Saturday, January 30, 2010
Hugo Chavez Shows America How
"President Hugo Chavez's decision to devalue Venezeula's bolivar and impose a complicated new currency regime may paper over some growing cracks in the economy, but it is also setting the stage for bigger problems down the road for the country's oil-rich nation and its populist leader. ... At Caracas's middle-class Sambil shopping mall, lineCarmens at cashiers reached 50-deep. Blanco, a 28-year old accountant, waited to buy a 42-inch flat-screen television she doesn't need because she already has one at home. 'It doesn't make any sense to keep my savings,' Ms. Blanco said Saturday. 'I'd love to see how things work in a normal country.' ... Chavez ... vowed to 'seize any businesses and shops that are participating in speculation.' ... In order to protect the poor, his main constituency, from the move Mr. Chavez announced the creation of another exchange rate of 2.6 bolivars per dollar for imports of food, medicine and other essential goods. Those rates will compete with a black-market rate, where the bolivar had plunged, forcing the official devaluation. On Friday, that black-market rate stood at 6.25 per dollar. ... Rising oil prices granted Mr. Chavez a huge economic war chest to smooth out economic problems during most of his presidency. But with oil prices off record levels, inflation soaring and the economy stuck in recession, the era of easy choices appears to be over", my emphasis, John Lyons and Darcy Crowe at the WSJ, 11 January 2010, link:
Right on Mish who likens Chavez to Obama, 11 January 2010, link: http://globaleconomicanalysis.blogspot.com/2010/01/chavez-threatens-to-seize-businesses.html.
This is the fate I expect to befall America. Not hyperinflation like in Zimbabwe, but Latin Americanization, i.e., high inflation, price and exchange controls, subsidies and who knows what else? In the US we steal people's savings through interest rate suppression. Venezeula's current inflation rate is reported at 27% annually. Televisions are better "stores of value" than the Bolivar. Governator, take note.