It’s September 27, and banks in Mérida are limiting people to Bs.10,000 in withdrawals at the window. ATMs are even more restricted  just a week ago, you had a Bs.20,000 withdrawal limit. At the time of this writing, a dollar buys you Bs.27,051. That means Bs.10,000 is worth about 35 US cents: that’s all you’re allowed to take from your bank account on any given day.

While the story has been explained elsewhere by many economists (including the very entertaining Daniel Urdaneta), it’s worth recalling that last December, President Maduro scared everyone into depositing the highest denomination bill at the time (the 100 bolívares note) into their bank accounts, saying he was going to pull it out of circulation. This was supposed to stop “speculation” (spoiler: it didn’t), with Maduro claiming that shadowy elements were “trying to sabotage Venezuela’s economy at the behest of the U.S. Treasury,” by siphoning out bolivars to warehouses abroad. How this would damage the economy, and why would anyone want to stockpile worthless currency, remains unexplained to this day.

Now, a year later, the 100 bolívares note is still in circulation, but Venezuelans no longer have cash stacked up around the house of course, it’s all in the banks. Their money has been kidnapped by the dictator, and they can only get it out thirty-five cents at a time.

“I need money to go home,” a man in an ATM line tells us. “The jeep to my house charges Bs.1,000 at daytime, Bs.3,000 at night. I have two kids and they already started school. They need money for the bus, for breakfast and maybe they have an emergency. How can I let them outside without money? And this machine will only give me Bs.10,000.”

In Caracas, you have to go out and hit up ATMs one after another, with some of them dry for weeks. Lines at cash machines are sometimes longer than those for bread, and people wait in them so they can stand in other long lines, to get increasingly scarce food. The scarcity rate is somewhere around 80%, which means that eight out of ten items on your shopping list will be missing from the shelves. And so when people stand for hours to get those two items, they only have $.35 to pay with.

The government doesn’t have the money to print money. That’s right, the Bolivarian government is so broke, it can’t pay to have its money printed.

But most Venezuelans might not have more than a few thousand bolívares in the bank, anyway. The man described in this article works as a motorcycle messenger, making the equivalent of $9 a month and that was back when that story came out (August 23, 2017). Today, his monthly Bs.150,000 is worth about $5.55, depreciating by the minute. Cut nearly in half in a month of Venezuelan inflation.

“I live in Valles del Tuy (suburbs at the west of Caracas), I need money for my ride, and I have to wait in line for two hours here,” a woman tells us inside a bank office. “I went to three banks yesterday. They don’t have enough cash and what they have is in smaller bills. You have to wait for someone to make a deposit.”

Why would a government limit the amount of money you can withdraw daily from the bank? Simple: the government doesn’t have the money to print money. That’s right, the Bolivarian government is so broke, it can’t pay to have its money printed and shipped in as it did last year. Of course, this comes after the mismanagement of a historic oil boom (2004-2014), corruption, graft, embezzlement, and all the other crimes the little Bolivarian mafia engaged in to bleed the country dry.

And that takes us to the only option for cash if you’re desperate: the black market.

There comes the “avance de efectivo” (literal translation: cash advance), which consists in someone giving you money and charging you a percentage after you pay with your debit card. Yes: you pay to get money.

Think it couldn’t get any worse? Think twice.

Certain stores and street kiosks used to have that option, but it has turned shady after the government admitted that it ni lava ni presta la batea. The process today for an avance feels like you’re trying to score crack: after a row of rejections, you will eventually reach someone willing to help, “but not right now”. You wait twenty, thirty minutes, and return when the kiosk is empty. Then you barter with the clerk; say you need Bs.30,000 and he will only give you half, charging you almost as much. The process might be interrupted at any time by other customers who may, or may not, be there to remind you that Big Brother is watching. When you finally get the money, it’s on a corner nearby and passed with a handshake. We’ll phrase this differently: you may be arrested for needing Bs.15,000 right now, and the government will present you like you’re a spoil of war.

Who’d ever have thought that 21st-century socialism would make “savage capitalism” look good?

57 COMMENTS

  1. Doesn’t make sense. MS liquidez monetaria has tripled from the same time 2016 (just eyeballing it from a chart). M2 (roughly defined) is the sum of currency in circulation plus bank deposits (M1) plus liquid investments such as short term debt, money market accounts, etc.. Worldwide, approximately 66% of transactions are “cashless” – settled by debit or credit cards or (I presume) checks. That may be higher in Venezuela, but if there is a shortage of bills, then those become more valuable, which means prices should come down, not go up, but just guessing, that would affect only 33% of transactions. Would that be enough to cancel out a supply shortage? Is it possible that the regime is actively stockpiling bills in some attempt to halt inflation? Or to transition to Chinese yuan? Is it possible that wear and tear on the bills is depleting the supply?

    • Our coin doesn`t stand on its own two legs, its price is based mostly on the price of the dollar on the Colombian border which has to do with the demand and offer for black market dollars. Our inflation has a lot to do with the bubble created by the currency exchange, right now the black market dollar`s price peaked a new high because the government did not deliver enough dollars to even cover the already small offer they supply. The factor is the shortage of dollars which adds more value to the dollar.

      There are a lot of bills on circulation but bs 50-100 .The tons of cash in circulation quickly becomes puny considering the inflation and how much of it is needed to buy the most basic things. The BCV was printing money like crazy but all those notes quickly became wiping paper, and the new notes of 500, 1000 and 20000 bsf are hard to find. I don`t think the government is stockpiling as part of a conspiracy, they are simply broke and can`t meet the demand, what little there is goes to bachaqueros and the military contraband network who always has first dibs on everything in this country.

      The middle class does use debit and transfers for everything, they earn in bank deposits and spend using the banking system but the middle class habits are fringe against the mass of informal commerce and slum economy that is fueled mostly by cash. Poor people rarely ever have bank accounts, They earn cash, save cash and spend in cash. and if they do have a bank account they don`t put them to the same use (a lot of people have Banco de Venezuela accounts because they receive some pension or the government pays trough there but they retire that money in cash as it is available and leave the account untouched otherwise) .

      We , as in my home, use debit to almost everything, i don`t like counting bricks of banknotes but still need cash around to pay for transportation, the water gallons and the vegetables and other foodstuff that is sold at the local market were there is no spot for debit cards.

      • Thank you, that explains a lot. The ground-level effects are really hard to imagine, for someone who is not there to see them every day. My conjecture is that the regime did not pay for the higher denomination bills that were contracted to be printed in Europe – some Swedish printer, I think – so that printing company maybe did not deliver them. Like the article said, the government literally doesn’t have the money to print money. So I guess one can identify the new-privileged (military) as the ones with the bigger bills.

        Here, I have a son who usually only has two or three dollar bills in his pocket. He grew up with plastic. In terms of Venezuela, I’m ancient history, man. I haven’t been there in decades. I think of a por puesto as a medio, a bus as a locha, and a puya was still a useful coin sometimes. A negrito was a medio (or a real, depending on where you went), marron grande Bs.1.00. Arepa rellena was Bs.2 or Bs.2.50. It took twenty years for espresso coffee to make it to the U.S., and Starbucks made a fortune off it, selling marron grande for $2.50 and higher (ridiculous, and even the owner of Starbucks admitted it).

      • I get really interested in all this because it is so far outside the bounds of what is taught about economics. The situation in Venezuela is surreal, like a fiction, which is what socialism is, a malevolent fiction, an intentional deception. I checked what listing of houses I could access, and of course here in the U.S. it’s going to be hard to find listing for casitas, so I turned up one that is obviously premium real estate, a house in Lagunitas priced at $450,000 dollars (if the pricing is accurate). A comparable 5 bedroom here in the U.S., an interior balcony leading to the bedrooms, with all the stone work and an interior pond in one of what looked like three salas, in a comparable neighborhood in a smaller city, would probably go for $5,000,000, and in San Fransisco, probably $30,000,000. The difference is in SF you don’t have to pay four armed guards and risk your life every time you leave your house, and you can do legal business without having the police arrest you at 3am – for nothing.

        Trying to even begin to make a rational comparison to an ATM withdrawal restricted to $0.35 cents is enough to make one believe – I bite my tongue as I put in print what I just thought – enough to make one believe something is wrong! Really wrong. Psychotic, totally separated from reality wrong, a comiquita, comic book, a play, a farce. Put that together with the vast oil reserves, and un manicomio pareceria ser una cima de sensatez comun, por comparacion.

        Maybe I’m not reading carefully enough, maybe I’m stupid, but I’m somehow not getting how you have shops where the enchufados buy stuff as if it were the U.S. or London or Paris or Madrid or Rome or Antwerp or Berlin or the “tourist” shops in Moscow or Belgrade or Sofia … a beautiful modern city like Caracas, and doctors and professors do not get enough to make a decent meal three times a day, babies die of malnutrition, and there are widespread scarcities of everything most people consider mundane commodities. Maybe I should read more about what happened in the Soviet Union and Red China to understand the street-level of what happened there, and then Venezuela would make sense!

        From an economics and finance point of view, the problem (one of the problems) is that the government has a monopoly on foreign trade. It is not that “the government does not have dollars”. It is that there is no legal free market for dollars – or any currency.

        Somebody really, really, really evil invented the opium pipe dream of “socialism”.

        Me voy a callar, and read more carefully, and try to grasp, but I lived there once, and I don’t get it. It is not hard to understand how someone who has never set foot in the country would not get the picture.

        • Yo sigo sin entender Venezuela y sin saber qué puede explicar la mayor parte de los actos del gobierno. No hay racionalidad en lo que hacen y ni el robo, la ideología o la inepcia son capaces de explicar por sí mismos todo lo que está ocurriendo. Tan solo una mezcla de las tres, en proporciones que por ahora desconocemos, puede aclarar en parte las cosas pero sigue sin haber un hilo que lo una todo. El caos entonces está asegurado.

        • “The situation in Venezuela is surreal, like a fiction”

          It pretty much is fiction, our inflation being induced by a currency exchange that created a speculation bubble is pretty much a virtual inflation, the same with all the price controls, government programs, nationalizations, etc.

          Nothing in Venezuela ever works as it should or it is done as it should and people with power always take what seems the most ridiculous turn.

          This is beyond ideology, things don`t ever match up even in that regard, we never were here nor there in the ideological aspect when push comes to shove , but populism have always been pervasive, clientelism, cronyism , always appealing to the lowest common denominator of the populace and always stealing , cheating and normalizing it and whoever poses a treat, the Escobar method applies : “Plata o plomo”

    • “Is it possible that wear and tear on the bills is depleting the supply?”

      I just grabbed a random bunch of 100 Bs notes and checked out the dates. Probably 60% of them are dated 23 June 2015, the rest earlier, 2013, 2012, and 2011. I didn’t see any dated later than 5 November 2015 and I suspect that’s the last time 100 Bs notes entered the country, though I could be mistaken of course.

      There are plenty of ratty bills in circulation, that’s for sure.

      • MRubio – You got it right, good on ya’!! Googling, I found that the average life expectancy of a bill in India is about one year. In the U.S., it used to be around 18 months ca. 2000, but the physical design improvements have extended that to 70 months (about 5 years).

    • Gringo,
      Maybe this helps.

      Inflation is generally held to be controlled by the relative availability of money and goods (or services). All else being equal, the higher the availability of money in liquid form, the higher the rate of inflation. The worse the scarcity of goods, the higher the rate of inflation. The main narrow measure of availability of money in this context is M1.

      If the Ven Government prints and circulates new banknotes, this increases M0 – cash notes in circulation, as well as M1. Alternatively, the Ven Government can (and does) sell a bolivar-denominated bond or promissory note to the Central Bank and the Central Bank makes an electronic transfer of funds to a government account which is then used to satisfy a government payment due – like, for example, the payment of public employees for that month. The Central Bank replenishes its own bolivar reserves on an as needed basis by selling dollars from its foreign reserves.

      This transaction (or other similar) has the effect of directly increasing the M1 money supply, but without increasing M0, the cash notes in circulation.

      If you examine the changes in M0 and M1 during 2017 you will see that only a proportion of the increase in M1 comes from newly minted currency. From the start of January to the end of June 2017, the M0 supply rose by 6.6 trillion (10^12) while the M1 supply rose by 12 trillion. The difference is explained by this non-cash electronic creation of money.

      The shortage of cashnotes is a source of great inconvenience, but it is not of itself a control on inflation, because the bulk of money movement is electronic. Venezuela has an excess of money supply and a shortage of goods – both of which conspire to cause inflation. It also has a currency shortage, especially of high value currency notes, and this causes inconvenience and frustration but little or no deflationary pressure.

      • Kribaez – Thanks, I thought about this a lot, trying to formulate a brief reply. The historic records of default on domestic debt are harder to get than similar on international debt, but whether issuing new domestic debt to the BCV, or simply pressing a few keys to “issue” new electronic funds, either is less costly than paying millions to print new bills, and are essentially the same effect. The idea behind currency stability is to match M1 change to GDP (PBN). Exactly as you said, when supplies vanish (or demand increases), that produces economic inflation. When monetary policy is errant, that produces fiscal inflation (or fiscal deflation). The two do indeed conspire.

        Inaccurate data leads to faulty conclusions, and data I’d like to see (but am not confident I can find), would be about the actual physical bills in circulation – because I’m still at a loss to reason out a shortage of those. Drawing on M Rubio’s post on this topic, the distribution of those between urban and rural areas might be useful, too.

        I could try to be funny, and say that given a (former) government chief economic advisor who stated “inflation does not exist”, it’s not out of the realm someone came up with the “brilliant idea of hoarding BF100 bills to pay off international debt burdens”, but the explanation probably lies elsewhere. I realize you did not intend to provide “The Answer” to everything (hehe) – your insight was clear and helpful.

      • Kribaez – Actually … looking over what I just wrote … your numbers on M0 and M1 … rereading … are you saying that because of electronic inflation, there is pressure (shortage) on the physical M0? In approximate guesswork terms (analogous to the relationship between cash and supplies of goods), higher prices but the same M0 supply, force the physical to do twice the work (and contribute to the slowing of the velocity of money and the multiplier effect)?

        It’s hard to find writing directly addressing these topics, since they are so on the fringes of reality (currency shortage in Australia in the 1800’s because the copper was worth more than the face value of the coin, anyone?), but my guess is that hyperinflation would serve to obliterate a multiplier effect because by the time payments are spent, their value has decreased, even if supreme effort is made to immediately spend. Just peripheral, and not comparable to the rate of inflation at all, but paying a 15% premium for cash might be an “appreciation” of cash, even if minimal.

        My apologies if I’m being obtuse. I never looked at situations like these, and just recognized the empirical and philosophical fallacies of socialism without going into detail.

        • These articles may be of interest to you. How nice would it be to buy dollars at BF’s 10 and exchange them on the black market at 1,000; 10,000; 20;000 and now 30,000, the scam of all scams. Take your BF’s and buy more dollars at 10, rinse and repeat. When there is a shortage of dollars to buy sell them to counterfeiters.

          http://www.insightcrime.org/news-briefs/paraguay-seizes-25-tons-of-venezuela-currency

          http://www.insightcrime.org/news-briefs/another-massive-seizure-venezuela-currency-deepens-mystery

          How much of this is not found, like the amount of drugs seized vs. ending up on the streets? I think it was you who commented in another article about the weights and quantities of dollars vs BF’s.

          • Waltz you have come up with the best answer so far, imho, thank you. I’ve seen that nowhere else. Yes, I was the guy who got nerdy and estimated that one million U.S. in BF100 bill weighs about 200kg IIRC (depending on moisture, dirt, etc.). So 25 metric tons would be a lot of bills out of circulation. Sixteen-wheelers full of them. I’m not going to estimate the percent of circulation. I think I read something like BF35 trillion (DolarToday) for M2, so

            BF 350 billion (350,000,000,000) if it were all BF100 notes
            BF 350 x 70% (the approximate % in BF100) = 245 billion
            BF 245 x 30% (approximate M0 cash v. electronic) = 71 billion
            BF 71 billion in BF100 in metric tons = ???
            Somebody else can do the math.
            25 metric tons actually seized as a % of total
            what % is not found?

            My guess is a lot of that gets counterfeited into currencies in LatAm. No need to run afoul of the U.S. when you can live well in LatAm.

            The currency is printed overseas by currency printers, so it makes sense that the paper is high-tech. The only problem I imagine would be the magnetic strip thing, which presumably would have all kinds of data on it. Paying $1,000,000 for a potential 1,000 times that much in counterfeit $100 dollar bills (I have no idea what the market value to counterfeit bill passers would be – only what I saw in a movie “To Live and Die in L.A.”) – seems like a deal. I don’t know apples from oranges about all this, but it certainly is more likely than assuming banks are holding bills because there’s a negative interest rate differential to inflation in lending.

            I still think the regime did not spare the cash to pay for the new bills, so those are probably sitting in crates in London or Amsterdam. Mainstream media made a big deal out of “Venezuela circulates higher denomination bills”, but those are reporters only. What was delivered may have been a test sample or a first shipment.

            And yes, your explanation of rinse and repeat is very clear. It took me a while, over a year ago, to dope that out, but you state it succinctly. It still surprises me how some small percentage of people will opt for crime, and most of us are too naive, apparently, to deduce what happens.

          • Waltz – I did some math on weights. Even if we make the assumption that the 25 tons found is some 3% of the total missing, and we further assume that it represents only a snapshot in time, and we further assume that it is done for three years running, I still only get a grand total of around 12% of the supply of physical BF100 notes.

            I did check on the life expectancy of currency in India, and came up with the surprising figure of about one year. In the U.S. it was 18 months around the year 2000, and has been improved to about 70 months (about 5 years) with new physical bill design. I don’t know what all the life expectancy depends on, but it seems likely that bills wearing out without being replaced is much more of a factor than counterfeiting.

            I think M Rubio got it right, above, when he posted about the dates on his bills. Maybe especially telling is what he wrote: “I didn’t see any dated later than 5 November 2015 and I suspect that’s the last time 100 Bs notes entered the country, though I could be mistaken of course.”

          • Gringo, the links were not meant as an explanation, just thought you would find them interesting.

            As you have mentioned, natural attrition (thru wear and tear) would have a much larger impact on supply, when they are not replaced. However, assuming your numbers are correct at around 10%, imagine the impact this would have. Normally taking that portion of supply out of market would boost its value. However, with annual inflation rates of 500-1000%, this effect would not be felt. It would add to the debilitating affects of the cash scarcity on day to day life.

            I do not know how this would fit in, but what happens to all of those Bolivars that are traded daily in the casas de cambio for dollars in Cucuta. Surely, the Colombians are not hanging on to them as an investment with the view that they will appreciate.

          • I should have also added that this level of inflation has some interesting effects on demand. Outside demand would be very static at zero aside from those engaged in criminal activity. While demand locally becomes exponentially elastic, as evidenced by the trials and tribulations discussed here to get Bolivars.

  2. Our problem here is the reverse. Our business generates a lot of cash and the banks, believe it or not, often limit the amount of cash that can be deposited! They limit withdrawals AND deposits to some accounts. Imagine hauling a sack full of cash to the bank only to be told you can deposit only a fraction of it. The roads are dangerous enough as it is without being exposed to robbery or death because you’re carrying a lot of cash. Also, explain the sack full of cash at a checkpoint, Yeah, that’s always fun.

    We’ve recently started with cash advances and they are the answer for us in so many ways.

    Cigarettes are a good example. The kids may go without a meal today, but god dammit the parents are going to find a way to buy those cigs so we sell out virtually every week. We’re required by the cig distributor to transfer funds every Friday for Monday’s delivery. We sell cigarettes by the box with no mark up over the legal price so the profit is minimal, but the sales are active. So, as we sell cigs, we accumulate that cash separately and use it to make cash transfers for selected clients. They, in essence, make our deposits for us for the next week’s purchase. Our charge is the same as everyone else’s, 15%. Our cig sale profits suddenly go from 1 or 2% to 16 or 17% with a quick turnaround.

    That charge may sound steep but when one considers that a roundtrip to the nearest bank (almost an hour one direction) costs Bs 20,000, the time spent in the bank, the risk of robbery leaving the bank, and the fact that there’s never a guarantee that the bank will even issue a single bolivar when you arrive, 15% for never having to leave the pueblo is a deal.

    • Our friend from the frozen north has objected to your sometimes impolite remarks (not this one) – and they WERE impolite- seeing fit to ignore that those remarks are the result of living under the stress of Real Existing Chavismo. Yet our friend from the frozen north, when confronted about his also making impolite remarks, refuses to simply acknowledge that he also makes impolite remarks.

      Please keep posting these stories about living under Real Existing Chavismo. They are much appreciated.

  3. I like to think of myself as a fairly intelligent fellow but I am having difficulty getting my head around a situation where you have, a) runaway inflation, and, b) a scarcity of money! How is it possible to screw up an economy this badly?

    Also, whatever happened to the Bitcoin promise? I thought the Bitcoin was supposed to take over commercial transactions and out-smart the government monetary meddlers. Seems it would be taylor-made for VZ.

    • “I like to think of myself as a fairly intelligent fellow but I am having difficulty getting my head around a situation where you have, a) runaway inflation, and, b) a scarcity of money!”

      It’s the fault of Dolar Today Lorenzo, try to keep up.

        • Your comment about Home Depot makes me think of something that crosses my mind every time I walk into a hardware store here.

          IF you can find one that’s open and IF you can find what you’re looking for, it’s usually crap and relatively expensive for the level of crappiness.

          Walk into Home Depot to buy a faucet and there 30 different options with pricing relative to the quality.

          So, a huge selection of both prices and quality so you can decide what’s best for your budget, but capitalism is evil.

          Okay, rant over.

    • ” How is it possible to screw up an economy this badly?”

      Because that’s been the plan of the cuban invaders and the communist traitors who stabbed Venezuela on the back in order to enslave the country.

    • Not that difficult. One is the cause of the other. Inflation goes up so fast you need more and more money to pay for anything. That includes inflating all the expenses in cash – that marroncito in the morning, the bus fare, all that stuff that is normally pay with coins and bills. Soon enough there is not enough printed bills to cover for all that.

      The thing that cant be understood in Venezuela is how can the chavistas keep doing exactly the same as they did all this years, do exactly all the stuff they did to bring all that ruin to the country, and not think for a moment that hey, maybe, just maybe, this thing is not working.

      And I know – most of it is because it is working for them, but Jesus Christ, even the Chinese Communist Party realized that if they wanted to keep ruling more or less forever, it its helpful to rule a somewhat funcioning country, not a disaster economy.

  4. “At the time of this writing, a dollar buys you Bs.27,051”

    3 days later, and now a dollar buys you Bs 29,146, according to Dolar Today..

  5. People are writing anti Maduro slogans on their money, I’m told. Maybe the limits are intended to crack down on this new form of pamphleting.

    • I collected those notes for a while until the old lady got mad at me for hoarding. Some pretty good ones and some sad tales written as well.

  6. There is also limits to what you can withdraw via check at the bank teller – 20.000 two weels ago, 15.000 one week ago … plus you have to pay 2.000 for parking lot fee…

    • Having been able to go to an ATM because I don’t hve enough cash to pay for parking and I’m saving what I have to pay for gas. This really is a sad country.

    • Basically you need cash to: Pay parking lot fees, gas, (if you have a car) public transportation, (if you dont), if you have persons that work for day (maids, gardener)0, who arecharging 15.000 or more per day, which by the way limit per day for checks, most ATM will only deliver 10.000 if they are from your same bank, 3.000 inter bank… Apart of this cash less situation, there are many problems with public transportation, which is theme for another CC essay…

      And dont talk about Social Security Pensions, which are being paid in many parts (170.000 aprox,) requires 11 + working days at 15.000 per day..

  7. For ALL you non believers and ignorant CC contributors and especially for Fransisco….
    “El almirante James Stavridis, excomandante supremo de las Fuerzas Aliadas de la OTAN, alertó que Venezuela puede entrar en una guerra civil.

    “Venezuela, una nación de más de 30 millones de personas con las reservas de crudo más importantes del mundo, se encuentra al borde del colapso y de la guerra civil”, expresa el artículo publicado en TIME.

    En la publicación, titulada “Es hora de prepararse para una guerra civil en Venezuela”, Stavridis expresa lo que a su juicio debe ser la actuación de los Estados Unidos ante la crisis venezolana y explica los riesgos de que la situación se agudice.”

    I’ve been shouting this for I think about the last 18 months or so. Feeling very satisfied that an admiral of NATO is stating this in TIME magazine. This communist narco cuban dictatorship will never give up power without being forced to do so. Violence is what the only way out, all this BS pacifist talk won’t lead to any regime change ever.

    • That article contributes really nothing to the conversation. The guy offers nothing substantial, and what he does offer, in my opinion, is just plain wrong.

      His analysis is to prepare for a mass exodus, as opposed to preventing one.

  8. The end of the republic is close, said the article. Except I’ve been thinking that for a year. What does “close” actually mean. Seems more likely that the change will come once the money is really and truly gone. And that DOES feel close, as this article suggests. With billions due in less than a month, there seems no exit this time. But I’ve thought that before as well. Chavistas are cockroaches in this regards. .

  9. Thanks, MRUBIO. I’ve learned a lot watching this cruel drama, mostly from the sidelines, even though my house is in Valencia and both kids are still sticking it out in CCS. What I’ve learned most of all the error in my thinking thinking the Chavistas would in some way vector their enthusiasm or willingness to rule off their reception from their countrymen and the world at large, from the actual state of the country, from the joy or despair mirrored in the national ethos, in what it is actually like to live and breath in a culture of their own making, and that as the country slowly circled the drain, their reasons – ergo their vim to still govern – would wane accordingly. What I learned is that the Chavistas are like the alcoholic father with a terminal illness. Not only will he not stop drinking the roncito, he will battle to live another month, week, day or hour no matter the condition of his family, his financial situation, his moral bankruptcy, or any damn thing. The only goal is to survive because this is the only life he will ever get. And since he can think only of himself, the fact that the sky is falling is immaterial. The impulse to survive, at any cost, is paramount.

    • I turn on Chavez TV every now and again and, of course, right now it’s all about campaigning for the election. The crowds are smaller, much smaller but still have plenty of enthusiam it seems. The other night I watched Godgiven Hair in Tachira and the place was full of chavistas dancing, chanting, and generally having a good time. I often wonder, who are these people? Where do they come from? Where do they live? What do they think when they look around at the condition of the country? Do they not see that every passing day the country sinks deeper into shit holiness? Do they not care? Are they so plugged in that it doesn’t matter to them? Or are they so team-oriented that they don’t even see what’s happening around them.

      It boggles my mind.

      • They do see what’s happening, but they’ve been convinced that is not Maduro’s fault. That all the blame falls on the opposition, the US, etc. I met one of these characters the other day at the supermarket and I tried to explain to him how things work, who’s been making the bad decisions, etc. and there was no way he could understand it or accept it. They’ve been brianwashed and there’s nothing one can do about it.

      • Is very well know that Diosdado got a whole entourage ready to show his support everytime he on tour, the amount of Chery cars you see everytime Cabello is in town is very telling of what going on.

        • Agreed Marcos, I’ve seen it firsthand here as Godgiven has made the trip to our humble pueblo several times over the last few years. And we always know ahead of time when one of his visits is coming.

          The road from the main highway into town is suddenly cleaned up, the overgrown shoulders are mowed, potholes are filled, the policia acostados are painted, and the town generally gets lip stick applied. Is all that for his viewing pleasure, ours, or for his entourage? And quite the entourage he has.

          Most of this town’s vehicles are on blocks in people’s garages for lack of spare parts and tires. At best there might be 30 that still roll and you can imagine what shape those are in. Anyway, when Godgiven makes his appearance, there are suddenly 100’s of cars, NEW CARS, flooding into town. Red-clad fat-assed women and big-bellied men coming pouring out of them.

          None of this seems lost on the local population, but instead of being pissed at what they see, most seem to just wish it was they who were driving new cars and sporting fat asses and big bellies.

    • Juan Largo,
      I think your analogy with a drunken father is missing something important – fear of consequences. The civil and military leadership have as a primary common driver the desire to stay out of jail, and as a secondary driver, the ability to enjoy the fruits of their rape and pillage of a country. They must at all costs avoid becoming subject to an independent judicial system. The borracho may realise at some stage that he can improve his life by giving up his drinking – he does have a choice. The chavistas have no such avenue of hope. They HAVE TO retain power at all costs, even as the cup they are drinking tastes more and more bitter. It is a question of survival.

      Ironically, the various international moves – sanctions by the USA and Canada, the likelihood of some form of sanctions by the EU, the unprecedented jump-start of an ICC investigation, the suspension of Venezuela by Mercosur, the declaration by the UN High Commission for Human Rights, and even the (failed) OAS conversations – all of these things reinforce the perspective that the options of the criminal leadership are becoming vanishingly small. Where do they go after they cede power where they can defy extradition? Cuba? Iran? Russia? Even China is unlikely to welcome them if it ends up stiffed on the oil for loans deal – and the recent actions by the Chinese CDB suggest that China is losing its apetite for continued support of Venezuela as well as its faith in the realisation of the exhorbitant returns promised.

      The senior corruptos will not cede power until and unless they are offered amnesty under a secure and credible deal OR they are carried out feet first. Any plan to restore democracy in Venezuela that does not recognise this fundamental truth quite simply WILL NOT WORK.

      • I know we need to recover democracy, but the problem with amnesty is that then a few years down the road, someone from either side will start stealing from the country again knowing that at the end he/she will get amnesty and will be able to live like a king somewhere on this planet.

        If Chavez had not been pardon, we wouldn’t been here today. Someone like him, who attempted against democracy, should not have been able to run for public office, specially the presidency.

        • Believe me when I say that amnesty for this filth would stick in my craw like a large chickenbone. I am just stating what I consider to be an obvious fact. Kill them or remove the key props from the self-supporting power structure with selective amnesty. There really is nothing in between.
          Your concern about the precedent of offering amnesty seems like it should be valid, except that there are a large number of occasions throughout history where amnesty has been offered as the best alternative, and no evidence that I am aware of that the precedent has acted as a control on the future actions of others.

  10. A couple days ago I was told a driver in Caracas requested a bunch of small denomination DOLLAR CURRENCY (bills, not necessarily coins), now it makes sense.

  11. We keep hearing “it’s only a matter of time, now…” For the last year. I am certainly not going to get my hopes up.

    I will start to say the end is near when it reaches 60,000:1 USD.

    Then you are talking unrelenting pain.

    Eventually it will just slide into a parallel dollar market. Smugglers are only accepting USD from what I was told.

    • “I will start to say the end is near when it reaches 60,000:1 USD.”

      Based on present inflation trajectory, that will happen by year end at latest.

  12. Great discussion, and everyone is making a valid point IMO. But I believe there is one other factor that might force the Chavistas out other than a violent shove or an offer for amnesty. And that is when they actually have no dinero left at all. Nothing. That nearly 4 billion dollar nut due in no time on those bonds, even if they manage to pay it, will take the spring out of God Given’s dancing crew – of that we may be sure.

    • I think that this raises the false hope of an early fall of the regime and a restoration of democracy without violent overthrow. I just can’t see it.

      As the emperors of Rome knew well, the survival of an unpopular regime does not depend on having enough money to keep its people fed, clothed and in good health. It only needs enough money to retain the support of its armed legions. Venezuela can continue to do this long after the majority of its population lives in a state of abject misery, disease and starvation, as long as it can maintain a certain critical level of production, export and sale of oil. Default on international debt has no short-term effect on this picture, but will certainly have a material effect on the rate of decline of oil revenues, because of its chilling effect on funds and access to services for essential and long overdue reinvestment in production and infrastructure. Even this presupposes that no dark knight from Russia, Iran or China intervenes to prop up the free-falling economy. If the regime cannot keep the cash-cow fed and watered, it yields less milk each year. This brings forward in time the date when the rank-and-file in the armed legions themselves seek regime change, but this is many years, perhaps decades, in the future, and by then it is too late for the rest of the country, who are by then dead, fled or peasant farmers.

      My best guess at a short-term scenario is that, yes, there will be a default on government debt at some time within the next year, and then, in 2018, Maduro will agree to step down in favour of a new carefully selected president who is trusted by the civil and miltary leadership not to put them in jail. It will probably be a face which has not appeared yet on the USA sanctions list, but who is owned by those who are already fully paid-up members of the narcoklepcy club. He will promise a new broom to sweep away corruption and all of the other little problems that beset the “previous regime”. He will win the ACN-managed election by a landslide. Chavista apologists will emphasise the importance of giving the “new government” a chance to prove itself. Most political analysts will recognise the move for what it is, a cynical cosmetic change for PR purposes only. Nevertheless it provides further excuse for other governments to continue their masterly inactivity. The president’s main job will be to prioritise the production and sale of oil, keep the armed forces happy and avoid the establishment of a free and impartial judicial system. The country will go on suffering a slow death from starvation, disease, unpunished theft and violent crime by regime supporters. Human rites will refer to religious ceremonies. Tout ca change…

      There are a number of things which could alter this future. A UN police action (ain’t gonna happen). Full trade sanctions, unilaterally by the USA or by a coalition which includes the USA, would cause immediate hardship, bringing the Venezuelan economy to its knees in a matter of months. However, the military and civil leadership, directly controlling (the substituted and reduced level of) imports and buffered by their overseas bank accounts, would be the last to suffer. They will watch their countrymen die in their hundreds of thousands, while they hurl abuse at the imperialistas for their genocidal action. They might use the sanctions as an excuse to activate the already prepared plans for forced labour “to substitute missing food imports” or something similar. What they WON’T do is retire quietly to go to jail. For the sanctions to have the effect of restoring democracy, the regime still has to stand down or be carried out. If they won’t stand down, who does the carrying out in this scenario?

      Alternatively, the regime might implode because of an internal rift between the Cabello faction and the Cubazuelans, making it impossible to choose a figurehead. It would be an interesting spectator sport, but it will still not restore democracy to Venezuela, since whoever wins power in such a fight needs, in the endgame, to have the support of the military leadership who must avoid an impartial judiciary. So I stick with my original analysis. Restoration of democracy requires credible guarantees of amnesty (targeted mostly on the military) or violent overthrow.

  13. It’s good to see a good discussion on the site again. It’s been a while…

    I think we’ll see a lot more dollarization of the economy before it finally implodes.

  14. This brings forward in time the date when the rank-and-file in the armed legions themselves seek regime change, but this is many years, perhaps decades, in the future.

    ——–
    Man, I’m not see this. This ain’t Rome. And with Ven. wholly dependent on foreign infusions of monies, and the armed forces so big, and international pressure mounting, and discontent rising, I think the country and the world is pretty much over Maduro and the socialismo experiment. What’s more, the IMF bailout will never happen save for a total overhaul of the economy, with full transparency and oversight. Meaning it will be exceedingly hard to steal or skim the monies. And that’s the whole plot at this point.

    But I’ve been wrong many times in this regards and Chavistas are like cockroaches.

  15. This guy on Aporrea has seen the light (translation by Google)

    “If socialism is what I am seeing in my beloved Venezuela today as a factory of poverty, I do not want it, and if being on the left is subjecting people to poverty, scarcity, inflation, speculation, poor quality of life , insecurity, from today I abjure my ideology of which I have been militant for about 50 years.”

    https://www.aporrea.org/actualidad/a253127.html

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