Chávez owes his re-election to the people

Baja-tion de la Mula-tion
Baja-tion de la Mula-tion

I mean, literally. You and me are going to have to pay for his reelection … out of our own pockets.

Ultimas Noticias reports on numbers from the Ministry of Finance saying that, just the last year, Venezuela’s foreign debt increased from roughly $80 billion to about $100 billion.

That increase, divided by Venezuela’s population, comes out to $800 per person.

In other words, each Venezuelan paid $800 for a spurt in government spending that was pro-cyclical, completely unnecessary and entirely uncalled for.

The economy was growing last year, and basic common sense tells you that you should manage cycles by saving when times are good and borrowing when times are bad.

Last year was good in economic terms, but that didn’t stop the government from borrowing and borrowing some more. I don’t think I need to spell out what they used the money for. It certainly wasn’t spent on public safety.

Think of Doña Petra out in El Pilar, Estado Sucre, with her ten kids, no husband, no job, and living in an adobe hut. Doña Petra’s family, all eleven of them, owe China roughly $9,000 … just because Chávez wanted to be re-elected comfortably.

I wonder how much his sure-to-be-over-the-top funeral is going to cost her.


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  1. This is a story that has to be told to the electorate in a way that should allow even the most devout Chavistas to understand how poorly the Chavez government is managing the country and leaving a mess for future generations. I remember how effective Ross Perot was in presenting financial information to average people who would not otherwise have understood. If the opposition was to adopt a similar strategy, perhaps a significant number of voters would change sides, assuming of course that an opposition government would do a better job of running the country. What do you think?

    • I Think you have zero idea exept what you have been programmed to write by the imperialist media.

      Your main point is that Chavez will leave a disaster for future generations? You do not explain why.

      It probably has to do with debt, correct? Venezuela0s external debt is about US$80 billion and represents around 20% of GDP. Comapre this to Japan – around 210%, US 105% the whole of Europe on average is around 80%. And you have the idiocy to think that a 20% debt to GDP ratio will leeave a chaos for futire generations?

      perhaos you should look at other countries and draw some sort of commonsense conclusion.

      The level of oposition analysis is like dealing with pre-school kids logic. Repeat after me………1 x 2= 2, 2 x 2 = 4 etc. etc etc.

      • Pardon my naivete! However, my concern stands. What is Venezuela getting for the huge amounts of money this government has been borrowing? Could future revenues be invested in sustainable projects instead of paying down debt that has been incurred buying armaments, as one example. Another would be the money that has been gifted or simply thrown away garnering international support for a political project that has delivered questionable benefits to the Venezuelan people. An increase in debt from $80 billion to $100 billion in one year???? Show me the accounts so I feel better about what is happening.

      • Wrong, Venezuela’s deficit is about 20% of adjusted GDP, its debt (including that of PDVSA) is over 80% of GDP at an interest rate above that of most US credit card holders. This year alone Venezuela increased its debt by about 30% of GDP.

        • And GDP is calculated at 4.3….guess what would happen at a realistic rate. And yes Japan is screwed, we are starting to watch that horror movie now, just like this one, and they only pay 0.4%, so the cost is significantly higher for Venezuela.

          • For Japan’s total interest payments to be equal to Venezuela’s, Japan would need to have a debt of about 2,700% of GDP (assuming rates remained constant). Of course Arturo is so clueless, he thinks only of the total debt and ignores the size of interest payments.

      • Looking to other countries to draw any sort of conclusions would be the worst mistake of your life. Chavez has nothing good for the poor and middle class people of Venezuela save the drug dealers and pimps!

  2. Once and again, I find myself arguing with friends and colleagues about the Chavez phenomenon. For every single argument my answer is the same:
    Ordinary Venezuelans have been “empowered” in the last 13 years. My answer: oil was at $11, now $100.
    Living standards have improved for a majority of Venezuelans. My answer: oil was at $11, now $100.
    Millions of people have gotten access to healthcare for the first time. My answer: oil was at $11, now $100.
    College enrollment has doubled in the last 10 years. My answer: oil was at $11, now $100.
    Chavez is an extremely able politician. My answer: oil was at $11, now $100.

    No surprise he gets elected over and over again. Revenues have increased tenfold (not counting new debt), living standards two, maybe threefold? Well, he should have won by a 90-10 landslide. Right?

    • He should be winning elections with 60 or 70 percent of the vote, compared with other South American presidents he is doing very poorly.

    • CPC: Most people don’t understand orders of magnitude changes. In Economics, they are rare and yes, they explain everything. Good comment, don’t tell a Chavista, numbers are irrelevant to them.

    • CPC, I totally agree with you and also argue about it saying that oil prices being what they are, even Mickey Mouse or Donald Duck could run this country, Chavez is a distant third.

  3. Venezuela right now is like a marriage where the wife, let’s call her Populus, has access only to some of her husband’s, let’s call him Hugo, financial information. It’s as though she has the password for his Credit Card, but she doesn’t have access to his savings account (at Fonden Bank).

    Populus has grown accustomed to a certain lifestyle, and Hugo has made all kinds of promises that that lifestyle is sustainable. Populus knows Hugo had a run of good luck in recent years, and made big windfalls out of his backyard mining business, but since Hugo won’t show her the statements for his savings account, she has no way of knowing how much of the windfall he saved, how much he has since spent, or how much is left on hand. Hugo sporadically brags about the lovely gifts he’s bought her with some of the savings from that account at Fonden Bank, but when Populus asks to see the statements he clams up.

    In fairness, she doesn’t ask very often. She’s prepared not to know. As long as her lifestyle is sustained, she’s more or less ok with being in the dark.

    Sure there are some signs that things may not be all that rosy. Those credit card statements are coming back fatter and fatter each month. Insofar as Populus worries about that, which isn’t actually very far at all, she can’t exactly figure it out. She knows he pays 12% interest on that credit card debt, and only gets 2 or 3% interest on his savings out of Fonden Bank. But, again, she doesn’t ask too many questions, because the times are good. And she’s minded to trust him, because she loves him so very very much.

    And why shouldn’t she? Life is great! They have this thing they do in their family where once every six-years they renew their vows and boy, Hugo really makes it rain at that time and he’s just wonderful.

    The question here is, is Populus’s lifestyle really sustainable? The obvious answer is that until we see those Fonden Bank statements and evaluate the rate at which their getting drawn down, and match those up with the rate of new debt on the credit card statements, we have no real way of assessing that. We can try all kinds of work-arounds to try to infer how much money is probably left in the Savings Account now, but that is a poor, poor substitute to actually seeing the account statement.

    That doesn’t really become an issue because Populus doesn’t know much about finance or interest rates or any of that, and she really doesn’t want to be bothered with the details. Hugo tells her their lifestyle is rock solid, and that’s that as far as she’s concerned.

    Now, here’s the rub: Hugo falls ill. Very very ill. And he leaves all his assets to Populus in a trust fund. Populus is the beneficiary, but Mr. Mature is the trustee. Populus has heard Hugo speak effusively about how wonderful Mr. Mature is over many years, so she’s somewhat positively pre-disposed to him. But she’s sure as hell not in love with him, and isn’t anywhere near as viscerally willing to trust him blindly as she was to trust Hugo. Besides, Hugo, when he was in his prime, assured her again and again that they’d turned a corner, that things would be fine and, again, as far as she’s concerned, his word is gold.

    Now, my question is: what happens if Hugo passes away and, say, 6 months or a year afterwards, Mr. Mature comes to Populus trying to explain, “erm, well, turns out the bank account was mostly gone by the time he passed, and the credit card is totally maxed out, and the Trust really can’t afford the next payment on your BMW, so, erm…so sorry.”

    I suggest Populus will throw an almighty tantrum at that point. She will smash the china, she will kick and scream. She will not take this lying down. Coming from Hugo, she might have. Coming from a different trustee after she had divorced Hugo of her own free will, she might have. But coming from some random suit she has no affective connection with just months after his tragic death? It will feel like a horrible, horrible betrayal to her. And China will be smashed.

    • That’s funny, cos I clearly remember the opposition telling us that Mrs Populus was a battered wife who was getting poorer and poorer each year, but was too scared to file for divorce lest husband beat her up. Now you’re telling us she was always in love and has been living it up ever since the wedding.

      • Yes, in Toro’s own words Mrs Populus has long been held hostage… but we shouldn’t expect any of this to have any consistency. It is, after all… FICTION!

    • >>> … I suggest Populus will throw an almighty tantrum at that point. She will smash the china, she will kick and scream. She will not take this lying down. Coming from Hugo, she might have.

  4. Would you deny a dying man a last wish, JC? That was just for getting him reelected. Come on! Have a heart! Let’s have our youths killed on the streets and our hopes of getting out of poverty smashed so he can have his wish. He entertained, nay, he produced catharsis for the Venezuelan people for 14 years! Have a f***ing heart!

    Now seriously, the answer to what’s wrong with this picture that allowed this unscrupulous but entertaining GorillaPran and his incredibly boring understudies to take over Venezuela is mundane enough, and predates him by a long time: We, Venezuelans have a Petrostate and don’t know anything else.

  5. Wow Arturo, now I am really confused!!! You seemed to be pretty sure of yourself in your post, especially when you concluded that “The level of oposition analysis is like dealing with pre-school kids logic.” However, NorskeDiv obviously disagrees with you. CPC makes some good points related to the amount of money the Chavez government has had to play with over the years. And, Sr. Toro makes some excellent points that even pre-school kids can understand about why we should be concerned about where all that money has gone.

    Like Toro’s Populus, I would dearly like to trust what the government is telling us and not worry about what they are not telling us; however, the government would make it so much easier for me and my pre-school friends to understand if they would just show us the accounting!

    In the meantime, please help me come to a “commonsense conclusion” about the points Juan raised in the first place.

  6. All the comments are passe’. Chavez is basically brain dead and being kept alive on a respirator. Is that how you want to recognized in the international community? You worshipping a dead man, thank God his demise has precipitated the total ruination of Venezuela.

  7. Arturo, please reply otherwise I won’t be able to stop thinking about this issue.

    Calvin and Get a Clue, would you please give Arturo a hand. I am sure you are bottomless pits of economic knowledge and that your trite posts are no indication of how objective and analytical you are in real life!

    Where is Cort???? He should be able to add something to this discussion!


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