Posted on 02/19/2003 3:22:49 PM PST by Tailgunner Joe
In a vain effort stop the exchange rate from collapsing, Venezuela's Marxist-Leninist President Hugo Chavez suspended dollar sales on 22 January, with predictable results.
A severe dollar shortage has emerged, making it nearly impossible to obtain, for example, essential medicines. This has created a critical situation for a country that imports nearly all of its medicines, 60 percent of its food and most of its capital goods and consumer goods
The effect on the export industries has been devastating. The overvalued bolivar is pricing their goods out of foreign markets. Although this policy has made foreign goods cheaper in terms of the bolivar they still have to be paid for in dollars.
Chavez is exploiting the dollar shortage by setting up a committee to decide who will be allowed to receive dollars. This is being done with the express purpose of denying perceived opponents of his regime access to foreign exchange.
Overvaluing the currency has created an unofficial foreign exchange market, despite Chavez's efforts to suppress it, where dollars are exchanging at up twice the unofficial rate.
The dollar shortage has prevented firms from maintaining inventories and has reduced sales forcing them to lay off workers, regardless of a state decree ordering that no one be fired.
The economic root of the problem is that Chavez is running the printing presses overtime. The flow of bolivars is driving down the exchange rate and causing prices to rocket. In response to the inflationary consequences of his monetary policy, Chavez has issued more decrees and imposed rigid price controls, the effect of which has been the disappearance of consumer goods, particularly food stuffs.
The result of these so-called anti-inflationary policies will be to bankrupt companies. Those who attempt to evade the controls will be dealt with harshly, including prison terms for the "incurred crimes of price speculation and withholding of merchandise." (Chavez's economic policies have already wrecked the PDVSA [Petroleos de Venezuela S.A], one of the world's biggest oil companies).
Chavez is being accused of using inflation to destroy the opposition and turn Venezuela into a South American Cuba with himself as Castro, a dictator whom he greatly admires along with Saddam Hussein. His talk of destroying "coup plotters", "vicious speculators" and of replacing judges with those "who would support" his Bolivian revolution has only lent greater weight to the accusations.
But using inflation as a revolutionary weapon to bring about an "economic coup" is not the smartest of things to do. Hyper inflations have always worked against those who started them. The infamous Weimar inflation fuelled the Nazi movement. The Tsarist government's highly inflationary funding of WW I helped subvert their rule. Allende's inflationary policy helped bring about his death.
Still, there is always a first time. Should Chavez succeed in making himself in the image of Castro, he will be ruling over a devastated economy and a people reduced to abject poverty by his socialist delusions and lust for power.
Bump!
The tanker, the Hem Maersk, is the first in a line of up to seven or more supertankers that will be chartered by PdVSA to help increase exports and convince major shipping agencies that dock and terminal facilities are completely safe, Ruben Rodriguez told Dow Jones Newswires by telephone from Jose.
The loading of another two tankers with a capacity of one million barrels of Mesa crude each are scheduled for Feb. 22 to Feb. 24, and Feb. 24 to Feb. 26, Rodriguez said. Rodriguez couldn't provide the final destination of the three tankers.
An additional four or more tankers are set to be chartered in the coming weeks by PdVSA, Rodriguez added. At the terminal, 3.5 million barrels of crude and products have been shipped during the first 12 days of February as exports and production at the oil behemoth are recovering slowly after a strike started Dec. 2 last year. Production currently stands at around 40% of pre-strike levels of three million barrels per day.
Foreign shipping agencies have been reluctant to use Venezuelan ports after military personnel and untrained crew took control of the operations after the strike started. [End]
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