The Ancient Mariner...
We’ll be wrapping up this week’s Venezuela : Down The Rabbit Hole segment in a few but first…This article made me think of The Rime of the Ancient Mariner by Samuel Taylor Coleridge, “water, water, everywhere, nor any drop to drink”. The piece by La Prensa Latina falls in the “Is this the easiest question ever?” category. “Is Restoring Venezuela’s Water Service In 2022 A viable Goal?” Anyone other than Nicolas Maduro would say “No Way!”…and would have said it when he made his promise in August to have the water issue resolved before year’s end.
In a “pass the buck” move, Maduro called on the population to report outages (like they don’t protest lack of water almost every day) and on ministers and utilities to remedy problems when they arise. (Somebody’s job isn’t feeling too secure right now) We detailed the problems Venezuela faces with supplying water to it’s people in a recent Venezuela : Down The Rabbit Hole segment so we won’t rehash the whole thing but suffice to say, just like the collapse of the oil infrastructure, Venezuela’s water delivery infrastructure will take a whole lotta’ time, a whole lotta’ money, and a whole lotta’ commitment to restore it to pre- 21st Century Bolivarian Socialism levels, not just empty promises from Maduro. It’s worth remembering that before the Chavistas took power about 80% of Venezuelans had regular access to fresh water and Chavez vowed to fix the system. Today about 30% or less have regular access to fresh water. 21st Century Bolivarian Socialism destroys everything it touches.
The article touched on one meaningful stat from today, three years after the Tuy pumping system, which supplies most of the water to Caracas, went down during the massive blackouts of 2019. Prior to Chavismo the Tuy pumping system supplied 20,000 liters per second to Caracas. Now, after it went down and with three years to fix it the system is delivering about 12,000 liters per second so they’re 8,000 liters per second short. Think about that number for a second…
Most Caracas water trucks, which the regime says is the solution until the system is fixed, have a 5,000 liter capacity and aren’t quite filled to capacity before delivery so until they get the system fixed they need to deliver two tankers per second, every minute, every hour, 24 hours a day to supply the needs of the people. Even I can do that rudimentary math. That’s 7,200 tankers per hour, 24 hours a day. Does anybody think that the same guys that currently have only one in ten buses running in the public transportation system will solve this problem any time soon?
La Prensa Latina also had a piece telling us that about a month after the much-hyped reopening of the Venezuela/Colombia border, after being closed for years, local business people see little change in formal business activity. Traffic is heavier entering Colombia than entering Venezuela primarily due to the three day processing time it takes to get a truck through Venezuela customs. Big surprise huh?
Then we have Fox News telling us that US Senators, Cruz and Rubio, sent a letter to President Joe Biden accusing the administration of undermining Interim President, Juan Guaido, and providing legitimacy to Nicolas Maduro. They cited the release of the “Narco Nephews” (Maduro’s wife’s nephews) as reckless policy and implored the Biden administration not to release Alex Saab (the architect of Maduro’s fraudulent CLAP food program and other schemes). The Biden administration keeps talking about negotiations between the Maduro regime and the opposition in Mexico for “free and fair elections” if sanctions are to be eased and while Maduro says he wants dialog he’s not really interested (Why would he be with his 5% approval rating?). “Negotiations with a dictator only beget more negotiations with a dictator.”
Now let’s head Down The Rabbit Hole….
Chapter 5/ continued…
…So what does Maduro do?…Wait for it…he announces in August,2018 a complete economic overhaul including massive devaluation, a new currency (The Sovereign Bolivar…as opposed to the Strong Bolivar…as opposed to the Bolivar…), a 3,000% increase in the minimum wage, and all these changes would be tied to the government’s already discredited and utterly failed (and completely worthless) cryptocurrency, El Petro. He proudly proclaimed that, once again, no one with any knowledge of economics, finance, or business had any input regarding these changes. It was purely a Chavista invention and was a new way forward for “The Revolution” and the world! Viva La Revolucion!…again. (All this new way forward stuff was what they said when they introduced the world to 21st Century Bolivarian Socialism)
The new currency, the Sovereign Bolivar, designation bsS, would lop 5 zeros from the strong bolivar, designation bsf (bolivares fuertes), which had looped off 3 zeros from the bolivar (and Maduro lopped off another 6 zeros since then, but I digress). So let me get this straight, one new bsS would be the same as 100,000,000 of those boring old pre- Chavismo bolivares. Uhh…OK…and we won’t even get into “El Petro” here. Again, it deserves it’s own chapter.
If you’re feeling a bit confused you’re not alone. Here’s something I found, and keep in mind, these figure come from official government websites.
According to the Venezuelan Ministry of National Commerce :
1 Petro = 36,000 bsS and $60
DICOM official exchange rate = 3,297 bsS/ dollar
According to DICOM each Petro should = 197,820 bsS ($60)
If the value of the Petro really is 36,000 bsS the Petro is worth only $10.92
The government can’t even reconcile values from it’s own websites! Needless to say, this discrepancy isn’t covered in the Venezuela media and there is never an interview where someone might ask the question, “So…what is it?” It has to be one value or the other. It can’t be both!! To ask that question would be to ask for jail time.
So, how’s all this working out for “The Revolution’s New Way Forward”? Well, in the first 3 and 1/2 weeks from the announcement until the changes went into effect the new “Sovereign Bolivar” didn’t stop the minimum wage’s nosedive in real terms. The huge increase of 3,000% got a minimum wage earner UP TO $30 A Month. Yes, a buck a day! (A dollar a day is the UN metric for extreme poverty) By the time it went into effect the devaluation in dollar terms reduced the minimum wage to $22 a month, shortly thereafter to $7 a month, and it continued to fall.
Summary : What were the announced intentions of these two policies, price and currency controls? Price controls would provide food to the Venezuelan people at affordable prices. The reality was the controls increased shortages of many items and increased prices on many items. Either you couldn’t find things or you couldn’t afford to buy what you could find.
Currency controls would keep dollars from leaving Venezuela and help control inflation while protecting the buying power of the average Venezuelan.Well, the dollars still left Venezuela only not through conventional avenues. The dollars went to overseas bank accounts of the overnight millionaire Chavistas created by the currency controls. Inflation went from 100% to 1,000,000%. Buying power … well… the $200 – $250 a month minimum wage that was deemed unacceptable when Hugo Chavez took power is under $14 a month today and that’s up from a low in 2018 of 60 cents a month. (There isn’t even a UN metric for under a buck a month… except maybe “starvation”) People that used to think about buying a house, a car, or taking a vacation now think about how to survive when a month’s minimum wage buys you 3 and 1/2 kilos of flour and nothing more.
What’s that I hear? It’s that broken record again. There was no major drought or famine. There was no war, There was no natural disaster. This was an economic disaster, a self-inflicted disaster, A Chavista- made disaster.
That will do it for the week. We’ll be back Monday with the next segment of Venezuela : Down The Rabbit Hole and more news for ya’.
Have a great weekend everybody!!!
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