situation? Yes, Maduro’s government and opposition leaders have agreed to talks. Whether these can actually accomplish anything remains to be seen, but the fact that Maduro “ruled out any changes to the course of what he calls the Bolivarian revolution, the distinct brand of socialism created by his predecessor in office, Hugo Chavez,” tends to indicate that the prognosis is still grim.

    Other Venezuela news:

  • An interview with the jailed opposition leader.
  • Two relative of opposition figures murdered.
  • Globovision assignment editor Nairobi Pinto kidnapped.
  • Spain halts shipments of riot gear.

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    Things Are About To Get Really, Really Ugly in Venezuela

    Tuesday, November 26th, 2013

    The Venezuelan Parliament just passed an “enabling law” to give Socialist President Nicolas Maduro dictatorial powers.

    Gee, you know what other Socialist President had his country pass an “Enabling Law” to give him dictatorial powers?

    Go ahead.

    Guess.

    Maduro’s opponents? Not happy.

    Earlier this month, Maduro sent the army to seize electronics store and force them to sell goods below cost, i.e. at the laughable “official exchange rate” of 6.3 bolivars per dollar rather than the real black market rate, which is some eight times higher. (They even tried to get Twitter to block unofficial exchange rates.) And Maduro is looking to loot more stores ahead of the December 8 elections. Given that Hugo Chavez has been hollowing out the country since 1999, I’m not even sure it’s possible for the opposition to win a large enough victory to escape the margin of voter fraud anymore.

    Inflation is running at 54%. Oil prices are at 16 month lows, and the country’s oil production has been declining for a while. That, and the crazy Socialist looting, have sent Venezuela bond prices into a tailspin and sent their interest rates to an all-time high. Crime is also high, with Caracas being the murder capital of the world (yes, even worse than Chicago).

    Maybe that’s why Goldman Sachs has a scheme to help Venezuela swap gold for dollars.

    It’s almost as if Maduro read Atlas Shrugged and saw it as a blueprint rather than a cautionary tale. Imagine Greece, if hyperinflation was just getting started and they didn’t have German taxpayers to bail them out.

    You can decree imaginary exchange rates the same way you can decree that π be set to exactly 3, and the reality will ignore and punish your delusion. Watch inflation skyrocket and business collapse as sellers are unable to buy goods and unwilling to sell at a loss, guaranteeing that a far-from rich country is about to get a whole lot poorer.

    The only question now is whether Venezuela’s economic collapse will bee Argentina bad, or Weimar Germany bad.

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    Posted in Crime, Economics | No Comments »

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