2010 January 18 Monday
Hugo Chavez Continues To Drive Down Venezuela

Hugo Chavez recently devalued (he rebranded this as "revalued") the Venezuelan currency. This rose prices of imports. He threatened to seize and nationalize any store that tried to raise prices in now more expensive imported goods. Well, stores tried to raise prices and Hugo has begun nationalizations in the retail sector starting with a small French retail chain.

Chavez announced on Sunday the imminent expropriation of Exito, owned by Casino Guichard Perrachon SA of Saint-Etienne, France and Almacenes Exito SA of Medellin, Colombia, for what he described as repeated instances of raising prices in defiance of government regulation.

The French firm holds 67 percent of Exito.

Last week, the leftist government closed 70 individual Exito and Cada stores for 24 hours, accusing them of increasing prices after a devaluation of the bolivar.

A BBC reporter finds decay in a visit to Venezuela.

The country's central bank has estimated that the economy shrank 2.9% in 2009.

And according to the International Monetary Fund, Venezuela is set to be the region's worst performer in 2010, with a projected contraction of 0.4% in a year when Latin America as a whole is expected to grow by 4%.

Without oil to export Venezuela's economy would collapse.

Oil, as ever, is still the mainstay of the Venezuelan economy.

In fact, it is responsible for more than 90% of the country's foreign currency inflows and 50% of government revenues.

Venezuela's declining oil production has continued downward beyond the time range of this graph. Notice the increase in consumption. Gasoline prices are subsidized and cheap in Venezuela. So soaring consumption is further cutting into oil available for export to earn foreign currency.

Venezuela Oil Production and Consumption, 1986-2006

The government oil company can't afford to develop enough production to arrest the decline. Hugo seized oil fields developed by ConocoPhillips and ExxonMobil among others. So most foreign oil companies aren't going to invest there. Hugo fired a lot of the technically skilled national oil company employees and then hired lots of supporters.

It is pretty easy to predict more decay. But Hugo has cracked down on inflation and brought it down to a mere 25.1%.

Annual inflation in Venezuela was 25.1 percent last year, down from 30.9 percent in 2008.

Rolling blackouts that last for hours at a time are doing their own damage to the economy.

A severe drought has forced Venezuela President Hugo Chavez to ration electricity in South America's top oil exporter, but underinvestment and shortsighted planning during an economic boom are as much to blame as the weather.

Meanwhile, Hugo is fighting his own battle against decay by taking on the Playstation game player.

Those games they call 'PlayStation' are poison. Some games teach you to kill. They once put my face on a game, 'you've got to find Chavez to kill him'.

He sees cigarettes, drugs and alcohol as the capitalist road to hell.

Games, said Chavez, "promote the need for cigarettes, drugs and alcohol," adding "That's capitalism, the road to hell."

Chavez has chosen the socialist road to hell.

Hugo thinks the US is going to occupy Haiti. Um, what would be the motive? I fail to see how the place could possibly pay for the cost of occupation. Though, to be fair, neither do Iraq or Afghanistan.

“I read that 3,000 soldiers are arriving, Marines armed as if they were going to war,” Chavez said. “They are occupying Haiti undercover.”

Marines armed as if they were going to war? I would hope so. Port au Prince was a dangerous place before the earthquake.

Share |      By Randall Parker at 2010 January 18 08:55 PM  Socialism, Capitalism

no i don't said at January 19, 2010 10:09 AM:

"Chavez has chosen the socialist road to hell."

Food, Housing, Clothing, Health Care, Education, Employment and Leisure: When every human in the world has access to these basic needs -whether by money(Capitalism) or by law(Socialism)- then war and terrorism will be over. And there'll be no need for so much security, invation, war; there'll be no need for so many capitalist or socialist cameras watching how people pick their noses, wipe their behinds, chew gum, work, spit on the sidewalk, fix their penises to the right side or throw an angry-sumissive look at every marine-like officer who yells at them.

The only thing Communism provided in the USSR was LACK for most and abundance for a very few.
The only thing U.S. Capitalism provided in the U.S. is endless DEBT for most and abundance for a very few.
Both systems have disregarded their citizens.

Socialism-Capitalism... Who cares! Whichever works best for all humans in the world, but it has to work FOR ALL. People in the world don't care what you call it: "Socialism", "Democracy", "Communism", "Capitalism" as long as everybody is included, not just the country club-champagne-firstclass-hugoboss-Harvard politicians of the world.

Xenophon Hendrix said at January 19, 2010 6:53 PM:

It seems to me that Venezuela is not a problem for the United States, and I hope we have the sense to refuse Venezuelans asylum. Maybe we will be lucky and Chavez's eventual fall will serve as an object lesson for the rest of the countries to our south.

no i don't said at January 20, 2010 8:32 AM:

"It seems to me that Venezuela is not a problem for the United States"

Agree, and also it shouldn't be a problem. Democracy means that every nation has the right to self determination and others should respect. The fact that Venezuela has economic problems means only that there's a world economic recession. Other countries seem to be doing a lot worse than Venezuela, like Mexico for example.

Whether we like it or not Chavez was elected and re-elected by the majority of the Venezuelan people and that's what a democratic election is all about. In fact Chavez has been for some years now, the most popular president in Latin America, closely followed by Lula from Brazil. However I see no reason to confuse a country's government with a country's population. The peoples of the world is what matters in the world, but their governments have ignore them.

I personally think that we have more things in common as humans than differences as citizens of a particular country.

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