Wednesday, August 20, 2008

The Venezuelan Central Bank is fudging the country's balance of payments numbers The other day, I presented a back of the envelope calculation showing at what price of oil does the country start having problems in its balance of payments. I am still reviewing those numbers, my main small mistake was only that imports are higher than I assumed. Today, I paid attention to this Central Bank press release on the same subject. The first thing it says is that the balance of payments was positive to the tune of US$ 2.93 billion in the second quarter of 2008. That sounds ok at first sight. However, the report says that oil exports in the quarter, in which the average price of the Venezuelan oil basket was US$ 109.9, was US$ 28 billion. Of course, such a number only makes sense if Venezuela exported 2.7 million barrels of oil a day. This does not even fit with official numbers! The problem is that all of this data is simply fudged. They talk about exports, but don’t mention imports of oil. Venezuela consumes at least 800,000 barrels of gasoline a day, but Venezuela does not produce such a large amount. Thus, the reality is that Venezuela may be “exporting” 2.7 million barrels of oil, but Venezuela is not getting paid for that many and in the end it has to also import to satisfy the local market. In fact, that the numbers are fudged, can be seen in the next paragraph on the “financial account”. After telling us the country exports US$ 28 billion, the Central Bank tells us that there was a full US$ 11.1 billion in a financial deficit, a full 39% of the “income” from imports, which corresponds to “the increase in the oil credits given to foreign clients which are not related to PDVSA” What than means in plain language is that PDVSA is not charging for a full 39% of its exports or 1.05 million barrels of oil a day. Which I don’t believe either, it is simply too large a number. The fudging is simply getting too absurd. We don’t give away so much. As simple as that. But let’s look at this from a different point of view: The Government claims Venezuela produces 3.3 million barrels a day The country consumes 800,000 barrels a day. That only leaves 2.5 barrels a day for import, so the 2.7 million number given in the BCV report and calculated on the basis of the average price of the Venezuelan oil basket in the second quarter has to be fake. And so has to be the 11 billion in credits, we just don’t give away so much oil. It is just creative accounting. I am sure that these “credits” hide the value of a lot of the gasoline imports of the country. But we can “redo” my calculation using the final fudged numbers given out by the Central Bank. The final numbers should be fine, they are harder to fake: The Central Bank says that the surplus in the current account was US$ 2.9 billion The total for oil imports was US$ 28 billion. Thus, the “net” surplus, including everything is only 10% of the amount from oil imports. Since the average price for the quarter was US$ 109.9, then ten percent of this is US$ 11, which says that if the price of oil dropped to US$ 98.9 per barrel, the balance of payments will be negative! Think about it, my very approximate number was too low! 11:45:02 PM    comment []

A Chavez video with an incredible historical value: His ignorance and his lack of interest in democratic principles This may be one of the most relevant videos of an Hugo Chavez tirade. First he has his world fight and claims the revolution starts here in Latin America. Chávez y la oligarquía pitiyanqui Cargado por noticias24 But, oops, here is the leader of a supposedly XXist. Century Revolution, after calling Marx and Engels the leaders of “scientific socialism”, Then he calls Simon Bolivar a socialist. He also talks (minute 1:20 or so) about the “pages” and the “windows” and the “Internet” clearly showing he has no clue about the difference between a computer and the Internet Then he just says what he always wanted to say, after calling a local newspaper a pro-US paper, people with no country, because the laws he issued allowed him to confiscate 1600 Kilos of rice, he threatens that freedoms for some sectors will be finished and that people will have fewer freedoms. Of course, it will be the oligarchs whose freedoms will be restricted. Can it be clearer than that? Some leader! He then praises the same guy I criticized last week for saying that price increases will not lead to inflation. Another “scientific” hero of the revolution I guess. Has anybody asked what happened to the money he got from selling the rice at the subway station? Is Mr. Saman depositing it in his personal account? Such are the ways of the stupid revolution! 11:24:34 PM    comment []

All recent expropriations and nationalizations are simply unconstitutional Just a reminder in the face of the wave of nationalizations and confiscations: Art 115. of the Venezuelan Constitution: Artículo 115. Se garantiza el derecho de propiedad. Toda persona tiene derecho al uso, goce, disfrute y disposición de sus bienes. La propiedad estará sometida a las condiciones, restricciones y obligaciones que establezca la ley con fines de utilidad pública o de interés general. Sólo por causa de utilidad pública o interés social, mediante sentencia firme y pago oportuno de justa indemnización, podrá ser declarada la expropiación de cualquier clase de bienes. Art. 115. The right to property is guaranteed. All person have the right to the use, possession, enjoyment and disposition of its goods. Property will only be the subject to the conditions of restriction and obligations that the law establishes with the public good or general interest as its end . Only die to the public good or social interest, via a firm sentence and opportune payment of just indemnization, can the expropriation of any type of good be declared. Can it be any clearer than that? Each and everyone of the steps in the nationalization and expropriation of Sidor, Cemex, Fabrica Nacional de Cementos and Cementos Caribe are simply illegal. Apparently, many people don’t want to defend their rights. 10:50:15 PM    comment []