Wednesday, January 27, 2010

Venezuelan electricity crisis addressed a la Cubana

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

Venezuela's government could solve the energy crisis with 3 billion dollars and a phone call to China to acquire the necessary technology, increasing with this the national power generation system. Unfortunately, although Venezuela has the economic resources to exit the electricity crisis, its political leadership is very ill-advised.

The Chavez government is principally advised by Cuban experts(?), a personnel who have very limited knowledge on generating real welfare since they are accustomed to administer a semi-enslaved, ruined country.

So no matter the amount of resources that Venezuela has, the representatives of the Havana government advise Chavez with the Castro's traditional economic prescription: DESTROYING the national productive sector and RATIONING what little socialism had left. This is what they have been doing for 50 years in Cuba, they do not think in terms like quality, development or efficiency.


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- Electricity in Venezuela, Three Gorges or Russian weapons?

- Chavez's military strategy: National productive sector

- Others consume more electricity than Venezuela

Wednesday, January 20, 2010

Uribe's inadequate budget cut

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

In Colombia, considering the bad results of employment and economic growth, it seems unreasonable the cut of nearly $300 million, announced by President Alvaro Uribe, in government spending for 2010.

Although the government justified the cuts by appealing to the public deficit reduction, it does not match the 5% of GDP; however, the 14% of unemployment rate is a figure that should pressure the Colombian Executive to apply development plans -increase spendings- in order to expand the employment opportunities.

In the same vein, Colombia grew -0.3% in 2009 -the economy needs stimulus- so if the government makes an adjustment to investment programs in 2010, it will cut oxygen to a weakened market.

Uribe and his cabinet should have calculated that we come from a severe international economic downturn: this is a year for recovery, not for cuts. In any case, if things go well in 2010, 2011 may have been the time to apply budgetary constraints.


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- Why the Colombia-US military agreement

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Monday, January 18, 2010

Electricity in Venezuela, Three Gorges or Russian weapons?

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

It's no secret that President Chavez has spent billions of dollars on weapons. Money that, given the many other needs of Venezuela, could well be spent on improving the electrical system of this country.

According to sources of the Russian newspaper PRAVDA, the estimated total costs of armament contracts between Hugo Chavez and the Kremlin will reach $30 billion before 2012. Incredibly, more than it cost to build the China's Three Gorges Dam, which had a cost of approximately $25 billion and has a generating capacity of 100 TWh per year -the largest hydroelectric dam in the world-.

If Chavez had used what it spent on Russian weapons to develop national energy programs, we would not be experiencing the severe electrical crisis caused by the neglect of his government.

It's disconcerting, but that is the real Chavez's Venezuela, a poor country immersed in a frightening power crisis, ruled by a clique of communists with a penchant for Russian weapons. As in Cuba, in socialism welfare is rationed, never the arms race.


Related articles:

- Others consume more electricity than Venezuela

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Wednesday, January 13, 2010

Maxi-devaluation in Venezuela, without a rise in prices?

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

No, it is not an idea from a parallel universe, is from Chavez: He is trying to enact a maxi-devaluation without increasing prices. That is, the Chavez government diminishes the value of the object that pays for goods and services in Venezuela, but expects the same purchasing power as before for this devalued currency.

Unfortunately for Chavez, although now the government wants to throw the blame on retailers, the market has its own rules. A devaluation almost always causes a general rise in prices, more so if it is a maxi-devaluation of 100% -not to mention what happens in the black market- and even worse if we talk about a country like Venezuela, which imports 80% of what it consumes.

Prices will rise, no matter whether Chavez agrees or not. The government may fine/expropriate retailers to intimidate them, but sooner or later the facts will have to be faced; just as happened in the fight between the black market dollar vs. CADIVI's dollar, where the wishes of the government were not sufficient to contain reality.

Before Chavez's black Friday, the expected rate of inflation for 2010 in Venezuela was 30%, but after the maxi-devaluation of the bolivar, inflation is now projected to climb above 50%.


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- Chavez's black Friday

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Monday, January 11, 2010

Chavez's black Friday

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

On January 8, the Chavez government announced a devaluation of 21% -the bolivar goes from 2.15 to 2.60 per dollar- on the official currency to import food, medicine and some basic services. While the devaluation will be of 100% -the bolivar goes from 2.15 to 4.30 per dollar- on the official currency for trade and industry. Similarly, Chavez announced the liquidation of 25% of the Venezuelan international reserves to be transformed into public spending.

The consequences of these measures will be colossal as the shock of the devaluation will impact especially on a steep rise in prices of goods and services consumed by Venezuelans; at the same time, the official exchange rate moves to a dual mode that complicate still more the procedures and allocation of dollars to the citizens. Moreover, the consumption of a quarter of the country's international reserves by the government is a blow that removes more confidence from the national currency, and shows us that the government's finances are so bad that it is eating the nation's savings.

In regard to the parallel market, the two measures in the long run will be magnified in the unofficial price of the dollar, which will cause even more inflation. But worst of all is that the government's adjustments do not end here, the country's severe economic crisis provoked by Chavez, and the government mismanagement of the public resources, will force the regime to appeal to maxi-devaluations that will try to balance the accounts of the XXI century socialism.


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Friday, January 8, 2010

Polls for Costa Rica's presidential election

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

On February 7, there will be elections in Costa Rica to choose president and parliament. In them, the ruling party is the favorite, beating the voting intention of all his opponents combined.

Based on the latest opinion poll, Laura Chinchilla -PNL- owns 46.6% of the electorate, followed by Otto Guevara -ML- with 19.5% and Otton Solis -PAC- with 8.3%. This survey was conducted by Demoscopia from 30 November to 10 December. Margin of error is 2.8%.

The PNL is a party associated with the modern democratic left. In this regard, one can see in their leaders a more sophisticated speech : they do not blame the U.S. for the plight of Latin America, aren't enemies of the private sector, are not in arms races, and are very critical of the Marxist discourse that still prevails in several politicians of the region.


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Wednesday, January 6, 2010

Venezuela 2010: Stagnation with hyperinflation

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

The IMF, the local schools of economy and the Venezuelan independent business chambers agree: Venezuela's economic expectation for 2010 is a scenario of stagnation.

The IMF expects growth of -0.4% for the GDP of Venezuela, despite the major economies are already in the recovery phase after the alarming 2008-2009 financial crisis. It is envisaged that Latin America as a whole will increase the size of its economy by 4% on average; being Chile, Colombia and Brazil the countries with the highest expectations (5% growth in GDP) and Venezuela the worst in the region.

However, according to forecasts of these institutions, not everything will stagnate economically in Chavez's country. Thus, although private consumption and investment will remain weak in 2010, due to faulty government economic policies, inflation is expected to continue its dizzying upward trend, comfortably surpassing the mark of 40%.


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