More fun in the workers paradise
I am thinking that Chavez is just simply in well over his head and is flailing around without a clue. From
Reuters:
Venezuela's Chavez vows more financial crackdown
President Hugo Chavez vowed on Thursday to deepen a financial crackdown after raids on 15 brokerages and the arrest of four directors in the wake of the state's takeover of foreign exchange trading.
The socialist leader said this week's move to exclude private money-changers and transfer the so-called "parallel" currency business to the Central Bank, had brought a typically ferocious reaction from Venezuela's traditional elite.
"We're going to keep hitting them hard," Chavez said in a speech on state TV. "We will become more radical, the more imperialism and its allies attack us."
With Venezuela's "parallel" market paralyzed, until the central bank sets up its new system, economists and business leaders have accused Chavez of bringing chaos to the OPEC member nation's already recession-hit economy.
Given restricted access to dollars at the official rates of 2.6 and 4.3 bolivars, more than half of imports had been depending on the "parallel" market, where the local currency had dived this year to more than 8.0 to the dollar.
By taking over that "parallel" market, South America's biggest oil exporter is now effectively setting up a third controlled exchange rate, albeit within a band. Chavez said the band would be near the 4.3 rate, though analysts and traders had forecast around 5.0-7.0 bolivars.
Angrily waving the front page of local business daily El Mundo and quoting business leaders' criticism of him, Chavez said the "savage Venezuelan bourgeoise" had launched a concerted attack since Tuesday's currency announcements.
Analysts say a new black market will inevitably spring up, creating a fourth and much higher rate for the dollar, and another devaluation may come next year.
Since Tuesday's measures were announced, financial officials have searched 15 institutions in Caracas, studying documents, examining computers and quizzing staff.
Four brokerage directors have been arrested.
Chavez said the government was bringing down an old system of "fraud houses" run by a "mafia". "Nothing and nobody is going to stop me, I guarantee you, Mr. Oligarchs," he said.
The glitterati keep fawning over this guy as though his shit doesn't stink so he thinks he is doing good. With inflation of 30%, the 'parallel market' was the only thing keeping goods coming into Venezuela -- nobody will accept the Bolivar for anything more than toilet paper as it continues to devalue, you cannot convert it into anything stable.
What gets me is that there is no real exit strategy for Chavez -- a military takeover? A political coup? These just install another thug into the presidential palace and do nothing to reverse the problems that are hurting the citizens. The citizens aren't going to do much either as they would lose their entitlement programs that are funded from oil revenues.
Posted by DaveH at May 24, 2010 8:25 AM