Oil Wars

It is amazing how good you can make yourself feel if you just eat enough Snickers bars.

It is also interesting how good you can make things feel in with your economy if you just borrow and spend enough.

Case and point, the United States of America.

Last fiscal year it ended with a 1.4 trillion dollar deficit. Yes, you read that right, defiicits in the U.S. are now measured in trillions - billions are passe.

If you think this is just a one off, think again. In the fiscal year that began on October 1st they expect to run a deficit of another 1.4 trillion. In fact, if you annualized the October 2009 deficit they could be pushing 2 trillion dollars before it is over.

But living in the U.S. it is hard to see what they did with that $1.4 trillion. During the New Deal they at least got lots of new schools, massive electrification via the Tennessee Valley Authority, Hoover, and Grand Coule dams, and new parks and roadways all over the country.

$1.4 trillion later we have... what? I know Wall Street types are back to getting tens of billions of dollars in bonuses but was that the purpose of all this spending (sadly, it probably was). No joke, there is no visible evidence of what that money went for.

You can spend tonnes of time on the governments web-site and you still can't figure it out. More and more, it looks like they just literally pissed it away.

Well, I am being a little unfair. There are SOME results from all this spending. The stock market is over 10,000 again. Oil is back up to high levels. Gold is well over a thousand dollars an ounce. And every other commodity is spiking again.

So they may not have built anything worthwhile with all this spending, but that have at least created a new commodity bubble. Gee, just what we needed, a new bubbles!!

So bad are the new bubbles even the Chinese are starting to freak out. And the very few credible economists that there are see it too. Regardless, the lemmings keep running and the U.S. keeps pissing away money.

Of course, the U.S. is not the only place on a sugar high. Venezuela is there too. So messed up is their economy, lacking virtually any real or productive investment, that they are having to borrow record amounts to fund their waste even though oil prices are at quite high levels.

Recently Venezuela has sold more than $11 billion in bonds... to what end?

Are their massive new public works taking place? Any much needed power plants being built? (and btw, the fact the country has a electric sector that can't meet the country's needs shows that the fools that think the Chavez government has a plan are just that, fools.) Are new industries springing up across the country?

Nope. Just like as the U.S. pissed away almost unimaginably large sums of money got little more than "cash for clunkers" to show for it Venezuela is taking on large amounts of debt and looks to have little more than some cheap cell phones to show for it.

It's not going to be fun in the Western Hemisphere when the sugar high wears off.
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People thirsty for power always chose to plactate to conservative voters against progressive ones, but it is maddening when it comes from supposed progressives, the same was when Hillary Clinton and Lieberman tried to censor violent video games, that said Chavez takes it a step further like always not only by having a symbolic pile burning

implica el comiso y destrucción de los videojuegos y juguetes bélicos”.

but also by treating it like if it were drug contraband, where purchasing, making and importing said games is punishable by 3 to 5 years in prison, just so much as promoting them leads to a hefty fine. Well here I am breaking the law before it is finished in stating that violent video games are FUN and in no way incite violence, the evidence is drastically inconclusive.

The ASA said that video games and other violent entertainment are being used as a "folk devil" and have no real impact on the behaviour of children.

Jonathan Freedman, of the Department of Psychology at Toronto University, reviewed every media-violence study published in English and concluded that "the majority of studies produced evidence that is inconsistent or even contradicts" the claim that exposure to media violence causes real violence.

According to the ASA article Do Video Games Kill? (PDF) such studies do not demonstrate that media violence causes aggressive behaviour, only that the two phenomena exist together.

"Excluding a host of other factors (such as the growing unrest during the civil rights and antiwar movements, and the disappearance of jobs in central cities) may make it seem that a direct link exists between the introduction of television and homicides. In all likelihood any connection is incidental," the article states.

But that is not all the crusade also extends to promoting marijuana use as evidenced by the attack on Family Guy using a law that regulates OTA to regulate cable is insane but that is their legal footing.

By banning speech that is progressive Chavez is laying the groundwork for the accusation that he is not only violating freedoms but also attacking allies, what is next? gays? abortion? who knows.

All I know is that I am in opposition to all conservative governments, so I probably will have to oppose this one. Family Guy was great before it wen off the air in 2000 but now it is crap, the same could be said for Chavez.
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With the economic slowdown finally impacting Venezuela the bright lights of the "revolution" came to the conclusion that part of the problem was that they weren't pissing away enough money by giving out cheap dollars to import consumer goods.

So a couple of weeks ago they pissed away $5 billion (actually, they went borrowed that amount) giving out cheap dollars so people could take money out of the country (ie, they facilitated the "capital flight" they have always complained about) and importers could start bringing in more consumer goods. Now PDVSA is about go into debt to the tune of another $3 billion to again facilitate capital flight and waste money subsidizing middle class consumers.

What can we say, the insanity continues....

But there is more.

First, we have Jessie Chacon talking about how next year they will give $4 billion in cheap dollars to the auto sector (read, General Motors, Ford, Toyota and even the trade unionist killers Mitsubishi) who will presumabely assemble more cars in Venezuela. Never mind the question of whether or not Venezuela should really be spending $4 billion more on subsidizing car purchases for middle and upper class Venezuelans.

The real question is why don't they use that $4 billion to actually build a true domestic producer of automobiles instead of just giving money to transnationals to continue assembling kits which in and of itself will never get Venezuela anywhere?

The answer of course is too obvious and too sad - Venezuela has no plan to actually build a real automobile manufacturing industry. They prefer to spend their money to temporarily boost consumption and temporarily boost Chavez's poll numbers.

When they did that in 2005 and 2006 this blogger naively thought it was a temporary and necessary expedient due to the important elections at that time. Now it is clear it is actually their permanent way of doing things as they have no strategy beyond buying enough support to keep winning the next election. In other words, they want power not because they have ideas on how to make the country more prosperous, they want power because they happen to like having power. But I digress....

Today the silliness got even sillier. It appears that in the governments view one of the most harmful aspects of the current slowdown is that.... cell phone prices have gone way up.

Chavez may not have any development plan, but he is smart enough to realize that one of the quickest ways for him to get his ass run out of Miraflores would be for Blackberrys to be out of the reach of middle class Venezuelans. If he has to choose between empty shelves in the local Mercal or empty shelves in Movistar he sure knows which one is more tolerable... and it aint Movistar.

Soooooo, the government has taken drastic measures to make sure that millions of cell phone are brought into the country - and just in time for Christmas.

But just getting the cell phones into Venezuela isn't enough. They have to be CHEAP cell phones. If come Christmas your average Venezuelan can't afford to make hallacas that is one thing, but if they can't get a cheap new cellphone with all the latest features all hell will break loose. So now Venezuelan Ministers are strong arming the cell phone companies and making it clear to them that if the government is going to piss away billions making sure they can import cell phones cheaply they expect the cell phone companies to lower their prices.

All the silliness pointed out in this post is to say: 20 or 30 years from now when people are trying to figure out why Venezuela is still a shitty little thirld world country in spite of it having gone through a huge oil boom they'll probably be wondering "What the hell did they spend all the money on".

And part of the answer will be... cell phones.

If nothing else, at least Venezuelan's know what their priorities are.
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Both followers of the Venezuelan economic scene and habitual readers of this blog know there is one all purpose excuse for the Venezuelan government avoiding any economic measure it doesn't want to take - INFLATION.

That is, whenever a necessary and probably very helpful measure was suggested that the Venezuelan government found inconvenient (read - it would hurt Chavez's poll numbers) it was always said: "No, we can't do that, it would create inflation".

When it was pointed out that Venezuela already had high inflation without taking those measures the retort would be - "Yes, but doing that would lead to hyper inflation, we can't do that until inflation is under control".


And so on and so forth. The Venezuelan government and its sycophants found in inflation a great all purpose excuse for allowing all sorts of non-sensical and harmful distortions build up in the economy, inflation.

Funny thing is, no matter how much the Venezuelan government was careful to avoid carrying out any of the supposedly inflationary measure inflation in Venezuela just kept chugging along. It has consistently been the highest in Latin America for years now and with an annualized rate of 27% in August it doesn't show any sign of being tamed soon.

What is particularly interesting is how persist ant the inflation has been in SPITE of the fact that the biggest excuses the Venezuelan government and sycophants gave have disappeared.

For example, inflation was attributed to the economies high growth, "bottle necks" , and "overheating". Given that no one can accuse the Venezuelan economy of over heating these days inflation should be just a memory. Unfortunately, it is still a current reality.

Also, inflation was said to be "imported inflation" - that is that prices in Venezuela went up because world wide prices of key commodities increased so much, particularly the price of foodstuffs. Thing is, the price of global commodities crashed yet Venezuelan inflation persists. In fact, one of the highest rates of inflation in Venezuela is with food - this in spite of the price for food imports decreasing and food production supposedly increasing!!!

So by all rights, inflation should have decreased significantly in Venezuela. Yet it persists, causing further distortions and effectively robbing Venezuela workers of any real wage increase over the course of this huge oil boom.


Just as bizarrely Venezuelan inflation remains high even though the government did NOT do the things that were supposed to cause it.

For example, the Venezuelan government has steadfastly refused to devalue its overvalued currency even though not doing so brought growth in Venezuelan industry to a standstill. So clearly devaluation didn't cause inflation as Venezuela didn't devalue and inflation has just continued. Of course this is because it was a bogus excuse all along. Exchange rates go up an down all the time without feeding inflation. The U.S. has seen its currency lose lots of value and it has no inflation to speak of. Colombia last year saw its currency go from a high of 1,600 Pesos to a dollar to a low of 2,300 pesos to a dollar (a devaluation of almost 50%) and it too has no inflation to speak of. Obviously a bogus excuse is just that, a bogus excuse.

Another example is the price of gasoline which if it were adjusted to anything approaching a reasonable price would bring in billions of extra dollars which could be used to fund social programs and invest in industry. The government has steadfastly refused to change gasoline prices citing "inflation" and a need to educate the general population (notice that while they say the population has to be "educated" on the issue of fuel prices before anything can be done, which is probably true, the government never undertakes any such educational effort).

The funny thing here is that if you travel to Venezuela's western neighbor you will see that Colombia has ABOVE market rate gasoline prices (the government actually pegs the gas prices above market prices) and a) has no inflation and b) bus tickets are the same price they are in Venezuela. Colombians do though drive more fuel efficient automobiles. Imagine the horror - if the Venezuelan government raised gas prices the sales of gas guzzlers might go down!!!

In the end, one thing is obvious. All the hot air on inflation wasn't based on sound economic analysis. It was just non-sensical and silly excuse making for the myopic policies pursued by the Venezuelan government.

Sadly, while needed economic measures are forever being put on hold Venezuela's chief economic excuse will just keep chugging along.
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Here is the first internet campaign against it.

Sound cannons are all the rage nowadays as the new rubber bullet. From Michelleti using it against Zelaya and Zelayistas to the recent G20 protests. Such weapons need to be banned because prolonged exposure causes permanent damage and is closer to torture than crowd dispersers.

By making it illegal internationally will make it more likely that the Americas will be rid of it.
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It seems the policy of political encroachment has hit another landmark recently that cannot be overlooked simply because it is so hypocritical. As of now calling for a demonstration (and having this turn violent) is a crime, the implications are disturbing for many reasons not least of which is the absurdity of the case against Governor Cesar Perez Vivas, the fact that people breaking windows is seen as noteworthy by Chavez, but not chavistas throwing items from rooftops.


If Chavez wants to punish people that become aggressive (which the spearhead no doubt is) then they better have evidence of agression, and even then only the spearhead should be punished, not the people that organized the event. Putting a Chavista firebrand like Lina Ron does not give Chavismo carte blanche to establish "order", because if the law is applied equally and blindly then Chavez should be impeached because he would then be responsible for HER actions.

PS To the opposition: control your shocktroops.

EDIT Chavez seemed to back down from his earlier threats, lets hope dissidence is not stifled as gleefully predicted. Violence from both sides should be punished, but only those responsible (hint not Oscar Perez without a shred of evidence of a conspiracy).
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Seriously, no matter how ugly the government seems, no matter how creeped out I am about its encroaching strategy, or its failure to develop Venezuela economically. Or practically put me in jail for selling violent video games (I read the draft law and it does not say this though, I am just being dramatic).

All I have to do is look at the alternative, see the bunch of hacks that run around the opposition, from the so called intelligentsia to the common brute. They really are pinochetistas in waiting.

So now CC is talking about their revisionism of April 11, a completely one sided piece of propaganda, I will not reply to every piece of nonsense but with what Wilpert already said.

Nelson says he did not mention Neustaldt's testimony (which was videotaped) because he was unable to personally interview him.

Well here is the testimony they utterly and completely refuse to accept, like christians refusing to believe in evolution. Chupense esta mandarina.



There you go Brian Nelson, an account uncorrupted by the "ripples of time".

EDIT Here is a follow interview of Neustaldt where he confirms the pertinent statements he made.

""Pregunta: Hay una parte en el vídeo que transmitieron que vimos, que usted dice que recibió una llamada el día 10 en la noche indicándole que iba a haber un vídeo, que iban a haber una declaración contra Chávez, y después volvemos a ver en el vídeo que transmitieron, que a las 11 de la mañana recibió otro llamada indicándole que no eran ya veinte sino menos, pero representativo y que iban a haber los muertos en los mismos contextos ¿cómo se explica eso?

Otto Neustald: No tengo que explicarlo, recibí la llamada es totalmente cierto. Así como la recibí yo, vimos que Jorge Olavarría dijo que a él también le habían dicho que se iba a romper el hilo constitucional y le llevaron una copia del decreto, mucha gente más también lo hizo. Yo fui a un medio de comunicación a avisarles de lo que me acaban de informar, yo lo notifiqué en ese momento yo trabajaba para CNN, yo lo notifiqué a mi Mesa de Asignaciones, el día 11 lo volví a notificar y traté de avisarle a todas las personas que podían a hacer algo en ese momento, no fui lógicamente además cuántas veces no recibimos montones de denuncias o de datos que nos dan que no podemos confirmar sino hasta que ocurren."

Hat tip Charly Birther
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