Archive for March 22nd, 2005

A clear path to default

March 22, 2005

Many
people tend to minimize Chavez’ ability to think and plan long term. Politically, Chavez
has always stuck to his long term plans and continues to do so. Thus, one needs
to analyze all of the following events in its proper context:

-PDVSA
buys back its debt last summer in an operation that had no financial
justification: It left the company with practically no debt and the price paid
was too high. The only possible explanation was that it was being done to
protect the company’s Board from prosecution, since it had been unable to file
its financials (Is it impossible?) under US
law.

-CITGO
also repurchased its debt. The possibility of this being done to protect its
Board was not feasible, as the company has filed and continues to file
financials due to the partnerships it has.

-Chavez
announces that the country will sell CITGO because the company makes little or no money. This
despite the fact that the company is making record profits and according to one
of its partners, Lyondell, receiving up to US$ 5 per barrel of oil above
market price, under the terms of its contract.

-Chavez
threatens to not export more oil to the US. This could only happen if CITGO
is sold, as the Venezuelan oil company PDVSA, has long terms agreements with
CITGO.

None of
the above events makes sense, unless the plan is to have the country eventually default on
its foreign debt, the moment oil prices drop. The excuse? Easy: The revolution needs
the funds. With no debt in the US,
no property in the US and no
exports to the US, the
effect on Venezuela
will be minimal.

If not,
look at Argentina.
It not only defaulted, but restructured its debt under terms extremely negative
for debt holders who had no recourse but accept. If Argentina
can do it, why can’t revolutionary Venezuela do it too?

Investor
beware.

Two thoughts hanging in there

March 22, 2005

For the last two weeks, I have been wondering about two statements made by Venezuelan Government officials:

-Attorney General Rodriguez on the amount of C4 found at the beach
apartment of Antonio Lopez’ parents, three months after his death:
There was enough C4 to blow up all of Venezuela.

Interesting. Who has enough C4 to blow up all of Venezuela? The
Military? Has it been investigated? Isn’t C4 made in such a way that
there are different traces of elements to allow the identification of
its origin? Where did it come from? Which military fort? Which lot? Who
was in charge of it? Hello Isaias! Are you looking into this?

- Miranda Governor Diosdado Cabello on the cost of an alterante
transporation system that would help the half a million people that
commute daily from the Altos Mirandinos: “It’s too expensive, it would
cost US$ 500 million”

Too expensive? Isn’t that the same amount that will be invested in
Argentina’s bonds? But of course, if the Venezuelan Government buys US$
500 million in Argentina’s bonds, the Argentinains will never see the
money, it will go to the seller, most likely a US or European fund.
These are not NEW bonds, this is secondary market of existing bonds.
Thus, the Chavez administration is helping the specualtors, while US$
500 million is too much money to solve an important problem of 2%
of the Venezuelan population. Go figure!

A statement of principle: We can not be intimidated

March 22, 2005

The nice
thing about traveling is you can relax and think. While I did not have the
privilege of having a room which cost 2,670 euros a night (The Raphael), like the President of
the people did in Paris,
the trip was fun and relaxed. Perhaps being away allowed me to step back a bit
from what is going on in Venezuela, but as I read the news once in a while, I
could not help the feeling I get that, despite what is going on here, people
are simply too complacent. While I was away the new penal code was approved,
land was illegally taken away from their owners and the Minister of Defense
justified the death of two people in the name of better military discipline.
And nothing happens, nobody reacts.

Yes, the
new penal code is in effect. In its article 147 it says:

“Anyone who offends with his words
or in writing or in any other way disrespects the President of the Republic or
whomever is fulfilling his duties will be punished with prison of 6 to 30
months if the offense is serious and half of that if it is light. The term will
be increased by a third if the offense is made publicly.”

From a
legal point of view, this article is so screwed up, that those that wrote it
should simply proclaim their stupidity. By the way, by calling them stupid, I
am violating another article.

First of
all, what is an offense? Does it need to be false to be offensive? If I say
Chavez is ignorant on economic matters, am I offending him? If I say he is a
murderer too, am I being offensive? If I say he allows rampant corruption
around him, is that offensive? Or what about if I say that he is a proven liar?
I am sure he would be offended by being called a liar, but it is true. From his
“poor” background, to why he went to the military academy, or why he could not
go to college, to his campaign promises, lies, lies, lies…

Then comes
serious and light (“grave” and “leve” in the Spanish original). Who decides one
or the other? A judge? Is calling Chavez a murderer in the 1992 “light” or
“serious”. Or accusing him of premeditated murder on April 11th.
2002, “light” or grave”. I simply don’t know.

And then
comes the public versus private debate. It says that the term will be increased
by one third if the offense is made publicly. What that does exactly mean? If I
tell my wife Chavez may be gay in the sanctity of my home, could I be offending
him? If I say in my blog that Chavez has allowed his family to get rich, is
that private or public?

Whoever
wrote and approved this, should be ashamed of what a bad job was done. The
problem is that Article 222 of the same Penal Code says:

“Anyone who by his words or acts
offends in any way the honor, reputation or decorum of a member of the National
Assembly or any other civil servant, will be punished in the following way, if
the action is made in his presence and is motivated by his responsibilities…”

Clearly, Article
147 was written by the National Assembly. Thus, I may be getting into trouble
if I call them dumb and dumber for writing Art. 147, but this article may be
just as bad. Who is a civil servant in Venezuela? Can I say the Assembly’s
doorman is stupid? Or the guy that denied me a new passport is corrupt? Or the
Vice-President a cynic? Or the Minister of Information a liar? Or unethical
(both of them)? I just don’t know.

Then there
is wonderful Art. 442 of the new Penal Code that says:

“Anyone who communicating with
various people, together or separate, would have charged any individual with a responsibility
which may expose him to public scorn or hate, or an offense to his honor or
reputation, will be punished with prison of one to three years…if the crime
were committed in a public document or writings (blogs?), drawings or exposed
to the public, the penalty will be from two to four years…”

You have
to love this one. You only need to accuse someone of something that may cause
public scorn, let’s say corruption, but the article says nothing about whether
it is true or not. Whether you have to prove it or not. Just that if you expose
someone to public scorn, bingo! Go to jail, do not collect 200, who cares if
its is true or not.

All of
this takes me back to the beginning. We are being overrun by this outlaw
Government and people are just sitting there, letting the Government abuse
them, take advantage of them and intimidate them. The Venezuelan press is saying
little, being extremely careful of not violating the media law or the new penal
code. The truth is not getting out. We are losing my friends. That is the stark
reality. Reporters are fired for fear of losing Government advertising. Events
are not reported by the press for fear of violating one of the innumerate new
articles of these two new bills.

Which
comes to the point of this article. I am no hero. I don’t pretend or want to be
one. But I will simply not back down. I will continue to call murderers,
murderers. Idiots, idiots. Thieves, thieves. Thugs, thugs. This is my country
and my life we are talking about, not some abstract concept of freedom and democracy.
This is my freedom, this is the democracy I have lived in and fought for most
of my life. All Venezuelans that are against this autocratic regime should
fight everyday in everyway they can. We can not be intimidated by militaristic
and Stalinist practices of this Government.

If allow them to push us back, we lose. I will not step back. As simple as that.

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