On Saturday, Chávez announced another Bs.564 million rescue to try to plug the neverending financial shortfalls facing the Nationalized Guayana industries.
There’s enough candy for everyone in that piñata: Alcasa gets some, Bauxilum gets some, Venalum too, and Ferrominera and Sidor get rather a lot, actually. But it’s not just the big boys; even the bit players in the tragicomedy that is CVG, like Cabelum and Rialca, get a taste.
The good part comes later, though: Chávez followed this shower of petrodollars with a stern admonition to the Guayana SOEs to stop making losses already!
It’s heart-rending, really. Nobody in the government has the intellectual furniture in place to grasp the connection between a soft budget constraint and chronic loss-making on the part of State Owned Enterprises.
They really, really don’t see how extending a virtually explicit guarantee to the Guayana SOEs that they can come back again and again and get one bail-out after another per secula seculorum might put a a dent on managers’ incentives to make a profit. It’s like a brand new thought to them – nobody’s ever walked them through the logic behind it.
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