3 Strikes..You're Out!
We’ll get to our Down The Rabbit Hole segment in a few but first…We have Caracas Chronicles reporting that Nicolas Maduro’s Vice President, Delcy Rodriguez, presented a chart to a group of Turkish businessmen to illustrate the Chavista’s success in fighting inflation. The presentation went viral as only the Chavistas would consider a 234% inflation rate a success although she did have a point. When compared to their previous monumental incompetence things are looking up. The 234% inflation rate looks pretty good compared to the rate for 2018 of over 130,000%.
She didn’t mention that inflation this year is already back over 305% and climbing. She touted a growth rate of 15% for 2022 (Economist Oscar Torrealba puts the real growth rate at 7%). She didn’t mention that the economy shrank for 27 consecutive quarters from 2014-2021, almost the entire Maduro presidency (dictatorship).
Also left unsaid were some of the things we’ve previously told you. The two primary drivers of Venezuela’s fragile economic recovery were (I can’t really say “are”) the allowance of the use of dollars in Venezuela (not allowed by the Chavistas before 2018) and the BCV’s (Venezuela Central Bank) buying of bolivares (local currency) on the currency exchanges, creating artificial demand for the bolivar and keeping inflation in check. Both of these things are going away.
Since everybody was using dollars for transactions Maduro instituted a new foreign currency/cryptocurrency tax, although he called it the “Law of Large Financial Transactions”, whatever that means, so the Chavistas could get their hands on some of that money. Maduro obviously never heard the old adage “When you tax something you’ll have less of it”. Strike one!
Then BCV curtailed it’s buying of bolivares on the currency exchanges using their dollar reserves (they ran out of money). Now there’s no artificial demand for the bolivar and inflation is ticking up. Strike two!
Then you have the Maduro regime’s punitive reserve requirements on the banking sector. The reserve ratio, the amount of deposits to be held at the banks, has gone from 17% when Maduro took power to 73%, the highest reserve ratio in the world. Since banks have no money to led existing companies can’t borrow to expand and new companies can’t borrow to get started. Strike three!
The odds of the Chavistas fixing Venezuela’s economic problems (created by the Chavistas) are the same as if you decided to have a plumber fix your electrical problems, an electrician to fix your plumbing problems, or an accountant fix your car.
The Chavista approach can best be summed up by Maduro’s statement when he announced his economic reconfiguration a few years ago that included a new currency (again…Chavez did it as well) and would be driven by his “15 economic motors of productivity”. He proudly proclaimed that his new plan was conceived “without any input from economists or anyone from the financial or business communities”. Hmmm… I think I hear someone shouting “Viva la Revolucion!”
We also have the Fresno Bee reporting that the US State department took custody of Venezuela’s embassy and official residences in Washington and New York after Juan Guaido was voted out as “interim president” and the country was left without diplomats recognized by the US. I’m not sure this is really news but there you have it.
Then we have Law 360 telling us that the Fifth Circuit Court has revived a criminal complaint against two Venezuelans charged in an international bribery scheme involving US businesses and PDVSA (Venezuela government-owned oil company). No further details…
Now, let’s head Down The Rabbit Hole…
Chapter 16 continued…
…Before we move on I want to mention that between the Resorte Law and the amendment of same Chavez, in 2006 had a law passed (He didn’t rule by decree like Maduro. He simply told the National Assembly what he wanted done and they passed whatever law would accomplish his wishes.) barring insult or criticism of high officials.
In 2013 the oppression of free speech (and oppression in general) snowball continued rolling downhill. Created by official decree (The president began ruling by decree due to the emergency in the country, yes, the same emergency they deny exists…you can’t make this stuff up) CESPPA, the Strategic Center for Security and Protection of the Fatherland, would be given broad powers that again were vaguely defined, following their recipe for abuse. “The law is what we say it is and our powers are what we say they are.”
When 2014, the year of the “Guarimba” rolled around we got a glimpse of what the future held in store for the Venezuelan people. Remember, these protests were primarily relate to food and medicine shortages and occurred even before Obama’s initial sanctions in 2015 (which were individual, not directed at the government). Maduro used the Resorte Law 103 times during this period. It was the first time I ever heard of someone being jailed for “fomenting economic chaos” when the manager of a pharmacy chain committed the unforgivable sin of not having enough cashiers to handle the long lines.
Conatel, the National Telecommunications Commission, had been previously semi-autonomous but was now basically an extension of the executive branch.The heavy hand of government came down on all forms of media and practicing journalism without a degree and proper credentials became a jail-able offense punishable by 3-6 months in prison.
In 2014 the Press and Society Institute reported that 1/3 of journalists declined to report information vital to public interest for fear of personal security. Over the Maduro years, as attacks and harassment ratcheted up, many journalists simply left the country.
Media that resisted government control were eventually forced to sell to undisclosed buyers. Two examples are Globovision, the last television network that was even remotely neutral politically, and El Universal, the nation’s oldest newspaper. Editors and reporters resigned or were fired and coverage became more favorable to the government.
Then came the massive protests of 2017 which we’ve previously discussed regarding the government’s repression and all the people killed, wounded, and jailed but we didn’t get into the media aspect. In 2017 the Maduro regime closed 40 radio stations. From 2013-2017 three quarters of all newspapers were closed. In the first four months of 2017 there were over 200 attacks on journalists.
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