La entrevista de El Universal a Juan Carlos Monedero nos revela la manera de pensar y de actuar de los socialistas.
Éste ideologo de la revolución bolivariana nos repite que la propiedad privada será respetata en el socialismo del siglo XXI, reconociendo que fue un error de los modelos socialistas anteriores no haberlo hecho.
Sin embargo, reconoce ciertos sectores estratégicos sujetos a expropiación, dentro de los cuales incluye los sectores servicios y aliementos, y dentro de éste último hace referencia-casi explícita- a Alimentos Polar.
Que el socialismo del siglo XXI respetará la propiedad es sólo una manera de decir, porque dentro de su lógica siempre encontrarán la manera de hacer lo que les da la gana. De justificar lo injustificable, y de expropiar lo que bien les parezca.
En mi opinión sectores estratégicos es una buena palabra justificar la abolición de la propiedad, al menos de aquella que les resulte molesta.
Éste socialismo es esencialmente el mismo del siglo XX. Y es que aunque la mona se vista de seda, mona se queda.
domingo, septiembre 30, 2007
viernes, septiembre 28, 2007
La revolucion de las pagodas (Birmania)
Cuando se habla de Birmania, normalmente no lo asociamos con nada y es que este pais del sudeste asiatiaco es el pais mas cerrado del mundo. Solo a traves de documentales se puede saber algo de este pais.Se sabe que es un pais pobre, donde hay gas natural y que ahora se llama Myanmar(Ex Birmania).
Sin duda vive un regimen militar desde hace 45 anos y hoy en dia esta viviendo unas de las mayores protestas en la historia de ese pais, liderizadas por los monjes budistas en contra del regimen. Pues no ha sido sencillo para empresas como Reuters tener acceso a informacion de primera mano ya que no dejan entrar periodistas extranjeros y las imagenes que se tienen de las prostestas se han obtenido a traves de particulares.
Lo que mas me ha llamado la atencion de este asunto, ha sido la declaracion de el Presidente de la petrolera Total, que tiene operacion Offshore en Birmania ante el llamado del Presidente frances Nicolas Sarkozy de congelar las inversiones francesas en ese pais. Total, que opera desde 1992 en Birmania, asegura no dejara el pais y que ademas las reservas de gas y petroleo no quedan necesariamente en democracias. Por otro lado argumenta que si ellos se van del pais, otro tomara su lugar.
China y Rusia que pueden ejercer influencia en Birmania, no han dejado actuar a la ONU, debido a que estos dos paises son los primeros provedores de armas. Sin duda llega la famosa cuestion, la etica de los negocios.
Esta situacion me hace pensar en cuantos interesados puede haber en que Chavez siga en el poder.
Conclusion:Salir de un presidente de un pais que tiene importantes recursos naturales, no es solo a punta de protestas y manifestaciones pacificas. La historia se esta escribiendo en Birmania
Sin duda vive un regimen militar desde hace 45 anos y hoy en dia esta viviendo unas de las mayores protestas en la historia de ese pais, liderizadas por los monjes budistas en contra del regimen. Pues no ha sido sencillo para empresas como Reuters tener acceso a informacion de primera mano ya que no dejan entrar periodistas extranjeros y las imagenes que se tienen de las prostestas se han obtenido a traves de particulares.
Lo que mas me ha llamado la atencion de este asunto, ha sido la declaracion de el Presidente de la petrolera Total, que tiene operacion Offshore en Birmania ante el llamado del Presidente frances Nicolas Sarkozy de congelar las inversiones francesas en ese pais. Total, que opera desde 1992 en Birmania, asegura no dejara el pais y que ademas las reservas de gas y petroleo no quedan necesariamente en democracias. Por otro lado argumenta que si ellos se van del pais, otro tomara su lugar.
China y Rusia que pueden ejercer influencia en Birmania, no han dejado actuar a la ONU, debido a que estos dos paises son los primeros provedores de armas. Sin duda llega la famosa cuestion, la etica de los negocios.
Esta situacion me hace pensar en cuantos interesados puede haber en que Chavez siga en el poder.
Conclusion:Salir de un presidente de un pais que tiene importantes recursos naturales, no es solo a punta de protestas y manifestaciones pacificas. La historia se esta escribiendo en Birmania
jueves, septiembre 27, 2007
High prices and US economy
Sin duda la economia estadounidense comienza a sentir el impacto de tres importantes acontecimientos. El primero es la debilidad del dolar frente al euro, el cual alcanzo record esta semana cuando el Euro llego a 1.41. El segundo es la crisis inmobiliaria, mejor conocida como el subprime, grandes bancos han mostrado sus perdidas frente a la crisis. El tercero ha sido los altos precios del petroleo, que parecen quererse quedar sobre los 80$/b.
Adam Sieminski, analista de Deutsche Bank, afirma que el americano puede lidiar con altos precios de la gasolina o con hipotecas mas altas, pero no con ambas.
Otro problema en el sector transporte en USA, es la caida de las importaciones de Diesel debido al dolar debil. Es un hecho que entre julio y agosto hubo una disminucion del consumo en el sector transporte pesado americano.
Otro analista, Antoine Haff de Fimat, argumenta que con la crisis de las hipotecas, el ciudadano no buscara mudarse a los suburbios de las grandes ciudades ya que eso implica el uso del auto y por tanto impactara la demanada de gasolina.
Lo interesante es que el consumidor americano aprende es de esta manera a hacer economias de la energia. A diferencia de Europa que viene a ser el buen alumno en el area. Sin duda el factor cultural permanece, un buen TRUCK en USA es la tarjeta de presentacion para el ciudadano medio. Esperemos que a punta de golpes el mayor consumidor de petroleo, aprenda a que hay una nueva realidad a la cual hay que adaptarse.
Adam Sieminski, analista de Deutsche Bank, afirma que el americano puede lidiar con altos precios de la gasolina o con hipotecas mas altas, pero no con ambas.
Otro problema en el sector transporte en USA, es la caida de las importaciones de Diesel debido al dolar debil. Es un hecho que entre julio y agosto hubo una disminucion del consumo en el sector transporte pesado americano.
Otro analista, Antoine Haff de Fimat, argumenta que con la crisis de las hipotecas, el ciudadano no buscara mudarse a los suburbios de las grandes ciudades ya que eso implica el uso del auto y por tanto impactara la demanada de gasolina.
Lo interesante es que el consumidor americano aprende es de esta manera a hacer economias de la energia. A diferencia de Europa que viene a ser el buen alumno en el area. Sin duda el factor cultural permanece, un buen TRUCK en USA es la tarjeta de presentacion para el ciudadano medio. Esperemos que a punta de golpes el mayor consumidor de petroleo, aprenda a que hay una nueva realidad a la cual hay que adaptarse.
miércoles, septiembre 26, 2007
Islam’s Money Problem
By Dr. Samuel Gregg, research director at the Acton Institute
The Qatar Investment Authority, the agency that invests the country's oil wealth, is a front-runner to clinch a deal to buy a nearly 30 percent stake in the London Stock Exchange. That follows a recent $4 billion bid for OMX, the Stockholm-based Nordic stock-exchange, offered by Borse Dubai -- Dubai’s government-backed stock-exchange.
Decades of oil revenue have transformed many Persian Gulf states from the world’s paupers into cashed-up, international financial players.
Anxious to diversify their economies beyond reliance on oil revenues, some Gulf states such as Kuwait and Bahrain are slowly liberalizing their economies. Their “sovereign-wealth funds” (government investment corporations) are also becoming more creative in their financial strategies. Thus we see Gulf investors, private and public, seeking to acquire stakes in companies ranging from British supermarket chain, Sainsbury’s, to American utility TXU Corp.
Given the Arab world’s increasing religiosity, however, one potential obstacle could significantly handicap these nations’ financial creativity and economic diversification policies: Islam’s absolute prohibition of interest-charging.
The Qur’an’s proscription of usury (riba) has caused considerable angst for Muslims for centuries. Though some Islamic thinkers argue about what the Qur’an means by usury, it has been generally interpreted as prohibiting interest-charging. More than one scholar suggests that this continuing ban has contributed to the Middle East’s slower economic development compared, for instance, to Western Europe.
Christianity once had a usury issue, though somewhat different from Islam’s. Many Christians were influenced by Aristotle’s insistence that money’s apparently unproductive nature made interest-charging indefensible. They also faced the apparent contradiction between the Hebrew Scriptures’ condemnation of interest-charging, and Christ’s parable of the talents which implies that accepting interest payments is legitimate.
Christianity began resolving these matters in the medieval period. As embryonic forms of capitalism began emerging in thirteenth-century Europe, some scholastic theologians turned their attention to economic questions, including usury.
First, the scholastics established that, under certain conditions (such as free exchange economies), money transcended its “sterility.” In these circumstances, money was not simply a means of exchange, but also “capital”: that is, a productive good whose owners could legitimately charge others for its use.
Second, as John T. Noonan explained in his authoritative The Scholastic Analysis of Usury (1957), the scholastics clarified usury as the sin of “taking profit on a loan without just title.” Noonan notes that what constituted just title or a loan became understood as “matters of debate, positive law, and changing evaluation.” Not all interest-charging, the scholastics concluded, constituted usury.
As a result, observes the economic historian Franz-Xaver Kaufmann, the scholastic literature developed and codified these distinctions. This, Kaufman writes, “contributed to the growing sophistication of economic discourse; for instance, concepts such as risk and opportunity came to be invoked with increasing frequency.”
In short, many seeds for Western financial capitalism were laid that bore fruit in succeeding centuries. No analogous developments exist in Islamic thought.
Today many Muslims simply ignore the Qur’an’s strictures on money-lending. Increasing numbers, however, opt to invest in Islamic banks and shari’a-compliant investment funds. These avoid interest-charging and trading in financial risk (gharar), and focus on activities such as profit-sharing ventures (murabaha) and issuing Islamic bonds (sukuk).
A July 2007 IMF working paper estimates, “there are currently more than 300 Islamic financial institutions spread over 51 countries, plus well over 250 mutual funds that comply with Islamic principles.” The paper states that these organizations presently enjoy, “growth rates of 10-15 percent per annum” and exist in majority Muslim nations and nations with Muslim minorities—including Britain, whose Financial Services Authority has authorized shari’a-compliant investment and retail banks.
With religious observance increasing among Muslims, more are likely to invest in these banks and funds.
While good for devout Muslims, such trends could impede the Islamic world’s financial integration into global financial markets. As the IMF working paper notes, some Islamic scholars have already questioned, “the legitimacy of establishing Islamic subsidiaries or banks using capital from conventional banks”.
A graver question is whether Islam’s money problem is symptomatic of what some regard as Islam’s apparent inability to generate the foundations required by any free society from “within” its own theology. To say that doubt exists, even among some Muslims, about Islam’s potential in this area is an understatement.
The West’s resolution of its usury question showed that it could settle conflicts about an economic issue in ways consistent with its dominant moral traditions—a process which gave rise to new conceptual possibilities for economic creativity. Likewise, medieval debates about the state’s powers provided important intellectual foundations for concepts of rule of law and constitutionally-limited government.
It is not fashionable to say so, but not every expression of religious faith is compatible with free and pluralist societies, let alone capable of internally spawning the institutions that protect these goods.
Is Islam one such religion? The jury’s still out, but the Muslim world’s inner-wrestling over interest-charging provides fascinating insights into Islam’s current dilemmas – something we all have a stake in.
The Qatar Investment Authority, the agency that invests the country's oil wealth, is a front-runner to clinch a deal to buy a nearly 30 percent stake in the London Stock Exchange. That follows a recent $4 billion bid for OMX, the Stockholm-based Nordic stock-exchange, offered by Borse Dubai -- Dubai’s government-backed stock-exchange.
Decades of oil revenue have transformed many Persian Gulf states from the world’s paupers into cashed-up, international financial players.
Anxious to diversify their economies beyond reliance on oil revenues, some Gulf states such as Kuwait and Bahrain are slowly liberalizing their economies. Their “sovereign-wealth funds” (government investment corporations) are also becoming more creative in their financial strategies. Thus we see Gulf investors, private and public, seeking to acquire stakes in companies ranging from British supermarket chain, Sainsbury’s, to American utility TXU Corp.
Given the Arab world’s increasing religiosity, however, one potential obstacle could significantly handicap these nations’ financial creativity and economic diversification policies: Islam’s absolute prohibition of interest-charging.
The Qur’an’s proscription of usury (riba) has caused considerable angst for Muslims for centuries. Though some Islamic thinkers argue about what the Qur’an means by usury, it has been generally interpreted as prohibiting interest-charging. More than one scholar suggests that this continuing ban has contributed to the Middle East’s slower economic development compared, for instance, to Western Europe.
Christianity once had a usury issue, though somewhat different from Islam’s. Many Christians were influenced by Aristotle’s insistence that money’s apparently unproductive nature made interest-charging indefensible. They also faced the apparent contradiction between the Hebrew Scriptures’ condemnation of interest-charging, and Christ’s parable of the talents which implies that accepting interest payments is legitimate.
Christianity began resolving these matters in the medieval period. As embryonic forms of capitalism began emerging in thirteenth-century Europe, some scholastic theologians turned their attention to economic questions, including usury.
First, the scholastics established that, under certain conditions (such as free exchange economies), money transcended its “sterility.” In these circumstances, money was not simply a means of exchange, but also “capital”: that is, a productive good whose owners could legitimately charge others for its use.
Second, as John T. Noonan explained in his authoritative The Scholastic Analysis of Usury (1957), the scholastics clarified usury as the sin of “taking profit on a loan without just title.” Noonan notes that what constituted just title or a loan became understood as “matters of debate, positive law, and changing evaluation.” Not all interest-charging, the scholastics concluded, constituted usury.
As a result, observes the economic historian Franz-Xaver Kaufmann, the scholastic literature developed and codified these distinctions. This, Kaufman writes, “contributed to the growing sophistication of economic discourse; for instance, concepts such as risk and opportunity came to be invoked with increasing frequency.”
In short, many seeds for Western financial capitalism were laid that bore fruit in succeeding centuries. No analogous developments exist in Islamic thought.
Today many Muslims simply ignore the Qur’an’s strictures on money-lending. Increasing numbers, however, opt to invest in Islamic banks and shari’a-compliant investment funds. These avoid interest-charging and trading in financial risk (gharar), and focus on activities such as profit-sharing ventures (murabaha) and issuing Islamic bonds (sukuk).
A July 2007 IMF working paper estimates, “there are currently more than 300 Islamic financial institutions spread over 51 countries, plus well over 250 mutual funds that comply with Islamic principles.” The paper states that these organizations presently enjoy, “growth rates of 10-15 percent per annum” and exist in majority Muslim nations and nations with Muslim minorities—including Britain, whose Financial Services Authority has authorized shari’a-compliant investment and retail banks.
With religious observance increasing among Muslims, more are likely to invest in these banks and funds.
While good for devout Muslims, such trends could impede the Islamic world’s financial integration into global financial markets. As the IMF working paper notes, some Islamic scholars have already questioned, “the legitimacy of establishing Islamic subsidiaries or banks using capital from conventional banks”.
A graver question is whether Islam’s money problem is symptomatic of what some regard as Islam’s apparent inability to generate the foundations required by any free society from “within” its own theology. To say that doubt exists, even among some Muslims, about Islam’s potential in this area is an understatement.
The West’s resolution of its usury question showed that it could settle conflicts about an economic issue in ways consistent with its dominant moral traditions—a process which gave rise to new conceptual possibilities for economic creativity. Likewise, medieval debates about the state’s powers provided important intellectual foundations for concepts of rule of law and constitutionally-limited government.
It is not fashionable to say so, but not every expression of religious faith is compatible with free and pluralist societies, let alone capable of internally spawning the institutions that protect these goods.
Is Islam one such religion? The jury’s still out, but the Muslim world’s inner-wrestling over interest-charging provides fascinating insights into Islam’s current dilemmas – something we all have a stake in.
What Is Energy Security?
By A F Alhaji
The following article was written for MEES by A F Alhajji, energy economist and associate professor at the College of Business Administration, Ohio Northern University. This is the first of five articles on the theme of energy security by Prof Alhajji. The remaining four will be published in future weeks. The author can be reached via e-mail: a@a-alhajji.com
Many pundits warn about the impact of oil nationalism in oil producing countries on energy security in the oil-consuming nations. They ignore the fact that talk about energy independence and lower oil imports in the consuming countries is another facet of oil nationalism, which paradoxically leads to greater energy insecurity. Politicians and IEA officials who press the oil producing countries for “security of supply” are instigating nationalism in these one-resource states. They give legitimacy to an illegitimate concept – “security of demand.” The rise of both concepts in recent years hinders cooperation and increases animosity between the two groups.
US politicians who call for eliminating dependence on oil to “improve energy security” and at the same time agree to fund doubling the size of the US SPR to “improve energy security” are ignorant of inherent contradictions in their proposals. Politicians who support building up the SPR in their countries seem blind to the fact that it reduces commercial stocks, thus rendering vain their efforts to enhance energy security.
The contradictions built into the concept of “energy security” make it as elusive as a needle in a haystack. Worse, politicians talk about energy security despite the fact that they do not provide a clear definition of energy security and do not know how to assess it or measure it. Even energy literature has failed to come up with a definition that most people can agree on. In a sense, we are searching the haystack, but we do not know what we are looking for.
This is the first in a series of articles on energy security that aims to invigorate the debate on energy security in the hope that experts and policy makers will have a better understanding of these issues. The costs of not understanding them are steep and cannot be ignored: energy independence posturing could well lead to energy shortages and political instability.
What Is Energy Security?
The debate should focus on answering questions such as: What is energy security? Is it just a slogan or a real issue that societies have to deal with? If energy security is a real issue, what are its main concerns? Is the aim of energy security to eliminate or reduce the effect of energy shortages or to reduce energy prices and reduce their volatility? What is the relationship between energy security, national security, economics security, and environmental security? Should governments intervene to enhance the energy security of their nations or leave this matter to free markets? Why or why not? Should governments intervene only during periods of market failures, or should they intervene to prevent market failures? What is the role of monetary and fiscal policies in improving energy security?
Does energy security apply only to consuming countries? What about producing countries? Should oil producers intervene to protect the value of their energy exports to get what they call a “fair price”? What is the fair price? How does this price contribute to the world energy security? Why does it vary substantially from time to time? What are the factors that determine such a price?
Is energy security the responsibility of each country, of all countries, or a group of countries? What is the exact relationship between interdependence and energy security? Does cooperation among energy-producing and energy consuming countries enhance energy security? What is the theory behind such thinking? Is there any evidence to show that such cooperation works? Should that cooperation be market-based and market driven? Or should it be negotiated?
Role Of SPR?
Does building the SPR enhance energy security? If the answer is yes, does the location of the SPR matter? Does it matter who owns the SPR? Should the SPR contain all types of crude and products or just certain types of crude? As oil imports increase over time, should the level of the SPR increase proportionally to keep the days of import cover the same?
Does energy security apply only to tradable energy resources such as oil and natural gas or to all energy sources? How does nationalism threaten world energy security? Does privatization of national energy companies enhance energy security? How does the privatization of the national companies differ from the privatization of energy resources? And finally, does energy self-sufficiency enhance energy security? Now I hope that I’ve got you thinking.
The following article was written for MEES by A F Alhajji, energy economist and associate professor at the College of Business Administration, Ohio Northern University. This is the first of five articles on the theme of energy security by Prof Alhajji. The remaining four will be published in future weeks. The author can be reached via e-mail: a@a-alhajji.com
Many pundits warn about the impact of oil nationalism in oil producing countries on energy security in the oil-consuming nations. They ignore the fact that talk about energy independence and lower oil imports in the consuming countries is another facet of oil nationalism, which paradoxically leads to greater energy insecurity. Politicians and IEA officials who press the oil producing countries for “security of supply” are instigating nationalism in these one-resource states. They give legitimacy to an illegitimate concept – “security of demand.” The rise of both concepts in recent years hinders cooperation and increases animosity between the two groups.
US politicians who call for eliminating dependence on oil to “improve energy security” and at the same time agree to fund doubling the size of the US SPR to “improve energy security” are ignorant of inherent contradictions in their proposals. Politicians who support building up the SPR in their countries seem blind to the fact that it reduces commercial stocks, thus rendering vain their efforts to enhance energy security.
The contradictions built into the concept of “energy security” make it as elusive as a needle in a haystack. Worse, politicians talk about energy security despite the fact that they do not provide a clear definition of energy security and do not know how to assess it or measure it. Even energy literature has failed to come up with a definition that most people can agree on. In a sense, we are searching the haystack, but we do not know what we are looking for.
This is the first in a series of articles on energy security that aims to invigorate the debate on energy security in the hope that experts and policy makers will have a better understanding of these issues. The costs of not understanding them are steep and cannot be ignored: energy independence posturing could well lead to energy shortages and political instability.
What Is Energy Security?
The debate should focus on answering questions such as: What is energy security? Is it just a slogan or a real issue that societies have to deal with? If energy security is a real issue, what are its main concerns? Is the aim of energy security to eliminate or reduce the effect of energy shortages or to reduce energy prices and reduce their volatility? What is the relationship between energy security, national security, economics security, and environmental security? Should governments intervene to enhance the energy security of their nations or leave this matter to free markets? Why or why not? Should governments intervene only during periods of market failures, or should they intervene to prevent market failures? What is the role of monetary and fiscal policies in improving energy security?
Does energy security apply only to consuming countries? What about producing countries? Should oil producers intervene to protect the value of their energy exports to get what they call a “fair price”? What is the fair price? How does this price contribute to the world energy security? Why does it vary substantially from time to time? What are the factors that determine such a price?
Is energy security the responsibility of each country, of all countries, or a group of countries? What is the exact relationship between interdependence and energy security? Does cooperation among energy-producing and energy consuming countries enhance energy security? What is the theory behind such thinking? Is there any evidence to show that such cooperation works? Should that cooperation be market-based and market driven? Or should it be negotiated?
Role Of SPR?
Does building the SPR enhance energy security? If the answer is yes, does the location of the SPR matter? Does it matter who owns the SPR? Should the SPR contain all types of crude and products or just certain types of crude? As oil imports increase over time, should the level of the SPR increase proportionally to keep the days of import cover the same?
Does energy security apply only to tradable energy resources such as oil and natural gas or to all energy sources? How does nationalism threaten world energy security? Does privatization of national energy companies enhance energy security? How does the privatization of the national companies differ from the privatization of energy resources? And finally, does energy self-sufficiency enhance energy security? Now I hope that I’ve got you thinking.
viernes, septiembre 14, 2007
Sobre los 80$
El mercado petrolero esta semana ha estado muy agitado. Basicamente han ocurrido tres acontecimientos que hayan influido en este subida record del crude light de Nueva York.
El primer acontecimiento fue la reunion del martes 11 de septiembre, de los ministros de los paises miembros de la Opec en Viena, donde luego de una larga discusion ( mas de 7 horas) se acordo un incremento de 500 mil barriles diarios. Algunos analistas creen que la decision no ha sido suficiente para calmar el mercado. El precio retrocedio solamente 0.20 $. Esto demuestra que ya la Opec no tiene el poder que tuvo en una epoca para estabilizar los precios.
El segundo acontecimiento ocurrio el miercoles, luego de la publicacion semanal de los niveles de los almacenes de crudo en los Estados Unidos. La noticia que llevo el precio a los 80.20$ el barril, fue el descenso de mas de 7 millones de barriles de crudo en los inventarios en la region del golfo.
El ultimo suceso para rematar, Ley de Murphy, es la aparicion de la Tormenta Humberto en la region del golfo. Hasta ahora se espera que no afecte a la produccion, pero mantiene en vilo al mercado ya que las refinerias podrian sufrir algun dano.
Vale hacerle seguimiento a un grupo armado en Mexico que esta dedicandose a sabotear Oleoductos afectando la produccion que va destinada a los Estados Unidos. Analistas afirman que los mexicanos son lentos en reparar los danos y que deben aprender de los colombianos...
En todo caso hay un riesgo de que Mexico se vuelva un Nigeria, donde los sabotages y grupos armados que claman por igualdades, recurran a las instalaciones petroleras, para hacerse escuchar.
jueves, septiembre 06, 2007
Hugo Chavez's economy is starting to unravel in the currency market.
Alex Kennedy and Matthew Walter, Bloomberg
While Venezuela earns record proceeds from oil exports, consumers face shortages of meat, flour and cooking oil. Annual inflation has risen to 16 percent, the highest in Latin America, as President Chavez tripled government spending in four years. Exxon Mobil Corp. and ConocoPhillips are pulling out after Chavez demanded they cede control of joint venture projects.
The currency, the bolivar, has tumbled 28 percent this year to 4,750 per dollar on the black market, the only place it trades freely because of government controls on foreign exchange. That's less than half the official rate of 2,150 set in 2005. Chavez may have to devalue the bolivar to reduce the gap and increase oil proceeds that make up half the state's revenue.
``This has been the worst managed oil boom in Venezuela's history,'' said Ricardo Hausmann, a former government planning minister who now teaches economics at Harvard University in Cambridge, Massachusetts. ``A devaluation is a foregone conclusion. The only question is when.''
Chavez will devalue the bolivar 14 percent in the first quarter of 2008 after he introduces a new currency on Jan. 1 that will lop three zeros off all denominations, according to JPMorgan Chase & Co., the third-largest U.S. bank, and Merrill Lynch & Co., the biggest brokerage firm.
The new currency, to be called the strong bolivar, will have an exchange rate of 2.15 per dollar, the equivalent of today's rate, Finance Minister Rodrigo Cabezas said last week. Analysts forecast the official rate will decline 13 percent by the end of 2008, according to the median of nine estimates in a Bloomberg survey.
Healthcare, Housing
``We're not going to devalue no matter how much they pressure us,'' Cabezas told reporters in Caracas on Aug. 31. ``The so-called parallel market doesn't dictate our fiscal, exchange or monetary policies.''
Chavez, an ally of Cuban President Fidel Castro who calls capitalism ``evil,'' weakened the currency 11 percent in 2005. He imposed restrictions on foreign exchange in 2003 to halt capital flight that has driven down the bolivar more than 70 percent since he took office in 1999.
A devaluation would give the government more bolivars from its oil export tax receipts, helping fund Chavez's policies to provide free healthcare, housing and discounted food to millions of Venezuelans. The government says social programs helped cut the poverty rate to 34 percent in the first half of 2006 from 49 percent eight years earlier.
Oil, which has risen 155 percent in the past five years, accounts for about 90 percent of Venezuela's exports. The country is the fifth-biggest member in the Organization of Petroleum Exporting Countries.
Trips to Curacao
As the gap between the official exchange rate and the black market rate has increased, so has the incentive to exploit rules, such as a regulation that allows people to spend $5,000 a year on their credit cards while traveling abroad.
Some Venezuelans travel to nearby Curacao, where they buy $5,000 of casino poker chips with their credit cards, exchange the chips for cash and then sell the dollars in the black market back in Caracas.
``People are invoking their right to circumvent what are very, very stiff controls,'' said Alberto Ramos, senior Latin America economist at Goldman Sachs Group Inc. in New York.
The foreign exchange regulations are part of the controls that Chavez, 53, has created in his ``march to socialism.'' The government sets retail prices on hundreds of consumer products and fixes both the maximum rate at which banks can lend and the minimum interest they can pay depositors.
Chavez, who is seeking to end presidential term limits, has taken $17 billion of foreign reserves from the central bank and expropriated dozens of farms that he deemed underutilized.
Exxon, ConocoPhillips
He nationalized Venezuela's biggest private electric and telephone utilities and took majority stakes in oil projects owned by Exxon, the world's largest producer, and ConocoPhillips, the third-biggest in the U.S. Foreign direct investment was a negative $881 million in the first half as foreign companies pulled out money.
Chavez terminated the broadcast license of the country's most-watched television network in May, sparking weeks of student protests. He has threatened to take over cement makers, hospitals, banks, supermarkets and butcher shops, saying they weren't obeying price controls.
``It's like our director of marketing, our director of sales, our director of manufacturing is President Chavez,'' said Edgar Contreras, who runs international operations at Molinos Nacionales CA, a Caracas-based food manufacturer that employs 1,500 people. ``We can't go on like this.''
`Fantasy Prices'
Contreras called the government-set prices on many products ``fantasy prices'' that are below production costs. Items including milk, chicken, coffee and flour have disappeared from store shelves in Caracas at times this year because companies refused to sell at a loss.
The government has responded by giving importers more dollars at the official exchange rate. Imports soared 43 percent in the first half to a record $20 billion after tripling in the previous three years.
The country's current account surplus fell almost in half to $8.8 billion in the first half even as near-record high oil prices buoyed exports. Crude oil for October delivery rose 4.2 percent last week to $74.04 a barrel on the New York Mercantile Exchange.
``The growth in imports is so out of whack that it's choking off the local sector,'' said Teodoro Petkoff, a former government planning minister who now publishes opposition tabloid Tal Cual in Caracas. ``The engine of growth isn't the real economy. It's the government.''
`House of Cards'
While the rise in government spending fueled economic growth of 9 percent in the first half, output in five of 16 manufacturing industries shrank from January to May, according to the central bank.
Harvard's Hausmann said the growth in public spending has been so rapid that the government needs oil prices to keep rising to hold its deficit in check. He estimates the public sector deficit will equal about 5 percent of gross domestic product this year. The Finance Ministry forecasts the public sector will post a balanced budget this year, Public Credit Director Luis Davila said last month.
``For the macroeconomic house of cards not to come crashing down, the price of oil has to go up at double digit growth rates,'' Hausmann said. ``If oil stays at $70, they're going to hit the wall.''
While Venezuela earns record proceeds from oil exports, consumers face shortages of meat, flour and cooking oil. Annual inflation has risen to 16 percent, the highest in Latin America, as President Chavez tripled government spending in four years. Exxon Mobil Corp. and ConocoPhillips are pulling out after Chavez demanded they cede control of joint venture projects.
The currency, the bolivar, has tumbled 28 percent this year to 4,750 per dollar on the black market, the only place it trades freely because of government controls on foreign exchange. That's less than half the official rate of 2,150 set in 2005. Chavez may have to devalue the bolivar to reduce the gap and increase oil proceeds that make up half the state's revenue.
``This has been the worst managed oil boom in Venezuela's history,'' said Ricardo Hausmann, a former government planning minister who now teaches economics at Harvard University in Cambridge, Massachusetts. ``A devaluation is a foregone conclusion. The only question is when.''
Chavez will devalue the bolivar 14 percent in the first quarter of 2008 after he introduces a new currency on Jan. 1 that will lop three zeros off all denominations, according to JPMorgan Chase & Co., the third-largest U.S. bank, and Merrill Lynch & Co., the biggest brokerage firm.
The new currency, to be called the strong bolivar, will have an exchange rate of 2.15 per dollar, the equivalent of today's rate, Finance Minister Rodrigo Cabezas said last week. Analysts forecast the official rate will decline 13 percent by the end of 2008, according to the median of nine estimates in a Bloomberg survey.
Healthcare, Housing
``We're not going to devalue no matter how much they pressure us,'' Cabezas told reporters in Caracas on Aug. 31. ``The so-called parallel market doesn't dictate our fiscal, exchange or monetary policies.''
Chavez, an ally of Cuban President Fidel Castro who calls capitalism ``evil,'' weakened the currency 11 percent in 2005. He imposed restrictions on foreign exchange in 2003 to halt capital flight that has driven down the bolivar more than 70 percent since he took office in 1999.
A devaluation would give the government more bolivars from its oil export tax receipts, helping fund Chavez's policies to provide free healthcare, housing and discounted food to millions of Venezuelans. The government says social programs helped cut the poverty rate to 34 percent in the first half of 2006 from 49 percent eight years earlier.
Oil, which has risen 155 percent in the past five years, accounts for about 90 percent of Venezuela's exports. The country is the fifth-biggest member in the Organization of Petroleum Exporting Countries.
Trips to Curacao
As the gap between the official exchange rate and the black market rate has increased, so has the incentive to exploit rules, such as a regulation that allows people to spend $5,000 a year on their credit cards while traveling abroad.
Some Venezuelans travel to nearby Curacao, where they buy $5,000 of casino poker chips with their credit cards, exchange the chips for cash and then sell the dollars in the black market back in Caracas.
``People are invoking their right to circumvent what are very, very stiff controls,'' said Alberto Ramos, senior Latin America economist at Goldman Sachs Group Inc. in New York.
The foreign exchange regulations are part of the controls that Chavez, 53, has created in his ``march to socialism.'' The government sets retail prices on hundreds of consumer products and fixes both the maximum rate at which banks can lend and the minimum interest they can pay depositors.
Chavez, who is seeking to end presidential term limits, has taken $17 billion of foreign reserves from the central bank and expropriated dozens of farms that he deemed underutilized.
Exxon, ConocoPhillips
He nationalized Venezuela's biggest private electric and telephone utilities and took majority stakes in oil projects owned by Exxon, the world's largest producer, and ConocoPhillips, the third-biggest in the U.S. Foreign direct investment was a negative $881 million in the first half as foreign companies pulled out money.
Chavez terminated the broadcast license of the country's most-watched television network in May, sparking weeks of student protests. He has threatened to take over cement makers, hospitals, banks, supermarkets and butcher shops, saying they weren't obeying price controls.
``It's like our director of marketing, our director of sales, our director of manufacturing is President Chavez,'' said Edgar Contreras, who runs international operations at Molinos Nacionales CA, a Caracas-based food manufacturer that employs 1,500 people. ``We can't go on like this.''
`Fantasy Prices'
Contreras called the government-set prices on many products ``fantasy prices'' that are below production costs. Items including milk, chicken, coffee and flour have disappeared from store shelves in Caracas at times this year because companies refused to sell at a loss.
The government has responded by giving importers more dollars at the official exchange rate. Imports soared 43 percent in the first half to a record $20 billion after tripling in the previous three years.
The country's current account surplus fell almost in half to $8.8 billion in the first half even as near-record high oil prices buoyed exports. Crude oil for October delivery rose 4.2 percent last week to $74.04 a barrel on the New York Mercantile Exchange.
``The growth in imports is so out of whack that it's choking off the local sector,'' said Teodoro Petkoff, a former government planning minister who now publishes opposition tabloid Tal Cual in Caracas. ``The engine of growth isn't the real economy. It's the government.''
`House of Cards'
While the rise in government spending fueled economic growth of 9 percent in the first half, output in five of 16 manufacturing industries shrank from January to May, according to the central bank.
Harvard's Hausmann said the growth in public spending has been so rapid that the government needs oil prices to keep rising to hold its deficit in check. He estimates the public sector deficit will equal about 5 percent of gross domestic product this year. The Finance Ministry forecasts the public sector will post a balanced budget this year, Public Credit Director Luis Davila said last month.
``For the macroeconomic house of cards not to come crashing down, the price of oil has to go up at double digit growth rates,'' Hausmann said. ``If oil stays at $70, they're going to hit the wall.''
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