UPDATE: Free falling....

My oh my oh my..... The price of crude is dropping like a rock, thanks in part to the global economic crisis causing reduced demand for oil.

What will Chavez do if the price of oil drops any further? How will he pay for his 'imperial' foreign policy of giving oil and money away to buy influence in South America and the Caribbean?

Here is further evidence that Chavez turn at the reigns of power in Venezuela has damaged it's economy. The estimate is that Venezuela has lost out on 25% of it's potential output - from 3.2 million bpd in 1998 to 2.4 million bpd now. (I've seen other figures that make the 2.4 figure seem rather generous.)

And why has output declined, when reserves are in the 80 billion barrel range? From the mouth of the president of PDVSA

"The new PDVSA is central to the social battle for the advance of our country,"
said Rafael Ramirez, the company's president and the minister for petroleum. "We
have worked to convert PDVSA into a key element for the social battle."

That's political speak for "we've plundered the profits of our oil and diverted them to buy the allegiance of foreign governments, and lined our own pockets as well." What happens when you don't invest some of your profits back into your business? Output falls - especially in the oil business.

Since 98, Chavez has nationalized the oil industry, ripping the oil fields out of the hands of private enterprise (largely American), in the name of taking back the oil profits. Problem is, those private enterprises invested billions in the oil fields to maintain output and to drill new areas. (Billions that Chavez never compensated them fairly for.) They knew what it took to get the maximum value out of the oil fields in Venezuela.

But no more....

And now, PDVSA is producing food and furniture? They can't perform their main business adequately, yet they have other tasks as well. Wow.... I bet the furniture falls apart when you get it home.

I find the last paragraph very interesting. Experts believe Venezuela won't be able to pay it's bills if oil drops below $80 a barrel. That means even as we speak, Venezuela is having a hard time paying it's bills.

And to think that Venezuela, back in the 70's and 80's, used to be able to pay it's bills when the oil boom produced far lower prices per barrel.

How sad....

UPDATE: See the MATH on how much Venezuela is missing out on per year with it's drop in production.

Chavez the financial expert

On Friday, Financial Expert Chavez (representing the financial powerhouse 'Dewey, Cheatam, and Howe') declared that the US would not be able to fix the financial crisis it is currently mired in.

Furthermore, he declared that the US was attempting to buy the world with it's worthless money:

"The Americans harass us and attack us... (they) want to buy the world with paper that does not have any value."

Meanwhile, PDVSA continues to cash those checks that are sent to it by the US petroleum companies for the oil that is imported into the US. And that money continues to flow to Latin American nations in forms of subsidies, 'aid', and down right bribes. Who is trying to buy the world Mr. Chavez?

Why a reporter didn't ask Mr. Chavez about the ever increasingly bad situation in his own country of Venezuela, including rising inflation, crime, etc. I have no idea. Maybe it's because France is a great socialist country that dare not challenge one of their own? Or maybe it's because France wants to fill the void left by the expulsion of American oil and defense contracts, and soon to be automakers? (GM is reportedly looking to get out of Venezuela.)

Mr. Chavez is right in one regard when he said that the crisis won't be fixed "by running the money printer...." Nope, it won't. Yet at the same time, something needs to happen, or Mr. Chavez will start feeling the pinch at home. If the US recession continues to strengthen, the economy will shrink, and there will be less demand for his oil in the short term, meaning less capital in his pocket.

A large US recession will damage the global economy, further depressing the oil market, causing oil producing nations to pump more oil, causing more supply with less demand, thus dropping the price of oil further.

So like it or not Mr. Chavez, this US financial crisis affects you too....

Socialism will save the world.

At least according to El Burro Chavez.

Notice in the article that Chavez sings "you are so like me" in reference President Bush. I'm not sure, but I think someone has the hots for POTUS!!! And it's not Laura Bush!!!

I love the way he states he's been pointing out flaws in the US economic system for years. Sure, he's criticized US for it's 'imperialist' ways, but was he a prophet of the housing bubble burst? I don't think so.

Socialism, communism, or even capitalism are all great theories in a vacuum. Add the element of man into the equation, and any one of them is likely to be twisted into a pretzel to squeeze every ounce of economic advantage to those that are in power or have money. Communism in Russia produced a ruling elite, where long lines for bread were found constantly. Socialism in Venezuela just means that the money has changed hands from the private sector to the Chavez government lackeys. And with capitalism, you have the crisis we face today in the US. No one system is perfect.

Mr. Chavez, socialism isn't going to save the world. No governmental or economic system is going to save the world, because there will always be the haves and the have-nots. It's how the haves treat the have-nots that predicts whether this world will be saved.

And before you, Mr. Chavez, say your model in Venezuela for treating the have-nots is any better than anyone elses, please take a look at the key stats of human conditions in Venezuela. Crime is up (especially homicides and kidnappings), unemployment up, and your infrastructure is crumbling around you as you seek to nationalize key industries. The poor in Venezuela aren't much better off than they were when you took power 10 years ago.

If anything, socialism in Venezuela has helped to concentrate more money in the hands of government officials and those that do it's bidding, and less to the people. Corruption has risen in Venezuela, even though you Mr. Chavez promised to wipe it out. As a popular blogger on Venezuelan issues calls it, you have instituted a 'robolution', not a 'revolution'.

BREAKING NEWS: Venezuela among most corrupt nations in the world.

Okay, so the BREAKING NEWS part was a bit of overstatement. Venezuela has always been corrupt in one way or another, but paradoxically it has become more corrupt under Chavez.

Transparency International has released their latest rankings in their Corruption Perception Index Report. Venezuela is ranked 158, compared to the US at 18.

Let's look at the rankings:

1995 - 38/41 (2.66 score)
1996 - 48/54 (2.50 score)
1997 - 44/52 (2.77 score)
1998 - 77/85 (2.3 score)
1999 - 75/99 (2.6 score)
2000 - 71/90 (2.7 score)
2001 - 69/91 (2.8 score)
2002 - 81/102 (2.5 score)
2003 - 100/133 (2.4 score)
2004 - 114/145 (2.3 score)
2005 - 130/158 (2.3 score)
2006 - 138/163 (2.3 score)
2007 - 162/179 (2.0 score)
2008 - 158/180 (1.9 score)

This is pretty fair evidence that things haven't improved much in the corruption arena, or perception there of, in Venezuela despite Chavez' promises to eliminate it.

Compare that to the US scores which have hovered around a rank of 18th overall and a score of 7.3.

Nice revolution Sr. Chavez.

China and Venezuela

China is increasing her investment in Venezuela via a mutual investment fund, and oil refinery building agreements.

As articles have noted, China needs to play out the relationship with Venezuela delicately, considering Chavez public display of dislike for the US (except the billions in petrodollars of course).

China is the obvious choice to replace the US as the major consumer of Venezuelan oil. Chavez has nationalized the oil industry in Venezuela effectively kicking out American oil companies, and China has an increasing demand for oil.

While this is not necessarily breaking news today, I find the following quote from the article rather interesting. I'm not sure who makes the bigger gaffes, Biden or Chavez.

"In the face of the collapse of global capitalism, we can say: how fortunate that China had a revolution, how fortunate that Venezuela had and still has a revolution, how fortunate that we got to know each other."

Yes, how fortunate. Of course, if you examine the details and history you will find that while it may be fortunate, Venezuela and China owe a great deal of their prosperity to capitalism AND are heavily invested in capitalism. China is a leading trading partner with the US, thanks in large part to cheap labor (a capitalist notion: increase profits by decreasing labor costs). Venezuela (or at least it's leaders) are swimming in money thanks to the increase in the price of a barrel of oil, determined by the capitalist commodities markets. Venezuela floats debt on the capitalist debt markets.

Question to Mr. Chavez: If the US economy collapses, what will that do for demand of Chinese goods, or Venezuelan oil?

What if....

I was doing dishes thinking about an article I had just perused in my quick glance at Google for Venezuelan news. My thoughts quickly wandered to what would happen if El Burro were to get his wish and the US were to attack Venezuela.

Before I go off into my day dream, let me first say that the likelihood of the US having to invade Venezuela is VERY VERY VERY remote. Given the two fronts on which we are fighting the war on terror in Iraq and Afghanistan, our forces are stretched a bit thin to start another war.

Furthermore, there isn't enough provocation at this time to even think about invading Venezuela.

But let's continue the thought of what would happen if the US were to invade Venezuela.

There would be some resistance from the military and armed civilian 'militias', but it would be defeated within about 2 weeks at the most. Pockets of resistance would remain in the mountains of eastern and western parts of the country, and maybe in the south in the dense rain forest. Those would be the only really safe areas for Chavez' allies to hide and operate from. Those would take a little longer to eradicate, but would be eventually wiped out as well.

Those in the opposition, including current military and ex-military members, would rise up and help overthrow Chavez and his buddies. There would be a new government quickly formed to fill the void of Chavez exiting the presidency. It wouldn't be a long drawn out, sectarian process like Iraq. A new government could be in place in a matter of months, with a new Constitution in place as well. The Venezuelan people have previously tasted the freedoms of democracy, and are eager to revisit those days again.

For sure, the US would suffer some casualties, and the armed resistance would be a bit tougher than what was seen in Iraq and Afghanistan - Venezuela has a Navy and Air Force which would quickly engage any invasion force. But even so, these forces would be defeated fairly easily, as loyalties for and against Chavez would quickly split the command and control of the Fuerzas Armadas.

If there were ever a 'winnable' war that the US has faced since WWII, it would be against Venezuela.

Heaven forbid we ever get to that point though.....

The base is crumbling, or just a hoax?

I received the following email from my dad, who received it from a colleague. Not sure where he got it from, but the website noted is real. Would be interesting to know if this is legit or not.

Declaración de la Union Nacional de Circulos Bolivarianos

Imprimelo, copialo y pasalo -22 de Agosto del 2008

Chavez ya no representa al pueblo Bolivariano,
todos a votar en contra del PSUV
creador de desempleo, desabastecimiento,
miseria e inseguridad publica

Le aclaramos al pueblo de Venezuela que Hugo Chavez 'El Viajero' ya no
representa al pueblo Bolivariano que tanto apoyo y victorias le ha dado, yo Juan
Carlos Medina Fontalvo en nombre de la Union Nacional de Circulos Bolivarianos
hago un llamado a todos aquellos miembros de los Circulos Bolivarianos a nivel
nacional, a todos los miembros de PSUV que han sido utilizados y engañados por
la nueva elite corrupta, a todos los venezolanos que han sido victimas de robos
y secuestros, a todos aquellos que han sufrido la perdida de seres queridos en
manos del hampa salvage que se adueño de las calles venezolanas, a todos
ustedes, les hacemos un llamado a no votar por este gobierno retrogrado creador
de miseria e inseguridad, Hugo Chavez ya no es garantia de nada para los
venezolanos.

Ya en Diciembre del año pasado vieron los resultados de nuestra fuerza
politica y nuestro trabajo furtivo, ahora llego la hora de sacar a todos los
Gobernadores y Alcaldes que fueron puestos por Hugo Chavez que son una partida
de ineptos (vease Acosta Carles), no hicieron nada por mejorar las condiciones
de vida de los venezolanos y llego la hora de pasarles la factura, en Noviembre
recuperaremos los Estados y Municipios de la cuerda de locos fanaticos y luego
le tocara a la Asamblea Nacional, les queda dos meses de wiskhy y caviar, que
les aproveche.

No se justifica que nuestro pais siendo tan rico y que cada dia salgan
miles de venezolanos al extranjero porque en nuestro propio pais el Presidente
no nos garantiza ni la vida (vease inseguridad publica) ni un empleo justo y
digno (de empresa privada) para mantener a nuestras familias, cada dia miles de
miembros de Circulos Bolivarianos emigran aun habiendo apoyado su gobierno y
habiendo arriesgado todo para que usted lograra la victoria, hoy tienen que
emigrar, eso no se lo han dicho ni Elias Jaua, ni Diosdado Cabello, Ni Cilia
Flores, Ni Maduro, Ni Saul Ortega, ni Pedro Carreño, ni ninguno de los ineptos
que sin tener experiencia ni ganas de trabajar hoy ostentan cargos que otros
venezolanos competentes deberian de ostentar.

La revolucion no justifica acciones y leyes que producen mas miseria, somos
Bolivarianos pero no imbeciles, desde hace tiempo venimos observando una actitud
erratica y poco elocuente del Presidente Hugo Chavez Frias y los maximos
representante de la Asamblea y demas organos publicos, existe mucha opulencia y
egocentrismo en su forma de actuar, ya ustedes se desconectaron de la realidad
venezolana y por eso ya no nos representan.

Tenemos todo el peso moral para reclamar y ustedes todo el peso inmoral de
aceptar que fallaron, llego la hora de corregir los herrores y en Noviembre lo
haremos, saldran todos de eso pueden estar seguros,

NI UN GOBERNADOR NI ALCALDE CHAVISTA EN NOVIEMBREBOLIVARIANOS SOMOS TODOS
-EL CHAVISMO NO EXISTE !!!

Bolivarianos SI Socialistas NO
Votemos por los Lideres Regionales
Votemos por nuestra Patria Venezuela
Todos a reproducir nuestro Manifiesto

'Mientras Venezuela Tenga Hijos quie la quieran, Lucharemos por ella'

Juan Carlos Medina Fontalvo
Director General de la Union Nacional de Circulos Bolivarianos

Pagina Oficial de la UNCB http://uncb.blogspot.com/