So Moises, Mark, Patrick, Anita, Miguel, Michael, Ray, Joy, David and I walk up to a bar…


…punchline here.

Spending-led “socialism” can’t last. For years, Venezuela has been borrowing at credit-card level interest rates. As the country runs out of money and out of people willing to lend it more, the real question is who’s going to be left holding the checkbook when the spending must screech to a halt?

Chávez’s possible exit is exquisitely timed: après moi, le déluge. His colorless vice president, Nicolás Maduro, strikes no one as the kind of leader who could handle the fury of so many ordinary Venezuelans who fear that their beloved leader’s memory might be betrayed by heartless neoliberalism.

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    • If you really want to get worked up – take a gander of this garbage article from CEPR by Wissenberg in which inflation is apparently only 13.7 percent in Venezuela (mentioned at the bottom of page 4) and, of course, the economy is doing just wonderfully.

      That is actually a professional piece of work. Someone paid Whatshisface to write that crap. It’s all very well written. Just completely off based. Oh, and missing actual facts.

      • Time to post everyone’s favourite Weisbrotism:

        1) where he argues that the White House “openly supported” the 2002 coup by quoting the one half of a sentence out of a 90-page report he actually likes.

        Full sentence:

        “While it is clear that NED, Department of
        Defense (DOD), and other U.S. assistance programs provided training, institution
        building, and other support to individuals and organizations understood to be
        actively involved in the brief ouster of the Chávez government, we found no
        evidence that this support directly contributed, or was intended to contribute, to
        that event.”

        Can you guess which part Weisbrot left out when he quoted it?

        2) where he argues that all those horror stories about Chavismo dominating the media are totally overblown. Sure, there’s half a dozen government channels and he gets to call a cadena whenever he feels like it – but since nobody watches State TV, that’s fine with him.

        • That “no one watches state media” thing is total propaganda when you realize that Carter came down to convince billionaire Gustavo Cisneros to change the programming on Venevision (and all media owned by Cisneros Group, presumably). Globovision is the only network there one could reasonably say is opposition friendly to any relevant extent and even they are under constant threat and back off a lot of the time (if only for their own survival). I’m still shocked that Venevision let Capriles on their network at the end of the campaign even as they had nearly blacklisted and negatively reported on his campaign a huge chunk of the time.

          The Cadenas are Big Brother Five Minutes Hate personified, really, and truly. When I learned that this was something that was actually real in this world I couldn’t believe it at first. That some singular figure could take over all airwaves and demand all attention… it’s just inconceivable.

      • Hey Jonathan,

        As he clearly states, that number was for the last quarter. Not the annual rate. Funny how all of the criticisms of Weisbrot here are based on nonsense interpretations of what he has said, or just flat wrong nonsense. Its very revealing.

        • Get a clue,

          Let me spell this out clear enough for you to understand. I didn’t state whether the inflation rate I referred to was annual or over the last quarter. What I said was that he used the number 13.7 percent – as opposed to the 19-20 percent or whatever it is – which is merely a way to hide real numbers and actual facts. Ok, show the 13.7 percent over the last quarter…but wouldn’t it be relevant to actually (if you’re looking to be fair and unlike the horrrible opposition you claim has such a huge bias in its storytelling) display all figures to allow for a neutral and objective report? Yes, I know what I said is revealing…of a desire for a balanced report that doesn’t hide numbers because of someone’s political agenda.

          • Genius,

            Precisely my point. Why would anyone who is writing an Executive Summary only refer to the quarterly rate? He’s showing the picture he wants before he actually has to elaborate. Would it have been terribly difficult to include the actual inflation rate from the beginning to not flash a false picture?

          • Uh, he referred to what the annual inflation rate was up to the third quarter. He couldn’t give the fourth quarter statistics because he doesn’t have a crystal ball. This is getting painful….

    • Chamo, care to inform anyone on this comment thread about the NYT correction at the bottom of Weisbrot’s piece?:

      “Correction: Due to an editing error, an earlier version of this comment mistakenly stated that Hugo Chávez and his party had recently won 13 of 14 local elections. It should have said, as originally written, that 13 of 14 elections had been won nationally since Chávez had taken office.”

  1. The prize for the dumbest argument has to go to Anita Isaacs (whodawhoooo!?) for:

    The Bolivarian Alliance – a Chavez brainchild forged to assert regional claims to policy autonomy during the Bush era — is likely to take the strongest hit. Whereas Venezuela’s relationship with Cuba can be seen as mutually beneficial, there is no similar upside to pouring millions of dollars into other corrupt regimes like those in Ecuador and Nicaragua.


    • “at just under 18 percent is about the highest in the region. However it has come down from 28.2 percent in 2010, even as the economy has recovered and growth has accelerated. This shows that the government can bring inflation down with the right policies.” …down from stratospheric to still highest in the region shows “the right policies?” Weisbrot’s talent has always been to paint lipstick on a pig.

    • Seriously?? Even CEPAL recognizes that poverty was cut in half. Only on Carcass Chronicles can we still find people denying this fact today. Amazing!!

      • During Chavez´s terms Venezuela’s debt went up 4 times and oil prices up 10 times, shouldn’t poverty have been reduced even more? 50% for me shows what a complete failure this revolution has been. We have the largest oil reserves in the world, shouldn’t we be more like Norway or Qatar?

        • Venezuela has to be the only country in the world where poverty can be cut in half, and the idiotic opposition says “shouldn’t poverty have been reduced even more?”

          Let’s get rid of this government and get those guys who had twice the poverty rate back in here damnit!! Hee hee!!

        • BTW, no, Venezuela shouldn’t look more like Norway or Qatar, because countries’ wellbeing isn’t determined by the resources they have in the ground. That much should be obvious by simply looking at a map.

      • CEPAL and other organizations also say that poverty has been reduced substantially in most Latin American countries during the past decade. I remember a couple of days ago you tried to temper the problem of crime in Venezuela by saying that it’s also high in other Latin American countries (never mind that only El Salvador, Honduras and Jamaica have murder rates comparable to Venezuela. The others are considerably lower).

        But I guess you wouldn’t temper the government’s achievements saying that many other Latin American countries have also made substantial progress in poverty reduction, would you? It would against your long cherished double standards when it comes to analyzing Venezuela’s situation.

        • Nope, actually I said that crime is a huge problem in Venezuela, and that it is worse than most other Latin American countries. However, it is true that it has drastically increased in a few other LA countries.

          • Good, so by implication you admit Venezuela’s poverty reductions are nothing special (since you do accept comparisons with other countries).

            And if Venezuelan production of agricultural goods has increased, why has Venezuela become a net importer in coffee, sugar, rice and so forth?

          • I’ve never claimed Venezuela was the only country that has seen poverty reduction. I’ve simply claimed that poverty has been drastically reduced, something that is frequently denied around here.

            As for ag production, care to take a wild guess?? Could have something to do with the other side of economics…. you know…. demand?

  2. Congrats, you are in good company! I don’t want to be annoying, but you have a type in the first word of the title (Austerity). I’m sure it’s the gnomes in the NYT, so better ask them to get their show in place…

  3. Moisés Naím curtly, sparely and por encimita touches blindly an elephant with his fingers for the outline of the obvious, and does it very well. [Limits to Growth, a 1972 dated book traced unchecked economic and population growth with finite resource supplies is worth checking out].
    I fancy Mr. Maduro will soon rue his words.

  4. There was a wicked mutt lying in a manger full of hay. When the cattle came and wanted to eat, the mutt barred their way, baring his teeth. The cattle said to the mutt, “You are being very unfair by begrudging us something we need which is useless to you. Mutts don’t eat hay, but you will not let us near it.” sin comentarios

  5. Am I the only one who sees the irony in a guy writing a book titled, “Venezuela: What Everyone Needs to Know” referring to a coup d’etat in 2004 that, from his references seems suspiciously familiar to another coup-thingy that took place in 2002?

    Did I miss something? I mean, I remember a bunch of Colombianos supposedly stirring up trouble, but I was unaware they had much to do with PDVSA let alone were part of the Oppo team.

    Those tricky Colombians. Impinging upon the sovereignity of Venezuela! I blame Alvaro Uribe.

  6. “Chávez’s possible exit is exquisitely timed: après moi, le déluge.”

    Is there more of a perfect description of the Chavez years than….that? He came, he saw, he destroyed. Exit stage left.

  7. Are you playing the economic crisis card too early? If i read naim correctly, the level of indebtedness seems much lower than several european economies. When you include continuous (albeit mismanaged) oil revenues in the equarion surely the Chavistathon madness can continue for some time yet.

    • Correct, the Orinoco potential and broad international support/loans means no crisis on the horizon. You heard it in the CC comments section!

  8. The Pet Shoppe
    A customer enters a pet shop.

    Customer: ‘Ello, I wish to register a complaint.

    (The owner does not respond.)

    C: ‘Ello, Miss?

    Owner: What do you mean “miss”?

    C: I’m sorry, I have a cold. I wish to make a complaint!

    O: We’re closin’ for lunch.

    C: Never mind that, my lad. I wish to complain about this parrot what I purchased not half an hour ago from this very boutique.

    O: Oh yes, the, uh, the Norwegian Blue…What’s,uh…What’s wrong with it?

    C: I’ll tell you what’s wrong with it, my lad. ‘E’s dead, that’s what’s wrong with it!

    O: No, no, ‘e’s uh,…he’s resting.

    C: Look, matey, I know a dead parrot when I see one, and I’m looking at one right now.

    O: No no he’s not dead, he’s, he’s restin’! Remarkable bird, the Norwegian Blue, idn’it, ay? Beautiful plumage!

    C: The plumage don’t enter into it. It’s stone dead.

    O: Nononono, no, no! ‘E’s resting!

  9. Thanks for posting this debate Toro. It is very revealing. All the sworn enemies of Chavez are (for the millionth time) predicting economic collapse in Venezuela, using completely made up numbers (20% fiscal deficit??? The IMF says 7%, Bank of America says 8.8%, but believe what you want!). I wonder why they are always predicting doom??? Could it be that they are writing what the WANT to believe??? No way!! It is just a coincidence that they hate Chavez…

    • All that public debt is not going away, sir. Anyone, even you, can see the current status with the currency will screw us over sooner rather than later.

    • According to what I’ve read, a 7-9% fiscal deficit is very worrisome. It is not catastrophic as a 20% deficit would be, but still very worrisome.

      • Very worrisome doesn’t tell us much. How so?? It will require a devaluation sometime this year. Other than that I’m not seeing what the big deal is.

        • GAC, if you ever pull away from all your comic book reading, you’ll find that economics focuses on more than just a stand-alone aspect. Tronco de genio, tenemos.

        • The devaluation may need to be quite large, like 50-100%, if not more. It will cause a lot pressure on inflation. Last time, the devaluation was also of that order (50-100%), even though the deficit was not nearly as large back then, and it did affect inflation quite a bit.

          Now, I know you cannot compare the US with Venezuela, but isn’t the deficit over there also around 8%? Aren’t they talking something about a cliff?

          Ok, 8% of the whole US economy is heck of a lot more money than 8% is for Venezuela, and maybe that’s the reason things are not so dramatic in Venezuela, but I’m no economist, so I don’t know.

          • The last devaluation was at the beginning of 2011, and after a short increase in inflation it has continued to decline since then, while the economy has continued to grow.

            I’m not saying everything is rose-colored, but the picture certainly isn’t as oppo hacks like Toro and Moises Naim want to portray it.

          • I hope you are right, because if the picture is as bad as some are saying, and if Chavez dies, I don’t see how anyone without his popularity is gonna be able to handle that hot potato.

          • GAC is sadly wrong, bank of America is not including loans to PDVSA and not adjusting for the cost of the loans relative to a realistically valued Bolivar. If you estimate debt vs the size of the economy at a 4 Bolivar you ends up with 8%, but we all now the Bolivar at 4 is a fantasy.

            Also, I nor any of the writers for this blog said Venezuela is headed for collapse, rather that it is in the worst fiscal situation since Chavez became president, and that anyone but Chavez (or perhaps his anointed successor) will find it impossible to peacefully return to a responsible path.

          • Right, no one is saying Venezuela is headed for collapse, Naim’s piece is just entitled “An Economic Crisis of Historic Proportions”… hee hee!!

  10. From the good Dr. Faustus “Is there more of a perfect description of the Chavez years than….that? He came, he saw, he destroyed. Exit stage left.”

    I have a sinking feeling that Chavez will remain a hero and his followers will believe int their hearts that the economy tanked only because he died and was not their to manage it, not because he destroyed it.

    • Yes, sadly, I completely agree with you. It’s what makes this situation so ironic. There will likely be no consequences to Chavez for his insanity. None. The upcoming funeral will be on par with Princess Diana’s. It will be spectacle of humongous proportions.

  11. Whoever falls into Weisbrot’s and, for instance, GAC argument of “poverty HAS been reduced in Venezuela” is missing the whole point about the debate. Or at least the way I see the debate should be conducted.
    For me, the debate should be more focused on whether a government could or could not diminish poverty in the light of having increased by tenfold its income in the last decade. Most of it, all of the sudden in 2000-2002.
    Even the most neoliberal government could have run some “social programs” with such a windfall.
    Now, another aspect of this discussion is the QUALITY of that “poverty reduction”. Namely, people is out of poverty because they have improved their skills, become entrepreneurs, have managed to graduate in a university (a real one), have a permanent job, etc…
    What we’ve got in Venezuela is the opposite. People survive with social programs from which they cannot be de-hooked because there are no other alternatives such as the private sector. This force people and transform them into slaves of the state, or slaves of the government in this case. They have created parallel systems of education that simply don’t work, preparing more mediocre “professionals” and functional literates… Mision Ribas is the most heart telling: They now pay the lazy ones that left highschool to complete what it used to be called before “parasistema”, half time, and now paid. They don’t even check if the lazy boys go to school. Mision Vuelvan Caras, that was supposed to contribute enhancing workers’ skills, it’s pretty much the same; beneficiaries don’t even bother to go to the classes and instead spend most of the time queuing up in a Banco de Venezuela’s branch, to get their “allowance”. Another thing worth checking is the size of national, regional, and municipal payrolls. I’m sure the growth has been brutal since 2002 or so. Or better, PDVSA after the coup. How many employees and how much do they get paid. Before, one engineer could have around earning around 15,000 BsF; now, probably BsF 5,000. As for pensions, yes, everybody got one now; the real question is would that be sustainable in the long term is oil prices fall? Where do we get all that money from? Of course, this is “counterfactual” and therefore “idiotic” in the light of ratiochavismo.
    What about the informal sector???
    It would be interesting to see in historical perspective does the Venezuelan state expands and contracts in function of oil prices. Obviously, to try to compare Chavez’ administration the last 14 years with Caldera II, Lusinchi or Herrera Campins is a mockery of its own. Comparisons have to be draw in the light of net income; and to hurt GAC, the only government with which we can do that is CAP I. Unfortunately, I’m not economist, so that would be a job for Pitiyanqui maybe?

  12. This debate highlights the way people misuse economic statistics while failing to understand what’s beneath them.

    Yes, poverty has gone down. Yes, the economy is growing. But why? Is it long-term growth? Is it durable?

    The main driver of long-term growth is productivity growth. If the burst of growth of the last few years were due to people getting better quality education, or companies investing more, or hell, even the government investing more, then one could make the case that productivity is increasing.

    Sadly, that is not the case in Venezuela, where the only thing increasing is rents. In other words, people are making more money per capita because of an oil boom, and because its government spends on them lavishly (getting a Haier washer may qualify as a step out of poverty). People didn’t get misiones checks before, now they do, and that helps them get out of poverty. As soon as we can’t access capital markets or the price of oil falls, the economy tanks, just like it did in the very long recession of 2008-09.

    However, this mechanism is not sustainable in the long run because it is not really improving people’s productivity. If you go to Cote D’Ivoire and start throwing dollar bills out of a helicopter, poverty will fall, and the people will go out and use that money to buy stuff(much of it imported, they might even get themselves a Haier washer!), which will make GDP grow. But is that durable? Is that a long-term solution?

    Venezuelan businesses are not investing enough, foreign investment is very low, and the quality of education is bad and not improving. Without that, it’s all simply a growth spurt that doesn’t really get us anywhere.

    • I actually agree with much of what you say here Juan. But that doesn’t justify trying to deny reality. Poverty has fallen drastically. Does that mean Venezuela’s growth is sustainable? No. But it also doesn’t mean that policies that have reduced poverty shouldn’t be recognized. It is not clear that a neoliberal oriented government would have had the same effect, given their opposition to increases in social spending, etc.

      Your critique about a lack of productivity growth under Chavez is true (or at least I think it is, I haven’t seen the numbers), but it is also true throughout Venezuelan history, including when people who you support were in power. And it is also true for much of the region.

        • Juan falls to the Trojan horse–flattery will get you everywhere. Venezuelan Bs./$ exchange rate has been long-fixed at 4.3 (vs. at least a realistic 9-10, with the free market currently about 18, and nobody currently selling for less than 20) mainly (apart from “understating” Mercal-type Bs.inflation from the imported sector) to make National statistics look better than they are. Poverty?-Minimum wage Bs.2M/mo. or so, divided by 10, equals $200/mo=some reduction! GDP?-80% non-oil at 10 , instead of at 4.3, puts poor little rich girl Venezuela’s Debt/GDP (even with help from the 20% oil dollar-denominated Bs.equivalent 10 devaluation, and devalued Bs debt worth less in $) at well over 100%, and this assumes we really know (not) the real extent of all Venezuelan indebtedness. Of course, GAC et. al. knows all this (BIG assumption), but he/she/they will continue to try and bait this Blog (and, that’s how they earn their keep).

      • Finally, the hysteria dies down. Concessions are made. Though excuses continue, as though Vz’s results should be compared to those of the region, given the elephant that is oil.

        Those who assiduously study the economics of a nation should have sufficient criteria to know the difference between half-assed policies, designed for short-term (electoral) results, versus those that are planned and instituted with long-term macro benefits, not just for one segment of the population.

        Claims of “it is also true throughout Vz history…for much of the region” should not be made without the ability to compare historical precedents with the past decade’s performance, vis-à-vis per capita indicators and the surge in oil incomes.

        • Its not at all clear that “the elephant that is oil” helps productivity growth, and there is in fact evidence that it does the opposite, so I’m not sure I get your point. And a decade of declining poverty can hardly be summed up as “short-term electoral results”.

          Your last comment doesn’t make any sense, since there is little relationship between productivity growth and oil income, at least not that I know of. Oh, and I’m still waiting on those statistics that you claim vindicate your nonsense remarks up above…

          • So how do you justify that in the 14 years Chavez has had pretty much absolute power, given the immense oil windfall, that the reduction in poverty, while measurable in terms of numbers in the present, does not seem to be a durable reduction?

            If it is true that there is little relationship between oil income and productivity growth, we could have been the first to do the oppsote and been better off!

            It looks more like 14 years of handing out fish and not 14 years of teaching how to fish.

            I don’t think you can argue that even if the population is better off today, it will continue to be better off should oil fall in the short term, nor if sales to cash customers decline.

            The only oil cusotmer that pays cash on the barrel head at market prices that we have is the US, and dependency on “oil from hostile powers” is going down. This includes Venz.

            Selling our oil to Cuba and the rest of Caricom on a buy now, pay me when you can basis is ludicrous. Selling our oil, the oil still in the ground (illegal per the Constitution) to the Chinese for 60 cents on the dollar is also shortsighted.

            We are still an exporter of raw materials and not of finished goods that have higher value added.

            We import over 80% of the food we consume, and we have not lacked either the money, the land or the knowhow to exploit it correctly yet here we are importing sugar, coffee and other foods that we should be exporting instead, after having adequately supplied our inernal market.

            The fault lies squarely with Chavez and his incompetent train of ministers. With Chavez, because the buck has to stop somewhere, and that is usually the president. With his train of seals, because of their immense lack of capacity to plan, execute and control sensical policies.

            And please, don’t bother to throw that the 4th this or that. The 4th be dammned, we are way past any pernicious effects of the fourth.

  13. aplicar el monedero magico al paquetazo – 1. aumento [puya por mes?] en la gasolina, 2. aumento a las tarifas del estacionamiento, y sres dejan de la bulla – que el dolar este a cuatro, o a diez – eso no tiene que ver con la falta de orden en la vida cotidiana de los venezolanos.

  14. Verga, I wonder if Naim is correct. Why do I feel economists are always wrong about the likes of economic apocalypsis in the country? Orlando Ochoa used to frequent my office between 2003 and 2010 and every year he defended that the economy was going to explode next year but it never happenned! So, is Naim right or is more habladera de paja?

  15. What is coming isevident and obvious: Chinese natural resources “consultants” coming in ever increasing numbers to “help” the crippled debtor nation. Ni how ma,anyone? They already are there, carrying Bolivarian passports. Watch the parades in andoutof Ft Tiuna, e.g..


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