Wednesday, June 08, 2005
Odds and ends from the Southland
Not much to mention in the news from Venezuela today. The talk of the town is the butt whipping given the U.S. at the O.A.S. But seeing as that was amply covered yesterday there is no need to dwell on it. So time to play catch up on some odds and ends that don’t justify posts in their own right but are worthy of mention.
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First, it appears that the European Union will not be sending a group of observers for the local elections in August. The reason given by the E.U. is that they normally do not send observer groups for local elections, only national ones. However, the C.N.E. is still making it clear it wants them to come (no matter how much Tulio Alvarez might object ) in December for the National Assembly elections.
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Next, there was more good news on the economic front. It was reported in Panorama today that automobile sales keep increasing this year by leaps and bounds. In May 2005 14,716 cars were sold in Venezuela compared to 9,537 in May of 2004. This is an increase of 54.3%. Year to date 76,621 cars have been sold which represents and increase of 82.58% with respect to the 41,966 sold through May of last year.
The other day we saw how the poor in Venezuela had their income increase by 33% in 2004 which is certainly very good news. But these sales numbers show that it is not only the lower classes that are doing well, but the middle and upper classes as well. Clearly these cars are not being purchased by people in Mission Robinson. The middle and upper classes, who in general despise Chavez, can bitch and moan all they want. But what they are doing with their wallets, as evidenced by these sales statistics, speaks much more forcefully to the true state of Venezuela than any of the ridiculous placards they carry at marches.
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On another note the foreign oil companies operating in Venezuela better watch out, the tax man in coming. Jose Vielma Mora, the head of Venezuela’s tax service SENIAT, announced that he believes foreign oil companies in Venezuela owe $3 billion in back taxes. If indeed they owe that money they better pay up. Mora doesn’t suffer tax cheats. After decades of rampant tax evasion by Venezuela’s commercial and upper classes SENIAT now has teeth and consistently exceeds its tax collection goals. The reason is that they have imposed strict record keeping and reporting requirements on Venezuelan businesses. Businesses are regularly audited by the tax authorities and if anything is out of order, even due to sloppy record keeping, heavy fines are imposed or the establishment is temporarily closed. So these oil companies better not be trying to pull a fast one or they will definitely regret it.
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A final note on the economy. Inflation through the first five months of the year was 7.4% as compared to 9% through the first five months of 2004. So along with all the other good economic news inflation maintains its downward trajectory.
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The last little item is another example of the age old item that copying someone the sincerest form of flattery. Recently it seems a good many people are trying to emulate Chavez. For instance last week we saw how some other countries are copying his oil policies. In fact, if he could patent his ideas and license them as intellectual property just those royalties alone would do much for the Venezuelan treasury!
Today it was Colombia’s turn to follow in Chavez’s footsteps. One very sensible policy that Chavez has followed it to quit running up foreign debt and when debt is needed make sure it is local debt in the local currency. This is a very smart policy because paying back debt in your own currency is much less onerous than paying it back in hard currencies. It greatly mitigates the negative aspects of inflation because if your debt in your own currency then to the extent you have inflation the money you have to pay back is less valuable and not as difficult to obtain. And it reduces the need to do everything possible to keep an over valued currency.
Today Colombia announced that it was following Chavez's lead on this and swapping $3 billion of debt in dollars and euros for debt in Colombian pesos. Pretty soon the Colombians won’t need a finance minister – they can just watch Alo Presidente and follow Chavez’s cues.
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First, it appears that the European Union will not be sending a group of observers for the local elections in August. The reason given by the E.U. is that they normally do not send observer groups for local elections, only national ones. However, the C.N.E. is still making it clear it wants them to come (no matter how much Tulio Alvarez might object ) in December for the National Assembly elections.
....................................................................................
Next, there was more good news on the economic front. It was reported in Panorama today that automobile sales keep increasing this year by leaps and bounds. In May 2005 14,716 cars were sold in Venezuela compared to 9,537 in May of 2004. This is an increase of 54.3%. Year to date 76,621 cars have been sold which represents and increase of 82.58% with respect to the 41,966 sold through May of last year.
The other day we saw how the poor in Venezuela had their income increase by 33% in 2004 which is certainly very good news. But these sales numbers show that it is not only the lower classes that are doing well, but the middle and upper classes as well. Clearly these cars are not being purchased by people in Mission Robinson. The middle and upper classes, who in general despise Chavez, can bitch and moan all they want. But what they are doing with their wallets, as evidenced by these sales statistics, speaks much more forcefully to the true state of Venezuela than any of the ridiculous placards they carry at marches.
.................................................................................
On another note the foreign oil companies operating in Venezuela better watch out, the tax man in coming. Jose Vielma Mora, the head of Venezuela’s tax service SENIAT, announced that he believes foreign oil companies in Venezuela owe $3 billion in back taxes. If indeed they owe that money they better pay up. Mora doesn’t suffer tax cheats. After decades of rampant tax evasion by Venezuela’s commercial and upper classes SENIAT now has teeth and consistently exceeds its tax collection goals. The reason is that they have imposed strict record keeping and reporting requirements on Venezuelan businesses. Businesses are regularly audited by the tax authorities and if anything is out of order, even due to sloppy record keeping, heavy fines are imposed or the establishment is temporarily closed. So these oil companies better not be trying to pull a fast one or they will definitely regret it.
................................................................................
A final note on the economy. Inflation through the first five months of the year was 7.4% as compared to 9% through the first five months of 2004. So along with all the other good economic news inflation maintains its downward trajectory.
..................................................................................
The last little item is another example of the age old item that copying someone the sincerest form of flattery. Recently it seems a good many people are trying to emulate Chavez. For instance last week we saw how some other countries are copying his oil policies. In fact, if he could patent his ideas and license them as intellectual property just those royalties alone would do much for the Venezuelan treasury!
Today it was Colombia’s turn to follow in Chavez’s footsteps. One very sensible policy that Chavez has followed it to quit running up foreign debt and when debt is needed make sure it is local debt in the local currency. This is a very smart policy because paying back debt in your own currency is much less onerous than paying it back in hard currencies. It greatly mitigates the negative aspects of inflation because if your debt in your own currency then to the extent you have inflation the money you have to pay back is less valuable and not as difficult to obtain. And it reduces the need to do everything possible to keep an over valued currency.
Today Colombia announced that it was following Chavez's lead on this and swapping $3 billion of debt in dollars and euros for debt in Colombian pesos. Pretty soon the Colombians won’t need a finance minister – they can just watch Alo Presidente and follow Chavez’s cues.
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