Friday, May 25, 2018

Matias Vernengo — Venezuela is about to explode

The Empire at work. Is history about to repeat?

Al Jazzera — Opinion
Venezuela is about to explode
Matias Vernengo | Associate Professor of Economics, Bucknell University

See also

Naked Keynesianism
Lula da Silva is a political prisoner. Free Lula!
Matias Vernengo | Associate Professor of Economics, Bucknell University


Konrad said...

Al Jazeera says, “The boycott resulted from the notion that the elections are always rigged and that an opposition candidate would have no chance of winning.”

No. Plenty of international observers in Venezuela certified that the election was fair. The neoliberals boycotted the election because they knew they would lose and be embarrassed. They boycotted the election so they could claim that it was “rigged.”

Al Jazeera says that Venezuela’s economy is “collapsing, and is experiencing “hyper-inflation.” Wrong again. Venezuela has been suffering from inflation (not hyperinflation) for two main reasons: [1] the USA is flooding the Venezuela black market currency exchange with dollars in order to fuel illegal currency speculation. [2] There are shortages in consumer goods, caused in part by illegal hoarding, and in part by the fall in oil prices.

Regarding illegal currency speculation, Venezuela’s government has reduced much of this by imposing price controls and issuing Food Stamps (EBT cards).

Regarding shortages in consumer goods, the price of crude oil has been climbing ever since it hit bottom on 16 Jan 2016. Today the WTI index is at $72 per barrel, while the Brent index is pushing $80. That’s bad news for motorists in America, but great news for Venezuela, Russia, and Iran. By mid-July oil will be over $100 per barrel. Venezuela will be able to buy more imports, thereby easing the shortages in consumer goods.

The Empire knows all this, and its leaders are wringing their hands. “We own all of Latin America except for Bolivia and Venezuela, and now Venezuela is recovering. What to do? If we invade, or we start bombing, we will politically weaken our neoliberal partners in Latin America. But if we do nothing, we will be laughed at. What to do? Israel, please tell us what to do.”

Al Jazeera says that Venezuela has defaulted on its sovereign bond payments. No. Venezuela temporarily delayed $2.3 billion in interest payments, in return for agreeing to an even higher rate of interest, knowing that oil prices would continue to rise. This agreement was made with the four biggest holders of Venezuelan debt: Ashmore Group of the UK, plus the three American firms of BlackRock, T. Rowe Price, and Northern Trust. Goldman Sachs did not agree. Therefore Goldman Sachs got paid off by Venezuela’s government.

Washington is angry that Venezuela’s government has been able to get these loans. Therefore Washington has barred American firms from lending any more money to Venezuela’s government.

NOTE: The private firms mentioned above are not banks. They lend their own money in return for interest. By contrast, the IMF is a bank, and can therefore create infinite loan money out of thin air. Unlike the private firms, the IMF does not need to be paid back, and does not demand that it be paid back. Instead, the IMF uses debt bondage to force neoliberal “reforms” ...

>>The nation indebted by the IMF must privatize its public assets and government services.

>>The indebted nation must put its seaports, airports, its military, and its intelligence agencies at the disposal of the Empire.

>>The indebted nation must put its natural resources (e.g. minerals, timber, water, etc) at the disposal of foreign firms.

The IMF would be happy to lend to Venezuela’s government, but Venezuela’s government knows that this would be disastrous. Hugo Chavez kicked paid off the IMF and banned them from re-entering, not long after Chavez was first elected.

Konrad said...

>>The nation indebted by the IMF must also

[a] Formally recognize Israel’s “right to exist.”

[b] Establish a government department tasked with “fighting anti-Semitism.”

[c] Make holocaust™ indoctrination a mandatory part of public education

[d] Construct a huge holocaust™ memorial, plus a museum of “tolerance” (i.e. of Jewish supremacy) in the capital city of the indebted nation.

André said...

It is actually very hard to understand what is happening in Venezuela. Both sides of the history lie heavily. Facts cannot deny it. For example, venezuelans are flooding through brazilian borders. If everything is alright in Venezuela, why would it happen?

The same is true about Lula. It is hard to understand, but reality is plain, simple and crude. Lula maybe can be considered one of the best presidents of Brazil - he did a good work. Yet he was really corrupt. Is there a contracdiction there? No! He is a criminal, and his place is in prison. Very odd to see people trying to release him. But what is even more odd is the fact that a lot of corrupt right wing politicians are not in prison like he is.

Konrad said...

@André: Everything is not alright in Venezuela, but neither is Venezuela about to “explode” as Al Jazeera claims.

”Both sides of the history lie heavily.”

The Empire and its targets both lie equally? I don’t think so.

Regarding Lula, he was the most popular President that Brazil ever had. Lula was nowhere near as corrupt as the neoliberals who staged the coup against Lula, plus the Worker’s Party, and President Dilma Rousseff in August 2016.

Latin America is not difficult to understand. The 2000s commodities boom allowed the people of South America to elect progressive leaders who ushered in the populist “pink tide.”

Lula da Silva in Brazil
Evo Morales in Bolivia
José Mujica in Uruguay
Rafael Correa in Ecuador
Hugo Chavez in Venezuela
Nicanor Duarte of Paraguay
Néstor Kirchner in Argentina

When the commodities boom ended in 2014, right-wing elitist neoliberals once again seized power in South America, and once again crushed the masses under their heels.

The governments of Bolivia and Venezuela continue to hold on today, but the U.S. Empire wants them destroyed.

André said...

"Lula was nowhere near as corrupt as the neoliberals"

Very hard to claim that. Unfortunately, we do not have official statistics about illegalities or about how much each politician or political party robbed. But the fact is that the Car Wash investigation arrived at astonishing big amounts of illegal transactions from all major parties, and it is far from being over.

Things are complex in Brazil (and in the rest too probably). The truth is that nobody can get things done in Brazil without doing illegal transactions. But it seems that the Workers Party indeed robbed a lot, in line with previous governments.

Tom Hickey said...

When corruption becomes normalized culturally and is endemic institutionally, it's very difficult to change that. This is not to excuse anyone for corruption, but just to point out that many cultures suffer from this blight. Reforming them doesn't happen overnight. The mindset has to change.

A good example is the US political system. Corruption has been normalized culturally and institutional. Now it is hardly noticed by most, and since it is legalized, the elite view it as ethical. But it is rotting the system.

Calgacus said...

From what I have read, Lula was not at all corrupt and the Car Wash accusations against him are complete and baseless fabrications. I am sure though, that he, like every other human being, ripped tags off matresses and violated federal law by using products in a manner inconsistent with their labeling.
It is easy to say everyone is corrupt, but but excessive cynicism and skepticism can turn into the greatest gullibility. From Lula's record and the way he has been jailed, the accusations deserve rather more skepticism than his innocence.

André said...


I always read your comments and you are a very smart and cunning commentator. I guess that we disagree this time not because you think different from me, but because we have different information about the subject.

As a brazilian, I paid special attention to all that happened through those last years. Maybe you haven't paid so much (which is no problem at all, considering that Brazil is not such an important country in the international scene).

What I can tell you is that the Car Wash investigation discovered probably the biggest corruption case in the world found so far. And there are a lot (I mean, really a lot) of people participating in a whistleblower program ("delação premiada"), telling details in exchange for reduced penalties. Actually, if you understand portuguese, they are available in YouTube, and they are more interesting than any Netflix movie or series.

The corruption scandal involves the government, the biggest brazilian company (Petrobrás, a public company), the biggest brazilian building companies/contractors, and some billions of dollars.

There is no way that it went unoticed by the political leadership. The ruiling Workers Party was/is heavily involved in such corruption schemes, and some of the first tier politicians were indeed arrested - something unprecedented in Brazil. The corruption was so heavy that even the most protected politicians could not avoid jail.

Yet, somehow, for some time the investigation could not find any evidence on the involvement of the then president Dilma Rousseff or the former president Lula at the time. But then, some time later, investigators found that a building company gave advantages to Lula, enough to get him arrested for some years. It is hard to believe that they found everything there is to be found, but that is the evidence we have so far.

I believe that it is true that the judge Sergio Moro went overboard one time, when he made a private telephone call between Dilma and Lula public for everyone to listen. It became an inappropriate sensationalist media theme.

However, in general, the investigation and the judgment of the case were very ethical and correct. Even more so if you consider the fact the mostly (if not all) brazilian politicians are trying hard to sabotage the investigations that are still ongoing.

In my mind, there is no doubt that Lula and most (if not all) of the Workers Party are very corrupt. Also, I have no doubts that most of the relevant right-wing politicians are also corrupt, as made clear by some whistblowers.

What bothers me is not Lula's arrest - he deserves to rotten in jail, and it is odd when people try to save a criminal. What bothers me is that no major right-wing politician is in jail so far (I mean, what is so special about them? why is a left-wing criminal worse than a right-wing one? they should both rotten in jail).

Another thing that bothers me is that it is impossible to do politics and be a politician in Brazil without involvement in corruption schemes. Our political leadership is entirely made of criminals. No one really knows exactly what are their specific crimes or schemes, but everyone knows they are rotten somehow. Yet we are unable to do anything about it. It is really sad, maddening actually...