Mom Can’t Visit Daughter as Airlines Shun Venezuela Cash

[Godhumor]

Source: Bloomberg

Gladys Varela is stuck in Venezuela this Christmas. After scanning travel agencies in Caracas for three months for a plane ticket to visit her daughter in Mexico, she found airlines want nothing to do with bolivars.

Tickets from American Airlines Inc., Grupo Aeromexico SAB and Avianca Holdings SA among others have become harder to buy in Venezuela since September, as tighter currency controls make it more difficult for companies to convert bolivars into dollars. The shortage of greenbacks to fund imports of goods and services led the bolivar to decline 73 percent this year in the black market.

Airlines have the equivalent of $2.6 billion locked in the country at the official exchange rate of 6.3 bolivars per dollar, according to the International Air Transport Association. They don’t want to increase exposure to a currency that investment banks from Bank of America Corp. to Goldman Sachs Group Inc. say will be devalued for the eighth time in 11 years, said Helane Becker, airlines analyst at Cowen & Co LLC.

...

“It’s like the borders are closing down without anybody putting a travel ban,” Susana Garcia, owner of Margarita Island-based Chill Out Travel Tours, said in phone interview. “We are becoming trapped in our own country because of government policies.”

Read more: http://www.bloomberg.com/news/2013-12-18/mom-can-t-visit-daughter-as-airlines-shun-venezuela-s-bolivar.html

---

Very interesting article with a lot of information about how currency controls installed by the government has led to a massive curtailing of imports and rampant currency speculation. Venezuela is in serious economic trouble.

[MADem]

1. If you have a fistful of bolivars, no need to worry about that pesky toilet paper shortage.... nt

[Tarheel_Dem]

17. +1

[hack89]

2. The government is caught between a rock and a hard place

the present currency restrictions are wrecking the economy. If they repeal them, everyone in VZ will convert their money into dollars and stash it in foreign banks.

[Sedona]

3. easy fix

wire money to the daughter in Mexico and have her buy the ticket

Lazy media...Its like the "my awesome health insurance got cancelled"

[jtuck004]

4. No, you can't. Currecy controls within the country, can't do it without govt approval, and you ain't

gonna get it.

[Godhumor]

5. Not quite that easy

Currency speculation and the massive difference between black market exchange rate has caused a restriction on exchanging bolivars, as well. This is not an easy problem to fix.

[ieoeja]

7. And, yet, my employer exchanges bolivars for dollars every single day.

[hack89]

9. Completely separate issue

The late President Hugo Chavez created currency controls in 2003 that allow the central bank to handpick companies and citizens that have access to dollars at the government-set exchange rate. As international reserves fall, his successor Maduro has reduced the supply of dollars, crimping imports and making it harder for international companies to exchange their bolivars into greenbacks, said Francisco Rodriguez, chief Andean economist at Bank of America.

Companies don't want a huge pile of bolivars that they cannot convert.

[7962]

8. Dont worry, Maduro will fix everything! He promised he would!

What a joke. Let the apologists begin their defense of this nonsense........

[MyNameGoesHere]

13. Those apologist might be people that want VE

to succeed and not be a puppet of Tio Sam to the north. Those on the other side that are rooting for failure would tend to enjoy business as usual. IN other words a third world country that is beholden to the north. We did that for 100 years or more and helped generate a continent of extremely poor people. The current system has flaws. The idea it was brought about from is not. Let the country grow and have its pains and triumphs. But don't profess to be progressive and yap the lines of the right either. It is neither helpful or very enlightened.

[Ranchemp.]

14. You do know that this is an internet chat board,

where we can opine about anything as long as it doesn't violate Skinner's rules don't you?
As far as VN, you say the current system has flaws? FLAWS? The current system is so mismanaged and corrupt that I seriously doubt that anything short of a massive overhaul of the system, which would include ridding the govt of the corrupt Maduro and his toadies and instituting meaningful reforms.
As long as the people of VN keep electing these corrupt pols, nothing is going to get better, in fact, I predict that the economy is going to completely collapse in the next few years.

[Tarheel_Dem]

18. Moises Naim, who's an actual "economist" of Venezuelan descent disagrees with your analysis.

An Economic Crisis of Historic Proportions

Last month, Jorge Botti, the head of Fedecámaras, Venezuela's business federation, explained that unless the government supplies more dollars to pay for imports, shortages -- from food to medicine -- would be inevitable. "What we will give Fedecámaras is not more dollars but more headaches," replied acting president Nicolas Maduro, the heir apparent to the Chavista regime (and Hugo Chávez's vice president).

Maduro is correct. Crushing headaches will soon be inevitable across the country, including within the private sector but especially among the poor. President Chávez has bequeathed the nation an economic crisis of historic proportions.

The crisis includes a fiscal deficit approaching 20 percent of the economy (in the cliff-panicking United States it is 7 percent), a black market where a U.S. dollar costs four times more than the government-determined exchange rate, one of the world's highest inflation rates, a swollen number of public sector jobs, debt 10 times larger than it was in 2003, a fragile banking system and the free fall of the state-controlled oil industry, the country's main source of revenue.

Oil-exporting countries rarely face hard currency shortages, but the Chávez regime may be the exception. Mismanagement and lack of investment have decreased oil production. Meanwhile oil revenue is compromised partly because of Chávez’s decision to supply Venezuelans with the country's most valuable resource at heavily subsidized prices. Thus a large and growing share of locally produced oil is sold domestically at the lowest prices in the world (in Venezuela it costs 25 cents to fill the tank of a mid-sized car).

http://www.nytimes.com/roomfordebate/2013/01/03/venezuela-post-chavez/chavez-will-leave-behind-an-economic-crisis

The whole article is well worth the read.

[MyNameGoesHere]

19. He says he disagrees with me on letting them make their own fate?

I did not read that in the article. So what are you proposing? Tio Sam to the rescue to "save democracy" aka neoliberalism? Oh MY GOD! 25 cents to fill a car!!!! Holy fuck send the Oil Cartel immediately. Send the IMF! WORLD BANK ALERT! CODE RED! CODE RED!

Leave em alone unless they ask for help. How about that for a change?

[Tarheel_Dem]

22. I could give a shit about helping Venezuela, whether they ask or not. I agree, "we should stay out

of it", for better or worse, let their "friends" help 'em out. It'll be interesting to see how that all plays out.

[Judi Lynn]

20. Moises Naim is dearly loved by the extreme right-wing Heritage Foundation,

a group of loathesome, greed-obsessed dirtbags NO Democrat would ever take seriously.

[Tarheel_Dem]

21. Yeah. An all too familiar argument from you. Why can't you face what the rest of the world is...

now learning? Chavismo sucks! And it's not just the "rightwing" who's saying so. You can question everyone's "Democrat-ic" bonafides all you want, but the truth is being borne out just as Naim predicted back in January, no matter who "loves him", and who doesn't.

[Ranchemp.]

26. Doesn't mean Moises is wrong.

[7962]

24. Yes, since I criticize the foolishness of this decade-plus "experiment", I'm now right wing. Ha.

How long do you want to give them before you can admit that its not working? How much poorer does the country need to get? Your comments must mean that you believe the countries in Latin America who ARE doing well are "puppets"? You need to do some more research.
Maduro/Chavez economics will fail. Or continue to fail, I should say. And this is an oil-rich country on top of every thing else. They have tons of money flowing in from oil sales and still cant shoot straight. But Maduro will do just as Chavez did, blame all the problems on the US or other "outsiders" in order to drum up nationalist feelings. That'll only work for so long.

[MyNameGoesHere]

28. It really isn't any of my damn business now is it?

If they fail they fail. You don't control it, I don't and our nosy Tio Sam government shouldn't try to control it. WE should not spend money on opposition and meddle in their affairs. We shouldn't treat them publicly with disdain. However if you feel so strongly in doing something, you may go start a armed struggle, send money, or become a citizen and vote the Bolivar's out. I understand that Tio Sam would probably even pay you. Until then, your opinion has zero (0) influence on the people in Venezuela, and one (1) here. Yourself.

[7962]

29. Well then, I guess we shouldnt have any threads here on news outside the US!

It isnt 100 yrs ago anymore. The world is connected like never before. Just like Greece's problems affected the EU, among others. When VN fails, and it will if they dont change, it will become a massive burden on Latin America and the US will likely be asked to help in some way as well.
Why shouldnt we be critical of a regime that propagates such a burden on its own people?

[MyNameGoesHere]

32. Wait I have a solution eom

[Beacool]

10. Yes, it is.

Cristina Kirchner in Argentina imposed similar rules last year and the Argentines are up in arms about it. It's ruining their economy too. I made out like a bandit when I went to Buenos Aires in September. The official exchange was a tad less than 5 pesos to a dollar. I exchanged it in the black market for almost 9 pesos per dollar. Instead of Venezuela, other Latin countries should look at what Chile is doing.

[LeftyMom]

27. You violated the law, exploited people and now you're bragging about it?

Wow. Every time I think this board has hit a new low somebody gets out the shovel and starts digging afresh.

[Beacool]

30. Exploited people???

What the heck are you going on about? The black market is the only way for people to purchase dollars. Don't criticize unless you know what you're talking about.

[LeftyMom]

31. You ripped them off based on their lack of legal options, and yes, that's exploiting people.

[Beacool]

33. Oh, please.......

You have no clue as to how things work in some countries. Save your self righteousness for someone else.

[hack89]

38. If they paid 9 pesos then they were worth 11 pesos

the black market money exchangers price their products to make a profit - if they did then how is that exploiting them?

[Bacchus4.0]

37. the other aspect of this travel mess, you can get up to $3000 at the official rate

on a government issued travel card. (In dollars since Bolivars are worthless outside of Ven) People will travel to nearby countries have their cards processed at a point of origin card reader and receive the $3000 dollars minus the transaction fee and return to Ven where they can sell their dollars at over 10 times the government rate.

this is why she can't get a plane ticket. Flights are booked either with people traveling to take advantage of that travel exemption for exchanging dollars, or for people who book the flights but never actually show up. Proof of a flight is necessary in order to get the travel card so people book the flights and never travel and simply get the money from a point of origin machine in country or just over the border in Colombia.

[Beacool]

39. Kirchner did the same.

Travelers can only get $3,000, which is not much. I have a couple of cousins and an aunt who live in Buenos Aires. The first thing one of my cousins wrote was not to change a single dollar at the airport, that either my cousin or her best friend would buy them. That's precisely what I did. They both are well off and travel a lot. I had no clue what the black market rate was, but they insisted to pay me that (I'm the baby cousin and they are protective of me). So, it turned out to be a win-win situation. They had the dollars they needed and I got more bang for my buck.

Isn't Socialism great?

[FrodosPet]

11. Is NOT!

Venezuela is a worker's paradise, freed from poverty, where the government even has a Ministry of Happiness.

Why would anyone want to fly out of there, unless they are a member of, or a tool of, the oligarchy?

[7962]

25. You forgot some folks here dont get sarcasm! nt

[cosmicone]

12. Proof that ideology driven socialism wrecks economies. n/t

[Nye Bevan]

23. Given that most countries are capitalist, Venezuela is an interesting experiment

as an example of a country that has spurned capitalism.

[brooklynite]

15. Easy fix--Maduro snaps his fingers and imposes a 50% cut on ticket prices for Aeropostal...

...the Venezuelan airline (if he tries it with any of the foreign airlines, even the South American ones, they'll pull out of the market. They should be able to get some pre-Christmas flights in before running out of money to buy airline fuel.

[quadrature]

34. umm...these people should buy gold and silver...why not?...nt

[davidpdx]

35. Oh, why not just blame the US

That's the solution for the world's problems.

[7962]

36. Sadly, many take that seriously. Or blame Israel wile they're at it; make it a 2-fer! nt