Photo: EPA retrieved


Nicolás announced the third wage hike in just four months of 2018, effective starting this Monday, which is now the 44th raise in 19 years of chavismo, presenting it as an accomplishment and not as the evidence of our economic collapse. The minimum wage went from Bs. 392,646 to Bs. 1,000,000 and food stamps, from Bs. 915,000 nto Bs. 1,555,500. The Tax Unit (UT) went from Bs. 500 to Bs. 850. This is yet another raise that wasn’t consulted with the rest of the economic sectors, and it’s useless so long as the government doesn’t take measures to halt hyperinflation, which already stands at 13,000%, compared to the 1,200% minimum wage hike. Pensions went from Bs. 392,646 to Bs. 1,000,000 and the “economic war” bonus rose to Bs. 400,000. Bonuses for carnet de la patria holders increased, from a two-member family that will get Bs. 500,000 to a ten-member family that will get Bs. 2,580,000. The bonus for people with disabilities and for pregnant women will be Bs. 1,000,000; while the monthly bonus (called “working class” because it’s May) will be Bs. 1,500,000. He had the nerve to joke about the possibility of giving a bonus to the male audience for the size of their bellies, “that’s expensive to maintain,” he said. All the raises will be covered with BCV financing; you’ll see why when you get to the section on PDVSA below.

Other absurdities

Nicolás read incomprehensible figures (in both dollars and bolivars) to show the success of the Expo Venezuela Potencia, promising that after May 20 he’ll develop “economic articulation fairs” and he’ll stop the “criminal economy that’s killing the Venezuelan people.” He claimed to have cared and perfected el finado’s legacy to protect the working class and blamed all economic distortions on a complot created between Miami and Colombia “to rob the people.” At least he admitted he’s way beneath the current economic challenges, not without first claiming that without a socialist government, Venezuelan would already be a battlefield; evidence of how little he reads about deaths caused from malnutrition, treatable diseases, maternal deaths and murders. Since they lost all interest for appearances long ago, he blithely said: “We’ll check all carnet holders, we’ll seek their oaths, call them and teach all carnet holders that they must enter with their carnet in PSUV’s webpage starting this Sunday and take someone to vote (…) All carnet holders, either by carnet de la patria or by PSUV, must go vote. I scratch your back, you scratch mine.” He also restated that Venezuela doesn’t need the “scraps” of other countries, thus denying the possibility of a humanitarian channel.

Against the TSJ in exile

A group of justices from the Supreme Tribunal in exile denounced the raids to their homes and offices carried out by agents of the Bolivarian Service of National Intelligence (SEBIN). Pedro Troconis denounced the forced entry to his office without a search warrant; Elenis Rodríguez denounced that they raided her mother’s house (she suffers from Alzheimer’s,) and lawmaker María Gabriela Hernández said that Rodríguez’s sister was summoned as a witness by SEBIN. They also raided the offices and homes of Antonio Marval and Miguel Ángel Martín; as well as an inn owned by justice Cioly Zambrano and the home of justice Sabino Zamora. Several lawyers emphasized that in case there’s criminal liability against the justices, it must be individual, so persecuting their relatives is a violation of their rights. This happens the same day that former presidential honor guard Luis Fernando González Seyas revealed that he was ordered to murder Pimero Justicia leader Tomás Guanipa.

Selective default

Despite the poor treatment they’re giving their employees, Hydrocarbons minister Ángel González said that Venezuela will seek financing with its private partners to increase the production of light and medium cruel barrels by a million, which is the government’s plan to take advantage of the recent rise in oil prices. They’ll have to move faster because OPEC’s oil output in April reached its lowest level in a year due to Venezuela’s oil-pumping problems (in April, output dropped to 1.5 million bpd,) a decline that no other country in the organization has yet taken advantage of.  Additionally, three sources in the financial sector told Reuters that PDVSA started paying some $100 million in interests to some holders of the bond due in 2020. The money reached some bondholders through the American custody firm DTC. Remember that the government had already paid pending interests to investors in the PDVSA 2022 bond, which was mostly bought by Goldman Sachs Group Inc. Analysts caution that this kind of selective default could detonate legal actions from less favored bondholders.

Abroad

  • The OAS’s 70th anniversary was commemorated with the holding of a Permanent Council session that discussed the Venezuelan crisis again. They didn’t reach a definitive resolution but there was a broad exposition of arguments and information describing this crisis, both for the country itself and for the region. Secretary general Luis Almagro said that the only economic war is the one promoted by the government, adding that health and food ceased to be rights and that the situation of millions of Venezuelans is the worse than that of “a war-torn country.” On Twitter, the accounts @VE_ONU and @OVCSocial covered the entire session in detail.
  • Samuel Moncada, the government’s representative before the OAS, acknowledged that there are “great economic difficulties,” but still said that the debate was “hypocritical”. He accused the U.S. of promoting a coup d’état; the OAS of preparing a case to “intervene” the country; cardinal Baltasar Porras of being a “political agent” and the Episcopal Conference of undermining peace. Moncada claimed that they won’t be able to replace the government (?), saying that the sanctions against government officials are “measures of coercion” (brilliant, eh!) and denied that this is a failed State, promising to resolve the humanitarian crisis with free elections (hahaha!), without tutelage from international organizations.
  • Earlier, State deputy assistant secretary for Western Hemisphere Affairs Michael Fitzpatrick said that the U.S. is willing to lift economic sanctions against Venezuelan “when the government or officials change their course (…) when they are willing to re-establish accountability over their control of financial flows, when they can and wish to reinvest in the county, when they are willing to take simple steps to respect the Constitution and the National Assembly, to open humanitarian channels.”
  • Yesterday, the Brazilian Prosecutor’s Office filed a new corruption accusation against Luiz Inácio Lula da Silva, in prison since April 7 for a term of 12 years. The accusation extends to three of his former ministers.

– The Islamic State (IS) claimed responsibility for the double suicide attack in Afghanistan that killed at least 25 people, among them nine journalists.

Starting this Tuesday, May 1, by order of the BCV, all monetary figures must be expressed in (strong) bolívares and sovereign bolívares. PSUV didn’t confirm their celebration for happy workers today (and called for one on May 6,) but the Federation of Health Workers and the Broad Front for a Free Venezuela -Frente Amplio Venezuela Libre- did announce their own protest demonstrations.

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37 COMMENTS

  1. I need the source of his “I’ll scratch your back, you scratch mine” quote, as that needs to be quoted in other forums. Thanks

  2. “Analysts caution that this kind of selective default could detonate legal actions from less favored bondholders.”

    Defol Selectivo.. Translation: Pay Goldman Sachs only if they agree to dish out some hefty Kickbacks, pa’ los frescos.. Sets a clear precedent: want your money back? Cuanto hay pa’eso? $90 Million back to you, ok, but after 10% of it in cash for me. That’s the “selective default”, Kleptozuelan style. You can bet your house on that.

    I suspect something similar will happen after the “elections” mega-fraud about international “Humanitarian Help”. Similar to the Clapcrap mordidas: They will start accepting some stuff, after the Guisos are cooked.

    • It has to do with who has the deepest pockets to leverage acceleration and start seizing assets. They bought a large sum of debt back over the last many years. They are playing a suckers game, but there is logic to keeping GS and other institutional investors paid. Who really knows how much difference this will make…but it kicks the can a bit further. Rest assured they are not doing this out of socialist love.

  3. Stating the obvious, electronically printing bolivars costs nothing but creates inflation, which is a bad thing in most countries. But when inflation erases internal debt the dictatorship loves it.. if they could only do that with external debt..

    btw señora, thank you for your 25 years of service, let me buy you a cafecito, good luck finding your next meal.

    Nothing will change until el pueblo is not willing to accept that digging through garbage is a viable career or retirement plan.

    • This is just another nutty part of it:

      VZ can’t print their own money. I believe it was a German vendor who fulfilled the last “order.” Can’t remember.

      But the B is literally not worth the costs associated with printing it, both the paper and printing vendor/labor costs. And it becomes dramatically less worth it every damn day.

      So…

      You have Chavismo contracting a foreign company, but they can’t afford to pay them, so what do they do? Do they tell them, “Just print a couple of trillion…gazzillion…more for yourself to cover our bill.”

      This is how Chavismo works, and via arbitrage, this is how VZ has become the economic basketcase it is today.

  4. I see PDVSA is offering India a 30% discount on oil if it pays in Petros:
    https://www.ccn.com/venezuela-offers-india-30-oil-discount-on-petro-purchases/

    So let’s assume: 1 Petro = 1 bbl. oil = 60 USD.

    If India wants to buy, say, 100 bbl. and takes the discount deal, it would: 1) Buy 70 Petros from VZ for $4,200, 2) Take possession of 100 bbl. of oil from PDVSA, 3) Give PDVSA the 70 Petros.

    The Petros are back in VZ where they started, and VZ/PDVSA has received only $4,200 for oil that they otherwise could have sold for $6,000.

    What am I missing here?

    • It seems that everyone outside Vz sees the flaws of the petro, so you’re not missing anything.

      And there’s more.
      Something like:
      Maduro ordered Petróleos de Venezuela (PDVSA) and the ministers for oil and transport to get the payments for aviation fuel from international airlines, in the Petro — Venezuelan cryptocurrency.

      https://maduradas.com/sepalo-gobierno-vendera-gasolina-a-aerolineas-en-petros/
      “Toda la gasolina que se venda a los aviones en dólares, de servicios internacionales (…), toda la gasolina debe venderse en petro, toda a partir de ahora”, expresó [Maduro].

      • It is a very silly order and meaningless. The few international airlines that still service Venezuela don’t buy local Venezuelan aviation fuel (given the state of fuel quality and availability in Venezuela would you trust that your flight would not drop in to the Sea?). Most carry fuel for the return flights or re-fuel at other stops along their flights.

    • Think big and follow the money! Venezuela needs Dollar. They are having trouble getting dollars. Their prime partners (China and Russia) will no longer lend additional $ and Embargos are blocking access to other credit markets. So how do you get dollars to use for your ”Gisos” and corrupt friends?
      First, India would never buy just 100 Barrels. It would cost too much to ship half way around the world to India and would provide little useful value.
      India would probably buy a full tanker ship. The average oil tanker holds 2 million barrels of oil. So, India buys 1.4 million Petros @ $60.00 each for a total Dollar Value of $84 million. They then pay for the 2 million barrels of oil with the 1.4 million Petros. Venezuela nets $84 million.
      So what … here is the magic …. India needs to purchase the Petros before a drop of oil is received, i.e. money before Oil is shipped or received. So if the oil is bad or not up to quality standards too bad for India they’ve already paid the piper? And where do you think the $84 million will actually end up? Given all of the current and potential future embargos not in Venezuela! It will most likely end up in a secret account somewhere that is not impacted by or visible to the Embargo watching authorities. No doubt the full $84 million will not end up in that account certainly a large percentage will vanish.

        • 2 million barrels @$60 = $120 Million. 70% of $120 Million (i.e. 30% discount) is $84 Million. So to get 2 Million barrels they need to purchase 1.4 million Petros @ $60 each.

    • There is probably some clause in the proposal that India has to buy more than 70% of the hard currency value in petros. Not the full amount but enough of a percentage to leave them holding petros. Then through the phony currency exchanges the petro will be traded around by surrogates. The BVC will transfer money back to exchange in the form of hard currency or “credible” crypto currencies to be “cashed out”. Thus giving false credibility to the notion the petro has value on the secondary market. True pump & dump technique by the regime to pull a propaganda stunt and create a “buzz”. They are hoping there are loads of people with more money than sense. It cost too much to sustain. The petro is a stillborn currency and the last ditch effort of a rogue and isolated dictatorship.

      • I thought regime insiders would be allowed to pay, say $30/Petro and offer it on the “open market” for $45, netting a nice 50% profit and laundering the money in one “nice clean” transaction. Would make sense as to why the Russians assisted in the design/creation. Let the imbeciles in Venezuela be the proverbial lemmings and waste whatever is left of the foreign reserves.

  5. Supposedly within the next three months all govt. agencies will be required to accept transactions in Petros. Seems to me this will be a MOMENT OF TRUTH, as prices will have to be stated in both Petros and Bolivars. And to my way of thinking, this will wipe out the Bolivar and essentially dollarize the Venezuelan economy.

    For example, your tax bill will have to be stated in both, “X” Petros and “Y” Bolivars, your choice of payment type. So a little math would indicate that one Petro will be worth “Y/X” Bolivars. But wait! One Petro = 1bbl. oil = 60 USD (+/-). Ergo, “Y/X” Bolivars = 60 USD.

    Today, DICOM officially determines (Y/X) (stop laughing!). But wait again! The Petro White Paper says that (Y/X), “will be determined through an average weighted by the volume of all exchange houses authorized by the Venezuelan government.” In other words, hello, free market, bye bye, DICOM. We all know where the open market of the Bolivar is and where it is going. An hour ago, Venebloc quoted free market (Y/X) = 47,011,377 Bolivars (Yea, that’s 47 million and change. You gotta do some math to get it from the website).

    So, hello, Petro, pegged to the US Dollar through the price of oil, goodby totally worthless Bolivar. But wait yet again! You need internet access to deal in Petros! Fuck it! Let’s also legalize the Greenback!

    • To paraphrase; volume from all “official” exchange houses. So in the end still controlled indirectly by the regime, another arbitrage opportunity not related at all to the free market. Wave goodbye to any actual reserves the country has left courtesy of another corrupt regime policy.

      • Yes, they probably thought they had their asses covered with that “official” qualifier, and they might try a DICOM thing ala the Bolivar. But they are committed to one Petro = one bbl. oil. So if they flood the world with Petros then you will be able to buy them on the cheap in the open exchanges, and then buy PDVSA oil with near worthless Petros. Hey, I ain’t sayin’ they won’t try something stupid!

        • I thought the Petro was “backed up” by oil in fields that have yet to be exploited. In other words, there is no buying an actual physical barrel, only the promise of a claim to a future barrel after costs. Either way one is banking, literally, on the word of known criminals.

          • Ah, Waltz, but we are now talking about what government agencies are required to accept, not what the damned thing is actually backed by. According to the White Paper:

            “The Bolivarian Republic of Venezuela guarantees that it will accept Petro’s as a form of payment of national taxes, fees, contributions and public services, taking as a reference the price of the barrel of the Venezuelan basket” —- of oil as listed “in the official website of The Ministry of the popular power for Oil,
” based on the previous day’s trading. All real simple, eh? The crooks are probably licking their chops as we speak. Put it this way; I sure as hell won’t invest.

            My brain hurts. I am going to pour a nightcap and call it a day.

          • Is there anyone with money to “play with” that would for one second consider the Petro?

            I have invested “play money” in various schemes* and business opportunities. The vast majority have worked out very well. The point is, that the risky aspects of each opportunity were well researched ahead of time. I knew all the players and knew what the risks were. From what I have read about the Petro, only the most foolish rich person would invest a dime in such a scam. Which is an oxymoron, because rich people don’t get/stay rich by being foolish. Why would ANY person buy into a shady deal with known hucksters who can’t be trusted to guard a dead rat, let alone organize a financial tool?

            This Petro scam is all smoke and mirrors. It if were legit, then Maduro et alli would have all sorts of transparency built into it. As it is, it is nothing but snake oil. Is there ONE financial person of integrity out there who is suggesting that it is anything but a scam?

            ~~~~~~~~~~~~~~~~

            *Usually some “hot stock tip”.

          • ElGuapo, I totally agree. I believe in taking a flyer only when I feel I have an edge. I am researching the Petro because I think these guys are in WAY over their heads. They will try to manipulate the markets. They will fail. They will instead create easy arbitrage opportunities.

            Only those of us intimately familiar with Venezuela will be able to believe how really stupid they really are. The rest of the world will not. That might be my (our) edge.

          • The only way I can think to game this GAMED system, if one is not linked to the regime, is to find some clown at AIG (or elsewhere) to sell you a derivatives contract, not to mention the fact that for some of us dealing/investing in the Petro is illegal. Even if not I would not try to scam the thieves (scammers) of the millennium on their home court.

          • “Is there anyone with money to “play with” that would for one second consider the Petro?”

            Of course there is.
            It is called Greed, “Dealers Money” or gambling.

            There are thousand or 10’s of thousands people out there that have benefited from bitcoins over the last few years. Most had little idea of what they were doing, but bang, they now have profits sitting in the “bank”.

            They know they made easy money in bitcoin, and feel a $1000 Petro “investment” can turn into $100,000 and can turn to dust.

            What the heck, it is Dealers Money, a gamble, but why not?

            We all know it is a ponzi scheme, or 1 in a million bet (or at least we are 99% sure), but we are in the know. But are we gamblers as well? That is a bug many can not shake.

    • So at $60 per barrel a Bolivar would be worth almost 800,000 Bolivars but at $30 per barrel a dollar would be worth almost 1.6 million Bolivars. The dollar cost of a barrel of oil determines the value of a Bolivar and the purchasing power of the pueblo. But what if the US were to embargo the sale of light oil to Venezuela, the Petro I am guessing would be pegged not to the international price but rather the lower price of Venuelan oil which would skyrocket inflation and devalue the Bolivar. Is that right Lorenzo?

      • Bill, I am not a world-class economist. I am using CC as a sounding board trying to get a handle on this, same as you.

        HAVING SAID THAT, I think this is how it would work. With tonight’s Bolivar, El Pueblo would have this purchasing profile:

        800,000 Bsf = 1 Petro = 1 bbl. Vz oil = $60.00

        Then The Donald brings the hammer down, and instantly: 1 Petro = 1bbl. Vz oil = $30.00. The only change in the relationship above:

        400,000 Bsf = 1 Petro = 1 bbl. Vz oil = $30.00

        In-other-words, the change in price is in the oil which by definition determines the price of Petros, so no immediate effect on El Pueblo’s purchasing power in Bolivars. Emphasis on immediate. As oil exports account for 90% of Vz’s revenue, cutting this in half would quickly screw things up big-time. Again, not an expert, so take it for what it is worth.

  6. In the above calc’s, I don’t see anything on how the price of coke or smack will be taken in to account. Please advise.

    • You got me there, Doughbouy. Totally out of my league. My addictions don’t go beyond Kentucky bourbon or maybe a good Canadian blended.

    • Not advise but that money is only going into private accounts not the public coffers. Why share with the people what you have “earned” privately? Ideology is not a good enough reason.

  7. “One Petro = 1bbl. oil = 60 USD” = fantasy.

    One thing to keep in mind is that the *net* value of a barrel of Vz heavy crude is near zero. Maduro’s *claim* that the petro is backed by crude in the ground is worth much less than zero.

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