Caracas Chronicles

Katy says: Some worrying economic items today:

• Inflation is up, and may reach 20% by year’s end. Finance Minister Merentes is saying that this is a consequence of excessive liquidity and of problems in food production, but that government spending has nothing to do with it. Yet today’s El Nacional headline says that spending on Chavez’s social programs, “misiones”, is 8 times what was budgeted for them. Perhaps if the government allowed the Central Bank to operate more freely there wouldn’t be so much money floating around. You can’t take away most instruments of monetary or exchange-rate policy from the Central Bank and then wash your hands when inflation shoots up. O lavan, o prestan la batea… But the again, Mr. Merentes is not an economist, so what does he know?
• Oil prices continue to fall, and in spite of Venezuela’s constant plea to cut production quotas, OPEC decided to keep production steady. So, if according to chavistas, Chávez was responsible for the spike in oil prices, can we pin this drop on him too? I wonder why he’s making oil prices fall?
• London Mayor Ken something-or-other announcing that poor Venezuelan taxpayers will subsidize wealthy Londoners’ transportation needs. In the words of Conservative Angie Bray of the London Assembly, “I’m sure the 35% of Venezuelans who struggle below the poverty line, many of them critically so, would be shocked at the cynical siphoning off of their main asset to provide one of the world’s most prosperous cities with cheap oil. “
• Brazilian experts seriously questioning the economic, technical and environmental feasability of the gas pipeline across South America. Among other things, they say that it is not certain that Venezuela has the amount of gas it claims to have, that Chávez’s price is ridiculously low, that the pipeline would cost much more than what has been said so far, and that supplies would not be assured if Chávez were to leave office. They basically conclude that the project has progressed with more political and less technical objectives. Only one word comes to mind: duh!
• Fedeindustria chief (and one of Chavez’s favorite businessmen) Pérez Abad says sales from small and medium enterprises are down the latest quarter, perhaps the first sign of the forecasted slowdown in the Venezuelan economy in 2007. Something tells me the opposition will be blamed for this one when it finally materializes.