If not capitalism then what exactly?

Gavin

booty bass intellectual
In recent months there have been reports of shortages of foods such as beef, sugar, corn oil, milk, chicken and eggs. In most cases these foods can be purchased in various black markets when they are unavailable in supermarkets and the Mercal centers. These shortages are generally believed to be at least partly a result of price controls, the rapid growth of the economy and consumption, as well as hoarding of some items. While this may become a political problem if it persists or worsens, it is something that the government can easily mitigate. Even more so than in the case of inflation, the government has the ability to ease any shortages through imports, and presumably would do so if there were a serious threat of economic or political damage.

http://www.venezuelanalysis.com/indicators

I like this site -- they aren't rabidly anti-Chavez like U.S. media, but they aren't cheerleaders either. They make a good point too -- if it's really a huge problem they can just import more food. They certainly have the petrodollars for it.
 

vimothy

yurp
The reason for the shortage is vendors unwilling to sell at the fixed price (so either hoard them or sell them on the black market) and inflation (the result of a growing economy, yes?).

I'm really busy, but two things:

1. The reason for the shortages (as the Guardian article makes clear) is that producers are unable (not "unwilling") to sell basic goods without making a loss, due to the price controls.

2. Inflation of over 20% is not due to a "growing economy", but due to the government printing money.

EDIT: In fact there would be no need for price controls were it not for the inflationary pressures that price increases act against, and there would be no inflationary pressure (of such a ridiculous degree, at least) if the government were not printing money. Price controls will obviously make inflation worse, which, given the Chavez government's astonishing monetary irresponsibility, seem likely to increase the strictness of the price controls, tightening and speeding up the inflationary spiral. But don't worry, like you say, "if it's really a huge problem they can just import more food. They certainly have the petrodollars for it." So if you've caused massive inflation by forcing your central bank to repeatedly issue currency on your petrodollars (to the point of near bankruptcy), if you've prevented deflationary price increases by setting price controls, causing widespread shortages, and if, as a consequence, real appreciation of your currency is having the net effect of subsidising importers and discouraging native producers (making claims of self-sufficiency an extremely bad taste joke), just draw more money out of the bank against your pile of petrodollars, ramp up the imports, tighten the price controls and hope for the best (while shifting all of your personal assets off-shore -- just a precaution, of course).

Have a look at this -- it's pretty obvious what's going on (M2 is monetary liquidity):

Absorption.jpg


http://blogs.salon.com/0001330/2007/01/30.html#a3310
 
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Vimothy said:
... astonishing monetary irresponsibility, seem likely to increase the strictness of the price controls, tightening and speeding up the inflationary spiral. But don't worry, like you say, "if it's really a huge problem they can just import more food. They certainly have the petrodollars for it." So if you've caused massive inflation by forcing your central bank to repeatedly issue currency on your petrodollars (to the point of near bankruptcy), if you've prevented deflationary price increases by setting price controls, causing widespread shortages, and if, as a consequence, real appreciation of your currency is having the net effect of subsidising importers and discouraging native producers (making claims of self-sufficiency an extremely bad taste joke), just draw more money out of the bank against your pile of petrodollars, ramp up the imports, tighten the price controls and hope for the best (while shifting all of your personal assets off-shore -- just a precaution, of course).

This, multiplied by a thousand, is a very modest description of the US economy, right?

You'd think George Bush would get down on his knees and kiss Hugo Chavez's behind. Not only has Chavez delivered cheap oil to the Bronx and other poor communities in the United States. And not only did he offer to bring aid to the victims of Katrina. In my interview with the president of Venezuela on March 28, he made Bush the following astonishing offer: Chavez would drop the price of oil to $50 a barrel, "not too high, a fair price," he said — a third less than the $75 a barrel for oil recently posted on the spot market. That would bring down the price at the pump by about a buck, from $3 to $2 a gallon.

But our President has basically told Chavez to take his cheaper oil and stick it up his pipeline. Before I explain why Bush has done so, let me explain why Chavez has the power to pull it off — and the method in the seeming madness of his "take-my-oil-please!" deal.

Venezuela, Chavez told me, has more oil than Saudi Arabia. A nutty boast? Not by a long shot. In fact, his surprising claim comes from a most surprising source: the U.S. Department of Energy. In an internal report, the DOE estimates that Venezuela has five times the Saudis' reserves. ...
Greg Pallast on "The Assassination of Hugo Chavez"​

History has repeatedly taught that when you put social democracy, egalitarianism and popular power at the top of the political agenda, as Chavez has done, and as the vast majority of the populace enthusiastically responds, the Right, the reactionary military, the ‘Centrist’ political defectors and ideologues, the White House, the hysterical middle classes and the Church cardinals will sacrifice any and all democratic freedoms to defend their property, privileges and power by whatever means and at whatever cost necessary. In the current all-pervasive confrontation between the popular classes of Venezuela and their oligarchic and military enemies, only by morally, politically and organizationally arming the people can the continuity of the democratic process of social transformation be guaranteed.

Change will come, the question is whether it will be through the ballot or the bullet.

...

Venezuela’s democratically elected Present Chavez faces the most serious threat since the April 11, 2002 military coup.

Violent street demonstrations by privileged middle and upper middle class university students have led to major street battles in and around the center of Caracas. More seriously, the former Minister of Defense, General Raul Isaias Baduel, who resigned in July, has made explicit calls for a military coup in a November 5th press conference which he convoked exclusively for the right and far-right mass media and political parties, while striking a posture as an ‘individual’ dissident.

The entire international and local private mass media has played up Baduel’s speeches, press conferences along with fabricated accounts of the oppositionist student rampages, presenting them as peaceful protests for democratic rights against the government referendum scheduled for December 2, 2007.

The New York Times, the Wall Street Journal, the BBC News and the Washington Post have all primed their readers for years with stories of President Chavez’ ‘authoritarianism’. Faced with constitutional reforms which strengthen the prospects for far-reaching political-social democratization, the US, European and Latin American media have cast pro-coup ex-military officials as ‘democratic dissidents’, former Chavez supporters disillusioned with his resort to ‘dictatorial’ powers in the run-up to and beyond the December 2, 2007 vote in the referendum on constitutional reform. Not a single major newspaper has mentioned the democratic core of the proposed reforms – the devolution of public spending and decision to local neighborhood and community councils. Once again as in Chile in 1973, the US mass media is complicit in an attempt to destroy a Latin American democracy.
More ...
 

vimothy

yurp
This, multiplied by a thousand, is a very modest description of the US economy, right?

And what was the US current inflation rate in 2006? 3.24% (not in excess of 20,000% as you suggest above). That should be enough to put paid to your comparison, but for the record I would also like to note that the US lacks price controls on basic goods and has a floating exchange rate.

So no, actually, it's not.

Venezuelans queing for milk (much bigger version of pic here):

DSC01487.JPG


Got any similar pictures from the US?

You'd think George Bush would get down on his knees and kiss Hugo Chavez's behind.​

Yes, that or maybe Hugo Chavez should get down on his knees and kiss Bush's behind, since US dollars are paying for Venezuela's public spending programmes, not to mention the vast increases in wealth (surely some sort of coincidence) experienced by the Chavistas.

In my interview with the president of Venezuela on March 28, he made Bush the following astonishing offer: Chavez would drop the price of oil to $50 a barrel, "not too high, a fair price," he said — a third less than the $75 a barrel for oil recently posted on the spot market.

The people of Venezuela must be very glad that their President is so free and easy with their most valuable natural resourse. After giving billions of dollars in cheap oil for no reason to the Cuban dictatorship, the poverty stricken United States is the next obvious choice. Palast has his nose so far up Chavez's arse that he is not even concerned about the political games the President is playing with Venezuela's resourse rent.

Oh and your InfomationClearingHouse article is a sick joke:

Faced with constitutional reforms which strengthen the prospects for far-reaching political-social democratization, the US, European and Latin American media have cast pro-coup ex-military officials as ‘democratic dissidents’, former Chavez supporters disillusioned with his resort to ‘dictatorial’ powers in the run-up to and beyond the December 2, 2007 vote in the referendum on constitutional reform. Not a single major newspaper has mentioned the democratic core of the proposed reforms – the devolution of public spending and decision to local neighborhood and community councils. Once again as in Chile in 1973, the US mass media is complicit in an attempt to destroy a Latin American democracy.​

The US mass media is attempting to destroy a Latin American democracy? It's those bastard Neo Libs in the Washington Post and the NYT (and the BBC) again!

Chavez's "democratic" reforms are basically intended to expand the power of the presidency. In short to:

  • Remove constitutional limits on the president re-running for election;
  • Extend the length of a single presidential term from six to seven years;
  • Allow the government to appropriate private property without first seeking court authorisation;
  • Give the government total control over the Central Bank;
  • Create collectivised property managed by cooperatives;

So why are you bothering to defend this disaster of a regime? Oh that's right -- Chavez calls it "socialism", and that's enough.

"We who were nothing" etc ad absurdum...
 
With almost 50m Americans (around twice the population of Venezuela) now dependent on food stamps and soup-kitchen food charities (whose supplies and donations are quickly drying up), a bankrupt US steps up its belligerent threats:

More Coup D'Etat Rumblings in Venezuela :

The situation is ugly and dangerous, and lots of US money and influence fuels it. Petras puts it this way: "Venezuelan democracy, the Presidency of Hugo Chavez and the great majority of the popular classes face a mortal threat." An alliance between Washington, local oligarchs and elitist supporters of the "right" are committed to ousting Chavez and may feel now is their best chance. Venezuela's social democracy is on the line in the crucial December 2 vote, and the entire region depends on it solidifying and surviving.

Iran and Venezuela vow united front :

The presidents of Venezuela and Iran have promised a united front against the US, predicting that the country was nearing the end of its world domination with the weakening greenback.

Here come the US thought police:

Not since the "Patriot Act" of 2001 has any bill so threatened our constitutionally guaranteed rights.

US Crash of 2008? :

The Fed's raising of interest rates would push up the rates on mortgages, credit cards and auto loans, and push millions of marginal folks into bankruptcy and the country into recession, a disaster for the Republicans.

Global crash imminent, warns expert :

A sharp downward correction is due in the global markets as real estate, stocks and energy soar to record highs, warned a leading expert on the opening day at this year's Dubai International Financial Centre (DIFC) Week.
 

vimothy

yurp
Tra-la-la

Who will pick up the thread after the great unwinding? - Martin Wolf, FT
A plausible view of the future, then, is that the US will experience a lengthy period of sluggish growth in domestic private demand, partially offset by fiscal expansion and an improvement in net exports. It is via the latter effect, moreover, that monetary policy should have its principal impact, since households are unlikely to borrow much more while their houses decline in value.

This is the great unwinding. So what does it mean for the rest of the world? It means that the rest of the world will adjust either by increasing demand, relative to potential supply, or by reducing its supply relative to demand. The former adjustment is clearly the more desirable.​
Thinking about the dollar - Paul Krugman, NYT

...Now along comes a change in investor expectations that makes the dollar weaker at any given interest rate. This also, with some lag, makes the economy stronger at any given interest rate, because a weaker dollar means stronger exports and less imports.

So what would we expect the effect of changing expectations that weaken the dollar to be? We’d expect it to lead to a weaker dollar (duh) and also higher interest rates — but the latter effect would happen only because the Fed is trying to offset the expansionary effect of that weaker dollar. It shouldn’t depress the economy at all.


Willem Buiter Cries "Doom! Doom!" for the Dollar - Brad DeLong

But there seems to be another line of argument back there: one in which demand for dollar-denominated bonds is diminished by the mere fact that they have been a money-losing asset class in the past, and that this is a source of excess volatility in the currency markets. Such excess volatility is a bad thing for U.S. consumers of imports--they will face lousy terms of trade. It is a good thing for U.S. manufacturing companies and their workers. It is probably a small net minus for the country as a whole. However, it is not enough of a net minus to justify the Federal Reserve hitting the economy on the head with a brick--raising interest rates to recessionary levels--in order to prop up the value of the dollar.


Subprime Datapoint of the Day - Felix Salmon
The entire market in subprime debt is just 1.4% of the size of global equity markets. Or, to put it another way, a 1.4% downward fluctuation in stocks erases the same amount of value as if all subprime-backed bonds were collectively marked to $0.​
The dollar's in decline. Great news! - Greald Baker, The Times

The pundits have finally run out of bad news to report from Iraq, where, unmolested by the morbid fascination of misery-seeking reporters, the locals actually seem to be belatedly enjoying the first fruits of their liberation. So attention has turned again, as it has tended to do from time to time these past 50 years, to the inevitable collapse of the American economy...


And finally (for hmlt) ...

The Seven Wonders of the Totalitarian World - Corey Sobel, Esquire

lenin-mausoleum.jpg
 
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Vim said:
After giving billions of dollars in cheap oil for no reason to the Cuban dictatorship ...

Predictably, the Right continues to criticize Chavez for two initiatives that the vast majority of Americans (and Europeans) are demanding to have implemented in their own countries — public health care and increased oil company taxes. Chavez is ridiculously and wrongly castigated for his friendship with Fidel Castro, even though up to 13,000 Cuban doctors and health care workers came to Venezuela in return for Cuba receiving oil, while Chavez's oil industry reforms contained a progressive doubling of oil company taxes. He also opposes U.S. predatory and malignant attempts to implement 'free trade' agreements that would involve the total surrender of the country’s valuable natural resources and raw materials in return for expensive products from abroad. But most tellingly, Chavez is simply feared by the wealthy elites of the Right because of his increasing independence in a country whose vast oil reserves are arrogantly claimed by the north as it's 'rightful property.'

The Venezuelan leader’s popularity is summarized by human rights activist Medea Benjamin:

Walk through poor barrios in Venezuela and you’ll hear the same stories over and over. The very poor can now go to a designated home in the neighborhood to pick up a hot meal every day. The elderly have monthly pensions that allow them to live with dignity. Young people can take advantage of greatly expanded free college programs. And with 13,000 Cuban doctors spread throughout the country and reaching over half the population, the poor now have their own family doctors on call 24-hours a day.

He knows what happened to leaders in Iran and Guatemala and Chile and Haiti over the past half-century when they tried to defy the western world by nationalizing oil and other industries. He’s influenced by the memory of the US-backed attempt to depose him in 2002. And he can see the effects of unregulated multinational companies in Nigeria, where in 2004 80% of the revenue from the oil industry went to only 1% of the population, and only 2% of Shell Oil’s employees were from the local population.

Chavez has alienated the wealthy, the business establishment, thousands of upper-class student protestors, and, perhaps worst of all for him, the media. But the mainstream media rarely speaks for the poor majority. Chavez has instituted a literacy program, land-acquisition policies that benefit the poor, job training for unskilled workers, free health care, and manufacturing cooperatives which give the poor an active role in business development. He was democratically elected, and recent polls still place him about 20 percentage points ahead of his nearest challenger.
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vimothy

yurp
Chavez is ridiculously and wrongly castigated for his friendship with Fidel Castro, even though up to 13,000 Cuban doctors and health care workers came to Venezuela in return for Cuba receiving oil, while Chavez's oil industry reforms contained a progressive doubling of oil company taxes

Oh, and Venezuela are undoubtedly getting a fair deal for their billions. Haven't you heard that Cuban doctors are the most expensive (sorry, I mean qualified) in the world?

One of the most damaging examples of the Chávez government’s political and economic corruption is the oil supply agreement with Cuba. Fidel Castro and Hugo Chávez signed this “integral cooperation agreement” in Havana in October 2000. The agreement pledges Venezuela to supply Cuba for 15 years with volumes of Venezuelan hydrocarbons, starting at 53,000 barrels per day. In December 2004 this volume was increased to 90,000 barrels per day.

Several characteristics of this oil supply agreement are irregular and highly damaging to the Venezuelan nation: First, the form of payment, including 15 year financing at 2 percent interest of 25 percent of the volume, is a gift to Cuba that can be estimated at some $400 million per year at current oil prices; second, Cuban delays in paying or outright refusal to pay should have triggered an interruption of supply, which has not taken place. This is bureaucratic negligence on the part of the Venezuelan government and means that some $1.3 billion per year is not being collected, either in a timely fashion or at all; Finally, Cuba’s real consumption of hydrocarbons is probably lower than claimed. There are indications that Cuba is reexporting some of the petroleum supplied by Venezuela, possibly as much as 25,000 barrels per day. At current prices that would represent a further loss of some $500 million per year for the Venezuelan nation.

In total, therefore, Venezuela is giving Cuba a subsidy on the order of $2.2 billion to $2.3 billion per year. This is an enormous amount, sorely required by Venezuela for the improvement of the quality of life of its citizens.

- Gustavo Coronel
 
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