Skip to main content

VENEZUELA ECONOMIC COLLAPSE DEFIES ECONOMIC LOGIC ...

















New post on The Devil's Excrement









Random Thoughts About Blogs, Venezuela and a Government Caught in Political Asymptotic Slavery








It has been one of those weeks in Venezuela where nothing happens and that is what worries you: How long can the Government continue without making decisions or making half-assed ones, expecting that nothing will happen? 





But at the same time, Government officials and supporters say the darndest things and you wonder what type of thought process goes through their minds.




And in a country with little significant news to talk about, Quico of Caracas Chronicles, all of a sudden decides to call it quits, sailing into the sunset and deciding that he no longer has the intensity to continue writing about Venezuela. 




And in some sense, I envy him, because the idea of not writing the blog any longer, comes back frequently into my mind like a boomerang, but while I am writing less, I somehow can not cut that cord off. 


I am not ready yet. Kudos to him that could write for eleven years and give up. But somehow I can't.




I wish good luck to him and those that will carry the torch for him now.




When I originally started writing these pages in the summer of 2002, my goal was to tell the world how absurd Venezuela was becoming and how the Chavez Government was using gray areas to subvert democracy and law and order.





 A few months later, if my memory is correct, Quico began his chronicles, a welcomed relief in my mind, as the intensity at the time was hard to keep up with. More sources, more coverage. Soon afterwards, Daniel showed up with his views and a bit later Alek Boyd started vcrisis. 





I did not know any of them, but over time, I met all personally and we became a sort of loose conglomerate of telling the world what was happening in Venezuela.





 Alek later looked for other horizons within the Venezuela theme, but Quico, with more coauthors, Daniel and I kept going and I believe we did achieve a level of originality and credibility not found in the regular media, each in its own style and focus





Quico will be missed, with his sarcastic and provocative style which promotes thought and discussion. He leaves Juan and Gustavo, who will reveal a new look and collaborators, but as good as they are and can be, it will be a different era. We are all getting old, I guess. 




Time to move on...


For some...




But not for me.




When I began this blog, I always envisioned the day when Chávez would disappear from the scene and I would write The End and that would be it for the Devil. 





Well, Chávez went away and THE END can not be written yet, because the absurd revolution is thriving in its inconsistencies and irresponsibilities which are still around and amplified. 





And somehow, it is hard to see the end to all the insanity and absurdities, but I hope one day I can write something like a final chapter.






Physicists like to give name to theories. 




When I was a Physics student, asymptotic freedom was in vogue, later the name asymptotic slavery was also coined for the property of some superconductors. 





 Somehow, I have felt for a while that Chavismo is trapped in something we could call political asymptotic slavery.





Because Chavismo made a number of decisions years ago, that it thought it could one day change, but the longer it waits, it becomes asymptotically impossible to change things.




 As time goes by, Chavismo has become a slave to this decisions long ago. 



It can no longer back track. It is trapped, a slave to its own inconsistencies.







Let me give you an example: Gas prices.



 Even before Hugo Chávez became President, he asked then President Caldera not to continue increasing the price of gas.



 So, let's look at the price of a large tank of gasoline in US $ in Venezuela from 1998 to today at the non-official rate of exchange at the close of the year. 




I use a tank of gas, assuming it is 80 liters or 21 gallons, because if I used a gallon, it would be hard to show the price in US$:











In 1998, right before Chávez came to power a tank of 80 liters of gasoline, or about 21 gallons, cost about 13.5 US$ in Bolivars.






 Chávez decided to freeze the price of gas to preserve his popularity. 




By now, that same tank of gas costs 11 cents of a US$. 




Asymptotically, this is simply zero, gas is free, and is one of the many ways in which Chavismo is trapped. 



Raising it to two dollars, that is bringing it back to the equivalent of seven years ago, represents a factor of twenty increase. 




It would be political suicide to do so. 



But raising it to what it was when Chavez got to power would be a factor of 122, 12,000% give or take a percent here or there. Madness. 




Hard to get out of this trap. Slaves of their own ignorance.





Or take the money supply in Bolívars, the so called M2, the monetary liquidity in circulation:











When Chávez got to power, M2 was Bs. 10 billion in today's "Bolivares Fuertes"



This is practically zero in the scale of the above graph.




 Today, it is 121 times larger, there are 121 times more Bolívars in circulation than when Chávez got to power . 





 Given that reserves are barely more than that fateful day, it is any wonder that the Bolívar has depreciated so much. (Curiously, it is another factor of about 120, scaling perfectly with the growth in M2. When Chávez got to power the exchange rate was Bs. 0.563, today the unmentionable rate is slightly above 120 times that. And Merentes in his aberrant ignorance says he has seen no evidence that increasing M2 affects inflation!)






We could call this inflationary slavery, another physics name. 





By now, they can't slow down, they are trapped in their inflationary economy and fear getting out of it. 



There is no way to absorb that much money to stop inflation, there is no way for them to live without creating more and more money.





The problem is that Chavismo thought they could ride their luck up. 



And luck they had and they seem to forget it whenever they talk about the bad old days. 




This is the yearly average price of the Venezuelan oil basket since Chavez came to power:










When Chávez came to power, the average price of oil the previous year was 8.08 dollars per barrel. 



Between that time and 2006, that average grew by a factor of ten, something lost when Chavismo looks at its lack of accomplishments. 





Last year it was US$ 97 per barrel, but that was down like two dollars from 2012.




Chavismo thought this would go on forever, until it did not. Thus, Venezuela which had debt of US$ 35 billion (combined PDVSA and the Republic) when Chávez came to power, began borrowing by issuing bonds.





Today, the debt in bonds is about US$ 35 billion for the Republic and another US$ 43 billion for PDVSA.




But the Government realized that appetite for Venezuelan bonds was not infinite, so they borrowed about US$ 20 billion from the Chinese, to be paid in oil, so that the cash flow from that oil went to pay those loans.




Then one day, the Chinese said Wú (No) to any more loans. 



Thus PDVSA started not paying its suppliers. 




Later, it was its partners in oil projects that did not get paid. When that was not enough, Cadivi stopped paying for imports already in the country. 




And when that was not enough, PDVSA started borrowing from the Central Bank and the Treasury.






It all adds up and these are all of the country´s debts today:


PDVSA bonds US$43 billion

Republic bonds US$ 35 billion

China US$ 20 billion

Debt with private sector US$ 42 billion

Debt with Central Bank and Treasury US$ 105 billion (in Bolivars)

A cool US$ 245 billion, a factor of seven increase since when Chávez got to power.






And despite all of these policies, the Minister in charge of the Economy says today that there are shortages in "only" forty of the basic products. 




Well, in 1998, there could be shortages of one product, maybe two, but not chronic shortages of forty products. 



After all that debt, a factor of 12 increase in the price of oil, 120 in the number of Bolívars in circulation, you would think things would be at least as bad (or as good?) as in 1998, before this funky "revolution" came to power.





Instead, everything Chavismo does is talk about a future they will somehow build. 





They could not do it with money and they now will attempt to do with without money.






Yeah, sure...






And that is THE END that I want to be able to write about.




 I am not sure how this ends.




 I am not sure about the end of this tragedy (tragicomedy?), but after all this effort, I do want to be able to write about how asymptotic slavery was resolved, how the whole thing unraveled.



And unravel it will someday.




And I will not miss a beat of it.




http://devilsexcrement.com/2014/02/02/random-thoughts-about-blogs-venezuela-and-a-government-caught-in-political-asymptotic-slavery/

Popular posts from this blog

MEET MELANIA TRUMP: The 5'11" supermodel married to Donald Trump

Aly Weisman, INSIDER

Sep. 2, 2015, 3:28 PM 











Chip Somodevilla/Getty Images







While Donald Trump loves to be the center of media attention, his third and current wife, Melania Trump, is a bit more camera shy.










The Slovenian-born model keeps a lower profile than her husband, doing philanthropy work, raising their son, working on a jewelry collection with QVC, and creating a $150-an-ounce caviar moisturizer.




With Trump on the campaign trail, Melania has stoically stood by his side.




But who exactly is Melania and where did she come from? Learn about Trump's other half here ...





Melania Knauss was born April 26, 1970, in Slovenia.




Wikimedia/Getty







The 5'11" brunette began her modeling career at 16, and signed with a modeling agency in Milan at 18.



Chris Hondros/Newsmakers via Getty









She took a break from modeling to get her degree in design and architecture at the University of Ljubljana in Slovenia.








Wikimedia/Getty

Source: MelaniaTrump.com









But after graduating, her modeling career took off and Me…

THE MOST SOUGHT AFTER MANGOES IN THE WORLD ....

While "Flavor" is very subjective, and each country that grows mangoes is very nationalistic, these are the mango varieties that are the most sought after around the world because of sweetnesss (Brix) and demand.

The Chaunsa has a Brix rating in the 22 degree level which is unheard of!
Carabao claims to be the sweetest mango in the world and was able to register this in the Guiness book of world records.
Perhaps it is time for a GLOBAL taste test ???





In alphabetical order by Country....










India




Alphonso





Alphonso (mango)
From Wikipedia, the free encyclopedia








Alphonso (हापुस Haapoos in Marathi, હાફુસ in Gujarati, ಆಪೂಸ್ Aapoos in Kannada) is a mango cultivar that is considered by many[who?] to be one of the best in terms of sweetness, richness and flavor. 


It has considerable shelf life of a week after it is ripe making it exportable. 

It is also one of the most expensive kinds of mango and is grown mainly in Kokan region of western India.

 It is in season April through May and the fruit wei…

INDIA 2016 : Mango production in state likely to take a hit this year

TNN | May 22, 2016, 12.32 PM IST






Mangaluru: Vagaries of nature is expected to take a toll on the production of King of Fruits - Mango - in Karnataka this year. A combination of failure of pre-monsoon showers at the flowering and growth stage and spike in temperature in mango growing belt of the state is expected to limit the total production of mango to an estimated 12 lakh tonnes in the current season as against 14 lakh tonnes in the last calendar year.



However, the good news for fruit lovers is that this could see price of mangoes across varieties decrease marginally by 2-3%. This is mainly on account of 'import' of the fruit from other mango-growing states in India, said M Kamalakshi Rajanna, chairperson, Karnataka State Mango Development and Marketing Corporation Ltd.




Karnataka is the third largest mango-growing state in India after Uttar Pradesh and Maharashtra.



Inaugurating a two-day Vasanthotsava organized by Shivarama Karantha Pilikula Nisargadhama and the Corporation at P…