Omnishambles Chronicles

tumblr_mdfwhf7IBM1qedj2ho1_500Nicolás Maduro had barely finished making his big Foreign Exchange Control system announcement yesterday before he was  in damage control mode.

Having initially announced that a sum roughly equivalent to all of Venezuela’s oil income would be allocated to private sector buyers via SICAD, he had to backtrack later in the day, clarifying that SICAD wouldn’t dish out $900 million a week but rather $900 million total, starting with $100 million this week.

It was an Austin Powers moment in reverse – from an absurdly large number to a ridiculously low one in the span of a single correction.

For reference, the old, failed SITME system was pumping $175 to $270 million dollars a week into the economy last year and that wasn’t nearly enough to keep the black-market rate within some reasonable striking distance of the Official Exchange rate.

Now, after months and months building up pent-up demand, Maduro munificently offers up $100 million a week for SICAD, for about two months. (And, btw, they insist on calling SICAD an “auction” mechanism – don’t be fooled, it’s no such thing.)

Of course, fixating on the dollar amounts to be made available through SICAD is missing the point. The underlying exchange rate policy with a fantastically overvalued bolivar made available mostly to state importers while an illegal, black-market dollar skyrockets and a BoP crisis slowly brews in the middle distance is fucked up beyond all repair. The various policy patches applied over the years are comically mismatched to the task at hand (unless, as I’ve come to believe, the real task at hand is actually to destroy the private sector completely.)

Tossing $900,000,000 into the SICAD pyre from now til Christmas does nothing to change any of that.

In totally unrelated news, the black dollar jumped to Bs.45:$, while inflation climbed to 4.4% in September alone, standing just shy of 50% over the preceeding 12 months. ‘tamos chévere.

21 thoughts on “Omnishambles Chronicles

  1. Amazing their disconnection.

    In a totally unrelated news as well, the mayor of Valencia, PSUV Parra, declared he thought the corruption accusations against his sons were from some foes within the party. And then he commented that his older son was in Spain not on the run but simply carrying out some businesses for his import company.

    This might look like a detail for many but it shows the ridiculous contradictions within the so-called Revolution: almost all PSUV honchos are related, to one extent or the other, with businesses importing stuff to Venezuela and profiting from the crazy currency system and the stupid difference between official and black market exchange rates.

    Now: how does revolutionary socialism combine with private import companies in a system of tight currency controls?


    • About that, Kepler:
      As of yesterday afternoon, the only news outlet to have reported on the news was El Universal, later Bocaranda put it on his site, but I thought curious the fact that neither Notitarde or El Carabobeño had anything to say. This morning on Notitarde’s webpage, the main article is a about Parra defending himself and his family and denouncing the accusations as fake (El Carabobeño’s site seems to be down), as an inside job from the PSUV. Surely this confirms that our regional newspapers are scared shitless of provoking the wrath of the government, right?.


      • It seems so. But the PSUV realises Parra is more than hated in Valencia.
        In any case: I would love to see several PSUV honchos with relatives involved in the import business to explain how those businesses do not make their relatives into capitalists and how they are not taking a surplus value from workers’ labour or customers’ payments. They will probably say – hypothetically, if someone forced them to talk – that those Boligarch businesses do not profit from workers but only from final capitalist vendors.


    • the move seems to be focused at distancing disgraced Parra from the PSUV in an attempt to convince the weak minded that Parra was bad but that other even less known guy from the PSUV can do better, thing that I find very doubtful.


      • Months ago, I was in Valencia (before the PSUV announced its candidate) and II watched an interview on DAT TV said that the PSUV had a better chance of retaining Valencia by sticking with Parra than going with other candidate (even if Parra had high unpopularity). The PSUV didn’t just sack Parra, they’re now running him under the bus.


        • Parra has been just too clumsy.
          First thing Parra did when he was elected was to go with his clan and friends to China.
          He has done everything badly.

          Flores is way too close to Ameliach.
          Flores and Ameliach have several front men for the Carabobo construction projects.

          I don’t like Cocchiola, but that seems to be the lesser evil.

          So sad.


        • Parra had no more chance of winning reelection than Salas Feo had, he was a guarantee of defeat for the psuv, the only chance they have to win is to go all in with another guy under governor Ameliach’s wing.

          By the way Ameliach started pretty impressively by doing some desperately needed mantenience to the highway but soon settled in a similar state of mediocrity only slightly improving the Salas Feo disaster, lack of funding seems apparent.

          The problem with Valencia is that it is a huuuuuuuuge municipality, it has far more responsabilities and problems than the carabobo governorship. And since there are no plans to split the 1,5+ million people constituency then a real genious is required to run it with decent results. Parra tried to keep things running but in general he was awfully overwhelmed by the problems, crime, traffic, street craters and garbage colletion problems were rampant throught his 5 year reign, no garbage truck passed by my house for a full month.

          It doesn’t help the PSUV that the north of the city votes election after election 80%+ on the side of the opposition, sorry for the off topic overextention but just giving my view on the state of the city, there could be dozens of posts about Valencia alone.


            • We all know the not so good reputation pollsters have in this country, Parra won the election 5 yr ago with 38% of the vote vs Cocciolas’s 36% because the Salas (just out of spite) put an asshole candidate in the ballot that had no chance but still took 11% of the vote denying the opposition of a key victory.
              Anyway some people hate Cocciola for unknown reason, don’t know if it is bacause he’s italian and speak spanish poorly or because he have lots of money thanks to the wood business (Maderas Imeca), still, Capriles won twice in the Valencia municipality and I can’t think of any good reason for Cocciola to lose on december.


  2. Mark Pollyanna Weisbrot, January, 2013:

    “Inflation in Venezuela is clearly too high; although much lower than in the pre-Chávez era. But the [most recent estimate is 19.9 percent for 2012, which is down from 27.2 percent in 2010]
    despite a rapid acceleration of growth from the recession, which ended in the second quarter of that year. The government will want to bring it down further, but this level of inflation is not by itself a serious threat to the economy of a developing country.”


    • Jeffry,
      Weisbrot is a Chavista lackey propagandist. For a few bucks, he will write that Chavez was the world’s best economist. Oh wait, he already did that.


  3. It’s almost as if their actions are intentionally programmed to increase the black market rate in order to enhance their fx import business. A bit like a mafia in charge abusing the politics of socialism. Maybe the social resentment is counterbalanced by their view that the measure of a man is to be found in his bank account and not within his moral attitude.

    So with negative post after negative post is there any hope for Venezuela or gas it become recently clear it is doubtless all downhill from here ?


  4. “Omnishambles” was named Oxford English Dictionary Word of the Year in 2012. I think there is no Spanish translation for it. I propose “Omnichavez”.


  5. More SICAD money? Goody!
    I understand that Air France has just decided to lease an additional 5 A-380’s for their non-stop service to Paris. The seats may be empty on each and every flight, but that leaves enough added weight capacity for transport of, you know, other stuff……


  6. I think the saddest part is that this evidences that Maduro has absolutely no clue about how much money Cadivi approves from imports and believes that the government can both maintain CADIVI and give 900 million a week through SICAD and is probably making important macroeconomic decisions based on who presents the shinier chart (Giordani probably put a Spider Man logo in his).


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