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Friday, February 21, 2014 2:40 PM


Caracas Chronicles: Riots in Venezuela Continue 19th Day; Best Wishes but a Sober Assessment


Ukraine has been in the spotlight by every major news organization. Meanwhile, Venezuela simmered in riots for 19 days.

Where are the stories?

That's what Francisco Toro at Caracas Chronicles wondered yesterday in his report The Game Changed in Venezuela Last Night – and the International Media Is Asleep At the Switch

Listen and understand. The game changed in Venezuela last night. What had been a slow-motion unravelling that had stretched out over many years went kinetic all of a sudden.

What we have this morning is no longer the Venezuela story you thought you understood.

Throughout last night, panicked people told their stories of state-sponsored paramilitaries on motorcycles roaming middle class neighborhoods, shooting at people and storming into apartment buildings, shooting at anyone who seemed like he might be protesting.

People continue to be arrested merely for protesting, and a long established local Human Rights NGO makes an urgent plea for an investigation into widespread reports of torture of detainees. There are now dozens of serious human right abuses: National Guardsmen shooting tear gas canisters directly into residential buildings. We have videos of soldiers shooting civilians on the street.

And that’s just what came out in real time, over Twitter and YouTube, before any real investigation is carried out. Online media is next, a city of 645,000 inhabitants has been taken off the internet amid mounting repression, and this blog itself has been the object of a Facebook “block” campaign.

What we saw were not “street clashes”, what we saw is a state-hatched offensive to suppress and terrorize its opponents.

Here at Caracas Chronicles we’re doing what it can to document the crisis, but there’s only so much one tiny, zero-budget blog can do.

After the major crackdown on the streets of large (and small) Venezuelan cities last night, I expected some kind of response in the major international news outlets this morning. I understand that with an even bigger and more photogenic freakout ongoing in an even more strategically important country, we weren’t going to be front-page-above-the-fold, but I’m staggered this morning to wake up, scan the press and find…

Nothing.

As of 11 a.m. this morning, the New York Times World Section has nothing.
Media, Paramilitaries, Abuses, and Some Blood

Today, writer Juan Cristobal Nagel writes about Media, Paramilitaries, Abuses, and Some Blood
The stories
  • The Media Blackout - From yanking a Colombian cable news channel off the air to taking an entire city offline, the government has made controlling the flow of information about the crisis a priority. This comes on the heels of the looming threat to newspapers all over the country, which we have documented extensively. President Maduro has already announced they will pull the plug on CNN En Español, an important source of independent information. Now their journos’ official credentials have been revoked. All told, the past two weeks have been dreadful for the right of Venezuelans to be informed. The result? Tons of rumors, tons of disinformation, tons of uncertainty.
  •  
  • Paramilitaries: Let’s call a spade a spade: colectivos are paramilitaries. It’s silly that chavistas are somehow trying to minimize the role of these government-sponsored groups that now roam freely in the streets of Venezuela, heavily armed, accountable to God-only-knows whom. They have been repeatedly lionized by the government. They are christened by Ministers as the main line of defense of the Revolution. They talk to the foreign press and gleefully display their weapons and their fire power. Chavista governors give them orders via Twitter. And numerous eyewitnesses tell stories of violence. True – they don’t always shoot live ammo. Sometimes their role is simply to intimidate. Regardless, they are real, and they are not going anywhere.
  •  
  • Human Rights Abuses - From the jailing of Leopoldo López to the alleged torture of student demonstrators, it seems clear that Venezuela crossed a rubicon in the past few days. This has been a PR disaster for the government, with everyone from Amnesty International to Human Rights Watch to (gulp) Madonna weighing in. I don’t know if they care or not, but Maduro’s cast in international public opinion seems set for now. He is an abusive, mustachoed thug. Any lingering claim to the moral high-ground or to hemispheric leadership that the revolution may once have held on to died this month.
News Suppression

Maduro threatens to expel CNN but suppression of the news does not change the facts. Those in Venezuela are well aware of the horrific situation, thanks in part to sites like Caracas Chronicles.

Mission Impossible to Stop Capital Flight

On January 23, in Venezuela Strengthens Currency Controls in Impossible Mission to Stop Capital Flight; Airlines Collapse; End of the Line I commented ...
Hyperinflation, and economic stupidity by the leftist government are both out of control. On the currency side, the official exchange rate is 6.3 Bolivars to the dollar. The exchange rate for foreign travelers was just set to 11.36 Bolivars per dollar. The black market exchange rate is 79 Bolivars per dollar.

The end of the line for the Bolivar is at hand. The leftist government nationalized oil reserves, and the result was an immediate collapse in production. The only way Venezuela can import anything is from dwindling US dollar reserves. When those run out, it's lights out for the Bolivar.

Ridiculous Idea

Hyperinflationists believe the same thing is going to happen in the US. The idea is ridiculous. For more on the story, please see Venezuela’s Hyperinflation Anatomy; Army Storms Caracas Electronics Stores; Total Economic Collapse Underway; Could This Happen in US?
Plunging Oil Revenues

Two days ago professor Steve Hanke offered his stark view regarding Venezuela’s Plunging Petroleum Production
A hallmark of socialism and interventionism is failure. Venezuela is compelling proof of this, having spent the past half century going down the tubes. Indeed, in the 1950’s, it was one of Latin America’s most well off countries. No more. Now it is a basket case – a failed state that’s descending into chaos.

How could this be? After all, Venezuela’s combined reserves of oil and gas are second only to Iran’s. Well, it might have reserves, but thanks to the wrongheaded policies of President Hugo Chavez, Venezuela is the only major energy producer that has seen its production fall over the past quarter of a century. The following chart tells that dismal tale:

The above chart may not look so ominous. The next chart will.

Venezuela Foreign Reserves



Given complete mistrust of president Nicolás Maduro, and nationalization of the oil industry, Venezuela's massive energy reserves are not worth much.

Current production does matter to the extent Venezuela can keep paying its bills. At the current pace, those reserves will last another two years.

Best Wishes but a Sober Assessment

Best wishes and a tip of the hat to writers Francisco Toro and Juan Cristobal Nagel for the two lead stories in this post. Those interested in Venezuela may wish to bookmark Caracas Chronicles.

Unfortunately, my sad assessment is things are likely to get a lot worse, eventually culminating in complete or near-complete loss of value of Venezuela's currency, the bolivar. Meanwhile, ridiculous exchange rates ensure a constant shortage of consumer goods and food.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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