Nobel Prize Anyone ?
We’ll go Down The Rabbit Hole in a sec but first…I thought I’d heard it all until I came across this. Merco Press reports that Nicolas Maduro says his government (he) deserves the Nobel Prize for Economics for overcoming the “blockade and sanctions” imposed by the US. “The Bolivarian Economic Agenda and the 18 engines (he used to call it the ’15 economic motors’)…new diversified economy… virtuous cycles (Yeah, I always think about virtue when I think about economics) to produce food,goods, services,and energy.”
Forget that it was his government’s (his) policies that were responsible for one of the greatest economic collapses in history (eight years of recession, four years of hyperinflation, etc. while sitting on top of the world’s largest proven oil reserves and unable to produce oil). The jury is still out as to whether these few short months of a pause in the economic free fall will last and it’s worth noting that the Economic Commission for Latin America and the Caribbean recently rated Venezuela,Cuba, and Haiti as the three worst economies in Latin America. Sounds like Nobel Prize material to me.
And I also saw this from JD Supra. BCV (Venezuela Central Bank) data for the last 12 months doesn’t show a clear downtrend in CPI (Consumer Price Index) except for February. They went on to say it remains to be seen what impact the huge minimum wage increase and the new foreign currency (and cryptocurrency) tax will have.
And since we’re talking money, Digital Journal reports that after years in free fall the bolivar (local currency) has stabilized. Since the government’s (Maduro’s) announcement of the new bolivar (replacing the Sovereign Bolivar,which replaced the Strong Bolivar, which replaced the Bolivar), lopping off 6 zeros (14 in total), the bolivar has depreciated just over 3% compared to 76% depreciation in 2021. To enable this the government has injected $2.2 billion in cash into the system buying bolivars with dollars creating an artificial demand over the last 5 months. Can it continue? Well, that’s the big question. BCV says it has $10.8 billion in reserves but $5 billion of that is an IMF (International Monetary Fund) loan which has been withheld over the disputed 2018 election of Maduro. Another stabilizing factor has been the widespread use of dollars ever since the Maduro regime legalized their use in 2019. (The majority of transactions today are in dollars, not bolivares.) They also mentioned the possible effect of the new foreign currency (and cryptocurrency) tax.
And also on the money front (well,kinda’) el Petro (Maduro’s totally fraudulent ‘cryptocurrency’) is in the news again. Bitcoin.com reports that Sunacrip (Venezuela cryptocurrency regulatory agency) has announced new changes to Petroapp – PTR (el Petro) wallet. The changes are to promote increased usability for things like phone, cable,etc. and “possibly to buy gift cards,to buy PTR with bolivares, and to “possibly” withdraw assets from the platform. Doesn’t that make you feel better about buying “el Petro”? How is it that years after it’s official launch (launches) there is no whitepaper (other than the 7 versions that have been withdrawn) that details exactly what el Petro is?
And in “the hits just keep on coming” category we have the Miami Herald reporting that the Venezuela government has launched an investigation into Teixeira Duarte, a company out of Portugal, for the ‘alleged’ bribery of port officials to secure contracts for port upgrades. No charges have been filed…yet.
And in the “we’ll take anything we can get” category we have Alcircle.com reporting that Venezuela aluminum scrap exports are up 59.38%. The bad news is that analysts expect a drop of 24.5% in 2022. FYI, the total revenue produced by this ‘huge’ rise in exports comes out to about $6 million. In the world of global commerce it’s not exactly a game changer.
Then we have AP reporting that Human Rights watch says the Venezuela government has been working with ELN rebels to remove FARC dissidents from trafficking routes in the border area with Colombia. The Maduro regime denies this saying they are fighting against rebels trying to destabilize the government. (or maybe they’re just trying to protect those drug trafficking and smuggling routes?)
On that note, let’s head Down The Rabbit Hole….
Before the onset of Chavismo people were not fleeing Venezuela, they migrated To Venezuela! In the latter 20th Century 15% of the Venezuelan population were immigrants coming from Spain,Portugal,Italy,Lebanon,Syria, and people of Jewish heritage. There were also a number of Canadians and Americans as well as from anywhere companies invested in Venezuela originated. Many of the earlier immigrants established family businesses or were professional people. Most of those have now returned to their country of origin but it didn’t happen overnight.People were reluctant to give up on businesses they had invested a good portion of their lives (and resources) building.A good example is the 70 year old woman who recently returned to Portugal.In Venezuela she owned an accounting firm and employed 10 people. In Portugal she is a cleaning lady. Now don’t get me wrong here. It’s not a knock on cleaning ladies but a cleaning lady is like an independent contractor. In Venezuela this woman had 10 other people and their families tied to her success, and had for years. When she finally had to give up it meant they had to as well. Some professional people are fortunate enough to find work in their countries of origin in their chosen profession but those are few and far between. There are Venezuelan doctors and lawyers all over the world washing dishes. And those left behind are nowhere near that fortunate.
The earlier “escapees”, those first 695,000 prior to 2015, left primarily by plane and most,having the financial wherewithal, took their families with them.As the migrations ramped up over the next few years the situation changed drastically on several fronts.
The next few years were primarily what we’ll call the “middle escapees”. This group contained the majority of Venezuela’s middle class as well as those who for one reason or another stayed another couple of years.Unlike round one, many of these people, while by no means destitute, had more to consider financially and this fostered change beginning with destination and method.
The “middle escapees” began going overland, primarily to Colombia, and on to Ecuador,Peru,Chile, etc.Some drove their own cars and others took buses. This was a far cry from the wealthier group that just headed for the airport,family in tow, and jumped on a plane to Spain or wherever. Another big difference was that the second round often couldn’t afford for the entire family to go. Some would choose to leave the elderly behind, often because they didn’t want to leave, and in many cases the children would stay behind with their grandparents. The prevailing opinion was that there was less risk to the children and they would be sent for once the mother and father got established. Another common method used by those with limited resources was for the family to stay put and send the young adults abroad. Over half the families in Venezuela have at least one family member abroad sending monthly remittances to help their family survive.
Venezuela’s Latin American neighbors adopted a welcoming attitude toward Venezuelan migrants, at least initially, as Venezuela had welcomed migrants from their countries. That attitude held up for the next year or two until round three, “the refugees”, was well underway and it appeared there was no end in sight. It was one thing for Maduro and the Chavistas to destroy their own country but now it was having a real effect on surrounding countries.
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