Coke and Gas, Coke and Gas…go together like a horse and carriage…
This Bloomberg story by Matthew Bristow and Andrew Willis gets the lede-of-the-year award:
Criminal gangs are shipping the equivalent of 60 to 100 tankers of subsidized Venezuelan fuel per day into Colombia, much of it paid for with cocaine, according to the Colombian government.
It gets better(worse): Continue reading
The most important pick-up for Chavismo in last year’s regional election was Zulia’s State Governorship, the largest in the country.
This defeat was a big setback for MUD, but it was more so for UNT (Un Nuevo Tiempo), the political party that has dominated local politics since the year 2000.
Now, UNT will make its last stand in Maracaibo, Venezuela’s second city. Its future depends on what happens this 8-D.
One final note on Omar’s alucinocagante chart.
It’s hard to miss the fact that the hundred-billion-bolivar+ spurt in debt monetization we’ve just experienced coincides pretty much precisely with the CaDakazo – Maduro’s feverish propaganda offensive to shift the blame for inflation on shopkeepers.
Which adds a layer of machiavellian evil to the whole thing.
Because when think about it, there’s no way in hell that’s a coincidence: at the same time as BCV was cranking up the bolivar printing presses, doing the one thing more or less every economist agrees will kick inflation into over-drive, Maduro was launching this elaborate, enormously destructive smoke screen and musing about inflation going into reverse this month.
Come to think of it, I would’ve loved to have been a fly in the planning meeting where it all went down. Continue reading
Omar Z., over on his increasingly invaluable blog, points us to the nub of the nub of the issue: the enormous, fast-growing debt that PDVSA has been running up with the Central Bank this year.
If you’ve been paying attention you already know that, more than anything else, it’s the uncontrolled growth in the money supply that’s driving the growing macroeconomic chaos we’re seeing in Venezuela.
The finer point, though, is less often made: more than anything else, it’s the uncontrolled growth in money-created-to-be-loaned-to-PDVSA that’s driving the growth in the money supply.
To be clear, running up debts with the Central Bank isn’t like running up debts with a normal bank. When it’s the Central Bank you’re borrowing from, the money you’re getting is hot off the printing press: money created exclusively for this purpose. That’s why this kind of “monetized debt” is a four-letter word for economists: it has inflationary impact on a scale that’s different from normal money.
Which is why it’s hard to look at that chart without a deep sense of foreboding. It’s not just that PDVSA’s tab at the Central Bank has risen 150% this year, it’s that the Central Bank has created 100+ billion bolivars out of thin air for PDVSA to spend in the last four weeks alone.
There’s a Yakov Smirnoff joke hiding in there somewhere: in Soviet Venezuela, it’s Central Bank that bankrolls state oil company!
The thing is, inflation doesn’t give a shit that 99,999 Venezuelans out of 100,000 don’t understand that what’s driving it is this obscure BCV-PDVSA financing mechanism. It gets driven all the same.
Here, a dark thought insinuates itself: even at the insane official rate, the Bs.400 billion the BCV has printed up for PDVSA to spend comes to around $63 billion. Spread over the last five years, that’s around $13 billion per year which, depending on whose sums you go by, is either a little more or a lot less than the cost to PDVSA of giving away gasoline in the internal market for what amounts, centavos más centavos menos, to free.
Take a minute to think about what that means…
There’s a lot to like in this op-ed on oil policy by Leopoldo López, published in El Nacional.
The money quote:
“Los proyectos requieren inversión tanto nacional como foránea. Incluso si no pudiésemos participar en las inversiones de estos proyectos, a los venezolanos las leyes nos deberían garantizar la oportunidad de invertir en fondos de ahorros o compra de acciones en las empresas mixtas de la faja, con lo cual se garantizaría la transparencia de ellos, pues el gobierno se vería obligado a presentar cifras públicas. Adicional a esto se debería promover y apoyar a empresas de bienes y servicios de contenido nacional para que realicen sus actividades en la faja.”
Leopoldo basically makes the case that when people talk about bringing democracy to the oil industry, they usually limit the discourse to “democratizing the rents.” He says that we have to go beyond that, and allow Venezuelans to participate in the ownership of the oil business, whether via “mixed companies” or via ownership of private companies that participate in the oil business, be it via exploiting the resource or servicing it.
He even goes so far as to propose … gulp, listing these companies in the local stock market.
Let’s face it, our public discourse has fallen in such a deep hole, any time a local political leader can talk about oil in a thoughtful way we need to celebrate. Compare and contrast with this (rewind to 1:37:30 more or less) …
Last year, politics in the Venezuelan State of Monagas were shaken when then Chavista-leaning governor Jose Gregorio Briceño (a.k.a. “El Gato”) defected to the MUD.
But that gamble didn’t pay off, as internal division was one of the factors that kept the governorship in Chavismo’s hands.
Now, the tables could actually turn in the state capital’s mayorship, thanks to local Chavismo’s split. The MUD could get in Maturín an important pick-up as a result.
Back in 2008, Jose Vicente Maicavares won Maturín’s mayorship by a landslide.
He was back then a major ally of “El Gato” Briceño, but when he broke ranks with Chavismo, Maicavares stayed with the PSUV. He later accused Briceño of not keeping with his political promises.
His loyalty was rewarded with the chance of running for a second term, but his past has caused certain amount of distrust.
Enter Maicavares’s predecessor as mayor, Numa Rojas. His political relationship with Chavismo can be defined as complicated: he loves the late comandante eterno but the PSUV kicked him out in 2008.
He’s back in politics after a short penalty by the Comptroller General’s Office and now wants to return to his old job. And he’s boasting of having more than enough popular support to beat the PSUV-GPP.
With local Chavismo’s split, and based on the 14-A election results, the opposition thinks there’s a good chance of a win here.
Warner Jimenez won last year’s primary and he’s looking for a re-match, after his fourth place five years ago (running as an independent candidate).
His major proposal is to build a light rail (metro ligero) system in Maturín, to the point he has already made feasibility studies.
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