Chavez: Driving Venezuela to Ruin.

[Gan]

CARACAS, Venezuela (http://www.iht.com/articles/ap/2008/01/11/news/Venezuela-Expropriations.php#): President Hugo Chavez threatened again on Friday to seize property from businesses if they are caught hoarding products, as Venezuela struggles with shortages of some basic foods and high inflation.
Chavez warned that price speculation is occurring "at all levels of society, from the big capitalists to the small shopkeepers," and said his government could expropriate property from individuals or companies that purportedly sit on goods for months to sell later them at inflated prices.

"I ask the ministers and lawmakers to pay a lot of attention to this because it's one of the causes of inflation," he said during a marathon address to legislators.

Annual inflation soared to 22.5 percent in 2007 — the highest official rate in Latin America — according to the Central Bank.

Chavez — a close ally of Cuban leader Fidel Castro — has made similar threats in the past. No such takeovers have occurred so far, however, and Venezuela continues to have many private supermarkets and food distributors.

Some food staples covered by price controls — sugar, cooking oil, milk, black beans, eggs and chicken — are sporadically hard to find in supermarkets, and Chavez's critics warn shortages are likely to persist as long as the price controls are maintained.

Leading retailers deny hoarding products. Many argue that currency controls established in 2003 are also responsible for higher prices, because some businesses are forced to buy imports using black-market dollars at more than twice the official exchange rate. Others say heavy government spending bankrolled by soaring oil profits has pushed up prices.

http://www.iht.com/articles/ap/2008/01/11/news/Venezuela-Expropriations.php
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Some people just dont get it.

I feel sorry for the people of Venezuela, a little. If they really wanted change they would make a greater effort to enact it.


WAY TO GO HUGO!!!

[Sean of the Thread]

At least they've got cheap gas.

[Latrinsorm]

22.5% ffs!!

[Kembal]

I feel sorry for the people of Venezuela, a little. If they really wanted change they would make a greater effort to enact it.

I feel a lot more sorry for them. They've got no way to kick him out of power until 2013. (and it's not like they haven't stood up to him by denying the recent consitutional amendments)

The only ways Chavez goes down before 2013 are either via street protests or a coup. He's already beat back one coup attempt. And unless you find a true democratic reformer to lead the street protests, they wouldn't go anywhere. Right now, there isn't anyone.

[Atlanteax]

Too bad all the state-owned/state-run farms and other producers have seen a significant decrease in output, leading to the shortage.

The main issue/problem is that he will undoubtly resort to drastic measures (worse than what he has already done) to retain power at the expense of the Venezulean economy (and people).

[Gan]

You can throw money at the peasants all day long, but if there's no one to sell them the food, all that money will do them no good. And he's got to throw around a lot of money at 22% inflation to do any good.

Too bad you cant eat oil.

I wonder if you marinated the currency would it taste any good?

[Bhuryn]

You can throw money at the peasants all day long, but if there's no one to sell them the food, all that money will do them no good. And he's got to throw around a lot of money at 22% inflation to do any good.

Too bad you cant eat oil.

I wonder if you marinated the currency would it taste any good?


Well, we're next so hopefully they'll pass along the recipies once their currency is insolvant. :)

[Tolwynn]

Well, we're next so hopefully they'll pass along the recipies once their currency is insolvant.

Even during the heydays of the Carter administration, we didn't approach 22% inflation. It's really not going to happen here.

[Bhuryn]

Let me respond in two parts.


Even during the heydays of the Carter administration, we didn't approach 22% inflation.

I was, like, totally kidding...


It's really not going to happen here.

...except for the part where it's happening already, since you know our deficit is a bit out of control and that whole fiat currency/assumed value thing...

...but I was kidding too.

[Gan]

Well, we're next so hopefully they'll pass along the recipies once their currency is insolvant. :)


Let me respond in two parts.



I was, like, totally kidding...



...except for the part where it's happening already, since you know our deficit is a bit out of control and that whole fiat currency/assumed value thing...

...but I was kidding too.

No we're not next. And your perception of how the economy is going resembles too much like the doom and gloom nightly news.

I'm starting to see really good signals from the REFI market in our area as rates have dropped, people are either taking out equity or pulling their rate down. But more importantly, our devalue in currency has created a huge demand for our export product as well as our demand for tourism. Expect to see really strong production numbers next signal report and places like NY are already demonstrating high receipts from increases in tourism.

Also expect to see unemployment to rise a little more as the lenders trim off bloated payroll sheets due to the glutted rampup for inappropriate demand during the housing/lending bubble. I dont expect that to be reabsorbed until years end. At the least it will be offset somewhat by the labor demand for increased production levels.

[Tsa`ah]

Well, we're next so hopefully they'll pass along the recipies once their currency is insolvant. :)

Although you claim you're kidding, you're also comparing an apple to ostrich.

Chavez has essentially committed economic suicide. When you place price controls on the market, you essentially hamstring it and lead inflation in by the hand.

Venezuelan currency was nailed to the US dollar (which has dropped in value) and prices on many staple items (largely imported) were fixed. This discourages many businesses from even buying goods to stock their shelves with .. considering they'll make no profit and in some cases lose money.

A shop owner isn't going to buy a case of black beans at 15 bucks when he can only legally sell them for 16 bucks once they're parceled out. Let's not even get into how the currency drops in the future .... that case of black beans will be 16 bucks with the available currency, and the proprietor can't raise the price at all.

It's a vicious cycle that we won't have to deal with ... we don't have the price controls.

[Bhuryn]

Cause all services in this country are controlled by the market right? :)

I know though -- Price control BAD!

[Tsa`ah]

Cause all services in this country are controlled by the market right? :)

You've got that backwards .... "cause the market is controlled by services in this country right?"

Policies in Venezuela mandate the price on a dozen eggs, a pound of beans, a loaf of bread ... so on and so forth. And it goes one step further by attempting to lock in the value of it's currency to match the value of a US dollar.

It's a three fold neck slit (that we don't have).

1. With price setting you usher in inflation and devalue your currency (as mentioned)

2. You prevent the market from responding to demand through necessary imports .... and with the value of your currency dropping that's less buying power your business sector has.

3. You cut the throat of your agriculture sector, thus bringing it one more step toward nationalization. Since prices are capped, this means your farmers earn less and less every time they bring a crop to market (their selling price is capped ... which is the market's buying price ... which isn't that different from the market's selling price). When your farmers earn less and less off of their crops, machinery goes into disrepair and crop yields drop because of machinery disrepair, and the increasing cost of seed/feed/fertilizer/herbicides/pesticides.

The price controls on our market are consumer driven.

[ClydeR]

Even during the heydays of the Carter administration, we didn't approach 22% inflation. It's really not going to happen here.

Famous last words. It happened in the United States before (http://en.wikipedia.org/wiki/Continental_%28currency%29), and it will probably happen again.

[Tolwynn]

Famous last words. It happened in the United States before, and it will probably happen again.

That example is pretty much irrelevant to the modern day, the post-Revolutionary War United States was hardly a leading superpower.

Amazingly, the United States, the world, and the world economy changed in the centuries between, too - it's a situation that won't repeat itself that way.

[Tsa`ah]

Famous last words. It happened in the United States before (http://en.wikipedia.org/wiki/Continental_%28currency%29), and it will probably happen again.

Wow ... you don't understand a word you read do you?

[Gan]

Famous last words. It happened in the United States before (http://en.wikipedia.org/wiki/Continental_%28currency%29), and it will probably happen again.

LOL
At least your posts are entertaining (read: easy to laugh at), since they really dont contain anything remotely relating to whats really happening in the world today.

[Bhuryn]

The price controls on our market are consumer driven.

Supply and demand aided with a healthy dose of subsides.

E85 is a prime example of a product that wasn't created by the market place, rather by government intervention/subsidies.

It's not the same thing as price controls in an exacting sense, but it's still dangerous.

[Gan]

Venezuela's top food company has accused troops of illegally seizing more than 500 tonnes of food from its trucks as part of President Hugo Chavez's campaign to stem shortages.

The leftist Chavez this week created a state food distributor and loosened some price controls, seeking to end months of shortages for staples like milk and eggs that have caused long lines and upset his supporters in the OPEC nation.

The highly publicised campaign has also included government crackdowns on accused smuggling, with the military seizing 1,600 tonnes of food and sending 1,200 troops to the border with Colombia.

Jose Anzola, a director of food company Alimentos Polar, told reporters that troops stopped 27 of its trucks over the last three days and described the seizures as "illegal, arbitrary and irresponsible."

Troops said they halted the transport of 350 tonnes of food to states along the Colombian border on suspicion of smuggling, he said. Another 165 tonnes were impounded in an eastern state on accusations of hoarding, he added.

Venezuela's National Guard did not immediately respond to requests for comment on Polar's statements.

Polar, one of the country's largest private employers and best-known brands, produces and distributes grocery products including corn flour, a central element of Venezuelan cooking, and the country's most popular beer.

Business leaders say shortages of these products are caused by strict price controls, which have lagged inflation that is Latin America's highest.
Chavez is focusing on practical issues like food supply and crime after losing a December referendum that would have let him run for re-election indefinitely and expand his self-styled revolution.

He announced an increase of more than 30% in the retail price of milk in an effort to ease shortages that have created headaches for consumers of all social classes.

He also threatened to expropriate companies selling food above regulated prices.

"Anyone who is distributing food ... and is speculating, we must intervene and we must expropriate (the business) and put it in the hands of the state and the communities," Chavez said during the inauguration of a new state-run market in Caracas.

http://tvnz.co.nz/view/page/536641/1555965

[Clove]

Supply and demand aided with a healthy dose of subsides.

E85 is a prime example of a product that wasn't created by the market place, rather by government intervention/subsidies.

It's not the same thing as price controls in an exacting sense, but it's still dangerous.

Gee I wonder how US corn subsidies convinced Sweden to use E85 (I guess Europe isn't a market).