Wednesday, July 09, 2008

The passionate lies of the revolution and its cheerleaders Politicians by nature like to spin the truth, a small lie here or there, or simply a twist of the truth. All in the name of the success of their project, whether personal or partisan. But nobody can beat the Chavista revolution at the passion with which they can lie and deceive, essentially assuming that their supporters will not notice the inconsistencies, laughing at the intelligence of the people they claim to love and believing in their ability to trust them unconditionally. The supporters and cheerleaders of the Chavez revolution are no different, they make up facts, dismiss others and try to portray a reality they know little about except that they sympathize with it. Today Quico wrote an excellent article debunking one such article in The Independent, which you can ascribe to either an incredible ignorance by the author, which speaks badly of his professional abilities, or to an incredible lack of ethics by him. While Quico dealt well with the factual errors of the article, some of them outrageous, what still amazes me is this ability to attempt to suggest that Hugo Chavez has never even come close to supporting the FARC terrorists. This is not only the case in Hari’s article which explicitly says: “You have been told that the Venezuelan President supports the Farc thugs who have been holding her hostage”, but seems to have permeated the PSFhere, ever since Ingrid Betancourt and the other fourteen hostages were rescued by Colombian military authorities. The passion and intensity with which so many people have attempted to portray Hugo Chavez, as an innocent bystander is simply sickening. Many of these cheerleaders seem to have joined the story only recently, as if Reyes computers were the only source of evidence for Hugo Chavez’ support of the FARC, which at times was blatantly open and for which there is ample evidence factual and very very real: -Venezuelans will never forget General Gonzalez Gonzalez, an active military General telling the Venezuelan National Assembly that in 1999 and 2000, he brought to the attention of Chavez pictures proving that there were active FARC camps within Venezuelan territory and they should be destroyed. Nothing was ever done about it. -Or how about the Foreign Minister of the FARC Rodrigo Granda, who was found in Venezuela living in the lap of luxury, with Venezuelan identity papers, provided by none other than the man who is today back into the Ministry of the Interior and Justice. Rodriguez Chacin was later proven to have met Granda at the VIP Government gate at Maiquetia International Airport upon his entrance to the country. -And since we are speaking of Minister Rodriguez Chacin, can we forget his words on the occasion of the release of two hostages to the soldiers turning over the two former Deputies of the Colombian Congress, saying “we are watching what you are doing, keep it up!” This is a man described by the FARC as a true “badass”, on the occasion of his visit to the FARC to ask for “training” support. -And by the way, how did that wanted FARC terrorist and criminal Ivan Marquez get all the way to Caracas to meet with…you guessed it, Hugo Chavez at the Venezuelan Presidential Palace? Once again, it was Chavez current Minister Rodriguez Chacin who gave him a lift, all the way to meet the top honcho. -It was Hugo Chavez who attempted to get a movement going to have the FARC declared a belligerent force by the world. The move never even got off the ground, but is that sympathy or what?. -Then there is all of the information in Reyes’ computers, which many don’t seem to believe in, but it’s there, certified and consistent. It was actually used by Interpol to jail some people. Of course, Chavez failed in his efforts and suddenly turned around and has gone back to talking to Alvaro Uribe a man he hailed last November “never to meet again”, when he broke relations with Colombia when Uribe told him that he was no longer welcomed in his negotiation efforts because he had overstep the bounds of the rules agreed to. But local politicians are equally passionate in their lies and exception. Only ten days ago, Chavista Deputy Carlos Escarra made an impassionate defense of the disqualifications of candidates by the Comptroller. Escarra spoke of the fight against corruption, stopping the robbers of the people and the like. Curiously, we learned yesterday that the same Escarra, then a Deputy but always the lawyer, took on the case of Chavista candidates that were disqualified from running for office, using precisely the opposite legal arguments that he used two weeks ago. And then there is the august leader of the Venezuelan National Assembly Cilia Flores blasting reporters who wrote about nepotism in the National Assembly. Flores seemed to forget she is the wife of Foreign Minister Maduro, who she succeeded in that Presidency. Of course, she made it sound like the accusations were all false, that there is no nepotism. But besides accusations of a hiring process that did not seem kosher, in the recent hiring process, Flores was lucky enough to place relatives in nine of the sixty permanent positions up for grabs. These included three brothers or sisters, two nephews, a cousin, the mother of that same cousin and her “consuegra” (co-mother in law?) and her aunt. Flores arguments are simply circular, she complains that nowhere in the article is it mentioned that the workers of the Assembly have better benefits and denies there is nepotism…I guess the Flores’ must be the new Kennedy’s of Venezuela. But of course, the revolution is full of nepotism anyway. Chavez’ brother was a Minister and Ambassador. His Father Governor (elected, yes, on Chavez’ coattails). His other brother is Secretary General of his father and a cousin is on the Board of PDVSA. Which only proves that nepotism is a way of life in the revolution, but you have to lie passionately and deny it so that the “people” will never find out about it. It’s a way of life for them… 12:43:57 AM    comment []

Monday, July 07, 2008

Weil strikes again, too close to my world not to post it 8:36:53 PM    comment []

Sunday, July 06, 2008

The brainless cheerleaders of revolution try a silly and baseless spin on the Betancourt rescue It has been an amazing few days as the brainless cheerleaders of revolution attempt a ridiculously silly spin on the liberation of the hostages by Colombian authorities. Silly and brainless because in attempting to construct an alternative story to the rescue, they only who how heartless and insensitive they are, despite claims to the contrary.But even worse, the spin is just baseless, another fantasy of their febrile revolutionary fervor. Even the chief faker Hugo Chavez did not even attempt to create a spin. He did not even hide his true thoughts when he stated that news of the rescue “left him cold” (better than saying he almost had a heart attack), clearly expressing the sentiment of loss he must have had when he heard it, as he wasted a year of this life on his failed project, allowing Colombian President Alvaro Uribe to destroy the FARC in the process. (Just think, the Colombian military painted the helicopter with the same colors used by Chavez in earlier attempts and releases of hostages!) And while he later expressed his happiness at Betancourt being liberated, it came too late for a President and a Government always ready to issue a quick press release and an opinion about subjects that are not directly of their concern in an immediate fashion and without having all the facts in. But his cheerleaders did not follow the party line off the bat, daring to give opinions without any relevant information or basis. First of all, there was the theory of the US$ 20 million first raised by a Venezuelan “analyst” Luis Brito Garcia who is more of a commentator full of himself who loves to see his image on television speaking on issues he knows little or nothing about. According to this wizard with no information, the Colombian Government “interfered” with the release of the hostages by the FARC to two people on a humanitarian mission. Never mind that 15 people were supposedly release to only two negotiators. Never mind that except for this analyst, nobody seemed to know about this release. Never mind that the FARC has not released many hostages even to his buddy Hugo Chavez, and we are supposed to believe that a couple of guys just arrived in the country a couple of days earlier would get the grand gesture of the largest hostage release in history, including the precious hostage, Ingrid Betancourt, that the FARC said in its internal messages they did not want to release because of her strategic value. But suppose for a minute that the US$ 20 million story is true. We would first have to ask why the FARC would “sell” the hostages for such a small amount, when Master Hugo would have certainly paid more. But more importantlyÑ is that what “revolutionary” forces do these days? Kidnap for ransom and forget the revolution_ Is this what we are supposed to follow and admire? What’s the money for? Retirement in Iran? And who paid the money? Who negotiated? Why has the FARC said nothing about this part? In the past, the FARC has reacted swiftly and quickly to admit or deny news via websites and their own sources. So far, there has simply been total silence from them. But more importantly, there is the testimony of Betancourt herself, no Uribe fan, saying that there is no way this was a release that the Colombian authorities interfered with, the tension was there in the transfer, her long term guard, thrown on the floor of the helicopter, punched without mercy after being fooled by the set up. These guys spoke even before the Colombian authorities showed the video with the hostages tied up, tense, strain on their faces as they were moved once again from place to place. By now, it is the length of the video they question, as if the Colombian authorities would show the faces of the military involved, so that a cruel and bloodless guerrilla group could go after them in revenge. And then here is the touch of the camera crew, looking like a Telesur team, something the FARC has gotten used to in many cases, including the now infamous long live Marulanda speech upon his death, staged and taped by Chavez’ Telesur apparently somewhere in Venezuela. Then came that despicable character Mario Silva in his offensive TV program La Hojilla, a lowlife if there has ever been one, expressing no joy whatsoever at the liberation of Betancourt, instead calling her selfish for not thanking Chavez for his efforts. Which she did anyway, but maybe Mr. Silva has not noticed that it was Uribe that rescued Betancourt and that Chavez’ efforts yielded little in the almost ten months he has been involved in the case. Moreover, it is also clear hat the FARC toyed with Chavez, leading him to believe he would achieve something but all the time hiding information from him.  And if there is someone that deserved a selfish moment was Betancourt, held against her will for years, three of which she spent chained with the same irons carried by his guard Cesar in his backpack as he was overtaken in the helicopter. How could he not travel with that most useful tool of perversity and human misery? But none of this seemed to have been noticed by Silva, who would likely not survive with dignity the same fate as Ingrid Betancourt, if he were kidnapped and mistreated in similar fashion. Whether you believe them or not, the Reyes computers did say that the FARC did not want to release Betancourt, their most valuable trading chip in their gutless game of terror, murder and drug trafficking.And all the acts of the FARC confirm this idea. But perhaps the most despicable statement was that of Ecuadorian President Correa when he said the FARC kept making Uribe look good with their failures. To Correa apparently, the release of the hostages, innocent people kidnapped, chained and tortured against their will for years, is something to be proud of and admire. To him the wholesale violation of human rights by the FARC is something to praise and defend and romanticize, saying Che Guevara would be ashamed of them. But maybe Correa and the other sycophants have forgotten that only 15 of the hostages were released, with thousands still in the hands of the FARC. And with the release of the hostages, came bad news of some of them who were thought to be alive in the hands of the FARC but were callously murdered by Correa’s sentimental friends. No case is more dramatic in terms of sheer perversity by the FARC captors that a sergeant of the Colombian military named  Luis Hernando Peña Bonilla .  Thought to be alive, it turns out that he started having mental problems during his captivity, which led to his captors to chain him, which only made his mental state worse.  And then these emblematic figures of the idiotic Latin American left decided that there was a simple solution, so they shot him dead. Just because… Nice people, no? Of course, the idiotic theories and statements by these useful and brainless idiots are chorused by the international mindless left alliance, who in their ignorance and from the comfort of their cushiony lives, hail the FARC, criticize Uribe and parrot the illogical, unsupported and silly theories, which in the end would simply show what a revolutionary farce the FARC have become. Because they are trying to turn a moment of joy, a victory for what makes us human, a time for reflection and hope, into a political defeat, which does not exist for Colombian President Uribe. Uribe set the course long ago for his strategy and he is getting results, which 90% of Colombians, who elected him, support. It was indeed a victory for him; he took a huge gamble on his political future and won. But it was not an improvised one. It was one more step in a professionally executed strategy, which has been bearing fruit for years and has been even magnified by Chavez’ naiveté and improvisation in meddling in the case. Because in the end, the FARC could have released the hostages too many times if they really meant it. They still can, but so far they haven’t done it. This proves once again that the whole thing has to be resolved the way it is being solved and that the embarrassing vote of the Venezuelan National Assembly criticizing the release of the hostages via a military operation, simply demonstrates not only how much time they have in their hands that they can consider this, but how primitive their understanding of the whole situation still is. But in the end, winners and losers are simply irrelevant when there are human beings and lives at stake. What is important is that fortunately, the fifteen hostages were released. That these people can attempt now to go back to their regular lives, accompanied by their ghosts and their nightmares. They can be human beings again or at least try, a right that nobody can take away from them. But perhaps they will not feel that sense of relief, tranquility and humanity again, until they know that not a single person is still in the hands of the FARC. Sadly and shamelessly for those that still praise the FARC, that moment still seems too far away. 11:53:23 PM    comment []

As Ingrid Betancourt is freed, a victory for some, a defeat for others, but in the end a victory for civilized behavior This post was generously placed by Daniel in his blog when I was unable to post remotely during my travels. I thought the release of Ingrid Betancourt was too significant to skip without a post. As Ingrid Betancourt is freed today, Alvaro Uribe scores a huge victory and Hugo Chavez loses big, as his bid to gain worldwide fame, helps Colombia defeat the FARC and the most symbolic hostage is out. This puts the FARC in a corner, where it makes no sense anymore to hold the remainder hostages and their decades old terrorists war, which turned into drug trafficking and kidnapping to support the effort, is over. While the news is great, as long held Betancourt is finally freed in good health, it throws some uncertainty over the remainder hostages, as the former Presidential candidate represented the most visible hostage the world was ready to fight for. Thus, there will be a period of uncertainty for the remainder people suffering the horror of years in captivity, treated badly and without good medical care. Its already been hours since the surprising rescue by the Colombian Government and there has been no reaction by the Venezuelan Government. Perhaps Chavez is calling Cuba to map out a strategy for his response, perhaps he is depressed, but is certainly a bad day for him. The Venezuelan President tried to play a high stakes game, the way he has tied with us in the last ten years, but he had a more formidable opponent, used to playing tough and they actually used him to raise the communications levels among the FARC commanders and in the end Uribe got the upper hand on both the FARC and the Venezuelan President. French President Sarkozy is another winner as he made the liberation a point of honor and made the media and his country focus on it. But most of all, it is a great day for Ingrid Betancourt, the three American hostages and the eleven Colombian hostages who may now attempt to escape the horror they have lived through and regain some semblance of their lives. The world also has to learn from recent events, not to sympathize with terrorists, not to defend them. Uribe was painted as the bad guy too many times in his fight to return peace to his country, while the FARC kidnapped and traded drugs to survive. The terrorist criminals of the FARC should be given one last chance by the world to give up the remainder hostages and return to civilian life. If they dont, the world should back the Colombian President. It is not a matter of ideology, it is simply a defense of humanity and peoples rights. 10:30:18 PM    comment []

Thursday, June 26, 2008

When all the clowns in Venezuela want to run the circus Somehow the picture above reflects what is happening in Venezuela much better than any words I can put together.  It was taken on Tuesday during the parade in Campo de Carabobo, in celebration of the battle that gave the country its independence. First of all, Chavez spent this “celebration” talking about politics and telling us why it is that “no volveran” (they will not comeback). The problem is that it is no longer clear if he means “no volveran” or “yo no me voy” (I will not leave), because nobody even seems to remember who it is that will not come back. Because Chavez used his speech to tell us who among his former heroes will not come back. Baduel for example. Chavez’ former buddy, friend, confidant and the man that saved Chavez’ rear end in 2002, we were told that Baduel can go to hell and never come back. He then proceeded to do the same with burping, bumbling idiot Acosta Carles, his self-appointed Governor of Carabobo, famous for the burp that was heard around the world. One of the most visible clowns of the revolution. And we heard Acosta Carles come on and say he forgives Chavez, sounding like the veritable clown he is. Reminding Chavez that he saved his revolution with his burp. The guy is actually quite proud of his silly moment in history! And Acosta Carles turns the “Patria, Socialismo o Muerte” of Chavez in a more benign “Patria, Socialismo o Amor”, certainly an improvement and better than Chavez Minister of Defense that says Socialism is life and that is why he is ready to fight for the revolution. Another day, another clown. And just to remind us that things can actually get worse under Chavez, he praises his new hero he has found for poor Carabobo State: That perverse and despicable journalist of La Hojilla named Mario Silva. I mean, why does Chavez hate Carabobo so much? What did they do to him there? Because Mr Silva has no redeeming qualities. No managerial experience. No political following. Thus, Chavez wants him to be Governor of Carabobo. And who would have ever thought that we may be grateful to Acosta Carles for anything? Acosta Carles, while he apologized to Chavez, in his delirium said that if the “people” want to be a candidate he will be. Which is just a lesson he learned from the clown master himself, Hugo Chavez, who always says he is doing things for the “people”, but he only does what Hugo Chavez, wants. That’s the problem, Chavez has created dozens of powerful monsters, which to us appear as clowns and now he does not know how to stop them, but these clowns have undertaken a life of their own. And then Chavez showed why he is the despicable autocrat he is, when he said that he defended the Comptroller for disqualifying the corrupt of the country. Corrupt? Not one person in the list of the Comptroller has been tried or found guilty. Moreover, the most relevant ones are not being disqualified for stealing money, but for changing line items in the budget, or for violating obscure sections of the administrative code. But nobody is disqualified, for example, for charging commissions for giving bonds to anyone at a discount. Or even investigated for example, for carrying suitcases full of cash in Government airplanes. Or nobody has looked into the sudden wealth of Government officials, like Chavez’ family. Or former Vice President Jorge Rodriguez. Or the multi million dollar apartments in Miami of PDVSA Directors. Or the use of VTV for a political party. Or the use of the Electoral Board for Chavez’ party’s primary? Or front running of PDVSA bonds? Or Sovereign bonds? Or the sale of the Citibank building? Or the drop of production of PDVSA? Or stealing the funds for the non-working sugar plants? Or where did Juan Barreto find money to buy the Daily Journal? Or who owns Banco Bolivar, Banco Confederado or Banpro? Or who acts an intermediary for the structured notes and bonds sold by the Government (All 8 billion dollars of them)? Or where did the money from the FIEM go in 2003 (we are talking billions missing)? I could go on but it would get boring, it is all in this blog since August 2002. And the clowns! How about the Minister of Health who claimed the current mumps epidemic was the fault of the prior Government because 14 and 15 year olds were getting it and thus never got the vaccine, forgetting that four year olds are also infected? Or the Tax Office guy this week saying there was no Supreme Court decision on taxable salary, but it is right there on the Court’s webpage? Or the defense of the Intelligence Bill by the usual people that suck up to Chavez, until Chavez realized the issue was becoming too hot to keep and dumped them? How about the crimes that are not relevant to society, like gang homicides, jail killings and family disputes? Those don’t count for God’s sake; they are irrelevant according to the Minister of Justice. Who by the way was accused of a massacre when he was in the military during the awful days of the Fourth Republic, but now sympathizes somehow with those on the other side of the massacre! And how about the military clowns? Do you realize that almost none of the Ministers of Defense that Chavez has had could speak well? Why is that? The last one can barely put a few sentences together and now General Garcia Carneiro, one of the worst offenders of this,  is being imposed on the people of Vargas State as Chavez candidate for Governor.  As if the people of Vargas were not masochistic enough already! An act of God destroyed their state in 2000 and Chavez is making sure it stays that way and they keep voting for his people! They deserve Garcia Carneiro! They deserve their children to speak up as incoherently as him and their votes! And today the National Assembly defends the Comptroller; one day after saying the Moral Council’s attempt to remove two Supreme Court Justices was illegal. And guess what? The Comptroller is one of the three clowns in the Immoral Council! We are now supposed to believe that the same guy who could not read in the Constitution that decisions of the Council have to be unanimous and by all of its three members, can understand more complicated things like what disqualifying means, or what human rights are or how to even spell  “Interamerican Convention on Human Rights” Just think, in ten years, only one-person has been found guilty for corruption. That guy is probably innocent! Or stupid! But of all the stupid and clownish things I have heard lately, the best one has to be the General that said the media could be prosecuted for revealing national secrets. What was the context? Well, Clown #1 had ordered nine divisions to move to the border with Colombia to defend the country. For two days, the media reported that there had been no movement. That was when the Chief military clown threatened to prosecute the media for “revealing” this national secret. Of course, he never thought he should prosecute the Chief clown for announcing the troop movement on National TV. Or making the decision by himself without consultation in violation of the laws. Or maybe, just maybe, he should have ordered an investigation on why the clown troops did not obey the orders of the Chief Clown? Or why when the troops were finally mobilized, only a fraction of what was ordered was mobilized. Could it be that after US$ 9 billion in weapons purchases we are still running in place like six years ago? The problems is not the clowns, it is that by now, these guys think they can run the circus… And they all want to replace Chavez in running the circus. 11:52:10 PM    comment []

Tuesday, June 24, 2008

Another black list under Hugo Chavez: Disqualifying opponents from running for office I have not written much about the “inhabilitaciones”, the new black list by the Hugo Chavez administration, which my dictionary translates as disqualifications, but does not seem quite right. In any case, I was waiting for the time to register candidacies to be closer to talk about the issue in the still naïve belief that the whole thing was so absurd, that it would surely go away. But it hasn’t…it represents another black list and abuse of power by this Government which is only efficient at violating people’s rights. Absurd, because the procedure used to disqualify a person is so ridiculous and simple and so dependent on a single person, the Comptroller, that if the legislators had meant to it to be that way, they would have realized what a mess it would be. Just so that you understand the process, let me describe how easy it is to be disqualified. The procedure can be as simple as this: -Someone from the Comptroller’s office or a citizen detects or accuses someone of doing something improper. -The Comptroller has the lawyers that work for him interview the accused (without a lawyer being present), you are asked at the end to sign to certify that you said what is in the minutes typed by the lawyer interviewing you.  -The case is reviewed and at that point new questions may arise which require a new meeting with the lawyer, at which point they will ask additional questions and/or clarifications about the case. The lawyers will then say what sections of the administrative code were violated and the case goes to the Comptroller for a final decision. -The Comptroller, alone and singlehandedly, decides whether you have committed a fault and decides what to do. It can be as simple as a fine or disqualifying you from being appointed to office for a certain period. Up to a few years ago, it was never interpreted as you not being eligible to be a candidate. That’s how easy the process to “disqualify” you is in this new revolutionary interpretation. How do I know this? Easy. A few years ago, I was on the Board of a Foundation associated with one of the universities in Caracas. We signed a letter of intention to buy an office for Bs. 250 million (at the time around US$ 300,000) and asked for a mortgage from a bank. On the day we had to pass papers, the mortgage had not come thru, so the seller pulled out unless we paid more, I don’t recall how much more but it was something like Bs. 20 or 30 million. The case came to the Board and we approved it because we could not find anything cheaper and the location was perfect for the Foundation. A couple of years later, someone went to the Comptroller’s office and denounced that there had been a payoff of some sort and that was why a higher amount was paid. The Comptroller opened the case and all eight members of the Board were investigated and we all went to the Comptroller’s office twice to testify or be interviewed. The lawyers conclusion was that we were not guilty of what we were accused but we were in violation of the law for attempting to borrow money without the Cabinet approving it (Despite the Foundation not having received any Government funding since 1970). Thus, we were charged with this different accusation and the penalty was a fine of what was then about $700-800 and two years of disqualification from being named to any Government position. The case went to the Comptroller (Russian, the current one) who decided we were not guilty. We never knew why he ruled that way; we were just sent letters of good behavior, saying the case had been closed. This is the first reason the whole thing is absurd, you cannot have such a process dependent on one person and subject to manipulation. Yes, you can appeal, but in the appeal, you just write why you are innocent and the Comptroller once again decides what to answer back. The fact that this is the case can be seen in the statistics which show that 80% of those disqualified from running for office are opposition in a country where the opposition holds less than 30% of the offices in the country between Mayors and Governors. That extreme asymmetry is no accident. In fact, the Comptroller is not a judge, he can disqualify someone from being appointed to office, but he can not stop them from being elected. The only way to take away your political right to be elected is if a Judge finds you guilty. This is not even just Venezuelan legislation, this is part of the Interamerican Convention on Human Rights (The San Jose pact) which in its Article 23 clearly says that your political rights can be limited by a number of reasons such as age, nationality and…”sentence, by the competent judge, in a penal process”.  Article 65 of the Venezuelan Constitution establishes a similar limitation, which I still find it hard to interpret in any other way, and takes precedence over any legislation below it. But in any case, Venezuela signed the San Jose pact, which will clearly delimit how anyone’s political rights can be taken away: Only by sentence of a judge in a penal process. Thus, we are once again facing a gross miscarriage of justice by the Chavez administration, which has simply disqualified those figures of the opposition that were a threat, while at the same time using similar arguments to remove pro-Chavez figures from office in the case of those Chavistas who were a nuisance to Chavez’ plans and desires, such as the recently removed Governor of Yaracuy State. If the rule of law existed in Venezuela, this would be easily and readily fixed with a ruling from the Constitutional Hall of the Venezuelan Supreme Court, but despite numerous injunctions submitted to that body, the Court has either ruled against them or denied the injunctions on technicalities. All of this has been helped by the absolute obedience of the Electoral Board, who despite the fact that none of them are lawyers, reached a decision on the matter without even asking for an opinion from its legal counsel. I have no hope that this new black list by the Chavez Government will be revoked. It is a Government for which the wholesale violation of human rights represents no problem if they are in the way of the empty political project of the Chavez revolution. From the PDVSA workers, to the Maisanta list and now the black list of the “inhabilitados”, it is a way of life for Chavez and his comrades to perversely violate the rights of those that get in their way. 11:29:08 AM    comment []

Sunday, June 22, 2008

Chavez Guisonomics 101, part IV: Why did the Government stop the use of structured notes to buy a bank? For a few weeks, there had been rumors that one of the largest banks in Venezuela, Banco de Venezuela, owned by Banco Santander of Spain, would be bought off by one of the largest banks at #5 in the country Banco Occidental de Descuento (BOD), creating the country’s largest bank. What was not clear was how the deal could be pulled off. Then, at the beginning of this week, someone explained to me that the transaction would simply be a hand off of the structured notes denominated in Bolivars in the hands of BOD. Such notes are worth slightly above the half of the US$ 2.4 billion registered on the books. Santander would receive them and ask the Government for the dollars at the official rate of exchange. While I haven’t seen the numbers, it made some sense if the regulator (the Government) allowed the transaction like it has allowed the others that have taken place. For Santander, it would be an elegant way out of the country (the bank has been rumored to be for sale for ages) and BOD would get rid of the notes in its balance sheet, acquiring a very healthy bank with the largest branch network in the country. Of course, the purchase would still be suspicious in the sense that those notes were purchased with depositors money. That si why I started this series. But then on Thursday there was a bombshell, the Government issued a very strict resolution essentially banning any bank or financial institution or even anyone currently owning more than 5% of any such institution from buying another one, reaching an agreement to buy another one, without prior permission from the Government. Moreover, the resolution bans the transfer of the structured notes without the financial institution having prior approval from the Government. Lawyers are still arguing whether the resolution banks the BOD/Banco de Venezuela acquisition as described, but most think the Government’s resolution is airtight. But whatever interpretation anyone may give it, to me it expresses in no uncertain terms that the Chavez administration does not want the transaction. Thus, unless Chavez himself gives the green light I don’t think the acquirer or the subject of the acquisition will go ahead with it. The puzzle is why it was blocked. All sorts of rumors are flying around Caracas about this. There are basically two ways of thinking: One, that blocking the transaction originates, as has become customary in the robolution, in some parallel racket (guiso) being set up by someone else who wants to by the same bank. The second one is that this reflects the arrival of the more fundamentalist Ali Rodriguez to the Ministry of Finance and that he stopped it. I would lean towards the first explanation, because it has always worked so far when you are trying to find a rationale to some act by the Government that does not make sense. But the same resolution contained what to me is a somewhat worrisome proposition: It orders auditors of banks to reflect as of June 30th. 2008 the quantitative impact of the notes being valued at its true worth. Additionally, it bans any bank from divesting itself of the notes until the Government approves it. The problem with this is that June 30th is this week and I doubt any bank is ready to divest. This means that the auditors will look at he notes and calculate their value at the only exchange rate accepted by the Government Bs. 2.15 per US$. But these notes are worth more than that since the guarantees behind it are US$ which can be sold in the parallel swap market currently around Bs 3.4 to the US$.. So, if you look at what the auditors will say, it will exaggerate the loss incurred by these banks to the point that many will look absolutely bankrupt. Today the Minister of Finance complained about this situation, saying bankers will have to capitalize their institutions because they bought the notes with the depositors money. (Will all of them?) And he is right. However, he fails to say that it was Chavista Government officials that allowed this to happen without any action. For a Government that likes to blame the 40 years of the Fourth Republic for everything, this time around, it can’t use that excuse, exchange controls have been in place since 2003 and all of these structured notes were created since then. Who is to blame? I am pretty sure that not only will the Government not do anything about prosecuting those buddies responsible for it, but I am sure all of them can run for office in the November regional elections. And will we see if the “guisos” continue now that Rodriguez Araque is in the Ministry of Finance? He is supposed to be extreme radical, but a straight arrow. His tenure at Finance will tell us if the latter is true. More guisos, as they show up. Stay tuned. 7:53:30 PM    comment []

Saturday, June 21, 2008

Chavez Guisonomics 101, part III: How to buy a bank without using your money Growing your market share as a bank is not easy, you have to work hard, do it for many years and convince depositors that they should prefer you over your competitors. On the way you also face many hurdles, economic swings can affect your performance and if you stumble once, depositors and clients will never forget it. While history says that “good” bankers are the ones that grow their business organically, slowly and carefully, “nouveau” bankers tend to want to grow faster by acquiring other institutions and/or straying away from the core business of banking. Venezuela is no different, for decades we have seen acquisitions and takeovers as the way to grow banks and the last few years have seen quite a few of those transactions. In many cases, these transactions were made at prices which make no sense if you are a true banker. Problem is, you may be stingy if you are buying something with your own money, but if it is someone else’s money, you may not care if you are paying too much. In this third installment I explain how if you own a bank in Venezuela today, it is possible to buy another one without putting up any money. In fact, at the end of the day the transaction is such that the money you used to buy the other bank simply “disappears” under the magical world of structured notes. Suppose you are a Venezuelan banker and you know one of your competitors wants to sell. Unfortunately, you own a bank, but don’t have enough money to acquire the other institution. But wait! You have your depositors money… For the sake of argument let’s say the bank is being sold for half a billion dollars and your own bank has capital roughly the same as that, but it has deposits that are eight times as much (US$ 4 billion). The official rate of exchange is, of course, Bs. 2.15 per US$ and the swap or parallel exchange market is at Bs. 4 per US$. Well, you go to the parallel market and buy half a billion dollars using Bs. 2 billion of your depositors money. But wait, there are regulations that say you can not have more than 30% of your capital in foreign currency, thus, you turn around and give the money to a European bank or Wall Street firm and ask them to issue a “note”, guaranteed by them, but issued and denominated in Bolivars (2 billion) and having as its underlying asset the dollars you gave them. This “note” is simply a contract between your bank and the other financial institution and it is likely to have some conditions, such as a rate of return, conditions under which get US$ or Bs. and even clauses about borrowing against the guarantees. From the point of view of your bank, you have done nothing but take your depositors money Bs. 2 billion, “invest” it at the other institution with a certain return, which is typically low. In your balance sheet the money appears simply as an investment at XYZ Inc. in Bolivars. Now you ask XYZ to lend 80% of the guarantee at a market rate to a company which is part of your financial group, as was pre-agreed in the “note”. This company in turn, goes and buys the bank that is on sale using your depositors money. Voila! You have acquired a bank with your depositors money, the money is no longer there, but you have doubled the size of your holdings! Hopefully, five years down the line, the parallel exchange rate will be four times higher, you can bring bank the 20% of the original amount that is left and tell the bank that hold the note to keep the other 80% as you have no plans to pay back the loan. Or maybe the bank you bought will make enough money to pay the loan back or a combination of both. The point is that at the end you own that bank, for free! You put none of your own money on the line and for quite a while you really don’t even have the money you claim to have in your balance sheet and you are circumventing Bank Laws by having more foreign currency than it is allowed. How many times has this been done in the last few years? At least four, as far as I can tell, but maybe more. And I started this series because a fifth case was ready to be announced and may even still be announced, except that… The Government decided to stop it for reasons that are not quite clear to me. This time, the operation was going to be more sophisticated. Remember that the Government issued a resolution ordering banks to get rid of these notes? Well, one bank decided to do the following: Rather than “get rid” of US$ 2.4 billion in notes that are worth about US$ 1.2 billion, it offered to buy one of Venezuela’s largest banks by handing over the notes to the owners of that bank. In one swipe, this bank gets rid of these “bad” notes and acquires a healthy, large bank, one of the largest in the country. Creative, no? Almost like magic… Except that the Government decided to stop it this time around… Next: Chavez Guisonomics 101, part IV: Why did the Government stop the latest bank takeover? 9:30:38 PM    comment []

Thursday, June 19, 2008

Chavista Guisonomics 101 part II: There is indeed no such thing as a free lunch I am going to have to speed up this primer, as events that led me to write part I have accelerated in an unexpected fashion, forcing me to cover the material faster than I expected. There is indeed no free lunch for Venezuela in always “making money” when it buys Argentinean bonds even if they drop in value. In fact, you and I are simply paying for it as usual, if you are naive enough to think the money is "ours". The apparent free lunch arises from the fact that at the end of the day, what is happening is that the Government is leaving a lot of money on the table. Our money. Let’s look first at the Government’s profit in our previous example: The Government bought one million dollars of Argentinean bonds at 100%, sold them at 110% for a 10% profit of Bs. 215,000. But suppose for a minute, that rather than buying bonds from Argentina, the Government went straight to the banking system and offered to sell them US$ 800,000 at Bs. 2.965 per dollar, the same amount and price at which the bank effectively bought the dollars when it bought the Argentinean bonds and sold them in the international markets in part I. From the point of view of the bank, the transaction is identical, no? But it makes a world of difference for the Government which now, rather than making a puny 10% profit, will get (US$800,000x Bs. 0.815)=Bs. 652,000 for the transaction. Huge difference, no? Of course, the Government made now Bs. 652,000 on the transaction, rather than Bs. 215,000, but on top of that, it sold US$ 200,000 less! Who kept the difference? Easy, Argentina, which received in the case of the bonds a full one million dollars but the bonds later dropped 20% (US$ 200,000 less). And of course, we Venezuelans are better in theoryof, because we all collectively have US$ 200,000 more.(Even if we will never see it!) Is the Government stupid? Of course not. First of all, it helps Chavez friends Mr. or Mrs. Kirchner in placing a billion or so dollars of Argentina’s debt with one call. Second, by hiding the transaction behind bonds, most people do not understand that the whole thing is just a “guiso” or racket at the same time. (Call it corruption if you like!). Third, the Government can maintain the official line, that there is no and there will be no devaluation and dollars are worth Bs. 2.15 per US$. Because these type of transactions are given only to a select group of “friendly” banks or financial institutions who are friendly because the obviously pay somebody off, no? But it doesn’t end here…because, why should the Government allow the bank to make so much money. The bank buys each dollar at Bs. 2.956 and sells it for Bs. 3.45, making a nice profit of Bs. 0.494 or 16.7% without doing anything! Thus, the more normal, regular, rational, customary and transparent manner would be if the Government offered the same US$ 800,000 to ALL financial institutions at Bs. 3.4 per US$ for their customers. Then, the Government would make US$ 800,000 x (Bs. 3.4-Bs. 2.15)=Bs. 1,000,000, rather than Bs. 652,000. The banks would make a tidy Bs. 0.05 per dollar, which adds up after a few million dollars. That is the usual way foreign currency markets work. Thus, there is no such thing as a free lunch, just a bunch of people having a profitable lunch off us Venezuelans. Soon: part III, how to buy a bank with no money... 9:31:09 PM    comment []

Chavista Guisonomics 101, part I: Why the Government never loses money with Argentinean bonds The word “guiso” in Spanish means “stew” and is used as slang  for those fraudulent transactions or deals that take place whenever two or more parties find a way to fix things in such a way that they can make a lot of money. In the Chavez revolution, Guisonomics has truly become a science thanks to the wonders and arbitrage provided by foreign exchange controls. Simply put, the fact that the Government has access to or decides who has access to foreign currency, allows it to generate huge amounts of profits from the artificial arbitrage between the official and the parallel swap exchange rate. In fact, hiding behind the exchange controls, corrupt Government officials can obtain illegal profits in magnitudes never seen before in Venezuela’s history of corruption. Sometimes, there is not even enrichment involved, just the ability to use creative accounting and the artificiality of the exchange rate to help the revolution and/or its friends without most people noticing or even realizing what is going on. In this first installment of Guisonomics 101, I will describe the simplest transaction there is, in order to prepare you for some transactions that I expect will be in the news in the next few days. If you have been following the news lately fo example, Argentinean bonds have been dropping like a stone in the last few days as the conflict between the Kirchner Government and the farmers has intensified. In fact, talk of a second Argentinean default in this decade have also intensified as that country’s debt levels reach historical highs once again. But if you have been following the news, it has been Chavez and Venezuela that have been saving the day for Argentina buying close to US$ 6.5 billion in the last three years of the countrys’ debt. Only three weeks ago, Venezuela bought about US$ 1.4 billion of that country’s bonds the so called Boden issue, of which between US$ 400 to US$ 600 million has been sold by the Government in order to lower the parallel swap rate. Thus, there is about US$ 800 million left and their prices have been dropping. But, you may wonder, has Venezuela lost money because these bonds have dropped in the international markets? The answer is no, because thanks to some of the elemental principles of Chavista Guisonomics, for the Venezuelan Government it is very difficult, if not impossible,  to lose money in these transactions. Say what? This almost magical trick is possible, because accounting-wise, for the Government all Bolivars are valued at Bs. 2.15 to the US$, while it can manage to sell dollars at a much higher rate in the swap market. Let’s look at an example: Suppose the Government buys one million dollars of Argentienan bonds. From an accounting point of view, only the exchange of Bolivars is registered, thus, the US$ 1 million cost Bs. 2.15 million. Let us assume, that the Venezuelan Government bought the bonds at a price of 100% and that they drop 20 points to 80%. (These prices are faked for illustration purposes). How can the Venezuelan Government make money if they have dropped so much? Easy. It can sell these bonds to a local bank at 110% of its value, but at the official rate of exchange of Bs. 2.15 per US$. Thus, the Government bought the bonds at 100% and sold them at 110% for a tidy 10% profit of 215,000 Bolivars, even as the bonds dropped in price. But why would the local bank buy them? Also easy. The local bank paid 110% for them at the official rate of exchange or Bs. 2.365 million (1.1x2.15). But then it turns around and sells the bonds at 80% of their value in the international markets. Thus, it receives US$ 800,000 for them. Thus, the local bank paid in the end Bs. 2.956 (Bs. 2.365 million divided by US$ 800,000) for each dollar it receives. But since the swap rate is somewhere between Bs. 3.4 and 3.5 per US$, the local bank makes roughly half a Bolivar per dollar or 16.9% profit in the sale of those US$800,000 to the swap market. Thus, the Government makes money, the bank makes money and there is indeed such a thing as a free lunch in Chavista Guisonomics. Or is there? More in Part II 12:14:14 AM    comment []

Wednesday, June 18, 2008

US Treasury Department ties Venezuelan diplomat to Hezbollah Today the US Treasury Department identified two Venezuelan citizens as Hezbollah supporters, identifying their names, businesses and activities, accusing them of providing support for the terrorist organization and making fundraising efforts in behalf of that organization in Venezuela. The charge are not new, exiled reported Patricia Poleo made similar charges with even more details last week in her column in Nuevo Pais. Poleo gave names of people who come to Venezuela to train Venezuelans as well as Venezuelans who travel to Lebanon to train in guerrilla warfare. Poleo also linked one of the men designated by the Department of the Treasury as being linked to badass Chacin’s Vice-Minister Tarek el Ayssami. The Treasury Department froze the assets of the two Venezuelans. One of which is actually a new era diplomat for our country, who was in charge of the Venezuelan office in Syria and is now at the country’s Embassy in Lebanon. As I noted a few days ago, it was the new Minister of Finance Ali Rodriguez who took charge of destroying the country’s diplomatic service, replacing professionals with only supporters of the revolution with no qualifications. I am sure that tomorrow we will have Minister of Foreign Relations Maduro call this another attack on Venezuela and the usual empty garbage the thugs spew out when they are caught red handed, but I wonder whether Maduro will address such issues as: ---The Venezuelan diplomat Ghasi Nasr al Din is also known by eleven different names in the best tradition of badass Rodriguez Chacin. Maybe we can learn who was in charge when this guy was nationalized Venezuelan or how many ID cards, names and the like he has. ---The other character in this plot, Fawzi Kan’an is known by about seven other names, with a variety of birthdates and birthplaces. Maybe his ID number is fake, as the number is simply too low for someone who claims to have acquired the Venezuelan nationality in 1997. Maybe Maduro can also enlighten us on this. Kan’an or whatever his name is also accused of funneling money to Hezbollah, as well as setting up its office and community center in Venezuela. Of course, in a Government with no accountability or checks and balances, all we will get are denials by the same thugs and hoodlums that we have by now all gotten accustomed to. In any serious country there would be at least an investigation, but in “revolutionary” Venezuela, impunity rules if you are a friend of the process. Remember suitcases full of cash? Remember sugar concerns in Barinas? Remember structured notes? Thugs and hoodlums run and rule in Venezuela! 10:13:07 PM    comment []

Venezuela is being run by irresponsible, miserable hoodlums While there has never been any doubt that Minister of Interior and Justice Rodriguez Chacin is the closest thing to a hoodlum and a public gangster that there is in Venezuela, his irresponsible behavior either shows that the man is close to an intellectual retard or he thinks we are. During his various tenures as Minister, Rodriguez Chacin has assumed multiple identities, used them for personal enrichment, allowed FARC leaders to come to Venezuela legally, nationalizing them and even allowing them to vote, as he has flirted with the worst elements of the FARC, who impressed with his personal destructive qualities and inhuman nature, labeled him a badass. But he is much more than a badass, he is simply an irresponsible bastard, who has no respect for human rights and who does not assume the responsibility he has to share in the failure of the Hugo Chavez Government to stop the growth of crime and homicides during the last ten years. Because it has been ten years since Hugo Chavez got to power and for nine of them Hugo Chavez did not even acknowledge the crime was even close to a problem. He can ignore that the homicide rate had tripled in those nine years, he can ignore that he had promised to fight crime when he was a candidate in 1998, he can ignore that more Venezuelans have died in the last ten years than Iraqis in the war in Iraq, he can ignore ten years of absolute disregard for the human rights of Venezuelans, but neither Hugo Chavez neither his Minister of Interior and Justice can ignore their responsibility for the pain, the sorrow and the sadness that with their negligence they bring to so many Venezuelan homes everyday. But rather than accept that responsibility, like so many other failures of the empty Chavez revolution, instead Rodriguez Chacin shows what a miserable human being and “leader” he is when he begins classifying crime as relative, telling us last week that weekly deaths in Caracas were down to zero, but backtracking this week and acknowledging that there are 40 deaths per week in this city, absurd for a city of five million. But then he shows he is a man to be despised when he states that deaths between gangs are not part of citizen safety¨ and that “crimes of passion” are also second-class homicides, not worth his time or his tears. What´s next? Dismissing crimes against old people? Or opposition members? Give him one more week and this misery of a man maybe will tell us that stray bullets should also be ignored when compiling crime statistics and well, I guess suicides are also not his responsibility and cab and bus drivers are also asking for it by driving late at night trying to make a living. This is a socialist society after all... Because it has been ten years of total irresponsibility where all problems, whether inflation, shortages, crime, garbage, unemployment, kids in the streets, poverty and the like, are always the responsibility of some long forgotten Governments or people, who nobody remembers or cares for any more. People who had many faults, but at least there was respect for human rights and the law and while there was corruption, it was kept in check by the rightful institutions, which have been destroyed by Chavismo to protect their stupid project. Remarkably, Chavez, who claims to care so much for the people, not only brought back this man that should be in jail for stealing and killing fellow citizens, but keeps him in his all powerful position even if he legislates at will on his shadow the most absurd bill to control the population, while creating his own “badass” hierarchy of crimes. But “badass” Chacin is in the end just a poor soul who through his friendship with Hugo Chavez has managed to impose his non-existent system of values and his disregard for human life and rights on all Venezuelans. Who has managed to reach dozens of levels above his Peter principle, where death is irrelevant, human rights just a vague concept and playing at being soldier and guerrillas and being a tough guy, are more important than assuming the responsibility of running and managing his Ministry or upholding the laws of the country. The fact that this irresponsible Minister remains in charge today, is simply another sign of the tragedy that the Chavez Government has become for our beleaguered country. And Chavez and him are responsible for the deaths of close to one hundred thousand Venezuelans in ten years. A record for the type of miserable, irresponsible hoodlums they represent... 12:58:29 AM    comment []

Monday, June 16, 2008

As Chavez rolls over them with his new pragmatism, people feeling optimistic One of the benefits of the controversy and the abrogation of the intelligence Bill is that Chavez seems to have gone on the defensive, concerned about any possible reaction by the opposition and/or students that his Government’s actions may have. Which actually puts him in a difficult position, as the end of the Enabling Bill is coming soon and Chavez was supposed to take advantage of his special powers to legislate by decree and put a framework to his “XXIst. Century Socialism”. Except that project seems to have been diverted by Minister of Planning El Troudi, combined by Chavez’ dwindling popularity. El Troudi’s theory seems to be that the Government needs the private sector (duhh!) as investment has reached ridiculously low levels for the private sector, while Chavez spends too much money on imports and current expenses and no real investment takes place. Thus, despite high oil prices, the economy is actually cooling off under the effect of inflation, high interest rates and the surprisingly low Government spending in the first five months of the year. But even if cooling off is what Chavez needs, the question is whether he can afford to pass up the opportunity to legislate on important economic matters before the July Enabling Bill deadline. Reportedly, there was a new Commercial Code ready to replace the one that has been around for over a century and a half, and people expected it to redefine property and to have elements in it that would force the private sector to “integrate” more with the public one, whatever that may mean. This is no longer expected because it may raise an outcry, but I find it very hard to believe that this is the case. As witnessed by the nomination yesterday of Ali Rodriguez to be Minister of Finance, Chavez has not changed one bit, he just has had these lapses of trying to convince people he is a good guy, while he plots how he will manage to implant his vague revolution on our country. People are so complacent these days in Venezuela that I actually heard people call Ali Rodriguez a pragmatist a couple of times today. That is how much Chavez and his cronies can abuse Venezuelans without them realizing what a masochistic bunch they have become. This “pragmatist” was responsible for the firing of 20,000 PDVSA workers, whose severance and pensions, whether voluntary or not, were simply confiscated, as he destroyed Venezuela’s oil science and technology center, sending hundreds of the most competent engineers and scientists to work for the competition everywhere else in the world. And once Ali Rodriguez was done with this “pragmatic” solution, he went to the Ministry of Foreign Relations where he repeated his act, except that he just recalled any diplomat not with the process and has kept them in a room doing nothing for the last three years. Of course, this requires naming former military and loyal supporters to diplomatic positions, also destroying the Venezuelan Foreign Service in the process. Costly? You bet, but for Rodriguez, the ends justifies the means. Let’s see what his pragmatism does in Finance this time around! Meanwhile, the Venezuelan Supreme Court “approves” the decree that will allow the Government to take over the cement industry. Nobody knows what this means, whether the Government will bypass the capital markets laws that says there has to be a tender for these companies. Who cares? I bet nobody complains if they do, much like the Government gets away with mosth of what it does and says. Somehow, it just seems as if people are immune to the fact that the Government is taking advantage of them, bypassing the laws and the Constitution so that Hugo Chavez can push his undefined program and revolution. Opposition candidates are not only banned from running, but the Chavez appointed and controlled Comptroller seems to come out daily to defend this gigantic abuse of power, which is being ratified by the same Electoral Board that has failed to finish counting the votes from the December referendum. But of course, we are supposed to trust these same guys to count the more easily manipulated results from the November regional elections. Sure, just look at this graph in esdata and tell me you really trust them. But those are the guys that will count the votes in November and that is the Court that will decide controversies if there are any. But somehow, people are optimistic and I am not sure about what… 10:15:29 PM    comment []