Sunday, February 05, 2006

Long live Chavez by Oscar Garcia Mendoza Oscar Garcia Mendoza is President of Banco Venezolano de Credito, as you can see his article in yesterday's El Universal, agrees with everything I have said here about the banking system, its present and its future: Long live Chavez by Oscar Garcia Mendoza After seven years of his Government, there are very few Venezuelans that are thankful of Chavez’ Government. The country has received more than US$ 375 billion in oil income and the reality is chaos in the infrastructure, increase in malnutrition and poverty, administrative disaster and one can’t stop counting. Some have benefited. Among those, the banking sector has been quite privileged. In these seven years the earnings of the sector have been the highest in its history. It has grown substantially and in its majority it backs the Government. What has happened? The banking sector from the beginning of the regime has acted as a facilitating mechanism for the cash flow of the Government and has allowed it to take unproductive current spending to the levels desired by the administration. It has been the mechanism to conduct the flows of the Government. On the one side it receives funds from state companies and ministries and on the other it acquires public debt instruments which are exempt from income tax, realizing great benefits from this. In recent days, the Superintendent of banks was complaining that banks barely pay taxes, the reason is there for everyone to see: if a great part of its earnings arise from exempt bonds they have to pay or little or nothing. On January 31, an article in the Financial Times related how the Ministry of Finance was making opaque sales, without an auction, of Argentinean bonds to local banks, which it mentions by name. Those banks, says the article, acquire those bonds in bolivars at the controlled exchange rate and immediately sell them generating a profit that miraculously evaporates. Up to now those involved have not denied the news. Banks enjoy on top of that accounting privileges: revaluations, portfolios outside the balance sheet. And it is rumored that given the huge monetary liquidity the Basel indices will be lowered so that banks can capture more deposits, without the bankers having to capitalize. The feast may last as long as oil income can support it or maybe less, because the level of spending is so exorbitant that they will have to rely more and more to inorganic issuing and to inflation, in fact the highest in Latin-American for years. The time will come in which “out of friendship” it will no longer be possible to sustain the earnings and the illusion of solvency and at that moment the losers will be the depositors, as it always happens. With the regime collapsed some, from afar, will continue to gratefully proclaim: “Long live Chavez” 9:24:49 PM    comment []

Bans do not apply to those that deserve the privilieges, like revolutionaries A year ago, the Government banned airplanes from using the Caracas military airport "La Carlota", decreeing that only helicopters could take off and land from that day on. The ostensible reason was that this represented a danger to the population of the city and, after all, it was only used by a "priviliged few". The ban held until the viaduct collapsed and I had heard rumors that planes were landing there once in a while. Yesterday while taking part in the march I took the picture below. Unfortunately, one can not see the letters on the plane to check who it belongs to, but I am sure that it belongs to the Government and this is just the new oligarchy and their friends, taking advantage of their priviliges. I am sure that in their minds, some are more deserving of priviliges than others. Unless it is a well-designed UFO. Viva la Revolucion! 11:19:35 AM    comment []