Sunday, March 09, 2014

Alek Boyd: Hugo Chavez’s corrupt cronies find GOP friends

Interesting, the Chairman of the American Conservative Union - organizer of CPAC - boutique law firm represents several Chavista Oligarchs.



Alek Boyd: Hugo Chavez’s corrupt cronies find GOP friends: A prominent Washington conservative’s law firm is representing a shady Venezuelan company that has close ties to the Chavez regime, meanwhil...

Sunday, October 13, 2013

What Chile Could Teach The United States About Preventing Government Shutdowns

What Chile Could Teach The United States About Preventing Government Shutdowns

Chile’s urgency provision is rooted in an important insight in constitutional design. It recognizes that legislation sometimes arises that is so important it must become the immediate business of the legislature, and that a forcing mechanism is sometimes necessary to ensure that such legislation receives a timely vote. Were a similar provision inserted into the United States Constitution — one allowing the president to bring a bill to the House floor and force a vote even against the House leadership’s will — that would likely be enough to end our current impasse and prevent leaders like Speaker Boehner from unilaterally vetoing legislation that enjoys majority support in the Congress.

Wednesday, March 06, 2013

Hugo Chavez is Dead

So what can you say about this?  Tragic, yes, but his legacy casts a shadow over Venezuela and Latin America.

Chavez was very popular with common people and spent a lot of money on projects to help them. But with little transparency, lack of political checks and balances and no accountability, hundreds of billions of dollars were wasted and stolen. First that means many projects were never completed - casting doubt on official poverty-reduction figures. if a clinic or hospital is never completed you can't count those hospital beds; the same goes for tons of containers of food that rotted in warehouses. Also it created a new class of multi-millionaires and further enriching Venezuela's traditional oligarchs. Chavez' State Capitalism enriched a lot of people at the very top.

Remember in a decade of historically high oil prices Chavez presided over a country with the biggest oil reserves in the world. He came into power with a barrel of oil at $10 dollars it climbed to $150 With this unprecedented bounty poverty SHOULD HAVE been reduced. You could hand out cash to poor people. Indeed, in previous governments during oil booms social spending was about the same percentage of GDP. People forget Venezuela had Social-Democratic governments that subsidized housing, education and health, well before Chavez.  Chavez spent a lot of money and poverty did go down, but with the kind of money available and spent you would expect a stronger overall picture, which still is not true, due to waste, corruption and inefficiency. He has plowed through a trillion dollars in oil revenue and somehow left a country with the regions highest inflation, food scarcities, weak currency, indebted, infrastructure collapsing

Sunday, September 23, 2012

Corruption in Chavez Venezuela - The Caracas Consensus Part 1 - Capital Flight


Some see the Chavez regime as a benign entity that shares the oil wealth of the country with the poor for the first time in Venezuelan history.  Amazing how some will excuse away authoritarian tendencies or wasteful incompetence with an argument that seems to boil down to what I would call "but..it has its heart in the right place."

Truth of the matter is that the Chavez government has become one of the most corrupt governments in Latin America in recent times.   It has also enjoyed a windfall of one trillion dollars in oil revenue, since the price of a barrel of oil has gone from 8 bucks a barrel to 100+ while Chavez is in office.   Sure, it claims it has directed 300 billion dollars to social programs, which on paper might be true, but its hard to see where all that money goes.   With  little oversight or accountability  hundreds of billions of dollars are not accounted for, and are prime candidates for corruption by government officials and friendly businessmen.

Which Brings Us To Capital Flight - And Hugo's Big Mouth.

Opposition  newspaper Tal Cual, editorial called  El Saqueo "The Plunder", by Carlos Diaz,  reported on statements President Hugo Chavez on September 11, 2012.   President Chavez stated there was more than 400 Billions of Venezuelan dollars in foreign fiscal paradises.

 President Hugo Chavez was citing statistics from the Tax Justice Network, an English NGO whose issue is concern with unrecorded, untaxed private wealth being squirreled away in offshore havens.   The latest and very publicized TJN report in 2012 was The Price Of Offshore Revisited. by James S. Henry, which used new criteria to measure the amount of untaxed private wealth that has accumulated in offshore tax havens and the largest 50 banks in the world the past 40 years.     The reports appendix had statistics on estimated "private Venezuelan funds directed to fiscal paradises during the period 1970-2010.' according to Diaz. TJN measures pre-tax private wealth that flows to tax havens including First World banks.

When Chavez was probably referring to was the sum of 400 Billion dollars which is estimated to be the dollar amount of  the value of off-the-books private capital that has fled Venezuela the past 40 years plus what this capital it has earned in returns.   Diaz correctly notes that while Chavez uses the data to "demonize" prior governments, the reports findings are especially damning to his government.


Chávez se agarró de esta cifra para demonizar el esquema institucional previo a su gobierno que mantenía un cambio libre y obligaba a Pdvsa a entregar al Banco Central de Venezuela (BCV) todos sus ingresos en moneda extranjera. Según el mandatario, estos mecanismos sólo facilitaban que los venezolanos sacaran dinero del país. Pero como suele ocurrir, a Chávez le echaron mal el cuento.
De la lectura del reporte se concluye que Venezuela no está sola en la problemática de la fuga de divisas. En términos nominales nuestro país ocupa el tercer lugar detrás de Brasil y México, y apenas por encima de Argentina; mientras que en términos reales sólo nos supera Brasil. Ahora bien, el aspecto importante a considerar es cuándo se produjeron esas fugas.

Basically, if you look at the report, most of the Capital Flight has been continuous under Chavez. Not only is Chavez off-base, he is damned by the report.   He is responsible for 55% of the total capital flight for the period 1970-2010.   Venezuela government corruption and economic mismanagement were notorious before Chavez, and the charts reflect that fact.  There was massive plunder of oil revenues in the 70's, during the 90's bank crisis' billions left the country, which is what Chavez supporters often point to (correctly).  But still during 1999-2010 period, more pre-tax dollars ended up abroad than during the "Venezuelan Saudi" period of the 70's and 80's and the "Neo-Liberal" 90's combined.

   the chart on page 23 of Appendix 3 of the report shows this well:

  In absolute numbers, Venezuela is second to Brazil in Capital Flight, the past 40 years.   For the period of Chavez rule Venezuela is #1 in absolute numbers in Unrecorded Capital Outflows.  This estimate is $153 Billion Dollars in the time period 2001 to 2010, which coincides with the single largest oil boom in history, with a trillion dollars in revenue.    And a good chunk of it can not be explained by anti-Chavez Wealthy Venezuelans pulling money out between 99 and say the PDVSA strike of 2003 - though that did happen.  But, unrecorded private capital outflows spiked after oil prices increased after 2005

What does this say about corruption? 

Venezuelas economy and revenues mostly come from extracting oil, and from the national oil company PDSVA.  This capital flight happened under a government with strict capital and currency controls, and where the government controls a substantial part of the economy. Private Sector activities in the traditional agricultural and manufacturing sector have suffered, due to government policies of expropriations, price controls and currency controls,  That also dries them up as potential sources of capital flight..  The government is flush with cash, and spends a lot of it which ends up being filtered out to a parasitic Private Sector that acts as subcontractors and bankers for the inefficient and wasteful state.  The government has also been directly involved by selling  billions of dollar denominated bonds at artificially low exchange rates, so private buyers can deposit them in foreign accounts and the government can spend more money to buy votes.

Brazil and Mexico have large and more diversified economies with actual multi-nationals.   Together with Argentina, over the past 40 years have well-documented histories of economic collapses and debt. We just need to look at the financial crisis that bookended the 90's in Brazil to find some explanations for capital flight.   Mexico went through a horrible crisis in the early 80's, the Tequila crisis in the 90's and this decade has the U.S. Great Recession and drug violence and money laundering. 
All 3 of these countries have a long history of government corruption that also explains their capital flight.  Mexico under the PRI in the 70's and 80's produced multi-millionaires (Lopez Portillo or Salinas De Gortari anyone?) 
Yet in Chavez' Venezuela is a bigger exporter of unreported dollars to private bank accounts than trillion dollar economies like Brazil or Mexico.   Private individuals in a revolutionary government, somehow end up exporting billions in capital beating out legendary oil-flush thieveocracies like the PRI of the 70's and their own homegrown ADN/Copei.  That says a lot about the rot at the core of Chavez supposed Boliviarian Revolution.



Thursday, April 19, 2012

Cry for Yourself Argentina

Wacky!!

Cristina Kirchner expropriating Repsol's holding in YPF is just about the boldest and dumbest thing you can do.   Bold in the sense that she herself and her hubby were major backers of YPF being privatized in the early 90's and as of 2010 praised Repsol for its work in Argentina.

As for helping Argentina, it is just a short term desperate measure.   She claims that Repsol did not invest, and that the country had to achieve energy self-sufficiency.

The reason production and investment is down is pretty much due to the complex Kirchnerian web of regulations, price controls  and subsidies in the hydrocarbons sector.

Gasoline prices are kept under international prices, while exports of crude are tightly controlled by the State.   Natural Gas - a cornerstone of the energy and heating needs of Argentinians - is subject to price controls and heavy regulation.  This means less money for exploration in oil and gas since you can't sell at market prices domestically and even abroad.     Less production meant the Argentine State went abroad to buy things like natural gas at market rates - selling them domestically at subsidized rates at a price of billions a year. Perversely, this lower prices also meant increased demand for oil and gas.

In the end it looks like another disastrous decision to remedy a situation the Kirchners themselves are responsible for in large parts.

Tuesday, January 11, 2011

Evo's Gasolinazo - Morales Finally Does Something Right Then Cancels

From the Economist, 




The logic behind the increase was impeccable. Fuel prices in Bolivia have been frozen since before Mr Morales came to power in 2006, even as the world price of oil has surged. The result has been rising demand, falling oil output and a mounting bill for fuel imports and subsidies. The price freeze cost the government $380m last year, a bill that would rise to $660m this year, according to Álvaro García Linera, the vice-president.