Archive for January 7th, 2004

Hugo Chavez outclasses Hugo Chavez

January 7, 2004

 


I thought I had heard everything until Humberto (thanks, I also borrowed some of your comments!) pointed out these words today by Chavez in the same speech as in the one in he threatened to intervene the Venezuelan Central Bank. With these words it seems like this time Hugo Chavez has actually managed to out -Chavez himself.:


 


“We are overwhelmed by common thievery, subversion, contra-subversion, paramilitary forces, drug traffickers, all of that comes from Colombia, that was not born here and it has impacted us a lot”


 


Where should I begin? In one single and short sentence, and unless the Ministry of Foreign Relations issues a press release saying these words have been taken out of context, Hugo Chávez has managed to:


 


-Insult Colombians.


-Attack the concept of a single Bolivarian continent, which he previously praised.


-Make one of the most xenophobic statements ever made by a Venezuelan President.


-Blame the incompetence on his Government on another country.


-Shift the blame from poverty for our problems, to the citizens of another country.


-Ignore who is the one that has been careless about the border, including the protection of some of the people he mentions.


-Complete a sentence without blaming the local oligarchs for something.


-Outdone himself.


 


And I thought the previous post was hard to top…what a sad parody of a President we have!

Hugo Chavez outclasses Hugo Chavez

January 7, 2004

 


I thought I had heard everything until Humberto (thanks, I also borrowed some of your comments!) pointed out these words today by Chavez in the same speech as in the one in he threatened to intervene the Venezuelan Central Bank. With these words it seems like this time Hugo Chavez has actually managed to out -Chavez himself.:


 


“We are overwhelmed by common thievery, subversion, contra-subversion, paramilitary forces, drug traffickers, all of that comes from Colombia, that was not born here and it has impacted us a lot”


 


Where should I begin? In one single and short sentence, and unless the Ministry of Foreign Relations issues a press release saying these words have been taken out of context, Hugo Chávez has managed to:


 


-Insult Colombians.


-Attack the concept of a single Bolivarian continent, which he previously praised.


-Make one of the most xenophobic statements ever made by a Venezuelan President.


-Blame the incompetence on his Government on another country.


-Shift the blame from poverty for our problems, to the citizens of another country.


-Ignore who is the one that has been careless about the border, including the protection of some of the people he mentions.


-Complete a sentence without blaming the local oligarchs for something.


-Outdone himself.


 


And I thought the previous post was hard to top…what a sad parody of a President we have!

A tragicomedy in four acts

January 7, 2004

 


If it were not tragic, this would be considered funny:


 


Act I (11:41 AM): Dozens of pro-Chavez followers gathered at the Venezuelan Central Bank (BCV) to back the request by President Hugo Chavez to use US$ 1 billion from the country’s international reserves to finance agricultural programs.


 


Act II (2:25 PM): Central bank Director Domingo Maza Zavala reiterates that the bank can only contribute to agricultural programs via credit operations and never through giving out international reserves.


 


Act III (3:00 PM): President Hugo Chávez reiterates his request for US$ 1 billion from the international reserves to finance agro-industrial projects. The President says (I heard it live and in instant replay!): “if we have to intervene the Central Bank, it will be intervened”. He adds “the funds I am requesting are not for Hugo Chavez, but for the well being of the country…the Central Bank can not deny it…”.


 


The President of the pro-Chavez union called the Bolivarian block of workers says after the speech on TV: “it is time to intervene the Central Bank…new authorities need to be named that are more consequent with the people that need social programs”


 


Act III (5:41 PM): The Ministry of Finance, who was closing the book on a 30 year, US$ 1 billion bond issue this afternoon, issues a press release denying that the Government had any intention of taking control of the Central Bank and that Chavez statements were “taken out of context (!!)” . The press release says’’ the Government has no intention of looking for control of the international reserves or take control of the Central Bank. All of the actions of the Government are framed within the Law and the Constitution, which protects the independence of the Central Bank”


 


Well, you could have fooled me!

A tragicomedy in four acts

January 7, 2004

 


If it were not tragic, this would be considered funny:


 


Act I (11:41 AM): Dozens of pro-Chavez followers gathered at the Venezuelan Central Bank (BCV) to back the request by President Hugo Chavez to use US$ 1 billion from the country’s international reserves to finance agricultural programs.


 


Act II (2:25 PM): Central bank Director Domingo Maza Zavala reiterates that the bank can only contribute to agricultural programs via credit operations and never through giving out international reserves.


 


Act III (3:00 PM): President Hugo Chávez reiterates his request for US$ 1 billion from the international reserves to finance agro-industrial projects. The President says (I heard it live and in instant replay!): “if we have to intervene the Central Bank, it will be intervened”. He adds “the funds I am requesting are not for Hugo Chavez, but for the well being of the country…the Central Bank can not deny it…”.


 


The President of the pro-Chavez union called the Bolivarian block of workers says after the speech on TV: “it is time to intervene the Central Bank…new authorities need to be named that are more consequent with the people that need social programs”


 


Act III (5:41 PM): The Ministry of Finance, who was closing the book on a 30 year, US$ 1 billion bond issue this afternoon, issues a press release denying that the Government had any intention of taking control of the Central Bank and that Chavez statements were “taken out of context (!!)” . The press release says’’ the Government has no intention of looking for control of the international reserves or take control of the Central Bank. All of the actions of the Government are framed within the Law and the Constitution, which protects the independence of the Central Bank”


 


Well, you could have fooled me!

Parmalat and Venezuela

January 7, 2004

 


The collapse of Parmalat is important for Venezuela. Some years ago, Parmalat came to Venezuela with a fat wallet and started buying properties related to the milk business including one of the largest milk producers in the country. In time, the company had many different brand names in milk (Parmalat, La Campina), Milk-based drinks (Riko Malt, El Chichero), Yogurt (Frigurt, Yoka), cheeses (Quenaca) and even fruits juices (Frika) and Tea. The company has about 15% of the liquid milk market in Venezuela and 40% of the powder milk market. I remember being in awe of the company as it came into Venezuela buying many milk producers, paying top dollar and gaining market share. I also remember their advertising of the “cheapest” liter of milk in the country, except the container had less than one litter (This is called Russian inflation). The company boasted when it began opening ice cream stores that each cost one million dollars and I wondered how they could make money selling such crummy ice cream in a country where there is fairly good ice cream (my favorite is called 4-D).  Clearly, it was part of the now crumbling Parmalat pyramid, where assets were invented in order to cover losses as the latter occurred and thus expansion with losses was possible as long as nobody discovered the rip-off.


 


The question now is what is the state of the local operations of Parmalat? There is a lot of confusion on the issue. The Head of local operations says that the company has sufficient cash flow and supplies to continue operating and that its operations in Venezuela were fairly independent of Italy. However, the Government says that it is ready to help the local company which has lost US$ 30 million in letters of credit for imports (mostly powdered milk). The Minister of Agriculture also has said that the Government may intervene the local Parmalat branches and participate financially in it, with a joint venture with the workers. Meanwhile, today’s El Nacional quotes members of a pro-Chavez union as saying that they will propose to the Government that the workers take over the company. The whole issue is further confused by the fact that one of the Parmalat executives reportedly involved with the fraud at the parent company was in charge of the Venezuelan subsidiary.


 


Obviously, this is all premature. It is clear in my mind that Parmalat was built on cheap capital (It is very cheap when you pay nothing for your capital!). If the company is self-sustaining in Venezuela, I would imagine Parmalat Italy would simply try to sell the unit or keep it until it comes out of bankruptcy if the operations are healthy. Reuters says the company was quite successful in Latin America, give me free capital and any business can be successful, so I am not sure what they are talking about.  Curiously no such noise was made when Enron went under. Enron had a unit in Venezuela called Vengas (previously Industrias Ventane) which distributed close to 50% of the bottled butane used mostly by poor people in Venezuela for cooking. Vengas remained healthy after Enron went into bankruptcy and is part of the new Enron which coincidentally may emerge from bankruptcy as soon as next week.


 


What is remarkable about the case is how rudimentary the fraud was. Reportedly, company executives had been creating assets for more than a decade in order to cover losses as they occurred. They did this by inventing the assets within shell companies in the Cayman Islands and apparently with the cooperation of their auditors. Truly incredible!

Should the Ruhr refinery be sold?

January 7, 2004

 


While I tend to agree with Tal Cual’s Editor Teodoro Petkoff on many economic issues, I disagree with most of the content of today’s editorial. Basically, Petkoff objects to the sale of the Ruhr refinery in which PDVSA owns 50% with Veba Oil. Petkoff argues that this is simply privatizing PDVSA, something that should not be done, even if the properties are abroad. I think that if PDVSA has something more profitable to invest in, there should be no problem in selling the refinery. What I object to, is that fact that the process being used to sell the refinery lacks transparency. It should be sold to whoever pays the most, not simply to the first group that comes around to offer something for it. Moreover, it does raise some suspicions when the second in command at the company is a former Executive of the company buying the refinery. I think PDVSA should become an international oil company, investing both in Venezuela and abroad, wherever good return on investment may be found. I also think that the Government should privatize 10-20% of it as a way of having the company respond to the shareholders and not the Government’s whims. But I do not believe any part of the company should be managed with nationalistic emotions.

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