Venezuelan Central Bank Joins The Dark Side

December 31, 2013

bcv

While not wholly unexpected, yesterday’s bimonthly inflation report was a disgrace, which signals a change in the institutionality that the Venezuela Central Bank had managed to maintain during the last fifteen years under Chavismo. In some sense, the surprise was that it did not happen before, that for better or for worse, the technical side of the Central Bank had managed to prevail somehow in demanding that the data be fudged as little as possible.

And the data for November for November and December was a terrible 4.8% for Venezuela’s CPI in November and a “projected” 2.2% for December that the monetary authority takes to signal a change in direction and a slowing of inflation. Never mind the dreadful 7.5% for Food and Beverages in November, nor the 56% inflation for the year, nor the hiding of the fact (in a graph in page 2) that the scarcity index was at the high for the year.

But whether the data is believable or not is irrelevant. It is the language of the communique, the irresponsibility of it all that is simply unbelievable. The institution most responsible for the current levels, via its lonas to PDVSA, of inflation passes the buck, blaming the economic war and politics and failing to assume its mandate as being responsible for controlling prices.At the same time, it sucks up to Maduro, by suggesting that the supposed improvement in the numebrs for Decemebr is thanks to the actions of the Government on Commerce.

But it is the ideology and the politics of the language that is shameful, that reduces the Central Bank to a tool of the Government, as the Central Bank suggests that some nebulous sectors of the opposition took advantage of Chavez’ death to “artificially deteriorate economic variables” as an “authentic economic war” was waged on the population, which was only stopped by the “Government’s offensive” in November.

But there is no mention of the irresponsible lending to PDVSA and other Government institutions, nor of the dramatic and doubly irresponsible growth in monetary liquidity, nor of the continuous deficit spending by the Government, nor of the decimation of the productive sector and the total failure of the Government in its attempt to substitute it.

The whole report is simply a disgrace, a shameful yielding to politics and ideology and a refusal to admit the crass errors of the mediocre economists (and other strange professions) that today occupy the Board of the Venezuelan Central Bank.

It was the day that the Central Bank joined the dark side, after fifteen years of attempting to avoid submitting to the political pressures of Hugo Chávez, they now become servile to his fake substitute.

Who will the blame when the numbers deteriorate once again in 2014 in violation of the mandate given to them by the Constitution? How will they hide the upcoming scarcity and even higher levels of inflation? Or will they also blame the coming devaluation on these mysterious forces that are nowhere but in the midst of the Government and the sadly dependent Central Bank?

Another tragedy in Venezuelan history and a disgraceful chapter in the history of what was once a very professional Central Bank.

Added: BTW, Maduro was almost right on the magnitude of inflation, he suggested -5%, but he got the sign wrong, the magnitude almost right. Shows how clueless he is.

25 Responses to “Venezuelan Central Bank Joins The Dark Side”

  1. Island Canuck Says:

    Very well explained Miguel & exactly my reaction when I first read it.

    I have very little hope that 2014 will be any different than 2013.

    Rampant inflation.
    Increasing scarcities.
    An out of control black market rate (especially if oil prices fall)
    Increased borrowing at criminal interst rates.
    Numerous wage increases to try & keep the minimum wage crowd happy (which will just push prices even higher)
    New currency notes – Bs.500, Bs.1.000

    All in all a very difficult future for those of us who live here & have no escape (real estate market is non existent)
    Only bright spot is our annual CADIVI cupo for travel.

  2. Charlie Says:

    The thing is, it’s not what they say or write, it’s who buys that crap. Someone in aporrealos said that Giordani should be fired because of the high inflation rate for 2013. The immediate response was that; why should he be fired if it’s not his fault, it’s because of the economic war. Chavistas, even the more educated ones, have no clue whatsoever on how to run a country, so the blaming others will continue for a very long time.

    Happy New Year!

  3. Ronaldo Says:

    Definition– Chavismo= Government based on blaming others for all failures while acquitting those in charge. Failed governments can quickly be identified as Chavismo. Se also.. Socialism, communism, Cuba, Zimbabwe, dictatorship.

  4. Tomate Says:

    Is going to be interesting to hear their explanation when the reported inflation is 20% and real inflation (mainly in food) is more like 200%… Guerra Economica will not cut it… Hopefully it will disenfranchise a portion of the chavista population

  5. noel Says:

    The Argentine government didn’t seem to have a problem in reporting fudged inflation numbers for a very long time

  6. xp Says:

    the phalanx.

    Bcv econodrones, shoulder-to-shoulder marching to
    & preparing to jump the cliff in Kamikaze style.

    Is this the monk stonewalling?
    Can this really be the end?

  7. Mitch Says:

    This is the real Disneyland….The land of make believe.

  8. Morpheous Says:

    I agree 100%… Now Venezuela has a Central Bank board of directors at the service of the PSUV and NOT for the service of all the people NEITHER for the interest of economic stability… Dark times indeed… Sure there are still some BCV technicians that are against this, but they are living in a dilemma between have dignity and speak up or make silence and be humiliated.

  9. Lars Says:

    OT: Edward Snowden and Venezuela. A quick comment on how ES compromised the NSA’s Venezuela ops. The first leak was about about the email accounts in the Finance Ministry circa 2006. It also mentioned San Antonio, TX. This first leak was very damaging. These where not gmail accounts. This confirmed a network penetration. This probably set off a scramble to identify the weak links. They should have identified potential suspects. The latest NSA TAO leaks in German Spiegel would cofirm how the Venezuela penetration was done. Down to the equipment level. It’s very damaging to US National Security. ES is not who he says he is…he is spy traitor POS.

    • Kepler Says:

      Lars, can you tell us what that that first leak was? Sources, please?

      As for the German Spiegel: it actually has NOTHING, NOTHING the Cubans and Russians didn’t know already. The only thing Snowden has really “revealed” for the masses is the amount of information the NSA and GCHQ process of normal citizens and how those agencies actively crack and listen to their top “partners” in Germany and the rest of NATO.

      As for those agencies getting into our private systems, setting botnets in our computers, going through social media and getting into the data: that is something the Cuban and the Russian and the Chinese agencies always knew and thus communicated to the Venezuelan regime.

      In fact: you just need to read very public data (read non-conspiracy theory professor Richard Aldrich, for instance) and have a tiny bit of technical know-how to tie the knots and you know about all that.

    • m_astera Says:

      “ES is not who he says he is…he is spy traitor POS”

      Sort of depends on how you define traitor. I define a traitor as someone who acts to undermine the rights and freedoms of the people. It seems you define a traitor as someone who exposes questionable actions by the established government. Would Lars say that anyone publishing information that might threaten the absolute tyranny of the Cuban government over the Cuban people is a traitor POS?

    • ErneX Says:

      You are an idiot.

  10. Kepler Says:

    Miguel,
    I expected Aveledo or something having a press conference where the MUD declares the Banco Central de Venezuela people who wrote that piece of shit
    are violating the state of law whereby State and ruling government must be kept apart and whereby the Central Bank cannot be doing propaganda for one system and must respect pluralism.
    Where are the MUD leaders? Sorry, Delsy Rodríguez is stupid to publish the information about where our leaders went and she used intelligence information for that, violating the law…and yet, as expected, our leaders went abroad as soon as election time finished and Christmas came.

    I mean: even if they do want to go to Paris or Frankfurt or Miami or Panama, can’t someone be left at home with some authority to give a real press conference? Just a couple of tweets? (or did I miss something?)

  11. Paal Says:

    Am I right to assume that there was a prolonged struggle about this report? I mean it was very delayed. If so, who are the light side or gray jedis fighting? Totally agree with Miguel that it is surprising they made it this far, which maked me think someone powerful is backing them? Does anyone know any of these people inside the BCV? Could it be Diosdado supporting them for long-term strategic reasons?

  12. Alex Says:

    So great! The faster they print money, the faster they’ll drive the economy to hell. Not that it’ll topple the government but it’ll help for sure in achieving economic chaos.

    • m_astera Says:

      Which is exactly the plan, methinks. How a Trotskyite revolution works, the slow way. When everything totally goes to hell, a “new and improved” solution will probably be offered by the usual suspects.

  13. Ira Says:

    GREAT article in the Wall Street Journal about the “two” Latin Americas:

    http://online.wsj.com/news/articles/SB10001424052702303370904579296352951436072

    And here’s a great quote for you as a tease:

    ——Last year, one Brazilian summed up the Atlantic bloc harshly: “Brazil is becoming Argentina, Argentina is becoming Venezuela, and Venezuela is becoming Zimbabwe.”——

  14. Roger Says:

    The other dark hole in the central bank is the Sucre http://finance.yahoo.com/news/needs-bitcoin-venezuela-sucre-235100819.html It would be interesting
    to know how much of this is going on.

  15. Island Canuck Says:

    As I predicted in on Dec. 31 (see first post) Maduro has just announced a 10% increase in minimum wage & pensions:

    Maduro anuncia aumento de 10% del salario mínimo y las pensiones

    http://www.noticierodigital.com/2014/01/maduro-anuncia-aumento-de-10-del-salario-minimo-y-las-pensiones/

    Next announcement is the official devaluation and gas price adjustment.

  16. DD Says:

    Monica Spear RIP. One of the most beatiful venezuelan women I have ever seen.

    • Ronaldo Says:

      Maybe. Just maybe, Monica Spear’s tragedy can help focus Venezuela on its losses by murder and actually make the leaders do something to stop the murders.

      Most murders in Vzla are not solved and no one is punished. I hope Maduro is paying attention.

      • Ira Says:

        Shit in your left hand…wish and pray in your right…and see which one gets filled up first.

      • Ira Says:

        It’s not like anything can be done to “fix” the problems of murder and crime.

        It’s now an integral part of their system.

        Brazil tried to solve it via police assassinations against the undesireables– there is no doubt this is what happened. And it didn’t help anyway.

        VZ is too broken to fix the crime problem in any significant way whatsoever.


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