Archive for July, 2006

Benford’s Law and the Florida and Mexican elections

July 27, 2006


While it
does not deal with Venezuela, maybe some readers would be
interested in a paper on Benfordís Law and elections
written by Prof.
Mebane of the Department of Government at Cornell University.

The paper looks
at Benfordís law in the context of elections and the detection of fraud. It
looks at the effects of manipulations of data on the results and shows that
various simulated manipulations can have a strong impact on the expected results
from Benfordís Law.

The author
then looks at data from the 2004 Florida
election and the recent Mexican election. He concludes that the second digit
Benford test worked well in Dade, Broward and Pascon counties, although there
were some exceptions where questionable results were obtained.

In
contrast, the results from the Mexican election imply that there are problems
in many Mexican states with the results although not in most of them. Prof. Mebane
suggests that a manual recount of the vote would clarify these discrepancies. And
based on a recount with sampling, one could decide whether to carry out or not
a complete recount.

By the
way, the Mexican election shows a lot of cynicism on the part of both the
Venezuelan Government and the opposition. The Venezuelan Government because
while suggesting that they thought there had been fraud in the election, they
never came out and said that there should be a recount. This would be exactly the opposite of their position in local elections. The opposition, because
their apparent sympathy towards Calderon or antipathy towards Lopez Obrador,
stopped them from calling for a full recount in Mexico, which would have been completely
consistent with their positions on the Venezuelan elections. Shame on both
groups!

Letís get Sumate, SumateÖ(To the music of Let’s get Physical)

July 27, 2006


So now, Deputy Josť Albornoz wants to
go after Sumate
. According to this incompetent Deputy, Sumate violated the
Law of Foreign Exchange Illegalities when it received dollars in 2005 and did
not go through the Foreign Exchange Office CADIVI. Well, Sumate says they
received Bolivars, but the point is irrelevant anyway, because that law went
into effect on October 14th. 2005. You see Exchange Controls were imposed in
February 2003, but there was no law that established punishment for exchange
control operations. The law was introduced in April of 2003, but thanks to the
inefficiency and ineffectiveness of the National Assembly controlled by
Chavismo, it was not approved until last
September
, only two and half
years later. The law clearly states in its transient articles that it goes into
effect 30 days after its publication, which took place on September 14th.
2005. Until that day, you had to go thru CADIVI to get dollars, but there was
no law penalizing foreign exchange operations.

But I do find it interesting that Albornoz cares so much about the
Sumate funds, some one hundred thousand dollars, while the Governmentís
Development Bank Bandes, presided by Minister Merentes at the time, exchanged
some US$ 1.5 billion, between 2004 and 2005, of the PDVSA social fund via the
parallel market in a total non-transparent way using ďfriendlyĒ banks, but this
does not seem to get the attention of the Deputy who
was awarded today
the ďSleazebag of the weekĒ award by Daniel.

This is pure and simple political persecution of the enemies of the
regime. Sumate is a threat to the Government. They almost succeeded in the
recall referendum, revenge has to be extracted at all costs.

(Note added: In fact, even after the law came into effect, it left opened the use of any form of security as a way to exchange dollars. Thus Sumate could legally change dollars via CANTV shares or swaps of securities. As a matter of fact this is what the Argentinean bond sale to the banks does. The Ministry of Finance sells banks and financial institutions Dollar bonds for Bolivars and this swap is perfectly legal under the same law)

I pass on El Conde, there are no magic solutions

July 26, 2006

I was going to avoid talking about the candidacy of El Conde del Guacharo, but many people have written to me asking what I think and there has been some comments below on it. My answer is simple: I pass. This guy is Chavez without the military uniform. Same style. Same promises. Is he good? Yes, he is an entertainer and he has assumed that role well, but there are no magic solutions and I just can’t have hope that he will be a good President. No matter what people suggest and say, I am sorry, I just don’t believe this man is qualified; the same way I did not believe Hugo Chavez was qualified. Nothing he has said convinces me that I am wrong. Businessman? There are hundreds of better and more succesful ones. Humble origins? There are hundreds of better qualified people of humble origins. They may not be entertainers, but they have more experience and sense of what needs to be done and who can do it. Take out the fiery retoric and he is Chavez redux.

I think his candidacy is an unnecessary distraction. I will not take him seriously. One clown as President is enough for my taste during our lifetime, even of this one does not have a military uniform…I simply pass…

Chavez and Lukashenko: It takes one, to know one

July 26, 2006


Even though I am late to the game, I can’t help but comment on our
illustrious President visit to Belarus.
In my opinion, there was never a Chavez visit that could be as justified as this
one. Think about it. Chavez has more affinity with Lukashenko than with Fidel,
Gadafi, Mugabe or any of the autocrat/dictators that our esteemed President has
visited in the last seven plus years of the silly Bolivarian revolution.

And it showed. He congratulated Lukashenko for neutralizing the
opposition, for those that do not follow Belarusian affairs, this “neutralization” has consisted
of brutal attacks on peaceful demonstrations,
jailing of opposition leaders and the manipulation of elections to guarantee
that results will not go against the autocrat. Sound familiar? In fact, Chavez
called these protests a “new imperial format” and said he was ready to
neutralize them in Venezuela,
because “they are attempting them in Venezuela”. You have all been
warned!

Given the common track record we can obviate such details such as trade
between the two countries being of the order of the cost of the trip. The
difficulty of significantly increasing it, since Belarus’ energetic needs can easily
be supplied by its neighbor at more competitive prices.

But there are other hidden affinities. The Belarusian President could
not have said it better referring to Chavez: “
ou
are versed not only in the economy of Venezuela
but in the Belarus
economy as well, you know military science, the military-industrial complex, and
this impresses me very much”.Well, we may not be so impressed with Chavez’
understanding of the Venezuelan economy, but he is definitely a man of war, a
man of weapons, a true military autocrat.

Lukashenko is a man with interesting opinions, such as saying that
Hitler’s policies “weren’t all that bad for Germany”, although he never
explained which part of the policies he was referring to, but stay tuned, he
may explain it someday. He is also a man of weapons, like his Venezuelan
counterpart, remembered for giving his country’s tennis players pistols as a
gift as they elft the country to represent it in the Davies Cup. Fortunately,
they did not bring them to their matches.

But perhaps Chavez’ true reason behind the trip was to learn more about
referenda in Belarus.
You see, Lukashenko has led a parallel life to Chavez’, without the need for so
many elections or a Constituent Assembly. He went the shorter route, simply
holding a referendum to extend his term from 5 to seven years in 1999 and another in 2004 to eliminate
the two term limitation on the presidential term. Maybe Chávez wanted to know
how this was executed or simply how Lukashenko has handled not giving a damn
about those appearances that Chavez seems to worry about so much, after all, Lukashenko
has no relationships with the European Union, belongs to the anti-Bush bashing
club and could care less about international opinion, except that for that of
his nearest neighbor Russia. Chavez could use some tricks from his book as he
becomes Venezuela’s
lifetime President.

The similarities go much farther than all this. Lukashenko also yearns
for an agricultural country, for the days of Governments that imposed “more
discipline”, the glory days of military achievements. He has looked for
military alliances in his region, talking about a “Slavic NATO”. The parallels
are simply uncanny.

Hopefully both autocrats will not last until they die, as they currently
plan. Hopefully, the forces of democracy will remove these autocrats from their
positions. Unfortunately, it does not look like this will happen in either
place anytime soon. But clearly, it takes an autocrat to know another one.

The revolution marches on at its own unique beat

July 25, 2006


After taking off a few days for the long local weekend, because yesterday was a holiday, I come
back to find that the revolution is indeed marching on in its reckless attempt
to ruin Venezuela:

–Since what the country needs is more and better education, the
Ministry of Education has
decided
that to reach the rank of ďTitularĒ or ďFullĒ teacher in elementary
or secondary schools, you will need to show that you have received your
ďBolivarianĒ education. At the same time to reach this level will be easier,
you will no longer be limited if you donít have a Bachelorís degree, but you
may also reach the highest academic level of the primary and secondary school
system if you only have a three year technical degree. Lower standards and
political indoctrination are supposed to bring better education. Just the
opposite of what I thought, but you know, I am in the opposition, that must be
why I donít understand.

–We were told a week ago that the damage at the Paraguana refinery was
limited and the Amuay plant that burnt would be back on line in a short time,
at most two weeks. The media was even accused of creating a scandal out of the
fire, exaggerating the damage for political purposes. Well, we now read that
PDVSA is telling people it will be at least five months before things go back
to normal that the crude unit was destroyed and the whole thing will have to be
rebuilt. Thatís exactly what the ďlyingĒ experts of the opposition said a week
ago, but what do they know anyway. (Even us non-experts thought that tower
looked too black!) The truth shall make you free! Not in the revolution!

–The Government Development Bank Bandes purchased the Uruguayan Credit
and savings coop for US$10 million, which will be converted to a branch of the
bank. Well, the latest financials of the coop say
that the coop
has negative equity and it has lost US$ 1.046 billion in
deposits since February. I guess this has gone from solidarity to stupidity at
the expense of stupid Venezuelans. I like the business plan: Take over a
bankrupt financial institution in a country you have no experience with and have it run
by people with no financial experience. A recipe for financial disaster for
spreading the goodwill of the revolution! More losses in the name of
solidarity! Less money for Venezuelans! Not even the Chavistas can understand
this one.

–The Mayor of the Libertador district of Caracas said
today
that to solve Caracasí
problems he would need 20 years and would have to get rid of one million people.
I have a few questions: Did he mean 21 years? Is he using crime to get rid of
the people? When will he start working on solving the problems, it has been six
years of him already? I guess I am more impatient than that, I have been waiting at
least double the years he says and see no progress, before during or after. In fact, I think things are
worse, but once again, I am in the opposition.

–Chavez had
offered Ecuador
to begin refining 65 thousand barrels of oil a day of that
countryís crude. There were problems
signing
that agreement with discrepancies over the terms and now
we hear
that Ecuador
is asking for international bids for refining 15 million barrels of oil. That
is ChŠvezí problem, he does all these things and then his underlings screw it
up. The question is why the underlings are always the same ones and they never
get fired, just rotated. Remember Petrocaribe? Well, there
are big problems
with that too. If only ChŠvez could do everything himself!

–Minister of Justice Chacon in union radio (can’t find link): “We need to restructure the judicial system”. I thought that was one of the biggest achievements of the revolution. Didn’t Chavez’ emergency comitte to restructure the judicial system fire over 500 judges, naming some 400 “temporary” judges that have yet to be ratified, including a convicted murderer? So why seven years later do we need to restructure again? Wasn’t the current Ambassador Manuel Quijada the architect of that restructuring? Did he not do it right? I guess I must be mentally impaired, after all I am a member of the opposition, but I just don’t quite understand. I guess it must be the fault of the first part of the Vth. Republic or some excuse like that.

Big demonstration in front of Conavi, the office in charge of housing. Those protesting are mostly poor and mostly Chavista. Nothing in the “official” media about it. I just wonder when the Government carries out it’s threatened cancellation of the licenses of most private TV stations, who will carry these type of news? Can it be that he Chavistas did not experience the major traffic jam Caracas witnessed today? I guess not, they must have been walking, flying around or boating in the Guaire river, rather than in buses like the opposition. (The subway itself has problems and will continue to have them until Friday)

Oscar GarcŪa Mendoza, Argentinean Bonds

July 24, 2006

I was talking about Argentinean bonds before it was fashionable, this is part of the evident levels of obscene corruption taking place in the revolutionary or robolutionary Government. Of course, those that support the Government are always quiet about these posts. In doing so, they become accomplices.

Here is an article from todayís El Universal by Oscar Garcia Mendoza who I have translated before. I think the daily volume is slightly smaller than he says, but except for that detail, the rest is a clear explanation of the levels of absurd and obscene corruption and enrichment taking place in this Government. Those that became Chavistas because they opposed the corruption of the Fourth are surprisingly quiet and silent on these topics. Why? It hurts to much? The truth is that the level of corruption has increased by orders of magnitude as the Chavistas cheer on.

Oscar GarcŪa Mendoza, Argentinean Bonds

Since January 2006 when the Financial Times denounced that two Venezuelan banks (with full names) had negotiated with the Ministry of Finance and with important gains, Argentinean bonds, the so called Boden 12, a lot of questions were raised, but few answers were given. At last the Minister gives us some clues. Evidently there was no transparency, but we could not expect it otherwise.

Now we have something. In the operations the Government made US$ 201 million, says the Minister, through negotiations in which dollars were sold at a weighted average of Bs. 2,380 per dollar. Without pretending to be mathematicians, but being a banker, it is evident that all that was done was a simple foreign exchange operation. Without the price of the bond changing at all or very little, there was a ďbenefitĒ, by manipulating the exchange rate.

Explanation: in the regular foreign exchange transactions, in Venezuela, as well as in the rest of the world, the difference between the purchase and the sale price is very small (before exchange controls, in the 80ís you would buy dollars at Bs. 4,2925 and would sell them at Bs 4,30, with a gain to the foreign exchange operator of 0.175% who was happy because he was making a good profit. (With the current exchange controls, the difference is between 2.144,60 and you sell at 2.150, a gain of 0,25%). Now the Minister acting as an ďinvestment bankerĒ tells us that he made a ďprofitĒ selling at a weighted average of Bs. 2,380. Here, my esteemed and ached readers, the gain for the Nation, was based on the manipulation of the price of the dollar which is fixed at Bs. 2.150. It would have been a true gain if the price of the sale of the Boden 12 had gone up from 77% to 90.40% and they had been sold in the international markets.

But there is something worse. That price of Bs. 2,380 at which the favored banks buy, gets transformed to roughly Bs. 2.650, because the banks sell the dollars that result from the transaction in the parallel market, euphemistically called in the slides of the Minister ďTR: the reference exchange rate (taken from the Reuters screen or the CANTV ADRís)Ē, generating for them an enormous gain. Once again, without being a mathematician, if we extrapolate the data of the Minister, the gain for the banks in the period must have been between 190 and 240 million dollars or between 503 and 636 billion bolivars. Which is pretty good for companies accustomed to make percentages of 0.25% as we mentioned above. In this case the percentage is around 11.34%. That is, 45 times the gain, which exchange controls allow. Not bad, the beneficiaries must think.

To give a clear idea: It is said that each week US$ 90 million of BODEN 12ís are sold. If the gain is 270 Bolivars for each dollar (2.650 minus 2380) the weekly gain for the favored banks is Bs. 24.3 billion. Note, every week, week after week, month after month. In six months the exchange gains for the banks must have been in this semester (including those that did not participate) was Bs. 1,316 billion. That is, in all of these operations they made more than half their earnings. Question: Why doesnít the nation make this gain for itself?

The permanent deception in these operations, the harm to the public is of unheard of level of seriousness. But nothing will happen. The Governmentís operations are totally covered and sealed. A few gain, the majority is harmed.

What the report from the three universities really concluded

July 20, 2006

While the press has concentrated on saying that the problems with the Electoral Registry were found to have no incidence on a possible presidential election, this is not exactly what these institutions concluded. What was actually concluded had a lot of caveats to it. First of all, it was explained and clarified that the study had limited access to all of the information that would be necessary to perform a proper audit of the REP. This included the absence of addresses for those registered or the information of when the person either registered or changed the data in the registry.

Within these limitations, the study concluded that the anomalies found in the REP could npot possibly have an incidence on a presidential election to teh extent of chaging its outcome. However, it could change the outcome of regional elections.

Additionally the study found:

–There are 107 municipalities (one third of the total) where there are more voters than inhabitants over the age of 18 as projected by the Government run National Institute for Statistics. This anomaly appears to be uniformly distributed over teh whole country.

–The irregularities increased since the Government registered more people to vote in 2004 as well as giving them ID cards.

–Anomalies by age group, particularly in the range 45 or older.

–There are significant anomalies when one looks at the statisical distribution of bithdates across the board.

–Four states show anomalies which are more significant now than they were before the three million new voters were registered: Miranda, Portuguesa, Zulia and Lara.

–No correlations were detected within the limitations that implied any correlation by political preferences.

–The results will only be conclusive if other tests could be performed with a complete set of data.A more exhaustive study with more data provided by the CNE could be conclusive.

–Many of the errors have been around for years, are significant, but appear to have a uniform distribution and thus no material impact on a presidential election.

–There is no explanation for the excess voters that is reasonable.

Thus, the conclusion is that within the limitations of the study, the problems of the REP detected could not change a Presidential election.

On the formal and informal observations of the REP by the Carter Center.

July 19, 2006

Many of
you have been asking what I have been up to. Life has not been good to this
ghost. First, my favorite soccer team was eliminated from the World Cup. Then
my tocayo (probably a distant cousin) was no longer the manager of the team and
next, my tomato plants were not growing as expected.

The good
news is that Miguel has been getting so many complaint messages about my
disappearance that he has begged me to please do something about it because not
even Gmail can contain so many emails.

So, in
spite of the fact that I swore not to come back until I was allowed to open the
tomato section of this blog , I decided to please my fans, get momentarily out
of retirement, and accept Miguelís invitation once again.

The day
started in a cheerful way since I am always happy when I learn that old friends
are coming back to visit. In fact, browsing the dayly news this morning, I came
up with this news.
You read it right: it says that the Canter
Center was coming to Venezuela to
observe the REP audit that is being carried out by the Universities invited by
the CNE. I was so happy to hear that the CC was coming to town that I quickly
went to the CNE site and I got confirmation of the news (see here).

The press
release from the CNE indicated that the Canter Center
invited themselves in a letter addressed to Tibisay Lucena, the ďnewĒ CNE
President. And that Lucena had accepted the CC as an observer.

But that
was this morning just before I left to do errands for my tomato plants. When I
came back home this afternoonÖsurprise surprise!  El
Universal
reported that the Carter
Center is not coming as a
formal observer.  In a Press release, the CC said that they
should have been formally invited by
the CNE with enough time to send their personnel, which was not the case. It
seems that their representative in Venezuela, Hťctor Vanolli, is going
to informally hang around the audit, but that cannot be considered a formal
observation.

So my
first observation is that I am happy to learn that one can observe things two
ways: formally or informally. In the formal observation, one is formally
invited to get a seat and observe. In the informal observation, one is
informally invited to get a seat and  informally observe what is going on.

What? You
donít see the difference?

Of course
there is one difference (like in the ACE commercial). If  the informal observer finds something wrong,
it does not count, because it is informally wrong. Not so when you are formally
invited to be a formal observer, in which case whatever you observe as wrong is
then formally wrong.

Clear,
isnít it?

But now,
the real question. What happened between this morning and this afternoon?

If you got
any formal or informal ideas, you are welcome to post them in the formal
comment section.

Formally reporting
from Cyberspace,

Jorge
Arena

Ghost
Blogger Emeritus.

Two Asian Species

July 18, 2006

Between travel and not spending much time at home, I haven’t been keeping up with taking pictures of all my flowers, missing some by a day or two and just not having the timw to take good pictures. I will actually be travelling again this weekend, but took these on Sunday. Not as nice as I like but neat

Left, Phalenopsis Cornu Cervi. I actually brought back a flask of these from the World Orchid Conference in Malasya four years ago and now they are recahing maturity. I love the texture of the petals, they are so waxy that they reflect so much light that it is not easy to take a good picture. On the right, an overall view of a Grammatophyllum Elegans with three sparsy of flowers. Below, a close up of a bunch of the flowers, about one and a half inch in diamete each.

Accidents up, transparency down in the new PDVSA

July 18, 2006

Yesterday,
there
was a fire
at the Amuay refinery in Paraguana,
Venezuela’s
largest refinery complex. I could go on and on about the lack of investment,
the fact that there are more accidents, deaths and fires that there used to be
before the 20,000 oil workers were fired in 2003, I could tell you this is the
same stuff that made the Caracas-La Guaira viaduct collapse, but I wouldn’t.
What has really irked me about this is the lack of information as well as the
attempt by PDVSA and the authorities to hide the real nature and scope of the accident.


First of all, we have seen press releases in which PDVSA claims that the number
of accidents is lower than it had been in recent years. This is absolutely
false! This is a lie! PDVSA has never had the level of accidents that are
present today, nor the level of injured and deaths. In the “old”
PDVSA no unit was ever shutdown for more than three months, while we already know
that the cracking unit at El Palito has been shutdown for a long time due to an
accident, part of the Cardon refinery is still down after an accident last year
in which six people died and only this year, Paraguana has had five fires, five
deaths and over two dozen injured. (Two fires during the last week alone!). This was unheard of before 2003! In fact,
the magnitude of this fire never occurred before 2003 and this is the
third large fire to take place.

But the worst part is the attempt to make it look like this is
“normal”. Pro-Chavez reporters interview former oil executives and
suggest that fires like this were “hidden” by the old PDVSA, as if
you can hide 50 meter flames shooting out of a refinery surrounded by
people. But even worse, we are told that everything is normal, nothing has
changed and the plant will go into normal operation very soon, as soon as next week even.

Look at that burnt tower (Thanks Mora!)! Does it look like it will go back into operation
anytime soon? In fact, outside experts say this part of the plant will not go
back into operation anytime soon. Moreover, they even suggest the whole section may
have to be rebuilt before it can brought back into operation. Thus, another
70,000 plus barrels go out of Venezuela’s
production of gasoline and these guys are just smiling. Do I hear sovereignty
anyone?

The “people” have a right to know what is going on, but they don’t.
PDVSA has become a huge blackbox. Over a month ago Minister Ramirez held a
press conference because, finally, PDVSA’s 2004 financials were being
submitted to the SEC. We were told all sorts of junk about results, even lies
like production numbers had been audited, when KPMG does not audit such things.
Almost two months later, you go into the EDGAR database, write PDVSA and the
financials (20F report), which are already late only by twelve months,
are not yet there. And he actually said they had filed them!

Never had
the information coming out of PDVSA been so bad. In the bad, bad days of the
fourth Republic, Congress had to approve contracts and bids while now the Ministry tells
Congress what to do and contracts are never discussed. Mysterious companies trade the
crude for PDVSA, something which used to be done in-house. There are very few
open bidding processes and the Minister is also the President of PDVSA, a company
filled by incompetent military making decisions which will negatively impact it
for years to come. Oh yeah! I forgot, according to PDVSAís 2006 budget, salary per
employee will be at an all time high at the company. Mind you, I really donít
mind if PDVDA pays their people the best salaries in the country, but a
certain former military hose first name is Hugo got to power by making a point about the high salaries
of this special class of Venezualns, only to replace them by an even more special one Guess what! They are even more special today in terms of
what they make, but they do not have the technical qualifications of their
predecessors, just look at the picture!

And then
we are told that PDVSA is stopping the sale of gasoline to some CITGO gas
stations because it
was ďbadĒ business
. Sure, while refinery companies like Valero have no
capacity and are
basically printing money
we are supposed to believe that CITGO can lose
money refining and selling gasoline. Yeah and I believe in Santa Claus too!

Of course,
going forward things will only get worse. PDVSA will no longer be required to
file its financials with the SEC. The shareholders, read all the Venezuelans, will
no longer have access to the financials. There will not even be shareholders
meeting even to comply with the formalities of the law.

Yeap, ahora Venezuela es de todos, nope, del autocrata? You bet!

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