Reuters Busted for Indecent Exposure: The Automobile Industry in Venezuela

[Judi Lynn]

Reuters Busted for Indecent Exposure: The Automobile Industry in Venezuela

In their report, “ANALYSIS-Venezuela car industry gridlock as dollars run out,” Reuters pays another shill to tell another half-story about Venezuelan affairs. In this “analysis” they shamelessly expose their indecency as a major news broker in western media. I'm writing this critique for Axis of Logic to call Reuters on what they pass off as journalism and help clarify what is really happening in the auto industry in Venezuela.

In 2009 there were approximately 5.6 million vehicles in Venezuela. From 2005 to 2007 new car sales were 1.15 million units with a further 350,000 being sold in 2008/2009. Thus, the number of vehicles on Venezuela’s roads increased at least by 30% in five years, even allowing for cars being put out of service. This is the reason for heavy traffic congestion in the cities and not necessarily due to cheap gasoline.

The consumption boom in all sectors from 2004 – 2008 was not only due to rising oil prices but also due to the fact that oil revenues came into the economy instead of being spirited away to off shore banks. Local banks were obliged by the government to grant car loans at 17% which is a real bargain in Venezuelan loan terms.

At the same time the private sector was booming and its growth outstripped the state sector (including oil) during these years. The economic and consumption boom, fueled by easier consumer credit and a proliferation of credit cards in the market, encouraged more people to buy new vehicles, most of which were imported using preferential dollars by the car dealers. Unfortunately for the consumer all sorts of tricks began to be played out to fatten up the dealers’ profits.

The first step back in 2005 was when there were many cases of customers buying a new vehicle and then not being able to take delivery…..unless you paid a cash premium of anything from US$2000 – US$5000 to the dealership. You would then have your car the next day. In other words, the customer bought and paid for the car but the dealer held it as ransom until the customer paid him a bribe for delivery.

In 2006 the dealers began to ration cars by hoarding them in huge parking lots and telling customers that there were no cars available since they had not received the preferential dollars from the government Exchange Control Commission CADIVI.

At that time, for example, the official price for a Ford Explorer on the Ford Venezuela web site was around Bs. 105 million (in old bolivares), or US$49,000. Not too far removed from the selling price in the US. However, with the “policy” of hoarding vehicles prices began to escalate and the vehicle in this example was selling for up to Bs. 250 million or US$116,000. In other words a total rip off but people were desperate and naïve enough to fall into this game.

The whole scheme was a mafia type operation between the dealers, banks and insurance companies. The bank would give you a loan for more than the official value of the vehicle and the insurance company would insure it at the inflated selling price.

The public lost and the dealers, banks and insurance companies cleaned up by fleecing the public. It was been estimated that excess profits made from this scheme in just over two years (2006 and 2007) amounted to more than US$20 billion not including the role in this scam played by the banks and insurance companies.

As you can clearly see, the “price distortions” referred to by Reuters have nothing to do with the official exchange rate. These have been caused by the dealers selling vehicles over and above list price. The second hand market has just followed the lead of the dealers.

More:
http://venezuelanalysis.com/analysis/5357

[Peace Patriot]

1. I call them Rotters, cuz that's what they are--as bad as the Associated Pukes,

the New York Slimes, the Washington Pestilence, the Wall Street Urinal and even the Miami Hairball, on Latin American subjects.

What we are seeing is a psyops campaign designed in Langley. These copyboys at the "lamestream" so-called news organizations basically copy & paste whatever line the CIA feeds them that serves their common corporate masters, or maybe these days the CIA outsources its "analysis" directly to their masters' P.R. departments. They all rant the same rants and lie and distort and disinform in the same ways, using common themes and methods. They will never forgive Chavez for staring down Exxon Mobil in Venezuelan oil contract negotiations, and giving Latin American countries the idea that they have a right to set the terms of such contracts, nor for being transparently elected and hugely popular, nor for using profits from the biggest oil reserve on earth (twice Saudi Arabia's) to benefit the poor, nor for NOT being a "dictator" (that lie didn't fly; now we have the new lie, "Chavez the incompetent"), nor for elbowing the World Bank/IMF loan sharks out of the region with the Bank of the South (locally controlled development; rich L/A countries helping poor L/A countries pay off their debt; "raise all boats" philosophy), nor for being friends and allies with other L/A leaders, such as Lula da Silva, president of Brazil, who have defied every dictate from Washington to "isolate Chavez."

Rotters & brethren are disgusting. Given Lula da Silva's triumph in Iran yesterday--triumph for peace, triumph for a level playing field sans the U.S. military--a policy developed in Latin America, especially by the Chavez/Lulu alliance, they are likely to get MORE disgusting in their bald-faced lies about the Latin American Left.

Obama/Clinton are following the exact same path on Iran as Clinton/Bush on Iraq--sanction, isolate, harm, invade, steal the oil. It is a seamless continuum. Clinton destroyed Iraq's air force; Bush Jr bombed the shit out of an undefended city. Clinton set it up; the Bushwhacks carried it out. And that is what our "change we can believe in" President--or at least his Sec of State and the war profiteers (hard to know about Obama) have been doing--to BOTH Iran and Venezuela. They have continued the U.S. military buildup all around Venezuela's oil coast and northern oil provinces. They continually demonize Chavez--the best president Venezuela has ever had, who can PROVE that he was elected, while they cannot. And they have continued the Bushwhack war plan as to Iran--surrounding it with the U.S. military, a dire threat, demonizing it for wanting to defend itself (join the nuclear club as a deterrent; Iran has exhibited NO territorial ambitions!) and constantly criticizing its leaders for human rights violations that pale into insignificance next to the U.S. murders of thousands of civilians in Afghanistan, the U.S. slaughter of one hundred thousand innocent people in the first weeks of bombing alone, in Iraq, U.S. torture of prisoners and U.S. support for hideous regimes like that in Colombia, where tens of thousands of union leaders, human rights workers, teachers, community activists, journalists, political leftists and peasant farmers have been slaughtered by the Colombian military and its death squads ON OUR DIME. Colombia is our "best friend" in Latin America, recipient of $7 BILLION in U.S. military aid and the putrid smell of it all may be coming from the recent mass grave found in La Macarena, Colombia, nearby to a U.S. military base, with up to 2,000 bodies of local, 'disappeared' community activists (according to local community members). Children in La Macarena got sick drinking water polluted by those rotting corpses. That's how the mass grave was discovered.

Is Iran guilty of atrocities like this, by "our friend" Colombia? U.S. hypocrisy is as putrid as it has ever been--rotten, stinking lies and propaganda. I WANT SOMEBODY to champion human rights, at home and abroad. Unfortunately, it is as if bats and spiders fly out of our leaders' mouths, when they blather about human rights for the purpose of stealing other peoples' oil.

Lula da Silva and the Latin American Left just changed all this for the better. They want a PEACEFUL world. In a peaceful world, they have a good chance of becoming THE powerhouse economy of the 21st century, because they are INVESTING IN THEIR PEOPLE, like we used to do. In a world dominated by U.S. corporate resource wars, they are well aware that they may be the next victims. This diplomatic triumph and end-run around U.S. warmongering, by Lula da Silva, Turkish diplomats and others, sets the world on a DIFFERENT path. Chavez is as much responsible for it, as Lulu. He was the first to invite Iran's president to Latin America. When liars like Rotters got on Chavez's case for that, Lulu quickly followed suit and invited Ahmadinejad to Brazil. Now this. It is a policy worked out among Latin American leaders as Latin American's entry onto the "world stage" as an INDEPENDENT power.

And Rotters is stuck with yesterday's memo from Langley--rag on Chavez about auto sales in Venezuela. (The week before: Rag on Chavez about the drought and hydroelectric power shortage, etc.)

THE GAME JUST CHANGED. And apparently nobody's gotten the new memo on that yet. How to spin it for our Corporate Masters?

[ChangoLoa]

2. Hmm

It was easy to control the dealers though. In this case, many of the distribution networks were owned by people close to the Govt. Why didn't they receive the proper sanctions when it was so obvious and visible? Similar to what happened with the banks' collapse some months ago. The oligarch "chavista" bankers* were punished after having cheated for 6 years.

* All those who fell were in the Govt financing-contracting network, starting with the click of the regime's 2nd man's brother, Cabello and Fernandez Barrueco's click.

[protocol rv]

3. Flawed analysis

The price of gasoline does have a lot to do with the demand for vehicles. When a Venezuelan decides whether to buy a car or not, the cost of gasoline doesn't factor in the decision, because it is nearly free. Thus the decision is made to buy the vehicle, and this puts it on the street, where we have tremendous traffic jams, etc.

There was no "conspiracy" to withhold cars from the markets, when the country was flush with money as the oil prices ran up to $150 per barrel in 2008, and the government pursued expansionist economic measures, which led to very high inflation rates, the public was flush with cash. Because the government stupidly insisted on keeping the Bolivar pegged so that it was extremely strong, people could buy other items fairly cheap, which meant they had disposable income to buy cars. The sad thing is the strong bolivar, the cheap imports, and the flood of new vehicles which use nearly free fuel was a policy which mostly served the interests of the upper and middle classes - the truly poor ride in buses or the metro.

The price distortions do have to do with the exchange rates, which are gyrating as if conducted by a drunk sailor.

What seems to escape our simple minded friends at venezuelanalysis is that whenever the government puts in place practices which reduce competition, make it harder to enter the market, complicate matters, increase risk, and require payoffs to government officials, then those who are willing to risk, corrupt government officals, and put their money in play will indeed reap enormous profits - profits which they end up sharing with the same corrupt government officials who ease their business deals. After all, these guys could not get the dollars to bring in parts and vehicles unless they went through the CADIVI subsidized market, and we know many of them got their cheap dollars because they were bribing government officials at CADIVI - which is one reason why Chavez got so pissed off he asked Castro to send Cubans to sit in the Cadivi system to see if they could slow down the corruption and theft.

So my friend Judy, what we see going on is the result of the mismanagement and corruption, the stupidity and utter lack of capability of the people who run the system. People who are so utterly stupid, such morons, that today they continue to insist on using more of the same failed methods, and think they can work out a solution by pointing their fingers at those who profit from the utterly stupid and indecent economic management systems they have put in place. The people conducting Venezuela's economy, from the insistence on keeping the strong Bolivar for so many years, to the cheap fuel, to the systems which allow corruption and theft to proliferate, to the ones who allow the customs officers to be so corrupt, and those who make it nearly impossible to open a new business, are the poison killing Venezuela's economy. All of them ought to be put in an insane asylum. Unfortunately, Chavez isn't well trained enough in these simple issues, and is swallowing the swill and lies he is being fed. Because I know in the end the one thing the guy wants to do is stay in power, and keep on chugging with his revolution, and what is being done to the economy is the surest way to kill Chavez' dream.