Caracas Chronicles

Photo: PBS retrieved

My last visit to Caracas took place in September 2016 and it was a “walk in the park” compared to my recent two-week stay: a 127% inflation rate was beginning to take a toll on the purchasing power of Venezuelans (today’s inflation rate is 64,000%), the minimum monthly wage was $7.36 (today’s minimum monthly wage is $0.56), the USD to Bs.F. black-market exchange rate was Bs.F. 1,022 per dollar (today the exchange rate in Bs.F. 9,000,000 per dollar), and street protests were warming up in Eastern Caracas as a prelude to 2017’s three month massive street protests where more than 163 people were shot and killed by the National Guard and the National Police.

The earth shook, Maduro broke the economy (once again), the electric crisis deepened, and Venezuelans’ daily life got worse by the minute.

I decided to summarize my shocking experience because a lot happened in my brief trip to Venezuela: the earth shook, Maduro broke the economy (once again), the electric crisis deepened, and Venezuelans’ daily life got worse by the minute. But, let’s start at the beginning:

My landing

I landed at Simon Bolivar International Airport the third week of August. During the 1980s, this airport was the gateway to Latin America. During those golden years, Jumbo jets, the Concord of Air France and British Airways were a common sight. The day of my arrival though, most jetways were empty.

Hot air slapped my face as I disembarked the plane. The airport’s air conditioning wasn’t working and the Caribbean sun was doing its job on the big glass windows of the corridor. This was my first interaction with Venezuela’s electricity crisis.

Buying a bottle of “Ron Pampero Aniversario”

When I saw that the duty-free shop had an excellent inventory of great Venezuelan rums, I decided to buy a bottle of my favorite: “Ron Pampero Aniversario”. The price of one bottle of rum that day was Bs. 75.000.000 ($15 at the black-market exchange rate then in effect). I flipped my wallet open, handed the store clerk my Black Banco Provincial Visa card (two years earlier with enough credit to buy a cheap motorcycle on the spot) and 30 seconds later the electronic point of sale machine greeted me with this note “your purchase exceeds the credit limit of your card”. Well, I had to use that card to pay 25 million bolivars, another Visa card to pay another 25 million bolivars, (using in both cases 100% of my credit limit), plus I had to throw in the basket five dollars in cash to cover the full price of the bottle. I was shocked to learn that the entire credit limit of my cards wasn’t enough to buy one bottle of rum.

I was shocked to learn that the entire credit limit of my cards wasn’t enough to buy one bottle of rum.

This experience allowed me to learn that paying for goods and services in Venezuela the next two weeks wasn’t going to be something trivial. Also, my worries were spiced-up because I had been alerted that there was no cash available on the streets since a crazy monetary reconversion was around the corner.

In less than ten days the price of the bottle of rum increased from 75 million bolivars to Bs.185 million. This is nothing compared to what Venezuelans will experience in hyperinflation by year’s end.

From Maiquetía to Caracas

I grabbed my luggage at the conveyor belt, went pass immigration baggage control and was greeted outside by a pre-hired private transportation service. A chauffeur and an armed bodyguard escorted me to our car. While on transit the bodyguard provided me with security tips for the next two weeks: no early morning street 10k runs, no driving after 8:30 p.m., consider restaurants only for lunch and not for dinner, etc. I followed all his instructions with precision.

Economic measures make matters worse

The night of my arrival Maduro announced new economic measures to fight hyperinflation. Although the government blames the international blockade, the reality is that inflation in Venezuela is the direct result of government mismanagement, corruption and printing inorganic currency.

In a nutshell: Maduro eliminated five zeros from the bolívar fuerte and created the bolívar soberano; he increased the minimum wage 35x, effective September 1; pdecided that a fraud cryptocurrency called petro was a new account currency; increased the Value Added Tax rate; implemented advance income tax payments calculated by applying a % to gross sales in an environment where most companies are reporting huge operating losses; froze the maximum prices of 50+ products; eliminated the exchange control, increasing the official exchange rate 24x from Bs. 248,832 per dollar to Bs. 6,000,000 per dollar; paving the way for a perfect economic storm that will devastate Venezuelans by the end of the year.

Time to buy groceries for my two-week stay

Saturday morning I decided to swing by the supermarket to buy groceries. I thought it was going to be a quick errand, but it turned out to be an unforgettable four-hour shopping experience. Panicked citizens were buying anything they could.

I thought it was going to be a quick errand, but it turned out to be an unforgettable four-hour shopping experience.

I drove to the nearest supermarket and had to wait 20 minutes to enter the parking lot since there were no empty spots available to park my car. Then, I waited another 15 minutes for someone to free a cart. The store was full of people and I perceived a lot of tension in the air since there were long queues to pay in each corridor.

I was lucky to find most of the items I was looking for, but the selection was limited and impossible to choose between brands. In reaction to Maduro´s announcements, I realized I had to be ready to pay a steep price for everything. I was also shocked to see the many, many empty shelves, a sight I had seen in the news but not live.

https://twitter.com/NachoImery/status/1030913611626176518

When I finished shopping I joined the queue. While I was waiting, I overheard people complaining about the economic reforms, the shortage, insufficient cash flow, the state of their business and the imminent bankruptcy many would have to face.

Eventually, I reached the cashier and it was finally my turn to pay. My only option to pay was my debit card. The total amount of my purchase was Bs. 250.000.000; or $41 at the new official exchange rate of Bs. 6,000,000 per dollar; or the equivalent of 1004 minimum wages. Yes, a Venezuelan worker making minimum wage would have to work 1004 months to have enough bolivars to pay for the groceries I bought that day, for just two people and the next two weeks.

Even though I had sufficient funds available in my bank account, the total amount could not be charged to my debit card. At the point of sale, I learned that there was a maximum limit per transaction of Bs. 40.000.000, therefore, the clerk had to break the total amount in transactions of Bs. 40.000.000 each until the total amount was paid. Only four transactions were processed before my bank blocked my debit card.

Three hours in, my patience was running short. I asked to speak with the store manager and asked to pay from home by wire transfer. She answered “no,” and explained that if I couldn’t pay the full amount with my debit card, I couldn’t take the food home with me. Eventually, I was able to convince the store manager to allow me to use her office computer to process the wire transfer, as she needed printed confirmation. This process took another hour.

Only four transactions were processed before my bank blocked my debit card.

Earthquake!

Monday arrived and it was time to meet with my employees. I spent the whole day in my office, and when our meeting was about to end, a 7.6 magnitude earthquake shook our office building for more than a minute.

We were located at the PH of the building and the rocking was very strong. Keeping a calm spirit we decided to run to the rooftop of the building and waited for the shaking to stop. In a matter of minutes, all the streets were full of people and the street traffic got out of control.

I can only hope

The chaos I saw in the streets after the earthquake was very similar to the mess I saw in Venezuela during the two weeks I spent in my beautiful but destroyed country.

Nonetheless, the chaos in the streets caused by the earthquake slowly but surely disappeared. My frustration is not knowing when the chaos induced by a government of criminals will go away.

It’s time to put Simón Bolívar’s quotes on the spotlight. In particular this one: “When tyranny becomes the law of the land, rebellion is a right.”