The Venezualan Saga Continues

[djones520]

WriteDown (1000+ posts)      Mon Aug-31-09 02:44 PM
Original message
Venezuela's "strong bolivar" swamped by inflation
 Source: Reuters

CARACAS, Aug 31 (Reuters) - Coffee and a pastry: $8.14. School supplies: $164. A middle-class weekly family shopping trip: $830. With prices like these it is no surprise Venezuela's capital, Caracas, was rated in July one of the world's priciest cities.

Oil-rich Venezuela imports much of its food, clothing and other goods, and while consumers have been long used to double-digit inflation, the recent spurt of price increases is hitting hard after five years of economic growth ended in the second quarter.

While other Latin American countries have seen inflation moderate with the global economic slowdown, the rate of inflation in Venezuela has barely slowed as lower oil revenue forces the government of President Hugo Chavez to restrict foreign currency to the private sector.

The surging cost of living put Caracas as the second most costly city in the Americas behind New York, according to a July study published by human resources consultancy Mercer.

In line with Chavez's anti-capitalist policies, Venezuela severely restricts currency flows and has a rigid exchange rate, policies many economists say are feeding inflation.

Importers unable to get permits to buy currency at the official exchange rate of 2.15 to the U.S. dollar turn to the tolerated black market, where the greenback recently traded as high as 6.7 bolivars, nearly double the level of a year ago...


Read more: http://www.reuters.com/article/bondsNews/idUSN313961902...


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So much for my plans to retire to Caracas.

   A South American speaks out against Chavez!!!

enid602 (1000+ posts)      Mon Aug-31-09 03:25 PM
Response to Original message
3. Chavez
 Edited on Mon Aug-31-09 03:26 PM by enid602
Chavez is too busy helping out the FARC and foisting his Bolivarian Revolution on the rest of Spanish-speaking South America to worry about such mundane economic concerns.

enid602 (1000+ posts)      Mon Aug-31-09 03:54 PM
Response to Reply #4
5. Chavez
 Well, it´s odd. I live in Bs As, and the press here (unlike the US press) covered every minute of the recent Unasur Summit in Bariloche, Argentina in protest of supposed US bases in Colombia. Uribe of Colombia used the occasion to criticize Chavez´s helping the FARC, and spent much time demouncing terrorism and narcotraffickers. Yesterday, when Chavez got back to Caracas, he spoke in public to publicly denounce terrorism; not the FARC´s terrorism, but rather ´media terrorism.´ He´s already closed all of Venezuela´s newspapers (including his party´s own newspaper yesterday), but still finds a way to turn the conversation to fit his own agenda. It´s all about him. I believe he does care about poverty, but public programs do little when 30% inflation is constantly adding more poor to the ranks than his programs can eliminate.

EFerrari to Chavez's rescue!

EFerrari  (1000+ posts)        Mon Aug-31-09 04:05 PM
Response to Reply #5
6. So, who is Glenn Beck in Buenos Aires?
 lol

How do we fix inflation?  The GUBERMENT!!!!

David__77 (1000+ posts)      Mon Aug-31-09 06:25 PM
Response to Original message
13. The solution is capital controls.
 Clamp down on the big owners and investors. They are sowing problems on purpose to disorganize the economy. Things are still way better than in the 90s however. Let the parasites flee to Miami, but not with their wealth.

Dreamer Tatum (1000+ posts)        Mon Aug-31-09 07:13 PM
Response to Reply #13
16. Um...the government pegs the exchange rate
 So can you explain your post? It makes no sense whatsover.

Can you explain how choking off investment helps the Venezuelan economy in ANY way? To keep interest rates low enough to encourage private consumption with no capital investment, Chavez would have to print even more Bolivars, and therefore cause even higher inflation!

Chavez supporters, there is NO SHAME WHATSOEVER in admitting that you have no idea how economics works, but you still support the guy.

EFerrari  (1000+ posts)        Mon Aug-31-09 07:26 PM
Response to Reply #16
17. What no capital investment? Try China, France, Japan,
 Russia, Argentina, Brazil, the US, etc.

There is no shame in admitting you have no idea what you're talking about and yet continue to make absurd assertions.

Dreamer Tatum (1000+ posts)        Mon Aug-31-09 08:05 PM
Response to Reply #17
21. DU rules and your lack of basic insight prevent me from adequately responding, but
 No one said that NO foreign investment is allowed in Venezuela.

At issue is the rate at which (legal) foreign investment is allowed there, which is choked off due to the
unrealistic exchange rate mandated by the government. These are matters of fact. The black market exchange rate
is about 3x the official government rate, but unfortunately you can't open production plants and such on the black
market.

You can attack me all you like, but all I've done is respond to the facts that are in the article. If you have actual
facts that can be part of an educated discussion of economics, then please post them.

Without resorting to attacks that only reveal your lack of thinking skills in this arena, can you tell me why Chavez
is pegging exchange rates so low, to the detriment of total investment in Venezuela? With oil prices so low, Chavez
has to issue debt just to keep interest down and people spending.

This is called a currency tax. It's a way of transferring wealth from the private sector to the government sector. Transferring
wealth of ALL Venezuelans, that is.

Can you explain that policy?

  Ferrari never comes back.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4040416

Hot bed of Venezuela discussion over in Latest Breaking News today.

[Rebel]

I'm wondering when the bitch is going to move there. Seems like she'd fit better there than here.

So, GTFO, bitch. Leave, and take your mental issues with you.

[jukin]

Obumbler is working hard on making Hugo envious.

[The Village Idiot]

I have been reading a venezuelan blog and things are going very badly down there. Banks and corporations are being given to Chavez thugs who have no idea how to run a business. They have fired scientists, their best scientists, who supported the opposition.

This country used to export coffee and now they are importing it. The grocery stores are becoming more and more bare and stocked with unknown foreign brands. They used to have special stores for the poor but the prices in those have also skyrocketed. The price of staples is growing fast too. The average Venezuelan finds it hard to make ends meet.

Opposition Mayors find themselves stripped of their powers, offices, staff and everything else. At least one police station was taken over by troops because the local chief might have been an opposition supporter. Their colleges elect their leader, I had no idea, and Chavez is changing that in a new election law because students vote for anti-Chavez candidates.

A sugar ship from Cuba was a big news item a while back. On live TV!