Tuesday, October 26, 2010

Shock measures a la Cubana

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

When Fernando de la Rua in Argentina proposed an agenda of fiscal discipline and privatizations that copied the IMF's recipe, several leftist sympathizers in Latin America had to be hospitalized due to sudden heart diseases. Ironically, neither in the Domingo Cavallo's Argentina, nor in the current indebted Greece, the IMF technocrats came up with an economic program as ruthless as the one that the Cuban government has been pursuing.

With words similar to that of Milton Friedman, the Cuban regime is now talking about the need to eliminate "unreasonable expenses", but prefers an economic policy that would embarrass even the father of neoliberalism. 10% of the Cuban labor force was fired from its state employment as a saving measure and thrown into the streets to survive at its own, without social security, fixed income or solid legal guarantees to start its own business. 500 thousand human beings who are also only allowed to open small hair salons or mobile food sales, which means that a whole mass of people will start, at the same time, identical businesses to compete savagely in an archaic market with very little money movement.

To make matters worse, as these people have been working during years for a Marxist bureaucracy, they do not have the preparation or experience needed to succeed in private businesses.

As if it was not enough, these new local micro entrepreneurs must cope with the giants that come from outside the country, because Cuba is also privatizing several sectors of its economy into the hands of international private capital, with the hope to generate the development that the communist government was never able to materialize.

And like most governments looking for help of the International Monetary Fund, Cuba is forced to practice emergency measures once it is in the brink of a more extreme economic disaster, resulting in traumatic adjustments.

We can add the words humanism, socialism or global warming, which combine better with a Leninist propaganda, but economically, what Castro is doing is a grip so cruel that we do not remember having seen something similar in any of the IMF's bailouts.


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Monday, October 11, 2010

Venezuela: Estimate of 2010-III GDP growth

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

The Venezuelan economy would have grown -1.4% during the third quarter of 2010, compared to the same period last year.

This quarter was boosted by a bit lower inflation and the electoral spending of the parliamentary elections, but the weakening of the Venezuelan middle class -as consumer and merchant- continues to be reflected in the general state of the economy.

If our figures are correct, this would represent the sixth consecutive quarter of economic contraction in Venezuela, i.e., 18 uninterrupted months of revolutionary recession. Which also means that Venezuela is only two additional quarters of decline from an economic depression. Reality should not surprise anyone, given the socialist policies Chavez has implemented despite the lessons of history.


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