The beginning of the end for Venezuela and his socialist revolution

The poor Venezuelan people will be taking a harsh dose of medicine over their choice of leaders.


http://news.yahoo.com/s/ap/20070216/ap_on_bi_ge/venezuela_currency_1


http://www.bloomberg.com/apps/news?pid=20670001&refer=&sid=aP0vG6d9rOAk

 

I'm as anti-Communist as they come but IMO Chavez, Morales and to a lesser extent Lula are receiving overheated reaction in the U.S. These guys are no where near as bad as Castro.

Multi-nationals and Euro-tyrants who stole land through bribery and corruption are crying at the injustice of democratically elected leaders redistributing portions of properties that should have been in the public domain all along. Boo hoo.........

It's been great news though for sagging Miami real estate prices.

 

When was the last time, a currency revaluation actually worked?
As in , doing more than just stall a financial crisis?

Socialists, its all-ways with the "revolution", why is that?
It can't just be "a few policy changes in the interets of equity and fairness", no, it has to be a "revolution".

WHAT is revolutionary about it? It's not like its original.

"Rule by decree" and " socialist revolution " are not words that belong in the same sentence.

 

The economic reforms and nationalist policies being advanced by Hugo Chavez, the populist president of Venezuela, are liberating Latin American nations from the suffocating grip of the international financial oligarchy.

The wide-ranging reforms promoted by Chavez are being financed by the immense oil wealth of Venezuela, the world’s fifth-largest exporter of oil. The year 2006 brought increased state control of Venezuela’s oil production.

Venezuela, with the largest proven oil reserves outside of the Middle East, produces more than 3 million barrels of oil per day. On Jan. 1, Venezuelan Oil Minister Rafael Ramirez announced that 32 privately operated oil fields had come under state control with the start of 2006.

In 2001, Venezuela passed a law requiring oil production to be carried out by companies in which the government held the majority share. The deadline for the oil companies to convert their operations to joint ventures in which the state oil company Petroleos de Venezuela SA (PDVSA) has the controlling stake expired at midnight on Dec. 31, 2005.

The oil fields that came under state control on New Year’s Day produce about 500,000 of Venezuela’s declared production of 3.2 million barrels a day. The Venezuelan state could own as much as 90 percent in some of the new ventures, depending on how much the private companies had invested in the field.

The soaring price of crude oil has allowed Chavez to support other nations and economic reforms across the region. From Argentina, for example, Venezuela purchased more than $1 billion in bonds in 2005 and may buy as much as $2 billion more.

“Venezuela has been supporting Argentina in freeing it from International Monetary Fund debt, and we will continue, as much as we can, to help Argentina end its dependence on the IMF,” Chavez said.

The Venezuelan investment allowed Argentina’s President Nestor Kirchner to completely pay off its $9.8 billion debt to the IMF on Jan. 3.

“With this payment, we are interring a significant part of an ignominious past,” Kirchner said.

Many Argentines believe that the IMF was responsible for the disastrous economic policies that caused the financial crisis of 2001 and then abandoned the country to recover on its own.

BANK OF THE SOUTH

Chavez has proposed the creation of a new multilateral bank to free the region from IMF influence and the increasing “dollarization” of the region. He called on Brazil and Argentina to contribute some of their international reserves to help fund the new regional bank.

During a recent speech in Brazil, Chavez called for the creation of the “Bank of the South” to “allow us to manage all this money for our own interests,” he said. “Venezuela would bring a part of its reserves; Brazil would bring a part of its reserves, Argentina, too, and other countries.”

Chavez said South American countries should disinvest from rich countries that “manipulate, lend and make a lot of money off our resources.”

Venezuela’s central bank, for example, sold $10 billion of U.S. bonds and other U.S. assets in the first half of 2005.

“How stupid we’ve been,” said Chavez. The Bolivian president-elect, Evo Morales, met Chavez in Caracas as he began a seven-nation world tour. Morales said he and the Venezuelan president were united in a “fight against neo-liberalism and imperialism.”

Morales and Chavez represent a growing number of Latin American leaders who are opposed to U.S. attempts to impose a “free trade” agreement on the region.

Morales, a Socialist, is the first Bolivian politician to be elected with an absolute majority having won 54 percent of the vote. Morales is also the first Indian to come to power in Bolivia where 85 percent of the population is indigenous.

During the trip, Morales discussed his plans to nationalize Bolivia’s vast natural gas holdings, the second largest in South America. “Hydrocarbons and their nationalization—we’re going to talk about that,” Chavez said as he met Morales at Caracas’s international airport.

If the United States “wants bilateral diplomatic and commercial relations, it will have them, but without submission, without subordination, without conditions and without blackmail,” Morales said in Cuba.

On his return from Cuba, Morales held a private meeting with U.S. Ambassador David Greenlee. Representatives declined to give details.

“We join in the task of Fidel [Castro] in Cuba and Hugo in Venezuela to respond to the needs of the national majorities,” Morales said in Caracas the following day, Jan. 3. “The time of the people has arrived. This is the new millennium of the people.”

“We are going to change Bolivia. We are going to change Latin America,” he said. Chavez referred to the three nationalist presidents as “an axis of good.”

Chavez offered to provide Bolivia with diesel fuel, trade benefits and financial assistance for the social reforms Morales has proposed. Venezuela provides some 200,000 barrels a day of subsidized oil to Cuba and 12 other nations in Central America and the Caribbean Basin.

Chavez said Venezuela would supply 150,000 barrels of diesel fuel monthly to Bolivia. “I won’t accept you paying us a cent, you are going to pay us in agricultural products,” Chavez said.

Venezuela will also donate $30 million to Morales’s government following his Jan. 22 inauguration, Chavez said. Iran’s President Mahmoud Ahmadinejad welcomed a proposal from Chavez to develop three-way cooperation between Tehran, Caracas and La Paz on energy.

Chavez proposed cooperation in the field of oil and gas and asked Iran to supply Bolivia with the technical assistance required to help the Morales government nationalize its oil and gas industry. Morales said he intends to nationalize Bolivia’s vast natural gas holdings but not touch foreign oil and gas companies.

“I don’t want to prejudice anybody. I don’t want to expropriate or confiscate any wealth,” Morales said on a recent trip to Santa Cruz, the center of Bolivia’s gas production. “I want to learn from the businessmen.

http://www.americanfreepress.net/html/chavez_influence_growing.html

 

From the previous text...........


"“I don’t want to prejudice anybody. I don’t want to expropriate or confiscate any wealth,” Morales said on a recent trip to Santa Cruz, the center of Bolivia’s gas production. “I want to learn from the businessmen."


Thats kinda a contradiction in terms, is it not?

I just hope thay can fight their way out of this economic double -blind.
I previously thought chavez was just playing to populist sentiment, giving dubya the shits for political capital, and otherwise would be a hard nosed economic rationalist, just with significant protectionist measures, same as the states has done for a long time.


Oh, lordy-he actually thinks, government running shit, with ACTUAL government price controls (rather than the 'suggested' ones in other nations) is gonna help.

That doesn't bode well.

Is venezuealan currency backed by gold, BTW?

 

There are so many innacurracies in this story I would have thought SA wrote it.

Canada has the second largest proven oil reserves and I'm pretty sure they are outside of the middle east and Venezula is 7th. Oil wealth is no measure of a country's health. See Nigeria.

The country will implode and he'll drag all his latin american buddies down with him.

 

Bingo! Wherever men aren't permitted to keep the fruits of their own labor, production is inevitably subdued, and shortages are always the result.

Chavez will go down in history as yet another economy-wrecking communist loser.

http://www.nytimes.com/2007/02/17/w...&ex=1172293200&partner=MYWAY&pagewanted=print

NY TIMES:

February 17, 2007
Chávez Threatens to Jail Price Control Violators
By SIMON ROMERO
CARACAS, Venezuela, Feb. 16 — Faced with an accelerating inflation rate and shortages of basic foods like beef, chicken and milk, President Hugo Chávez has threatened to jail grocery store owners and nationalize their businesses if they violate the country’s expanding price controls.

Food producers and economists say the measures announced late Thursday night, which include removing three zeroes from the denomination of Venezuela’s currency, are likely to backfire and generate even more acute shortages and higher prices for consumers. Inflation climbed to an annual rate of 18.4 percent a year in January, the highest in Latin America and far above the official target of 10 to 12 percent.

Mr. Chávez, whose leftist populism remains highly popular among Venezuela’s poor and working classes, seemed unfazed by criticism of his policies. Appearing live on national television, he called for the creation of “committees of social control,” essentially groups of his political supporters whose purpose would be to report on farmers, ranchers, supermarket owners and street vendors who circumvent the state’s effort to control food prices.

“It is surreal that we’ve arrived at a point where we are in danger of squandering a major oil boom,” said José Guerra, a former chief of economic research at Venezuela’s central bank, who left Mr. Chavez’s government in 2004. <b>"If the government insists on sticking to policies that are clearly failing, we may be headed down the road of Zimbabwe.”</b>

For now, Venezuela remains far from any nightmarish economic meltdown. The country, which has the largest conventional oil reserves outside the Middle East, is still enjoying a revenue windfall from historically high oil prices, resulting in a surge in consumer spending and lavish government financing for an array of social welfare and infrastructure programs. Dollar reserves at the central bank total more than $35 billion.

The economy grew by more than 10 percent last year, helping Mr. Chávez glide to a re-election victory in December with 63 percent of the vote. Yet economists who have worked with Mr. Chávez’s government say that soaring public spending is overheating Venezuela’s economy, generating imbalances in the distribution of products from sugar to basic construction materials like wallboard.

Public spending grew last year by more than 50 percent and has more than doubled since the start of 2004, as Mr. Chávez has channeled oil revenues into social programs and projects like bridges, highways, trains, subways, museums and, in a departure for a country where baseball reigns supreme, soccer stadiums.

In an indicator of concern with Mr. Chávez’s economic policies, which included nationalizing companies in the telephone and electricity industries, foreign direct investment was negative in the first nine months of 2006. The last year Venezuela had a net investment outflow was in 1986.

Shortages of basic foods have been sporadic since the government strengthened price controls in 2003 after a debilitating strike by oil workers. But in recent weeks, the scarcity of items like meat and chicken has led to a panicked reaction by federal authorities as they try to understand how such shortages could develop in a seemingly flourishing economy.

Entering a supermarket here is a bizarre experience. Shelves are fully stocked with Scotch whiskey, Argentine wines and imported cheeses like brie and Camembert, but basic staples like black beans and desirable cuts of beef like sirloin are often absent. Customers, even those in the government’s own Mercal chain of subsidized grocery stores, are left with choices like pork neck bones, rabbit and unusual cuts of lamb.

With shoppers limited to just two large packages of sugar, a black market in sugar has developed among street vendors in parts of Caracas. “This country is going to turn into Cuba, or Chávez will have to give in,” said Cándida de Gómez, 54, a shopper at a private supermarket in Los Palos Grandes, a district in the capital.

José Vielma Mora, the chief of Seniat, the government’s tax agency, oversaw a raid this month on a warehouse here where officials seized about 165 tons of sugar. Mr. Vielma said the raid exposed hoarding by vendors who were unwilling to sell the sugar at official prices. He and other officials in Mr. Chávez’s government have repeatedly blamed the shortages on producers, intermediaries and grocers.

Those in the food industry argue that the price controls prevented them from making a profit after inflation rose and the value of Venezuela’s currency plunged in black market trading in recent weeks. The bolívar, the country’s currency, fell more than 30 percent to about 4,400 to the dollar in unofficial trading following Mr. Chávez’s nationalization of Venezuela’s main telephone company, CANTV, and its largest electric utility, Electricidad de Caracas.

Fears that more private companies could be nationalized have put further pressure on the currency as rich Venezuelans try to take money out of the country. Concern over capital flight has made the government jittery, with vague threats issued to newspapers that publish unofficial currency rates (officially the bolívar is quoted at about 2,150 to the dollar).

Regardless of efforts to stop illicit currency trading, the weaker bolívar has made imported food, fertilizers and agricultural equipment more expensive. Venezuela, despite boasting some of South America’s most fertile farmland, still imports more than half its food, largely from Argentina, Brazil, Colombia and the United States.

Supermarket owners expressed relief when the government this week cut value-added taxes on retail food sales and raised the prices on more than 100 staples in an effort to alleviate the shortages. The announcement included an average 32 percent increase in beef prices and a 45 percent increase in chicken prices.

Following Mr. Chávez’s nationalization threat, supermarket owners were cautious in their public statements. “As long as we are complying with the regulations, I don’t believe there will be any type of reprisal,” said Luis Rodríguez, executive director of the National Supermarket Association.

But many were clearly torn, afraid that their stores could be seized if they complained, but at a loss as to how to continue operating. “If I don’t sell at the regulated price they’ll fine me, and if I don’t sell meat I’ll be out of business,” said a butcher shop owner here.

During his television broadcast, Mr. Chávez said his measures would be laid out in a decree, a power that his rubber-stamp legislature just bestowed upon him. He acknowledged that removing taxes on food sales would deprive the government of more than $3 billion in revenues, higher than the military budget, but he said tax increases on luxuries like beach homes and yachts would make up for part of the shortfall.

Mr. Chávez also said he would raise subsidies for state-owned grocery stores. Economists say such subsidies, together with hefty loans to farmers, have allowed the price controls to function relatively well until recent weeks.

But recent expropriations of farms and ranches, part of Mr. Chávez’s effort to empower state-financed cooperatives, have also weighed on domestic food production as the new managers retool operations. So has the flood of petrodollars into the economy, easing food imports and making some domestic producers uncompetitive, an affliction common to oil economies.

“There seems to be a basic misunderstanding in Chávez’s government of what is driving scarcity and inflation,” said Francisco Rodríguez, a former chief economist at Venezuela’s National Assembly who teaches at Wesleyan University.

“There are competent people in the government who know that Chávez needs to lower spending if he wants to defeat these problems,” Mr. Rodríguez said. “But there are few people in positions of power who are willing to risk telling him what he needs to hear.”

 

LOL.LOL.LOL.LOL.LOL.

As if there was something new under the sun.
There is an excellent author who wrote books on social psychology, revolutions, crowd behavior. He was writing about Chavez 100 years ago.
Gustave Le Bon

 

Justifying the measure, Chavez argued that the country's strong economic growth of recent years, which has been fueled by high oil prices, has made Venezuela "a world economic power," and that it was psychologically damaging for $1 to be worth so many bolivars.


Chavez said three zeros will be stripped from the bolivar, and banknotes and coins for the "new bolivar" would enter into circulation in early 2008.

Chavez said the measure would help fight inflation and boost the strength of the local currency.
That's the way to fight inflation right
What's funny this guy wants to fight U.S..LOL

The only thing different from the past is that it takes much shorter time for this kind of shit to work itself out.

Mr. Chávez, whose leftist populism remains highly popular among Venezuela’s poor and working classes, seemed unfazed by criticism of his policies.
I admit I have a contempt for these stupid retards who think they can get something for nothing but they will pay dearly for their ignorance which is satisfying.

 

This is one thread where I would actually like to see Southamerica, Hydroblunt and the likes who keep running off their mouths on the U.S. demise what would be the spin on this story.
Strange, actually NOT, people who keep predicting U.S. economic meltdown forever couldn't see this coming.