Tuesday, February 12, 2013

Train Wreck, That Everyone Except Venezuelans Saw Coming, Is Here

Well, it only took 13 years, but Hugo Chavez and Chavismo has thoroughly destroyed the Venezuean currency, the bolivar.  Since 1999, the bolivar has lost 91% of its value and yet still remains 42% overvalued based on The Economist's Big Mac Index.  This despite some of the largest reserves of petroleum in the world.  IBD has a rundown of the destruction.
Venezuela's monster 47% devaluation from 4.3 to 6.3 bolivars to the dollar, reportedly ordered by President Hugo Chavez from his hospital bed in Cuba, marks the reckoning for his regime's big-spending ways in Venezuela's low-growth economy.
It was about as predictable as a crash from a runaway train, given his mad-lunatic war on economics — his lethal combination of welfare spending, destruction of the private sector and capital controls to cover up the disaster. And as in any train wreck, it wasn't something he could control.
Venezuelan banker Miguel Octavio noted on his blog "The Devil's Excrement," that "in the end devaluation is not a policy, it is the result of bad policy."
This devaluation is characteristic of all tyrannies, which benefit by effectively expropriating the savings of the private sector through monetary means rather than the more common thuggery.
Yes, as predictable as the sun rising.  But the age old question is why do people choose this type of destruction again and again.  Chavismo is likely to survive the death of Chavez himself and Argentinians consistently choose this form of destruction for themselves, this time in the person of Christina Kirchner.  People allow their meager savings to be plunder again and again.  Why?


Post a Comment

<< Home