The Grinch that DID steal Christmas

On November first Nicolas Maduro announced that Christmas had started and he went as far as already lightening up the traditional cross on the Avila mountain which is normally turned on December 1. Well, since then he did his utmost to wreck the Christmas of joy he promised in spite of shortages, crime and what not. After what happened this week, he has definitely wrecked Christmas for all, without possible redemption by December 24.

The news of today are dramatic, and even tragic as there is at least one dead protester/looter. At this point people are hungry and frustrated enough so the line between looter and protester is easily crossed.


Reports of looting and protests from all around Venezuela came in. They included even the looting of banks in the belief that the regime kept inside the new bills that are not appearing anywhere. And that is the crux of the problem, the regime has not made available the proposed new bills as it was taken away all the ones that were the blood line of a wrecked economy.

For your understanding. A large portion of Venezuelan everyday economy is run through cash transactions, in particular outside of Caracas. There is a very large sector of the population that does not hold a real job and do not even have a savings account. And even if they have one, they probably do not have an ATM card (not that this matters much as ATM are not delivering bills these days). And in many small towns and villages there may not even be a bank, and if they have electronic payment points those are limited to very few stores and do not work well due to the distance and bad communications with rerouters and the like.

As a consequence of that a large chunk of the population did not deposit their 100 banknotes because they had nowhere to deposit them. They had to wait for today when the banknote exchange would officially start at the state owned banks and the Central Bank. But it did not happen and the population were furious when the only thing offered, if at all, was a certificate of deposit to be honored when the new bills would arrive.  How would these people buy food? Take the bus? Buy something for their child's fever? Even less, prepare for Christmas?  No wonder we had serious stuff happening all through the day (I re tweeted some, you can find them on my time line on the right).

What is quite amazing is how tone deaf the regime has been. Last night Maduro pushed his chutzpah at reducing the number of days allowed for exchange at the Central Bank, probably assuming that most people had deposited. It is simply amazing that a government of "el pueblo" ignores the real life conditions of that "el pueblo". But tonight we learned that in spite of Maduro words the Central Bank will open this week end...  We'll see, and at any rate in an unsafe area of Caracas at 10 PM people were in line at the Central Bank building. Also, additional proof of the regime utter mess is announcing that the subway would be free which is like applying a small bandage on a large open broken bleeding leg.

To finish this post, there is no point in dwelling on how fucked up the regime is, how lost Christmas are, you just need to watch the news or read twitter to understand the magnitude of the disaster. Journalists are having a field day with a furious population that has unusually harsh words against Maduro. Let's instead try to perceive why the regime took such an idiotic, ill planned measure.

From what I can gather, the leftist economic counselors of Maduro, from Cuba and Spain Podemos, suggested that a spiraling black market rate of the dollar could be countered by merely reducing the monetary mass.  That simplistic of a theory is believed, ignoring that the structural inflation of Venezuela is its lack of production due to a decade and a half of wrong headed economic decisions. To which you may add internal chavista infighting where a gang was willing to risk such a disaster in order to punish another gang. There were probably other motivations such as increasing control over the populace by making them more dependent on the government by the mere fact of monetary scarcity, so to speak.  Indeed there was a tiny grain of truth in it. Incorporating the new higher denomination bills would have been a sudden increase in monetary mass without support, and hence accrued inflation. But the solution was a slow incorporation as the old bills were removed.  Not what happened.

So why did the government act so brutally at possibly the very worst time? This is were the conspiracy theories take hold. Some say that the crazy measures may have been ignored by those who knew better in order to speed up the end of Maduro. Others, that Maduro felt that by doing such a change was an irresistible way to show resolve and vision. The border mafias could be accused, The conspiratorial NGO treachery could be advanced with hoards of 100 bills in Switzerland vaults, etc. The nincompoopier the better. While at the same time slowing down inflation long enough for, say, a snap election advantage.

I do not know whether inflation will be stopped, My guess is that December inflation instead of being 30% may end up being a mere 20%, only to roar back in January.  The black market rate did indeed dropped by half but that is no surprise. There was a speculative component to it. But what Maduro cannot stop is that there are Colombians that need to buy bolivars to pay for their businesses inside Venezuela and as such they need to sell Pesos even though nobody right now has the cash for them. Hence the  temporary drop in the black market quotes. But just you wait. That the black market rate is still the double of what it was two months ago is an early sign of failure.

Had Maduro listened to any one else than the commie hacks that surround him, he would have been told that as long as the lingering structural causes of inflation were not dealt with it the only thing he could get through crunching monetary mass was a brief, very brief lull in inflation. But never an end to it. That and the hubris of wanting to be in control of a general situation that has escaped his hands explains while he took such a gamble that even if well prepared would not have turned out well. Instead it brought upon his regime a new disaster and probably the loss of a significant chunk of whatever support he may have still had.

Now let's see if the opposition can cash in that mess.

In two tweets, the collapse of Venezuelan economy

Two tweets, one from November 21 and one this morning this morning, November 30

Hasta el 2021!
Chávez lo había prometido!
Cumplió! #DolarToday2021 @DolarToday pic.twitter.com/Es06uFZRy3

— daniel duquenal (@danielduquenal) 21 de noviembre de 2016

(word play on Chavez promising that his revolution would last with him at the helm until the year 2012, his version of the thousand years Reich).

Thy end neareth! Hear thee trumpets blaringth! Apocalypse cometh to thy stomach! pic.twitter.com/ZzPPqqgIX2

— daniel duquenal (@danielduquenal) 30 de noviembre de 2016

The Venezuelan currency on the black market lost 50% of its value in not even ten days. Note that in October it was hovering at 1100 and this afternoon it has already crossed the 4200 barrier. Thus we can say that the depreciation over a month is around 75%.  I do not think that historically Venezuela's currency has experienced such a drop in such a short time.

Economist will have all sorts of fancy explanations to give you. The regime will speak of a terrorist attack on Venezuela by the imperialism, refusing to consider that the Fidel Castro, finally croaked, model is the guilty party. What I am going to tell you is what this means at ground zero, the one of yours truly.

It means that with the hyperinflation setting in with our two paycheck combined we may not be able to cover food and medical expenses of my SO, even with insurance.

It means that assuming that I can find and purchase raw material to keep producing it would be so expensive to produce that no one will be able to afford me (or no one else for that matter).

It means that considering that national food is insufficient we will not be able to purchase imported food.

It means that come February, when the full effect of this is felt, I may be out of a job, out of food, out of medicine for the SO. And it will not be a question of price and money in the bank. Simply, the shelves will be barren.

Why o why?

Well, it all started when the regime decided to pass a national budget without approbation by the National Assembly. As expected, once creditors were told that nothing outside of a National Assembly vote would be recognized as debt, then loans stopped. Oil prices did not go up. Plus other well known factors of a dysfunctional economy. Conclusion? Bankruptcy and a dollar that goes from 1000 to a USD to 4000 in about a month time.

It is just that simple folks, truly. An absolute lack of confidence in the regime.

The worst thing of all is that there is little that can be done at this point, the damage is too deep. A mere relaxation on price controls or currency exchange will not do. We are like in Eastern Europe circa Berlin Wall collapse. The regime tried for so long to avoid an economy bang that it created the conditions for a nuclear economic bang. Now we need to do, SIMULTANEOUSLY, removing currency control, removing price controls, negotiate with the IMF some sort of bridge loan to help the poorest people to eat.

And all of this is only possible with a change of government. It is not even a matter of sharing responsibilities with the opposition, it is too late for that (and I have my doubts about the opposition wanting to reach office now, but that is matter for a future post).

Tales from the breadlines

Two short tales on food lines.


There are breadlines everyday in front of the bakeries that will be making bread. Not all do, some because they cannot deal with the mess and others because, well, they have no flour. The lines start forming around 11 AM or 5 PM. That is that.

The other day I was in El Recreo district and stuck in traffic I watched what is a short line. Yes, a short breadline. I have seen some that are 3, 4, 6 times as long as the one you can see in this Instagram video I posted. Being bored I did make a croquis of that line, to locate the picture below.

This is the little tail on the map below where
it says foto.

On other news, a tale from my cleaning lady.

Now she needs to go a get a number the day before her appointed day for shopping (note: for certain items you can only shop on the day that corresponds to your last number of your ID card). That line to get the number by itself lasts a couple of hours, at least, if you want to be sure to get a number. And then you still need to go early next day and do, at least, another couple of hours standing in line if you want to make sure supplies are not exhausted before your turn comes.

This is already bad enough but it gets worse. See, while they are in line people chat, get comfy, start exchanging phone numbers so they can text each other when things arrive. So far so good. But the bachaqueros, those people making a living out of buying and reselling what they get in line, have noticed. So they play the friendly game without passing for bachaqueros and THEN, when they happen to not get as many number line as they wished for, they start calling people and threaten them if they refuse to give up the number they got.

In other words, within the long line there is a now a surveillance network of bachaqueros that notice who are the weak links and when they do get a number. Then, voila, extortion on those poor friendly souls.

----------------

Added in proof: I just learned that the regime is now threatening to close/fine the bakeries that have lines outside. Apparently Maduro says that there is enough flour and that the bakers, in a giant conspiracy I suppose, want to force people in line to give bad propaganda to the regime.

Now I can die, I have seen it all.

Esau would get a good deal from Jacob in Venezuela

The new minimum wage increase decreed by Maduro is of course a fraud. No need to insult the gentle reader reminding him or her that the inflation has already pre empted any increase Maduro may give us; and the relatively large but very insufficient increase will not solve the workers purchasing power problem while adding yet more fuel to inflation. Only chavistas do not know that, or worse, do not care about that.

The new minimum wage is officially 22,576 VEB. At the SICADI exchange of today we see that the VEB is at 645 to the USD. In short the minimum wage is officially 35 USD PER MONTH.

There goes the glorious bolivarian revolution in the name of workers.

And do not complain, I could have used the black market rate of 1,007 instead of 645 because that is the only one I can use to buy dollars with my 22,576 VEB. It would be, well, 22 USD.  How people can live off such a paltry amount is a mystery beyond belief, less than 1 dollar a day.


Ah! but the well informed reader will tell me that I forgot about the food bonus!!!!  That is right. And I will explain that next.

For reasons too long to explain Venezuela has a complicated system of severance payments. That is, when you fire someone, or they simply resign, you have to pay them X amount of money based on all the income that person has gotten while working for you. The trick here is how do you define income. One way the Venezuelan government, before Chavez already, found to go around ballooning severance sums was to give its employees bonuses not counted as regular income. The most creative way was to establish a food bonus for lower scale wages. First it was limited to large business. Then it spread to small business, then everyone got it, not only lower scale workers. Now, I have been informed that even as an associate in my business I could get fined if I did not receive that food bonus, something that I have refused to receive until now.

Chavismo in recent years has steadily been increasing the food bonus as a way of slowing down the amount of severance pay that the state today cannot meet anymore, by the way.  The pay increase I refer above raised stupendously the food bonus to 42,480.  Yes, that is right, the food bonus is now almost twice the basic monthly wage.

So why should I complain? Very simple: that food bonus comes through tickets or a bank card AND can only be used in food stores. Guess what? the worker may want to use part of that 42K to buy such things as public transportation to go to work or medicine for her children. And one of the few ways to make good on that 42K for cash is to go to certain grocery stores that will give you cash in exchange (illegal, of course) but at a 20% discount.

So there you go, no matter how positively you try to look at that minimum wage hike it is a fraud to the worker, its severance pay will be negatively affected and s/he can only buy food (which incidentally cannot be purchased through that food bonus from black market).

But it gets worse.  Today I got from a relative in France a a tweet and a picture.  The tweet is from Miro Popic, food editor at Tal Cual.

Bs.3.995 el 1/2 kg. de lentejas. Nuevo salario mínimo dará para 2.82 kg. al mes. pic.twitter.com/rut7ewJwTg

— Miro Popic Editor (@miropopiceditor) 16 de agosto de 2016

Cheaper and yummier

So about a pound of lentils in Venezuela costs 3.995 which at the SICADI in euro of 727 is 5,49 Euros. Why Euros? Look at the picture on the right on how much is a pound of lentils in France this week: 1.73 Euros.

Now you be kind and explain to me at which level this could possibly make sense. There is certainly a speculative factor from the merchant in Venezuela, no doubt. But it is not enough.

At any rate, with the new minimum wage 65,056 VEB, food bonus included, you can buy 8 kilos of lentils. That's all you will be eating that month, lentils, 86 grams per meal (and let's forget about cooking gas, water, etc... to prepare them).

I am sorry, but unfortunately such things cannot be made up........

When the statist state runs out of ideas (and other's people money)

AS expected the rise of general Vladimir Padrino as co-president of Maduro has changed nothing. After all Venezuela has been a dictatorship for a while, of a new XXI century kind certainly, but a dictatorship nevertheless. It was all just a formality.

Padrino cannot succeed in his attempt at putting food on the table of Venezuelans. His multiple inspections, in combat drag, of food producers have revealed no scandal so far, no hoarding, no lack of manufacturing will. The reason why there is no food production in Venezuela is simple, it is because there is nothing to make food out of.

For better or for worse, and with chavista bred officers it is likely for worse, Padrino seems to have been put there to prepare, or chair, a transition out of Maduro's mess. We already have the first signs on how doomed this might be as clashes between radicals and pragmatists, military and civilians have come to the forefront this past week.


One, for example, has been setting up a system for forced labor. I kid you not. A decree states that the regime can draft workers from private agribusiness to work for up to 60 days (and 60 more if needed) in the state agricultural undertakings. That is right, I repeat, workers from agribusiness, even myself, could be forced to go to work where the regime decides. I am not insulting the intelligence of readers discussing the historical precedents that say that forced labor never ended up in something positive, and always brought different levels of tragedy. No, the details are more interesting in a decree that cannot be applied.

First, there is no provision as to what would happen to a worker refusing to go to a state run facility (employers MUST part with the employees drafted while preserving their social benefits and their penalty does not need to be expressed since we know by experience what the regime does to us). Second, those business that still produce something could well come to a stop if they lose their trained personnel. Where would be the food relief in the country?.

One chavista union official quickly went to say that no one would be forced to serve against their will. But that is quite hollow when you read the decree where only different forms of expressing obligations can be found (I highlighted them in the scan from the decree on the right, if you can read Spanish).

I find it interesting that besides being an extraordinary sloppy job of a decree it is also so direct and self assuming of its importance. If you ask me it is from the hand of a military turned bureaucrat, used to give orders and be obeyed. But in real life that does not work.

Another example of the confusion reigning inside the regime comes from a "debate" between the head of the state oil monopoly PDVSA and Elias Jaua, a representative of the more radicalo-communist wing of the regime. It all started with del Pino saying that the nationalization of the services of the oil industry in Maracaibo Lake by Chavez in 2009 was a mistake. It is a taboo in Venezuela: oil industry should belong to the state. At least some good sense had prevailed in letting competitive services manage a large chunk of the oil industry, usually the more delicate work that required nimbleness, something that was not a given even in PDVSA best days.

In short what del Pino was suggesting is that the private sector should not be banned outright from Venezuela's oil industry. Something very pragmatic since oil output has been dropping after 2009 and that with current oil prices and Venezuela bankruptcy we do not even have the money to keep the current level of production for much longer. That is anathema to the radical left that is unable to come to grips that the Chavez and Cuban models have failed, that the country is broke and that we have run out of food and medicine. In their minds there is a course traced by Chavez (Plan de la Patria) and it should be followed, period. Elias Jaua even goes one more stating that the said plan was discussed and voted upon and turned into law (it was an emanation of Chavez and thus was never properly discussed to begin with, and a monstrosity to read by the way).

And thus we see the plain division between the "civilian" groups of chavismo, between those who think that something should be done and those that think nothing should be done, that we are all doing fine and that the only thing needed are yet more regulations, more controls, and now forced labor.

It is interesting to note that even if one were to agree with the need for some strong initiative to restart production these come too late for Venezuela. When Chavez came to office in 1999 there was already a strong tendency for the state to rule over everything. On that aspect Chavez simply did one better, pushing the system to its last consequences, benefiting of disproportionate and undeserved oil rent to smooth things over and thus pretending that the private sector was not needed. Now there are voices inside chavismo that want to re discuss the model, and there are even admissions that only the private sector can take us out of the mess, After all, the forced labor decree is simply a way for the regime to force technicians from the private sector to work for derelict state companies. This is an admission, if any, that the public sector is incompetent, at least on that front to be charitable.

Ways out of the mess, doubtful all, military for sure, recall it ain't

Last I wrote on ways to get out of this mess was June 11 (and April). Things have changed somewhat since these entries. Time to include recent developments.

What has not changed

It is still a matter of a group of narko-mobsters holding Miraflores Palace who cannot surrender power because they will go to jail. All problems originate from this.

Period  1.

This has been a military regime for quite a while. Naming Vladimir Padrino as the head honcho co-president does not change things much, except on some stylistic matters, such as more naked repression, always a possibility.

Period 2.

What has changed

Even people that were reluctant to use the D word (D not for Democracy) are coming around and calling a spade, a spade. That for me it was officially a dictatorship since January 2013 is no consolation. Ever the Cassandra, sometimes even the laughing stock, but oh, so right.

The economic crisis is nearing tragedy proportions and the regime is simply unable comprehend, instead resorting to scrapping the very last bolivar that can be found. The cruelty shown by the regime is reaching genocidal proportions. This is for all to see, even at home in spite of heavy censorship of the air waves and even threats at social media.

And to drive in the point of the crisis there are reports of belt tightening in Cuba which proves that the colony is having problems supporting its master. From there to think that Cuba may want to get rid of Venezuela it is not that long of a stretch.

As a consequence there is some intensifying international movement. The OAS is starting the proceedings to apply its democratic charter on Venezuela. Mercosur does not want to give the rotating presidency to Venezuela. But the US seems to have misplaced views at forcing a "dialogue" upon Venezuelan opposition least a final collapse of Venezuela sends waves of Cuban, and Haitians, and Caribbeans, and Venezuelans to the Florida shores.

Facing all of this, the military had to take a more visible direct role. Why? They are already responsible for the mess, nobody believes for a second that their corrupt structure is going to change anything.  Two possible reasons.

First, and foremost in my opinion, there is not enough to loot and the higher ranks have decided to limit the robbery intake and restrain it some, to some. That extremely corrupt Marcos Torres is not sacked and remain in office would point that way. Let me remind you that he was the one managing the billions at HSBC Spain and is yet to account on how that money was used. He has been censored by the National Assembly and yet Maduro keeps him even though his signature on contracts has no more validity as far as the National Assembly is concerned. His direction of the economy in the last couple of years, well, speaks for itself.

Second, the army does not want to do Maduro's dirty job. That is, they do not want Maduro to call on them for rough repression and be the ones to go to trial some day for it. That co-presidency sounds to me like a "if I go down you go down with me" thing

What are the current exits

This being considered we can review quickly which could be the possible exits to Venezuela's political crisis today. Which may be invalid by tomorrow but that is another story.

The best one for the chavista party PSUV to avoid a final collapse is to have Maduro resign. This can be done in such a way that Maduro remains in office for, say, three more months before a new election to complete the 6 years term of office, even if the opposition (if not divided) is certain to win. That way chavismo can put all the blame on Maduro and pull out a relatively untainted figure that would ensure the PSUV to bounce back to the 20ies it currently hold in polls to a more palatable 30ies, or even 40ies.

Odds? since it makes sense the odds are not good. Also, it requires several things. That Cuba approves. That Maduro accepts to abide. That the opposition gets into the deal and offers a more "moderate" candidate than Capriles or Lopez or Machado. That X Y and Z.

The coup is a resuscitated option, the more so when one sees the probably faked coup of Erdogan in Turkey that is allowing him to get a MASSIVE purge of public officials in there. After all, there is a precedent in Venezuela. Chavez himself admitted to have provoked the 2002 crisis and used his survival to purge all what he could in the Venezuelan state.

There are two modalities for the coup depending on what the "provocation" may be. One is a simple dissolution of the National Assembly, akin to the Peruvian "Fujimorazo". The other, a variation, is a more extreme state of emergency removing all powers of the state,  Both options are "moderated" through a promise of  elections within a year.

Odds? since it is reckless, since they are more into the current style of Maduro, Cabello and all the others that are going to jail sooner or later, the odds are not bad. Since Venezuela is already a bankrupt pariah state, who cares?!

There is the possibility of general collapse. It is clear that the army, no matter what Padrino tries to do, is less and less in control. The latest shopping exodus to Colombia is an evidence. Just as when the Iron Curtain borders control collapsed announcing the end of Communist Eastern Europe.

La foto más impactante de los venezolanos cruzando la frontera con Colombia https://t.co/qANXRl7mah pic.twitter.com/PQUTD56pQc

— El Nacional (@ElNacionalWeb) 17 de julio de 2016

What would happen if general looting started, if people started marching from chavista former strongholds like Catia to Miraflores Palace?  All is possible, from civil war, to military bloody coup to a swift regime collapse like Argentina's De La Rua escape from Casa Rosada in 2001. Many variations are possible but all drive from a provisional regime to an opposition take over that would have to face the highly unpopular economic measures necessary to end and correct the chavista narko-corruption mess. Let´s not speculate on that for the time being.


Odds? Probably the highest at this point as it seems that the "civilian" and narko wings of chavismo would chose this way out, either to exculpate its mistakes or to purge once and for all its opposition. But it is doubtful that the military would accept that last one as they will be finding themselves at The Hague benches. We are in the XXI century after all. Hence probably the recent take over by Padrino, which is far from ruling out that option as the guy has started by counting chickens in combat vest.

@vladimirpadrino visita Empresa de Alimentos El Tunal, en Lara, como parte de la Gran Mision Abastecimiento Soberano pic.twitter.com/Hec5CVYXQ2

— Vladimir Padrino L. (@vladimirpadrino) 16 de julio de 2016

So that is that.

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PD: something probably thought that I did not discuss the Recall Election scenario. There will be no Recall Election. Nor any election for that matter (can you imagine chavismo losing 90% of State House in December!!!!).

A recall  election is the worse case scenario for chavismo. If Maduro is recalled, say, with a 20 points spread, that would reverberate badly downstream and the following presidential election could go to a spread half as larger!  That is, the end of PSUV.  Thus why I think that if the regime were to be forced into a Recall Election before 2017 it would have Maduro resign first, a less damaging option for the PSUV.

Father's day

It has been a rough week for your truly. On Monday I was mugged with all the problems that this entails for the rest of the week. And the week ends on Father's day, with a melancholy.


What happened Monday is that I was bringing supplies to the S.O. who is in the mid of a bad chemotherapy bout. I was cornered as I was getting out of my car by two motor bikes with two people on each. One of them a woman. I did not stand a chance, happy that they did not kidnap me, or steal my car or shoot me for sport.

The what they took me is not really the matter. My aging smart phone is gone (but for some luck of destiny the night before I had downloaded all the pics at home). My bag had some very personal valuable items that are of no use for them, except perhaps for the knife I always carry with me as the good Frenchman I am. The bag with the supplies they did not even look at it even though it had 5 liters of very precious milk and a brick of 50,000 bolivares that I bring regularly to the S.O. so he does not have to stand by cash machines or bank tellers where his weakness could make him an easy prey, with a probable fatal denouement if he were to be thrown on the floor in the scuffle.

Rather what the event left me was a profound thoughtfulness. I realize that I was in a hurry and not quite as careful as I usually am. That is, in Venezuela today you cannot make a single mistake because dark forces are always on the look out. Always.

I compared myself with the forest floor small rodent that needs to get out and scavenge for something to eat. That rodent needs to think about a lot of things before peeking out its den. There might be a wild cat close by. Maybe it will cross the path of soldier ants that shall make mince meat of it fast. If it needs to go near a clearing some bird of prey might pounce fast out of nowhere. Of course there are the silent slithering snakes.

Same thing for me, in particular the red snakes.

The rest of the week was a scramble to get some ID papers back, to cancel credit cards, change my passwords, to buy a new smart phone, an obligation in this country if you still have a job with some responsibilities.  I had to be exposed to what were a couple of bolibourgeois buying in front of me a golden Samsung S7 Edge priced 6 times more than the more modest Grand Prime that I had to downgrade to after my  stolen S3. That S7, for your information, is worth 100, ONE HUNDRED times the MONTHLY minimum wage in Venezuela.  I do feel already embarrassed to buy a smart phone which already costs 18 minimum wages, but I have no choice if I wanted a screen big enough to read who calls me without glasses (another security concern). At any rate, the cheapest of smart phones start at 10 minimum monthly wage. So there, 17 years of chavista equality down the phone drain.

This morning I was hoping to find some solace. The S.O. informed that he was starting to recover a little. I was safe at home, café au lait in hand (a luxury by itself) reading the weekly Tal Cual edition which had a special father's day issue. And a sad one as it focused on the broken families that cannot celebrarte such dates together because of emigration. The most conservative estimates give 1.5 million Venezuelans gone into exile since Chavez was elected. Apparently there are Venezuelan communities registered now in 96 countries, from the mighty half million in the US to a few dozens in Podunkistan.

And I started thinking about those of my family and friends that have left. For a while my close family did manage to stick together, but that is not true anymore, and it is about to get worse. My parents are now unable to come back to Venezuela for medical reasons. They could travel, yes, but they would not get the adequate care they need here, never mentioning that they cannot stand in line for food. For the third year in a row a phone call had to do, and them calling me since now there is no more direct calling to Europe. See, Venezuela state phone company is so broke that the regime has decided to go back to operator assisted calls to most countries so it can charge more. Private mobile phone companies have simply stopped offering the service. and you need to dial dozens of time until an operator answers.

But I digress, the point is that I cannot have my old parents anymore here, limiting myself to a yearly visit, as long as possible. But this summer I am losing two nephews who are graduating from high school and whose sad parents have to accept the financial sacrifice to send them overseas for college even though they have been accepted at one of the last decent private universities still operating in Venezuela. It is quite possible that they may never come back to Venezuela except perhaps for a brief Christmas stay as long as the parents still live here. My other nephews will follow the same path starting in a couple of years from now for the older one still here. Maybe in 5 years from now we will have all left.

That Maduro may fall this year does not change much the situation, the country has become a pit of red snakes.

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.

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.

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.

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........

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.

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.

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).

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.

Just a day in the life of a dictatorship: Maduro starts applying the enabling law

I never cease to be impressed by the deep denial that still exists in some people as to Venezuela being a military dictatorship.  Sure enough, there are "elections", a civilian "president" is the one "ruling", you can travel if you can find an airplane ticket, you still can read this blog though more and more the regime practices blocking certain pages, there are "so few" political prisoners, the hundred of thousand people that emigrated out are simply not genuine patriots, etc.

Fortunately for those that still do not understand that dictatorships in the XXI century are of a very different species than the earlier ones, Maduro first day with his new toy should be the beginning of enlightenment.  Even among the opposition: this Saturday finally Capriles has called for protests all around the country. About time.....

There is no need to go much in the details of the two new laws signed today: they are, as expected, designed by the regime to control more the economy and punish those it wants to punish. The laws, as the ones to be published in the next months, are mere excuses that make the task easier in finding motives to crack down. As all such type of laws they will not work out, and in the end they never worked in any country. They are mere examples of laws that a dictatorship emits, nothing more, nothing less.  What is more interesting is how the regime bends backward further, if it were possible, the constitution.

One law is to promote corruption. Through this law Maduro creates a Centro Nacional de Comercio Exterior or National Center for Foreign Trade.  Maduro's reported words are rather confusing. Apparently now if you want to import anything you need to pass though that CNCE and sign a contract that proves you will use the dollars approved as intended and that you will be willing to be monitored in all your operations. We can sort of deal with that, it is just a more centralized CADIVI where those who have the power to grant the dollars, corrupt or not, will remain in similar posts.  Not only this will not stop corruption, it will only make it a little bit more circumvented and thus only increase the price of bribes that you will need to pay to get access to dollars to keep your business running.

Where Maduro loses us is with his announcement is that dollars that are approved will have to be deposited in a local account  instead of being transferred to your directly to your provider as it should be the case. How do I transfer dollars from my account to my provider if 1) I cannot have an account in dollars inside Venezuela and 2) there is a currency control exchange that forbids me such transfers? Is this a circumvented way to force providers to "invest" in Venezuela? A disguised devaluation as such transfers could be taxed? Was it just yet another idiotic misunderstanding of Maduro?

The other law, as expected, was to tie together a series of previous laws that will allow the regime to fix not only prices but also how much you are allowed to make in your business. In short, it is the law that is going to destroy large sectors of the economy that require flexibility in their earnings (seasonal character, for example) or that sell few large ticket items that need large margins to sustain business in between sales.  Maduro claims that this law decree will stabilize the economy. He may be right, it will be base line stability.

Now, if this does not reek enough of dictatorship, let me add that Maduro wants to give the price and earning control law a character of "organica" which does not mean at all wholesome and organic.  In Venezuelan legal tradition there are the so called organic laws which need to be voted by 2/3 of Parliament and can only be modified with a 2/3 vote.  The intention is to approve through such laws what the institutions of the country should be, things that are dangerous to change according to the whim of any government. In other words organic laws are in principle the laws that are used to implement the constitutional provisions as to how is the country organized, and NOT necessarily how it is run since this requires more flexibility to account for changes in economy or society.

Thus the beauty of this Maduro initiative: a president that stole his election in April, that is, 1) who does not have 50% of the electorate behind him, 2) has used a 3/5 vote of an assembly which has been obtained courtesy of gerrymandering, blackmailing representatives and firing others, 3) this 3/5 by the way representing LESS votes of the people in 2010 than the 2/5 sitting across the aisle, to 4) get a law that in the future can only be modified by a 2/3 vote even if it was in practice voted in with a spurious 3/5.  And he will get his wish because he only needs the high court, TSJ, to validate the new law as such. Of course, a high court that has violated the constitution so that Maduro can become president is certain to grant him his wish.

Now, if with this you still think that Maduro is not a dictator then please, do not read this blog anymore. Though, of course, you may be able to read it for only a few days more, until the regime blocks my page or something.

The next few months for Venezuela

Let's go beyond what qualifies as the "mundane" for the regime. Let's not focus on the organized looting, or the spontaneous one.  Let's not delve on the idiocies of the regime which claims that looting and forcing to sell at a loss will encourage production and lower unemployment. Let's just say that what started with the Daka looting over ten days ago is a mere politico-electoral ploy from the regime, that they never quite meant it the way it turned out.

Yet there will be consequences. Which ones?


I am not going to write as a pontificating economist. Firstly, I am not one. Secondly, you do not need to be a graduate from Ivy League School of Business to guess that the odds for Venezuela to enter a deep recession next year are in the 99%+.  The Maduro regime has made a massive blunder by destroying the commercial sector which is what holds together the financial and productive sectors.  Without commerce to distribute the goods around the country there is diminished receipts for the manufacturing sector, and there are no commercial benefits that go to the banks so they cannot invest in production ventures. If you do not understand this generality, if you do not agree with this, then do not waste your time reading further.


Venezuela is a very difficult country to work in.  The inherent flexibility of any commercial sector has made the Venezuelan one able to cope more or less with the situation making sure it all did not fall apart earlier, as it is about to happen.  Logistics are tremendously complicated in a country where the inefficient regime makes harbors unworkable, does not maintain properly highways and infrastructure in general, create rules after rules that inhibit commerce, etc. Furthermore, commerce is particularly understanding with the difficulties of many producers in ways that the banking system cannot or will not. I will refer you to the glaring example of AgroIsleña which nationalization 3 years ago has created havoc in Venezuelan agricultural output.

And in case the difficulties alluded to in the preceding paragraph were not enough, commerce must deal with an inflation above 50% that is joined to the corruption of the currency control that includes nice features such as retroactive devaluations where the regime forces you to pay old debts at new larger prices, wiping out any earnings you may have managed.  Thus the calculation of restocking costs has become a true dark science in Venezuela where you need to calculate selling prices by balancing what you think the market may pay for the goods you want to offer against your wild bet as to what you will need to fork in order to replenish your shelves. Any error may make you look like Shylock or may send you into bankruptcy.

The regime has used the rules it made to control the economy as a paltry excuse to punish the economic actors for the mistakes of the regime. And this is where it all centers: who will want to keep playing a trumped game knowing now for sure that there is no way you can protect yourself from the main abuses, and even less hope of winning your case.

If we assume that the regime "never meant it that way", which I think it did but that is my opinion, then what can the regime do to restore some equilibrium? Nothing. The regime does not have enough money available to refurbish the depleted shelves, if anything because corruption would take too much of a bite out of whatever the regime would be willing to settle with. Can the regime replace the commercial sector? No. We have for that the glaring failures of AgroIsleña now a derelict AgroPatria; we have the failures of the Bicentenariao chain holding courtesy of left over French management, and the Mercal who only offer goods on occasion, according to arrival, numbering people's arm for their turn in line when necessary. The state distribution system as it is is on the verge of instituting ration cards.  If the regime wants also to pick up malls and electronics it will only add more strain to what it is doing today, and further corruption and black market.

Considering all of this, what can we expect, not even for next year, for next month already?

First, people are going to empty their meager savings to shop for whatever they can shop. I went myself to a Locatel (refusing to shop in any taken over shop refusing to profit from the misery of others) and spent several K bolivares on stuff that I do not need yet but that I know I shall consume in the next 6 months, from soap to acetaminophen.  I did not buy electronics because I have all that I need and I am not going to buy a refrigerator just because the one I have is sixteen going on seventeen.

Second, surviving commerce is not going to be able to replenish shelves or will do so in part, and ONLY after the regime guarantees them access to a stable currency rate.  The consequences are immediate, beyond the empty shelves: a whole bunch of people are going to go jobless in the next very few months.

Third, our quality of life is going to go down south. Commerce also provides spares parts and once a store is on its knees it will, if it does, only buy a minimum of spare parts, those that it is sure can fly away from the shelves really fast before any inspector shows up.  Now, when my refrigerator breaks down, I may not be able to get a new compressor, nor a new refrigerator.

Fourth, production will be affected faster than what you know. Because in addition of needing to import raw materials that the regime intends to control more than ever, by purchasing it all themselves before they sell it back to you, we also need a lot of supplies that will not be readily available anymore (and many already missing before last week crisis).  For example at work I need car spare parts, electrical supplies, safety implements for workers, etc. If I cannot find these within reasonable delays I may have to shut down, first a day here or there, then a week here or there and then close down once and for all.

Let me illustrate you the perversity of the system. For example safety equipment for workers are already difficult to get. If I cannot get them anymore what should I do? Endanger my workers? Risk a punitive fine by INPSASEL that could bankrupt me as they cannot care less whether I can find the supplies?  I better close shop.

Fifth, as the regime relies on sales taxes and income tax and fines to pay for its public workers (the rest is paid by oil, rounding up numbers if you allow me), it will lose significant income with all the consequences you can imagine.  Will the regime ensure purchasing power of the public sector? Yeah, right...Some of my clients depend in part of contract from the regime to supply Mercal. If the regime stops paying, how long can they hold?

Sixth, seventh, eighth.....  you get the cascade picture.

The regime has put itself in a corner. It has either to back down badly and badly fast, or it has to go all the way with its open dictatorship plan that I doubt it has much capacity to implement in the long run as it needs to start by internal purges.  Whatever the regime decides we can expect next year a major degradation in living conditions forcing
massive repression which will not be able to stop violence, a violence that I must say will start mostly from the henceforth supporters of the regime.

The regime has no capacity to raise fast oil production to get the money it needs to import all the country needs and no capacity to spread it in case it could miraculously increase oil production and revenue; or at least tell Cuba and China to fuck off on their indentured share of oil.

Thus 2014 is a sure crisis waiting for us.