Archive for December, 2007

Handover of hostages in Colombia collapses as the FARC fails to deliver

December 31, 2007

For some as yet unexplained reason the delivery of three hostages in the hands of Colombian guerilla group FARC to the operation staged by President Hugo Chavez has collapsed. After Chavez himself had given a deadline of last night, the international group of personalities present in the Colombian town of Villavicencio to guarantee the integrity of the hostages has left that town, including former President of Argentina Nestor Kirchner and movie Director Oliver Stone, who made absolutely stupid comments about who the FARC are and what they stand for.

The FARC blames the Colombian Government for staging military operations in the area, while the Colombian Government is suggesting that the FARC may not even have the kid in its hands as it may be a child in the hands of Colombian social workers for over a year. Thus, once again, the FARC make President Hugo Chavez look very bad, the same way that they did in November when they even failed to provide proof that some hostages, such as former Presidential candidate Ingrid Betancourt were even alive. After that failure, Colombian police found such proof in the hands of some guerilla members in the city of Bogota and the proof was dated at least one month before the talks collapsed at the time.

Hugo Chavez had created a whole media circus surrounding the handover of the hostages, making it seem like a complicated military operation which it did not have to be. Chavez kept talking about “search” and “rescue” when it was just a matter of the FARC finding a way to leave the hostages at a safe place to be picked up by the Venezuelan helicopters flying under the Red Cross flag. But something was clearly wrong, as the handover was postponed repeatedly without explanation. Reports are that former Argentinean President Nestor Kirchner, a Chavez ally, was so upset yesterday with the operation that he was ready to leave and had to be stopped by “panicky” Venezuelan diplomats. President Uribe had stayed away from the operation until today when he met with the international observers and agreed to allow a corridor to be opened for the hostages to be handed over, after extending the Chavez deadline yesterday. The FARC meanwhile, contends that the Colombian military was staging operations near where the handover was supposed to take place and made it unsafe.

As I have suggested before there is no reason for this to be so complicated, but the diverging goals of those involved: Chavez, Uribe and the FARC made it complex as each group wants the other to look bad. What is a mystery is why the FARC have so far left Chavez out in the cold each time he has tried to mediate the handover of some hostages. In the past, the FARC has broken truces with the Colombian Government, failed to return hostages when promised and once killed eleven Deputies who were in captivity and were supposed to be about to be returned. The Colombian Government recently released the Foreign Minister of the FARC to the French Government as a goodwill gesture. There has been no reciprocal gesture from the FARC, who had only agreed to release these three hostages, two women and a kid, despite having thousands of hostages in their hands.

For now, the whole thing has collapsed and made Hugo Chavez look very bad, after he tried to raise his national and international stature after the loss in the Dec. 2nd. referendum. For now, the whole thing has collapsed and it looks as if it will be a while before the same show can be staged again with everyone’s cooperation.

Chavez finally signs Amnesty decree

December 31, 2007

So, we are getting the “soft” and “lovable” Chavez now. After his “humanitarian” effort in Colombia looks like is failing, Chavez signs an Amnesty Bill that he had refused to consider as recently as last Christmas, when it would have been more appropriate for people like Henry Vivas and Lazaro Forero so that they could spend that time with their families. I wonder if the decree implies that PDVSA will return its lifetime savings and severance pay to its former workers, since none of them were ever even tried and PDVSA confiscated their property illegally. The list for the Amnesty cases decreed is here.

As General Uson suggested yesterday, Chavez does not change, this is probably part of his new strategy to regain popularity by being more gentle and human, let’s see how long it lasts. In any case, he needs to start running the country and so far, none of his moves imply that. Meanwhile, I obviously welcome the decision as the rights of so many had been violated by the travesty that is the Bolivarian revolution. It is indeed a belated Christmas present for those involved that have suffered so much because of the whims of the autocrat.

Not even Napoleon at Waterloo by Simon Alberto Consalvi

December 31, 2007

Historian Simon Alberto Consalvi wrote this piece in today´s El Nacional, which expresses quite well the remarkable media show staged by President Hugo Chavez in the last few days for the handover (Chavez calls “rescue”) of the hostages in Colombia. Some details are missing, such as Chavez naming his former Minister of the Interior and Justice as Coordinator, a man who after leaving Government was shown to have a second legal identity which he had used to divert funds from the secret budget of his Ministry. He also provided papers and aid to the Foreign Minister of the FARC Rodrigo Granda, a criminal who was later captured and extradited to Colombia, after living in opulence in Venezuela.

By now, the operation is surrounded in mystery and as of today, not completed as the FARC claims the Colombian military is not allowing the operation, while the Colombian President is saying the FARC does not have the kid. So, we go back to my earlier question: Why did the FARC once again promise Chavez something and not deliver? Only time may answer it.


Not even Napoleon at Waterloo by Simon Alberto Consalvi in El Nacional (by subscription)

If people were moved by the promise of the liberation of the two
Colombian hostages, Clara Rojas and Consuelo Gonzalez, adding the young kid
Emmanuel (born of the first in captivity), they could not explain the theatrics
displayed from the very beginning. One got the feeling that it was as if one of
the greatest battles in history was being fought. One thought of the useless
pomposity of Napoleon at Waterloo,
already in his imperial dawn. It was all ostentatious, despite the fact that the
matter was the return to civilization of only two of hundreds of hostages. As
if the FARC did not know how to free their hostages without any risk.

It used to be that they would get them out of the jungle or wherever
there were being held and they would leave them in some town where they could
ask for help and the operation ended there. This time pomposity and bombastic
behavior predominated, together with wastefulness and vanity. What was before a
secret, now was a media event. Star Wars, as interpreted by Alfred Hitchcock. One
suspense after the other. The only thing missing was some submarines in the
Arauca River. Times have changed; there is no doubt about that. Now the
“rescue” operation was simultaneously, a military one, one of protocol and
publicity, and of course, political and of such nature that it seemed to
contradict what it should have had of human solidarity. Pomposity and rhetoric,
proclamations and lessons in strategy, air force mobilizations and eloquent and
friendly references to the FARC or Marulanda, its unique leader and lifetime
factotum. All of this carried out with high class witnesses.

The modest handover of two women and a child that for the first time
will know something different than the jungle has turned out to be a
cinematographic operation. A celebration, in the end, which is reasonable in
its limits, but which tried to erase the horror of having kidnapped a three
year old kid, separated at birth from the mother and cared for by guerilla
members. That is, doubly kidnapped. The story goes that not even the mother
could see him. Clara Rojas will one day tell her story. When former Deputy
Consuelo Gonzalez returns to her home, she will miss her husband, who died in
2005. She will find two married daughters and a grandson.

With these precedents, when Ingrid Betancourt is freed (if Marulanda
ever allows it), the UN blue helmets will have to come, together with the most
indispensable part, the Hollywood cameramen. We will see the tenderness with
which American Director Oliver Stone, Danny Glover’s and Sean Penn’s colleague,
will register this “humanitarian gesture” by the FARC in the entrusted documentary
with which he will return to the comforts of the Empire. Not even Napoleon at Waterloo.

Flowering picking up as it colls down a little

December 30, 2007

This is a very nice Oncidium hybrid called Oncidium Alohi, on the right a nice shot with teh light behind the flower when they were opening.

On the left a nice, if misshaped Cattleya Percivalian. On the right Rhyncholaelia Digbyana, fromerly known as Brassavola Nodosa


This is my firts flowering of the ¨tie dyed¨ Dendrobiums I bought in Australia, this one is Dendrobium Burgundy. I got tehm from Duno Orchids. (Down Under Orchids). I can’t remember the name of the cute plant on the right, even ig I have posted it before, it looks like Aerides, but I don’t think it is, will look it up!

Another absurd and incoherent decision by the incompentent Venezuelan Government on dollar quotas for its citizens

December 29, 2007

One of the most significant revelations of the last few months in
Venezuela was that of General Raul Baduel, when he said that in his one
year as Minister of Defense he never saw President Hugo Chavez at a
Cabinet meeting. This was later confirmed by General Muller, who was
brought back from retirement and later dismissed without ever seeing
the President once. This little tidbit explains a lot of what has
happened in this country in the last few years, in particular the
incoherence and inconsistencies in public policies. There seems to be
no coordination whatsoever and the so-called “philosophy” of the
revolution is not applied uniformly and/or very inconsistently. Add to
this the lack of quality of management and one can at least begin to
understand why we are where we are today.
comes to mind, because while it is good that the Government is finally
tackling the problem created with the quotas for credit card use for
the Internet and travel, the decisions so far, are totally incoherent
and certainly contradict the fundamental precepts of the revolution,
such as privileging those that have less, having all Venezuelans share
the oil wealth and giving access to all to the same services and
As I reported a few days ago, the first measure was to prohibit the banking system from issuing pre paid credit cards and
ordering them to cancel the existing ones on January 1st. I have
explained the rationale behind the increased use of credit cards
before: As the difference between the official exchange rate and the
“parallel one” grew, it first became too large to pass up and later
became an illicit business in which people would pay others for their
quotas, using them for their businesses or to obtain foreign currency
which would then be sold in the parallel market at a huge profit, since
the difference of 165% between the official rate (Bs. 2,150 per US$)
and the parallel rate (Bs. 5,650 per US$) became too large by the end
of the year.
The opportunity became simply too
interesting to pass up. That new computer, ipod, camera, medicine,
book, watch, cell phone or whatever that you wanred, could be yours with a 62% discount
if you could get a credit card, then order something over the Internet
and use many of the courier systems that have sprouted in Venezuela to
bring your stuff. In fact, parents would get credit cards for all their
kids over 18, multiplying their availability. Companies began accepting
this as payment for insurance, travel packages and even for opening
brokerage accounts with cheap dollars. Later, operators of dubious
origin began the business of purchasing quotas, an industry sprouted
and a verb was even applied to the whole thing: “planchar” (Ironing, as
in there is money laundering and then there is now ironing your money).
In fact, I have lived the feeling it myself, I noticed this week that I
still have like $67 of my $3,000 left and have been looking at my
Amazon wish list to look at the combination of books that comes closer
to that amount. I also upgraded the body of my SRL camera for what to
me is really 250 US dollars. Not bad to go up to 14 megapixels with all
sorts of new features, bells and whistles. I really did not need to do
it, but I could not pass up the opportunity. It’s called human nature,
hard to pass up the bargains.
to the CADIVI website, requests for credit card use in January were US$
268 million, ballooning to US$ 701 million this December, as everyone
sought to take advantage of this. Clearly, the problem is with the
exchange controls, but the Government is clearly not ready to remove
them, as they are both a source of power and corruption. The longer
they are in place, the worst it will be in the end.
the Government began attacking the problem, which is good. The first
action was to publish a list, including the names and national ID
numbers of 5,000 people who had made questionable charges and had to go
to CADIVI. So much for protecting the privacy of the citizens. More
lists were later published, now removing the names and increasing the
paperwork that had to be submitted, asking now for letters “justifying”
expenses. This completely overloaded the exchange control office, which
does not have the staff to even receive this, and in the latest twist,
CADIVI has put the burden on the banks to check the paperwork. The
whole thing has been a charade anyway. If you showed uo, you are fine,
if you didn’t you will have no quota next year, which as we will see is
not much of a punishment now.
Meanwhile, not
one Government official has made a formal move to find out where Mr.
Antonini got the US$ 800,000 he was carrying in his suitcase when he
left Venezuela and the criminals have become the honest Venezuelans
that took advantage of their quota, while the Government has yet to do
anything about trying to find those that were profiting from the system
by buying quotas. Not precisely a “fair” system.
second measure was the prohibition of pre-paid debit cards. For many,
particularly those with little money and thus not eligible to obtain a
credit card, this became not only a way of taking advantage of the
quotas, but it also eliminated the need to carry cash in dangerous
neighborhoods, where crime has increased 200% during the eight years of
the revolution, according to official statistics.
with one swipe, some bureaucrat decided this and thousands of honest
people were left out in the cold with his decision. Even worse, this
was announced in mid-December and many people were about to go away for
the holidays, planning trips with their credit cards that will become
useless on January 1st. Fortunately, the date of implementation has now been postponed to January 11th.,
precisely to tackle this problem, but any competent manager should have
seen ahead of time the problem that was being created. That is what
“management” is all about, thinking ahead all implications of a
Clearly, the elimination of the
pre-paid cards would take care of most of the fraudulent use of the
quotas, but to everyone’s surprise, the exchange control office
announced yesterday that next year the new quota level would be US$ 400
for ordering via the Internet, a puny 13.3% of the old value.
Who came up with this number? Why the 13.3% solution? What is the rationale?
course, there has been none given. But it is simply stupid. You are,
sorry if I repeat myself, punishing a large number of Venezuelans
because there are some criminals that the Government is simply
incapable of going after, that have taken advantage of the system.
think about it, the Government is reducing to US$ 400 the Internet
quota, which is the more “popular” one, as it does not require you to
travel abroad. Thus, it is the quota that more people, particularly the
less well to do, can take advantage off and benefit the most from.  In
contrast, the travel quota, which as of today is ratified to be US$
5,000 using your credit card plus an advance of US$ 600 in cash (600
euros if going to Europe), has been left intact. Moreover, the ones
that travel pay for their tickets, which are quoted in US$, at the
official exchange rate of Bs. 2,150, so they benefit once again from
the exchange controls, as their tickets are subsidized by the
Government. (A roundtrip ticket Caracas-Hong Kong in business class
costs US$ 5,800, which when you calculate at Bs. 2,150 becomes around
US$ 2,000, nice deal, no?)
And who benefits
from this largesse? Certainly not the poor, the disenfranchised that
Chavez and his Government are always crying about, but the oligarchs,
the well to do and, of course, those plugged in into the Government
that can afford to travel. Most Venezuelans are simply screwed, as
simple as that. So much for “the oil now belongs to everyone”.
the deeper problem is that the whole thing is incoherent. The new US$
400 quota is incommensurate with a travel quota of US$ 5,600. There is
no method to this revolutionary Government, no thinking, no decision
making, simply random acts by mediocre Government officials, each
acting on their own.
I will not comment too
much on whether US$ 400 a year is too low or too high. What is
incomprehensible is that if before it was decided in some fashion that
it should be US$ 3,000 that there can be any reasoning now that will
reduce it to US$ 400 all of a sudden, while maintaining the US$ 5,600
for travel. Clearly, one would think that those things ordered abroad
should be of more importance than more frivolous leisure travel for the
well being of the people of Venezuela.
And of
course, you have to wonder if the suitcase quota will also be reduced
by the same fraction, making the standard “maleta” carried by those
replacing Mr. Antonini one with US$ 106,666 in cash, so that all
Venezuelans are more “equal”. I doubt it, you need more in order to buy
the unconditional allegiances that Chavez wants and needs.
he also needs to prop up his popularity given the referendum results.
But with his collaborators making decisions like this, he seems to be
doing exactly the opposite, as he concentrates on an international show that will bring him very few votes in the future.

Of Puppets, Puppeteers, Hostages and Politicians

December 27, 2007
has now become a very complicated game of puppets and puppeteers in
which its is hard to distinguish who is manipulating or trying to
manipulate whom, in a perverse game with the FARC and its hostages. At
the start, it seemed as if the FARC and Uribe had the upper hand as
puppet masters. Chavez fell for their game and he was getting very
little out of it. Thinking that the FARC’s wishes were somewhat aligned
with him, he played along and came out empty. After weeks of promises,
the FARC delivered little, he pressed too hard and got Uribe mad, which
led to their spat.

Uribe got what he wanted at
the time, his popularity shot up and Chavez thought he would get more
votes in the referendum, as some polls suggested, but maybe the
Colombian population that votes in Venezuela had in the end a larger
effect, since Chavez’ lukewarm supporters did not go and vote on Dec. 2nd, sealing his defeat..

And as Chavez lost his Constitutional gamble on Dec. 2nd.
he found himself losing all over. A spat with the King here, a spat with
Uribe there and a surprising rejection of his project from his
supporters was certainly not a promising framework for his future. And as problems in
Venezuela become harder to figure out, Chávez traveled and likely got
some advice from the master puppeteer in Havana, who suggested he try
to get something out of the FARC, just for show. Temporary relief. He
fell for it and so has the media.

who could care little about Chavez in the end, offered a very token
gift of three hostages, out of the more than 400 in their hands and
certainly not the big international catch that everyone is waiting for,
as Ingrid Betancourt is not in the package.

leave it to Chavez and his Cuban media masters to play it up and the
stupid international media to fall for it. Chávez held a press
conference yesterday, doing the only thing he enjoys and knows
something about: military operations. So, while problems mount in
Venezuela, including more than 200 homicides over the Christmas season,
which must certainly be a new record, Chavez likely put his military
uniform and played with little mock up planes and helicopters, reliving
his days of failure as a military Commander, but enjoying himself. What
else could he ask for?

The FARC meanwhile, gave
up very little, but managed to slightly undermine their archenemy
Alvaro Uribe, who was forced to accept the military operation cooked up
in the depths of the Miraflores Palace. But Uribe keeps playing his game, he knows
the FARC have their own agenda and have never given up anything of significance and
will in the end make Chavez look bad.

meanwhile was relishing his role as a newly found “humanitarian”, which
would almost be comic, except that it is simply pathetic. Never in the
whole process has Chavez asked to have any of the Venezuelan hostages
released. While not all eighty of them are in the hands of the FARC, as mostly they represent simply financial transactions in which if the relatives
pay, the hostages will be released, in what has become the standard
transaction of that guerrilla/mercantile institution called the FARC.

course, a true humanitarian would have released this Christmas or prior Christmases not one,
but dozens of his political prisoners, held without trial or evidence, who
languish in the country’s jails without even receiving due process. Remarkably, this nouveau
humanitarian refuses to give others, some of them former friends and
colleagues, the same treatment given to him when he got an
unconditional pardon after leading to failure an unconstitutional and
bloody coup that left many dead, mostly innocent civilians, in various cities of

The FARC only wants to get
rid of Uribe, to impose who knows what type of regime, after thousands
have died in a bloody and stupid war, like all wars, that they don’t
seem to want to end for the simple reason that they don’t want to give up the power they
have. Chavez at the same time, wants to get rid of Uribe and get
someone more friendly to his own international ambitions, now that his
own national goals have been put on hold for the time being by his
“people”. Uribe on the other hand just wants to annihilate the FARC and
consolidate his power, both politically and militarily. If he can do
Chavez some damage in the process, then even better.

as it is usually the case when politicians and military factions are
involved, it is the people that lose. In Venezuela, our lame duck
President rather than paying attention to our myriads of problems, creates
this circus of distraction to hide his own incompetence and his inability
to do better, including the release of our own Venezuelan hostages. In
Colombia, the hostages will hear about this token signal by their captors and get their
spirits up, but one would need over 100 similar operations and
commitments from the FARC to have everyone freed. They will never do

Meanwhile, the Court jesters and
recipients of Venezuela’s welfare, fly in to be in the limelight, from
the former President Kirchner to Evo, trapped today in his own political labyrinth,
go join the chorus and the cheerleading, as if this was some form of
success: luring a bloody terrorist group to release an irrelevant
number of hostages in order to prop up their magnanimous friend.

the traditional media will be there to describe and broadcast with
their customary stupidity the Grand Guignol set up in this silly
multinational confrontation. The same media that is blamed for creating
imaginary shows and plots out of nothing, such as suitcases full of cash
and the like. Except this time around they will be flown in, wined and
dined for the benefit of the show. And they will make something out of

And the perverse show will just go on…

Merry Christmas to all!!!

December 24, 2007

To many, spending Christmas in the tropics with warm weather andluscious greens seems somewhat incongruous, but as you can see in the picture above, the lights of Caracas glow like a Christmas scene every night.

To all the readers and friends I do hope that you have a spectacular Christmas Eve and Day, as I get ready for our traditional Christmas Eve dinner with hallacas and pan de jamon. Fireworks are already going off, hours before activities begin.

The events of the last moth have given us all hope that things are looking up and we can have a better Venezuela. But as we think about enjoying tonight and tomorrow, don’t forget those like Francisco Uson and Henry Vivas and many others, political prisoners who should be home tonight, but will not be able to be with their families because of the vindictive nature and the lack of compassion of a single man. The fact that this is the case, reveals a lot about the hard road ahead, before we can have a Government that truly cares about all of the people of Venezuela.

But we deserve to have hope today, after December began with a huge gift for those that believe in freedom, democracy and human rights. Let that gift, like tonight, be the beginning of something wonderful.

Merry Christmas everyone!

Note Added: Tonight at around 8 PM General Francisco Uson was given conditional freedom, a right that could have been given to him two months ago. I am extremely happy for him and his family.

Five silly questions on the day before Christmas

December 24, 2007

—Three weeks after the referendum one has to wonder if we will ever see the final CNE results for the referendum despite having the best (and most expensive!) electronic electoral system in the world.

—Did Guido Antonini talk on the phone to President Nestor Kirchner at the airport while the suitcase with the US$ 800,000 was being searched? Or was he made to believe it was the Argentinean President?

—Is the voice on some of the telephone conversations taped by the FBI that of the actual Head of Venezuela’s intelligence police DISIP?

—Is it true that Fidel Castro told Chavez to go back to the “loving” Chavez of two months before the 2006 Presidential election in order to regain his popularity? Can he stick to it?

—Will we see a complete overhaul of the Cabinet by January 1st.? Does it really matter? Will we miss the Minister of the Interior?

—Will any Venezuelan Government institution ever investigate Maletagate I?

The Nixon Moreno case: Political Persecution is alive and well in Chavez’ revolution

December 23, 2007

One of the
things that has characterized the judicial system under Chavez has been
its ability to follow orders from above to exact revenge from its
enemies. Whether accusing its enemies of corruption for minutiae while
protecting its own, to outright persecution, the limits to which
Chavismo has gone in some cases should put shame to those that claim to
support the revolution.

The latest case is that
of Nixon Moreno. Moreno is a student leader of the M-13 movement from
the Universidad de Los Andes. Chavismo has been unable to win many
student body elections since Chavez took power in 1998, but at the
University of Los Andes it managed a win at the first election held, but the second time around
Nixon Moreno was the candidate and Chavismo lost. Last year, The
Venezuelan Supreme Court suspended the elections, which Moreno
eventually won running away a few weeks later. Since universities are
considered autonomous, it was considered an intromission into the
affairs of the University to do so. Moreno won anyway and soon
afterwards he was charged with four different crimes, from rape to
political intimidation in what was clearly an act of revenge.

sought refuge at the Vatican’s representation in Caracas. The Vatican
later requested safe passage for Moreno out of the country, which the
Prosecutor refused to grant, arguing that Moreno was a common criminal
and not a political case. Moreno has been living there for months and
two weeks ago, the authorities from the University of Los Andes went there
to grant him his Bachelors degree in political science. Moreno had
completed all but one of the courses for his Bachelors degree and the
university admitted his time at the Vatican’s representative as the
practical training he needed to graduate together by a course he
completed online.

Immediately a group of Professors from that University
asked that Moreno’s degree be voided because nowhere is the Law of
Universities is it approved that students can take a course via the
Internet. Strange argument in a country which has an open university
called Universidad Nacional Abierta where all courses are studied remotely.

Immediately after this, the National Assembly ordered and investigation
on Mr. Moreno’s graduation, going as far as prohibiting the public
registration of Moreno’s degree and saying the decree was given to him
in “irregular fashion” without anyone pointing out what the
irregularity was. Soon after the outgoing Prosecutor
General Isaias Rodriguez, who has directed been the leader of political
persecution during Chavez’ years, opened an investigation and actually said he would attempt to void Moreno’s degree.

course, the same people and institutions persecuting Mr. Moreno, are
the same ones that have done very little since last August to find out
about the Maletagate case, in which laws written by the current
National Assembly were actually violated. We don’t know yet who
provided the US$ 800,000 in cash, how it got through customs on the way
out, who was the mastermind behind it and why there were PDVSA
employees in that flight, besides the presence of Guido Antonini, who
worked for none of the organizations involved.

that is how political persecution works in autocratic regimes, you go
after your enemies with the full force of the judicial system, even if
there are no basis for the charges, while at the same time you protect
your own even if the illegalities or corruption are blatant and staring
you in the face.

Moreno’s case is just
another one in a long string of persecution cases, all supported by
Chavez and his outgoing General Prosecutor. While some may question the
earlier charges against Moreno, it is after all his word against that of a
policewoman, the ridiculous attempt to stop him from graduating, should
shame those that support Chavismo and proves, once again, that
political persecution is alive and well in the Chavista revolution.

Ignorant economic management continues to generate waste and inflation in Venezuela

December 22, 2007

Some of the economic topics I have dwelled upon in the past were the subject
of intense attention in the news this week as the amateurish Government
officials that set policy finally realized what the most basic economic
common sense says.

First, the Government ordered the banking system to cancel all pre paid credit cards starting on January 1st. 2008. The reason? What I have told you about here a few times and attempted to parody in the Oligarco Burguesito
piece: People had made a business of purchasing internet quotas from
those that could not afford it making it a very profitable business.
First you find someone and get a debit card for him/her. Buy a $3,000
quota for Bs. 2,150 per dollar (Bs. 6.45 million), sell the $3,000 in
the parallel market at Bs. 5,500 (Bs. 16,500,000) and pay a couple of
million to the person, for a tidy Bs. 8.05 million, more than 100% over
the initial “investment”. A similar deal is done with the $5,000 travel
money, whereby people are taken to the Caribbean or Panama and are
taken to a casino where they collect their $5,000.

the exchange control office reported that debit cards have used in 2007
the appreciable amount of US$ 1.8 billion in Internet and travel
quotas (Add that to the flow of the parallel market), showing the dimension of the dubious orders. While it is not
easy to estimate how much of this was “planchado” as the practice of
buying the quotas is called in popular terminology, you can bet that it
is a huge percentage f the Government decided to eliminate pre-paid
credit cards all together.

Ironically, it is
the people without much purchasing power that will in the end be hurt
by the decision. The same people that the revolution claims to “love”
so much. In its infinite wisdom and stupidity the Superintendent of
Banks canceled all cards, not just simply its use abroad, which it
could have done.

In some sense this is like
the old joke of the guy who is telling his buddy he caught his wife
with another man on the sofa in his home and when his buddy asks what
he did, the man replies that he got rid of the sofa. That is all the
Government has done throwing away the sofa, not solving the problem but
attempting to solve the problem by prohibiting something which will
simply challenge the ingenuity of the “planchadores” to take advantage
of the huge arbitrage between the official and the parallel rate, which
you may recall I can not quote publicly.

the Superintendent of Taxes said that the Government is considering
reducing the financial transaction tax, which I called when it was
first approved the new magical mystery financial transaction tax and later revisited the subject under the name Ignorance or bad faith?.
You see, the tax was hailed as an anti-inflationary measure, the same
Superintendent of Taxes claimed it would have no impact on inflation
and it would absorb liquidity. All of these arguments were so absurd
that it was hard to tell if these guys were being facetious or not.
Well, my previous query was answered very clearly when the same man says that the tax may now be reduced
in order to reduce prices, clearly contradicting his earlier statements
and proving, much as in the case of the debit cards and the abuses with
the internet and travel quotas, that it is simply extreme ignorance which
continues to prevail and dominate the economic thinking of the
Venezuelan economic authorities.

Which is the
reason why this economy will at some point not too far into the future
explode in their faces and unfortunately in ours…

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