The Cuban Perestroika, cultural impact

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

The Berlin Wall fell down, the Soviet Union disappeared, the United States won the Cold War, China opened up to capitalism, the standard of living in South Korea is better than in North Korea and, generally, socialism proved to be a failure in all regions where it was tested. But in Latin America, many of these events were seen as distant stories that had nothing to do with local realities.

Like a teenager in love, many continued to believe in the myths of the fantasy, so for politicians, intellectuals, businessmen and ordinary Spanish speakers, the dictatorship of Fidel remained the same paradise of freedom and social welfare that existed only in the heads of the hippies. "In Cuba, health care is free, people are really happy and roses are redder", phrases like these could be heard in Latin American universities and centers of power even at the beginning of the XXI century.

Unfortunately for the regional communist thought, denial is a psychological defense mechanism that is not very reliable for keeping secrets. The truth has begun to explode in the Mecca of the Latino communism, so the re-structuring of the Cuban model will be something so close that would teach Latin American what they should have learned long ago about socialism. And as one day Castro's Cuba influenced many to insist on Communist system's error, it should now provoke the discredit of that ideology in the area.

Unlike the twentieth century, this socialist collapse is not happening in Europe or Asia, but in one of the most important symbols of the Latin American culture, so its impact should be greatest in the island and its sphere of influence.

Cuba is a small country geographically and economically, but ideologically, this nation affects the region like no other, even more than States such as Mexico, Brazil or Argentina. A lot of Latin American politicians wait for Fidel before expressing any opinion, only that this time, the philosophy of the Cuban government points to anti-Communist reforms (privatization and economic liberalization), which could mean an ideological earthquake for the left in Brazil and Spanish America.

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Evo, what has Marxism done for the environment?

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

In the present age, one would expect the global warming debate to be focused on the development of renewable energy, the more efficient management of natural resources, the geo-engineering, the reduction of carbon dioxide emissions, and the legal reforms that can cushion the impact of human activity on the planet. Unfortunately, a Latin American government trying to divert the discussion to issues specific to a time before the Internet could not miss at the Summit of Climate Change in Cancun, revisiting the idea of dismantling capitalism as the great panacea for saving the world from all the problems that afflict it.

"Either capitalism dies or Mother Earth dies", was the approach that brought Evo Morales to Mexico, returning us to a time when foreign policy was based on the acceptance or rejection of Marxism. But of course, for those who live in Latin America it is nothing new to see a politician explaining each event with the Leninist ideology, or that leaders like Chavez and Morales never knew the failure of communism in all regions where it was tested.

What can socialist regimes teach us about environmental policy? The worst nuclear disaster happened on Earth occurred in Chernobyl, then one of the republics of the USSR. The title of global largest emitter of carbon dioxide is held by China. Much of the water consumed in Vietnam has so much pollution that the issue has repeatedly been qualified by UNICEF as a "pressing environmental problem". North Korea has serious air pollution records because that nation produces enough of its energy from coal. And Laos is one of countries with highest deforestation rate, while Cuba, Venezuela and Bolivia lost respectively 1.97%, 0.55% and 0.45% (per year) of its trees between 1990 and 2010.

Clearly, the socialist models have no moral authority to criticize capitalism for the environmental degradation, so it's obvious that the solution to climate change is not in the Communists schemes of economic organization.

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The intellectual Anglo-Saxonism of Chavez

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

Every time Chavez has needed an ideologist to formalize the theoretical underpinnings of his political project (supposedly indigenous, African-American, anti-imperialist and friend of the marginalized), it is noteworthy that, contrary to what the bolivarian revolution preaches, he has always appealed to North American, German or British intellectuals.

When Chavez wanted someone to explain that he had been the victim of a coup in April 2002 and that his socialist revolution lived under constant threat from the United States, he did not seek an Amazonian Indian, he instructed Eva Golinger, American journalist and lawyer, to capture everything in a book - "The Chavez Code" - and in other publications.

Later, he needed someone to tell the world what the Venezuelan XXI Century Socialism is, and Chavez do not seek any national academic to entrust the task, but ordered to call the German sociologist Heinz Dieterich.

Sometime after, in 2009, Chavez decided that a film would revive faith in his leadership, but he doesn't seek the help of Venezuelan or Latin American filmmakers. He tried again with an Anglo-Saxon, Oliver Stone, who made for him a piece of political propaganda called "South of the Border."

Then comes 2010, chavismo gets fewer votes than the opposition in the September parliamentary elections, and this time, Chavez thinks he needs a thinker to develop a document for: 1) questioning the opposition victory, 2) re-selling the neocastrista project to Venezuelans, and 3) giving to the party the lines of action for the immediate future. But again, "el comandante" does not consider prudent to assign the task to any mulatto, so he sent for the Welsh Alan Woods.

There is clearly a racist pattern in Chavez when choosing his ideologist, especially considering that, in none of the cases cited, the Venezuelan president has hired black intellectuals from those lands, all of them are Anglo-Saxons with well-defined Caucasians features. Why he never resorts to Negroid people or Venezuelans as Professor Carlos Escarra, for example, for these assignments? Could it be that, in the logic of Chavez, the northern white is better creating ideas?

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Venezuela: Devaluation in 2011?

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

A major international bank is predicting a devaluation of the Venezuelan exchange rate in the first quarter of 2011. According to experts at Barclays Capital, the measure represents the best option for a government that will eventually be forced to balance its accounts. But leaving aside the speculations that may generate the report of the financial institution, the factors that Chavez should evaluate if he is planning a devaluation in the coming year are complicated.

A modification of the official exchange rate in 2011 would find justification in the long socialist recession that persists in Venezuela, the government deficit, the growing debts to government employees, the debt on the secondary market, the low tax collection due to the economic downturn , the oil price that has not returned to exceed $100 per barrel, and the 2012 elections which are relatively far away to absorb an impact of this nature and allow time for Chavez to regain some stability.

Unfortunately for the Venezuelan president, the 100% maxi-devaluation the government decreed in January 2010 is very recent, so launching a new macroeconomic shock could mean a trauma that is too close to the previous one, for the economy that has registered South America's worst performance in the past 3 years.

Furthermore, although PDVSA's lucrative exports have declined and the Chavez government has failed to manage it properly, the global oil market continues to live the most spectacular boom in its history, which produces a good income for an OPEC country like Venezuela. The current barrel is not worth the $140 he reached in 2008, but remains above $70, fairly high compared to the average of $36 per barrel from 1970 to 2008.

Also, from 2008 to 2010, Venezuela's economic conditions have deteriorated more than in any other year of the Chavez government, which, among other things, has adversely affected his popularity, lowering it to alarming levels for a populist leader. How do a new large devaluation would impact on this weak leadership? It's hard to believe it would be good, although missing 24 months for the 2012 elections.

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Chavez's attitude to the Costa Rica-Nicaragua case

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

In 2009, when Manuel Zelaya was overthrown by a polemical military coup, no one was so desperate for the OAS intervention as the Venezuelan government. Obviously, at that time was a Chavez ally who needed help and the Venezuelan President knew the more time Zelaya spent out of power, the harder he would return to office. So, Chavez called on all his allies to take a position as soon as possible, and pushed to such extremes on other governments that even Insulza fly in an aircraft as part of a dangerous counter-coup operation.

The same urgency showed Chavez for the intervention of the OAS when Rafael Correa was almost removed from power this year, in the police rebellion of September, but things change when indifference favors a revolutionary comrade. Now is Costa Rica who urges the OAS to mediate, and is Daniel Ortega -a Chavez friend- who benefits from the attitude of the current Venezuelan government. On November 12, 2010, the OAS voted unanimously to ask Costa Rica and Nicaragua to evacuate the disputed area for the moment and resolve the problem through dialogue; however, Nicaragua and Venezuela were the only two countries that voted against this resolution, and then Ortega announced that he would not abide it.

If he wanted, Chavez might influence his ally to take another position, but meanwhile the facts are imposed: The controversial dredging of the border river continues, which in practice would extend the rule of Nicaragua, as this country has by right the control of the San Juan river.

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The Costa Rica-Nicaragua tension

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

Beyond the cartographic considerations that gave rise to the boundary problem between Nicaragua and Costa Rica, it calls our attention the aggressiveness of the current Nicaraguan president to discuss the matter.

Daniel Ortega has made the difference in the current dispute, because although this conflict comes from long ago, previous Nicaraguan governments had addressed it in a more diplomatic way, obtaining very good results with this attitude. In fact, in 2009, the International Court of Justice recognized that the sovereignty of that territory rightfully belongs to Nicaragua.

There was no need to threaten war against a country that does not even have an army. In addition, the mobilization of troops by a government drowned in a terrible budget deficit, and with a very low risk of aggression, is an act extremely difficult to justify.

Everything seems to be more of what we are used to seeing on the extremists in the region: Correa responded with military threats to his problems with Uribe, Chavez has also warned to start a war against the Neogranadine country several times, Ortega himself wanted to restore Manuel Zelaya to power by way of force, and now shows his fists to Costa Rica. It is as if those who direct the diplomacy of the ALBA countries need to maintain external tensions to distract their countrymen from the serious problems that, internally, the revolutionary governments have not solved.

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U.S. legislative elections, Chomsky and Stiglitz

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

In the November 2 elections, Americans voted to choose members of Congress, among other authorities. Contrary to what has been happening since 2006, this time the Republicans were favored by the electorate, taking control of the legislature from Democrats and simultaneously marking the relaunching of the neo-conservative politics in this country.

But, why is important the strengthening of the U.S. rightist faction in the last election? Well, among the many interpretations that this vote could have, we would not want to miss that, because of the 2008-2010 financial crisis, social scientists of the likes of Noam Chomsky and Joseph Stiglitz warned the end of the influence of the traditional political-economic ideologies to begin an era where the more progressive doctrines would dominate the electoral environment, including in the United States.

And that's where the Nov. 2 election appears on the scene, refuting the hypothesis of such thinkers, in the sense that when American voters decide to give the majority of the legislature to the Republicans, the last thing that is happening is that the American political system is becoming an archetype of the international left because of the global recession. Ie, after the financial crisis of 2008-2010, the American people chose to transfer the Congress from the moderate right of the Democratic Party to the purist right of the Republican Party. Indeed there was an ideological shift, but toward neoconservatism, very different from that anticipated by Chomsky and Stiglitz.

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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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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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Polls for Lima's mayoral election

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

On October 3, Lima residents will vote to choose a new mayor. According to Ipsos-Apoyo, voting intentions are Susana Villaran 42% and Lourdes Flores 28%. Other candidates appear with little chance of winning in this study.

Villaran is from the left, from the Fuerza Social party, but she says not to share the ideas of radical leftism on the grounds that the modern left is represented by Bachelet, Lula and Mujica.

For her part, Flores is from the Unidad Nacional party, centrist, representatives of Christian democracy in Peru.

Whoever wins will replace the current mayor, Luis Castañeda Lossio, from the Solidaridad Nacional party, also centrist.

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The Fidel Castro we didn't know

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

In 1962, Fidel Castro threatened the U.S. with nuclear missiles, however, in the XXI century, the former Cuban dictator seems to prefer to launch rockets against other targets, this time directed at Latin American leftist ideology, of which himself was a notorious representative.

"The Cuban model doesn't even work", echoed last week across the international press. Normally someone would hear this phrase and would think it is from a speech by Ronald Reagan or George W. Bush, but no, not even are words from a neo-conservative Republican, they belong to the commander of the Cuban Revolution, Fidel Castro, no more and no less.

For less counter-revolutionary phrases than this, Castro sent to jail dozens of people, many were shot and several others were beaten, tortured, or lynched. Notwithstanding, Castro now says something similar and his words receive the respect of all the spokesmen of the revolution, and there is no one who dares to imprison him. A fact that, paradoxically, is in agreement with the sentence Fidel said about the Cuban model, since it is also an example of the double standard of Castro's socialism.

Amazingly, Castro spoke these words when the world is just emerging from the financial crisis that many believed would destroy capitalism, and less than 20 days before the parliamentary elections in Venezuela, where his main wannabe, Hugo Chavez, will face a tough fight for the control of the legislature.

This year, Fidel has made several controversial comments. Initially, he said that socialism and communism are the same, then admitted that he made a mistake by brutally persecuting homosexuals (they were imprisoned and made to work in concentration camps), then he called for respect for the Israeli people, and now claims that the Cuban political-economic model, that that the Latin American left presented as an unparalleled wonder, is not adequate to generate social welfare even in Cuba, which debunks some of the ideological tenets of radical leftism both in and outside Latin America.

They said the poverty in Cuba was the product of the U.S. trade embargo, but Fidel's words show he's aware that the real culprit is the socialist model that he copied from the Soviet Union.

Years ago, Gabriel Garcia Marquez, in his article "The Fidel Castro I know," spoke about the same legendary leader who was promoted by the Cuban Revolution's propaganda. But the current is a more real character, the Fidel Castro we didn't know.

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Venezuela: A less rigid exchange rate regime?

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

Since chavistas removed, in May, the way to buy dollars through stock brokers, we've heard rumors that Chavez would relax currency controls due to the upcoming election and the shortages of certain food items. But given the realities described below, we are inclined to think the government has in mind something different.

The exchange rate controls are for chavismo a domination mechanism, perfect to reward allies and punish enemies. Plus, it's wonderfully useful to weaken the big companies that have not been socialized.

Moreover, Chavez don't has the same amount of international reserves than before, which, among other things, prevent the government from burning dollars, as in the past years, through ridiculous semiannual bond issues -purchased with bolivares but sold for foreign currencies-.

We must also take into account the relationship between some chavista businessmen and the subsidized dollars, of which there is no need to say much...

Additionally, it's necessary to talk about the Cubans in Venezuela. We should recall that the free exchange of foreign currency does not exist in Cuba, the country that supply the chavismo's most important advisors and Hugo Chavez's ideological inspiration. On the island of Castro, the control over the currency is used as a method of subjection and economic decisions are based in primitive socialist notions, according to which, if paralyzing controls are imposed on the private sector, the fullness of economic anomalies are corrected. Ideas that have found influential fans in Venezuela.

All of which leads us to conclude that it is quite difficult that Chavez will soften his exchange rate policy in the near future. In fact, this scenario seems unlikely before, after the September election, or even in the next two years.

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The dynamic of macroeconomic populism

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

Allende, Peron and Chavez are examples of this. Each time a populist government comes to power in Latin America, the economic scenario is quite similar: The regime begins a crazy monetary policy, printing money in excessive quantities and generating spectacular rates of economic growth in the medium term. The first few years everything is going well and the finance ministers of these governments believe they are the makers of something unprecedented in human history, so they compliment each other due to the revolution's achievements.

But time passes and the wild printing of money begins to cause side effects. This stage is characterized by an uncontrolled increase in the general price level, a serious budget deficit and an economy in recession or very slow growth. In this hangover, the massive electoral spending is insufficient to stimulate consumption because of the neglect of the real economy, while hyperinflation makes commodities become unaffordable. Then, everything degenerates in maxi-devaluations to balance the public accounts, a drop in domestic production due to the low private investment -driven away by the grim scenario- and desperate governmental controls that attempt to stop the disaster.

Therein comes the inevitable, the economy plunges into a deep recession until things return to some sense of normalcy after traumatic macroeconomic adjustments. Then start again, repeating the process over and over till the revolution and the currency can withstand.

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Poll for Venezuela's Parliamentary election

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

The shortage of basic commodities, the national electricity crisis, the out of control crime, the long socialist recession, the endless corruption scandals, the Cuban colonization of Venezuela, the inflation of 30%, the attacks on private property and the eleven consecutive years in power are the main factors leading to the Chavez's current low approval ratings -close to 40%-.

Unfortunately, popularity and votes are not always the same, much less in a country governed with anti-democratic schemes such as Venezuela. When dealing with any election, chavismo relies on unfair practices that tarnish the image of the procedure, as the abuse of public institutions, the use of public resources to finance the PSUV's campaign, intimidation and voting processes that leave much to be desired due to their questionable transparency. Tricks that distort any electoral event and we think increase in more than 10% the real votes of Chavez's party. So we do not believe that chavismo will lose the majority of the National Assembly in September.

But although we do not expect a change of command in the Venezuelan Congress, we do believe that the reasons set forth above have adversely affected Chavez, so it seems very likely a change in the percentage of votes the parties would get. This should be the second hardest election Chavez had faced so far and it is probable that he will obtain the second lowest percentage of votes for his political project since 1999.

To put it in numbers, chavistas should obtain a 53% of the total votes counted, a figure that, in spite of giving them a majority in Parliament, would mean a substantial weakening of Chavez's electoral power.

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Colombia, Venezuela and economism

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

As easy as when Paul the octopus chooses his oyster: “economic interests will prevail,” says almost everyone who has an opinion on the current Colombia-Venezuela border spat.

They do not take into account the ideological factor, because, apparently, some experts believe that modern man is born without the brain's right hemisphere, which makes him a perfectly rational being who does not know of emotions, superstition, prejudice, or imagination.

They also do not consider the position of other sectors in both countries, because, according to them, the only ones that count in this matter are certain Colombian exporters who are apparently lobbying to recover the Venezuelan market. What about the Armed Forces, the electorate, the media, politicians and businessmen that do not trade with Venezuela? All this is out of their speculations. The division of Venezuelan society is neither mentioned in their analysis, nor the position of other interested countries, such as Cuba, Brazil or the U.S., for example.

Everyone that analyzes the diplomatic tensions between Colombia and Venezuela is based, mostly, on economicist hypothesis to predict that conflicts between Chavez and Colombia will disappear with the arrival of Santos. Unfortunately, we suspect they will soon realize that homo economicus existed only in the imagination of John Stuart Mill.

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Poll for Brazil's presidential election

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

Some Brazilian polling firms said, first, that Jose Serra was the favorite to win the presidency with a 10 point lead. Afterwards, they said Dilma Rousseff was ahead by a small margin, and they say now that there is a technical tie between the two main candidates in Brazil.

Initially, Serra was favored not so much for his work, but because of the economic downturn and the ruling party's time in government. Notwithstanding, economic conditions have improved significantly in the last months and Rousseff has managed to launch a more attractive proposition than simply being the Lula's candidate. While we note a weaker effort by Serra, currently.

Also, Brazil's electoral system has several deficiencies that compromise its transparency -fully automated and without manual audits of votes- which is an extra advantage that favors the ruling party, in this case, the coalition that supports Rousseff.

The pollsters expect a close fight and surely they will be jumping from one candidate to another when asking for the favorite in the remainder of the campaign. However, from our perspective, we don't see good possibilities for Jose Serra, so we think that Dilma Rousseff will be the next president of Brazil.

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Venezuela: Estimate of 2010-II GDP growth

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

According to our calculations, Venezuela's GDP should have dropped by 5,4% in the second quarter of 2010 over the same period last year.

This would mean the fifth consecutive quarter of economic contraction, while most other Latin American countries recovered growth since months ago.

Unemployment showed a slight decline during this period, but this was not enough to counter the electricity crisis and the fall in private investment. In addition, in this quarter the inflation rate had the largest increase so far this year and two extraordinary factors were added to the Chavez's recessive cocktail: There was an intense monetary trauma due to the insertion of the dollar-SITME in the exchange rate system, and the prosecution of almost all stock broker firms and “Banco Federal”, which caused a financial nervousness that did not do any good to the economy.

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Interview: Chavez or democracy?

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

In this link, we appear in an interview for the Ukrainian magazine "Український Тиждень.” We talked about the changes Chavez has made in the Venezuelan political system, why the shift to the Cuban model, Chavez's great mistakes as president, the real results of the XXI century socialism and other issues related to Venezuela's current political situation.

At the end, we say that if Chavez wins again in 2012, he would enact all the reforms he needs to install a communist regime, so Venezuela would definitely lose its democracy. In this case, we think Venezuela would look like Cuba or Belarus.

Economically, the system would be fully nationalized, but with a small space for the micro-private property. And politically, we would have a lifetime president and a privatized bureaucracy in the hands of Chavistas.

The original interview is in Ukrainian, but there are an English version here.

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The probable relationship Santos-Chavez

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

Juan Manuel Santos and Hugo Chavez are divided by ideology. The first is a democrat, the second a radical socialist.

They are divided by the FARC, because Santos is opposed to them, while Chavez has a very complacent attitude towards the socialist guerrillas. In this matter, by the way, they are also divided by the issue of the U.S. military in Colombia.

They are divided by the recent diplomatic tensions, which have caused the chronic stagnation that the two countries have been accepting as a habit.

They are divided by Brazil, because this has been one of the big winners of the fight between Chavez and Uribe. Venezuela now buys from Brazil what it previously imported from Colombia.

And they are also divided by Cuba, since trade between the Castro dictatorship and Colombia is relatively insignificant, which should be of paramount importance to explain the attitude of Chavez. Besides that Cuba does not share the Colombian government's interest of fighting terrorism.

For all this, although some people think that Santos and Chavez will suddenly be moved by a cold pragmatism, it seems very difficult for these presidents to improve the Colombian-Venezuelan relations to a level of warmth and understanding. They may have short-term goals, or statements that will try to dissolve the tension, but eventually, the elements described here should take things in another direction. Even we think Chavez will not lift his embargo against Colombia, he didn't during the worst of the Venezuelan electricity crisis, in spite that Colombians had the enough energy to mitigate the devastating shortages in Venezuela, then, why would he do it now?

Trade war and strong diplomatic tensions are the most likely scenario when the governments of Chavez and Santos begin to interact.

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Hyper-inflationary Statism

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

Belarus is, in general terms, a nationalized economy, even so, prices there usually rise at hyper-inflationary rates (8.4% in 2007, 14.8% in 2008 and 13% in 2009).

Vietnam is also, in general terms, a nationalized economy, even so, prices there usually rise at hyper-inflationary rates (8.3% in 2007, 23.1% in 2008 and 7% in 2009).

And in Venezuela, the government has also almost always had the habit of owning many businesses, a trend that has increased during the 11-year rule of Hugo Chavez. Even so, prices in Venezuela usually rise at hyper-inflationary rates (18.7% in 2007, 30.4% in 2008 and 29.5% in 2009).

The point is, if the government in these countries supply an important part of the goods consumed by the people, why the big rise in prices? It is a reality that contradicts socialist theories. It was assumed that the fault was in the private sector, but while these nations have economies with strong Statist characteristics, in them, the goods increase in value at vertiginous rates. In fact, in these havens of nationalization, inflation is much higher than that of the capitalist countries, as can be seen if we compare their records with those of the United States, Canada, Japan or the European Union members. Where inflation has only rarely exceeded 3% in the last ten years.

Inflation is a monetary phenomenon that is given mainly by government spending and the amount of money it prints, so when a country is affected by hyper-inflation, the government is the main cause. Removing the private sector from the system is not a guarantee that the general level of prices will stabilize, as evidenced by the cases described above.

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Double-dip recession, Stiglitz's third mistake

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

A small country like Greece do not have enough influence to destabilize the global economy. Furthermore, fears in Greece are based on the economic fundamentals shown by this country, contrary to what happens outside Europe, where most developed countries are presenting better results.

Europe is currently a weakened economy, and we expect low GDP growth in this region for the rest of the year; however, the solitary strength of Europe should not be enough to stop the joint recovery of countries like USA, China, India, Japan, Russia, most of Africa and almost all Latin America. Just the opposite should be expected: an export economy, like Europe's, will be influenced by the recovery of the rest of the world, a fact that eventually would also improve conditions in the Eurozone.

In 2008, Joseph Stiglitz said the credit crisis would represent the end of capitalism, but he was wrong. In 2009, the same author stated that the global reserve system based on the US dollar was in the process of fraying, but he was wrong. And now, in 2010, the winner of the Nobel Prize for economics says that there are great chances of a global double-dip recession, but it appears Stiglitz will be wrong for third consecutive time, because as we have said, neither the macroeconomic performance outside Europe, nor the solitary influence of the Euro zone, support the thesis of a second global recession in 2010 or 2011.

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South of the Border, a win-win-lose film

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

Hugo Chavez wins, because in the name of egotism he gets a Hollywood movie just for himself, obtaining colossal propagandistic benefits for his personal political project.

Oliver Stone also wins, even if we concede that the current Venezuelan president did not help to finance the film, because with a motion picture dedicated to Chavez, this movie tycoon and some Hollywood studios achieve an invaluable promotion. The publicity received by the film "South of the Border" in the Venezuelan government press is sensational, the national election results don't have the same attention from the Chavista media. These businessmen have now all the power of the Venezuelan State promoting for free their capitalist product -which is exchanged for money in order to attain capital gains-. Normally Stone and Hollywood studios would spend a fortune to advertise their merchandise, but not if they made a movie for the leader of the Venezuelan revolution, it is the XXI century socialism working for private U.S. interests.

Unfortunately Venezuela loses, because while these two satisfy their selfishness without caring about costs, the Venezuelan State is the one that pays the bills that run this society between Hollywood's capitalism and Chavez's socialism, in a country where a huge number of Venezuelans live in extreme poverty.

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Santos, as we said

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

Juan Manuel Santos won the first round in Colombia, as we expected, despite the fact that Gallup, Ipsos and the major Colombian pollsters predicted that Antanas Mockus and Santos would end up technically tied in the first round election.

These large pollsters want to blame their methodological errors on the National Electoral Council's prohibition of not allowing the publication of last week's results, but it seems unreasonable to assume that the voting intention has changed so drastically in few days.

These polling firms also predicted that Mockus would win the second round, however, for the second part of this election, we continue to believe that Santos should dominate the race, probably getting more support than before because he is now the favorite.

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Debt default in Greece? Unlikely

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

Greece is a relatively small economy, easy to bailout for giants such as Germany, France, Italy or Spain. And it's convenient for them to help it, because since the financial problems in Greece were aggravated in early 2010, Europe's currency, as well as its stocks and bonds, have recorded heavy losses, due also to rising fears that other countries in the region will experience something similar.

Greece is part of the Euro zone, so, if credit conditions get worse in the Hellenic country, falling into default, the other EU members would feel multiplied consequences.

But this is not only an issue of convenience, even if we review the macroeconomic situation, we note that although Greece's fiscal deficit is one of the highest in the developed world -13.6% of GDP-, it's not far from other countries that are not at risk of insolvency, as U.S. -whose budget deficit is 10.6%- or England -12%-.

And if we talk about public debt, certainly Greece maintains an excessive level of indebtedness -estimated at 120% of GDP by the end of the year-. Quite high, but not distant from the ratios that that country has been administering over the past decade. From 2000 to the present, Greece's public debt relative to GDP has generally been above 100%, notwithstanding, the country has been paying its obligations.

In the medium term, the default of Greece is unlikely, in our view. And the chances would be lower if we refer to Italy, Spain, Portugal or Ireland, as some experts have also predicted, because these other countries have better macroeconomic fundamentals than Greece.

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Expectation for Colombia's presidential election

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

Juan Manuel Santos comes from being one of the key players of the most successful government that Colombia has had in the past 20 years. The terms of Alvaro Uribe can be criticized because of employment and public health policies, but on the main issue of this time in Colombia, security, Uribe's achievements are unquestionable. Santos has the edge in this, since his election would ensure the continuity of policies that gave Uribe his high levels of popularity.

In addition, the Partido de la U's candidate is a hard-liner when it comes to addressing issues related to national security, topics that in our view will decide this election. Mockus has recently tried to present himself as a leader that will not cede power to the guerrillas and Colombia's enemies, but he has failed to match the strong image that Santos demonstrates in these matters.

Therefore, if we had to choose a favorite for this election, we would say that Santos has a better chance of winning the presidency of Colombia in the second round, although for now the major polling firms are predicting Mockus' victory.

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Chavez on Twitter: devil and capitalism

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

Devil:

The Venezuelan president says he was once at a summit of Heads of State, and Fidel Castro passed him a note telling him, "Chavez, I feel like I’m not the only devil at these meetings." So who knows, maybe the inspiration came from there.

According to the dictionary of the Spanish Royal Academy, the word Candanga is a Latin American name with three meanings: the first is the Devil, the second is annoying, and the third is mess.

Thus, in any of the cases, what Chavez express with his Twitter ID -@chavezcandanga- is something negative. If we translate his username, he well could be called @chavezdevil, @chavezannoying, or @chavezmess, and it would be almost the same.

Capitalism:

However, besides the name, the Chavez's Twitter account leads us to other considerations:

Twitter is a private company that represents capitalism, operated and managed by US citizens, and located in the country that Latin American Communists hate more than anything on the Earth. Ergo, an anti-capitalist who has an account on Twitter symbolizes a contradiction. Chavez should use socialist Internet services, with servers located in Cuba, for example, if that exists.

But even the most intransigent enemies of the free market cannot resist the progress created by the private sector in capitalism, and ironically, by making tweets, Chavez attracts thousands of socialist followers, expanding in this way the company's customer base, and thereby contributing to the rise of capitalism.

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Greece: A deeper crisis to clean up the budget

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

Greece is experiencing a serious problem of public finances. The government deficit reached 14% of GDP and national debt closed 2009 at 1.13 times the size of the economy. The issue is so dramatic that the Greek government has gone to the IMF and the European Union to seek financial support and save the country from a catastrophe. After negotiations, the plan agreed between the IMF and the Hellenic executive consist in a loan of one hundred and ten billion euros to Greece, in exchange for reducing the deficit to 3% by 2014 by implementing stringent budgetary measures, which include huge public spending cuts, suspension of year-end bonuses, wage freeze for four years, and tax hikes.

The problem with the IMF's measures for Greece is that they will plunge the nation into a major recession in order to overcome a public finances crisis, because such guidelines will depress even more the economy of a country that grew -2% in 2009 and whose unemployment round 10%.

Similarly, the political implications of the package in question cannot be overlooked. Greece has experienced since 2008 one of the worst governance crisis of the past thirty years, witnessing widespread protests across the country. In this climate, implementing the IMF's rigorous cost-cutting demands will promote instability in the political system.

In sum, what will be the benefit for Greece? to end the year with a small deficit but with a recession of -4%, an unemployment rate over 14 percentage points, and exacerbated political unrest?

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Regulated but democratic Internet

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

Most websites publish the address of the manager and almost all have special sections for reporting malicious or abusive users. But not only that, from defamation to plagiarism, many of the crimes that existed before the invention of the Internet are now applicable to the virtual world.

Several international terrorist groups have their web pages, like child pornography and the hundreds of sites that share plagiarized content, but the fact that we find pages involved in illegal activities does not mean that the Internet should be seen as a place where the law can be violated with impunity. While it is true that some manage to evade the legal system, the cases of persons punished for committing crimes through the Internet are abundant.

Even when there are no special laws, the Internet is in practice a regulated space, and we should not be surprised if, in the future, new rules for the global network are implemented, as has happened with almost all human activities. However, we must be clear that is not the same regulating with democratic ends, than controlling with authoritarian targets. In democratic countries, the governing institutions impose the legal order on everyone; while in authoritarian countries, the government allows access only to the information selected by a small sector of the nation.

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Polls for Colombia's presidential election

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

The coming May 30 is the date on which Colombians will choose their next president. And while Alvaro Uribe failed to advance the reforms necessary to seek a third term, he has the consolation that his candidate has lead the polls throughout the campaign period.

According to recent opinion surveys, the candidate with greater voting support is from the Party of the U -Juan Manuel Santos- with 29,5%, followed by Green Party candidate -Antanas Mockus- with 24.8%, the Conservative Party -Noemi Sanin- with 16,4%, and the Liberal Party -Rafael Pardo- with 5,2%. Survey conducted by Datexco from 6 to 8 April 2010, 3.7% margin of error.

The preference for the Uribista candidate is clearly a vote of confidence in the policies of President Alvaro Uribe, particularly in relation to the fight against insurgent groups and economic liberalization. On the contrary, it is curious that no leftist politician enjoy significant acceptance for these elections.

Update 29-04-2010: Santos 34.2%, Mockus 31.6% and Sanin 16.2%. Survey conducted by Gallup from 22 to 25 April, margin of error 3.2%. According to the same study, Mockus would defeat Santos in the second round election by a 47.9% to 42.2% margin.

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Venezuela: Estimate of 2010-I GDP growth

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

The first quarter of 2010 has ended, but for some strange reason the Central Bank of Venezuela takes nearly two months to calculate the percentage change of GDP in each period. Nonetheless, according to our estimates, the Venezuelan GDP should have fallen more than 6% during the first quarter of this year -specifically, we believe that the change was -6.2% over the same quarter last year-.

If these calculations are correct, this would mean that the Venezuelan economy would have recorded four consecutive quarters of contraction, which would not be at all unusual for a country that has the characteristics of Venezuela: national electricity crisis, currency maxi-devaluation in January, undermined private sector activity, delayed government payments and drastic legal reforms.

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