A primer on Ramir-ese

I'm serious. And I have a chart to prove it.
I’m serious. And I have a chart to prove it.

Venezuela devalued its currency today – or at least that is what we gather from Economy Minister, President of PDVSA, VP of the ruling PSUV party, and Energy Minister (yes, he has four jobs … that we know of) Rafael Ramírez.

Here is what he actually said.

Here is what he actually meant:

“I know, I know – the economy is in the dumps, and the whole SICAD / CADIVI thing is a scam. But we need to keep the scam going, at least for a little while. It is simply too easy, too irresistible to “sell” dollars for food and medicine at BsF 6.3, “sell” them for other stuff at BsF 11 or something, and “sell” them in the black market 78, which is what they’re going for today. In fact, you can buy at 6.3, sell at 11, buy them back at 11, and sell them at the black market. And me and my pals get to keep a fee every time you buy or sell. You think we’re going to give that up so easily? So yes, today was a devaluation, but you will never catch me saying it. The 6.3 dollar lives on, because it’s hush money for the revolution’s insiders. It will live on in the Panamanian bank accounts of the fake companies pretending to import medicine and food. It will live on in the supermarket shelves of Maicao and Cúcuta, where subsidized Venezuelan products go to die. And it will live on in the Miami real estate holdings of the military – after all, the busier they are trying to get their hands on cheap dollars, the less time they have to plot. We all know this won’t solve our problems. This will only fuel inflation, and a future devaluation will obviously be necessary. And it certainly won’t do away with the raspaítos that so many of you find so enticing – better to keep you searching for a place to raspar in Lima or Madrid than to have you in the streets protesting. But just like today, we won’t call it a devaluation. Because socialists like us never devalue. We ‘adjust imbalances in the currency market to do away with evil capitalist speculators’ … jeje.”

PS.- Here’s Daniel’s take.

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  1. Isn’t this rather closing the barn door after the horses have bolted and bred for generations in the wild, they has long since gone moldy, the barn burned down and a new high rise was built in its place, but in which the invasoras took over?

    Once again, we see a prime example of GWAC – “Governance without a clue”.

  2. There is method in the madness–Venezuela can continue to boast, at 6.30, one of the highest minimum wages/GDP’s/etc.in Latin America, U.S. firms operating in Venezuela can continue to pretend there repressed Bs. dividends of the past many years are really worth something, and Arturo can continue to gloat on this Blog about the wonderful economic accomplishments of the Robolucion.

  3. What if…and this is wholly hypothetical… the government decided to test the “speculators”. Just announce that they were devaluing the bolivar to 80/$1. Watch whatever chaos might ensue. Then announce two days later that they changed their mind and were reverting to the status quo, which was their intention the entire time.

    Beyond companies invested in Venezuela and bond holders, would anyone really, really notice?

    Completely arbitrary in decision making? Check. Nonsensical? Check. Messes with the normal economy? Check. Irrational? Check.

    What is to stop them from doing this? Unless, you know, it completely undermines the whole “economic war” they so highly tout.

  4. This is how things work. They announce new policies that benefit only them. The chavistas (who also get hit by the poor policies like all of us) defend them; and they get the last laugh, because they keep winning elections.

  5. don’t think your military retired and active are investing in droves in south florida. You have a very skewed picture of SFLA. But they are here don’t get me wrong. Their friends the strawmen and whatnot. Those big military guys are elsewhere in another country.

  6. I have been suprised at the amount of investments in dollars and euros. The smart ones are not in those currencies. But it’s moot when your government does not do shit (USA)

  7. Hush little baby, don’t say a word,
    Papa’s gonna buy you a mockingbird.

    And if that mockingbird won’t sing,
    Papa’s gonna buy you a diamond ring.

    And if that diamond ring turns to brass,
    Papa’s gonna buy you a looking glass.

    And if that looking glass gets broke,
    Papa’s gonna buy you a billy goat.

    And if that billy goat won’t pull,
    Papa’s gonna buy you a cart and bull.

    And if that cart and bull turn over,
    Papa’s gonna buy you a dog named Rover.

    And if that dog named Rover won’t bark,
    Papa’s gonna buy you a horse and cart.

    And if that horse and cart fall down,
    You’ll still be the SICAD’s sweetest little baby in town!

    Mother Goose

  8. I’ve made it a New Year’s resolution to try and be less negative with my posts, and I have to admit I am failing miserably.

    • If the cretins in charge make it their business to breed bad news every year, there’s pretty much nothing you can do, Juan. That’s like being a Major Crimes officer in Caracas and resolving to make less macabre crime reports.

  9. A few comments conjectures:
    1. now f, currency can be obtained directly from ex cadivi or thru sicad auctions which auctions to be funded in part by govt funds ( max $11.400 M for 2014) and by private parties wanting to sell their f currency through the auction.
    2, the exchange rate for part of whats sold through ex cadivi will be based on the sicad rate (which different each week) . for example travelers purchases.
    3. govt will decide how the f currency sold thru each system will be alloted among different types of buyers and in what amounts ( the import plan) .
    4. Most of the f currency needs of private parties will be channeled thru the sicad auctions while most of the govt imports will be chaneled through ex cadivi . Because the amount alloted sicad auctions by the govt is so low ( 11.400 M) most private f currency requirements will not be met, forcing private parties to go to other much more expensive sources, if only to keep in business.
    5. govt imports include a lot of overpriced imports from china and other places . ( overprices from corrupt dealings or negligent contracting by govt or pdvsa officials ) much of it will go to meet needs of ongoing projects with large cost over runs (also from incompetent management) .
    6. F currency exchange rate becomes an administered rate, which govt changes at any time depending on its availabilities and the priority of the needs for such F currency to buy esssential imports and maintain prices as much as possible inside a comfort zone minimizing adverse political impact on govt popularity .
    7. Extra bs from new f currency rates should ease financial pressure on Pdvsa and thus printing of money by BCV but only to the extent inflation fanned by continued printing and hiike in exchange rates dont eat up the new bs income.
    8. Depenalization of law of Ilicitos Cambiarios is probably meant to encourage private parties holding US$ to bring them to Venezuela for sale through Sicad, however because the amount of f currency the govt is likely to sell through ex cadivi and sicad is insufficient to meet demand , most likely there will remain a healthy demand for them (at higher prices) at an alternative market which these private parties will prefer to Sicad.
    7. It is possible that the govt will take the advantage of the high prices in the alternative market to sell part of its own f currency in that market to get more bs. Its done it before, can do it again.
    8. That probably explains why the functioning of the alternative market is tolerated . The regime may be profiting from its existence and doesnt want it to dissppear (while maintaining the fachade position that it only allows a govt controlled market to operate) .

    • In reality, with an estimated real demand of $60-70 bill. of imports, including corruption/over-pricing, and only maybe $30-40 bill max available for imports, versus maybe a combined $20-30 bill.really available/planned for combined Cadivi/Sicad, the Govt. must tolerate/cannot substantively affect the alternative rate , except for a very short term, BTW, is your “F” (currency) a 7-letter word–ending in “ing”?

  10. I love the understatement in the Bloomberg article – the word “discretionary” sums up everything you need to know about this regime.

  11. Sigh… Capriles: I wouldn’t have devalued the currency (http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/yo-no-hubiese-devaluado-dice-capriles-radonski.aspx)

    So he wouldn’t have devalued
    He wouldn’t raise gas prices
    He wouldn’t ration gas (chip)
    He wouldn’t scrap any social program
    He wouldn’t fire any state employee
    He wouldn’t privatize any state company

    Gee, then what’s the problem with the economy, Capriles?

    The only economic policy he seems to criticize is discounting oil in exchange for diplomatic clout (Petrocaribe) and subsidizing Cuba.


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