"When it comes to hyper-bureaucracy and chaotic management, Venezuela may be a world champion. "

[Marksman_91]

http://www.miamiherald.com/2014/01/18/3877363/andres-oppenheimer.html

A joke making the rounds in Latin American business circles says Brazil is looking increasingly like Argentina, Argentina is looking increasingly like Venezuela, and Venezuela is looking increasingly like Zimbabwe.

Are things really going that bad? Or is it wildly exaggerated to imply that countries in the region are heading toward the economic mismanagement and chaos that characterized Zimbabwe in recent years?

Let's analyze the joke backwards, starting with whether Venezuela is heading toward a Zimbabwe. In this case, the answer seems to be yes.

According to the newly released Index of Economic Freedom, an annual study by the Washington D.C.-based Heritage Foundation, Venezuela is virtually tied with Zimbabwe among the world's most repressed economies.

Of the 178 countries included in the study, ranked from the freest to the most repressed economies, Venezuela ranks 175th and Zimbabwe 176th. They are surpassed only by Cuba (177) and North Korea (178.)

Venezuela’s inflation rate is of more than 50 percent a year, one of the highest in the world. By that measure, Venezuela is doing worse than Zimbabwe.

While the African nation printed money like crazy during the past decade — like Venezuela is doing now — and ended up with hyperinflation in 2008, in 2009 it adopted the U.S. dollar and other hard currencies, and started opening its economy. Its current annual inflation rate is about 10 percent.

Despite Venezuela being one of the world's top oil producers, its economy will grow by only 0.5 percent in 2014, the slowest rate in Latin America, according to World Bank projections. Zimbabwe is projected to grow 3.3 percent this year, according to the World Bank.

When it comes to hyper-bureaucracy and chaotic management, Venezuela may be a world champion.

On Jan. 9, Venezuelan President Nicolás Maduro created 111 vice-ministries, including the Vice-Ministry of Supreme Economic Happiness. According to the official decree, the new vice-ministries will “optimize the results and the impact of the work being done by the national government.”

To make things worse, Venezuela has become one of the world's most violent countries, with much higher homicide rates than Zimbabwe, according to United Nations statistics.

Is Argentina looking increasingly like Venezuela? Yes and no.

According to the Index of Economic Freedom, Argentina ranks 166th in the world, nine places ahead of Venezuela, but within the same group of “repressed’’ economies.

Inflation in Argentina is more than 25 percent a year, although President Cristina Fernandez de Kirchner's populist government claims it's only about 10 percent, and people there are rushing to buy U.S. dollars in anticipation of a major devaluation.

Like Venezuela, Argentina has recently nationalized foreign firms — such as Spain's Repsol oil company — corruption is rampant, and the government has tried to control all major institutions.

But the Kirchner government has not yet been able to silence the media — although it is trying hard — and can't manipulate elections that easily. The government lost recent legislative elections, and there is a general expectation that Argentina will get a more responsible government after the 2015 presidential elections.

Is Brazil looking increasingly like Argentina? Not really, although sometimes it gives that impression.

According to the Index of Economic Freedom, Brazil ranks 114th in the world, about 40 places ahead of Argentina.

Granted, Brazilian President Dilma Rousseff, who is running for re-election in October, is failing to take measures to promote investments, and is sticking to a Third World foreign policy that keeps the country from signing trade deals with the world's biggest economies.

But Rousseff has fired more than half a dozen of her cabinet ministers over corruption charges, and Brazil's Supreme Court has sentenced leading ruling-party politicians to prison on charges that they bribed legislators. None of that has happened in Argentina, much less in Venezuela.

Likewise, Brazil is thinking long term on issues such as education, science and technology, which is not the case among its South American neighbors.

My opinion: The idea that much of Latin America is falling into a downward spiral makes for good jokes, but it's most likely untrue.

Sure, Venezuela may descend into further chaos, but it doesn’t have many followers. Argentina will most likely change course within the next two years, and Brazil will, in the worst-case scenario, remain stagnant.

More importantly, Mexico, Colombia, Peru, and Chile are doing well, and may drag several other countries in their direction. Together with Brazil, the four Pacific-coast countries make up more than 75 percent of Latin America’s economy.

More than a downward spiral, we may soon see the end of the populist cycle, and the beginning of an upward spiral.

[Scuba]

1. Another Venezuela smear. Someone's very afraid of the nationalizing of extraction industries.

[Flatulo]

3. How has Venezuela's nationalization of the extraction industries been working out for them?

[Marksman_91]

4. Nationalizing the oil industry won't do you much good if it's poorly managed

PDVSA is going down the drain, the national reserves are increasing without getting any new capital in, and the inflation is only getting worse with each passing month, and people are doing longer and longer lines to purchase many basic products. I know it's very hard for you to understand since you don't actually have any close friends or family living in the country, but I do, and not only that, I was actually born and raised in Venezuela and obviously speak Venezuelan Spanish as my native language, so I can also understand 100% any news article that comes out of any Venezuelan or any other Spanish-speaking news source, which tend to speak a lot more about Venezuela than English-language sources. I sure as hell know more about what is going on in there than most, if not all, people in this forum.

Even the most pro-chavista websites are starting to talk about the poor economic policies that the Maduro administration is implementing, as demonstrated by this article in Aporrea.com, one of the most pro-chavista sites in the web, which comments and acknowledges that there is indeed a real scarcity of many products that people shouldn't be lining up for:

http://www.aporrea.org/contraloria/a179997.html

Lo que viene es feo
Por: Rubén Marcano | Martes, 14/01/2014 03:33 AM

La cortina de humo que echó el mandatario nacional poco antes de las elecciones de alcaldes, comienza a disiparse, y reaparece la cruda realidad.

Unas semanas estuvimos emborrachado de onerosos precios y de una especulación atroz, fruto de empresarios irresponsables, política económica errática y sobre todo una falta de supervisión y control por parte de las instituciones del Estado.

Despuntó enero 2014, y las perspectivas económicas son francamente fea.

Enumeremos algunos aspectos:

Escasez. Siguen disparados los índices y ahora más que antes. Los productos regulados no se ven ni en los mercales, pedevales y muchos menos en Bicentenario. Se consiguen a través de los bachaqueros y trajinadores de los diferentes mercados, a precios exorbitantes.

· Hoy antes de escribir este artículo, me topé con una persona que llevaba un bulto de harina de trigo (trae 12) en sus hombros. Le pregunté el precio: “está a 350, pero me lo revendieron en 750”, respondió. Es decir, a 62 bolívares el kilo, y eso a precio de mayorista.

· La leche descremada, brilla por su ausencia, y la que aparece de vez en cuando es la Canprolac, a 100 bolívares la lata (regulada, a 30).

· La pasta, pasa de 30, porque los regulados, por favor, díganme dónde se consiguen

· Si vas por pollo, el kilogramo más barato que he conseguido, luego de mucho patear, a 65.

· La carne de primera pasa largo los 100 bolívares.

· El queso, dan ganas de llorar por lo caro que se puso.

· Mantequilla, no hay…

· Aceite, no hay… se consigue el de soya, a más de 50 bolívares el litro (regulado cuesta 6).
Harina, no hay desde hace años, y cuando llega, “la matazón es grande”.

· La cera desapareció, así como los productos de limpieza.

· La papa, bueno, cuesta el ojo de una cara, a 70 el kilogramo.

· El atún, ese Margarita de 350 kilogramos, que rinde bastante, se fue de las manos. Antes se conseguía a 25, ahorita pasa de 60.

Dejemos los alimentos de un lado, y continuemos con la inflación.

Tomen nota, que lo que viene, es duro…

Se acerca una nueva devaluación. Sí, otra, de los actuales 6.30 a 11 o 12, dicen los economistas, y todos los indicios parecen darles la razón.

Extrañamente, a la fecha, el Gobierno no ha habilitado los 400 dólares Cadivi, pues se espera que cuando lo haga, el dólar esté al mismo precio del Sicad para viajeros extranjeros (11 bolívares).

El aumento de la gasolina, no es novedoso, ya el Presidente anunció que la elevará, falta el precio y fecha.

A todas estas, la promesa del gabinete económico y del Presidente Maduro, de acabar con el dólar negro, cayó en el vacío, y éste está más vivo que nunca, rondando los 70.

Las reservas internacionales, bajaron 28% en 2013, y se espera que sigan en descenso, pues el déficit del gobierno es de 15% del PIB, lo que quiere decir, que para cubrirlo, se hará lo siguiente:

uno, devaluación en puerta, lo que ayudaría a financiar cerca de la mitad; dos, impresión de más bolívares para soltarlos a las calles, y con ello, que el demonio de la inflación siga su curso irrefrenable hacia los 100, en busca del récord de Carlos Andrés Pérez.

Por cierto, para este año se espera una inflación entre 60 y 70%, por los números más conservadores. Economistas agresivos, la sitúan en torno al 90%. Recuerden que en 2013, la inflación cerró en 56%, la quinta más alta desde 1950, y una de las 10 más elevadas del mundo.

El gobierno no parece tener la resolución para enfrentar y abatir la inflación, pues cada vez se contradice; sigue creando más burocracia, pero nada de apretarse el cinturón para disminuir los cotos y el déficit fiscal.

Acaba de promover una reorganización de los ministerios, que entre todos, suman 111 viceministerios. No son conchas de ajos, para un pequeño país de 30 millones de habitantes.

¿Qué presupuesto resiste pagar nómina de empleados públicos, superior a los 3 millones de funcionarios?

Pero en el gobierno, eso no parece importar, y sigue el relajo de la maquinita que imprime bolívares y los suelta a las calles, sin respaldo.

Fíjense este dato: en 2008 los billetes de 100 bolívares, representaban el 3% de las piezas; 5 años después, son el 25%.

Quiere decir, que el dinero cada día se nos vuelve agua en las manos, y no estamos lejos que el Presidente anuncie la creación de billetes de 200, 500 y hasta de 1 millón de los viejos.

Ese futuro, está más cerca que nunca, porque lo que viene es feo…

I don't have the time right now to translate it all myself, so I checked with Google Translate to see if the translation was decent enough for you to understand, and it is. Do take some time to read it.

[roody]

2. I depend on the Heritage Foundation

for reliable information. Forgot how to do the needed tag.