Finding Clarity in the 21st Century Mediaplex

Bolivarian Republic of Venezuela

Another boomerang stuns the Venezuelan bourgeoisie
By Ramón Santiago – Guest columnist, Axis of Logic
Axis of Logic
Thursday, May 20, 2010

At today’s meeting of the PSUV (United Socialist Party of Venezuela) President Chávez did not waste any time
reminding the beleaguered Venezuelan stock brokers that he would have no problem closing them all if they did
not step into line.
This sharp reminder came after trading in all government debt was suspended by the Stock Market Commission
yesterday in an all out assault on speculation against the national currency, the “bolívar fuerte”. This effectively
means that the only legal route of converting local currency to US dollars in order to send them out of the
country, capital flight, has been blocked.
Previously, Venezuelan brokers could trade in government bonds purchased at 2.15 to the US dollar and then
offload them into the parallel exchange market at a rate 3 times greater. So, just for moving a few pieces of paper
or keying in numbers on to a computer screen, so-called investors could free up their bolívares and make an easy
300% profit almost overnight.
In fact the correct word for such investors would be “speculators” or even “parasites”. Their actions have caused
the bolívar to weaken significantly against the US dollar sparking an inflationary spiral which affects all 29 million
One Bolivar Fuerte
inhabitants of the Bolivarian Republic.
The implications of these actions were not only financial but also political. The background plan of the speculators is one of creating high
inflation so as to prejudice the government’s chances of retaining control of the National Assembly in the September 26th elections.
Add to this the Venezuelan and international media campaign placing all the blame for climbing prices – especially food – at the government’s
door – and you have an excellent strategy to turn voters against government candidates. Essentially, it is an attack on the successful social
programs that have elevated the quality of live for Venezuela's poor and disenfranchised. The privately controlled media in Venezuela amounts
to at least 80% of all print and audiovisual media countywide and not one of these media outlets ever mentions the fact that it is the producers,
distributors, wholesalers and retailers who are continually increasing selling prices, undermining government policies and programs.
This corporate media campaign concentrates on the weakening of the bolivar without explaining that the cause lies not with the government but
rather with the speculators. International news brokers like Reuters and Associated Press consistently misrepresent problems in Venezuela,
placing the blame on the government rather than where it belongs - on the US-funded opposition. They also focus on the recent negative GDP
figures and the rate of inflation. No mention is made of the consistent fall in poverty levels from 71% in 1996 to 23% in 2010; or the increase
in the Human Development Index to .84 which is classified as “high” by the United Nations Development Body. The media campaign ignores
the gradual redistribution of wealth to the historically excluded classes
setting up of a National Health Service - new medical clinics, hospitals, free public health care.
Progressive Educational System - opening of new universities, public schools, medical clinics, and hospitals
construction of a national train system
aggressive law enforcement of crime, including violent offenders, illegal drugs and white collar crime
creation of the Women's Development Bank for small business
and the development of quality, affordable housing
The Venezuela bourgeoisie which controls most of the media, supermarkets, factories and much of the arable land is behind this strategy and all
work in concert to undermine government policy. Having control of trading the government bond market meant that they could influence the
devaluation of the currency and by extension the inflation rate but now all that has been stopped dead in its tracks.
Government debt will have to be traded via the Venezuelan Central Bank (BCV) which will set the exchange rate. Brokers are excluded from
these transactions. These companies will not be able to speculate on their own account and the end buyer will be vetted to ensure that no
hidden buyers are lurking in the shadows.
Reaction in the press, radio and TV as well as internet blogs has amounted to desperation in the bourgeois ranks. “The country is going to rack
and ruin”, they scream. Not so. A country goes broke when it has unmanageable debts in relation to its GDP such as Greece whose external debt
amounts to 115% of its GDP.
Venezuela's public debt fell from 47.5 percent of GDP in 2003 to 13.8 percent in 2008. In 2009, as the economy shrank, public debt picked up
to 19.9 percent of GDP. Even if we include the debt of the state oil company, PDVSA, Venezuela's public debt is 26 percent of GDP. The foreign
part of this debt is less than half of the total.
Boomerang!
The irony of this situation is akin to shooting oneself in the foot. The bourgeoisie created inflation and were moving their funds off-shore in US
dollars. Now, with it being impossible to trade government debt without the oversight of the BCV, they will have to suffer the consequences of
their own treacherous actions and suffer the inflation they themselves created.
This will devalue the purchasing power of the bolívares they hold and when a true illegal black market (or as Chavez recently quipped, "why are
we calling it the black market and not the white market?) arises, which it surely will, the perpetrators run the risk of being caught with cash
dollars acquired illegally. Jail sentences of 2 – 6 years are mandatory for amounts over US$20,000 plus huge fines.
Perhaps this will encourage honest investment in internal production and reduce the bill for imports in the longer term.
The perpetrators whose task was to destabilize the economy will have succeeded in prejudicing the middle class voters they need to win at least
some seats in the National Assembly in September.
You can rest assured that businesses which speculate will be expropriated and hoarders sent to trial. It is unfortunate that the government has
taken so long to act but it is not isolated in these actions internationally speaking.
The US Securities and Exchange Commission (SEC) has clamped down on “naked short selling” of debt as has Germany. Venezuela is simply
protecting itself, as developed countries are doing, against unbridled speculation which can cause countries to default on their obligations.
Let the international and local media criticize Venezuela’s measures. Constitutionally Chávez is obliged to protect the population against such
machinations and if that means closing down the stock broking fraternity and the Caracas Stock Exchange itself, so be it.
The greed of the Venezuelan bourgeoisie will have boomeranged back on itself and one can clearly understand why Chávez said today, “Tremble
bourgeoisie! Long live the Bolivarian Revolution!”
READ HIS BIO AND MORE HARD-HITTING REPORTS BY
RAMÓN SANTIAGO, GUEST COLUMNIST, ON AXIS OF LOGIC
References
1. Associated Press, Venezuela temporarily halts bond trading

2. Venezuela is not Greece, The Guardian (UK)

3. Multinational Monitor, A People's Health System. Venezuela Works to Bring Healthcare to the Excluded Multinational Monitor

4. Venezuela Analysis, A Look at the Venezuelan Healthcare System

 5. State University.com, Venezuela Educational System overview

6. Axis of Logic, Poverty in Venezuela fell from 70% in 1996 to 23% in 2009

7. Ralph T. Niemeyer, Does Venezuela Suppress Free Media?

8. MINCI (Venezuelan Ministry of Communication and Information)

9. Radio Nacional Venezuela

10. TeleSur

11. El Universal, US dollar skyrockets in Venezuelan swap market

12. Venezuelan National Television

13. Axis of Logic, Mass Transportation System in Venezuela Leaps Forward

14. Ven Global News, Venezuela's Railway Development Boosts Dynamically

15. National Public Radio (U.S.)

16. El Nacional, Venezolanos sufren para llegar a fin de mes por inflación récord

17. Associated Press, Venezuela annual inflation rate hits 30 percent

18. Venezuela Analysis, Venezuela Criticizes Bias in Inter-American Human Rights Commission Annual Report

19. Venezuela Analysis, Women's Development Bank: Creating a Caring Economy

20. Axis of Logic, Reuters busted for indecent exposure. The automobile industry in Venezuela.