We’ll head Down The Rabbit Hole in a minute.But first…Telesur (government media, although they deny it) had this from Nicolas Maduro.It’s become almost an annual tradition. Maduro starts off the year with a glowing outlook for the people of Venezuela and every year since he took office the economy has contracted. Sooner or later he’s going to be right. I mean the economy can’t contract forever, can it? Anyway, here’s what he’s putting out there this year.

 He tells us that the dissatisfaction with public services like water and electricity is “what imperialism is looking for.” He went on to blame sabotage and sanctions for the ills afflicting Venezuela. “We are persecuted worldwide.” I guess there are more ‘right wing imperialist, colonialist, oligarchs’ than we thought. “…economic engines (there’s that reference to the 15 economic motors that will power The Revolution to prosperity) replacing the old capitalist economy…inflation is dropping…” He doesn’t say that the reason inflation is easing is the de facto dollarization taking place in Venezuela thanks to those greedy capitalists, now that he has allowed business to be transacted in dollars. “We are trying to free productive forces in a scheme of war economy.”

 So…in short, the whole world is out to stop The Revolution, the glorious 21st Century Bolivarian Socialism, but the Chavistas will prevail and productive forces will be unleashed ( he’s never connected the dots between production and people actually working which means you need water and electricity). At least,for today. we’re Looking Good…Again!

 To follow up on the vaccination situation Telesur reports Maduro announced the start of the vaccine booster plan (never mind that he’s never published a vaccination plan) now that the vaccination rate has reached 91%. Remember, the PAHO (Pan American Health Organization) had the numbers around 40%.

 In a typical good news/ bad news (they don’t tell you the bad news) story, Morning Star reports that The Great Housing Mission has now built 3.9 million homes for underprivileged Venezuelans. This is a good thing if you overlook the fact that Hugo Chavez told the people these homes would be for them…”their homes.” Not so fast. The people never received the titles Chavez promised. The government retains them to guarantee compliance with Chavismo’s wishes. Nothing is really free. Ever heard of “The New Road To Serfdom”?

 For the skeptics out there (that would include me) we have a pair of oil-related stories. Aljazeera reports that PDVSA (government owned oil company) reported oil production figures for November of 824,000 bpd (barrels per day). Now this may or may not be true given PDVSA’s history of reporting numbers that are 25% to 50% higher numbers  than those that are later confirmed. We can only hope, for the sake of the Venezuelan people, that the numbers are real. (That’s if the Chavistas ever used any revenue to help the people) There are no active drilling rigs in Venezuela so sustainability is definitely questionable,at best. And remember, they’ve scrambled around using little known service providers and paying them with backpacks full of cash and scrap metal.

 However, we have Rigzone reporting that PDVSA says they reached 1 million bpd in December. The question they ask is…is that for one day or the month? Hope springs eternal.

 Now, let’s head Down The Rabbit Hole…

 When Chavez came to power over 20 years ago one of his major achievements was the Barrio Adentro (inside the barrio) Program.I,like most people, thought this was a good idea.The opening of thousands of small hospitals in poor neighborhoods and rural areas that previously had little or no access to healthcare had to be a good thing. What could have been something so positive turned into an abysmal failure due a poorly conceived and even more poorly implemented plan.

 As I explain this I’ll try to be as brief as possible but there are a few factors that need to be considered so please bear with me.

 In the early years of building up the program oil prices were beginning what would be a 10 year run of rising prices hitting all time highs and remaining there for years. For an oil dependent economy that should be good news.

 In the early days of Chavez’s tenure oil production was also high (3 and 1/2 million bpd which would drop to under 500,000 during Maduro’s regime).

 At the same time Chavez struck a deal with Fidel Castro to supply 25,000 Cuban doctors in return for oil shipments both at the time and for years to come.

 So the money is rolling in and you have cheap labor to staff the program. It should have been a slam dunk to set up a program that was almost indefinitely sustainable and would benefit the Venezuelan people for generations.The only way this could fail would be an unprecedented series of mistakes,miscalculations, and levels of greed and corruption never before seen in Venezuela. Well, you guessed it. That’s exactly what happened.

 The biggest factor to the failure this and basically every area of the Venezuelan economy was the massive borrowing campaign the Chavistas embarked upon. I know it sounds crazy. With all that money rolling in why would you borrow $60 billion from China and billions more from Russia? The only thing I can think of is the infamous trifecta of greed,corruption,and a lust for power combined with a healthy dose of economic ignorance.

 Nothing lasts forever. Other oil dependent economies have sovereign wealth funds or “rainy day” funds, if you will.Keep your debt low and serviceable and with the cushion of your wealth fund you will be fine no matter what happens. The massive borrowing by the Chavistas (and no sovereign wealth fund) took away all their wiggle room and mortgaged the future. Who worries about a rainy day when the sun is shining?

 The sun shone brightly for a while and spurred on by the widespread support from the populace the Chavistas pushed the envelope even further.They ran up a $6 billion tab with the pharmaceutical companies and expropriated companies that would later be needed to support the healthcare sector. As is the norm, when private sector companies are expropriated by governments their production drops precipitously if they are fortunate enough to not go out of business altogether.

 More tomorrow….