We’ll head Down The Rabbit Hole shortly but first…does anybody remember a much ballyhooed media event back in the day, “Al Capone’s Vault?” Our boy Geraldo was going to take us inside Al Capone’s secret vault for a look at what was in there. It turned out to be…well…nothing. Now we have Timeline taking us inside Swiss banking firm Credit Suisse’s vault and, as we said, it ain’t Geraldo. This time there’s something to see.

 Journalists have obtained leaked records (doesn’t everything these days come from “leaked records?”) showing Credit Suisse maintained accounts of Venezuelan elites accused of plundering Venezuela state oil company PDVSA of hundreds of millions of dollars and placed with Credit Suisse.

 Compliance experts said many of the people should not have been allowed to bank with Credit Suisse at all. Due diligence is important at the $1 million level but at the high net worth individual level the attitude at Credit Suisse is “Never ask a question you don’t want to know the answer to.” Two such accounts belonged to Carlos Aguilera, head of the Political Police (Secret Service) under Hugo Chavez. The striking thing is that Credit Suisse’s banking culture hasn’t changed even after a $1.3 billion fine levied against them in 2014 for such practices. It is expected there is more to come.

 And in the “Trouble in paradise” (or not) category we have Telesur (government media) reporting that 100 leaders of opposition party Voluntad Popular at the regional,parish, and activist levels have resigned for deviation from values and statements of Voluntad Popular. This may or may not actually be something (considering the source) but it’s worth keeping an eye on as VP is the party of Leopoldo Lopez (one of my favorites), mentor to Juan Guaido, the interim president, currently recognized by 60 countries as the legitimate President of Venezuela.

 And speaking of Juan Guaido, we have HSF telling us that the UK Supreme Court has determined that Guaido is recognized as Venezuela’s President so it will be up to a commercial court to determine what happens with the over $1 billion in gold held by the BOE (Bank of England) for Venezuela. The Commercial Court has already ruled that Juan Guaido is the recognized President of Venezuela and as such should control what happens to the gold.  Maduro has been trying to get his hands on this gold as he has already plundered the reserves that were held in Caracas, currently under $5 billion down from over $32 billion when Chavez repatriated it to Caracas to protect “The people’s gold”. This ruling by the Supreme Court says that an appeals court ruling which stayed the Commercial Court’s decision was a mistake in interpretation. It looks like Maduro may be out of options and the gold may actually be preserved for the Venezuelan people.

 Then we have Fast Mode telling us that Spanish telecom giant Telefonica is extending it’s Eco Rating system for mobile phones to everywhere in Latin America except Venezuela.

 Also on the technology front we have Bitcoin.com reporting something that may (or may not) have a positive effect in Venezuela. Bitbase is in talks with Venezuelan authorities to offer cryptocurrency ATMs in Venezuela. Venezuela is the leading country in Latin America in cryptocurrency adoption as Venezuelans seek protection from the devaluation of the bolivar (local currency) and,until recently, hyperinflation but has not as yet had cryptocurrency ATMs available. I guess the fly in the ointment will be the controls placed on the system by government cryptocurrency regulator, Sunacrip. Let’s hope they don’t screw it up. The Venezuelan people need all the help they can get.

 And on the migration front we have Epoch Times reporting that 8 years ago there were 5,000 Venezuelan migrants in Chile. Now there are 500,000. I wonder what they have to say about the wonderful world of 21st Century Bolivarian Socialism?

 Then we have the Venezuela Foreign Affairs Minister saying Venezuela is committed to the use of natural gas as a means of sustainable energy, as reported by Telesur. They didn’t mention that currently PDVSA just burns off most of it and that all other sustainable energy projects attempted by Chavismo have failed and been nothing more than glorified corruption schemes. There was also no mention of exactly how this would be funded.

 Also on the energy front we have IRNA reporting that Iran and Venezuela have signed an MOU (memorandum of understanding) to overhaul Venezuelan oil and gas refineries. Maybe that’s where that natural gas money will come from? The Iranians might want to talk to the Chinese about the success rate of joint ventures with Chavismo…it’s basically zero. As is typical of the Chavistas, they announce things like signing an MOU, which commits nobody to anything, and then nothing ever happens. Maybe this time will be different? You know how we feel here at TFT about thinking “This time will be different”…it’s never different.

 And then we have Iran Front Page channeling it’s inner Telesur with this from the Iranian President. “Venezuela will prevail in it’s struggle against imperialist powers by relying on it’s people.” Sounds good if they don’t all die from Chavismo’s policies or leave the country…6 million migrants and counting.

 Time to head Down The Rabbit Hole….

 So why did this continue for so long? It couldn’t be political reasons since Maduro is a dictator and has already proven many times he doesn’t care what anyone thinks. It couldn’t be that,like in the good old days, he was raking in so much money with oil sales and loans that he simply didn’t care about lost revenue. So, what gives?

 I’m sure nobody will be surprised that the reason involves the military and smuggling.We already know that we have an Army General running PDVSA and that the army is in charge of food distribution as well as medicine. Maduro’s CLAP food program is run by the most powerful of the ‘colectivos’, his civilian militia numbering in the hundreds of thousands. With cash being tight and those other avenues not producing what they used to how could he keep the military happy? Since the military controls the border, except where it’s controlled by FARC/ELN guerillas from Colombia who are in league with the Chavistas, smuggling has always been an easy task and with the price so much higher in Colombia it could be quite lucrative.

 At a cost of $ 0.000001 per liter or approximately $0.000004 per gallon (the reference point for us gringos) an average tanker which holds 13,400 gallons costs about a nickel, yes, five cents per truckload. So let’s say you could sell it for 1/2 the legal price. At that rate each tanker would be worth about $20,000. Not a bad return for each $0.05 invested,

 The only issue for the smugglers (the military) then would be supply. As we saw earlier about PDVSA, production was collapsing (or had collapsed). A rational person would deal with the domestic supply issue first which, by the way, is a requirement for membership in OPEC (all members must meet domestic needs before exporting). Even a rational crooked person would ensure that the smugglers would have something to smuggle. It would get harder and harder for Maduro to keep the smugglers (the military) happy due to his determination to continue shipping oil/gasoline to Cuba, who keeps him propped up, dominating his internal security apparatus.

 While rationing became necessary there were still people waiting in line for days to get their relatively free gas. At the same time Maduro was sending tankers full of oil to Cuba. When a tanker captain refused to pilot his ship to Cuba, in light of US sanctions, SEBIN security forces boarded the tanker and replaced the captain with one more Chavista friendly. A popular sanctions evading method is for the tankers to disconnect their transponders (go dark) when they near another country’s territorial waters en route to Cuba to avoid detection and therefore seizure. They have also had gasoline shipped direct to Cuba when Venezuela refineries couldn’t produce it.

 More tomorrow….