I’ll admit I’ve been finding it more and more difficult to write about Venezuela without sounding either alarmist or flippant, (or even worse, an odd combination of the two.) It’s a sign of the times here, that’s for sure. These days, what I find it hardest to convey to my friends who live outside Venezuela is this strong undercurrent of farce that now permeates public life here. Of course, I’d love to pretend that events here are of the utmost gravity, a completely serious class/social struggle a la Chile in the Allende years. And certainly, some of what’s been happening here is about as serious as serious gets: for a country as close to Colombia as we are, the ongoing rumblings about people setting up paramilitary groups and training intensively out in the countryside are enough to make the hair on the back of your neck stand. But writing about it that way wouldn’t feel quite honest, because the slow-motion train-wreck that is Venezuela under Chávez is full of little, slightly absurd side-shows, newspaper stories that teeter on the border between alarming and just plain silly.
Today’s far side news story concerns an active-duty Army General, Rommel Fuenmayor, who decided to show up at the Supreme Tribunal in full military regalia to introduce a writ for the impeachment of President Chávez. General Fuenmayor was involved in the April coup attempt, but like a lot of the generals involved he still hasn’t been kicked out of the army. So you sit there, remote control in hand, watching one of the army’s top-ranked officers standing outside a courthouse ranting and raving about the crimes committed by his commander in chief. OK! Of course, I agree that Chávez should be
impeached, but that does nothing to abate the Alice in Wonderland feel of the whole episode.
Yesterday, the surreal story du jour concerned the Banks Superintendent, who gave a press conference to denounce the nation’s bankers for being unwilling to keep lending money to the government. Now, you might think the banks’ unwillingness to keep bankrolling the government has something to do with the fact that Chávez has been calling the bankers counterrevolutionary swine each time he gets close to a microphone recently, accussing them of plotting an “economic coup”, of conspiring to bring down his government by shutting down the economy (and committing lemming-like commercial suicide in the process, of course.) Now, by now we’re used to this kind of shrill nonsense coming out of Chávez, but the Bank’s Superintendent? The head of the regulatory agency that’s supposed to look after the stability and viability of the financial system? Grrreat!
Actually, the government’s money problems have been the source of a lot of the recent barely believable news. The government is basically brokeat this point: its income is about 2/3rds of its expenditures, which presents a pretty obvious problem. Public sector workers get paid months behind schedule, schools get their electricity cut off cuz the ministry is late paying the electric utility. The finance minister lives in a frantic scrap to figure out how to keep the whole aparatus running, but it’s a losing battle.
For the last three years they’d dealt with these chronic deficits by asking for loans…more and more new loans at higher and higher interest rates. In three years they’ve quintupled the Internal Debt, to the point that almost 2/3rds of the loans in Venezuelan banks’ portfolios right now are loans to the government. This is a problem, since that means that those 2/3rds can’t go to finance businesses, or farmers, or people who want to buy cars or apartments or use credit cards. As the government gobbles up more and more of the available credit, the rest of the economy finds it harder and harder to get affordable credit, which has led to a huge increase in bankruptcies, big hikes in unemployment, and a recession that will see the economy shrink by about 7% this year alone. Ouch.
But the Banks Superintendent sees things differently. If only two thirds of bank lending is going to the government, he reasons, then that means that a WHOLE THIRD of it is NOT going to the government, doesn’t it? Outrageous!, he says. How dare banks claim that they’re all tapped out when they still have a whole third of their portfolios lent out to piddling things like, y’know, farmers or companies or home buyers?! Must be a conspiracy to undermine the glorious people’sgovernment. Economic coup, for sure. So this guy’s idea, it seems, is that until 100% of the banks’ loan PDVSA portfolios are in government debt, they have no valid reason not to keep buying government bonds. Oh dear. This is the head of the Banking regulatory agency we’re talking about. Oh dear.
So, y’know, you read news like that and you just sort of shake your head slowly and wonder, well how do I write seriously about this man’s incredible, rampant idiocy? Wouldn’t that just give his argument an aura of seriousness that it obviously doesn’t deserve? How do I deal with that, as a reporter? A lot of the public agenda here ends up putting me into that same broad conundrum.
The government’s mostly given up on trying to cover its deficit with loans. It didn’t help that at the same time his ministers were going around frantically trying to get new loans, Chávez was giving fire-breathing speeches pledging to turn over to their workers any companies that close down to participate in a protest lock-out against his government. As everyone knows, nothing boosts market confidence like the threat of massive expropriations.
No, by now the government’s made its peace with the idea that nobody will lend them any more money. Instead, they’re turning now to that tried-and-true method of deficit financing: the printing press. It worked so well in Weimar Germany and 1980s Argentina, why not try it here? The new plan is to print about 6 trillion new bolivars. For the economics-minded in the audience, that’s about 38% of current M2. For the non-economics minded, that means that they’re planning to print 38 new bolivars for every 100 currently in circulation. Depending which economist you ask, this is either the end of the world, or merely a complete disaster. The only possible outcome is massive inflation. They’ll cry us the standard river about how they can’t cut their revolutionary programs for poverty abatement just because they can’t raise the money to pay for them. And they’ll ignore the bulging heaps of studies and data showing how spikes in inflation screw the poor first and worst. It’s such an anachronism, really, it’s just embarrassing. The rest of Latin America tried this shit 20 years ago, crashed and burned 15 years ago, and has long since gotten over it. But Chávez is just determined to re-invent the hyperinflation wheel. Who can stop him?
Of course, in a brief little write-up like this I can barely scratch the surface of the proliferation of really strange we’ve been reading in the newspapers here. I can’t really go into the story of the guy who claimed he used to be the chauffeur for a well-known chavista congressman and now says his boss used to take him to paramilitary training sessions where army instructors taught die hard chavistas how to shoot it out with any opposition group that tries to topple Chávez, nor about how the congressman in question claims he’s never met his supposed driver. I don’t have the room to dissect Chávez’s new theory that plotting a coup is tantamount to international terrorism and that the April coupsters are on a moral par with Osama Bin Laden (an odd position for the guy who led two failed coups in 1992, and who was staging public celebrations of the of the coup attempt anniversaries just 8 months ago.) And I can’t even start to tell you about the completely public appeals some opposition members have started making in the radio, TV, and newspapers, basically calling the army wusses for taking so damn long to just topple “el loco.”
All I can say for now is that the newspapers here read more and more as though they were written by Gabriel García Márquez: a series of utterly fantastical stories bordering on simple nonsense, made credible only by the fact that they’re written in a totally deadpan style. Reporters here are really good at that. With the best of them you’re almost fooled into forgetting that lurking just behind that just-the-facts-ma’am style, a hack is laughing his head off about the utter silliness of the news he has to report.Caracas Chronicles is 100% reader-supported. Support independent Venezuelan journalism by making a donation.