NEWS: The Mess in Venezuela and the 200% of inflation

Alejandro Toledo, former president of Perú and author of "The Shared Society", writes in the op-ed pages of the New York Times, an article that is both accurate and simple, and that it is also ambitiously untitled: How to Fix the Mess in Venezuela. A must-read. "The recent news from Venezuela has been troubling — and also far from surprising. As the Venezuelan economy continues to struggle and inflation pushes many of the most basic everyday needs out of reach of ordinary working people, President Nicolás Maduro has responded, not with a plan, but with a crackdown. It has included arresting Antonio Ledezma, the mayor of Caracas, and other opposition figures on questionable charges — to say nothing of the jailings of peaceful protesters.

Mr. Maduro’s attempts to deflect criticism by pointing to aggression from the United States and international meddling — even if they were rooted in fact — would do nothing to solve Venezuela’s problems. If he were a serious leader, he would look first at the Venezuelan economy, which, in reality, is at least two economies, separate and far from equal. . . Fixing the economy, however, is only one of the tasks facing Mr. Maduro. The second is going to be tougher: He must shed the conspiratorial mind-set and authoritarian instincts he has carried over from the regime of his predecessor, Hugo Chávez, and accept that true democracy includes dissent, and that means he won’t always get his way." Read full article in The New York Times. E.T.P. 5'

 Tim Worstall writes in Forbes: "This isn’t perhaps the sort of thing that we normally congratulate people on, managing to so entirely screw up a national economy so as to generate 200% annual inflation. But we really should give credit where such credit is due. It is an achievement to manage to follow economic policies that blockheaded so, in the spirit of being entirely fair, congratulations to Venezuela’s Bolivarian socialism. It’s worth noting further that the reason for this stunning success of theirs is not because they’re a bit left wing, nor because they’ve tried to make the lives of the poor a bit better. It’s because they’ve ignored the most important rule of trying to run an economy, they’ve failed to understand that markets really do work. Something that we all need to recall in our own countries as various people tell us that we’ve got to excise market forces from one or another part of our own economies. There’s ways to deal with the effects that we don’t want from market forces: but ignoring or trying to abolish them leads to, well, to success like that that Venezuelan Bolivarian socialism is currently experiencing." Read full article in Forbes. E.T.P. 6' 

NEWS: The Impending Collapse of Venezuela

          People line up to buy food at a supermarket in San Cristobal, about 660 km southwest of Caracas, Feb. 27, 2014              via Business Insider.

"Back in the late 1980s, the economists Rudiger Dornbusch & Sebastian Edwards described how countries such as Venezuela which pursue highly expansionary populist policies to the detriment of public finances typically go through four distinct phases in what might be called a “boom-bust” cycle. This is their description of Phase 3:

Phase III: Pervasive shortages, extreme acceleration of inflation, and an obvious foreign exchange gap lead to capital flight and demonetization of the economy. The budget deficit deteriorates violently because of a steep decline in tax collection and increasing subsidy costs. The government attempts to stabilize by cutting subsidies and by a real depreciation. Real wages fall massively, and politics become unstable. It becomes clear that the government has lost.

This is why Moody’s has been too generous to Venezuela. The balance of payments problem is merely the trigger for a massive fiscal, economic and ultimately political crisis that can only end in one way – the disorderly collapse of the regime. Whether this will take the form of a revolution, a military coup or simple chaos remains to be seen. But what we are witnessing is the destruction of Venezuela’s economy. And that destruction is not, fundamentally, because of external factors. It is a direct consequence of the economic policies pursued by the Chavez and Maduro regimes." Read full article in Forbes. E.T.P. 8'

Linette Lopez writes in the Business Insider about Venezuela's "let them eat cake" moment, when the Food Minister (yes, there is a Food Minister), who refused to refused to answer questions to a journalist that does not agree with the administration's prevailing idea that all this economic suffering — rampant inflation, dwindling central-bank coffers, and more — is the result of an economic war on the Venezuela. Which is of course, a massive lie. Refer to the previous article if in doubt and read Lopez full article in the Business Insider. E.T.P. 3'

The Procrastinator (some) Times Sunday 25th of May Edition

EDITORIAL

This week's edition features two articles about the victory of of Hindu nationalist Nadendra Modi in India's elections via The Economist and Forbes. Postal services suspended indefinitely and more airlines fleeing Venezuela. In our Science & Technology section Le nouvel Observateur asks if we are living a detox overdose, and Wired shares the story of Oculus Rift. Baratunde Thruston asks if brands will stop trying to 'join the conversation' and actually make products worth talking about in our Design, Business & Innovation section where you can also have a look at some of the Kickstarter projects in NYCxDesign at MoMA. While in Culture & Entertainment, Dazed Digital asks what was really on that famous Pulp Fiction briefcase. La Guía del Perro share with us articles about shelter dogs helping bullied kids and the wonderful Phoenix in In Dog We Trust. And finally Germán is back with a new Sunday (some) Times wishing you all a happy Towel Day!

Happy Sunday, happy reading!


NEWS

Photo via The Independent.

While The Economist appears to be 'economically content' with the election of Narendra Modi as India Prime Minister and dedicate its last cover to him saying that "now, for the first time ever, India has a strong government whose priority is growth. Narendra Modi, who leads the Bharatiya Janata Party (BJP), has won a tremendous victory on the strength of promising to make India’s economy work." They clarify that they do not endorse him, but 'looking at the big picture' wish him success anyway: "because we believe that he has not atoned sufficiently for the massacre of Muslims that took place in Gujarat while he was chief minister, we wish him every success: an Indian growth miracle would be a great thing not just for Indians, but also for the world." Read full article in The Independent. E.T.P. 7'

Forbes assumed a much more critical position and questioned if Narenda will be a Prime Minister of all Indians: "Unfortunatly India’s presumptive prime minister, Narendra Modi, was implicated in one of the country’s worst episodes of sectarian violence.  In 2002 in the state of Gujarat, in which Modi served as chief minister, Hindu rioters killed more than 1200 people, mostly Muslims, and forced 150,000 people from their homes.  Eventually the Indian military and national police restored order.  Critics charged Modi with both encouraging the violence and failing to stop it.  Investigations and court cases went on for years." Read full article in Forbes. E.T.P. 8'

Photo: The Procrastinator (some) Times.

And in Venezuelan news, the postal service (that was extraordinarily bad already) has been suspended international mail deliveries. "Employees at the state-run company Ipostel told local media that the service had fallen victim to an ongoing dispute with international airlines over currency controls.
According to El Universal, postal workers said tonnes of undelivered international mail had accumulated at Ipostel sorting offices after deliveries to at least 29 countries were suspended.
"The company is practically bankrupt, not only with its international deliveries but also its basic services because we have no materials or equipment," said Jose Gallardo, of a labour union in the eastern state of Anzoategui."

The same article in the Guardian explains that basically international deliveries are impossible because of a dispute between Venezuela and international airlines as at least three major carriers have stopped or reduced flights to Venezuela: Air Canada, Lufthansa and Alitalia. t has claimed more than 40 lives in three months. "According to the International Air Transport Association, Venezuela owes around $4bn to international carriers." Read full article in The Guardian. E.T.P. 4'

The Venezuelan government also owes US$4bn to the local pharmaceutical industry, and this is traduced in a major scarcity of medicines and treatments. Here is the article in El Universal (link in Spanish). E.T.P. 2'

No money, no food, no medicines, no airlines, no postal service, no security, no human rights, no freedom of expression. Viva la revolución.