He knows how bad it is

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GiordaniA few days ago, Spanish daily ABC published an article about Venezuela’s weak position on external assets, basically arguing that the country does not have enough currency to pay for the imports it seriously needs. ABC somehow got access to a weekly report from the Ministerio del Poder Popular para la Planficación (where Jorge Giordani remains as titular head) that tracks a relatively wide selection of economic indicators.

Beside the information about falling foreign-exchange reserves, and the fact that currency allocations from Cadivi do not cover imports, it’s interesting to check the original document where the information came from.

From all the information available, our personal favorites are (in order of appearance):

  • The fall in annualized production of state-owned cement and steel industries. This explains, at least partially, the results recently published by BCV, showing the growth rate in the construction industry falling from 16.6% in 2012, to -2.3% in 2013.
  • Venezuela’s country risk is steadily above Argentina’s since September, 2013. So, huge oil reserves are not enough to make markets trust you more than they trust a country that defaulted in 2001.
  • The minimum wage measured in real terms in 2014 is pretty much the same as it was in 1991. In constant BsF from 2007, the minimum wage is now BsF 628, and it was BsF 632 in 1991. The top real minimum wage was BsF 955, way back in 1987.
  • Imports fell 11% from US$ 59.3 billion in 2012 to US$ 53.0 billion in 2013. This is interesting to note, just because BCV has not yet published the Balance of Payments’ results for the last trimester of the 2013.
  • Alleged Cadivi allocations fell from US$ 56.2 billion in 2012 to US$ 51.3 billion in 2013. We say “alleged”, because that amount actually corresponds to total currency expenses from the BCV. It’s not just Cadivi, but also Aladi, Sucre, Sicad, external debt payments, Fonden payments and everything else (you can check it).
  • Oil production in 2013 was 2.8 million barrels per day, below the 2.9 million barrels reported for 2012, and well below the 3.5 million barrels we were supposed to reach. It’s curious that since September 2013, the oil ministry apparently stopped sending first-hand data for the report, and now the source indicated for Venezuela’s oil production data is OPEC’s Oil Market Report.
  • Car sales are LOW. Annualized car sales fell 86% in March of2014. In the 1st trimester 2014, sales reached 1,213 units, one fourth of the 12,876 units sold in the 1st trimester of 2003, when a general strike had all but halted the Venezuelan economy.

There’s more to see. Check it out here.

1 COMMENT

  1. It was a good long run of selling people a garbage revolution they knew was garbage. These guys have their tickets bought and their bags packed. The tricky part is timing the exit late, when the revolutionary pillage is at its peak, but not too late…

    • Canucklehead,
      I agree. Maduro has realized the end is nearing and moved the limits on government actions. That is a logical reason that he is using force and violating human rights to maintain power. Maduro has no long run ambitions about leading Venezuela. Just take as much as he and his cronies can get quickly, then move to a villa in Cuba surrounded by Chavez and Fidel statues.

      How much of the economic disaster in Venezuela is caused by massive theft by government officials?
      My guess is that 1/3 of all petroleum income goes secretly into private pockets.

      • I’m curious. I read recently that they figure Iraq is 80/20…80% siphoned off. I don’t think they could keep the bureaucracy in Venezuela running with that level of corruption, but 1/3 seems very plausible. Recent experience at the regional level indicates that when the thing implodes, they are going to strip the country bare on the way out. Down to the last laptop.

    • That’s what happened in Nicaragua when the Sandinistas lost the 1990 election. It was called “la pinata” – every government office was stripped bare, every bit of movable property was taken, every cent in government accounts vanished.

  2. Problem is, ABC is… well, a government propaganda rag over here (I live in Spain).

    Which doesnt mean the report is false. But will diminish the reception of it.

    Amazingly, I have friends over here that are extremelly worried about the government “take over” of all the big newspapers and … mention the critical line against Venezuela “revolution” in El País as proof.

    Somehow people dont realize the enemy of my enemy can be another enemy, even after all these years.

    • Take over of El País? Están locos. But then again: there is yet a new lefty party in Spain now, a party created by a guy who is professor of politics and gets paid by the Venezuelan regime to go to Venezuela and give talks about how bad the situation is in Spain (PODEMOS party)

      • El País is now much, much more friendly to the PP government, and publishes more or less a less strident but similar set of “opinions” in the way of “The Crisis Is Over”.

        That has something to do with being almost broke, being bought by some US investors, and getting a (lesser) part of the institutional propaganda pie.

        It is true the press over here is being slowly controlled, in subtle and indirect ways. But of course, if, say, then El País reports on the crude and total control of the media by the chavistas, that doesnt make it false.

        The irony of it all is that the right wing government here would love it very much to be able to pull stuff like the chavistas in Venezuela, but they have to do it in smaller, subtle ways. But somehow this is not understood by almost anybody and the issue of Venezuela is just another political banner to keep the ritual reenacting of the Civil War, in which you HAVE to be critical if you are on the right and supportive if you are on the left, no room for having your own brain working and your own opinion.

      • And Podemos… is another classical example.They nail a lot of the critics against the situation and how the traditional parties have managed to screw the country and its people very badly. That gives them a bit of cache with people fed up with the crisis and the constant lying about “brotes verdes”.

        Then they go to EU elections with a program that includes the nationalization of all strategic industries :-/

        So another Diagnostics 1 – Solutions 0 match in the Marxist Political League.

  3. Abadi,

    The best portray I have read about Giordani is to be found in Carrol’s book…even if the book was about Chávez, there were quite a lot of interesting details about Giordani there, how he keeps power. And yet: I still can’t imagine what that guy really thinks, what he really believes in…and that is key in order to understand how far he will push his wrecked policies

    • Kepler,

      When I think of the Giordani types, I think of some of my lefty uncles that were young in the 60s. They are comunistas trasnochados – barbudos loving useful idiots, they are not willing to give up a life of religious belief after 50 years of commitment, it is too painful to admit that they were wrong. Besides that, they are usually smart and agreeable people. They really are 🙂

      I guess Chavismo is the fusion of Comunistas trasnochados with the myth “Venezuela es rica porque tiene petroleo” (Venezuela is rich because it has oil), so put it together, and they think they can get it communism right.

      Going forward, as these guys ‘se enpatunflan’ (retire), maybe Venezuela will be immunized from such destructive ideas.

  4. “2014, sales reached 1,213 units, one fourth of the 12,876 units sold in the 1st trimester of 2003” …. this should actually more like one tenth

  5. Well, they want to be like Cuba and they are getting there. Bankrupt economy, police state, refugees fleeing across the border in droves, and all the synchophants on the government dole worshiping dead El Lider while the colonial master, Cuba, siphons off more and more of their money.

  6. So the FEM after all is said and done only has $3MM to its name !! This is just pathetic. I can only think that the destruction of the economy that we continue to see is exactly what they want. Any other person would have already made some changes, No?

  7. All anyone needs to know about Giordani is that he published an academic paper praising North Korea for it’s self sufficiency in 1993. As you know, millions of people literally starved to death in North Korea between 93-97.

    He’s so utterly blinded by his outdated and discredited ideology that one can’t understand how truly destroyed the Venezuela economy is without knowing his background. To a muddled economic thinker and megalomaniac like Chavez, he sounded like the man for the job.

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