Things are going well, Maduro is in Paris eating and drinking better than in Caracas. The National Assembly will investigate how Chavez’ cancer was inoculated, but refuses to discuss how the terms of the Comptroller, some CNE Directors and some Supreme Court Justices have ended and they should be replaced (Most of the elected when the opposition had no representation in the National Assembly), while that exchange rate hits all time highs, even if its increase has been stopped by rumors the Government will do something to “open” the foreign exchange system.
But it is harder to find a dollar in Caracas that a roll of toilet paper.
People really understand little about how ideology is the main driving factor behind the now Maduro revolution. The papers are full of speculation about how the swap market will come back, the necessary laws changed and we will live happily ever after.
No such luck, as we have been predicting for weeks…
Yes, the Illicit Foreign Exchange Bill will be changed, but that’s about it. It will be changed so that the absolute ban on foreign currency trading without the Central Bank in the middle is removed and participants can buy/sell foreign currency in a market tightly controlled and regulated by the Venezuelan Government.
Yes, according to Central Bank Director Armando León, the “father” of the Bolívar fuerte, what the Government has in store for us, is simply a “new and improved” SICAD foreign exchange system, the same one that so horrendously failed in March.
According to Leon:
“The final alternative system to the official Cadivi system will be expanded and will be made to be as efficient as possible”
In fact, I can´t find a link to all that León said, but here is a summary:
-Venezuela is working to resume Sicad dollar auctions at the beginning of second half of year.
– The Government is working to allow private and public companies and banks to sell dollars on the Sicad system
addition to cash.
-The Government is focused in May and June on delivering more dollars to small and medium companies that are key to resolve shortages
-The Sicad in its debut was very complicated. A review of the system has been completed so that it includes small and
medium companies and individuals
-The Government will also make the official Cadivi exchange system more effective.
Thus, while people are looking for some sort of more pragmatic policy, what the Government is thinking about is about making more “efficient” a system that the same people planned and designed in March but failed miserably, but this time around, “trust us” it will be dynamic, pragmatic, efficient and will solve of the problems with shortages, drive the swap dollar down and make people happy.
Yeah, sure! And the Bolívar fuerte was going to stop inflation. Didn’t you suggest that Armando?
So, what we will see is a an expanded SICAD, with all sorts of rules and regulations. Remember SITME? The same people that created and designed SITME are in charge of this SICAD with Fluoride. These are the same people who blame the failure of SITME on the banks, the oligarchs and the capitalists.
Which is why the new system will also fail. First, they will make up a lot of rules. The ones for the first SICAD auction were doomed from the beginning. The ones for SITME were the ones that created the system that amde a lot of people a lor of money. They will improve on that and create many more. They love that, that is what they are experts on, control, rules, distortions and the like.
But, they have not said the most important thing: Who will sell dollars into the newfangled and improved system?
That, my friends, is the only important question. And as long as the system is rigged and controlled and the priced fixed, only the Government will. And that solves absolutely nothing.
As simple as that.
The Devil's Excrement 
June 4, 2014 at 5:58 am
Many people consider that V-Ray is one of the best 3D modeling tool in the world.
The blender comes with a book of over 350 Recipes and there is one whole section alone devoted to making your own baby food.
But that’s an easy process and it gives me an excuse to beat on the dog
when my wife isn’t looking (it’s cute when the cats jiggle it, though).
June 24, 2013 at 10:12 am
[…] As People Look For Pragmatism In Currency, Venezuelan Government Ready For More Controls […]
June 23, 2013 at 8:17 pm
I think he would be crazy to come here, with no independent judiciary, nothing guarantees him anything. On top of that he would look like a fool, leaking what he knew on “principles” and coming to a country where the Government records what the citizens do AND plays it live on TV when convenient.
June 24, 2013 at 8:53 am
I could imagine chavismo inviting or luring snowden to Vz. under cuba’s direction to be used as leverage for the U.S. to finally recognize maduro?
Whether he is stupid enough to come would be a different matter.
June 24, 2013 at 11:45 am
I think you give Maduro et al too much credit by assuming they can think two steps ahead, or even care about the beneficial aspects of normalizing relations with the U.S.
They will remain, and continue to act like, the uneducated and nasty children that they are, and once again do ANYTHING they perceive as demonstrating their “power” against the U.S.
And of course, every time they do this it hurts VZ, but to them, that’s totally besides the point.
I think at this point, Snowden’s principles have nothing to do with anything. He just wants to find a place that will give him the most comfortable life.
June 24, 2013 at 12:21 pm
That is why I said under cuba’s direction. I have never accused chavismo of thought.
June 24, 2013 at 11:38 am
But the same could be be said of Russia–he already lost a lot of his moral high ground by seeking the protection of one of the historically most repressive nations on earth, especially when it comes to free speech.
June 24, 2013 at 5:20 pm
Where would you suggest he should have flown to from Hong Kong? Which of the ‘bastions of freedom’ would not have immediately jailed him and held him for the Americans?
June 23, 2013 at 5:54 pm
Totally off topic. But…
Do you think there’s a possibility that Snowden will wind up in VZ for good?
June 22, 2013 at 9:09 pm
Miguel, take a look a the PDFs in these links:
http://www.minci.gob.ve/2013/06/victimas-de-la-arrechera/
and
http://www.minci.gob.ve/2013/06/15-a-2013-del-desconocimiento-de-los-resultados-electorales-a-la-violencia-fascista-en-venezuela/
from an official government site, including from the Defensoria del Pueblo, no less!!! Nothing can shocks me about this government anymore, but still, wow.
June 22, 2013 at 11:04 am
11,760,000 oz. x US$1686.16 = US$19,829,241,600
11,760,000 oz. x US$1290 = US$15,170,400,000
Difference – US$4,658,841,600
According to Veneconomia Reserves are:
BCV: 25.927
FEM: 3
BCV + FEM: 25.930
With the gold only officially representing 20 Billion & from reports liquid assets of around 2 Billion how are the reserves currently at US$26 Billion???
When do they have to revalue the gold?
VJ’s report is from Dec. 31, 2012 & it’s now June.
June 22, 2013 at 2:58 pm
Who knows how much gold is left or where it is?
June 21, 2013 at 11:18 am
OMG !!!
London gold fixing rate per troy ounce: US$ 1,290.25 21-Jun-13
52wk Range: 1,269.6600 – 1,796.0800
June 21, 2013 at 12:22 pm
That’s interesting.
Does anyone know what the current price that the government is using to value the gold reserves?
$1290 would mean that there’s been a drop of around 30% from the highs around $1800 just a few months ago.
30% of 26 million is $7.8 million or only 18.2 million worth of gold + around $2 billion in liquid assests. That would make the country’s foreign reserves around $20 billion.
Panic time??
June 21, 2013 at 8:41 pm
It’s gonna be fun watching em squirm!
June 22, 2013 at 10:13 am
The gold reserves are valued at US$ 1,686.16 per troy ounce and there are
11,760,000 ounces.
For more info see: “Nota 6.- ORO MONETARIO” Estado Financiero del BCV
al 31/12/2012 in the following link:http://www.bcv.org.ve/pdf/notasiis12.pdf
June 21, 2013 at 10:38 am
He is from Colombia, and he should never have been designated interim president before a new election after they decided to anounce chavez’s death. Should have been cabello, but pick your poison…They are both $hit.
There are more than enough reasons to disqualify and kick him out. Just not sure how to do that without getting people killed. That is one of the many differences between the oppositon and chavismo. Chavismo wouldn’t care.
June 20, 2013 at 8:19 pm
I hear now that Maduro is from Colombia, and he should have been disqualified from becoming President. Can anyone confirm this?
June 20, 2013 at 8:50 pm
In what way was he qualified to be president?
June 20, 2013 at 6:58 pm
Desperate times call for desparate measures. Look for chavismo to create a diversion to distract from the economy. Cabello is trying to pick a fight again with the oposition. Don’t take the bait.
June 20, 2013 at 8:16 pm
True. It is getting truly surreal. A sinking ship of state. It will get increasingly hard to distract from the economy.
June 20, 2013 at 5:02 pm
It appears that the economy is in a melt-down. It appears that there is no solution that is politically palatable for the government. It can only get worse! It appears to me to be nothing less than a disaster that is unfolding before our eyes. During a disaster, logic would dictate that mitigation of horrific human and material loss would be in order as in a wild fire or earthquake! Instead we are seeing denial and the repression of information. Can we only watch in despair?
June 20, 2013 at 7:23 am
Where does the government get dollars? PDVSA.
Where does PDVSA get dollars? Crude sales with production declining. PDVSA’s debt is catching up from years of neglect, lack of maintenance, and having to prop up chavez’s false revolution through every election. PDVSA has mortgaged off huge sections of the Orinoco Belt to China, Russia, etc. for promised future production that hasn’t materialized. Those past huge China bailouts are gone, squandered away with no improvement to production or integrity of the PDVSA run facilities. Production continues to decline and ramirez continues to mortgage off Venezuelan reserves trying to prop up PDVSA and maduro so they can survive from day to day. The impact and damage from this farce will be realized by Venezuelans long after ramirez and maduro are dead and gone. The debt has piled up so high that they are begging more loans just to repay the past debts under the guise of restoring and increasing production. Don’t expect PDVSA to be able to float the dollar market as they have in the past.That is why the government is reversing direction and starting to request help from the private sector.
June 20, 2013 at 2:11 pm
Doesn’t the basic law/understanding, disallow the selling of reserves?
June 20, 2013 at 2:18 pm
He didn’t mean ‘those’ reserves, gold and a couple of billion. Here’s what to watch for. Next week (!) the BCV is forced to recalculate their ‘reserves.’ It will drop from approx 26 B to 21 or 22 B. That’ll wake everyone up!
June 20, 2013 at 4:10 pm
Do you want to bet they will fudge the numbers.
With the black market rate in free fall they won’t want to publish that kind of bad news.
Just like they fudged the May inflation figures.
After being away for 5 weeks local prices have seen a huge increase since we left – minimum 20/30%
A bottle of Absolut Vodka was at 220 when I left & today is 372 (Margarita).
I know that isn’t representative of the general costs but everything is up.
Beer, produced here in Venezuela but not price controlled, has gone from 105 on Jan. 1 to 160 today (36 returnable bottles).
We needed some work done while we were away & bags of priced controlled cement were only available if you paid 150 per sack. Controlled price is somewhere under 30.
It just goes on & on.
Price controlled items are used for the inflation calculations so that keeps the numbers down even if the products are not available
June 19, 2013 at 10:19 pm
“But, they have not said the most important thing: Who will sell dollars into the newfangled and improved system?” Yes Miguel, simple and clear.
As you said, only the government will sell some if at all.
And who will buy? only persons connected to the the government who will resell some of that to the rest of people in the black market. An they hope to bring the parallel rate down in this way! …I don’t think so but sure some will keep getting richer and richer… 14 year and they just don’t get it … never will.
BTW, I remember they once said that the revolution had democratized the capital markets ..They have no shame.
June 20, 2013 at 1:11 am
Who will sell dollars into the system. Obviously they will people who prefer to own bolivars than dollars.
June 20, 2013 at 4:17 am
Both of them?
June 19, 2013 at 8:26 pm
I’m wondering how Maduro can accomplish a Cuban-like control of the economy. Cuba is an Island. Venezuela is not. That must make if much more difficult!
June 20, 2013 at 1:00 pm
Yes, Venezuela has a huge border, whereas Cuba can shoot down planes which are attempting illegal cross border contact/aid (brothers to the rescue).
June 19, 2013 at 8:16 pm
Even with the Permuta, the core of dollar supply came from the government. I´ve asked people that worked in Venezuelan brokerages how much of the dollar supply feeding the permuta came from the private sector and the response was the same: a very very small portion.
And it makes complete sense. Besides the fact that demand for dollars in Venny has historically been MUCH larger than supply, exporters could never -and still can´t- sell but 10% of the dollars through the permuta. Many of those -as we know- went out of business or sold to banks directly at 6.30.
So permuta or no permuta the problem remains. Who the hell is to sell the dollars? If it´s not the goverment, then the system -call it Sicad, Sitme, whatever- clearly will be dry as dirt.
June 19, 2013 at 4:45 pm
Miguel,
How long can the Maduro government keep the influx of food by sheer imports if oil prices remain at the same level?
June 20, 2013 at 8:41 am
That probably depends on how much of those mysterious funds (like Fonden) they are willing to give up. Since the main purpose of this regime is to siphon off as much money as possible, I would guess they will not give up anything as long as the ship is still afloat.
June 19, 2013 at 12:13 pm
There is hope for Venezuela in the form of a possible future change in International Financial Reporting Standards.
Venezuela actually implements IAS 29 Financial Reporting in Hyperinflationary Economies in terms of the monthly published CPI.
This unfortunately currently results in the erosion (destruction) of part of current year profits. IAS 29 only recognizes the 12 month-end CPI´s while the general price level changes 365 times a year in Venezuela. Venezula´s government capital inflation-indexed bonds are valued daily 365 per year in terms of the Venezuelan Daily CPI. Companies implementing IAS 29 ignore 353 non-month-end Daily CPIs.
There is a chance that IFRS would be changed in the future (when, I do not know – the IASB takes a very long time to do things) to prescribe (require) the use of the Daily CPI. When it happens, Venezuelan companies implementing IAS 29 would stop eroding (destroying) part of their current year profits and Venezuela would have a relatively stable non-monetary economy.
So, there is hope.
June 19, 2013 at 10:48 am
As I said in an earlier post, be grateful the Maduro government is doing nothing, because anything they do will be misguided and counterproductive. Any actual reforms that helped the economy and the people would diminish the income stream of those presently benefiting.
June 19, 2013 at 8:53 am
Hmmm. Trade dollars in this controlled forum for 6.3 Bolivars, which probably has fees to boot and a delay of months. Or, sell them “illegally” for 30+ right now. Tough decision.
June 19, 2013 at 8:28 am
THE VENEZUELAN PEOPLE ARE SIMPLY DOOMED! THERE ISN’T SO
MUCH AS A GLIMMER OF LIGHT AT THE END OF THIS L O N G BLACK/BLEAK TUNNEL THEY’VE HAD TO LIVE THROUGH!
June 19, 2013 at 7:37 am
Controls = OPPRESSION
please repeat
Controls = OPPRESSION
Controls = OPPRESSION
Controls = OPPRESSION
Controls = OPPRESSION
Reductio ad absurdum will resolve the issue,
making the controlling officials
rich, richer, richest than ever.
June 19, 2013 at 7:45 am
The “absurd” conclusion of a reductio ad absurdum argument can take a range of forms:
Rocks have weight, otherwise we would see them floating in the air.
Currencies are to be controlled, otherwise they will remain inaccessible …
June 19, 2013 at 8:54 am
Controls have illuminated our triumphant road
to socialist reality. La viveza manda. Moral y
luces están en la deriva, son pesadillas de
los viejos opresores. Yeah!
June 19, 2013 at 7:57 pm
Look! The laws of physics are clear, when the Bolivar reaches zero, inflation will stop.
June 19, 2013 at 7:06 am
And if I have dollars in Caracas that I did not get from the Government, I’d be damned if I’d let them know. Or if I got them from the government by not importing, same story. Well, let’s see if it even gets off the ground.
June 19, 2013 at 7:04 am
Questions:
“The Government will also make the official Cadivi exchange system more effective.” Devaluation is the only way to do this, correct?
If banks and businesses happen to have some dollars laying around, will they be able to sell them at free market rates without risk of being arrested for “hoarding dollars” or will the government set the sell price, thereby reducing the incentive to sell or is this legalizing speculation? Very complicated.