Mid March, and the march to abyss continues

Regular readers might be wondering about the sparse recent posting compared to the flurry early this year. Many reasons but it is not the point. Time to update things a little

Cruelty of the regime

My personal experience last week should make it clear that no one can escape the trained violence that the regime has sponsored, trained by Cubans, of course, as it has not been in the nature of Venezuelans whose earlier dictators would rather dispatch people and only torture for information, never for sport as it has become the case here, in particular since 2014 under Maduro (who hopefully will meet the fate that escaped Chavez, to sit in an international court of justice for crimes against humanity). If a simple particular, out of nowhere, can experience such psychological violence I wonder what people from Lopez to Afiuni have truly experienced. Even, if it were possible, more respect from me now.

But the cruelty is not only there, it reaches genocidal levels with the refusal of the regime to face down the health care crisis, one that could not be solved fast but could be attenuated fast with very simple measures, if the regime decided to try to steal a little bit less than what they are doing. When I hear Sanders at this point in time vaunting the Cuban health care system, in ruin and that ruined the Venezuelan one, I can only be aghast and and say that I feel the burn. How can a US presidential candidate with real aspirations can be so ill informed?

Corruption keeps apace

These past couple of weeks my business has been confronted with two direct extortion attempts by public officials that have become mere racketeers. One succeeded because we had no choice. We are tired to receive the visit of "brokers" which are people that miraculously have access to dollars and can import what we cannot do.  But at DollarToday rates. However they do offer a valid bill of purchase so we can put the goods into our accounting. If we were importing them on our own, without going through the currency exchange of control, the USD bill would be recognized at 10, not at 1100 as DolarToday has it. Imagine the taxes we would pay that way.

Meanwhile, of course, the barrening process of grocery store shelves keeps apace. Not even my blackmarteers can provide me with what I need, even at a ten fold increase of the official legal price.

Meanwhile the devaluation of a few weeks ago has already failed. Far from calming the country the black market rate registered a further 10% loss since the devaluation. So there.

The National Assembly under siege, literally

Videos show how chavista colectivos can post graffiti over the hallowed walls of parliament under the eyes of the Nazional Guard that remains nearly motionless.  The chavista whip takes to the barricades to ask paid for chavista "supporters" to storm the Assembly to which he was elected.

These are just a sign of the times, as judicial decision after judicial decision the regime is starting to rule through the high court, TSJ. But even that will not be enough soon. The Assembly spokesperson has said that any new debt secured without passing through the National Assembly risks not been recognized by a future government. Can the TSJ get the country into more debt as if nothing? Will someone be stupid enough to trust their money to these TSJ/Maduro racketeers? Me thinks not. Thus the regime will have to find a permanent way to neutralize once and for all the Assembly.

The Assembly tries what it can

Even though people disagree with the way the Assembly is proceeding, I beg to differ. First, I do not think it can do more than what it does now. Differently perhaps, but more I doubt. Second it has exposed clearly that if the crisis continues, and even worsens, it is because the regime is refusing to discuss ANYTHING. Compromise with these people is, well, impossible. Surprise!

So the Assembly has decided in earnest to do the last thing it can do : to take out Maduro. A multi pronged approach is necessary since the regime is already putting obstacles to any electoral test that they know they will lose. And the TSJ will, of course, annule anything they want because a comma is not exactly where it should be, even though their own sentences are usually ill written. Something that a ridiculous journalist, from Time no less, qualifies with the worst humor possible as a peaceful coup . As I was commenting, too many journalists still see Venezuela as a reality show.....

At any rate the Assembly has decided to try to oust Maduro in all possible ways: recall election, constitutional amendment, street protest and the ultimate nuke, constitutional assembly. It will fail of course because the regime CANNOT surrender power because they know what their fate will be: jail. They will sabotage, repress, annul even basic common sense. But something will get started and people will be hungry. And international narco justice and money laundering cannot be avoided for ever. All is thus possible. The question is when.

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There you have, a summary of the 4 posts I should have been writing if I had time on my hands.

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The evil that circles us

Today Leopoldo Lopez had an OpEd piece published in the Washington Post. The piece may seem short on specifics for us here in Venezuela but we are not the audience. The audience is the US political class in its time of trial during primary season, to let them know that on inauguration day the worst problem in the Western Hemisphere awaiting them will be the humanitarian crisis that is starting in Venezuela this past few weeks. The silence of the US has helped a lot Venezuela become a failed state as Lopez letter implies.

Whether Bernie Sanders will burnish his break from ideologies credentials by condemning the Venezuelan regime or Trump will develop an interest about Venezuela besides the beauty pageants remains to be seen. I'd rather use that editorial to muse on the evil that surrounds the people of Venezuela.

Let's start with Leopoldo Lopez in jail now for two years and condemned for a trial that we now know was based on forged evidence. He is not the lone political prisoner though now he is the best known, a cause in himself. The new National Assembly is trying to pass an amnesty law that is targeted at freeing these people and you should hear the vituperation from the regime's as to that law, announcing without a shade of self doubt, no beam in their eyes,  that it would promote crime in Venezuela.

But we could pass on that, perhaps, on politically motivated vindictive. The problem is that evil sneaks everywhere in the regime. I suppose it all started with the Tascon list of 2003 that split Venezuela in two type of citizens, those against Chavez having from now on a second class status. That list built by killing the vote secrecy is still in use today.

We can remember the multiple violent expropriations, the worse ones in the country side where often people were not even allowed to take their personal belongings. By then the totalitarian nature of the regime's soul could not be hidden anymore.

Then crime went up and up, and jail roles went down and down until the regime allied itself with the jail gangs who operate from the "safety" of the jail for all sorts of racket.

Should I even bother mentioning Venezuela becoming a narco-military regime or is that just a form of business?

But the worst evil was saved for the end, when all of us, chavista voters or staunch opposition alike must suffer lack of food and lack of medicine and the concurrent crime wave.  While the fat high ranking of the regime in all selfishness prove everyday their ignorance of the situation, it is made worse by their denial, and even worse, that they do not care about it. The question is simple and should be asked by anyone; if the regime actually cared about the plight of Venezuelans, would we be in the dire straits we are today? If you have an ounce of integrity you know what the answer is.

Today president Maduro launched in great fanfare a new plan of urban agriculture that is supposed to provide within 100 days 20% of the food intake of the 8 major cities of Venezuela. That this plan is launched at a time of major water shortages in Venezuela cities has not been detected by Maduro and his entourage, Or at least they did not care about it. Failure is certain, the more so in a country that does not like much veggies, and less to work for them. Pretending, in the XXI century, to present an agricultural construct that is a mere throwback to a primitive XIX century in Venezuela when actually privileged people who could lived off their backyard garden is an insult to our intelligence. Now becoming a failed state is an achievement.

To add insult to injury, that new wonder does give birth to a new bureaucracy: National System for Urban and Semi-urban Agriculture that will include a Venezuelan Corporation for Urban and Semi-urban Agriculture. Which gives a new meaning about selling the Tiger hide before killing it....

The ultimate stage of evil is when the torturer starts making fun of its victim. We have reached that stage.

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Not amused

I am watching and reading some of the news on Venezuela, slightly bemused. Apparently they are so unbelievable for the civilized world that one would be forgiven to think that Venezuela: survivor is just your latest reality show fade, somewhere between the Kardashians for its bad taste and Chopped for its cut throat run for food. My favorite of the day comes from a segment from yesterday nightly news (the big one at France 2) which starts with a food line. Yet readers of this blog have seen much more impressive lines filmed by yours truly, in this blog or Instagram.

But it is getting serious and CÑN tonight had a title with "no bread in Venezuela".

It is true and it is not amusing.


I eat little bread for diet reasons, limiting myself to full fiber sliced super market loaves. But the SO wanted some bakery bread. I went to 4. I did not find any. The last one I found some "pan dulce" and that was that, good enough to eat with a cup of coffee, if you have it. They also told me that they bake bread only twice a day now, for early breakfast and for diner when people come back from work. Depending on the bakery they give one or two "canillas" (sort of our local baguette). And that within 15 minutes it is usually all gone.

But this is not the only item missing.

Since my return early February things have been getting worse, almost on a daily basis. Supermarket shelves are getting emptier, lines are less frequent because nothing arrives, and when something arrives lines get truly huge in no time. If bakery bread is missing sliced bread is down at the grocery store and my favorite brand has now a weird taste. I am not complaining, I can still switch to another brand. For how long?

Bottled water seems to be gone for good.

Choice is also gone.  Deli is getting to a "it is that or nothing level". Now grocery stores are not even trying to hide the empty spaces with junk.

On the medical front things are worse, if possible. Today I learned of the arrival of some generics from a medicine for triglycerides that I had to stop taking. I arrived in time at my local "LOCATEL". I tried to get also a small bottle of rubbing alcohol. To my surprise there is none. The lone brand on the market has stopped delivering. No more rubbing alcohol for your disinfection needs!

Since my SO, and the mother in law, are physically unable to stand in line for anything for more than half an hour, we must all share the burden. I cannot so I am resorting more and more to black market. I put on Instagram the latest of my loot on toilet paper, two heavy bags at 8 times the normal cost (and I learned that actually I got it for cheap!). But I also got 12 kilos of pasta that way, albeit at only twice the normal cost. Currently I am waiting for milk (it will be twice) and rice (at least thrice). But I have also been told not to hope much for that arrival. Corn flour is too political so my black market guy does not dare to go there. For that I will need to go to "buhoneros" in Petare at 4 times the cost, if not more, under the eyes of the Nazional Guard.

There is no black market for medicine because  there is none. Well, almost no black market. One of my siblings got some of his heart medicine from some one bringing it form the US and cashing it in USD!!!!!!! Well, in all fairness apparently there had been some mistake so the guy sold what he did not need through contacts, but in dollars, with overhead anyway. I am expecting some form of black market for some medicines to start organizing.

At this point the neglect of the regime can only be qualified as of criminal, worthy of large scale human right violations and The Hague court. It is as such because the regime refuses to let any opening for anything, aware as they are that if they relinquish control over any item they risk to see everything tumble down fast. So if "el pueblo" suffers a secret Zika epidemic because there is no fumigation, there is no insect repellent, there is not even material to do mosquito netting, well too bad. I also read that HIV may be getting out of control since there has been a lack of protection for over a year, and lack of testing. This in addition to malaria and tuberculosis that made a come back BEFORE Chavez died.

Make no mistake: it is Chavez electorate that is suffering the most. And it is the one that lately seems to start heating up.

So you will excuse me if articles about gas hike in Venezuela or lack of tourists, even though it is the cheapest destination in the Western hemisphere, leave me cold.

I, for one, could not care less if my car gasoline refill is now 350 instead of 5.

In fact I do not give a shit about gas price.

I have real problems elsewhere. Let foreign journos that are into spectator sports take care of that.

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Mille e tre

Se sia brutta, se sia bella

I was in shock today going to my local grocery store after ten days out of the country. I was not expecting any improvement in the scarcity crisis but I was not expecting such clear degradation within a week. After all, the last week in January is the one where we are supposed to reopen business in full after the month and a half closing for the holidays. The least one would hope is that returning products would compensate for disappearing ones, for a few days, until all goes down the drain, say, late February. But it looks that wee will not have that luxury.

Madamina, il catalogo e' questo

I did not have time to look in details, first day at work, but that was I saw, or did not: lots of holes in all shelves. There was no pasta, not even the expensive imported Italian. No dish washing detergent.  No cereal whatsoever, not even some disgusting sugary concoction still available for kids. In fact, Coke had replaced cereal in its shelves. No tuna, even though it has gone a lot in price. Etc...

un catalogo egli è che [Lorenzo, not da Ponte] fatt'io

Of course, what is happening is simply what this blog narrative has been consistent about, "la costanza". There is no raw material henceforth, no production. The political humdrum welcoming me, much more important than grieving jails in Margarita, is the heptalogue of Lorenzo Mendoza about what the regime must do NOW, THIS INSTANT, WITHOUT ANY FURTHER DELAY before disaster strikes. I am not going to give you the details, I would need more than a post, and, besides, regural readers already can guess. What we need is regime change because reform at this point will not do anymore. Lorenzo did not say that but it is the inescapable conclusion of his words: he said what needs to be done and we all know that the regime is absolutely unable to do even a tenth of what is listed.

in Turchia novantuna

But Lorenzo went further than his proposal, he blew away the miserable half-assed actions that the regime has undertaken in recent days to try to cover up its failure at getting anything done anywhere, the more so that its emergency decree was rejected as it should have been. For example Lorenzo observed that in all those "mesas de trabajo" held to find solutions to the crisis, the Polar Group, the biggest, by far, food producing company in Venezuela was not invited to attend. Meaning that any regime plan that does not account for the only actor that can truly do something about the crisis is doomed to fail. And to nail in the point Lorenzo gave numbers, and deadly ones. He said that to import what Polar can produce with the 5.900 million dollars the regime allocated then the regime would have to spend 93.300 millions. In other words, Polar is 18 times more productive/efficient than the regime's bureaucrats.  The problem is not the private enterprise, it is the regime.

Osservate, leggete con me

Of course, the regime was not amused by the words of Lorenzo Mendoza, who were passed by Globovision that was punished again by the regime. But it is not going to stop there. We heard already heavy batteries shooting at Lorenzo from diverse quarters and tonight it came from Diosdado Cabello personally who said on his TV talk show that Lorenzo has received himself the 5.500 millions of dollars and thus became the richest man in the world. Why would the richest man in the world still reside in Venezuela he did not explain. But then again the audience he addressed such words is not the type of audience that delves in such finesse. Fancy fencing times are over, this is rude butcher knives throwing times.

...donne d'ogni grado,
D'ogni forma, d'ogni età

Meanwhile the currency reaches new records in the black market and lines for all are reaching new records. My black market person informed me today that he is not receiving goods, that there is not enough reaching the store so that he cannot resell some on the side. Apparently there is a certain percentage he was allowed to "buy" but now either there is not enough or he is outbid by other colleagues. How am I going to do to support not only me but those that I support because they cannot stand in line for hours, well, you tell me.... Anyone knows a good black-marketeer?

Voi sapete quel che fa........

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Emergency decree is down. We may be the better for it

A little bit busy these days so I will be fast.

The regime tried to force through an "economic emergency decree" which was a mere diktat to make communism a reality in 60 days. You could read it all here, before most pundits tired to think about it, or worse, to pretend that there was some redeeming value somewhere. Usually pundits from brainy places like Forbes who can only think about a return on an investment that they were foolish enough to give to a country whose bloggers were active and announcing disaster since 2003. But I digress.


Since everyone knew that this was a mere propaganda ploy to try to put the blame of the crisis on the opposition (a mere trap Castro style), the Assembly majority MUD organized the only response it could do for the time being: call for hearings knowing they would be stood up. This was very simple to get because the Assembly decided that the hearings should be open to the press like it happens in EVERY democracy on earth unless it is about national security, as in ISIS about to bomb you. But apparently the state of bankruptcy of the nation is such that it cannot be revealed in public. Thus the ministers use that excuse to bail out at the last minute. Score 1 to 1 on propaganda. And I am generous to the regime.

The parliamentary commission named to inquire on the decree ruled that without economic data, that without at least announcing some the of the expected measures to be taken (the decree had no specifics) the emergency could not be approved. The following full debate today pointed out among other things that the country had been ruled by chavismo through 17 years, and that there had been enough enabling laws to emit enough decree laws for the regime to deal with whatever it needed to deal with. The emergency decree was thus duly voted down. The government was welcome to send in new and more explicit proposals and they will be speedily examined. And that is that.

Now what?

I am not sure what leverage the regime got out of that wrestling match. Probably some, there were enough idiots that though the national assembly would open the gates to cheap and abundant corn flour. But me thinks that those who voted for the opposition MUD in December knew exactly why they voted for them and hot air from the regime is not going to play much if actually some stuff does not appears on the shelves soon. Period. After all, they have been used to abundant freebies for years coming from Chavez. If then, why not know? Why not for the last two years? If the "economic war" cannot be won by Maduro maybe, just maybe, he should be replaced by one that can win it. No?

The fact of the matter is elsewhere.  The regime has no idea what to do and I can vouch for that. Many clients and providers have been summoned to many meetings in recent days. Hysteria grows by the day. To give you an example, one of them told me that they got an urgent mail from ministry X to send them in 24 hours a list of what they could start exporting as soon as possible so the permits could be processed fast. Without inquiring about the supplies and dollars they would need to be able to produce enough for the local market to then be able to export..........  [sigh, deep sigh.... shit like that does not appear in economic pages, just in blogs].

So the regime tries to blame the opposition and the janitor and his dog.

But no matter what, the reality is there. In my opinion default is unavoidable because there is no money to pay what needs to be paid this year EVEN if oil were to go back up to, say, 35 USD a barrel by fall. Even starving Venezuelans will not avoid default AND allow at the same time to send Cuba whatever meager allowance can still be sent. Maduro and Cabello and Padrino can refuse to visit the National Assembly, and close it, and send the MUD representatives to the execution wall, that reality is not going to change. What needs to change is the economic system but any change is impossible because the regime would unravel in weeks.

The question is not whether Venezuela is going to the IMF, but when. There is nowhere else to go at this point.

Of course there might be those who think that PODEMOS in Spain or Correa in Ecuador or Evo in Bolivia are going to come and bail us out. Bwahahahahah.....

So I feel good tonight because I read this whole week as getting us close to the end. Whatever the end is, it cannot be postponed much longer. Just go and visit a grocery store.

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2015: the lost year

It has been three weeks without posting. But in all truth what should have I written about?


That the regime has decided to become outright cruel, be it Leopoldo Lopez jail or the Colombian border disgraceful human rights abuses?

That new electoral cheating is performed?

That now criminal gangs are using grenades against police quarters, when grenades are supposedly exclusive property of the military?

That even Putin tries to explain to Maduro that the price of oil ain't going back up any time soon?

That Obama and the Pope and the West are only too happy to let Venezuela sink as long as it keeps financing a Cuban transition and an assortment of ungrateful shitty islands of the Caribbean?

That the Syrian refugee crisis is to be blamed squarely on the West for not assuming its full responsibility when it started applauding the Arab spring?

That Santos seem to have been defeated by the FARC and Cuba and chavismo when the battle was nearly won when he assumed power first, a victory where his participation was stellar?

You already get the hint that 2015 will be a lost year for a lot of people even though we are only on October 4.

That realization came to me a couple of days ago, that the regime had stolen from me 2015, that it has not allowed me to even try to achieve any modest goal. The year has been a constant reaction to try to deal with negative events in increasingly desperate situations.

I have been looking back and there is no joy, nothing positive for me.

The year has been spent in lines trying to find food and toiletries items and medicines, not even for me, but for my cancer stricken life partner (and other people when I can help). See, he cannot stand in lines for the hours required to acquire food. He cannot go to half a dozen of pharmacies in a row to try to find one that has the pain killer or the anti inflammatory, or the anti-whatever the doctors prescribe. Even nutritional supplements are hard to find and too expensive for his budget. That and other stuff I have had to start paying for, never minding that I have had to go to the black market prices because I also need to work and I cannot spend 2-3 days a week looking for stuff.

As if this ordeal was not bad enough, it has made me face to incredible cruelty of the regime, its immense stupidity to boot. See, those long lines under the sun are equal for all, a true socialist victory. Pregnant women, sick people, elderly with mobility problem, etc...  all have to stand in that same line, no consideration whatsoever for any one, starting with the people in the line that have lost any decency in their search for basic items. Eat shit and die is the message.

But there is insult to injury, true injury from what you can get above. I have seen or heard from reliable witnesses how the Nazional Guards or other forms of "authority" help themselves first, or let go ahead of the line their friends or take payment to allow you to do so. The abuse of power is more obvious, more cruel when such situations arise.

And more insult to the intelligence as the system is a mess of confusion and inefficacy.  Some items are by ID card end number, some items are "once a week", more and more stores demand finger prints from BOTH your thumbs, even if you buy, say, a bag of chips. That finger printing is ominous because it seems to be working better than anticipated even though lines to pay are twice as long as the process to pay is twice as long. The implications is clear: at any time through these machines the regime can restrict access to whatever it wants to restrict. And to whomever. Food apartheid in the making.

You may think that perhaps I can find solace elsewhere, like at work. But the situation is getting worse by the day. I have already detailed on occasion how difficult it is to manufacture things in Venezuela, to produce anything. The two main causes are the lack of raw material and the labor laws that not only make it hard to organize efficiency at work but are now creating havoc as you cannot fire the constantly missing workers that have to leave work to stand in food lines. Not that you would fire them anyway as you understand the situation but the "food shortage absenteeism" has become a source of new abuses.

There is also insult to injury. As your business is having a hard time to survive, you observe newcomers that seem to be quite prosperous. For example the Polar group is closing its detergent and soap plants due to lack of raw material. But there is a newcomer, "Clic", that is flooding supermarkets with pricey house cleaning items.  They even run expensive TV ads! How do they manage to get the raw materials to assemble their concoctions? Why are they the only brand with such a complete and well packaged line of products? Because the packaging of other products trying to replace Polar products is dismal, for low quality products to begin with.

And yet that is not all. There is a new plague on business. Once upon a time corruption was expensive but some forms were preserved. For example to get money out of you they would use catch phrases like "the dockets are loaded, but maybe we could find ways to speed up processing your application to X". Now they ask you money upfront, without any shame. Usually assorted with threats that are not based on anything legal, just because they can threaten you as there is nowhere you can go for redress. The reason for this new bluntness that we have observed in recent months is very simple: bureaucrats know that their fate is sealed no matter what happens with December elections. See, even if chavismo were to win, there is not enough money to spread around anymore and many of them will be shown the door if they are on the wrong side of post December chavismo reshuffled leadership. So the time is now for a last push for corruption money. It is that simple.

How can you score any success in front of such a negative environment? Unless survival on the edge of bankruptcy is considered a success. Note that the latest business climate studies put Venezuela dead last, even behind Syria.

That is why I can write already that 2015 has been a lost. That no matter what happens in the last quarter the negativity of the first three quarters cannot be overcome anymore. I feel exactly in the same mood as I felt in October 2014: a sad mood with the certitude that next year will be worse.

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Economic electoral planning: institutional bachaqueo and printing money

The election date approaches. Whether these will be held is irrelevant, the regime needs to prepare for it no matter what.  From my sources I get the following tidbits as to how the regime is planning to distribute goodies to try to buy votes.

The "bachaqueo" is bringing some political dividends to the regime, at least from those who can actually profit from it. Bachaqueo for those late in the game is a Venezuelan variety of black market (1). Those that can stand in long lines because they are out of a job buy they share and resell part of it at significant markups. It becomes particularity lucrative when: 1) you belong to an information network from cashiers to truck drivers and storage personnel who can warn you that X will arrive at Z before the neighborhood hoi polloi knows about it, thus the bachaqueros are first in line before supplies disappear; 2) you know someone high ranked in the store or the Nazional Guards on duty to avoid riots and they let you get out with more than your share; 3) you belong to a network well organized with bus and motorbike drivers that can carry you fast from one line to another line so in one day you may be able to stand in line at 2 or 3 locations, and rack it in; and of course 4) you belong to a narco-military-mafia organization that do not even own a store and gives you a certain amount at mark up for you to mark it up further. (2)


The beauty of it all is that the Labor Law "reform" of Chavez to get reelected before he croaked is a major incentive for that line of business.  See, you cannot fire someone for multiple absences. If you try to, it is a long and tortuous process that in 95% of the time ends up with an expensive settlement. In fact today's practice is to call into the office to ask point blank the worker how much he wants to resign from his job. Certainly, you can discount from paycheck the missing day and the meal tickets, but what would a worker mind if s/he can make more in that day through bachaqueo? Which thus has become today the main cause of absenteeism, far above any epidemiological consideration.

Some of my clients, those with a significant payroll of say, more than 50, have observed an interesting arithmetic pattern. Say, you have 200 employees, of which 150 are workers whose paycheck is no more than twice the minimum wage.  In recent months you have discovered that absenteeism is at a steady 15%, EVERYDAY.  And never the same folks, of course. That is, e.g., you have in a single week missing, 26, 22, 38, 23 and 29. Everyday you have at least 22 folks missing, that is 15% of your labor force. Why?

Very simple. Workers have organized a network of absentee turns. No worker will be absent more than what the law "forgives". Sometimes you may even find out that, say, X worker is absent systematically every other Wednesday. And you may find out that the peak at 38 (25%) coincided with a food fair or a major arrival of goods at the market store next door. If it does not get worse than that it is because finger printing and stuff limit the number of people that can shop on a given day (never mind that the bachaquero needs to be able to pay for what s/he gets). Also, many business to ensure a minimum labor force for basic processes have established generous attendance bonus (I kid you not), so that workers will miss only when it is worth their while. Thus a fragile equilibrium exists which will break down anytime as scarcity becomes worse.

I trust the reader can figure out on its own how this affect productivity and costs in Venezuela.....

You may think that this is a conspiracy theory. Think again. Go to any ministry and the systematic absenteeism there is worse. Sometimes it is organized outright by the bosses who may even have shipped in some goods, in particular if linked with the military. From there to spread the habit more or less efficiently to private business is not far fetched. And the regime has gone out of its way to spread in time deliveries of scarce goods to create the illusion that things still arrive somewhat to the the shelves, you were just unlucky that day.

In other words the regime thinks it stands to gain something by promoting a bachaqueo network, not enough perhaps to compensate for the voters lost to the long lines, but a gain nevertheless where open and naked scarcity would cost more politically.

The other thing that I want to mention in passing is that from reliable sources I have learned that the regime is bringing in banknotes. Lots of freshly printed notes of 100, more than what is normally needed to replace the physically deteriorated bills. Those bills may actually be delivered in diverse areas of the country to avoid, I suppose, shipping and the like.

My guess is that they will be used to pay for the campaign and for direct cash payments wherever it is needed. Expect a tremendous surge of inflation next year as a consequence.

It also seems that the regime is trying to open, albeit, some partially made public works, such as a couple of metro stations in Caracas. That has happened in the past in Chavez campaigns, but this time after three years of nothing it is hoped for that opening even a single subway station, even if incomplete, may have a big impact. I doubt it, but that is not the point of this post, the point is that the regime is going to apply skinny populism but populism nevertheless. In the past they could raid, say, electronic stores. But all is empty. Thus fake income from bachaqueo, or a direct worthless cash advance, or a huge ceremony to open shit facilities is all that is at hand.

In addition of jailing opposition leaders; but that is another story.

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1) bachaco is the large tropical ant that eats everything on its wake and that laboriously carries huge loads on its back.

2) all courtesy, of course, from crazy price control schemes and currency arbitration (official 6.3, black market 700 to 1 USD; do the math).

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Will it hold?

It seems that creating an unjustified "state of emergency" at the border with Colombia has accelerated talk of regime "change". We have Miguel, or a nice article at the FT (subscription) by Daniel Lansberg or a dire "self-coup" from Oppenheimer at the Miami Herald. Readers of this blog should not be surprised as I have expressed often my doubts at the elections on December 6 would be actually held, or when describing how the country was collapsing steadily.

Rather than going into the macro thing covered extensively elsewhere, let me go first into the micro stuff.


The fact of the matter is that shelves of non controlled products at grocery stores are getting empty. As for the controlled stuff when it arrives, it is in insufficient quantities, immediately sold, often among some trouble and even looting outside of Caracas as the situation there is much worse.  But this you already knew, it's just that it's getting worse by the day.

But scarcity of food and medicine is just the apparent face.  The reality is much worse as it is more and more difficult to produce food and medicine. It is not that raw materials are lesser and lesser amounts, it is that working with the limited amounts available is increasingly difficult. Not only spare parts deficiency stop production lines frequently, in addition to raw material erratic deliveries, but insecurity in transport and distribution make the few still producing reluctant to ship far away or to risky areas.

And that is not all. To the above problems you must add a renewed corruption drive where public "servants" now are asking straight to your face cash to perform the duties that they are required to perform by law. Not only inspectors now are blunt about asking you for money or they will close your facility on some dumb excuse that would carry at worst a small fine, but requesting permits for whatever has become an ordeal.

I am not going to give you references for the above: this all is my personal day to day experience. We are helpless in front of it all. There is nowhere to go for redress of any abuse, of any black market activity.

As expected this is having a deleterious effect on the political climate, explaining why the regime is grasping at any excuse to blame others for its failures. It was the "economic war" then it was the irridente Esequibo, today it is Colombia unable to control its borders and promoting paramilitaries even though we ALL KNOW that the huge contraband at the border can only happen because of the connivance or actual help from the Venezuelan military. Tomorrow?  It will get worse as these political shows have a light traction, at best, for the regime's political aims. Polls this week seem to credit that if fair elections were held the opposition is above 20% the regime and up and up. Difficult to see how the regime could bridge the gap by December 6. Short of miraculously ending all food and medicine lines I do not see how the regime can reduce the spread to less than 10%, the maximum amount that it can compensate through electoral cheating.

This being said it is quite clear that the Tachira "emergency" and the abuses perpetrated  against defenseless Colombian migrants are a clear step in the strategy to falsify the election. The hope is that cheap nationalism will be enough to reverse the regime's fortunes, or otherwise justify a national "emergency" that will allow a postponement of elections in the hope of better electoral days.

This all we can take as "fact". What is more worrisome is that the regime in full economic debacle IS NOT taking ANY MEASURE. ANY. Unless arresting a few assholes with an extra 10 pounds of corn flour or a few gallons of gas on their bike to Colombia count as an economic measure in a country with maybe 30 million folks. Why? Are we that broke that we cannot even buy basic staples overseas? Is the regime so politically helpless that we cannot even increase the price of gas to a dime a gallon? Are divisions and/or incompetence so entrenched in the regime that they cannot come up with or decide on a single measure to deal with the situation? Measures exist, simple, like a devaluation from 6.3 to 100 which, believe it or not, would have more beneficial effects on inflation than negative ones.

Or is it that the regime is so convinced of its own demise that it is playing the burnt earth card?

Which bring us to the title. My own opinion is that it is a distinct possibility that the regime will not hold until December 6. Either Maduro will be gone, or the regime will have morphed into your regular explicit proto-totalitarian dictatorship. Even if measures are taken TODAY they cannot have much effect by December 6. Even if the regime brings in a whole bunch of imports they are not here yet, they would be insufficient, they will not be spread efficiently and at best could only reach the hard core chavismo.

It is just too late to save the regime in December 6, even if electoral cheating is applied bluntly irregardless of world observation. It would be worse than when Ahmadinejad was fraudulently elected against Mousavi.

Thus the possibility of regime "change", from a Maduro resignation to a coup and bloody repression is becoming quite distinct. Whichever it is one thing is certain: it will not go away peacefully.

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Food lines in Venezuela are getting worse

And this morning I filmed one.

It was in Macaracuay, in front of a small shopping center called CC Macaracuay which has the misfortune of its grocery store (former C.A.D.A.) become a public shop, Bicentenario after the expropriation of EXITO chain. I drove in front around 7:30 and the line was much bigger. Driving in front again around 10 AM I was so surprised at the remaining extent of the line that I filmed it.




You will note that at one point the video sort of stands still: the line brings general chaos as buses stop in double and even triple park to pick up or drop off people. But traffic chaos is not the only problem that came with the Bicentenario. All of the shopping of Macaracuay has decayed greatly in the last couple of years as scarcity in the poorer areas of Petare has forced people to travel further for their basic needs since the regime is unable to provide for Petare, and the private sector simply cannot deal anymore with logistics and crime to sell there. Crime followed to Macaracuay, by the way.

Macaracuay has the misfortune to be the closest middle class area to South Petare and thus its traditional commerce has migrated elsewhere, the area now dedicated to what we can call charitably "survival commerce" (small services, lottery stands and the like) the only one that can cater to the economic means of the bulk of visitors. People from Macaracuay, I am told, go mostly to El Cafetal or Chuao for their routine stuff even if it means driving half an hour in traffic. Middle class to semi affluent areas still live in Macaracuay but look at the fences and gated streets and you will notice that something is wrong. Macaracuay is now a frontier district.

Neither the poor, forced far from home to shop for survival, neither the "rich" who see their area become chaotic, are happy. With chavismo it is a lose/lose proposition.

PS1: there were many other lines this morning, in El Cafetal, Chuao, at all grocery stores.

PS2: coincidentally I was listening to "Fina Estampa" of Chabuca Granda who could not have been a better reverse symbol of social decay in Caracas. I hope you enjoyed the sound track.

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Recovering Venezuela is going to be more difficult than what most people think

There are reckless souls in the opposition that claim that a mere change in the National Assembly and a couple of years of decent public administration are enough to turn around the Venezuelan Economic crisis.

I think such talk is simply reckless even if its intentions are merely electoral. At this point stirring false hopes is a deadly undertaking for whichever side. At least chavismo being in full denial mode is pretending that there are only minor problems that are the fault of foreign interests, period. It does not help them much but it cannot hurt them much either compared to its other problems.

Maybe two-three years ago we could have still entertained the thought that a Venezuelan recovery was not too difficult a task. But the damage done to the economic fabric and the collapse of oil prices which are not going to recover in the foreseeable future to a necessary 100 per barrel have made this impossible. A Venezuelan recovery is now going to be a Greek tragedy where even raising sales taxes on tourism activities cannot help a bit.

This blog has covered in details from ground zero where its editor lives how the damage to the productive sector has been perpetrated, from destroying contractual relationships between employer and employee, to a collapsed infrastructure. It is my conviction that even if all economic repressive controls were lifted tomorrow the economy will not be able to regain a sustained growth for at least a couple of years. And a weak one at that. And with significant protectionist measures for at least half a decade, or at least until we produce enough food for 80% of our balance needs.

I am not going into this again today, I will merely mention two powerful articles published today that spell disaster for Venezuela even though it was not necessarily the intention of the journalists writing them. But when you are a foreign correspondent you may not necessarily realize the implications of what you write when you try to stick to facts.

The first one is a piece from Reuters written by Alexandra Ulmer: Pirates and hold-ups: crime strikes Venezuela's oil industry. Ms. Ulmer details here how crime has put under siege Venezuelan oil industry, be it state or privately managed. The extent of robbery of supplies for scrap facilities to robbery of employees inside facilities in spite of the presence of guards is seriously affecting the potential of the industry. What's terrible about it is that oil industry is our only source of income today and apparently the regime is unable to protect it. Or worse, I suspect, unwilling to do so for reasons that I better do not think about. Whatever it is, the money quote will say it better:

in Monagas state, around 26,000 potential barrels were lost in March during a shutdown after state oil company employees and contractors stole copper cables and caused a tank to overflow {my emphasis} 

The other piece comes from The Economist: Learning the lessons of stagnation. Per se it is not about Venezuela. In fact, Venezuela is barely mentioned, it doesn't count anymore in LatAm economy. The article tries to explain how countries are dealing with the end of the commodities boom that fueled Latin America economic growth of the preceding decade. Thus there is an extensive list of do and don't according to the different economies fails and wins, ranking from care to the infrastructure to maintaining sound fiscal policies. It is a very interesting summary with interesting graphs (where Venezuela figures as the worst, of course). But the reason why it is so damning for Venezuela is that almost EVERY mistake made by X or Y country has ALSO been made by Venezuela. By ourselves we are a conpendium of all that is wrong in Latin America failure to rise to the modern world. Or as I have written, chavismo is a reactionary movement that has made Venezuela go back in past.

The money quote: To return to faster growth, Latin America must address its chronic structural weaknesses. Put simply, it exports, saves and invests too little, its economies are not diversified enough and too many of its firms and workers are unproductive. Needless to remind the wise reader that Venezuela exports only one thing, and badly now, saves nothing and cannot invest anymore. And productivity is now nil. It is not a matter of "too little", it is a matter of we cannot anymore.

Read both articles and then when any opposition Pangloss comes your way, you will know better.

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The 400 question

As the Venezuelan currency is in an accelerating downward spiral the real question is not why such a thing is happening; the real question is why would one sell its US dollars for a currency that is becoming more worthless as days pass. I suppose that we could ask the ancillary question of who but we already know that one: the regime, the military, the corrupt "bolibourgeois", the drug launderers and assorted criminals. People with hard earned dollars do not invest them in Venezuela, at most they use them to pay bills they cannot help but pay.

So why sell dollars/euros for bolivars, even if your return rate is 420+ bolivars for one single USD?

There is nothing for sale in Venezuela. Nothing worth buying. All is imported so you would basically buy something that would be sold to you without guarantee at a comparable world price or at a price that is well overpriced. In bolivars nothing makes sense. But in USD they do not make much sense either. Even cars are now traded in US dollars in the black market and soon in the open one, with quite a mark up.

Buy real estate? Maybe. But what for? You cannot rent, you cannot put it to produce given the crisis. At best it is a very long term investment. The only reason for you to part of dollars this way is to launder them. And all the choice properties have long been sold or are not for sale as people holding them usually have the means to live on something else. Why would they sell they property in bolivares that they would have to go to the black market to trade for dollars right away? They would just make a direct arrangement to have a big chunk of it paid already in dollars.

The only explanation that makes some sort of sense in the current situation is that the regime is selling dollars to pay for its electoral campaign. It has nothing else to offer its voters but cash. By the time they realize that the cash they received is worthless it would be too late. Some inside the regime promote speculation so they can get a maximum of bang for the bug to pay the drag the vote in operation required at the end of the year.

As for the regime, see if they care about the damage that the latest bout of money crash will do tot he economy...  the more so that even the NYT is getting on Diosdado Cabello case even if rather meekly.

Sigh......

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Crashing

The free fall of the currency continues in Venezuela. On February 25 the black market value crossed the psychological line at 200. Today on March 5 we have reached 283:

That is a 10 Bs depreciation every day since February 25, 1 dollar a day at the official 6,3 exchange rate which has become a fiction since last year.

There is no way around it: hyperinflation is here. January is reported to be 10%. The government has stopped SIMADI. There is no word from CENCOEX and SICAD. In other words we do not know for sure whether Dollars are still being exchanged (a little bit still do, some particulars on occasion let us know that a small portion of their dollar debt has finally been approved for payment, never more than 10% of their total debt).

Draw your won conclusions. Mine is that the promised financial collapse predicted for April may have already started,

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The bicentenial bolivar

On January 16 I wrote that the Bolivar at 175 for a single dollar may sound expensive but if the regime were not to take REAL measures (it has not) within weeks that 175 would be cheap. There it is today, the black market value has crossed the 200 line even though the SIMADI was claimed to be the way in which the regime would kill black market. This one, it seems, is alive and well.  Apparently no one inside the regime seems to understand that no matter what gimmicks they invent the value of a currency depends upon which solid currency it can rest (gold, dollars or euros, same difference). It does not rest on revolutionary "values". (note that even the limited cash exchange value at Cucuta, the one to avoid bank commissions and delays, is at 179 and thus higher than SIMADI!)

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Why is the regime jailing private enterprise owners (and this blogger at risk).

There is a very simple answer for that: the regime needs a scapegoat that pays with its hardcore, Luddite, take no hostage, resentful base. The question would be more interesting if worded differently: why does it pay to jail a few business owners?


The answer to this question is a little bit longer but not very complicated. The reason can be found in 40 years of populism light followed by 15 of populism hard. In a country that has been told that "we are rich" and that the problem is that "wealth is not redistributed as it should" you do create a sense of entitlement that can easily be turned against private enterprise. I remember as a kid how COPEI used the term acaparadeco in the 1973 campaign against Carlos Andres Perez first election. Acaparadeco is a play on words with acaparador (hoarder) and adeco (follower of AD political party). The message was clear, seedy business allied with Adecos to make the people suffer scarcities. As you can see, chavismo has invented NOTHING, just strung it out to the limit.

To this you must add that a lot in the business system of Venezuela were only in there for the money, amassing in a hurry what they could to run away to Miami or somewhere to live the grand life. That this pattern is repeated and magnified under chavismo with its bolibourgoeis, or that many business people are decent, socially conscious folks (the Polar people, to name one) does not matter. In the deep recesses of the hoi polloi mindset there is a certain like of the private enterprise as the lone reliable provider of jobs and goods but a deep resentment of the owners. That dissociation has always existed, with more or less intensity, and no government has ever tried to limit it as for populism such beliefs are a political godsend.

What differentiates chavismo from a past attitude that probably dates from colonial times is that as an extreme populist and commie inspired system the regime has a special vindictiveness against private enterprise owners and even more against those that make the regime look particularly bad or incompetent. The harassment of giant agribusiness Polar is a text book case, forcing Lorenzo Mendoza, its chairman, to challenge the regime to concede administration of its nationalized mills so he would put them to produce. Suddenly the regime stopped its attacks for a while but they are back at it.

The two recent public cases are the owners of Farmatodo and Dia a Dia. Both chains had managed to reach popular sectors and be successful there while the distribution of medicine and food through the state system of Mercal and PDVAL was failing more and more.  Dia a Dia was a supermarket specializing in popular areas, small stores, no storage area to avoid crime. It had a limited and fast rotating inventory and was thoroughly monitored by the regime. Hence, that Dia a Dia provided reasonable service so close to the chavista electoral base was just too much. Dia a Dia had to go, its inventory seized and his managers sent to jail for gouging, speculation, hoarding and what not.

Farmatodo is not as clear cut a case as it does not go deep into popular areas. But it is close and it had become in a way the fancy store where lower middle class go to get a treat. Farmatodo was a first world experience in Venezuela, clean, neat, organized, usually well stacked. All social classes could shop there together getting from shampoo to medicine. Since there is major scarcity of shampoo, soap and other persona hygiene products, someone had to pay the political costs. Owners and management were summoned to a store on a week end. They complied freely and ended up in jail anyway. Never mind that a few weeks earlier Farmatodo had agreed to cooperate with the regime by putting organized rationing and finger printing machines per regime's wishes.

Since then things have not improved. I am privy to information that I cannot reveal because I cannot harm the parties, and I could place myself at risk. But I know of the people that have been arrested for questioning at their exit from Miraflores Palace after a meeting that they attended after summoning.

I know of a given minister, a particularly vulgar and uncouth general, who revels at these meetings at Miraflores threatening his "guests" of "ponerle los ganchos a la salida", arrest the guest at the door has he has already done. In these meetings the regime demands but offers no concession, no dollars to pay the debt, no price increase to stop the losses that food and medicine producers are forced to accept because of price control. But I also know that in some smaller meetings some of the business owners have challenged the military chair (it is almost invariably a military) to expropriate them once and for all, that they do not care but will start selling at whatever price they need to sell. And in at least one case I know of they did get a price increase, albeit insufficient.

I have also been told to pack an overnight bag and have a safe haven for a couple of nights if I need to do so. Now, even though I was told that in all seriousness I am not complying. First, even if associate in a food business we are low on the priorities of the regime at this time. Also, I am more likely to get arrested for this blog rather than any commercial activities. But I have been told and this by itself reflect the mood of the country as well as possible.

There is indeed an economic war waged, and I can guarantee that it has come from the regime and it is directed at defenseless people like my colleagues and me. We have no weapons and the judicial system is stacked against us from corrupt judges to regulations that these days cannot be met no matter how hard one tries. We are thus great fodder for the regime continued need for bread and circus. More circus these days...

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