Sunday, 6 October 2013

The Abominable Eudomar Tovar and other horror stories

There is no Alice here

The big shots

Eudomar Tovar is currently the president of the Central Bank of Venezuela. He announced to a Uruguayan newspaper that there would be some changes in the currency control. The Bolívar is right now highly over-valued, something that, together with all the other wrong economic policies in place, has led to a huge black market, smuggling of state-financed imports and other purchases for resale abroad and more corruption than we ever thought possible. Venezuela's exchange control needs to be loosened but that is highly unlikely now: although a lifting of that system would massively benefit the poor on the middle and long term, it would mean that those currently profiting from the arbitrage and the black market would stop getting billions...and they are the ones calling the shots in the pseudo-revolution. We also have elections early December. I expect a new devaluation, but only after that. Then many opposition politicians would say it was bad even though though it was necessary, they won't explain the economics as they understand them and the government will say it was not a devaluation but some thing else. If and when they devalue, they won't do it in the terms that are necessary, which will mean the country will keep on bleeding.

The government will keep on trying to get loans from China, Russia and anyone else. The problem is that those countries are getting weary. As Setty shows, Venezuela is not getting less bucks now for its oil than in 2008, even if expenses keep rising.

Tovar was talking about the Sucre being used in Venezuela and being used to reduce the purchase of "foreign currency".The Sucre is basically a mechanism whereby purchases country X does in country Y are paid by having the exporters get their money from the central bank of country X. The Sucre is for the moment just a façade used by the countries profiting the most from Chavismo: Cuba, Bolivia, Ecuador, Honduras, Nicaragua and tiny Dominica. In reality the amounts we are talking about here are peanuts in the  general trade.

Tovar is there because he is submissive, because he does what his superior - the Executive - tells him to do. Tovar cannot even read and much less interpret a basic chart of economic parameters or even talk like a literate person. No, I don't mean he cannot use a "posh" accent or one used by a certain social class. He simply can't talk.

The Apparatchiks

Last week Ovidio Almeida, member of the state party and head of Planning at the Ministry for the Popular Power of Sports was detained in Bulgaria with $407000 in cash. He claims to be going with the money Venezuelan sportsmen needed while training there. Any grown up travelling to the EU should know you have to declare the money you have if you are carrying €10000 or more. Héctor Rodríguez, the minister of Sports from 2010 until this year, decided his functionaries would directly give the currency needed to the sportsmen and would avoid doing that through the sport federations.

Why is this? This all has to do with the currency control and the mafias around it. And any control on this will generate more mafias.

If you want to read more negative economic news about Venezuela, go to Miguel's latest post.

The State priorities

Venezuela is trading with many countries and almost all but the US show a trade surplus with Venezuela. Still, the government is brainwashing the population and telling them our nation is in some kind of economic war and an almost economic blockade a la Cuba. This works for a third of the population.
If you want to read about Maduro in Wonderland, you can read VTV's site. I will spare you the pain and just translate a couple of news titles:

"Head of State: I gamble it all with the Venezuelan patriots in the economic war"
"President of National Assembly walked the Hugo Chávez street in Moscow (pictures and videos)"

Last but not least, the very trivial

"People positions tag #IGambleItAllWithMaduroAndPeriod to fight the economic war together with head of State" (Give it all:  my attempt at translating Venezuelan XXI slang for "gamble it all")

Yes: almost half the population or perhaps less than that but still a huge minority are gambling it all with a regime that is destroying the country.

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