Sunday, 31 August 2014

And the strategy is...

And now Maduro explains the finger print thing will be for the border regions and the state supermarkets only. What does that mean? It will be incredibly difficult to buy chicken, milk, flour and other products in private shops as the street vendors will buy their lot there. People with a real job will have to buy the goods to the street vendor for several times the state price. This is particularly bad for those who are opposition in Venezuela. The rich regime honchos do have their maids to do the shopping for them.

Maduro's conundrum: more than half a million strong

Shortages became so bad that the Maduro government started to look for a new emergency patch, as usual. It came with the idea of the fingerprint machines to limit the amount of products people can buy...or perhaps it was the fingerprint company that came up with the idea. In any case, the government doesn't deal with the reasons of the shortage economy but tries, once more, to mitigate the consequences of its mess. There is a rumpus about this but it comes mostly from the better off to hard-core opposition lower class in Caracas. A lot of the poor - at least for now, at least that's what I get as input from outside the capital - think the fingerprint thing might be a solution, even if not optimal. There is another group that is completely against the machine and for different reasons: those who work in the black market.
GDP: Venezuela, one of its kind

Shortages have to do with distortions in the supply and demand chain, whether we talk about socialist countries with central planning or a pseudo-socialist country with a mixed economy and full government intervention and harassment of the private sector not in the hands of the revolutionary "elite". In any case, the main reason why shortages exist are price controls that prevent supply and demand forces from working as they should. This reason is further worsened in Venezuela by the collapse in local production. Blogger Francisco Toro will say local production wouldn't collapse if prices were right, even if producers were Chavista functionaries taking over. I am not so sure of that. I can see what is happening to Owen Illinois in Venezuela: they are not that subject to price controls but production is collapsing, the higher echelons now are simply using the company as plundering ground. Besides, state bureaucracy in Venezuela simply puts too many trammels for any productive activity.

In any case: low prices trigger higher demand. This, in turn, entices some groups to hoard goods  for sale at the black market or to be smuggled to neighbouring countries. If the pricing issue were tackled, local production would improve and hoarding would collapse. 

Now, let's imagine the finger print scheme is implemented as announced as the system doesn't collapse totally, as Bruni foresees

A lot of the military profit from smuggling. Because they are the ones trying to prevent smuggling, things shouldn't change so much for them: the military would get a higher share of the smuggling flow, small border smugglers will have to look for other alternatives. Things would definitely change for small independent smugglers and some of them will be out of business. What will happen with the countless illegal vendors, in Venezuela the largest share of "informal workers" (who often live much worse than unemployed in Europe)?

The little ones will see their profits drop. They are the ones you see queuing up with their families in front of supermarkets everywhere in the city to buy as much as they can and resell for a living at 4, 5, 10 times the price of the product. According to official figures from 2012, more than half a million people work as illegal street vendors, in Venezuelan Spanish "buhoneros". My educated guess is that today over 1.000.000 people live off from selling things on the streets. A good chunk of those things they sell are goods you will need to show your finger print to get.

Then there are the bigger fish: those who have developed  mafia networks and work directly with supermarket workers to get products by large lots and who sell those products to the small street vendors. It will be interesting to see what happens with them.

My guess now is that a new level of corruption will appear within the system so that the big fish keep getting their lots.

Sunday, 24 August 2014

Wenn Idioten ein Land regieren: Venezuela 2014

Die neuen Maßnahmen der Regierung Maduro könnt Ihr hier lesen.

Ich will nur ein paar Kommentare hinzufügen.

Der jetzige Finanzminister, der Mogul Rafael Ramírez, hat eigentlich nie Wirtschaft studiert. Er ist ein Ingenieur, dessen Onkel ein bekannter Guerrillero gegen die demokratischen Regierungen Venezuelas war. Sein Onkel war einer der Gründe, warum Ramírez im Jahr 2004 der Vorsitzende der staatlichen Erdölgesellschaft PDVSA wurde. Mehrere seiner Verwandten haben dort sehr hohe Positionen bekommen. Ramírez ist auch Energieminister...obwohl alle Minister Maduros vor kurzem gekündigt haben - kündigen mussten. Nicolás Maduro will in den nächsten Tagen neue Minister ernennen, zum vierten Mal seit April 2013. "Die Reise nach Caracas" ist die neue Version der Reise nach Jerusalem.

Venezuela befindet sich in einer Rezession und das als einziges Land in Südamerika. Die Regierung weigert sich aber seit Juni, Daten zur Inflation und zum BIP zu veröffentlichen.

Rafael Ramírez und einige seiner Verwandten in der staatlichen Erdölgesellschaft PDVSA
Die Lernmitteln, die ein venezolanisches Kind für ein Jahr Schule nötig hat, kosten ungefähr 8000 Bs. Das ist etwas mehr, als was ein Dozent in einem Monat verdient.

Drei Soldaten haben einen Journalist umgebracht. Es handelt sich um einen Überfall, nichts politisches. Dieses Verbrechen ist aber kein Einzelfall. Die Militärs sind die schlimmsten Schurken der Republik - zusammen mit den Polizisten - nicht alle, natürlich...aber viele.

Saturday, 23 August 2014

Food for thought about crime

The results of this Swedish study are not surprising to me. A lot of social workers won't like those results. A lot of conservatives will see their believes confirmed.

I think one needs to further analyse the initial correlations that came out of this research. In any case, it is worth keeping an open mind. 

I wouldn't be surprised if a similar study would bring similar results for Venezuela, in spite of Venezuela having such a different environment as Sweden. The crucial thing would be: what can we do about it?

Saturday, 16 August 2014

Repression in Venezuela - slowly sinking state August 2014

The government got yet another regime-critical programme out of the air. Fewer and fewer media outlets have anything critical to say about the government.

Recently several Europeans asked me what was going on in Venezuela. They hadn't heard anything after April. I told them: the main leaders are in jail and thousands of students have to report to the cops every week.

Here you can read more about that (in Spanish). By the way: both links are from Notitarde, one of the few remaining newspapers to dare criticise the regime.

The government will keep increasing repression. It doesn't have another plan for the simple reason most of the high ranking officials are thugs, criminals with a lot of skeletons in the closet.

The rest of the world won't lift a finger: countries have either a nice trade surplus with Venezuela or, in the case of the USA or China, they think regime change would create more headaches for them.

The Central Bank of Venezuela, completely under control of the executive, hasn't published its inflation or GDP figures since May. It is completely paralyzed just as Maduro and Diosdado are paralyzed out of fear of losing power and out of ignorance about how to manage a country.

The opposition that is not in prison? It is in a mess. None of our politicians wants to go to jail like Leopoldo López.

In a coming post I will try to get a little bit deeper into what kind of GDP Venezuela will finally get for 2014. We have already said ECLAC's latest estimate is -0.5%, which seems to a lot of people an incredibly optimistic figure.

Wednesday, 13 August 2014

Venezuela und Benzin, Benzin, Benzin, Benzin + Tafelberge

Dieser Dokumentarfilm der ARD muss man sehen. Vor allem ab Minute 5, wo es um den Benzinschmuggel geht.

Nur erklärt er Journalist die Sache nicht so ganz richtig:

"Jeder hat sein Teil davon eingesteckt, von denen ganz unten bis zu denen ganz oben": 

Nur diejenigen, die in diesem Verbrechen beteiligt sind - einschl. der Schweizer da-, gewinnen was davon. Das Geld, das die Regierung für das stark subventionierte Benzin ausgibt, ist Geld, das die sie für die heruntergekommenen Krankenhäuser und Schulen nicht ausgeben kann. Ein Lehrer in Venezuela verdient wesentlich weniger als ein Militär, der ohnehin vom Schmuggel profitiert. Ein Lehrer kann mit seinem Lohn nicht mal eine Einzimmerwohnung mieten.

Man weiss, warum Maduro am Ende den Benzinpreis nicht erhöhen wollte: die Militärs würden weniger kassieren.
"El Honor es su divisa" ist das Motto der Nationalgarde. Es müsste "Schmuggeln ist ihre Divise" heissen

Venezuela's correlations

Here you can see in red the standard deviation of GDP growth for several countries with data from 1990 until now. I used World Bank data up to 2013 and I used the ECLAC projections for 2014 and, for Norway, my educated guess. As you can see, Venezuela stands as a particularly unstable country and Argentina follows. Reality will prove worse as ECLAC GDP growth for Venezuela is likely to be extremely optimistic at -0.5%/

The links between the countries represent the Pearson correlation Pearsons r correlation between GDP of those nations. The correlation is rather weak but there seems to be something there with Panama, Ecuador and Colombia, even though the relationship with each one of those countries develops at different levels. For instance: Panama is one of the main benefactors of Venezuela's investment money, including money to be laundered but exports much less than Colombia. Norway and Venezuela, on the other hand, hardly have anything together but both countries benefit from high oil prices. The difference  is that Norwegians have sustainable development as core policy and Venezuelan politicians don't even grasp the idea.