by J. Christoph Amberger
This past February, Venezuela’s “El Commandante” Chavez spent $1.3 billion buying out controlling stakes in Venezuela’s phone company CA Nacional Telefonos de Venezuela and power utility CA Electricidad de Caracas... acquired at a discount in his grand nationalization scheme.Such bountiful state spending has been going on in the name of neo-com buttering up of the Venezuelan electorate for a few years. Over the past two years, government spending has doubled, with the result that the Venezuelan bolivar is now the world’s worst-performing currency.
The bolivar has dropped 14% against the greenback this year on the black market, putting pressure on Chavez to devalue the currency again -- and aggravating his runaway inflation problem.Venezuelans have shipped an annual average of $8 billion out of the country since Chavez took office in 1999. International companies with assets in Venezuela are now following suit. And despite the dire predictions of Daily Reckoners that gold will be king, demand for dollars is going through the roof.
Socialism, the most discredited, most dour, and least successful ideology of the 20th century, is again following its inevitable course. Incompetent government spending, currency and price controls, and capital flight are resulting in shortages in consumer goods. Not X-Boxes or flat screen television sets, mind you, but the basic stuff: sugar, beans, meat, milk. Just like in the Soviet Union.
Shortages in turn are resulting in confiscation of private businesses accused of “hoarding” and “price gouging” -- which, like back in the good old days of East-bloc Marxism-Leninism, have been made crimes.
The one thing Chavez still has going for him is the cold spell in the Estados Unidos... which is keeping oil prices up and dollars flowing into Caracas.
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