Zorro
Zorro's JournalVenezuela's currency plumbs unknown depths
Even a modest rate of inflation compounds over time. This is why your tipsy grandfather might wistfully recall how little a pint of beer cost in his heyday. In Venezuela, where prices are rising at a four-figure annual rate, the good old days were last month. The defence minister, Vladimir Padrino López, on January 19th urged business leaders to peg back prices to their levels of December 15th, when presumably everything was just fine.
The spending power of the bolívar, Venezuela’s currency, had collapsed long before then. The Economist’s Big Mac Index gives a rough guide to how fast it has fallen. The index is based on the idea of purchasing-power parity (PPP), which says a fair-value exchange rate is one that leaves consumer prices the same in different countries. In our index, the price of a Big Mac is a proxy for all goods. In Caracas, this week, a Big Mac cost 145,000 bolívars; in American cities, it cost an average of $5.28. The ratio of those prices gives a PPP exchange rate of 27,500 bolívars. Two years ago, the rate was 27 bolívars. By this yardstick, the currency has lost 99.9% of its value in almost no time.
In fact the Big Mac gauge probably understates the general rise in prices and the slide in the currency. DolarToday, a US-based website that publishes real-time quotes, puts the black-market exchange rate at around 260,000 bolívars to the dollar, and falling. This rate has become one of the few reliable yardsticks against which to peg prices in Venezuela. Have your tyre replaced in Caracas, and the mechanic will check the DolarToday exchange rate before presenting the bill.
Imported goods, such as tyres, have a reference dollar price. But a lot of local prices do not keep up with the collapsing value of money. A monthly mobile-phone tariff is 38,000 bolívars, or 15 cents; a haircut is 25 cents. Wages tend to lag behind prices, in large part because it is so hard to keep up with them. The monthly minimum wage has just been raised for the umpteenth time, to around 800,000 bolívars. That is less than $4 at the current black-market exchange rate. If wages were perfectly indexed, it would serve only to speed up inflation. But their slow and uneven adjustment means the pain of hyperinflation is shared haphazardly. As Juan Perón of Argentina supposedly said, if prices take the lift, wages cannot take the stairs.
https://www.economist.com/news/finance-and-economics/21735596-hyperinflation-has-seen-bol-var-lose-999-its-value-two
IMF Projects Venezuela Inflation Will Soar to 13,000 Percent in 2018
The International Monetary Fund sees Venezuelan inflation spiraling to 13,000 percent this year, as the crisis-torn nation prints money to tackle fiscal deficits and confidence in its currency evaporates.
That’s more than five times the inflation previously projected by the IMF, and way above the median forecast from economists surveyed by Bloomberg. The fund estimates price increases surpassed 2,400 percent last year, according to a report published Thursday by Alejandro Werner, head of the IMF’s Western Hemisphere department. That was the fastest in the world.
Venezuela has succumbed to hyperinflation combined with a prolonged recession stemming from years of mismanagement as well as faltering oil exports. In an attempt to rein in inflation, the government of President Nicolas Maduro has refused to loosen foreign-exchange controls and price caps that have exacerbated the short supply of all sorts of products, from food to medicine.
The IMF expects the Venezuelan economy to contract 15 percent this year, leading to a cumulative GDP decline of nearly 50 percent since 2013. That’s holding back the rebound of the entire region; Latin America is expected to grow 1.9 percent this year, or 2.5 percent without Venezuela. While Venezuela suppresses the regional average, at this point the impact on its neighbors’ output is “very limited,” Werner said in a press conference following the report’s release.
https://www.bloomberg.com/news/articles/2018-01-25/imf-sees-venezuela-inflation-soaring-to-13-000-percent-in-2018
Colombia's Santos says he will not recognize Venezuelan vote
Colombia will not recognize the validity or the result of forthcoming presidential elections in neighboring Venezuela, Colombian President Juan Manuel Santos said on Thursday, adding he expected other countries would share the view that the vote is illegitimate.
Venezuelan President Nicolas Maduro is standing for re-election in the vote, which authorities announced this week would be held by April 30, and the ruling Socialists hope to prevail over a squabbling opposition despite an economic crisis and foreign sanctions.
“My position is the same as expressed by the Lima Group,” Santos told journalists on the sidelines of the World Economic Forum in Davos, Switzerland, referring to a regional group that said this week the vote would lack legitimacy.
“Until there are sufficient guarantees for a transparent elections, I don’t think anyone will recognize the results of elections in Venezuela,” Santos said in comments broadcast on Colombia’s Caracol radio. “They don’t have any validity.”
https://www.reuters.com/article/us-venezuela-colombia/colombias-santos-says-he-will-not-recognize-venezuelan-vote-idUSKBN1FE240
Venezuela has just announced an election and it's terrible news for democracy
News that Venezuela will hold a presidential election by the end of April dismayed democracy activists in the country. You might have good reason to find that sentence paradoxical. But if you do, you don’t understand Venezuela.
Why? Because the announcement was unilateral: my way or the highway. As such, it put a brutal end to a careful diplomatic dance that many people had hoped would yield an election they could believe in.
For the past three months, government and opposition representatives have been negotiating in the Dominican Republic, under international auspices, to try to agree on a set of minimal elections guarantees. Backed by diplomats from Mexico and Chile, opposition leaders had been pressing to appoint a credible new National Electoral Council that could hold an election free of the brazen abuses that have plagued recent Venezuelan elections.
By announcing an election without an agreement, the regime signaled that this isn’t going to happen. So Venezuelans should expect the upcoming vote to be another farce along the lines of the profoundly flawed municipal elections the government held last month.
https://www.washingtonpost.com/news/democracy-post/wp/2018/01/24/venezuela-has-just-announced-an-election-and-its-terrible-news-for-democracy/
Venezuela expels Spanish ambassador after EU sanctions
Source: BBC
Venezuela has expelled the Spanish ambassador to Caracas, Jesús Silva Fernández, accusing him of interfering in its internal affairs.
Spain has rejected the allegations and said it would reciprocate.
The announcement comes after the European Union imposed a travel ban and froze the assets of seven senior Venezuelan officials.
President Nicolás Maduro has accused Spain of pushing for the EU sanctions and plotting to oust him.
Read more: http://www.bbc.com/news/world-latin-america-42827779
Ecuador Prepares to Vote on Term Limits
On February 4, Ecuador will hold a referendum. The ballot features seven questions, ranging from reducing a national park’s acreage to preventing those accused of corruption from holding office. But the central item will be a question on whether or not presidential term limits should be reinstated into Constitution. The debate is the focal point of a bitter feud between the former President Rafael Correa—who has all but declared he wants to run for a fourth term in 2021—and his one-time vice president and successor Lenín Moreno, who backs a change that could bar Correa from the presidency for good.
So far, polls indicate voters will side with Moreno. In a December Cedatos poll, 67 percent of respondents expressed support for Moreno’s proposal to reinstate a two-term limit. A Perfiles de Opinion poll from the same month indicated 56 percent in favor of the measure and 29 percent against it. Meanwhile, Moreno remains popular with 70 percent approval as of late December. Correa’s support, meanwhile, fell to 26 percent in January 2018, down from the 43 percent a year earlier in the final months of his presidency.
Correa was voted into office in December 2006 and completed his third term in May 2017. Ecuadorans approved a new Constitution in 2008, which allowed a president to serve no more than two consecutive terms in office. In December 2015, Correa pushed a Congress-approved reform package that included a constitutional amendment to allow indefinite presidential reelection, asserting that term limits inhibited the citizens’ right to choose. At the time, Correa’s party, PAIS Alliance (Alianza PAIS, AP)—which he founded—held 100 out of 137 seats in the unicameral Congress, but some of his party members and allies were still wary about making the change to allow indefinite reelection. In order to secure their support, Correa agreed to a concession that the amendment would not go into effect until after the 2017 election, allowing him to enter the 2021 elections.
With Correa out, the party appointed Moreno to carry Correa’s legacy in the 2017 elections and keep PAIS Alliance in the presidency and the door open to a potential Correa return. Moreno won the presidency after a tight runoff election, with 51.6 percent of the vote over opponent Guillermo Lasso’s 48.8 percent. For his part, Correa moved to his wife’s native Belgium and initially pledged to spend Moreno’s term living there. But that promise turned out to be short-lived.
http://www.as-coa.org/articles/update-ecuador-prepares-vote-term-limits
Ecuador's leader laments "nuisance" Julian Assange
Ecuador's president has lashed out at WikiLeaks founder Julian Assange even as he contends his government is working behind the scenes to help him out of the Ecuadorean embassy in London.
Lenin Moreno said in a televised interview Sunday that Assange had become "more than a nuisance" after he violated terms of his asylum by interfering in other countries' political affairs.
Ecuador granted citizenship to Assange this month in an unsuccessful attempt to provide him diplomatic immunity so he could evade arrest in Britain. Moreno said other countries and "important personalities" he didn't name are working to mediate a solution.
Assange in 2012 sought refuge in the embassy to avoid extradition to Sweden over sex-related claims. Sweden dropped the case but Assange still faces arrest in Britain for jumping bail.
https://www.cbsnews.com/news/julian-assange-nuisance-ecuador-lenin-moreno-wikileaks-london-embassy/
Steven Mnuchin is trying to fix 'the first serious economic misstep by the Trump administration'
Source: Business Insider
Treasury Secretary Steven Mnuchin attempted to shore up confidence in the US dollar on Thursday, clarifying comments that sent the greenback tumbling the day before.
During a panel at the World Economic Forum in Davos, Switzerland, Mnuchin appeared to applaud the relative weakness of the US dollar compared with other major currencies.
"Obviously a weaker dollar is good for us as it relates to trade and opportunities," Mnuchin said.
The weaker dollar makes it cheaper for overseas buyers to purchase goods produced in the US. That makes US exports more attractive, but also leads to more expensive imports. A weaker dollar can help stem a negative trade flow while potentially eroding the US's purchasing power.
Read more: http://www.businessinsider.com/steven-mnuchin-us-dollar-weakness-2018-1
Inflation here we come!
Video Emerges of Trump Lying Under Oath
WASHINGTON (The Borowitz Report)—One day after Donald J. Trump offered to testify under oath for the special counsel, Robert Mueller, a newly discovered video of Trump lying under oath has sent shock waves through Washington.
In the video, which experts believe was recorded approximately one year ago, Trump places his left hand on a Bible and raises his right hand before uttering a stream of falsehoods.
“The video shows him lying in front of what appears to be a substantial number of witnesses, including his wife and a Supreme Court Justice,” Davis Logsdon, a professor at the University of Minnesota Law School, said. “It does raise questions about what, exactly, testifying under oath means to him.”
At the office of the special counsel, Mueller’s team was reportedly considering having Trump swear on something that was more meaningful to him than the Bible, such as a rolled-up copy of Forbes.
But, while Washington mulled the implications of the explosive video, the White House press secretary, Sarah Huckabee Sanders, questioned the authenticity of the video itself. “The person in this video is not the President of the United States,” she said.
https://www.newyorker.com/humor/borowitz-report/video-emerges-of-trump-lying-under-oath
White House Doctor Writes Note Saying Trump Too Sick to Talk to Mueller
WASHINGTON (The Borowitz Report)—Amid reports that Donald Trump might soon be summoned to appear before Robert Mueller, the White House doctor wrote a note on Wednesday indicating that Trump was too sick to talk to the special counsel. “Donald Trump is not well,” Dr. Ronny Jackson wrote.
The doctor’s note offered a laundry list of ailments afflicting Trump, including flu-like symptoms, upset stomach, headaches, dizziness, confusion, and what Jackson called a “wartime foot injury that appears to be acting up.”
Jackson acknowledged in the note that his current assessment of Trump’s health was at odds with the robust picture he painted last week, but added, “Every patient is entitled to a second opinion, and this is mine.”
Minutes after the White House doctor issued his note, the special counsel responded by indicating that if Trump is too ill to come to Mueller’s office, then Mueller would be “more than happy” to interrogate Trump at his sickbed. The White House doctor, however, quickly rebuffed this offer. “The strain of being under oath and giving truthful answers could kill him,” the doctor said.
https://www.newyorker.com/humor/borowitz-report/white-house-doctor-writes-note-saying-trump-too-sick-to-talk-to-mueller
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