Monday, March 26, 2007

On Venezuela, NY Times Up To Old Tricks



This response to a recent anti-Chavez article was caught off the Marxism list:

The NY Times writes (in response to new Govt. measure vs. inflation), "But demagoguery and showmanship will do nothing to solve Venezuela's 20 percent inflation rate.... Venezuela's currency, the Bolívar, has lost about a fifth of its value since January..."

Nice to see the Gray Lady up to her old tricks.

I haven't been covering economic affairs for a couple of weeks, so I thought
on reading this that perhaps I had missed the news of Venezuela's
devaluation, though I didn't think so. And a quick check of Google News (in
Spanish, the English language press coverage of Venezuela is worthless)
tells me that in fact I didn't miss it. It did not happen.

Because Venezuela operates with a system of foreign currency controls and
allocations on the basis of a fixed exchange rate set by the Central Bank,
if there had been a devaluation, to honestly report on it, the NYT would
have had to tell us when the last time was that the Bolívar's official
exchange rate changed, but of course that is impossible since the *truth* is
that Bolívar's exchange rate has not changed.

What has changed is the black market exchange rate used by wealthy
Venezuelans to turn the local currency into dollars for smuggling out of the
country. And I know that bourgeois journalists are true experts on black
market currency operations.
...
And there will be plenty more reporting and editorializing along the lines
of the Venezuelan economic "catastrophe" in coming months and years...
So it Goes,
Joaquín

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3 Comments:

Blogger jsb said...

Your understanding of the parallel market rate is weak. The currency, if you want to exchange it, has indeed lost value. And because of inflation, you can purchase less per Bolivar than in the past. You marxists never have understood these simple principles. Controls do not work. Never have, never will.

4:56 AM  
Blogger jsb said...

The New York Times was simply reporting on the fact that cutting 0's off the Bolivar would not accomplish anything. It is purely cosmetic.

4:57 AM  
Blogger Julia_1984 said...

"What has changed is the black market exchange rate used by wealthy Venezuelans to turn the local currency into dollars for smuggling out of the
country. And I know that bourgeois journalists are true experts on black market currency operations".

Those lines shows ignorance and irrational resentment. Put yourself in the shoes of the venezuelans for a second, from one day to another, the goverment doesnt allows you to have access to a foreign currency and for having access to an only limited ammount you have to go throughout a very complicated burocratic process. The black market doesnt only involves "bourgeois", involves people who needs of that currency to live, involves people who needs to buy suplys abroad for their business and who gives jobs to many people in my country. You have enjoy freedom and you take it for granted, its quite easy to be an ortodox marxist in the first world. Try here in Venezuela.
Jsb comments are correct, I won't add anything about it

9:34 PM  

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