Saturday, February 04, 2006

Even his enemies can't help but see the light 

The Washington Post has been one of the most strident anti-Chavez papers in the United States. They consistently refer to him as a "strong man", "quasi-dictator", and "a destabilizing force in the region". Yet when they sent a reporter to Venezuela to get first hand accounts of what this "dictator" is doing what did they find? That most Venezuelans like him and think he is doing a darned good job (gee just like the polls below say too):

Venezuela's Chavez Wins Hearts Among the Poor

By Michelle García
Washington Post Staff Writer
Saturday, February 4, 2006; A12

CARACAS, Venezuela -- The shanties came tumbling down, wiping out the families who had built their homes on the hill. Carlos Henriquez, then a young boy, vividly remembers the images of the deadly mudslides and the feeling that the government had failed to protect the poor.

In the years that followed, there were more examples of official indifference, said Henriquez, now 22, who has a slight build and a boyish face. Young men fell behind in school, became apathetic and entered shadowy careers on the street. And he felt the government did not seem to care.

But recently, under what President Hugo Chavez calls his "Bolivarian Revolution," named for the 19th-century independence leader Simon Bolivar, the Venezuelan government has offered high school and university educations to adults left behind.

"Now those neighborhoods are stabilizing. This revolution is putting some enthusiasm in the people," said Henriquez, the son of an artist, who peddles revolutionary posters on the sidewalks of the capital. "Before, they didn't have any hope."

He plans to follow in his brother's footsteps and attend Mision Ribas, a high school for adults. "People are looking for ways to advance and keep going," he said while standing near his poster display. "The people were waiting for that, and it has arrived."

Chavez, whose taste for revolutionary red, populist ideology and fiery rhetoric has made him a hero in this oil-rich country, governs with the self-proclaimed mandate of realizing Bolivar's dream, which included uniting numerous countries of Latin America. For decades, a tiny political and economic elite directed the country and reaped its oil wealth. But that has changed under Chavez, and his supporters say Venezuela now belongs to them.

On the world stage, Chavez often lobs barbs at President Bush, whom he has nicknamed "Mister Danger." Chavez, first elected in 1998, survived a 2002 coup that was at least tacitly supported by the United States, and a referendum to recall him in 2004. Critics accuse him of consolidating power, punishing opponents and instigating confrontations with the U.S. government.

But his domestic loyalists are fervent and number in the millions. The Chavistas , as his supporters are known, say that for the first time in the country's 47-year shaky attempt at democracy, they have a president who promotes an inclusive society and pride in the country's culture and history.

A Chavez-inspired moment occurred last week when indigenous artisans from the Amazon region and the border with Guyana gathered in a white tent after traveling here to sell their wares at the World Social Forum, a summit for leftist activists.

The palm weavers and jewelry makers said it was a rare opportunity to showcase their native culture. But the forum organizers neglected to build a vendors' stall, and the artisans were left idle.

"Every time we come to Caracas, it's difficult to find a place to sell," said Danilo Garzea, 23, of the Piaroa tribe, from the area near the border with Colombia. After hours of stewing with indignation, the group devised a plan.

"A brilliant idea occurred to us -- to ask for a market here in the city so this doesn't keep happening," said Garzea, who wears his black hair short and spiky and displays his handcrafted jewelry tied around his arm.

Before Chavez took office, Garzea and others said, Indians had no legal protections from discrimination and no political voice. In society, they were relegated to an ornamental role. The president, who embraces his Indian ancestry, bestowed native people with ancestral land, full citizenship rights, recognition and protection under the national constitution.

"With Chavez we have opened our eyes," Garzea said the next day, standing under the red canopy of the new vendors' stall. "Before, to think, to explore, to imagine, wasn't possible. Now, we can."

After Chavez won the referendum in 2004, opposition parties fell into disarray due to infighting. The rumblings of criticism are heard largely through the mainstream media, which aggressively cover Chavez's missteps, real or perceived.

One of the most egregious misuses of power, say his critics, is la lista , the list of voters on the petition that demanded a referendum. The list was posted on the Web sites of an opposition group and a pro-Chavez member of the National Assembly. Chavez's critics say the administration had been using the list to weed out opponents from government jobs and programs.

Jose Antonio Montenegro, a cabdriver, blamed the list for the demise of his construction company. Montenegro said that several months after he signed the petition, his application for a government loan was rejected when his name popped up on the list.

"Do you know how many lawyers are driving taxis?" he said, as melancholy U.S. ballads played over his car stereo. "Professionals don't have a future because they signed against Chavez."

Calixto Ortega, a member of Chavez's political party and the head of a parliamentary committee on domestic security, said the party does not condone the use of the list, adding that political discrimination violates the national constitution. But he said party leaders had consulted the list at times.

"When there was a situation in which the state was in danger, you had to take precautions," Ortega said. "You didn't know if it was over, so it was important for stability to know what people were thinking."

Still, in many parts of Caracas the enthusiasm for the Bolivarian revolution and its charismatic leader is so great that men and women are moved to cry. Without a hint of exaggeration, Chavistas punctuate their pledges of loyalty with shouts of "Revolution or death!"

In 2002, Escarlett Castro, a single mother of three and a supervisor for a landscaping company, made good on that promise. Faint scars are still visible on Castro's back. That's where a policeman's bullet grazed her after the coup attempt in 2002, as Castro joined protesters outside Miraflores, the presidential palace, to demand Chavez's return.

"We wanted to get to Miraflores, and we weren't going to leave until the president returned," she said, her voice choking, as she climbed through her densely packed neighborhood, pressed into the side of a hill, to reach her humble house with one small window. "Chavez is the man we have waited for all this time."

"We triumphed," said Castro, who has long black hair and wears bright red lipstick. "They have to take into consideration that the truth always, always wins, especially when it's the humble people who have the truth."

Some of Chavez's supporters stress the distinction between the desire of poor and working Venezuelans to determine their future and the will of its leader. Geomar Hernandez, 26, said he applauds Chavez but bristles at the name Chavista.

"I'm not a Chavista, I'm a Venezuelan," said Hernandez, a university student. "We have to believe in a nation. The leaders are circumstantial; their positions change."

So in their defense I guess we should say at least they are willing to have their eyes opened.


They work hard for their money 

As it is the beginning of the year, and an election year at that, the Venezuelan govevernment is making lots of adjustments to its budget and to things like pay scales. For example, the minimum monthly wage is being increased from 405,000 Bolivares to $465,750 Bolivares (about $200). Additionally the public sector salary scale is being adjusted upwards so that most government workers (and in Venezuela a great many people work for the government) will be getting even larger increases.

In addition to those changes there is one group that will probably be the most benefitted by some of these new initiatives and budget increases - women who work in the home (aka housewives). It first needs to be noted that when Chavez first came to office and a new constitution was written the rights of women, and in particular those who labor only in the home, was recognized for the first time. Here is what Article 88 of the Venezuelan Constitution says:

The State guarantees the equality and equitable treatment of men and women in the exercise of the right to work. The state recognizes work at home as an economic activity that creates added value and produces social welfare and wealth. Housewives are entitled to Social Security in accordance with law.

To my knowledge Venezuela is one of the few countries in the world that recognizes the value of work in the home and actually declares it eliligible for benefits.

What does this mean in pratical terms? In Fridays Ultimas Noticias they noted that just as the minimum wage is increasing the compensation to low income women working in the home was also increasing. It will be 80% of the minimum wage or 372,600 (which for some reason doesn't actually correspond to 80% of the above given minimum wage numbers which were in the same article - it appears someone made a mistake). It is estimated that about 100,000 women will benefit from this. This probably does not completely meet the need out there but it is a big step. And taken along with already existing programs aimed at the same population segment, such as the discounted food kitchens run out of peoples homes, this means government assistance is almost certianly reaching a very high proportion of the population.

So to summarize. Under Chavez Venezuela radically changes its oil policies and supports OPEC. Oil prices then increase significantly which in turn increases Venezuela's income. The government then uses this income to, among other things, help housewives who have no other means of support. Well, no wonder the Bush administration thinks Chavez is the second coming of Hitler. Personally, though, I'm glad to see my purchases at Citgo are going to some very worthwhile purposes, unlike my taxes which go to bombing people


Friday, February 03, 2006

Polling update - UPDATED POST 

Its been a while since I've given any polling information in part because not much has been released. Today though some showed up in El Universal based on polling by the Datanalisis polling firm which is one of Venezuela's major polling firms and strongly opposition minded. And what does it show? Essentially, that in spite of all the non-sense about Chavez not having much support, or the seven years of his government being a failure, or that the opposition doesn't want to go to elections because they don't trust the electoral authorities the real deal is that Chavez is much more popular than his opponents and that average Venezuelans think he is doing a good job.

Lets look at some of the numbers. First, Venezuelans classify themselves as follows:

Chavistas 41.3%

Opposition 15.5%

Ni-Ni (neither) 35.9%

So Chavez has almost 3 times as much support as his opponents. Sure the opposition's problem is a biased C.N.E. - we really believe that!!

On the condition of the country:

Good 60.6%

Bad 36.2%

So if people vote just based on how they think the country is doing Chavez wins in a landslide.

And lastly, confidence in Chavez:

53% have faith in Chavez

39.7% don't have faith in Chavez

Even in this least favorable set of numbers Chavez still comes out quite well.

So, my opposition friends, keep blabbering about the electoral authorities, or the electoral registry, or the voting machines, or how crappy the international observers are. Remember, obfuscate, obfuscate, obfuscate. Whatever ever you do, don't let people get focused on the simple concept that the country is doing well, most Venezuelans think it is doing well, and that Chavez is simply FAR more popular than his opponents.


Today (Saturday) in Ultimas Noticias they gave some updated polling numbers on Chavez's tenure. Here they are:

58.8% of the population think the situation of the country has improved under Chavez's government.

19.1% think it has worsened

19.8 think it has stayed the same

47% of the population say their personal situation has improved in the last 7 years.

15.4% say their situation has worsened.

36.8% say it has remained the same.

On various questions of perception:

53% say the economy has improved in the past 7 years.

41.9% say unemployment has increased over the past 7 years.

40.8% say corruption is as bad as ever.

On Chavez's overall approval rating:

77.7% think he is doing a good or excellent job.

20.5% think he is doing a bad or terrible job.

On voting preferences Chavez vs. various candidates:

Chavez 64.2%
Julio Borges 21.5%

Chavez 64.8%
Manuel Rosales 18%

Chavez 67%
Teodoro Petkoff 12.7%


Thursday, February 02, 2006

Umpteen years of bullshit 

Today is the seventh anniversary of Chavez taking office. For most Venezuelans the seven years of Chavez's government is something to celebrate. It is the best government of at least the past couple of decades and the only and the only government that has given a damn about the bottom two thirds of Venezuelan society.

But of course, there are the perenial malcontents out there for whom the past seven years has been nothing but a disaster. Given that they all seem to own their own newspapers or TV stations they don't have a problem making themselves heard. And one of the more prominent of them, Teodoro Petkoff, is probably going to run for President.

Not being one who can keep his mouth shut and avoid showing how dumb he is today he wrote an editorial called "Seven Years of Failure". In it he presumes to tell us how bad the past seven years have been for Venezuela. One would think such an article would be chock full of statistics showing us how the economy has nose dived, unemployment risen, poverty risen, etc. etc. But upon reading the article I discovered there weren't any statistics. I thought, "thats odd". But after reflecting upon it further its pretty apparent why. What statistics would he show. Not the ones that show Venezuelan GDP at its highest level ever and growing quickly. Not inflation coming down. Not the ones showing more jobs being created. Not the ones showing poverty being reduced or the income of the poor being dramatically increased. Of course, I guess he could have shown stats about crime going up under Chavez. But that wouldn't be a good idea because it would only make his not using any economic statistics all the more glaring.

So he just goes on and on with the usual lies - that povety is increasing, or that the gap between the rich and poor is somehow increasing, and on and on. He presents no statistics to back any of his assertions up because he doesn't have them. And he doesn't need them because the rabid opposition that reads his paper doesn't need them - they gladly take all those things as an article of faith. Petkoff has spent years now peddling this type of BS - from claiming that Bernal controlled the snipers on April 11th to the country being on the verge of collapse in the Spring of 2003. And all 5,000 readers of his paper gladly soak it all up.


"He's a person who was elected legally just as Adolf Hitler was elected legally." 

I kid you not, Donald Rumsfeld really did say that. Have a look With complete morons like this running things no wonder they were so stupid as to think Iraq would be a cake walk and they would be welcomed as liberators.

So now that the most absurd propoganda of the Venezuelan opposition (Chavez = Hitler) is being repeated at the highest levels of the U.S. government I think we can see clearly why Venezuela better be beefing up its military. After all, if Chavez is the new Hitler and everyone knows the great mistake with Hitler was not pre-empltively destroying him while he was still weak, then it sure does follow that Yankee troops should be storming the beaches of Chichireviche pretty soon.

As a somewhat off topic aside this just goes to show what a complete lack of historical knowledge people running the U.S. government have. Hitler was not elected. He was APPOINTED Chancellor by Hindenburg after no one else could form a government. Hitlers Nazi party never won a majority of the seats in the German Reichstag and in fact their number of seats went down in the election immediately proceeding his appointment. Given their blissful ignorance of basic historical facts should we really be surprised that they got Iraq wrong, didn't see the Hamas victory coming, and have screwed up just about every other intervention they have tried?


Take a hike, Jack, and don't ya come back 

This is probably something that should have been done long ago:

CARACAS, Venezuela - Venezuelan President Hugo Chavez said on Thursday he was expelling a U.S. Embassy military official who authorities have accused of spying with a group of Venezuelan military officers.

The diplomatic expulsion worsens already rocky relations between the United States and Venezuela, the world’s No. 5 oil exporter and a top supplier of crude to the U.S. market.

“We have decided to declare persona non grata or as we say here, to throw out of the country, a military officer in the U.S. mission because of espionage,” Chavez said during a ceremony to celebrate seven years in power.

We have declared persona non grata U.S. naval Capt. John Correa, who must leave the country immediately,” he said.

He said the full U.S. embassy military mission would be expelled from Venezuela if authorities caught any of its officers spying.

U.S. officials rejected the espionage charges.

“We will respond through diplomatic channels,” U.S. State Department spokesman Kurtis Cooper said, referring to a Jan. 30 letter the United States received regarding Correa.

“None of the U.S. attaches was or is engaged in inappropriate activities,” the official said.

Excuse me, but why are there any U.S. military attaches in Venezuela? Is there any possible legitimate function these people could be fulfilling? Not that I can think of. They all need to leave. Maybe they can hop a chartered flight with the New Tribes people.


Wednesday, February 01, 2006

Going further into debt? 

As anyone who has followed Venezuela for the past couple of years knows their economy has been on a roll. It is one of the fastest growing in the world at 9% last year and 17.4% the year before. It is further expected that the economy will grow between 5 and 10% this year.

Be that as it may, not everything is peaches and cream with the Venezuelan economy. Today there was an article in El Universal pointing out that Venezuela's indebtedness increased during 2005.

According to the article Venezuela's foriegn debt increased by $3.58 billion dolars in 2005 to a total of $31.6 billion. Further, its domestic debt (ie, what it owes to Venezuelans as opposed to foreigners) increased by $1.8 billion to reach $15.5 billion. So Venezuelas total national debt is now $47.1 billion.

That debt is equal to 37.8% of Venezuela's GDP. By way of comparison the U.S. federal debt is 63.5% of GDP. So Venezuela's debt is still reasonable. But it is up from 29% of GDP when Chavez first took office. The article also points out that servicing this debt will cost Venezuela $6.7 billion this year which is about the same as is spent on health care and education combined.

Now, the article does leave out a couple pieces of relevant information. For example, the state oil company, PDVSA, has paid down bilions of dollars of its debts which is really a reduction of Venezuelas overall debt. Further, the foreign reserves are at an all time high and have increased by more than $10 billion during Chavez's tenure. So the net new indebtedness hasn't really increased that much under Chavez. Not to mention there have been some mitigating circumstances such as a rather nasty oil strike that certainly didn't help things.

Nevertheless, news of the debt still going up in 2005 at a time when government revenues from both oil and taxes were very high is neither good nor acceptable. There just really isn't excuse that can be put forth to justify this. While Venezuela certainly needs all the money it can get and borrowing is one way to get money it is just not smart. All money that is borrowed ultimately has to be repaid. Worse still, it has to be repaid with interest. So borrowing money is something a country like Venezuela really wants to avoid if at all possible. And if you can't get off a credit addiction when you have a banner year like 2005 then I really have no idea when you will ever do it.

Side note: If you read the actual article in El Universal it is quite amazing. It is well written, informative, based on facts, and avoids the usual hyperbole. Whats up with that? Could it be they finaly want to do something to restore their tattered credibility? We'll have to see if this is a trend.


Tuesday, January 31, 2006

Trying to find smoke where there is none 

The Financial Times of London came out with a rather bizarre article today. In effect they are accusing the Venezuelan government of somehow doing something corrupt in buying and then selling Argentinian bonds. Here is the article:

A select group of Venezuelan banks is profiting from opaque government treasury operations involving hundreds of millions of dollars of Latin American sovereign bonds under a financial programme fostered by President Hugo Chávez.

Backed by record oil revenues, Venezuela has bought $1.6bn in Argentine debt during the past year - mostly dollar-denominated Boden bonds maturing in 2012. They were purchased in auctions that were eschewed, in some cases, by big investment banks, such as Citigroup (NYSE:C - news) and JPMorgan Chase, because the yields offered were considered too low.

Venezuela, which has been the largest buyer of Argentine sovereign debt since the country defaulted on itsforeign debt in 2001, has said it is ready to buy up to $2.4bn worth of Argentine bonds.

It has also bought $25m of Ecuadorean debt and finance minister Nelson Merentes recently said he was looking at buying Brazilian and Chinese bonds.

Investment banks Morgan Stanley and Deutsche Bank are reportedly advising on the bond transactions.

Mr Chávez justifies his virtual "hedge fund" as a benevolent concept that will allow Latin American nations such as Argentina to "liberate'' themselves from an international financial system that, he asserts, is manipulated by the US.

Last year, Venezuela transferred all of its foreign reserves that were held in US Treasuries or that were on deposit at US banks, about $20bn in total, to the Bank for International Settlements in Basel, Switzerland.

Venezuela's bond purchases have helped Argentina increase its foreign reserves. President Nestor Kirchner's government last month paid off its outstanding $9.5bn debt to the International Monetary Fund, in part thanks to the cash injection from Mr Chávez.

"Whilst the [bond] purchases are good news for the Argentine government, the benefits for Venezuela are less clear," said Vitali Meschoulam, emerging markets strategist at HSBC Securities in New York.

The Financial Times has learned that significant profits deriving from the bond transactions are being accumulated by a few private banks, rather than by the Chávez government.

In late November, Mr Merentes announced that some of the bonds had been liquidated, leaving a profit of $40m. Mr Merentes said last month that $600m worth of the Boden 12 bonds had been sold, without elaborating on the method.

Most of the bonds were sold directly - instead of in an auction - to two local banks, Banco Occidental de Descuento and Fondo Común, according to two people familiar with the deal and a senior official at a financial regulatory authority. The banks have since re-sold the bonds into the open market.

Mr Merentes didn't respond to several requests for comment during the past week. Victor Vargas, president of Banco Occidental de Descuento, and Victor Gil, president of Fondo Común, also didn't return messages seeking comment.

But though the chosen banks are likely to have profited from increases in prices of Argentine bonds, they have benefited more significantly from Venezuela's foreign exchange controls, in place since 2003, and a flourishing but tolerated parallel market.

Venezuela's treasury sold the Boden 12 bonds to the banks at the official exchange rate of 2,150 bolívars to the dollar. But, according to the people familiar with the transactions, the banks re-sold the bonds at the parallel market dollar rate, which trades at about 2,600 bolívars.

On a re-sale of $100m worth of bonds, the banks would gain bolivar profits equivalent to about $17m at the informal market rate, or $21m at the official rate.

Following alleged complaints from banks that were excluded from the operations, in recent weeks the finance ministry has also begun selling directly to them some of the bonds that it still holds, in $40m-$50m tranches every two weeks.

Orlando Ochoa, an independent economist, said that a lack of transparency has become the hallmark of the Chávez government's financial administration.

''The ministry of finance is allocating windfall gains in Argentine bond operations to selected domestic banks, without bidding rounds and without financial reasons to privilege them,'' Mr Ochoa said.

Of course, its hard to know what exactly is going on here as what is opaque is the article itself, especialy considering it doesn't quote anyone for attribution on the charges of wrong doing.

As has been mentioned on this blog before the Venezuelan government, as an act of solidarity, has bought Argentinian bonds. In effect this is just loaning Argentina money which Venezuela will get back when it sells the bonds. This has the benefit of letting Argentina get the money it needs without having to borrow it from obnoxious people like the IMF who will attach all sorts of right wing policy prescriptions as a condition to any loan. So this is good for Argentina, a nice act by Chavez, and it doesn't really cost Venezuela much of anything.

Now, Venezuela has turned around and sold some of the bonds to private entities like banks so it can get its money back. Fine. Nothing wrong with that and Argentina still has the money it needs.

But what the article complains about is that while Venezuela sold the bonds at 2,150 bolivares to the dollar the banks then turned around and sold them to someone else at a higher rate. Two things. First Venezuela had to use the official exchange rate when selling the bonds. That official exchange rate is the one that by law everyone in Venezuela must use when exchanging Bolivares and dollars. If the government didn't use that rate they would be breaking their own laws!!!!

It is then alledged that these private banks turned around and sold the bonds at a higher unofficial (and illegal) exchange rate. That may be. But the government can't control that unless it catches them. So instead of making anonymous accusations in newspapers maybe the people that supposedly know this should give the information to the Venezuelan authorities so they can do something about it. But that is not the way the article reads. They make it sound like their main beef is that THEY weren't given some of the bonds so THEY could sell them at high unofficial rates and make a nice, illegal profit for themselves. So I guess we know why the article is so opaque and unsubstantiated. The people complaining aren't concerned that the law is potentially being broken. They are upset they aren't getting a piece of the action!!!!!!


When you piss off these idiots you know you are doing something right 

From the American Family Insitute:

Venezuela Dictator Vows To Bring Down U.S. Government
Send an email to Chavez and to Citgo that you will not be shopping at a Citgo station.
Venezuela government is sole owner of Citgo gasoline company

Venezuela Dictator Hugo Chavez has vowed to bring down the U.S. government. Chavez, president of Venezuela, told a TV audience: "Enough of imperialist aggression; we must tell the world: down with the U.S. empire. We have to bury imperialism this century."

The guest on his television program, beamed across Venezuela, was Cindy Sheehan, the antiwar activist. Chavez recently had as his guest Harry Belafonte, who called President Bush "the greatest terrorist in the world."

Chavez is pushing a socialist revolution and has a close alliance with Cuban dictator Fidel Castro.

Regardless of your feelings about the war in Iraq, the issue here is that we have a socialist dictator vowing to bring down the government of the U.S. And he is using our money to achieve his goal!

The Venezuela government, run by dictator Chavez, is the sole owner of Citgo gas company. Sales of products at Citgo stations send money back to Chavez to help him in his vow to bring down our government.

Take Action

Send an email to Chavez and to Citgo that you will not be shopping at a Citgo station. Why should U.S. citizens who love freedom be financing a dictator who has vowed to take down our government?

Very important. Please forward this to your friends and family and urge them not to shop with Citgo. Most of them don't know that Citgo is owned by the Venezuela government.

And so immportant is it to stop this "socialist dictator" Chavez he got top billing, above even the outrage of Ford Motor company supporting homosexuals:

Tupelo, MS) - American Family Association (AFA), along with 43 other pro-family groups, has asked Ford Motor Company Chairman Bill Ford to honor Ford’s commitment to stop supporting homosexual groups. The organizations also requested that Ford stop supporting any group involved in the current cultural war.
In a letter to Ford, AFA Chairman Donald E. Wildmon said Ford, after a meeting with homosexual groups, reneged on a representation of action they told AFA Ford would take.

”After meeting with seven homosexual leaders and without any input from thousands of their dealers who stand to be adversely affected by Ford’s decision, Ford made their decision to renege on actions they told AFA they would take,” Wildmon said. “Ford’s support for these groups pushing homosexual marriage can only hurt dealers across the country. Why would Ford put the interests of seven homosexual groups ahead of the interests of all their dealers? Simply because Ford considers seven homosexual leaders more important than thousands of their dealers.”

Browsing their web site this Tupelo Mississippi based outfit wants abortion rights eliminated and a "In God We Trust" poster placed in every school room in the United States.

And to think an organization with so many other important projects actually made time to bust Chavez's chops!! All I can say is keep up the good work, Hugo, keep up the good work.


Monday, January 30, 2006

Confirmed: Oil prices still too low 

For years now the eastern half of Caracas has all been in a huff that oil prices are too high (yes, these are people in an oil exporting country saying this) and that this will push the world into recession, or alternative fuels to be developed, or simply price oil out of the energy marketplace. Of course, anyone who actually observed consumer behavior in energy consuming countries knew this was absurd. People may have griped about high energy costs but they have continued to act as if it were cheap. Today we get further confirmation of this as Americans aren't about to give up on gas guzzlers yet:

The consensus was sacrifice, the need for Americans to accept that sharing bounty and limiting resource consumption will be necessary parts of their future, if they want to live in peace.

The reality was something different, highlighted by panel discussions, news conferences and automotive executive interviews held in conjunction with the 64th annual staging of the Washington Auto Show, which ends tonight at the Washington Convention Center.

To wit: Not many Americans are willing to sacrifice anything that will in any way lead to their immediate discomfort or inconvenience or upset their sense of entitlement to the better life, especially in the matter of personal transportation.


You would think that with bullets flying, bombs exploding and people on all sides dying in resource wars overseas that fuel conservation would be uppermost in the minds of most Americans shopping for new vehicles. After all, it's America that's pouring huge amounts of blood and tax dollars into those global conflicts.

At the very least, you'd be tempted to wager that basic selfishness, reflected in concern about rising gasoline pump prices at home, would spark a rush toward more fuel-efficient cars and trucks. You'd be wrong on all counts.


What about fuel economy? It finished dead last in the survey, with only 3 percent -- repeat 3 percent -- of those polled listing it as their "most important" consideration.

If you think that's bad, 11 percent of those polled listed fuel economy as their "least important" concern, along with "least important" ratings for insurance costs (40 percent) and vehicle color (28 percent).

So oil is at $60 a barrel and Americans aren't batting an eye lid. Of course, there is a very logical reason for that. Despite high nominal prices gasoline is still inexpensive in real terms and even cheaper when compared to other things they purchase. The average American spends pays more for a gallon of bottled water than they do for a gallon of gasoline.

There was a little tid bit in the Wall Street Journal today that also helped explain why oil is still viewed as cheap:

...at $70 oil expenditure still makes up only about 4% of global gross domestic product, compared to 7% during the oil crises of the 1970s and 1980s. At $120, oil expenditures would make up nearly 8% of global GDP.

So due to growing economies and rising incomes oil is costing the world barely half of what it did in the 1970s. Thats why the price increases have been easily absorbed by the worlds economies. And that is why Iran and Venezuela are right to tell OPEC it should be cutting back on production to at a minimum keep prices where they are, if not nudge them even a little higher.


Import substitution charges ahead 

This item appeared on the Bloomberg news channel:

Venezuela to Spend $3.25 Bln on State Industries, Alvarez Says
Jan. 30 (Bloomberg) -- Venezuela, the world's fifth-largest oil exporter, will spend $3.25 billion to create 11 new state companies that will produce goods ranging from cotton to steel, Basic Industries and Mining Minister Victor Alvarez said.

The new companies will include a new state steel mill, an aluminum laminating company and ventures in cotton, iron ore, mining and paper pulp, Alvarez told reporters in a televised press conference. The government expects to create as many as 5,000 new jobs through the plan, Alvarez said.

``Many of the products will replace imports,'' Alvarez said. President Hugo Chavez will release details later tonight during a televised address.

Venezuelan President Hugo Chavez pledged earlier this month to invest the country's oil surplus funds in ventures that will create jobs, while developing the nation's industries.

The 11 companies will be part of the country's new heavy industries holding company, Compania Nacional de Industrias Basicas.

This sounds good, sort of. One of the frequent criticisms of the opposition is that there isn't enough investment in Venezuela. Yet, in this one news bulliten we hear of $3.5 billion in new investments. So this is good in the investment respect.

On the other hand, it would be nice to know what exactly these companies will be, how they will be run, what they will produce, what markets they will serve. I hope all that kind of preliminary analysis has been done. But we will have to see what Chavez says. Latin America is littered with failed State industries. Lets hope these don't wind up in that grouping.

BTW, just doing the arithmatic things don't look good. $3.5 billion to create 5,000 new jobs. That winds up being $700,000 per job. I hope there is a mistake and those aren't the real numbers, otherwise they would do better to just hand this money out as stipends in the Missiones!!!


Sunday, January 29, 2006

Coronel does some arithmatic 

A little while back it was pointed out how absurd some of the numbers are that the opposition gives for how much money Venezuela has supposedly given away. One point of contention was that if the opposition is going to give specific numbers about what has been given away then it should at least give some detail as to how these numbers are arrived at. Now it appears Gustavo Coronel has taken up the challenge and done just that. Before delving into the specifics of his numbers and whether or not I agree with them I would like to congratulate him on at least making the effort to do this. It is interesting that a few individuals in front of computers can do what the Venezuelan media and political parties, with all their resources, can't be bothered to do.

The amount of money Mr. Coronel comes up with that Venezuela has "given away" is $17 billion. Much less than what Julio Borges came up with and never substantiated. So right there we have a significant backing away from the oppositions original claims. But lets go through Mr. Coronels numbers line by line. I will then put them into one of three buckets; 1) Definitely not a give away, 2) possibly a give away, or 3) definitely a give away. So lets start:

1) Argentina was given 3.9 billion by Venezuela buying its bonds, $100 milion to build a refinery at Campanas, and the swap of 4 million barrels of oil for agricultural machinery.

The $3.9 in bond purchases does not in any way constitute a give away. All Venezuela is doing is loaning Argentina money which it will one day get back, with interest. To say this is a give away means I am giving money away to a bank when I deposit my money or that Venezuela is "giving" the US money when they bought US Treasury bonds. So this is clearly not a give away.

On the oil refinery it is a little less clear. What is the purpose of the refinery? Wil it be used to process only Venezuelan oil? Will Venezuela derive profits from it? Is this like when previous Venezuelan governments purchased Citgo, which certainly no-one in the opposition would call a give away? Those things would need to be known to correctly categorize this. So I'll call this a possible give away. lastly he complains about a swap of oil for agricultural machinery. Rather than a give away isn't that just barter. Venezuela isn't giving away oil, it is getting something, presumabley of equal value in return.

2) Bolivia; $60 million in unspecified donations and another $30 million agreed to by Chavez on TV.

Ok, lets accept this $90 million as give aways.

3) Brazil: $4.6 billion for a refinery in Pernambuco, the purchase of 20 Tucanos airplanes, 28 tankers for PDVSA and a polipropeline plant.

Again, the factories may or may not be give aways depending on their use. So that $4.6 billion falls in the category of maybe. The purchase of aircraft and tankers are, well, purchases and therefore do not at all fall in the category of give aways.

4) Andean Community: $50 million in humanitarian aid.

Ok, we'll count that $50 million as a give away.

5) The Carribean; $540 million in oil subsidies which are compensated with bananas.

So is this a give away or just more barter. Can't tell so this just goes into the maybe category.

6) Colombia; nothing is apparently being given to the Colombians

So, not much to talk about here.

7) Cuba; $2.1 billion in oil subsidies, $20 million for electrical work in Havana, $480 million to open a Venezuelan bank there, $50 million for housing there, $65 million for the Cienfuegos refinery, and others items worth $8 million.

I have never seen any substantiation of the the accusation of Venezuela giving away oil for free to Cuba. Further, even if it does give oil to Cuba it is certainly getting a lot of things of value, like doctors and teachers, in return. So this would seen to go into the not a give away category. On the others let me be generous to Mr. Coronel and assume they are all true give aways.

8)Ecuador; $25 million in bonds.

Again, buying bonds is in no way giving away money so this definitely goes in the not a giveaway category.

9) U.S.A. $16 million made up of lobbying expenses
and subsidized fuel.

Lets assume this is all a give away

10) Spain, $2 billion for the purchase of planes and ships

Jeepers, amazing he keeps screwing this up. So when I walk into the local Target store to and spend $10 to buy soap am I "giving away" money to Target ?!?!? A deinite no.

11) Guyana; $12 million in pardoned debts.

ok, this is a give away.

13) Jamaica; $300 million for a refinery and $300 million to build a highway.

As discussed before, the refinery goes into the maybe category while the highway I'll count as a give away.

14) Paraguay; $625 million for a refinery

Again, a maybe.

15) Dominican Republic; $156 million for infrastructure projects.

Sounds like a give away to me.

16) Russia; $175 million to purchase guns and helicopters.

Remembering the Target example this is deinitely a no.

17) Uruguay; 1.143 billion for a refinery, an airline, food, a hospital, and workers cooperatives.

Ok, lets say half of this is a give away and half maybe a give away. Adding this all up in an excell spreadsheet I get the following.

$1.7 billion in definite give aways

$6.75 billion in possible give aways

$8.2 billion in items that are definitely not give aways.

So after all this we have the sum of $1.7 billion in money given away to foriegn countries. Certianly not an insignificant amount but quite a reduction from either the $17 billion mentioned by Coronel or the $16 billion in three months mentioned by Borges. So what we have from the opposition, again, are wild accusations that evaporate in the light of quantification and evaluation.


Hopefully this is an idle threat 

Today, President Chavez, upset at what he claims is the U.S.'s refusal to help maintain Venezuela's exisiting F-16 fighters threatened to buy Russian Mig aircraft.

Now, it might be nice if the U.S. would be fully co-operative in helping Venezuela keep using the F-16s. But given the current political realities this is probably not realistic. So the question then becomes should Venezuela money aquiring new airplanes from anyone else? I don't believe so.

First, the primary threat to Venezuela obviously to Venezuela obsiously comes from the United States. Given the power of the U.S. military any airplanes Venezuela had would probably not be of much help. As the Iraqi resistance has shown, a low tech but capable militia is the way to go in deterring the U.S. So to the exten that Venezuela is going to spend money on arms it should be with that in mind.

Second, although others have previously said that Venezuela may need those arms to deter potential regional rivals such as Colombia I don't think that is really the case either. It doesn't look as though Venezuela and Colombia are at all likely to get involved in a shooting war with each other. They both simply have too much to lose. Further, if Colombia did sieze territory from Venezuela the best and most effective retaliation by Venezuela would simply be to start supporting the Colombian insurgents such as the FARC. Colombia, realizing Venezuela has a very strong card in that, therefore knows better than to get into an open confratation with Venezuela.

Given the above its hard to for me to see what possible benefit Venezuela would get from purchasing fighter aircraft. And cheap it would not be. Suppose they purchase 30 aircraft at $40 million each that would be $1.2 billion. Not an insignificant amount of money. Further, the planes would require a lot of more money to keep them in flying condition.

So here is to hoping this is all a bluff and Chavez really doesn't have any intention of making such a costly and unnecessary purchases.


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