Venezuela’s Central Bank (BCV) has released a brand-new website design, the first change in the institution’s only communications platform since March 2002. Gone are the days when economists and students could visit the page to find the remaining shards of economic data still made available by the government.

Right after typing the URL a sign pops up, warning you that the connection to BCV is compromised. Accessing the website of our country’s Central Bank looks just as dangerous as using Kazaa for downloading music:

Once you agree to forfeit all safety and still go in, you stumble upon a new interface that looks and feels like a chavista funcionario talking about the Venezuelan economy, right down to the trademark smugness and criminal negligence in trying (and failing) to conduct economic policy.

Although the BCV has not issued a statement of its monetary policy in almost five years…

…It has been busy peddling the Presidente Obrero’s clumsy arrow-shots of surrealist “economic policy”: the Bolívar Soberano, DICOM, and the Petro.

Press releases, social media updates, promo materials, all filled with the typical rants about ‘economic warfare’, ‘financial blockade’, ‘defense of the Bolivar’… Perhaps the most jarring absurdity here is that the regime is presenting opposing concepts such as an ‘asset-based cryptocurrency’, a monopolized foreign currency grants system and a brand-new fiat bolivar with three zeros shaved off, as panaceas for an economic mess they can’t explain with anything but their stale ñángara narrative.

All theatrics, no data

Predictably, the new website ignores the country’s most pressing issues. There’s zero incremental data here, which means no new updates on GDP, inflation, balance of payments, consolidated external debt balance indicators, etc. And most importantly, no updates of social or human-development measures on the effects of the ongoing hyperinflation-meets-humanitarian-crisis.

Save for weekly-updated monetary aggregates and figures such as International Reserves, which are still updated daily but not discriminated by asset, the bulk of the Venezuelan economy remains in the dark.

The website doesn’t offer much help in the foreign-exchange front either. According to several sources, including localbitcoins.net, the black-market dollar is fetching close to VEF 350,000 at the time of writing, much higher than the VEF 235,000 mark published by DolarToday and several times higher than the VEF 49,900 fix of the latest DICOM “auction”.

And talking about DICOM auctions, it appears that the recent US sanctions haven’t let the auctions to settle in the accounts of beneficiaries, so the only official mechanism to acquire foreign currency is basically out of service right now.

However, if you take a closer look past the nonsensical shenanigans…

… You can see that the printing presses are still red-hot and the money market, flushing with bolivars, is being force-fed by means of state-owned BANDES issuing 15 Trillion Bolivars in bonds at a 10% nominal interest rate…

The new website ain’t fooling nobody, on the contrary, it’s doing a superb job at exposing the economic clique of late madurismo as the propaganda-spouting, stew-cooking, criminally incompetent con artists they are.

Aunque el mono se vista de seda, mono se queda.

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27 COMMENTS

    • I don’t think that dollarizing would in any way keep the bozos from devastating the Venezuelan economy. It would merely eliminate one shovel that the Chavistas use to dig the collective grave. The monkeys at the controls of this current train wreck cannot do the right thing.

      I think the economy can be turned around. But it won’t be with these spendthrift morons at the helm. It is going to take a very contrite Venezuelan opposition (who have come to a collective economic plan and agreement) to go hat in hand to the IMF/World Bank and beg for debt forgiveness.

      I see a lot of austerity and a lot of humiliation. On the other hand, Venezuela can tell the IMF/World Bank to kiss its ass and wallow in despair for generations. Either way, nothing changes unless Chavismo is gone.

      • Don’t forget there will be some part of the debt that, depending on how soon it can be conclusively shown that Maduro occupied the presidency illegally, may be able to be denied.

        Dollarizing, to my non economist mind, is putting your monetary policy in the hands of another country’s central bank. Before anyone says what we already know about current policy, think long term. Dollarizing and going back is no walk in the park and has the potential for even worse outcomes.

        Let’s face it, in a way we have been dollarized since 1983’s Black Friday when we said goodby to gold ole 4,30 QEPD.

        That said, only a massive infusion of cash and restructuring is what we’ll need after the fall.

    • Dollarizing the economy won’t stop the regime from spending recklessly. People focus too much on Ecuador’s experience, but fail to look at El Salvador as an example of what can happen when you dump your currency and continue being a profligate spender.

      • There will always be opposition to dollarization for a very simple reason:

        Incompetent or outright anti-venezuelan gubmints won’t be able to devalue the bolívar to cover the money the fiscal deficit.

    • Lorenzo,
      Dollarisation is not a dumb idea. It is just not the panacea you seem to think it is. To gain a handle on the economy, several things need to happen. Among the top priorities are (a) elimination of the fiscal deficit and (b) bringing the money supply under control. Dollarisation on its own does neither, but several people here mistakenly think that it automatically solves the second problem. IT DOES NOT. And, if badly managed it could produce total armageddon. It requires FIRST a restoration of BCV autonomy and adherence to constitutionally delegated authorities. Do you trust the new government to do this well?

      If the present bunch of criminal defectives were to dollarise, for example, it is easy to imagine a continuation of massive fiscal deficit which the government would have to support via the “borrowing” of non-existent dollars from the BCV, just as today it borrows non-existent bolivares. These non-existent dollars are then transferred to government debtors in Venezuela in electronic payments made by the government. (This is by far the largest source of the current increase in M1 money supply). Very soon, the banks are full of non-existent dollars, backed only by a government promise that they will find the money at some time in the future. People would try to protect themselves by withdrawing cash from the bank if they could. The government would have to restrict such withdrawals (since the recipient bank doesn’t actually have these dollars other than as a promise from the government) to avoid a total banking collapse, so there is no relief from cash shortage. Confidence in “bank dollars” starts to fall at day one when people find they cannot withdraw the dollars they have in the bank. Electronic dollars in the bank start losing their value against the sparse number of cash dollars available on the street. Electronic transfer of dollars from outside Venezuela would dry up completely for obvious reasons – each time you transferred a real dollar from a US bank, it would end up in a Venezuelan bank at a fraction of its former purchasing power. Venezuelan businesses could not afford to export anything unless they received payment in dollars outside Venezuela. Clever buyers of Venezuelan oil would try to “buy” dollars in Venezuelan banks at discount to make payments in dollars to the government. The government would itself have to legislate to discriminate between dollars in Venezuelan banks and dollars outside to prevent it receiving discounted Venezuelan bank dollars in payment. [The exception would be any foreign banks foolish enough to have a retail banking business in Venezuela. They would enforcably become a source of government financing until their reserves were depleted.] Retailers would be forced to differentiate between a cash dollar and a rapidly devaluing “bank dollar”. Result is massive inflation in goods in Venezuela denoted in dollars with corresponding massive discounts for cash payment. Pure chaos. A non-solution, but a rich stew of opportunities for the well-connected.
      Dollarisation without restoration of separation of powers, rigorous adherence to delegated constitutional authorities and elimination of the government fiscal deficit solves very little or nothing at all. It certainly is not the magic bullet that some here seem to think it is.

      • I guess that a dollarization will in fact bring the money supply under control. as the BCV can print as many bolivares as they like, but not dollars, and thus, BCV will not be able to grant every wish of the government for more money. The bigger problem to me seems, that inflation caused by government money printing constitutes a tax on everyone that holds savings in the currency – after the crash of the oil industry and all the rest of the economy for that matter, there simply does not exist any other tax base in the country that could be milked in order to replace the “inflation tax income”, if any government chose to stop money printing , which leaves only one option : draconian cuts in expenditure to all government, state enterprise employees, the misiones, CLAP etc.,until the economy will find its footing again . And my uninformed guess is, that many Venezuelans on an emotional level know, that times will therefore wil get harder before they will get better after an eventual chavismo downfall, which limits their eagerness to fight for change, and makes emigration look much more enticing.

      • Just one little correction/clarification: I never claimed dollarization would be a panacea for all that ails the VZ economy. But my personal opinion is that it would be a small step in the right direction, imperfect and distasteful as it might be.

  1. Just thinking , If Maduro’s regime was replaced by a regime administered along the lines of the current Chinese regime what would they do ?? how would they handle the economy ?? would they print money to make up for revenue deficits ?? What would they do with Pdvsa ??

    • The first thing they would do is request an audience with the Trump administration and say, “Let’s put our heads together and see what is required to salvage this basket-case. We need your markets, your expertise and your capital investment. What do you need from us?”

      Don’t believe me? Look at the amount of trade between China and the USA. Google up the influence Milton Friedman had with the Chinese, post Mao. Check out the increasing number of big-time US/Chinese JVs, both existing and in the works. Two examples:

      http://terrapower.com
      https://www.ogj.com/articles/2017/11/chinese-alaskan-officials-sign-lng-project-development-agreement.html

      And, what to my mind is nothing short of amazing, is how well Chinese and American businessmen (and just plain citizens) warm up to each other, integrate and work together. Never woulda thunk it forty years ago.

      Hey, Bill, you might be onto something here. Is this template transportable to Venezuela?

    • ” If Maduro’s regime was replaced by a regime administered along the lines of the current Chinese regime what would they do ?? ”

      Continue plundering Venezuela’s resources and enslave the population to work themselves to suicide for 2$ a month of full-time jobs, of course.

      Ah, I almost forgot, kiss cantv bye-bye, because it’s soon going to be Huawei International Services Venezuela”

    • Your question is an interesting one Bill, and versions of it have been on my mind for a while. I suspect many people would be reluctant to admit that their issue with the Maduro regime is not its failure to adhere to democratic principles or rule of law -not its undermining of basic individual freedoms – and not even its vast corruption, but instead: (a) for business people, its antagonism to business which has not made its peace with chavismo, and (b) for other people, its failure to maintain the vast web of clientelist favours that kept the system relatively popular for many years. Bearing in mind that these two groups overlap quite a bit.

      That is why, I suspect, vastly more time is spent in this space railing about Cuba – a weak and opportunistic palace guard for chavismo- than about the more signifiant powers behind this regime, one of which is also ostensibly communist.

      Venezuela cannot be like China, because Venezuela is dominated by oil. But chavismo is at its core, a state capitalist system. Only, it is run by people who cannot control their levels of corruption at “sustainable” levels, and who are by Chinese standards, very bad at running the model they have adopted, or adapting it to a single resource economy.

      As China increasingly has economic leverage over Venezuela, and it increasingly looks like a state wanting to assert its leverage, it may start taking more direct roles in managing the economy. What does that look like, is an interesting question. Everybody here is an expert on Cuba. It comes with a bearded figure we can all agree is bad (and is dead, both physically and ideologically). You’ve asked the more relevant question I think.

      • To begin answering it, I could foresee divestment of direct government controlled entities into public private hybrids, or private companies of obscure ownership and direction, with chavista oligarchs and military people at their heads. To address its unsustainable debt, and without going to the West for help, wouldn’t the regime have to start relinquishing direct government control of state assets, as did Russia? Privatization of this nature (to state connected insiders) could go a long way, as it has in China, and still be called revolutionary socialism. Wouldn’t that be something: to watch the Chinese communists take PDVSA private…

        • ” to watch the Chinese communists take PDVSA private…”

          They’re doing it already with cantv, part of the HQ building in Caracas is actually off-limits for venezuelans by now.

      • Ok, how about this scenario:

        A Venezuelan works a 40 hr week at PDVSA, which is owned and run as a Chinese/USA JV. He is paid a decent wage in US dollars. Part of his paycheck is invested in an ESOP and a 401K designed by Daniel Urdaneta. And he buys his groceries at a well-stocked Chinese supermarket.

        Laissez les bons temps rouler!

    • Under Chi-communism, Vz-com, Any-com each person is merely a possession of the state. If the possession can be made into an asset then it is monetized and exploited. If the possession is a liability then it must be reduced ruthlessly.

  2. What’s going to happen with the price of a litre of gasoline? Is it going to go up to 1 bolivar (1000 of the old)? How do gas stations owners make their money? I understand the employees probably are there for the tips. Last time I filled up a few jerry cans of diesel for the power plant I handed buddy a 100,000 bsf note.

    • Of course chavismo will raise gasoline (and thus all prices and bus fares) by several thousands of %, gasoline will go up about 100.000% again, and bus fares will very much probbaly double or triple at least.

      Proof again that the “cArAcAsHo” was a cuban-planned coup to topple CAP’s government, because NO RAGING PEOPLE WILL TOPPLE A GUBMINT FOR A GASOLINE RAISE.

  3. Serious question, would dollarization help with FDI? Venezuela is going to need loads of investment, not just from the Petro majors. Given the past twenty years of experience who would trust their investment not to be eaten up by inflation much less expropriation?

    I know I can not assume Daniel supports Quico’s peaceful transition, but what would be worse; Falcón and complete immunity or dollarization?

    • There are much more investors that you can count willing to invest in Venezuela with an unique condition: That the goverment isn’t a bunch of communist lunatics, aka the goverment MUST be fully CAPITALIST.

      • Yet we all know that the best predictor of future behavior is past behavior. So , as said above FDI will have serious concerns as to what any government policies will be with the next administration or the following. Does dollarization help or hurt alleviating those concerns, serious question?

        • Again, only with a change of the two things you mentioned in your post: The money keeping at least partially its value (There are countries with double-digit inflation and foreign investments still get there), and absolutely no expropiations under any concept.

          These two conditions will be enough to begin luring investers to start injecting the much needed dollars into the economy again, and the only way it will be done is by forcefully passing through square one: COMPLETE ERADICATION OF COMMUNIST POLICIES, which means a government that respects property rights and that stuff, which alsot means full suport for a capitalist economic model.

          And that is, you guessed it, extirpating chavismo from power.

          You mentioned “Past Behavior”, and you see how in spite of having a lot of smothering socialist policies obstructing capitalism, Venezuela in the 4th still had private investment to the point that the country was self-sustaining in regards to food, yet anyone could import whatever thing they wanted and most folks could make a living out of their jobs.

          Let’s say that in the 4th the economic freedom was about 40-50% and still with that weigth the country had a glimmer of development, now under the castro-chavista tyranny the economic freedom is 0% or 1% at much, which is why no one can live from their work nowadays.

          And that’s a deliberate plan to keep the population sunk in poverty and controlled.

    • +1
      So sad and true — it’s the motive of every leftist. Anyone who seeks progress without accepting that reality is aiding and abetting the destruction.

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