Thread: Reckoning in Caracas -Venezuela is running out of other people's money.

Reckoning in Caracas

Venezuela is running out of other people's money.

Updated Jan. 26, 2014 10:37 p.m. ET

One of Margaret Thatcher's many great lines was that the problem with socialism is that eventually you run out of other people's money. Welcome to Venezuela.

That country's bonds took a dive Wednesday on news of a partial devaluation of thebolivar. Economy vice-president Rafael Ramirez announced that the central bank would no longer sell dollars to airlines or Venezuelan travelers at the official exchange rate of 6.3bolivars. Instead those buyers of dollars will pay 11.36 bolivars.

That's a big devaluation, but with the black market rate at more than 70 bolivars to the dollar, a much larger and broader adjustment is inevitable. Venezuela is facing a classic balance-of-payments crisis, which is what happens when a country drives out human and investment capital and then inflates the currency to paper over the trouble.

Venezuelan oil exports once generated enough foreign exchange to pay its dollar debts. But today Venezuela produces about the same 2.9 million barrels of oil per day as it did in 1998. Cuba gets about 100,000 barrels a day in exchange for supplying doctors and teachers. And more than 600,000 barrels a day go to China to pay down some $40 billion in loans that the late Hugo Chávez took out to win elections.

Public spending has boomed, and Chávez and successor Nicolas Maduro have treated the state-owned oil company like their personal cash machine. In 2012 PdVSA paid $20 billion in taxes, $9 billion to government social programs and another $8.5 billion to a state development fund. Venezuela is now running a fiscal deficit of between 12% and 15% of GDP and the central bank keeps printing bolivars to pay local bills. Even with price controls, the government says 2013 inflation was 56%.

The central bank holds $20.5 billion in reserves, down from $28 billion a year ago. More than half are in gold and thus not liquid. A large devaluation coupled with price controls will drive many importers out of business. That could produce more shortages.

The socialist bills are coming due in Caracas

http://online.wsj.com/news/articles/...38670057115190

Why Socialism Doesn't Work: Running Out of Other People's Money
BY CHARLES V. PAYNE, CP OP-ED CONTRIBUTOR
June 3, 2013|8:24 am

Why socialism doesn't work, and the consequences once you've run out of other people's money.

Item: Police in Venezuela seized 2,500 rolls of toilet paper in an overnight raid of a clandestine warehouse. In addition, officers seized 400 diapers and 7,000 liters of fruit juice.

Item: The Elysee Palace sold off a tenth of its wine collection in a Presidential garage sale. The French government says it's no big deal, and they're trying to set the example.

Selling presidential wine in a nation that loves its wine might chip away at awful approval ratings, but it speaks more to the stupidity of goals that include squeezing the inequality gap by bringing the top lower, taxing rich people and businesses, and demonizing success. Venezuela has become a shell of itself after confiscation of foreign assets and saber rattling spooked away expertise and investment. In the meantime, promises made to an entire continent aren't being kept, as it's become hard enough to keep toilet paper and diapers for Venezuelans in stock.

Margaret Thatcher talked about running out of other people's money, but in the game of ruining a country and squandering potential, running out of money is just the start of the fun and games. Usually by the time it begins, draconian options like higher taxes, fees and wealth confiscation has already been in place. Then it comes down to simply cutting spending or as is it's generally called- implementing austerity. But, in nations that have afflicted themselves with the most socialist policies, it's always back to higher taxes and confiscation of wealth anyway.

Of course when it's all really said and done, the end game looks like Greece where there's been talk of selling more than a thousand bottles of wine but major attractions including tourist sites and islands.

But for all these nations the spending doesn't stop, and yet they call it austerity. In America, we got a taste of austerity in the form of reinstatement of social security tax and sequestration. I didn't like the cut in social security tax, instead it should have been a permanent break on income taxes, but this was the easiest way to get wealth redistribution going along with supped up initiatives like the earned income tax credit and child tax credit. These scams used the cloak of rewarding workers when it was really focused on not helping people that earn too much.

(The starting point of most administration policies is how to make sure certain people do not benefit rather than how can we lift the entire nation. It's not a stretch to see how exclusive economic policies could lead to targeting by government toward other unfavorable people and organizations.)

If This Is How the End of the World Looks- Sign Me Up!

President Obama talked about the devastating impact of sequestration and even went on a national tour touting the harsh outcomes of government slowing the rate of spending by just two percent. Never mind American households took a $1.3 trillion haircut over the past few years ... we were promised Armageddon beginning on March 1st.

This is what we got instead:

• Dow Jones Industrial Average +1,234 points or 9 percent
• Existing home prices (median) +19,600 from Feb or 11 percent
• Job creation of 303,000 with April's tally as high as or higher than seven months in 2012
• Washington DC has seen 40,000 jobs, 5.3 percent unemployment, and huge spikes in tax receipts for neighboring states and more cranes anywhere in the world than maybe Dubai

Europe Continues to Spiral

While this was going on, Europe raised taxes as its form of austerity eschewing pro-business policies to support their welfare states and impossibly lavish social spending.

Headlines out of Europe this morning were heartbreaking.

Euro Zone unemployment is now at record high 12.2 percent, but that is just the tip of the iceberg. A country-by-country look speaks to a kind of desperation that can't be cured overnight or by printing money. Unemployment in the most troubled areas of Europe continues to deteriorate and is now in crisis mode, particularly for those nations' youth.

Last month I read that there are 6,000 pizza jobs unfilled in Italy because nobody wants to do that kind of work anymore. Yet the unemployment rate among Italy's youth is at an all-time record high (records kept since 1966). This speaks to the negative impact of the welfare state and welfare mentality. If you can get paid and live well, even live an inevitable life without working, then why make pizzas, why get off the sofa unless it's to go to the beach - where American tourists become jealous and think "these guys got it right."

They got it wrong!

Arvind Mahankiel got it right! Arvin was winner of Scripts National Spelling Bee after correctly spelling "Knaidel" to become champion of the competition last night. The beauty is Arvind actually got knocked out of the competition the two prior years when he was tripped up by German words. Last night he turned his weakness into his strength and got the German word and the title. This is what America has always been about, grit and determination made us great and is the only way to stay that way. More and more of our youth along with society at large are being lured into a European existence where the state takes care of our needs relieving the need to get better, overcome adversity, and to be great.

Charles V. Payne is a regular contributor to the Fox Business and Fox News Networks. He is also the Chief Executive Officer and Principle Analyst of Wall Street Strategies, Inc. (WSSI), founded in 1991 which provides subscription analytical services to both individual and institutional investors.

http://www.christianpost.com/news/why-socialism-doesnt-work-running-out-of-other-peoples-money-97138/

Tuesday, 25 February 2014 17:40 In Venezuela, Anti-Tyranny Uprising and Death Toll Grow

Written by Alex Newman

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Despite a ferocious crackdown on beleaguered protesters by the socialist regime in Venezuela that has left at least 15 dead so far, demonstrations against totalitarianism and economic collapse across the nation are still growing. While “President” Nicolas Maduro, successor to the late socialist strongman Hugo Chávez, has secured the support of government workers and fellow autocrats in the region, analysts say the escalating uprising has the potential to ultimately bring down the Venezuelan regime — and possibly other tyrants in the region.
Facing worldwide criticism for arresting opposition leaders, killing student protesters, and deploying the military to suppress peaceful demonstrations, Maduro is engaged in a delicate balancing act to keep himself and his minions in power. On one hand, the autocratic ruler has increasingly resorted to brute force, violence, and terror to prevent the toppling of his regime, merely sparking more public outrage and greater protests. The regime also deployed warplanes to buzz over the demonstrations and terrorize critics.
At the same time, Maduro also tried to convene a “national peace conference” with opposition leaders and officials. The first meetings, which were supposed to include state and local officials, took place Monday. However, while a few politicians from outside political parties participated, neither of the opposition’s top leaders was in attendance. Leopoldo López, who helped organize the student demonstrations that morphed into a full-blown national uprising, was among those arrested by the regime on trumped-up charges.


Meanwhile, former opposition presidential candidate Henrique Capriles said he would not attend the meetings either. “I am not going to make Nicolas Maduro look good,” Capriles, currently the governor of the state of Miranda, was quoted as saying in media accounts about his decision not to participate in the conference. “That is what they want, that I go there as if the country was absolutely normal.... The only thing Maduro wanted was a handshake and a photo so he can tell the world that everything is OK.”
The opposition leader, who lost the last presidential race by a razor-thin margin in what countless experts called a fraudulent election, also said that attending the “peace” meeting sought by Maduro would look like an endorsement for the regime and its “repression” of peaceful protests. Finally, Capriles added, he will not participate in discussions while López and dozens of other high-level critics of the regime remain behind bars as political prisoners.
López’s wife, Lillian Tintori, has also so far rejected the deceitful “peace” efforts of the regime, which analysts and many protesters view as either a propaganda stunt or a last-ditch attempt to hold on to power as anti-regime demonstrations sweep across Venezuela. “Look at the statements from Nicolas Maduro, every time he speaks, he insults us, he speaks with aggression, speaks with hate,” Tintori was quoted as saying by the Associated Press after a press conference announcing an upcoming women’s march against Maduro.
As the streets of cities and towns across Venezuela were filling with countless outraged citizens demanding an end to tyranny, lawless government, socialism, wild inflation, unfathomable crime rates, and more, Maduro went on offense. Among other tactics, he fiendishly demonized the public, calling citizens “fascists,” terrorists, murderers, stooges of the U.S. government, and more. He also ordered regime employees into the streets, with “security” forces instructed to suppress the protests and other workers told to hold “pro-government” rallies.
According to news reports, Maduro’s shock troops and paramilitaries have been swarming into opposition neighborhoods, firing teargas and shotguns at unarmed civilians. Reported death-tolls vary widely. Due to years of the regime’s relentless persecution of journalists and honest media — virtually every independent press outlet has been shut down — the accuracy of estimates is essentially impossible to determine. Foreign media has been targeted, too. Authorities even shut down access to social-networking services such as Twitter as the protests were breaking out in recent weeks.
However, anecdotal evidence, including videos of the violent repression uploaded online, suggest the official suppression of dissent has been ruthless and deadly. Hundreds of peaceful protesters have been arrested and seriously wounded by brutal “security” forces. With brazen assistance from the United Nations, former strongman Chávez had already disarmed the public, too, ensuring that the regime can brutalize the people at will without any serious resistance. Human rights groups are calling for investigations.
Numerous unconfirmed reports swirling around the Internet in Spanish also suggest that Maduro has appealed to foreign autocrats for assistance in containing the rebellion, including the communist regimes ruling over Cuba and mainland China. Protesters have expressed outrage over the barbaric Castro regime’s interference, even marching to the Cuban embassy. The radical “Workers’ Party” (PT) regime in Brazil led by “former” communist terrorist Dilma Rousseff, meanwhile, has already publicly expressed its solidarity with Maduro’s brutal crackdown on opposition forces. Other socialist rulers have done the same.
Some analysts suggest that the rebellion against Maduro could spread to other nations in Latin America ruled by totalitarian-minded strongmen. “The collapse of the Bolivarian Revolution will produce a significant impact in the entire region,” wrote Nelson Dordelly-Rosales, a professor of rule of law and development in Latin America at the University of Ottawa. “With the uprising of Venezuelan students, it is just a matter of time until citizens of other Latin American countries could join the stand against their populist governments.”
As The New American has documented extensively, the Maduro regime, a close ally of the barbaric Castro autocracy in Havana, is hardly an isolated pariah in the region. In fact, most of Latin America’s governments and transnational “integration” regimes are dominated by a closely knit network of socialist and communist forces known as the Foro de São Paulo. Founded by Fidel Castro, former Brazilian President Luiz Inacio “Lula” da Silva, the Sandinistas, and an assortment of Marxist narco-terrorism groups, the cabal now controls much of Latin America. The U.S. government knows this well.
The fruits of the totalitarianism are increasingly evident across the region — and especially in Venezuela. Despite gargantuan oil reserves, shortages of everything from food and medicine to toilet paper and electricity continue to grow nationwide. Inflation is spiraling out of control, and Venezuela now suffers from among the highest murder rates on Earth. Without massive market-oriented reforms, more than a few analysts and economists are predicting a complete collapse of what little remains of Venezuela’s shattered economy — now among the least free in the world.
Despite the Obama administration’s infamous meddling in virtually every nation — from supporting al-Qaeda-linked jihadists in Syria and Libya to backing an uprising in Ukraine more recently — the White House has remained virtually silent on developments in Venezuela. Aside from some meaningless statements issued by the State Department, in fact, there has been scarcely a meaningful word about the situation, even after Maduro expelled U.S. diplomats. U.S. Sen. Marco Rubio, though, has taken up the cause, lambasting the repression and wanton human-rights abuses.

Meanwhile, despite the lack of any evidence (and plenty to the contrary), the Maduro regime and its apparatchiks continue to claim that the protests are some sort of “imperialist” conspiracy against “21st Century Socialism.” With the best evidence presented so far being a series of diplomatic cables leaked by WikiLeaks showing that the U.S. embassy had at one point talked to some opposition figures, it is safe to say that there is no credible reason to believe the Obama administration is supporting the anti-socialist uprising. The opposite may be closer to the truth.
Separately, the powerful U.S.-based Council on Foreign Relations, which dominates vast swaths of U.S. policy making, has been strongly supportive of socialist autocrats in the region. Indeed, its current Latin American chief was exposed recently as a Castro apologist, and the CFR’s defense of radical leftist regimes in the region continues unabated. Chinese and Russian authorities have also been instrumental in propping up Latin America's tyrannical groundswell.
While much of the establishment press in the United States has also downplayed the growing uprising in Venezuela, it is becoming harder to conceal the massive scope of the unfolding tragedy. If nothing else, perhaps the exposure of the Venezuelan regime’s most recent crimes — and its partners in crime coming forward to defend it all — may help accelerate the eventual demise of the escalating tyranny in the region.

Photo of anti-government protesters in Caracas, Venezuela: AP Images

Alex Newman, a foreign correspondent for The New American, is normally based in Europe after growing up in Latin America. He can be reached at anewman@thenewamerican.com.
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http://www.thenewamerican.com/world-...eath-toll-grow