An Allegory of Superior (and Inferior) Organs

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1511475-20-dollar-bill-close-upThe Leader was cross. His flagship policy, the one he’d staked his reputation on, the one he’d learned from his revered predecessor, the Timeless One, could not be made to work. From the Timeless One he had learned that this policy, above all others, would break the cold grip of capitalism, delivering the workers’ nirvana they had dreamed of for so long.

It consisted of selling people $20-bills for ten bucks.

Try as they might, they just could not keep those shelves stocked. The long suffering pueblo would queue up for hours on end for a chance at the revolution’s promise, but more often than not their long wait was rewarded with an empty shelf. Stores did what they could to try to stretch out the supply, posting little notices reading “$20-bills, max 2 per customer. Price = $10.” And the government made titanic efforts to bring in more and more $20-bills, flooding the market at huge expense. And yet, try as they might, they just couldn’t seem to keep enough $20-bills on hand to sell to people who turned up wanting to buy them!

The problem vexed the Leader. Stumped him. Yet, deep down, he knew what was really going on.

“Saboteurs!” he thought, “wreckers and counter-revolutionaries everywhere! They’ve virtually declared economic war on our revolution!”

And so the outlines of a plan began to form, dimly, in his head.

“If only we could crack down on them…them, the evil capitalist hoarders who wage war on our revolution, buying up as many $20-bills for ten bucks as they can lay their grubby little paws on even if they don’t need them!”

“Yes,” the leader thought, “that’s what it will take…an iron hand against this scum! Mobilizing all the resources of the state to break the back of this shadowy conspiracy determined to bring down our Revolution. We need to centralize that effort right here in the Presidency, with me at the helm! We must smash their fascist conspiracy mercilessly! Only then will we be able to make sure everyone has access to a steady, predictable supply of $20-bills at a stable, revolutionary, solidary price of ten bucks each! Then the $20-bills will never run out!”

“Get me the president of Colombia!” he barked to an assistant, his mind swimming with possibilities.

“Once we’ve broken the back of the  conspiracy that’s been foiling us at every turn,” he thought, “we’ll need plenty of fresh new $20-bills to keep our market supplied. One never likes to do business with the reactionaries, but at times like this it can’t be helped.”

The edecán handed him the phone.

“Juan Manuel, good news! Now that we’re getting tough on the saboteurs, we’re going to need plenty of those lovely $20-bills you seem to have in Colombia. Send me a shipment, $600 million worth, post haste!

“That,” he thought, “that will show the conspirators!”

1 COMMENT

  1. What’s hilarious and sad at the same time is that this is how Maduro actually talks in public (“If only we could crack down on them…them, the evil capitalist hoarders who wage war on our revolution…”). Venezuela’s like a cheap pulp thriller.

    • Cognitive events within the Leader’s cerebrum might alternately be described as “uncontrolled flaring of the pars ruber charring neurons of the counterrevolutionary pathway”

  2. One of the net consequences of this insanity is that I am unable to purchase a ticket to Maracaibo to visit family. Why? Because one of the ways to get the deal above is to buy airline tickets as a way of accessing preferential travel dollars (CC has posted on this in past).

    Slightly off-topic: does anybody have experience flying stand-by?

    • A couple of twenty dollar bills discretely placed in your passport when you hand your documents over to the agent has a remarkable lubricating effect on the system.

  3. FT overwhelms us with the humour of his depiction of Maduros errant thought processes , while at the same time hitting home hard on the absurdity of the regimes financial policies .!! great piece !! Definitiely to be included in the next volume of “Blogging the Revolution” (Part II) .

    Maduro by saying that the regime is buying US$ 600 Million in food products from Colombia is openly admitting that the food shortage problems are very serious and are not going to go away any time soon. Its like saying “we are incapable of meeting Venezuelans . demand for food products with our internal production but nonetheless will do everything to keep the shelves stocked” .

    What happened to all the loudly touted “Food Sovereingty” proyects ?? clearly they ve failed !!
    Wonder what the Colombian producers will think of supplying Venezuela again after having gone through an experience where their payments were never met through sheer govt cussedness. The price will have to be very good to deal with the risk that is involved in selling to the Venezuelan govt or industries . Look at the recent declarations of the president of Panama “we are not being paid “one real” of what Venezuelan importers owe us”.

    The govt has created for itself a financial credibility problem with foreing suppliers of goods ans services which now makes it difficult for the regime to entice them to sell to Venezuela. Bondholders are treated all right but everybody else is threatened with the possibility of seeing their bills and charges ignored or posponed indefenitely .

    We are coming fast to a point where each Venezuelan import purchase will have to be securitized in advance before any deliveries are made to this country .

  4. How many of the products coming from Columbia will be “redirected” back across the Columbia border and sold to VZ over and over again?

    • Very few, I think. From British Columbia very unlikely. From the District of Columbia just a bit.

      Most products will go to the Republic of Colombia (aka as Colombia in English).

      • Firstly, thanks Kepler! You’ll get a gift courtesy of all Colombians in the mail.

        Second, I’ve never heard of back an forth smuggling. Usually it goes like this:
        -Venezuela buys $20 dollar bills and puts them in the market for $10
        -Smugglers bring them across to Cúcuta or Maicao or whatever and sell them for $15 (guaranteed to make $5).
        -People (both Colombians and Venezuelans who couldn’t find any due to scarcity) buy them for $15.

        Also, let’s add $1 somewhere for “lubricación de los procedimientos aduaneros”. You want an accurate exchange rate, ask the pimpineros how much they have to pay the GN in bribes in either vef or cop/usd)

        • Good stuff gentlemen! As a clarification…I wasn’t suggesting back and forth smuggling. I was envisioning a scenario where a person from the Republic of Columbia (not to be confused with folks from British Columbia, or the District of Columbia) openly sells his $15 bushel of corn to the Venezuela government for $20. The VZ government then sells that bushel of corn for $10. Said bushel of corn is then transported back to Columbia and sold to the VZ government again….and again. I was just wondering if something like this is likely to occur until VZ has spent their $600 million.

          • you’re just not picking up on the spelling tut-tut, are you?

            I have it on good authority that something very much like the circular trade you describe happened with Brazilian rice imports in 2010-2011 – gov’t paid full international price for rice imports from Brazil, brought it in, tried to sell it under-cost, most of it never even made it off the trucks on its way to Cúcuta where it was sold – again – at international price. Where’d the money go? Some fat Guardia Nacional fuck made off with the price gap, apparently.

          • So Venezuelan subsidies need to satisfy the Brazilian market as well before Venezuelans themselves can actually enjoy the subsidies…

          • Gisela’s husband, sorry. What they’re trying to tell you, somewhat humorously, is that the Republic of ColOmbia is spelled with two “o”s, not an “o” and a “u”. They try…

        • What about Culumbia?
          http://lmo.wikipedia.org/wiki/Culumbia

          On a more serious note, subsidizing goods can work as Mercal is trying to do, but you need to clear 100% of demand, otherwise it’s a waste of time. Providing anything less than 100% of demand simply results in a black market where the normal price is paid, and other people trade their time and effort purchasing up whatever limited supply is available and selling it at the market clearing price. This same mechanism is why black Friday sales in the US do not result in enduring price cuts.

          Venezuela is doubly screwed in its efforts, since Colombia lies right next door so any subsidy efforts need to satisfy Colombian demand as well.

  5. About two years ago I saw the interview of the head of the Colombian Meat Marketers Association on colombian TV . He explained how Chavez decision to stop imports from Colombia created a big problem for them . First they had been selling their meat to Venezuela at a price much higher than the price that was obtainable in Colombia . This had two effects , first it caused the meat producers costs to rise steeply ( you dont control your costs if your sale price always allows you a big profit) and 2nd the meat consumption in Colombia fell as local prices rose to meet the price of meat exports to Venezuela making meat more expensive than Colombians could pay . When Chavez closed the border they couldnt go back to selling their meat on the local market because the price they could charge was too low to cover their costs of producing it , and .. they could no longer compete with Brazilian meat exporters who had kept their costs low . They were in a jam . What they tried doing was to increase the consumption of meat in Colombia by lowering their price a bit and selling it through large supermarket chains . Things got better but at the time of the interview they were not out of the woods yet. This experience teaches us that having too much money makes you careless of the prices you pay ( Venezuela ) and the costs you incurr in your production process (Colombia )

    • Thanks for the story. It’s horrible, though.

      Venezuelans are petro-addicts. ColOmbians have become now Veneco-addicts.

      I hope people from Columbia and Columbia never have to go through what people from Colombia have to go through, just like I hope Venetians don’t have to go through what Venezuelans are going through.

        • I’ve never quite understood why it’s not Colonbia… and to the benefit of the gringos who insist on calling Colombia Columbia, the english translation is clearly that. Just as calling Deutschland Germany should not be offensive to germans, etc etc. I believe the USA was at some point almost named the US of Columbia, to honor the ancestral discoverer.

          • Sorry. Official English spelling of the name of the country south of Panama is “Colombia”. No excuses guys. If someone insisted on mis-spelling your name because “well, that’s how I spell it.”, you would be irritated.

            I once spent a few months in a town called Wilkes Barre in PA. Now, by all the rules I know of the English language, the “Barre” should be pronounced like “Bar”. However the locals there pronounce it like “Berry”. When I (naively and stupidly) suggested maybe they were wrong about how to pronounce the name of their town, they became righteously and justifiably indignant. I was wrong then to suggest that they had it wrong, and you are wrong now for the same reason.

          • Sure, but the point is that you are in no-man (or no-woman’s) land here on the net, and they’ve selected english as lingua franca on this site. So although the *official* name might be so-and-so, in *english* using Columbia is easily understood as a (possibly confusing) synonym for Colombia. Point number two, a rose by any name yadayada. Point number tres, lets be honest, it’s more a thing with gringo naming conventions often being plain annoying for those south of the border- take the “america” debate which flares up here occasionally. But if we start singling out people every time they make a spelling error or misnomer because it offends us, we’re just wasting time away from the real debate, like right now!!

          • Gentlemen, I apologize for my spelling error. I will do my best to make sure it doesn’t happen again. As a gringo that married a venezuelana, I have an obligation to be respectful and get things correct if I am going to “join the fray.”

          • Its comforting to know that people in the Iunaited Esteits are not finicky about the way foreigners spell the name of their country , so why should Colombians mind ??

          • We are not even talking about pronunciation. It is the the only form there is for that country in the native language of said speaker. And it’s not like it is a tiny island in Oceania or a country next to Burundi.
            There are like half a million Colombians in the United States.

  6. The govt is concerned with the rapid rise in the value of the black USD vs its official value , this is partially the result of a sharp drop in the amount of disposable USD income it recieves from oil exports and the rising cost of maintaining the many subsidies it must fund .

    Another often overlooked cause however lies in the BCV’s current policy of printing money to help Pdvsa cover its rising financial deficits , something which not only has an inflationary impact on the price of consummer goods but also on the value of the black USD which after all has become just another hard to find commodity for individuals and companies in the private sector !!

    The BCV by engaging in money printing is feeding the crazed rise in the value of the black USD and reinforcing a retrofeedback process that fuels the inflationary processes of the economy to gargantuan propportions .Venezuela’s economy is now riding a run away train which no one can stop without causing a derailment . Maduro is the Locomotive master in that train , no wonder he has started to allucinate !!. .

    • Apparently in October, the new mechanism is going to be launched:
      http://www.el-nacional.com/economia/Mercado-iniciara-operaciones-finales-octubre_0_263373968.html
      For me, the money quote is this:
      “Aunque hay la intención de actuar con celeridad -por el fracaso del Sistema Complementario de Administración de Divisas- en el Gabinete Económico continúan las diferencias relacionadas con el funcionamiento del nuevo mecanismo.

      Se supo que el ala radical del Gobierno se niega incluso a que el mercado secundario que se anunciará en los próximos días y en el que Pdvsa podrá participar se llame “de permuta”, pues sería reconocer –según señalan- el fracaso del cierre de las casas de bolsa y sociedades de corretaje en 2010. De allí que el Ministerio de Finanzas esté pensando en un nuevo nombre para denominar las operaciones de compraventa de dólares que se realicen.”

      This people is facing a major economic crisis and hyperinflation and they center their discussion on semantics.

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