Archive for December, 2008

A random collection of facts and thoughts about Venezuela from the last few days

December 27, 2008

—How about the Italian moviemakers that came to Venezuela to
make a sympathetic movie about Hugo Chavez, saw reality and made a
critical movie that they almost could not get out of the country?  The Threat (La Menaccia) is now winning awards and being watched all over the world as the fake message of the robolution spreads.
—And I read Enrique Krauze’ book “El Poder y el Delirio
(The Power and the Delirium) in which the Mexican historian looks at
who is Hugo Chavez? A very readable book about our autocrat which
Krauze wrote after coming to Venezuela a few times to research it. I
did not learn much I did not know about Chavez, but it is a well
informed book about Chavez and how he came about due in part of the
many errors of other Caudillos like him, like Rafael Caldera and Carlos
Andres Perez. Perhaps my biggest surprise is how the figure of Romulo
Betancourt has gained over time, as the left that fought him now
recognizes the important role he played in establishing the democracy
in Venezuela that Chavez is trying to destroy. It also looks at the
bloody history of Venezuela as well as how Simon Bolivar has been
distorted by the current President. Highly recommendable. 
—And
someone reminds me that while Chavez wants to convert the Sambil
shopping center in La Candelaria into a hospital or university, not far
from that same spot, stands “La Torre de David“,
30-plus story building which the Government took over in 2004 as part
of the financial crisis and which lies there unused and deteriorating,
while the Government pretends to take over a shopping center legally
built under its own nose and approved 100% by Chavista officials. It is
so easy to destroy and so difficult to build for this Government!
—And speaking of destroying, after doing that to the Venezuelan economy, subsidizing cheap imports via exchange controls, today Chavez wants to
diversify the economy, to “reduce the country’s dependence on oil”.
Jeez, you could have fooled me Hugo, after you have done exactly the
opposite for ten years. In fact, you claim among other things that you
want to increase production of goods for export and you mention cement
as an example. In May of last year you announced the
nationalization of Cemex  and other cement producing companies, because
they were exporting cement to make money. The companies were taken over
and the Government has yet to pay for them
—And
clarifying a previous post on the reelection referendum on Dec. 22nd.,
Article 64 of the Venezuelan Constitution says everyone 18 years old
has the right to vote in an election. This means that the Electoral
Registry has to be opened to allow all voters to register for the
referendum. Separately, the law also says that the registry has to
close 90 day before the election and has to be opened for at least 30
days. This means that even if the registry was opened on Jan. 5th., it
would remain open for thirty days (February 5th.) and the election
could ot take place until 90 days later at the earliest, which would
imply May at the earliest if the law and the Constitution were to be
followed.

Merry Christmas

December 24, 2008

I was planning to post a picture, not a very good one, but for days I took pictures and none of them made me happy. Then I selected the least horrible one and when I posted it the software told me I have run out of disk space, Thus, I have to keep it brief. Thanks to all of you for reading me all year and hope you have a wonderful time tonight and tomorrow celebrating Christmas, enjoy it, relax and make a toast to all Venezuelans, that they also have a spectacular time tonight and that all their hopes and wishes become true.

The triply illegal referendum for Chavez’ indefinite reelection

December 22, 2008

Just reviewing, the referendum proposed by Hugo Chavez is essentially triply illegal:

1) We already voted on it, as clearly spelled in Title IX of the Venezuelan Constitution.

2) Article 193 of the Suffrage Law clearly says that there has to be a two year span between referenda. Given that we had a referendum to consider this same question on Dec. 2nd. 2007, then we have to wait until December 2nd. of this year.

3) Article 64 of the Constitution says that if you are 18 you have the right to vote, which means that once a date for the referendum is set, anyone that turns 18 before that date should be able to register. The regulations say that once the Electoral registry is open, it has to stay open for 30 days, which makes Chavez’ date of February 15th.simply impossible.

There, three times ilegal, no matter what the autocrat says…

Interview with former PDVSA Economist on oil and 2009

December 21, 2008

Must read interview with former PDVSA Economist Ramon Espinaza in today’s El Universal.
Espinasa knows his stuff and understands oil markets line nobody else,
I have always been impressed by him and when PDVSA had an economic
office led by him, the company and the country could count on real hard
numbers economic analysis and not the clowns of today. In fact,
Minister of Planning Petkoff always used that office to calculate how
much things would cost. In contrast, Chavez and his Government don’t
calculate, they just do and hope for the best. Which style do you
prefer?

In any case, Espinasa is also worried about
PDVSA’s revenues next year. His estimate, which he gives no details
about is that the company will have revenues of US$ 23 billion if oil
prices stay where they are today. Espinasa gives no details of what he
takes into account or not in coming up with this figure, but it is 15%
higher than mine, he may be calculating all revenues, including sales
that do not get paid. But US$ 23 billion is low, given that the country
will import about US$ 50 billion this year.
Espinasa
tells us that he expects some 4 million barrels of new oil to come into
market this year from the US and Africa. In the US he is talking about three platforms including “Thunder Horse”, while in Africa it is likely to be Angola, the new star in the oil producing world.
Espinasa
points out that the gap between the Venezuelan oil basket and WTI is
widening which is due to excess over of light crudes reducing interest
in heavy crudes, as the differential has grown from 8.5% last summer to
28% last week. (You can’t take Friday into account as it was options
expiration, creating a strange discrepancy in oil markets as traders
avoid delivery)
According to Espinasa gasoline
is sold at US$ 5 per barrel in Venezuela and it costs US$ 25 to
produce, thus he thinks this will be one of the adjustments the
Government will make. 
Espinasa estimates that
in 2008, PDVSA’s costs were US$ 23 billion, including social programs,
clearly this is simply unsustainable. 
Whether it is my number or Espinasa’s is not really important,what is important is that something needs to be done. 
And
you need more than just cutting travel allocations, which as today’s
paper says represents only US$ 700 million in savings. And don’t
believe the paper’s US$ 7 billion for food which is only used by
ignorants. That number comes from a category, which excludes imports
from Aladi which are dominated by food and represent US$ 10 billion a
year (no percentage is given for items within Aladi). It also does not
include feedstuffs and machinery using in food production. But it is
irrelevant, what is clear is that such a drop in revenues will force
the Government to reduce spending and the economy will contract and
people are going to feel it no matter how much money is in the
investment funds. 
Because as the economy
contracts, inflation will soar above the 30% this year and the
inefficiency of Government controlled imports will hit the people. 
And that is going to be very rough on those that are doing the worst.

Another Chavez whim: He orders expropriation of a huge mall in downtown Caracas

December 21, 2008

I guess it is very dangerous to have Hugo Chavez not be busy with his politicking. Yesterday he said he would let people rest from politics until next year, which allowed him to come up with another one of his whims as he announced today that he would like to expropriate and nationalize the building of the huge new Sambil Mall in La Candelaria, located right where Avenida Urdaneta begins near dowtown Caracas.

There are many reasons while Chavez’ new whim reaches new heights of stupidity and the capricious nature of his decisions:

First of all, the Mall was conceived and designed during Chavez’ tenure as President and the approvals came from the Mayors of Libertador District and the Metropolitan area of Caracas who were not only Chavez’ buddies, but got there because Chavze wanted them to get there.

Second, this Mall, built exclusively with private sector funds, was aimed at the poorest sectors of Venezuelan society. After building the Sambil in the East of Caracas and others in Margarita, Maracaibo and San Cristobal, the Cohen group decided to go for it and built this mall oriented towards the lower classes and placing it in a business area which ahs deteriorated in the belief that it will improve it and will allow people to spend their time safely at their mall. (And yes, make some money in the process!!!)

But the stupidest reason of all is: What will he do with it now? Here is a man that is incapable of finishing or even building anything right and he plans to stop the building of the mall to turn it into a Hospital a unversity or a school? is he high? How long will it take? How much will it cost? How much corruption money will be involved?  Will he ever pay the rightful owners sufficiently to compensate for their investment, time and planning?

Then of course is the usual problem: Who will invest in Venezuela now when even things like just the building of a mall are being taken over by an incompetent, destructive and voracious Government?

Finally, it shows how Chavez is so isolated that this Sambil Mall is being completed now, less than 2 Kms. away from the Miraflores Presidential Palaca where Chavez hides out. But by now Huguito is so paranoid that he barely steps out of it. He is no longer the man of the “people” who used to walk the streets and talk to them. He only goes out by helicopter, surrounded by ever increasing circles of protection to fend off his fears of an attack on his life, protected by a clique that tels him everything is fine.

And coming up with crazy whims and ideas that in the end will only make him less popular.

(I was going to post a google maps picture of the mall, but the ggogle picture still shows just a parking lot)

OPEC cuts production, Venezuela lies, oil drops yet again

December 20, 2008

This is a repost of a post I made on Dec. 18th. For some reason, the file could not be seen in either Explorer and/or Safari (It could be seen in Firefox). I could not figure out the problem, so I am simply reposting it.

Today,
OPEC decided to cut oil production and as has been the case every time there
has been a decision to cut production; Venezuela has been among the
most hawkish countries calling for a 2 million barrel cut. The final decision was to cut 2.2 million barrels a day.


However, OPEC also issued its November report and while
Minister Ramirez maybe a hawk when it comes to calling for cuts, he is somewhat
sheepish when it comes to cutting Venezuela’s production as agreed.

Indeed, if
you check on page 35 of the November report, of the earlier 2 million cut in
October, OPEC members have only cut 739.7 thousand barrels, or 36.8 of the agreed
cut. However, Venezuela barely
cut 20,000 barrels a day, according to OPEC, which represents a scant 15.5% of
its quota to cut 129,000 barrels for the last cut.

So, do you
really believe Venezuela will
cut 189,000 barrels more a day this time around?

The market
certainly does not seem to think so, as the price of West Texas Intermediate closed downUS$ 3 per barrel at today.

Of course,
our own Minister Ramirez alias “Pinocchio” said he was satisfied with the
magnitude of the cut. Of course, let others endure it, let others cut, but the
robolution needs money.

You gotta
love the revolution.

Some tidbits from around the economic and financial world of Venezuela

December 19, 2008

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—Minister
of Finance Ali Rodriguez announced today that the Government would reduce the
dollar quota for Venezuelan travelers, indicating the Government has given up
on the middle class voting for Chávez. It would have been more clever
politically to not give airlines CADIVI dollars, reducing dramatically the
people that can travel abroad and thus instantly reducing the money given out
for this purpose. Nobody asked.

—And
speaking of CADIVI outflows, in November the Central Bank gave out US$ 133
million per day, a 32% drop compared to October. BTW, there is no data for the
last three weeks!!!

—And the
National Assembly approved Bs. 9 million or US$ 1.8 million (US$ 4.18
million at the official rate to value Banco de Venezuela, the Banco Santander
affiliate Chavez wants to nationalize. Funny, I have yet to find a single
person that knows the company hired to do the job Theorema Asesores 055. Nice
work if you can get it.

—And the
Venezuelan Oil Basket was up this week to close at US$ 32.14. Funny, WTI was
lower than last week, but our basket is higher!

—And El
Nacional says Manuel Rosales had a budget of US$ 358 million for the Maracaibo subway,
when the Central government took the project away from him and executed for US$
960 million, including Siemens’ commissions. Deputy Mario Isea tried to accuse Rosales of pocketing these
commissions, but clearly he has no clue about the complaint by the SEC, which
does not cite a mayor, nor the fact that Mayor Rosales had the project taken
away from him by the Central Government. The complaint is clear, it says the
commissions were paid to:

-A high ranking member of
the Central Government

-A former Venezuelan
Minister of Defense and diplomat.

-Two prominent Venezuelan
Attorneys

-A relative of a
politician

—And
Fitch Ratings downgraded Venezuela’s and PDVSA’s debt to BB+ from BB-
citing concerns that the Government will make no adjustments until after the
reelection referendum. PDVSA’s bonds now trade at a yield of 17-20%, compared
to the 7% yield they had when they were sold to the public in April 2007.

Zapata and the Devil’s Excrement

December 19, 2008

From Zapata in today’s El Nacional “The Power of the Process is made of the Devil’s Excrement”

Ad campaign against the doubly illegal Constitutional Amendment

December 17, 2008

Students are using clever posters like this one to get their message across about Chavezdoubly illegal Constitutional Amendment like the one above:

“Can you imagine Miss Venezuela with indefinite reelection?

People do NOt eat amendments”

Nice Flowers!

December 15, 2008

   

   

My Oncidium Onustum, now known as Zelenkoa Onusta bloomed spectacularly this year as you can see.

   

On the left a Dendrobium hybrid, no idea what the name is. On the right a dirt orchid from Venezuela Sobralia Leocxantha. (I think)

   

On the left a close up of a Sobralia flower, looks like a Cattleya, except that it lasts 24 hours.

   

A very nice Cattleya Walkeriana tipo from Brazil, this is the one with the largest contrast I have between the lip and the sepals. On the right a Picta.

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