I'm Not That Guy
We’ll get to this week’s chapter of Venezuela : Down The Rabbit Hole, “Tales From The Crypto” in a few but first…We have three prominent South American leftist leaders distancing themselves from Nicolas Maduro, in effect saying “I’m not that guy.” Peru’s president, Pedro Castillo, everybody’s new leftist darling, let it be known that the Cuban,Venezuelan,and Nicaraguan regimes are not a model to repeat. Then Chile’s president elect, a new hope for leftists, said that Venezuelan’s are living under brutal setbacks of democracy and economic conditions. The third was Colombian presidential candidate and longtime prominent Latin American leftist , Gustavo Petro , who said Nicolas represents “policies for death.” This marks quite a reversal for Gustavo as he has previously trivialized shortages in Venezuela.
And we have Maduro announcing he’s taking more steps for Venezuela to be a more business friendly environment. (Currently ranked last in the world) He says they will be lowering legal banking reserve requirements and making more credit available. On the surface it sounds positive however the reserve requirements dropped from 85%, which is really absurdly high, to 73% which is just absurdly high. He went on to say his regime was establishing a National Entrepreneurship Fund of $46 million to encourage investment. This also sounds good but we’ve seen way too many big announcements from Chavismo with zero follow through. Let’s see if they get any money (if there is any?) into the hands of actual entrepreneurs. He continued with telling us there would be more flexibility to open up accounts up to 1,000 bolivares (an attempt to support the increasingly irrelevant bolivar). I don’t how much of an account stimulative mechanism this will be as, in dollar terms, it’s a little over two hundred bucks.
FEDENAGA (agricultural group) reports that Venezuelan milk and meat producers are covering only 40-50% of the country’s needs.
And then we have the latest Corona virus numbers (which are usually half of the real numbers). They went from reporting an average of 110 cases daily in early 2022 to over 1,800.
And nurses in a major hospital in Barquismeto say that staff shortages are not due to Omicron (as reported by the government) but are because of low wages.
On the legal front we have Law and Crime reporting Fox News moving to dismiss a suit by a Venezuelan businessman for $250 million in damages. This stems from a piece on Donald Trump’s claims of voter fraud in the 2020 elections. (note: I said “Donald Trump’s claims”) The story was a two minute piece and Mr. Khalil was mentioned for four seconds. In case you didn’t know, there is no shortage of this type of lawsuit coming out of Venezuela.
And how about this from Havana Times (Cuba). “Why can’t Cuba have recall referendums like Venezuela?” Are you kidding me?
And in the possibly hopeful business category we have Rest of World reporting on a new delivery App in Ecuador called Turpis. It’s in the fledgling stage but it’s an App by Venezuelan migrants for Venezuelan migrants. Many of the vendors involved work out of their homes. It’s also worth noting that 60% of delivery drivers in Ecuador are Venezuelan. We wish them luck.
And in a follow up on VP Delcy Rodriguez’s statement, “No restrictions for journalists in Venezuela” a group of websites were blocked by their ISPs under orders from government regulatory agency CONATEL. No details were furnished. Oh, and the case against journalist and Human Rights activist, Luis Carlos Diaz has been suspended after three years. Note : I said suspended…not dismissed.
And we have Maduro’s National Assembly continuing it’s important work. (Can you feel the sarcasm?) An investigation into criminal actions by opposition leader and interim president Juan Guaido has been completed and submitted to Maduro’s National Assembly. While they were getting started on reviewing this they appointed a Judicial Nominating Committee to review Maduro’s nominees for TSJ (Supreme Court) justices. I can hardly wait to see where both of these go.
The IACHR (Inter American Council on Human Rights) reports 27 extrajudicial killings in Venezuela in the first two weeks of this year.
And one more note on wages. The National Federation of Health Union is demanding a wage hike to $60 a month. It doesn’t sound like much to those of us in the real world but it would be a huge increase (if you can believe that).
Let’s go Down The Rabbit Hole shall we?
Chapter 6/ Tales From The Crypto
You may think you’ve seen some financial manipulation, if not outright fraud, in the last chapter. There is a reason I only briefly mentioned “el Petro” previously. The world has never seen anything like this before, literally. It was heralded as the world’s first cryptocurrency backed by the hard assets of a sovereign government. Yet another Chavismo “Way of the future”. It was going to change everything! To call it a fraud or a scam is an insult to anyone that has ever perpetrated a fraud or a scam. And what’s really crazy is they’re still peddling it today!! Ladies and gentlemen … I give you…el Petro!!!
The year 2017 was a tough one for Chavismo financially. When Maduro went on his, now annual, trip around the globe begging for money and came home empty-handed (again) it must have seemed like the jig was finally up. His last two trips had proven fruitless and China and Russia had let him know that no new money was coming his way.The US sanctions list was growing, adding more and more individuals (note I say individuals) each time. Oil production was continuing to decline and oil prices had yet to rebound. Then something that had been coming for a long time finally happened. They defaulted on their bonds for the first time in their history.
They needed to come up with some money somehow to continue to buy the loyalty of the military.They could continue to print more bolivares but as we saw in the last chapter nobody was interested in bolivares. As all this was happening the financial community was fixated on blockchain technology and specifically the cryptocurrency Bitcoin. It had skyrocketed from $800 to $20,000 while Chavismo’s financial resources had done exactly the opposite.It seemed to be the answer to all their problems. Just invent their own “Bitcoin.” The result is what the former bus driver turned president (dictator) and his band of financial and economic illiterates came up with.
On December 4, 2017 Maduro announced the creation of el Petro, the world’s first sovereign-backed cryptocurrency. The trick would be that cryptos rely completely on trust,the confidence that people can but and sell them…you know… use them as the name implies, as a currency. Credibility might be an issue considering they were broke, had no credit with anyone since they had screwed basically everyone in the world on basically every deal they ever made, and now defaulted on their bonds for the first time in history.
Their concept to solve this problem was not actually all that bad an idea. It was common knowledge that Venezuela had the largest proven oil reserves in the world. If they could leverage that as backing for their new el Petro maybe they could generate some interest. As with all things Chavismo related the devil would be in the details.
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