OW, excellent analysis of that article. I was also going to bite the bullet and force myself to read 9 pages of distortions and bullshit, but now that you've given it a careful analysis, I won't waste my time.
I think one of the most important lessons to be learned from the kind of analysis that constantly comes out of US and international private media, is that it is always looking out for the interests of US capital, energy industry, multinationals, etc. This is why they always promote privatization, openess to FDI, and criticize any country that moves in the other direction.
Those policies ALSO happen to be the same policies that benefit the Venezuelan elite (as you showed with a couple clear examples) who get wealthy from bringing in huge amounts of foreign investment.
So who does Rosenberg interview? The very people who benefit from those policies, because she knows that they'll give her the kinds of answers that she prefers.
A good historical comparison is around the end of the 19th century, when US and European countries first began to invest in Venezuela. They began to extract asphalt and gold and other minerals, and began to build railroads and other infrastructure The Venezuelan elite was very excited about this investment, and got wealthy by facilitating it, even though it didn't benefit the Venezuelan people hardly at all.
When Cipriano Castro tried to put a stop to this kind of exploitative relationship with multinational capital, and kicked out some foreign firms, the New York Times ALSO wrote articles very critical of his presidency, calling him racist slurs, and building a negative image of him in the US.
Surprise Surprise, 100 years later and the New York Times is still defending the interests of US capital.
Actually, in my research I just found this article from the New York Times back during the time of Cipriano Castro. Look at how they cheer on and show their open approval for those who were planning a revolution to overthrow Castro. Any similarity to what is happening today?
http://query.nytimes.com/mem/
arc...9649D946997D6CF
ow,
thanks for taking the time to reveal the fakery in the usa "free press".
i met a dc politico last year who in all honesty told me that he read neutral publications like the christian science monitor and foriegn affairs quarterly. no shit.
only one who is extremely tranced could frame the arguement as "bolivarian socialism or more oil."
thanks again,
A wonderful post OW. Thank you.
ow,
I disagree with several of your conclusions. I want to discuss this, but it will have to wait a couple days. too much going on...
It is not so much that you are wrong and she is right, it is more that often your views are reconcilable with what the article says.
I don't agree with everything in the article, but often your critiques are a bit harsh given how things are worded.
"So it would only make sense economically to allow in private companies if the gains in efficiencies would be greater than the profits that are surrendered to them."
Briefly, this typically holds. SOEs are so inefficient that taxes increase and exceed what the state gets from profts from the SOE. Also private profits do not disapear from the economy (what do investors do with dividends?). In addition, in competitive bidding profits are bid down to what is accceptable given the risk of the projects (unlike how current Orinoco contracts are awarded).
Your argument can be used to defend SOEs in every industry. Afterall the state is surrenduring profits in the candy, automotive and food industry as well as in the oil industry. Why does the state not produce candy? Afterall it is giving up the profits to private companies? There is really nothing special about oil in this sense.
"I guess it is too late now but knowing that might have prevented her from letting the bald faced lie that they didn’t have any debt before go unchallenged."
she says 'little debt'. Using 7 billion of debt (your number) PDVSA only has a book leverage ratio of less than 10%. Average US companies have about 30%. So less than 10% is 'little debt.'
this is an example of how you can reconcile what you say with what she writes. there are many examples like this.
Bald faced lie? Fair?
There is really nothing special about oil in this sense.
Tor | 11.05.07 - 4:51 am | #
'''''''''''''''''''''''''''''''
How can you write such nonsense without a modicum of shame? There is everything about oil which makes it special. Its one of the most valuable and strategic commodities today and whoever controls it has power that is far more important than the mere revenues it generates. For decades oil in Venezuela was used for the benefit of very few, today its is being used for the first time in our history as an essential instrument for national development. OW is right when he mentions that the latter is the crucial debate. How are rising oil revenues going to be used in order to trigger and fuel our national development strategy, and how should that strategy be designed and implemented. Those are the main issues, none of which is really addressed by Rosemberg's sloppy article -typical run of the mill New York Times propaganda.
Ow, it is cool you can believe the "audits" carried out by "independent auditors".
"We quite possibly get a hint of why when she says of Venezuela: “It has become a rich country of poor people”. That is utterly false. For all its oil Venezuela is still very poor. A couple thousand bucks per person, which is what Venezuela gets from oil in its best years, doesn’t go very far."
It is true. Now, Venezuelans were earning on average more in the seventies than nowadays (a time when you probably had not been born and decades before you heard about a country in South America). We were half of the people Venezuela has now.
We are just producing the same stuff. We are importing more and, as you simply overlooked, we are not setting aside anything for the days when we will have thin cows.
Venezuelans can't just kill the chicken of the golden eggs, but they can't just take the 2 eggs a day it produces and expect to feed their ever-growing family with that. And they cannot do it specially if they just keep giving money to the gringos in Venezuela of this world and just telling some lies about the great Iranian-Chinese-Venezuelan industries being developed.
In a couple of years GIV will just have returned to the US and pretend the whole collapse would just be due to US imperialism.
BTW. I think it's time for the opposition to stop banging their heads against a granite wall: Dick Cheney just decided that Hugo Chávez is from now on the president of Perú.
Now, Venezuelans were earning on average more in the seventies than nowadays
'''''''''''''''''''''''''''''''
Exactly moron. The key words being: "on average". Do you understand what an average means? It's an artificial statistical artifact which doesn´t give us a REAL glimpse into REAL individual income. Two individuals, one making $99 an hour and another one making $1, have an average income of $50!
Venezuelans can't just kill the chicken of the golden eggs, but they can't just take the 2 eggs a day it produces and expect to feed their ever-growing family with that. And they cannot do it specially if they just keep giving money to the gringos in Venezuela of this world and just telling some lies about the great Iranian-Chinese-Venezuelan industries being developed.
--------------------------
You are nothing but a stupid gossip-monger desperately lacking a brain.
Moyhabin, I know very well what average is. I am sure the mean would be higher as well.
When did you see so many beggars on the streets as now? Not in the seventies. Were they perhaps hidden in some obscure cellar?
Moyhabin, Dick is silly, but so is your dear Hugo Chavez, who thinks the human species is just 25 centuries old. Perhaps his species is that old.
Nice, this is OW at his best--the policy wonkish, left-progressive skeptic of the official information sources.
Oil profits, politics, and the Venezuela people make for a unique circumstance.
Indeed, reporters from the New York Times wouldn't be given voice if they departed from acceptable corporate dogma about how the world is 'supposed' to work. US corporate media distorts and hides more than it edifies and discovers.
Again, nice post OW.
Off topic--it is worth noting that Colom won the presidency of Guatemala. No, he is not hard left--but he is the only left that Guatemala has seen in over 50 years.
True to form, the official polls had the rightwing, deathsquad oppoinent tied or even ahead by five points. This can be promoted only by engaging highly flawed polling strategies. We can imagine that the middle and upper classes in Guatemala voted for the deathsquad US toady over someone that might signal a change in tone and course for this nation.
Congratulations Guatemala!
Note to the US empire--Honduras and El Salvador are next you M-F'ers. In twenty years we will take Texas. 
When I arrived in Caracas I was a kid, and although I was coming from a quite modest country, Venezuela seemed awfully poor and unequal. Way more than Chile, which was essentially a middle class country. But what was particularly shocking to me, was the incredible mediocrity, parochialism, ignorance and vulgarity of the elites in Venezuela. So much corruption, obscene wealth concentrated at the top of the social pyramid and blatant disregard for the vast majority of the extremelly poor Venezuelans, seemed unbearable. El Caracazo signaled that what I felt anf thought was equally shared by millions in Venezuela. I'm glad the old Venezuela is dead and six feet under ground now.
Moyhabin, the old Venezuela is more alive than ever. In fact, Chavez represents the new Gomez.
I agree with you about the Venezuelan elite. The funny thing now is that the Boliburguesia asks for 18-year whiskey only, while the stupid old burguesia could also be happy with younger sorts.
The boliburguesia is more of a parvenu sort than the old group (which is a lot)
The CNE started already to use their weird interpretation of law to find any excuse to bugger off the opposition.
I wonder: has the minister of Energy payed already what he had to pay for saying what he said at the PDVSA meeting? And why was Chavez not fined if he said he supported the minister for that action and would ask him to do the same thing 100 times a day?
What a farce!
---------------------------------------------
CNE exige retirar dos cuñas por el NO
Rector Yépez explica que UNT todavía no está inscrito
KARINA BROCKS
EL UNIVERSAL
El Consejo Nacional Electoral solicitó que sean retiradas de las cadenas de televisión, hasta nuevo aviso, dos piezas de propaganda del bloque del "no" por el referéndum constitucional, las cuales habían sido aprobadas.
Germán Yépez, rector principal, asumió la responsabilidad de esta decisión, explicando que a la Comisión de Participación Política y de Financiamiento del CNE "se le pasó darle el visto bueno" a estas dos piezas y no se había verificado que el partido Un Nuevo Tiempo (que es el que hizo la propuesta) no estaba inscrito en ninguno de los dos bloques.
Yépez explicó que, de acuerdo con la normativa, para iniciar una campaña los bloques que participen por el "sí" o por el "no" en el referéndum deben estar previamente inscritos en la Oficina de Participación Política.
"El CNE va a financiar la campaña electoral a través de los dos bloques. Para poder acceder a la campaña y al financiamiento, se debe estar inscrito en uno de los bloques (¿) No hay ninguna intención de cercenar, todo lo contrario, el CNE abrió la iniciativa de financiamiento de campaña tratando de crear mayor equilibrio en el proceso electoral".
Agregó que desde el viernes formalizaron su inscripción por el "sí" el Partido Comunista, la Agrupación de Batallones Socialistas, el PPT, entre otros. En tanto que por el bloque del "no", hicieron lo propio Acción Democrática y La Causa R.
Enrique Márquez, representante de Un Nuevo Tiempo ante el CNE, afirmó que hay un malentendido debido a que la propaganda en cuestión se efectuó en representación del bloque del "no", tomando en cuenta la inscripción de La Causa R.
Slightly less than half of Venezuelans think Venezuela is moving away from democracy.
Del mismo modo, la percepción de cómo ve a Venezuela a mediano plazo, el 46,7% respondió que la ve convertida en un país socialista y democrático, 15,9% la ve transformada en una nación socialista pero no democrática, 29,9% la proyecta convertida en un país comunista como Cuba, mientras que el 7,5% no sabía o no respondió.
http://abn.info.ve/go_news5.php?...lo=109261&
lee=1
Santiago, what is your conclusion? Big majority on the side of Hugo or rather a country divided by two?
I don't think many reckon Cuba is a democracy.
Ow should do the maths.
"Briefly, this typically holds. SOEs are so inefficient that taxes increase and exceed what the state gets from profts from the SOE. Also private profits do not disapear from the economy (what do investors do with dividends?). "
Tor, in this case they likely would. Remember the companies in question will almost certainly be foriegn companies as Venezuela doesn't have private oil companies. So the profits would likely be repatriated to other countries.
"Your argument can be used to defend SOEs in every industry. Afterall the state is surrenduring profits in the candy, automotive and food industry as well as in the oil industry. Why does the state not produce candy?"
Tor, that is not my arguement. I am not against private companies and for state companies. I think you know that. The issue here is the state company seems to be doing ok so why focus on it? Why not focus on other areas that really are messed up?
Further, there are other special considerations with the oil industry such as OPEC quotas and also the fact that the oil industry in Venezuela is so huge if it is not kept under teh governments thumb it can get out of control (as it did).
"this is an example of how you can reconcile what you say with what she writes. there are many examples like this.
Bald faced lie? Fair?"
I know my post is long and not that well written but read carefully, this refers to Guerra's statement where he says:
"“Their debts are low, but they didn’t have any before,” says José Guerra, formerly chief of the research department of the Central Bank,"
That is a bald faced lie and that she let that go by - actually more than that she put it in her article - shows that she didn't know it was false. Most likely because she never read the financial statements.
Santiago, what is your conclusion? Big majority on the side of Hugo or rather a country divided by two?
Kepler | 11.05.07 - 8:25 am | #
Kepler, the latter is my conclusion. For all of Hugo's talk about 'la democracia plena', it looks like a LOT of people disagree.
"Ow, it is cool you can believe the "audits" carried out by "independent auditors". "
YEs, Kepler people beleive in them all the time. Do you think an affiliate of KPMG was filing false reports with the SEC??? Let us know if there is something you know that we don't.
"We are importing more and, as you simply overlooked, we are not setting aside anything for the days when we will have thin cows."
How have I overlooked that. I have stated it time and again here. I have done posts on it. I have very clearly criticized the rest of Venezuela's macro-economic policies such as having an overvalued currency. You must not read carefully. In fact I agreed with Rosenberg on those points. Thing is she never came back to them and said what to do about them.
"Venezuelans can't just kill the chicken of the golden eggs, but they can't just take the 2 eggs a day it produces and expect to feed their ever-growing family with that. "
I assume you mean by the golden eggs oil. In that case Venezuelans are NOT killing the chicken. The chicken is doing better than ever. Far better than the 1990s when the previous governments were in fact killing it.
The problem with this government is that although it is getting a lot more golden eggs it is wasting too many of them.
Quite frankly that you, Francisco Toro, and the rest of the opposition can never get that distinction, which at this point is pretty freaking obviousy, is why I have so little patience with the opposition and can't help but see them as formerly privaledged people who simply want to get their privaledges back, not develop the country.
Ow, half of Quico's family is actually Chavista and the other half anti-Chavista.
My family actually came from a very poor background. The most we could profit from was the free school, the free milk glass at primary school (a primary school that is almost in ruins now, but very very red), the free university.
My grandparents, I told you that, were illiterate and very poor.
The area where we came from is one of the most pro-Chavez in the whole region. We never played by the rules of the shitty teams Venezuelans have had and because of that my parents had a hard time.
Privileges haven't changed much for the rich. On the contrary. There might be more "parvenus" now and the rich are enjoying very much the cheap petrol and the whiskey and all the opportunities Chavez gives them to get richer by using the inexistent parallel market (the one that according to some of the Chavistas does not exist, check the blog of Devil's).
Look at what Katy wrote in Ccs. That kind of thing has shocked me since I had memory and that kind of thing is more evident now than EVER.
Ow, Venezuelans don't have much time left and Chavez is wasting it further. Yes, he is giving sweeties around, but at the same time he is making everything more unsustainable than ever.
Because of that and his way of intolerance I simply cannot put his "missions" into the balance.
When someone is destroying any level of tolerance in the country and when the country is becoming so chaotic and full of crime, when the whole infrastructure is such a joke at the service of Chinese and European and US exporters,
I cannot feel any sympathy for Chavez. I had none for previous governments but less so for Chavez.
You want me to thank him for doing just a fraction of what he should be doing while doing a lot of evil that the inept others were not doing?
Tor, that is not my arguement. I am not against private companies and for state companies. I think you know that. The issue here is the state company seems to be doing ok so why focus on it? Why not focus on other areas that really are messed up?
OW, wouldn't domestic private oil companies (imagining that they exist) also want to break OPEC quotas in order to maximize their profits?
I suppose the state could try to regulate that, but I can imagine that private companies would be putting a lot of pressure on the state to not only lower taxes, royalties, etc., but also to break OPEC quotas, lower wages, etc. etc.
"but at the same time he is making everything more unsustainable than ever."
How so? From everything I see if oil prices went back down Venezuela would be right back where it was in 98. Not good, but certainly not the end of the world either.
Again, I think to say that Chavez is not FIXING some problems that he should be fixing is fair. To say that he is possibly letting a great oppertunity go by without taking advantage of it may also be fair. But to say he is creating these problems does not seem to square with the facts at all.
Take non-oil exports. They aren't up, they aren't down. They are the same.
So on what are you basing your statement?
I am thinking: OW is talking about PDVSA being now more efficient. He previously criticized Chavez move to increase PDVSA's staff by A LOT.
Ow, why do you think the minister of Energy said in December than they had to sacar a conyazos a quienes crean que hay que abrir PDVSA a los nini?
Why would he even address the fact that some PDVSA people would think they need to open things up?
"wouldn't domestic private oil companies (imagining that they exist) also want to break OPEC quotas in order to maximize their profits?"
Probably.
That is why I think this whole thing should be left alone. PDVSA is doing fine and there is no need to fix what isn't broken. They of course just need to keep a very close eye on it.
Ow, the national industry is being hurt. Chavez has in place a stupid currency system that is draining billions of dollars by the month. There are lots of things I could go into like less accountability, the fact that most professionals are running away because this government has not controlled but doubled murder rates (and those are the professionals needed to run the country, not just sociologists who explain people how to build up machines by using The Capital as background).
We are not saving for hard times.
We have around 5 million more people now than when Chavez came to power and yet we are producing as much as before. That is not only "not good". It is BAD. Don't you get it? Same thing with housing, as you also admitted.
You say here that because the absolute numbers
of todos are as bad as before, Chavez is in those cases just equal to them? No, he is not.
The more people you have in a country, the more houses, the more exports, etc, should be produced.
How can you write such nonsense without a modicum of shame?
He is Tor, that's what he does. He writes nonsense all the time, with absolutely no back up, or even common sense.
He claims that SOE's have just as much incentive to grow and maximize profits as private companies, causing them to break the rules and avoid state regulation just as much as private companies do. But then he ALSO claims that the lack of a profit incentive leads them to be inefficient.
So which is it? Do they have a LACK of incentive or JUST AS MUCH incentive? Its a totally contradictory argument.
Tor is also completely incapable of seeing the huge inefficiencies and inherent problems with private companies. The fact that they will work to maximize profits for their shareholders, not for the state, and the fact that they create huge amounts of inequality. (private companies work to lower wages, while PDVSA keeps raising wages). He just keeps repeating the same argument over and over again: SOE's are inefficient, SOE's are inefficient, SOE's are inefficient. Yet he seems to not notice the world-wide threat that multinational private capital presents.
Its like if you're in a room with a tiger and a kitty cat, and Tor can't take his eyes off the scary claws of the kitty cat.
Kepler, we've been through this before - Venezuelan industry is producing MORE than before. It is up something like 30% under Chavez. In the 90s under people like Petkoff it was down. So you can't say the Venezuelan economy is getting worse, it is simply not true.
Yes, the population is growing and oil doesn't go as far. That is why Venezuelan needs a development plan. I completely agree with you or anyone else on that. Now if I could only get you to agree on the correct oil policy and then engage in a discussion of exactly WHAT the best development policy would be. I have discussed my ideas in great detail and everytime I ask you to discuss it you say you will come back with ideas later but you never seem to.
Kepler, you may want to go back and re-aqueint yourself with these stats:
http://oilwars.blogspot.com/2007...n-when-
you.html
Looking at them you just can't assert that things are getting worse under Chavez.
BTW, you may wish to note in the comments on that thread what even your friend Quico said.
Quico says: These days, "required reading" is just an empty cliché, a phrase drained of meaning by decades of lazy overuse. Normally, I avoid it.
I have to make an exception for Tina Rosenberg's New York Times Magazine cover story on the Perils of Petrocracy, though. Covering an immense amount of material fairly, honestly, and engagingly, her piece illuminates the petrostate disease with exceptional clarity. Remarkable stuff from start to finish.
After all these years, I still don't have a clear understanding of why Venezuelans are incapable of producing journalism of this caliber.
Is this guy just totally oblivious? Or am I just totally oblivious for asking this question?
Most of the journalism that the New York Times creates is such empty mindless nonsense that I am seriously amazed that anyone even remotely well-read would think it is high caliber.
It doesn't even come close to the kind of writing that you can find in places like New Left Review, Monthly Review, Le Monde Diplomatique, the Guardian, even souces like The Nation.
Besides its terrible quality, it almost wears its ideology on its sleeve. I mean, it is so obviously pro free-trade, pro capitalism, pro US capital, pro imperialist foreign policy, and totally incapable of criticizing "US motives."
They are capable of pointing out US foriegn policy mistakes, or errors. But totally incapable of questioning the motives. In the eyes of the NYT, the US is always looking out for democracy and freedom in the world. They have the best intentions, of course!
I have, Ow.
I told you quite some about education already:
- stringent selection of teachers, well payed, but above all, very well selected;
- Venezuela MUST take part in international competitions to measure up how good its education is. Read: PISA tests.
- very high taxes need to be implemented
- a month-long campaign needs to take place to teach Venezuelans about the petrol prices and a system needs to be implemented whereby normal car users pay MUCH MORE than what they currently pay, while public transportation remains as cheap as now.
Chavez was a fucking coward and liar to go back around his announcement to increase gas prices, he might probably do it after the elections as he needs firstly to get more power
I have already talked about how to promote
maths and general science and entrepreneurship at school. I won't go back to that now.
The government needs to have the BALLLS to open a national debate (not a thug-ring-fuck-off-you-opposition-you-don't-
belong-here
farce) about how to tackle crime and be
forced to publish all figures on crime
and give accounts on that;
The government MUST liberate price controls for
agricultural products or subsidize them. It cannot simply kill the local industry while paying the EU to get milk and other products. We are paying the EU and the US and just saying all the local producers are scum.
That is crazy.
The government needs to enforce tax collection
for EVERYONE, including street vendors. I know quite some who earn much more than people who own shops and who are harassed all t he time by the tax collectors because they are not rojos-rojitos.
Actually, I am for a parliamentary system. That is the only system for such an immature country as Venezuela where the head of state can be forced to give periodic accounts on specific topics (check out the discussions carried out in the Spanish or UK parliaments or in Germany).
We need a government that is forced to have a dialog with the opposition and the public needs to follow through those debates.
That is what people do in civilized countries such as Germany.
Now I have to go.
Ano, I liked very much the latest articles written by The Guardian on Venezuela, specially the one about the 6 hours or about how Chavez lost his temper at a question by the British journalist.
As for Le Monde: do you think they are more critical of the Great Nation, France?
I wonder if you use the word "imperialistic"
when you fall down because some banana leaf/ball is on your way: "imperialistic banana/ball, you, fascist bastard!"
I wonder how often you read The Economist.
You can't, right? As a fundamentalist, you just can't.
Kepler, I didn't say Le Monde, I said Le Monde Diplomatique. Very different.
And I didn't say any of those publications were perfect, just that they are much better than the crap that the NYT puts out.
As for the rest of your garbled nonsense post, I don't have the slightest clue what you are referring to.
People like you who think Imperialism is a quaint term, or a marginal force in the world, just show your ignorance out right, without even needing to discuss anything with you.
Kepler.
Absolutely agree with the at least the first two thirds of your comment 
And I agree one of the problems with Chavez is he is in many respects a typical pol who doesn't have enough balls to do some things that definitely need to be done.
See Kepler, when you actually say what you think he SHOULD be doing as opposed to just name calling your comments are much better.
Keep it up. I might not agree with you all the time. But we will all learn a lot more and help each other come up with better ideas.
I have already talked about how to promote
maths and general science and entrepreneurship at school. I won't go back to that now.
Promoting math and science doesn't do a bit of good unless you have an economy in which these people can be utilized. Otherwise they simply leave the country looking for jobs elsewhere.
Having a bunch of well-trained scientists standing around won't develop you an economy if your national production is being overtaken by imported production.
This is why the initiatives being taken by this government to create national industry is much more important. (scientists will be trained as needed, and agreements have been made with China, Argentina, Rusia, Iran, to train Venezuelans).
There has never been a Venezuelan government to make so many efforts towards the industrialization/development of the country. This is a fundamental point to recognize.
I have to disagree Anon. Having a well educated population, especially with technical skills, is key. If you don't have engineers are you truly developing industry or are you just buying machinery that you don't understand and having other people do everything for you?
South Korea and Tawain both put a huge emphasis on education at the SAME TIME that they were industrializing. That was how they developed the ability to learn how to do things for themselves instead of just buying kits from other countries. Further, they actually had a somewhat over-educated workforce which as Amsden points out helped them.
Most people who get more education will never leave. That some will can't be used as an arguement not to educate people. That would be totally self defeating.
Lastly, even people who leave are not a loss. Many of them will develop skills and experience abroad that they can then return to Venezuela with and that will help the country.
Industrialization and education are not in a "chicken or egg" situation. Venezuela needs to push ahead with both at the same time, ie. right now.
So Kepler is right, Venezuela needs to improve the QUALITY of its educational system right now. And it is troubling that it isn't doing that.
Ano', both things can be done at the same time.
We have had a bad primary school. What do you expect to teach meanwhile? Just people who become historians and politicians?
Oh, sorry, Le Monde Diplomatique...my brain must have just rejected it outright when parsing that structure. My cortex must have said: No, he cannot really mean Ramonet's newspaper.
Ano, give me a break. The Chinese are invading European universities to get a proper education, the same thing in the US.
They are more or less doing what the Japanese did after 1867.
Are we going to send our people to China?
Please! Iran? Oh, my! Russia?
It is not realistic at all. By the way: I would not advise Venezuelans who are not blond and blue-eyed to go to Russia right now or in the next few years.
Does the government needs to be socialist, at least pro forma, like in China or Chile?
Or is the requirement that the head of State of said country can be hugged by Hugo I of Sabaneta?
Ow, and I am not talking specially about engineers. I am talking above all about our normal workers.
We have a huge gap (we have had that all the time)
between engineers and workers.
Try to compare a factory worker in Venezuela and one in Chile or Costa Rica.
No way we can compete.
I become surprised about how long a person working at the post office in Venezuela needs to sort out how many stamps are needed
for a letter and the time his counterpart elsewhere needs (stamps just an example).
We need to have a general revision of how we are making it compared to the outside world.
I think GIV wants to control people as they could become too liberal. Nothing like making them all little Spanish-speaking "regurgitators" of The Capital.
I think he does not want people to hear much about other countries than the ones where Hugo still feels at large.
I have to disagree Anon. Having a well educated population, especially with technical skills, is key. If you don't have engineers are you truly developing industry or are you just buying machinery that you don't understand and having other people do everything for you?
Nearly all of the industrial programs that Venezuela is working on include the training of Venezuelans about the technology that is being transferred.
Industrialization and education are not in a "chicken or egg" situation. Venezuela needs to push ahead with both at the same time, ie. right now.
Of course it is. As I said before, having a bunch of scientists standing around won't develop industry.
It is a fundamental misunderstanding to think that Venezuela's inability to develop industry has anything to do with not having trained people. The lack of training is a RESULT of not having any industrial development, not the cause.
South Korea and Tawain both put a huge emphasis on education at the SAME TIME that they were industrializing. That was how they developed the ability to learn how to do things for themselves instead of just buying kits from other countries.
They did indeed buy kits from other countries. That is how they started. Of course they put emphasis on education, and no one is arguing that you shouldn't, but it isn't the root problem. Venezuela will also be training the necessary people as they develop their industry.
You seem to think that Venezuela should have already developed all this industry, without recognizing that this isn't an easy task, nor a quick thing. This is going to take several decades.
I think you're getting ahead of yourself on this, and on other things. For example, you want Venezuela to devalue its currency, when it doesn't even have any industries set up yet. This is backwards. It actually makes more sense to have a strong currency when you are setting up the industry so that capital goods are less expensive. The currency can be devalued when export sectors are on their feet.
There is no need to devalue the currency before that time because you aren't going to get private investment in these areas. They are too risky, and private capital can make a lot more money in other areas. The state has to set these up, perhaps with private participation, and can first replace imports, then promote exports (exactly as others have done). You don't necessarily need to devalue to control imports either, as they can be simply cut back through exchange controls.
Ano', both things can be done at the same time.
We have had a bad primary school. What do you expect to teach meanwhile? Just people who become historians and politicians?
Yes, both things can be done at the same time. And both things are being done. There are more people studying now in Venezuela than ever before in its history.
You totally discount this and say the Missions are horrible. Well, I say to you that the Universities are horrible (from personal experience) so your criticism is empty. And I know several people studying in the missions, and they appear to be at least somewhat decent.
The standard has to be raised all around, but you don't do that overnight. After all, good education is created by good teachers. And you only get good teachers if you have a decent education system. So this is a slow process of improvement. But the fact that a much greater percentage of the population is studying is bound to increase overall talent.
Are we going to send our people to China?
Please! Iran? Oh, my! Russia?
If we are bringing in technology from these countries, why would we not bring in the people who operate that technology to train us?
You see Kepler, you just laugh at nearly every policy of the Chavez government as if everything was so stupid, and none of it could possibly work. It is useless to discuss any of this with you because you are totally incapable of looking at it rationally.
Why would it not make sense to get trained by the people who are most familiar with the technology you are bringing in?
Because we are doing it indirectly. It is like learning from the people who are studying while we could learn from professors.
Besides, it is really not practical to send many people to those countries.
Have you tried to communicate with many Chinese just coming over from China?
And in the case of Russia: it is really getting very dangerous. And what kind of technology are we getting from them? Are we going to become experts in producing AK's?
Cool, way to go.
Are we going to send to Iran men only?
Gees.
Have you tried to communicate with many Chinese just coming over from China?
And in the case of Russia: it is really getting very dangerous. And what kind of technology are we getting from them? Are we going to become experts in producing AK's?
Cool, way to go.
Are we going to send to Iran men only?
As I said, you are just totally incapable of looking at it rationally.
A.) I'm sure we can communicate with the Chinese. (how anyone could think that would be a significant barrier is beyond me)
B.) Russia has a lot more technology than AK's (you'd have to be a total moron to think otherwise)
C.) Iran is already sending people here to train people, we are not sending Venezuelans there
and D.) These are not the only countries involved. Argentina, Brazil, Belarus, Italy, Vietnam, are a few other countries that are giving technology to Venezuela
"You seem to think that Venezuela should have already developed all this industry, without recognizing that this isn't an easy task, nor a quick thing. This is going to take several decades."
yes, I understand that things cannot all be done overnight. But what concerns me are trends - are they improving educational quality or taking steps to do so? I don't see it. Are they taking adequate steps to build up local industry? Maybe some, but I don't see enough.
Maybe I am somewhat impatient. But Venezuela should be also. Right now they are wasting lots of money - buying 500,000 cars and all kinds of other consumer item imports. Why not save some of this money instead and later invest it in the industrialization efforts when they are ready? Rosenberg is right to point out that Venezuela is saving no money at this point - most everything is being spent.
Now, the country is having some banner years. And hopefully supporting OPEC will be enough to keep oil prices high. But you can't really know that. For example, suppose the U.S. wins the war in Iraq by defeating the insurgency (and that COULD still happen). If they do they will definitely have Iraq producing as much or more oil than Saudi Arabia and we will be looking at $8 a barrel oil again.
Venezuela cannot be complacent. It cannot think that the current favourable circumstances will last forever or even that much longer. It has to prepare as quickly as it can and as best as it can to relieve its dependence on high oil prices. And the reality is that right now it is definitely NOT doing as much in that regard as it COULD and SHOULD be doing.
OW says: So Kepler is right, Venezuela needs to improve the QUALITY of its educational system right now. And it is troubling that it isn't doing that.
ow | Homepage | 11.05.07 - 10:42 am | #
Ow I disagree with you strongly: Venezuela in eight years has multipilied the educational opprotunities for millions of people. This is not even in dispute.
Can Venezuela do better? Of course, but the first order of business has to be the expansion of basic educational opprotunities. Venezuela can and should take a cue from Cuba in the area of education.
Another dimension of education is breaking away from capitalist indoctrination that is so rife in Europe and the US--where you have people (sheeple) that are 'trained', not educated to think critically so that they can become protagonists instead of consumerist bit-players.
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OW--care to comment on Guatemala's recent election of a left-of-center president?
I think that the Chavez-effect played a role. Guatemalans see that it is possible to engage social/economic changes that improve the lot in life of average folk.
This thing only scratches the surface:
http://news.bbc.co.uk/2/hi/europ...ope/
4969296.stm
It is worse than that.
are they improving educational quality or taking steps to do so? I don't see it. Are they taking adequate steps to build up local industry? Maybe some, but I don't see enough.
They are doing both of these. Since 2003 there are HUGE educational initiatives going on all over the country. Ever heard of Vuelvan Caras, Mision Sucre, Mision Ciencia.
As for industry, you might read this to find about just SOME of the initiatives:
http://www.venezuelanalysis.com/...m/analysis/
2689
But you also have to recognize that the Chavez government is FIRST setting up the social/political framework in which they are going to construct the economy. This is what the constitutional reform is all about. So it is crucial that they do the constitutional reform first. Remember the 5 motors of the revolution. That is all necessary BEFORE they can move into actual industry.
Why not save some of this money instead and later invest it in the industrialization efforts when they are ready?
Part of this consumption boom is probably to consolidate people's confidence and support of the government. But they are also discussing initiatives to spur savings:
http://www.rnv.gov.ve/noticias/?...=ST&f=4&
t=55586
For example, suppose the U.S. wins the war in Iraq by defeating the insurgency (and that COULD still happen). If they do they will definitely have Iraq producing as much or more oil than Saudi Arabia and we will be looking at $8 a barrel oil again.
No, I don't think so. OPEC still has some impact on prices, and increasing demand in Asia will keep prices relatively high. Sure, they could fall significantly. But I don't think we'll ever be looking at $8 again. It probably won't ever get below $30.
This thing only scratches the surface:
http://news.bbc.co.uk/2/hi/europ...ope/ 4969296.stm
It is worse than that.
Kepler | 11.05.07 - 11:37 am | #
yes, Kepler, racism in Russia has a LOT to do with whether or not Venezuela can bring in technology from them.
Seriously, do you have a brain at all?
SlaveRevolt, of course, people in Cuba think very critically. Is that the joke of the year?
Ano, I do think. Do you?
Perhaps sit down first.
Quality has to do as well with people being able to survive and feel well during the couple of years they are there.
Dark skinned foreigners in Russia are having a hell of a time. They cannot get out of their campuses. They are insulted all the time. They have killed several black students this year already. Dark-skinned people get insults almost every day. They are mobbed all the time. The only guys who go there and who are dark-skinned are those who can't afford Europe or the USA.
Do you want Pedro Perez from La Vega to hear almost every day in the metro "you fucking niggard, give me that place?" Do you want people to study there to be kept in their campuses only?
I suppose that is a good way to study really hard, right?
Besides: there are hardly English courses there at university level.
And what technology is it they will be learning in Russia? Please, tell me.
Or are they going to learn oil technologies from Belarus? (now Belarus is teaching us in that field as well).
And are you going to send men to Iran only?
And have you ever considered how the quality of education in China is? Why they are going en mass to the USA? And have you thought about the daily classes of Venezuelan students in China? In what language? And what quality?
GIV, you really have to learn a little bit about Russia and its current education system.
Also: In case you don't know it, the USSR ceased to exist many years ago. Things are quite different right now.
I knew you were going to be surprised. Imagine!
They even took away the Lenin award from the top of the Pravda newspaper! Imagine!
Do you want Pedro Perez from La Vega to hear almost every day in the metro "you fucking niggard, give me that place?" Do you want people to study there to be kept in their campuses only?
I suppose that is a good way to study really hard, right?
You don't even have to argue with this guy. He just makes himself look so dumb all by himself. It's hilarious!
GIV, you really have to learn a little bit about Russia and its current education system.
What does Russia's education system have to do with Venezuela's technological development?
Jesus, its seriously incredible how dense you are. In all your desire to show everyone that you "know" so much about Russia, (I'm surprised you haven't mentioned that you "speak" Russian too) you totally lose track of what the conversation is about.
No one has said anything about sending Venezuelans to study in Russia. What I have said is that technicians from countries like Russia, and many more, have agreed to COME TO VENEZUELA to train Venezuelans about the technology being brought in.
Seriously Kepler, I think you need to get some medical help. Something is NOT right with your through processes.
Superb post, and discussion, ow. Thanks very much for helping me correct my focus on the Rosenberg article.
My understanding is that much of the problem with de-industrialization and lack of development associated with oil income results from the consequent relative overvaluation of the local currency. (In the case of the US, the unfortunate overvaluation of the currency has resulted in large part from the denomination of world wide oil transactions in dollars, with similar consequences for our productive, non-financial economy.)
Perhaps it would be possible to reduce these effects in Venezuela by reducing the apparent overvaluation of the Venezuelan currency. The reported existance of a significant black market exchange rate seems to indicate both that overvaluation is a problem and that the pegging of the currency to the dollar contributes significantly to the problem.
This perception leads me to ask several questions:
What are the motives for maintaining such an overvaluation? In other words, why is the "strong" Bolivar considered a positive by Venezuelan policy makers? (This is a separate issue from the need to maintain a stable currency valuation over time - avoiding rapid inflation or deflation in terms of local prices.)
Is there a way to squeeze that part of overvaluation of the local currency attributable to oil income (as opposed to local manufacturing and agricultural production) out of the exchange rate, perhaps analogous to "sterilization", through monetary, or taxation and budget policy?
Would not such a policy reduce the costs of locally produced goods and services and increase the costs of imported goods and services in a manner to reduce deindustrialization and increase the growth of the productive, non-financial sectors?
(Note that the import of services is accomplished through the export of employment.)
Could tax and tariff policies be adopted which would divert the effect of excess valuation (sop up the oil income effect) on the local currency (suppress its value) by favoring (subsidizing) the import of capital goods not susceptible to local production, at the expense of imports of consumer goods which would be better produced locally? (China has accomplished this, but is not comparable to any other economy due to the degree of central control, and its size.)
Again, thanks very much for your help in understanding the situation with Venezuela's oil economy.
Anyone listening to Baduel? He's SLAMMING the reform.
"No, I don't think so. OPEC still has some impact on prices, and increasing demand in Asia will keep prices relatively high. Sure, they could fall significantly. But I don't think we'll ever be looking at $8 again. It probably won't ever get below $30.
Anonymous | 11.05.07 - 11:40 am | #
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Now shit for brains is telling us what the price of oil will be in the future. Is there a subject you would excuse yourself on?
My only prediction is that if you are as arrogant in person as you are here, you will have your teeth knocked off and a Venezuelan shoe deep into your ass in no time.
Yeah. GIV will tell you: the guy is a pawn of the Empire. He is Dark Vader's closest friend.
He is a CIA agent. He is bad. He is worse than bad. He is a capitalist, GIV dixit.
So ow is saying that all of PDVSA's fuck ups are by design. They have a bunch of rigs down because they want to keep the price of oil high, right? So why is it that at the same time they are tendering rigs?
Now shit for brains is telling us what the price of oil will be in the future. Is there a subject you would excuse yourself on?
There is a lot of analysis on this, and many experts say this. If you had read any of it, you wouldn't be so ignorant to say that I am the only one saying so.
My only prediction is that if you are as arrogant in person as you are here, you will have your teeth knocked off and a Venezuelan shoe deep into your ass in no time.
grac | 11.05.07 - 12:56 pm | #
I would imagine that if you ever had the balls to talk like you do on here in real life, you would have had your head knocked off a long time ago.
But we all know that Grac is a little bitch that only acts touch on the internet, but then locks himself in his car to listen to his fat ass drug addict heroes on the radio.
One really has to wonder, why do you spend so much time on this blog when you make absolutely NO contribution to ANY debate? You simply spend your time making personal insults.
But the truth is we all know why you spend time here. Because you are too much of a pussy to insult anyone in real life, or to act like such a tough ass. So you spend time acting tough on the internet.
Anyone listening to Baduel? He's SLAMMING the reform.
Santiago Garcia | 11.05.07 - 12:24 pm | #
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Absolutely predictable and according to a well rehearsed script. We knew this was coming, and as it was to be expected, Baduel was unable to give any profound reasons why he opposes the reforms, except for the same tired anti-Socialist rhetoric of those few who share his ideology within the revolution. Baduel opposes also any serious attempt at reforming the State and the armed forces and at creating a civil defense system. He wants changes, but only cosmetic ones. Good riddance, if you ask me.
Now shit for brains is telling us what the price of oil will be in the future. Is there a subject you would excuse yourself on?
You see Grac, if you weren't such a tota ignoramus, you would never make such retarded statements, because you would know that there are many other people who are saying the same thing. I am simply repeating what their professional analysis is:
Stevens, of the University of Dundee, said the most likely scenario in the next five to 15 years was for oil to stay above a floor of $60 a barrel. Ultimately, that will trigger a demand response, as the price trims consumption in China and India and as biofuels win market share. At that point, the floor might be tested.
In April, a UBS economist, Jan Stuart, estimated a long-term price of $50, below which oil would fail to yield returns that would encourage investment in production capacity growth.
HSBC has a similar long-term forecast. Its analysts, Paul Spedding and David Phillips, have just raised their 2010 forecast to $55 from $47, which "should preserve oil's competitive position in the energy stakes, slowing competition from natural gas and coal." "It should also be sufficient to meet the financial needs of most OPEC countries," they said.
Within the exporter group, there are differences on pricing strategy. Those with large reserves, especially Saudi Arabia, want crude to remain competitive. But the majority are keen for prices to stay above $50 as their own consumption - mostly heavily subsidized - expands and they become increasingly reliant on oil and gas revenue to feed budgets swollen by development and demographic pressures.
UBS estimates the "breakeven" price for major producers in a range from $23 for Kuwait to between $50 and $55 in Venezuela, where production costs are high, and Iran, which has a big population relative to production and reserves.
Now, grow a brain, and get a life. You won't learn this stuff by listening to total jerk-offs like Michael Savage and Rush Limbaugh. You'd actually have to READ something. Do you know how? If not, Venezuela has a literacy program that you might benefit from.
Anonymous said: I think you're getting ahead of yourself on this, and on other things. For example, you want Venezuela to devalue its currency, when it doesn't even have any industries set up yet. This is backwards. It actually makes more sense to have a strong currency when you are setting up the industry so that capital goods are less expensive. The currency can be devalued when export sectors are on their feet.
There is no need to devalue the currency before that time because you aren't going to get private investment in these areas. They are too risky, and private capital can make a lot more money in other areas. The state has to set these up, perhaps with private participation, and can first replace imports, then promote exports (exactly as others have done). You don't necessarily need to devalue to control imports either, as they can be simply cut back through exchange controls.
Anon, I fear it is you who "have it backwards" here. While your point about an overvalued currency making it easier to import capital goods is correct, the motivation to establish or grow the enterprises which would require those capital goods will be controlled by the health of the local market for their production. Local demand is subverted by excessive valuation of the local currency, because that overvaluation subsidizes imports and constitutes an indirect tax on exports.
Straight up tariff and tax, and even direct, subsidization of the import of capital goods, favoring those imports over consumer goods, would help to sop up some of the oil income that would otherwise be spent on imported consumer goods.
Continuing the "subsidization by overvaluation" of imported goods, especially the luxury goods currently the subject of so much criticism, is damaging the growth of the Venezuelan economy, and the stability of the social arrangements in the country.
So ow is saying that all of PDVSA's fuck ups are by design. They have a bunch of rigs down because they want to keep the price of oil high, right? So why is it that at the same time they are tendering rigs?
grac | 11.05.07 - 12:58 pm | #
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Graco, Graco, Graco. Stick to your one liners. That's all you can handle. OW explained in detail the issue of rigs, but you are unable to grasp such simple and obvious reasoning. Rigs are being tendered because it's stupid to allow expensive equipment to rot, not because they are essential for production, at least not right now. Comprendiste, huevoncito, o le pongo música también?
the motivation to establish or grow the enterprises which would require those capital goods will be controlled by the health of the local market for their production.
You aren't going to "motivate" private capital to develop these enterprises either way. No matter how devalued the currency is, it will be very hard to get private capital to set up the kinds of industries that Venezuela wants to create. It is much too risky, and private capital can make more money in other less-risky ventures.
This will require direct state intervention, as it has in every other developed country, and the state can do this regardless of how the currency is valued. (in fact, since one of the first steps will be to buy capital goods, the state is helping itself in that respect).
Once industries are on their feet, and ready for export, the currency can be adjusted to promote their export on international markets.
Local demand is subverted by excessive valuation of the local currency, because that overvaluation subsidizes imports and constitutes an indirect tax on exports.
As I said in my previous comment, imports can easily be cut back with the currency controls, by cutting back on the amount of dollars available for buying imported goods.
In my view this has basically the same effect as putting up tarrifs, forcing Venezuelans to buy local production instead of imported production.
"Rigs are being tendered because it's stupid to allow expensive equipment to rot, not because they are essential for production, at least not right now."
You are the very reason why I keep visiting this place for unlimited fun. Carry on, please.
You are the very reason why I keep visiting this place for unlimited fun. Carry on, please.
grac | 11.05.07 - 1:28 pm | #
That's it Grac, stick to the moronic three-year old style insults. We've all seen that you can't handle anything more complex.
Continuing the "subsidization by overvaluation" of imported goods, especially the luxury goods currently the subject of so much criticism, is damaging the growth of the Venezuelan economy, and the stability of the social arrangements in the country.
Jim Pivonka | Homepage | 11.05.07 - 1:18 pm | #
''''''''''''''''''''''''''''''
What you have to understand Jim, is that many economic decisions in Venezuela are being impinged upon by the difficult political circumstances that prevail today. Devaluation right now would send all the wrong message. What most people want at this moment is stability and security, after many years of political and economic turmoil. A devaluation will most probably take place sometime next year. Besides, we are not interested in creating many incentives for foreign direct investment to come to Venezuela, profit from a weak currency and very cheap labor, so that they can enjoy from a favorable national economic milieu while our country remains mired in backwardness, brutal inequality and poverty, as so many other Latin American nations today. New and heavier taxes on luxury foreign goods will be levied also next year. First, we need to have the political (the Venezuelan people organized from the bottom through emerging Consejos) platform for launching the next phase which includes drastic economic measures and an all out campaign against sabotage, "acaparamiento", "especulación" and corruption.
"Tor, that is not my arguement. I am not against private companies and for state companies. I think you know that."
I do know that, but that was the implication from your argument.
"The issue here is the state company seems to be doing ok so why focus on it? Why not focus on other areas that really are messed up?"
Fair enough, but do you have evidence the SOE is doing ok? Any company would deliver awesome results if its main products increased that much in price. Is it doing as good as it could be doing? Metrics such as oil produced per employee are worse now for instance. Investment is slow and we'll only see the results of investment in a couple years.
"Further, there are other special considerations with the oil industry such as OPEC quotas and also the fact that the oil industry in Venezuela is so huge if it is not kept under teh governments thumb it can get out of control (as it did)."
That is true, but history shows that it is easier to control competing oil companies than a dominant behemoth like PDVSA. The old PDVSA almost broke the country and was totally out of control. Corruption and patronage will be a problem whether the industry is private or state owned, but private companies produce more efficiently. Also while private companies will try to lobby and influence politics, PDVSA IS politics. RR is the oil minister. It does not get more political than that. Why not do what Libya is doing? Or what Norway did (some private domestic companies, foreign concessions, SOE competing against all these - now partially privatized)? Or Brazil?
"That is a bald faced lie and that she let that go by - actually more than that she put it in her article - shows that she didn't know it was false. Most likely because she never read the financial statements."
Fair enough. Saying 'no debt before' is wrong. Saying 'little debt' is not. She should have omitted that quote. I do admit that your post was somewhat vague in what it referred to here.
More on the financial statements later...I may have more time to debate late tonight...
One more thing. You need to stop referring the PDVSA's 3.25 as CRUDE oil. It is not. Even their own statements admits part of this is inferior products (stuff experts, OPEC and IEA don't count). This accounts for at least 0.3-0.4 of the 3.25. To have an apples to apples comparison you need to be consistent - and for that matter so does Rosenberg. She failed to investigate this; (although to her credit she only says: PDVSA claims X; everyone else claims Y) without really concluding anything.
There is likely also a difference in how PDVSA and OPEC count Orinoco. Stuff coming into the upgrader has higher volume than stuff coming out. OPEC counts stuff coming out. Experts speculate that PDVSA counts stuff coming in (speculate indicates a lack of disclosure from PDVSA).
My biggest problem with your oil numbers is this:
EVERYONE out there disagrees with PDVSA. I have yet to see a si
EVERYONE out there disagrees with PDVSA. I have yet to see a single source confirm the PDVSA numbers. Experts, analyst reports, OPEC, IEA, popular press etc. have access to the same info as you yet fail to draw the same conclusions. Why?
...as for the KPMG audits. Recall that both WorldCOm and Enron got clean bills of health from auditors. Does that mean PDVSA is deceiving? No, but it is not impossible and it does have an incentive to.
...the revenue analysis? Who knows what goes into export revenues of petroleum products. What is included? REfined products? Not enough details are provided. It is inconclusive.
...by the way PDVSA audited statements are very short and very basic compared to the SEC requirements. It is not good enough. Transparency is key whether the it is an SOE or private.
My opinion about the numbers? I basically don't know who is right. I'm on the fence waiting for more info, but I think the real gap is only about 0.2-0.4 accounting for the stuff above.
Continuing the "subsidization by overvaluation" of imported goods, especially the luxury goods currently the subject of so much criticism, is damaging the growth of the Venezuelan economy, and the stability of the social arrangements in the country.
Jim Pivonka | Homepage | 11.05.07 - 1:18 pm | #
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Of course President Chavez has spoken angrily about this on television. It is true that CADIVI doesn't have to release funds in order that an individual can buy a Hummer at a discount, and the same goes for whiskey. Were CADIVI to do this there would be more money to buy capital goods needed to get industries up and running. I guess the question is whether or not President Chavez' angry words are going to be put into action. "Not one dollar" for whiskey and Hummers, let's see.
Also while private companies will try to lobby and influence politics, PDVSA IS politics. RR is the oil minister.
You keep repeating this claim. But what would Ramirez's motives be for undercutting state regulations, lowering wages, siphoning away money, etc. if there is no profit motive?
Sure, you could say that he could be corrupt, but you could say that about anyone, in a private company or public company. Either way you have to get rid of corrupt people when you can find them.
The difference between private companies and public ones is that the private ones have an EXTRA motive to undercut state regulations, minimize the amount of money sent to the state. The EXTRA motive is that they are legally obligated to maximize profit by their shareholders. They are obligated to increase growth, to keep share value growing. This makes them resort to desperate measures, that a public company would simply not be motivated to undertake.
EVERYONE out there disagrees with PDVSA. I have yet to see a single source confirm the PDVSA numbers. Experts, analyst reports, OPEC, IEA, popular press etc. have access to the same info as you yet fail to draw the same conclusions. Why?
I really don't see the significance of their real levels of production. If production is lower than what they say, I would suspect that its not because they aren't capable of producing more, (which is what many analysis want us to believe) but rather that they are producing less than the OPEC quota because they want to control supply even more than what OPEC is doing.
Either way, whether they are producing less than what they say or not, no one can deny that this government's oil policies have led to an incredible increase in the amount of income coming into the state's coffers. These are smart policies, even if production is lower than what they say it is. And this is not only due to the OPEC policies, but also the REAL nationalization of the oil, the raising of taxes and royalties, etc. etc.
"I really don't see the significance of their real levels of production. If production is lower than what they say, I would suspect that its not because they aren't capable of producing more, (which is what many analysis want us to believe) but rather that they are producing less than the OPEC quota because they want to control supply even more than what OPEC is doing."
So now you leave the door open to them misstating their figures. Good start. Next step is for you to realize that PDVSA is a screwed up company. Since you never worked in the oil and gas business and never deal with PDVSA, it may take you months to see this.
Nationalization of the rigs: Venezuela has not nationalized any rigs. Read before you write, it makes a difference (and before you link me to a website, see who the owner of the rigs was in the first place, kiddo).
Re. my insults, I tailor them to the receipient.
"...the revenue analysis? Who knows what goes into export revenues of petroleum products. What is included? REfined products? Not enough details are provided. It is inconclusive."
It doesn't take a genius to pad revenue figures. KPMG will limit its scope to Venezuela, so the dirty work can be done abroad.
Nationalization of the rigs: Venezuela has not nationalized any rigs. Read before you write
I would recommend YOU read before you write, because I never said anything about the nationalization of any rigs, you freaking ignoramus waste of space.
I said nationalization of OIL. Can you read? Seriously, I think you need Mision Robinson. Come on down to Venezuela. Its free for everyone. Even if you are mentally retarded, they will probably figure something out for you.
I reckon if GIV still has some girlfriend it is solely because she is desperate enough to use him as rescue boat to get out of Venezuela in case of need.
Like those Moldavians or Philipinian girls desperate to flee their country who remain with any Western wally. Poor girl.
J. Keepler
"It doesn't take a genius to pad revenue figures. KPMG will limit its scope to Venezuela, so the dirty work can be done abroad"
Actually, the work was done from inside Venezuela. Please explain what Venezuela exported last year in total that gave it the $60 billion dollars that Espinasa says it got last year and the $53 billion for PDVSA alone that the auditors verified?
Cocaine?
"Fair enough, but do you have evidence the SOE is doing ok?"
yes, its audited financial statements which show production and revenue doind as well as they can do.
"Any company would deliver awesome results if its main products increased that much in price. Is it doing as good as it could be doing?"
yes, it is getting as much revenue as is possible consistent with oil prices and OPEC production quotas. Other analysis such as expenses would be difficult to do because they took over higher cost operations such as the operating agreements. Maybe some day when I have time I'll look at that in more detail.
"Metrics such as oil produced per employee are worse now for instance."
Where did you see that? That was another screw up by Rosenberg that I didn't say anything about because I was already writing too much and didn't want to come across as nitpicking. But she sated the number of employees as 100k or something and made it sound as a big increase. But PDVSA always had a lot of contract employees that they listed as such in prior audit reports. It looks to me like they just shifted a lot of them to the regular payroll in which case employment may not have changed that much. Plus now the operating agreement and Strategic Association employees are on their payroll I believe. So it is not clear to me that production per employee is down. But if you have soportable numbers please share them.
"That is true, but history shows that it is easier to control competing oil companies than a dominant behemoth like PDVSA"
Not necessarily. Did Venezuela always get its fair share when Shell and Exxon where there? Or did they get a very high proportion.
For a long time I think they got 50% which is VERY HIGH (ie in todays context out of $60 billion in exports the private companies would walk away with $30 billion).
ALso, just look at the royalties mess in the Gulf of Mexico. Even the U.S. government, which doesn't even take high royalties, is having a difficult time collecting.
Maybe if you have very detailed information on another country that has made that "heavily taxed private company" model work we could look at it and see how much it might actually cost Venezuela.
"Cocaine?"
Given how adament some are in refusing to concede to reality I am sure it won't be long until we hear people saying that.
"You need to stop referring the PDVSA's 3.25 as CRUDE oil."
Did I really refer to it as that? I don't remember and I would be surprised because I do know better and almost never use that term because it makes no sense in the case of Venezuela. Show me where it is and I will fix it.
"I have yet to see a single source confirm the PDVSA numbers. Experts, analyst reports, OPEC, IEA, popular press etc. have access to the same info as you yet fail to draw the same conclusions. Why? "
Actually, you and I both know very well the difference isn't that big. When the IEA includes EVERYTHING (as PDVSA does) the numbers come to within a couple hundred thousand of each other. Same for agencies like the BP Annual Worldbook. It is generally opposition supporters, former management, and some clueless reporters who quote the baseline numbers from OPEC and IEA reports without realizing, or being honest enought to acknowledge, that a significant amount of oil production is left out.
200 or 300k isn't a huge difference. But even there what I would ask is where are these third party sources getting their information? Maybe they can get some import numbers from places like the U.S. but how do they know what internal consumption is, what exports to China and Cuba are, etc., etc.
On the other hand we have audited financial reports we tell us how much the country earned from petroleum and petroleum product exports. That trumps everything else. It is also fairly rich of some who two years ago were complaining about the audited financials not being released on time and now when they are out basically say "oh, those numbers don't mean anything".
"...as for the KPMG audits. Recall that both WorldCOm and Enron got clean bills of health from auditors. Does that mean PDVSA is deceiving? No, but it is not impossible and it does have an incentive to."
Also recall that this is a POST Enron world and auditing standards were made much tighter. The PDVSA audits were under Sarbanes Oxley standards - you can see it on the SEC web-site.
"...the revenue analysis? Who knows what goes into export revenues of petroleum products. What is included? REfined products? Not enough details are provided. It is inconclusive."
Tor, was this really meant to be a serious comment? In any event refined products definitely are counted. Even assuming that take a crack at the numbers. Any way you do it the PDVSA export numbers are confirmed. Unless you want to tell me you can arrive at $53 billion in exports with only 1.6 MBPD of petroleum product exports per day.
"...by the way PDVSA audited statements are very short and very basic compared to the SEC requirements. It is not good enough. Transparency is key whether the it is an SOE or private."
Tor you are again caught in the same trap. Right now you are saying you don't have enough info but yet when that info is supplied you are saying it may not be reliable - presumabely it can be faked.
continued...
Tor you are again caught in the same trap. Right now you are saying you don't have enough info but yet when that info is supplied you are saying it may not be reliable - presumabely it can be faked.
For example, lets look at 2004. For that the FULL and VERY DETAILED audit report is on the SEC server. It has all the information you ask for - what was exported what its price was etc. And it also states that Venezuelan exports were what the government had always said - about 3.1 MBPD.
Now for that same time frame you can look up the press reports, AIE numbers, etc. and they will all say it was 2.5 MBPD.
So are you going to say the audit numbers were faked? And if that is what you say, when you have ALL the info you could possibly want, then what does it matter what you have in 2006 because you'll say the same thing, that it is faked.
I think if your position is that the audit is all phoney and doesn't count for anything you should at least come out and admit that is what you think.
Anonymous said: You aren't going to "motivate" private capital to develop these enterprises either way. No matter how devalued the currency is, it will be very hard to get private capital to set up the kinds of industries that Venezuela wants to create. It is much too risky, and private capital can make more money in other less-risky ventures.
and Moyhabin said: we are not interested in creating many incentives for foreign direct investment to come to Venezuela, profit from a weak currency and very cheap labor, so that they can enjoy from a favorable national economic milieu while our country remains mired in backwardness, brutal inequality and poverty, as so many other Latin American nations today.
Points taken on both counts. The discussion which follows is not so much to dispute these points as to expose my own point of view and policy preferences. My thoughts are that:
The use of tax and tariff measures to regulate trade is superior to the use of currency controls, for a number of reasons: The administrative processes are less cumbersome; they are more easily linked to instruments of policy implementation which are well established and more widely accepted than currency controls, and they are more effective - less subject to distortion and avoidance through uneven administration and corruption - than currency controls.
Currency controls are one potential administrative means of overcoming the effects of the distortions in economic activity which result from overvaluation of the currency. They are less "rule bound" and more subject to the vagaries of administrative discretion than are tax and tariff means to accomplish the same ends. The latter are therefore more flexible, and easily implemented, when selective action is required - as when encouragement of the importation of capital goods is socially desirable.
In an environment of extreme ineffectiveness in the administration of public management for tariff and taxation, the relative effectiveness of administration might be a consideration. While I am not familiar enough with the public management situation in Venezuala to assess this factor, it seems unlikely that the administration of currency controls would be any more effective.
Reducing the overvaluation of the currency would have a more significant effect on investment in Venezuelan agricultural and goods production than is implied by your comment, in my view. The willingness and ability of local participants in the economy to invest is critical. I believe that it would be more favorably affected by removal of the drag imposed by overvaluation than would foreign direct investment - as you point out, other factors have, and will continue to inhibit FDI.
The Chinese experience may be instructive - China has purposfully suppressed the value of its currency relative to the dollar, and other international currencies. The benefits to China's economy have included, in addition to the paper benefit
"Perhaps it would be possible to reduce these effects in Venezuela by reducing the apparent overvaluation of the Venezuelan currency. The reported existance of a significant black market exchange rate seems to indicate both that overvaluation is a problem and that the pegging of the currency to the dollar contributes significantly to the problem."
Indeed overvaluation of the Venezuelan currency has been a HUGE, HUGE problem. They really need to devalue and try to use the oil revenues in ways that don't put upward pressure on the currency.
"What are the motives for maintaining such an overvaluation? In other words, why is the "strong" Bolivar considered a positive by Venezuelan policy makers?"
I think the motives are the same that they have always been throughout Venezuelan history and throughout Latin America where almost all countries do the same thing. The motives are political - they want to keep the purchasing power and income of people high to garner political support. Chavez has been doing this of late because he had big elections in 2005, 2006 and now again in 2007.
"Would not such a policy reduce the costs of locally produced goods and services and increase the costs of imported goods and services in a manner to reduce deindustrialization and increase the growth of the productive, non-financial sectors?"
An across the board devaluation would do that and they should do it. An additional impact of a devaluation would be that the Venezuelan government, who controls most of the dollars coming into the country would itself get a big raise. With those additional funds they could subsidize to some extent people who might be hurt for a time by increasing import prices.
"The Chinese experience may be instructive - China has purposfully suppressed the value of its currency relative to the dollar, and other international currencies. The benefits to China's economy have included, in addition to the paper benefit"
I have been argueing for this for quite some time on this blog. Look over some of the very long threads of the past two or three weeks. Hopefully you will have more success than I did.
BTW, it should be noted South Korea did the same thing.
Lastly, I don't know that I would use the term "de-industrialization". Venezuela is not de-industrializing. Manufacturing is up 36% under Chavez.
But it probably could and should be doing better and non-oil exports need to do a lot better.
The Chinese experience may be instructive - China has purposfully suppressed the value of its currency relative to the dollar, and other international currencies. The benefits to China's economy have included, in addition to the paper benefit of the accumulation of foreign reserves, development of export markets supported growth of China's productive capacity and technical know-how. China has "imported" US jobs and production technology, and exported manufactured goods to the US.
People who are concerned about China's willingness to hold US dollars, or about the impact of a decline in the value of the dollar on China's "investment" in the US (as represented by reserves and debt) are forgetting that China could regard a decrease in the value of these investments as the economic cost of a purchase of productive technology, capacity, and jobs from the US. This purchase was real bargain for China - why should they be excessively concerned about the "value" of the dollars they have paid for it?
In this light Venezuela's attachment to a "strong" (as opposed to stable) currency seems less than rational: it puts Venezuela in the positon the US is in, where the overvalued currency results in loss of industrial capacity, employment, investment in local productive capacity and new production technology, etc.
Why would Venezuela, in this mattter, chose to emulate the US's (failed) policies, instead of China's?
I do appreciate the need for stability in the Venezuelan social situation and economy, so would not advocate precipitous action. I do unduerstand the unacceptability of FDI that results in exploitation of Venezuelan labor without compensating benefits to Venezualan social and economic development. My point is that China has managed to avoid overvaluation (and in fact has perpetuated an undervaluation) of its currency in a relatively successful effort to foster its development and economic growth, while the US model being, possibly for ineluctible reasons, followed by Venezuela has eroded the productive, non-financial sector of the US economy.
To the extent possible, and as judiciously as possible, Venezuela should unpeg its currency from the dollar, let it's value float within a stable range, squeeze out the currency black market, and adopt positive policies to "sterilize" or sop up any excess valuation of the currency attributable to the "oil income" effect. It is just not healthy for ANY economy to attempt to live very long off of the supposed benefits of imported goods paid for with an overvalued currency.
Ow, I told you already: the manufacturing we have now are tyres for the Hummers, plastic glass for the whiskey drunk at every miserable party.
Chavez's US employee here will tell us it is "PCs and tractors", of course.
Sure Kepler, and under Petkoff/Caldera when manufacturing declined 15% we are to believe they were manufacturing jet aircraft?
"Would not such a policy reduce the costs of locally produced goods and services and increase the costs of imported goods and services in a manner to reduce deindustrialization and increase the growth of the productive, non-financial sectors?"
An across the board devaluation would do that and they should do it.
What exports would be promoted by a devaluation? Venezuela doesn't produce hardly anything. So devaluating wouldn't stimulate anything. It would perhaps stimulate the export of raw materials, maybe some agricultural goods.
Before Venezuela can work on promoting exports, IT HAS TO HAVE SOMETHING WORTH EXPORTING!!!
And, before it can have something worth exporting, it will have to build up some industry. The private sector won't build industry. We already know that from a long history of non-industrial investment. The state will have to do it. How will they do it? Importing capital goods from a wide range of different countries. Having a strong Bolivar will make this a heck of a lot easier.
Anonymous said: "What exports would be promoted by a devaluation? . . . It would perhaps stimulate the export of raw materials, maybe some agricultural goods."
{head shaking} Exports? If you mean to say that, at this point, the export of manufactured goods are not the primary concern, that may be true.
What we know is true is that the import of goods which would be better produced locally unecessarily inhibits Venezuelan economic and social development. It's a drug on the productive economy, and it is encouraged by the overvaluation of the currency.
Oil exports, since the transactions are denominated in dollars, are not affected by changes in the valuation of the local currency.
But if the dollars received for oil must be converted to local currency for any purpose, then overvaluation of the Bolivar actually deprives Venezuala of revenue - fewer Bolivars are recieved per Dollar exchanged than if the currency were not overvalued.
Since capital goods procurement by the Venezuelan government can be purchased using dollar reserves obtained from the sale of oil, and likely often are, a reduction in the official exchange rate will not affect the real cost (in oil) of those purchases.
It will, however, increase the "cost of living" for privileged residents of Venezuela who wish to consume imported goods.
You mention agriculture. The significance of overvaluation on agriculture in Venezuela is especially important - though possibly not to urban radicals. Overvaluation of the Bolivar reduces the relative price of agricultural imports. This encourages agricutural imports, disadvantages Venezuelan produce, and erodes the Venezuelan agricultural base.
Reducing overvaluation will decrease the relative price of local agricultural production. It will be a boon to that sector as it removes the artificial advantage currently accruing to imports, and even lets Venezuelan farmers hope to compete on international markets. This is not peanuts, either in terms of healthy economic development or increase social stability in the countryside.
Hey, I hadn't notice this in todays El Universal but it is pretty on topic. Some other group in Venezuela tried to estimate production based on tracking how much oil other countries recieved from Venezuela:
http://economia.eluniversal.com/
...il_577609.shtml
They came up with 2.95 MBPD for 2006 which is a heck of a lot closer to the figures the Venezuelan government gives than what opposition clowns like Espinasa say. And 200k difference - I am not going to fight over much over that.
Maybe with all the audited financials out showing how much money is coming into the country some of these opposition oil analysts are feeling the heat to make their numbers at least somewhat more realistic
You mention agriculture. The significance of overvaluation on agriculture in Venezuela is especially important - though possibly not to urban radicals. Overvaluation of the Bolivar reduces the relative price of agricultural imports. This encourages agricutural imports, disadvantages Venezuelan produce, and erodes the Venezuelan agricultural base.
But this simply isn't the case, because the state controls what is imported. It only approves import of those goods that national production does not cover.
Food imports have gone up, but that is mostly due to increased consumption, not due to cheap imports.
In fact, national agricultural production has also gone up a lot since Chavez came to power.
Complete transcription of the baduel speech today, this is extremely relevant along with his farewell speech at the army:
http://www.raulbaduel.blogspot.com/
"yes, its audited financial statements which show production and revenue doind as well as they can do."
...but that is exactly my point. Revenues are up because of high prices. Of course PDVSA's finances look great. So do Exxons and Saudi Aramcos. If your product is up from 20 to 80 in several years your balance sheet will look good.
To see if PDVSA is doing well you have to compare other metrics. How is PDVSA doing compared to private companies? How much oil does it produce per employee compared to other companies? How profitable is PDVSA compared to other companies? SOEs? Private companies? How are costs doing? Is enough being invested? Basically if the state wants to maximize revenues you need to ask harder questions.
In fact, the big question on production is what will happen in the next couple years. Will production stagnate, increase or decline. There is a lag of 2-4 years during which you can get away with investing too little.
So many things to quote from the Baduel speech, but this is just beautiful:
"La Constitución del 99 no impide para nada ejercer un gobierno socialista, con altísimos niveles de inclusión y amplio contenido social, porque es en si misma un ambicioso programa de gobierno a favor de los excluidos y de la sociedad en general."
"Maybe some day when I have time I'll look at that in more detail."
I hope you do. It would be interesting.
"Where did you see that?"
Back of the envelope. They had 40K in 2002 and now they have about 75K. They have not increased production so there you go...
You could argue - as you do - that they are doing more stuff (and they have certainly absorbed some workers), but I doubt this is enough to offset the increased workforce.
They absorbed contract workers and Orinoco, but these employees are not close to 30K (the 100K is something Chavez talked about for 200
. I saw numbers on workers absorbed at some point, but I couldn't find the source now.
You should try to calculate this. I remember that in 2002 PDVSA was about twice as efficient by this metric as Pemex, and about the same as Petrobras.
...this pegs employees at 75000. It claims 'several thousand' were added from Orinoco.
http://www.vheadline.com/readnew...ws.asp?
id=76480
I can't find the contract workers, but I remember the number being small.
see the production chart here. Source: Eni. It has production of CRUDE flat since 2002. the split between types of crude is interesting.
http://online.wsj.com/article/
SB...=googlenews_wsj
thanks for the great analysis, ow- I was reading the NYT yesterday and saying 'this is bullshit! this is bullshit!' over and over again.
btw, WBAI in New York did an interview with Bart Jones, the author of "Chavez-From Mud Hut to Perpetual Revolution" last Friday morning. If you go to their archives, http://archive.wbai.org/, scroll down to the Friday, November 2, 7:00 am and hit "Download". The interview starts at about 15 minutes into the hour.
"La Constitución del 99 no impide para nada ejercer un gobierno socialista, con altísimos niveles de inclusión y amplio contenido social, porque es en si misma un ambicioso programa de gobierno a favor de los excluidos y de la sociedad en general."
LeChuck | 11.05.07 - 9:00 pm | #
------------------------------
Why is this so beautiful? It's nothing but his quite limited perception of things. What does he know what kind of socialism we are trying to implement in Venezuela? Apparently nothing. It's easy to surmise that his notion of socialism is some sort of populism on steroids: everything centralized around a huge welfare state. Otherwise he wouldn't be saying such stupid things. The 1999 Constitution had nothing to say about Consejos, which will become the cornerstone of our socialist project. And precisely what we are trying to implement is a twofold strategy of increased power at the top combined with increased power at the bottom, followed in a few years by decreased power at the top and even greater power at the bottom. But before we get there, we need to reduce the burocracy, disengaging ourselves from obsolete figures such as Baduel. Again, good riddance!
Baduel answers you:
"Según esto, la motivación de la reforma constitucional, tal como se ha presentado es llevar al pueblo venezolano hacia un proceso de transición, hacia algo que se denomina de manera genérica “socialismo” sin indicar claramente a que se refiere este término. Como ya indique en otra ocasión cuando entregue el Ministerio de la Defensa, la palabra socialismo no tiene un significado uniforme y puede incluir regímenes como el de Pol Pot en Camboya y la Unión Soviética Estalinista, hasta el llamado Socialismo Nórdico o el Socialismo Democrático Europeo. ¿A que socialismo se nos quiere llevar? ¿Por qué no se le dice al pueblo claramente hacia donde se piensa conducir a la nación? Tenemos como pueblo que exigir que se nos diga claramente el destino de nuestro futuro y no se nos mienta con un supuesto socialismo a la venezolana."
Anonymous said: But this simply isn't the case, because the state controls what is imported. It only approves import of those goods that national production does not cover.
Anytime an import is artificially priced lower than competing domestic product due to overvaluation of the Bolivar, the Venezuelan consumer, producer, economy, and society is disadvantaged by the transaction - punished by it, to be frank.
Agricultural produce, as other goods, are subject to substitution - the cheaper good is substituted for the more expensive, even though they are not really equivalent. Rice can substitute for manioc, chicken for beef, etc.
Governmental action cannot compensate for the damage done to Venezuelan consumers and producers by the excess cost of domestic production resulting from overvaluation, because it cannot anticipate or compensate for this substitution of foreign goods for goods produced by Venezuelans.
Moreover, the suppression of competition by Venezuelan producers due to this artificial overpricing of their product lets the foreign producers wring additional profits out of the Venezuelan economy. The foreign producers can then make additional capital investments to reduce their cost of production, and so perpetuate their initial, artificial and unjustifiable advantage over Venezuelan producers.
Venezuela suffers. Those exporting to Venezuela gain at Venezuela's expense - all for the sake of a matter of foolish "strong currency" pride, institutionalized inertia, and the government's reluctance to face down those who enjoy consuming imported goods.
Food imports have gone up, but that is mostly due to increased consumption, not due to cheap imports.
If it were not for the "subsidization" of imports by overvaluation of the Bolivar much of the increase in consumption would have been satisfied by increased demand for, and investments in increased Venezuelan agricultural production.
The cheap imported goods subsidized by the overvaluation of the Bolivar are an indulgence extended to a small section fo Venezuelan society. That indulgence damages the long term interest of Venezuela and the majority of its people by depriving local producers of markets for their production, and of the funds and motivation for individual investments in additional and more efficient productive capacity.
"Did I really refer to it as that?"
No you did not. I should have been more precise.
What you say is this:
"Venezuelan oil production last year was 3.25 million "
However, when other sources talk about 'oil production' they mean crude oil production. It would be helpful if you used similar terminology. For instance, Rosenberg's numbers are from the usual suspects (OPEC etc.) and they mean crude when they say 'oil production'. So when you compare your 'oil production' against her 'oil production' of 2.4 (or whatever she said; that is the latest IEA figure) you are not comparing apples to apples. That was my point.
"Actually, you and I both know very well the difference isn't that big. When the IEA includes EVERYTHING (as PDVSA does) the numbers come to within a couple hundred thousand of each other. Same for agencies like the BP Annual Worldbook."
Exactly, and that is what needs to be clear. It is not clear from the Rosenberg article. I actually think PDVSA needs to stop shopping 3.25 around as oil production, and more importantly that Reuters and their copycats need to stop putting the "PDVSA claims 3.25 but OPEC says 2.4". That is like comparing GM and Ford, but leaving out compact cars for GM.
"200 or 300k isn't a huge difference. But even there what I would ask is where are these third party sources getting their information?"
Aparently from tanker shipments, imports etc. I believe they do what they can to gauge the truth. They seems to be accurate most of the time for other OPEC countries. They were also undisputed for Venezuela before 2002. In fact, no other country to my knowledge disputes the veracity of these sources.
"On the other hand we have audited financial reports we tell us how much the country earned from petroleum and petroleum product exports."
You don't think the secondary sources OPEC and IEA use, analyze these?
That trumps everything else. It is also fairly rich of some who two years ago were complaining about the audited financials not being released on time and now when they are out basically say "oh, those numbers don't mean anything".
"Also recall that this is a POST Enron world and auditing standards were made much tighter. The PDVSA audits were under Sarbanes Oxley standards - you can see it on the SEC web-site."
Actually I think the PDVSA SEC reports were done under SOX, but the 05-06 reports conform to international accounting standards not to US GAAP and SOX rules.
"Tor, was this really meant to be a serious comment?"
Sure it is. Often companies will have big revenue baskets and they will put lots of stuff into them. Export of petroleum and petroleum related products could contain all petroleum related revenue not just sale of crude and refined crude.
Most financial statements contain more details about revenues in the 10K were you can see detailed breakdowns. Since PDVSA's statements are extremely short there is no such disclosure.
"Any way you do it the PDVSA export numbers are confirmed."
I did this before and the numbers seemed to make sense. In fact, I doubt the auditors would have approved the statements otherwise.
"Unless you want to tell me you can arrive at $53 billion in exports with only 1.6 MBPD of petroleum product exports per day."
Where do you get 1.6? OPEC is claiming 2.4 + other oil products. Take out the stuff PDVSA did not get. How much is that? They held about 40% of the Orinoco fields so take out .36. I think the operating agreements were mostly assumed in 2006. So PDVSA gets about 2 MBPD. Add some 0.4 of inferior stuff.
A portion of the 2 MBPD is refined in Venezuela.
A very rough calculation gives (using $55 for 365 days at 2.4 MBPD; some stuff sells for less (inferior stuff) some for more (refined stuff)) gives $48. How much did PDVSA get from CITGO? How much from other international operations?
Could this bridge the gap?
You should do an excel calculation.
Include:
refining
cuba
other oil products
exactly how PDVSA gets Orinoco and operating revenues in 2006
CITGO
other international
...all this info is out there somewhere....if only PDVSA disclosed it...
"Right now you are saying you don't have enough info but yet when that info is supplied you are saying it may not be reliable - presumabely it can be faked."
Not really. I have two sources that I trust:
1. OPEC and everything else
2. Audited numbers
They conflict so I don't know. Call it a trap, but it is the only honest answer I can give without more detailed info.
I am not saying they are fake, I am just saying that it is not impossible for them to be fake. Companies that have incentives to cheat have lured auditors before - and PDVSA does have an incentive to lie. Before the audited numbers came out I was pretty sure they were lying, but now I'm not sure.
My biggest problem: Why does OPEC and Co not buy the audited numbers. These guys are not stupid. They know how to analyze the available info.
Can you get a hold of S&P or Fitch reports on PDVSA? I think both of them got a more complete financial statement from PDVSA than the Venezuelan people did (we discussed this and you thought they'd release what they sent to these companies).
...and you got to agree that PDVSA's statements are inadequate? I mean should a multibillion dollar company with 75K employees that is the sole guarantor of a nations income and a potential source of unlimited corruption and patronage discloses a couple lousy pages? Come on...
I don't care what PDVSA did or didn't do before. It is simply not good enough...
"For example, lets look at 2004. For that the FULL and VERY DETAILED audit report is on the SEC server."
I want to see this for 05 and 06.
"It has all the information you ask for - what was exported what its price was etc. And it also states that Venezuelan exports were what the government had always said - about 3.1 MBPD."
Exports? local consumption is about .6. You mean production right? I think you do.
So do the usual adjustment you get 2.7 MBRD of 'oil production' (=crude oil production). If Ven is making the Orinoco mistake (see my other post) then this may explain part of it.
"I think if your position is that the audit is all phoney and doesn't count for anything you should at least come out and admit that is what you think."
I don't think they are. I'm not sure. Two good sources contradict. Either:
1. PDVSA is deceiving the SEC and the auditors
2. All industry experts are wrong. Note that all these guys are (1) generally reliable, (2) have access to filing and audited statements and (3) have no incentive to lie.
It is like two witnesses saying different things. So who knows? Not me...
Tor, I'm busy now so I'll have to respond to your points later. Suffice it to say I think you are too rushed and making some mistakes on the numbers.
Plus on the employees you say they have 75,000 now? Well from the 2004 full audit tehy had in 2003 33,998 regular employees and 38,166 contract employees. That is what, about 72,000.
In 2005 (the 2004 and 2005 audit reports came out at the same time so they sometimes combine numbers) the regular employees had gone up to 49,180 and the contract employees down to 10,498 which means they were down to 60,000.
So the increase in formal employees seems to just be contract employees given regular status and the TOTAL number of employees was going down.
See, it pays to actually read the audited financial statements ( that was on page 81 of the 2004 financial statement btw).
OW, it's good to see you back to kicking the asses of anti-Chavez liars. If only you could "get it" that for the foreseeable future it's literally Chavez or "the spirit of Grac." Understanding that there is but one way to go. You are a very talented and well read person. It's infuriating to me when you go into your "anti authoritarian" shtick. If anything, the Venezuelan State and government have acted like puppy dogs and not at all like watch dogs or attack dogs when it comes to the US funded anti-patriotic opposition. Chavez is finally saying some things that show his patience has run out with these rock throwing fire setting anti democratic frat boys. This should be supported. He's really only indicating what any head of state ought to under these circumstances.
By the way I'm back working. Thank God.
This is a signal: when 11/9-Weixel pops up, we know Ow has fallen back into old bad habits.
Moyhabin says that other guy does not know what socialism they are doing in Venezuela. The only person who knows it is Hugo I every time he gets out of the toilette. He is going towards some Chavezlandia with lots of red and and increasing use of hatred to keep his sort in power and pretend to be the saviour of Latin America and the World while stealing nicely, better than the proto-Chavistas, i.e. the Adecos and Copeyanos, were doing.
We are heading towards an ever-growing personality cult and a place where everybody has to lick Hugo I's ass and declare in truly fascist fashion "Socialism, Fatherland or Death".
I wonder if the Karin person who wrote here one of those lefties was who claimed Stalin was not really bad way until the eighties.
This is unbelievable!
Socialism, Fatherland and Stupidity!
OW, your method of calculating oil output proves exactly the opposite of what you say. You say it shows that the country is producing 3.2 mln barrels per day. In fact you are showing that this figure is the absolute maximum. The minimum is much lower.
The income from Pdvsa's international operations on the audited financials include not just oil sales but also sales of gasoline and other refined products, almost all of which have higher prices than crude oil. It also includes the profits from refining at Citgo, Hovensa, Veba Oel and Isla, all of which are international. It also probably includes the company's shipping joint ventures, which are registered outside Venezuela.
Oil products, refining and shipping all had bumper years in 2006, so the difference in prices between them and just crude oil would be significant.
Every barrel refined or shipped and every barrel sold that's gasoline rather than crude increases the international sales figure without increasing output.
This year, income from refining and shipping will be much lower, but exports of products are doing better as the domestic refineries have been on line more. So the figure for 2007 will be closer to what you say. But talk about a lack of apples-to-apples comparison!
Finally, about what OPEC counts: It used to matter that they are only talking about crude oil, but not any more. OPEC does count upgraded oil like the stuff now coming out of the Orinoco. As far as their sources, I understand they are secret but reliable.
Finally Moyhabin said something I agree with 100%: That the people of Venezuela crave stability. But is that really why Chavez hasn't devalued? If he respects stability so much, why does he want to change time zones, tax systems, constitutions, place names and regulatory regimes, often with less than 2 weeks' notice?
The best oil policy in the world is Alaska's. All of the royalties are put in a fund that is managed transparently by a professional board with very strong oversight. The money is invested in a variety of ways. Income from those investments pays for most of the state's government and the leftovers are given out to residents in the form of cash money, an equal amount for rich and poor. (While this may seem regressive, it also keeps the rich "bought into" the system and makes it less likely they will seek to undermine it for their own gain.) The dollar figure of the dividend is based on the fund's returns averaged over 3 years, reducing year to year volatility.
Having lived in Alaska, where there are no taxes, I disagree with the trendy notion that a government needs to tax in order to have a relationship with its citizens. Citizens there have a perfectly good relationship with the government through effective representative democracy.
Stability guy,
TIME ZONE? Do you hear him talking about time zones lately? After the embarrassing moment where he and his brother showed how ignorant they were about what they had said was "a scientifically based decision"?
Well, not anymore. Same thing about increasing petrol prices: he did not have the balls.
He is focused now on getting his most important thing, which is more power. After that he could consider increasing petrol prices (HE MUST!!!)
or also spend a lot of time in doing silly changes like time zone, calling more things "Bolivarian" or doing presidential tourism around countries in such centres of democracy as Iran, Cuba, Belarus or the like.
"The income from Pdvsa's international operations on the audited financials include not just oil sales but also sales of gasoline and other refined products, almost all of which have higher prices than crude oil."
Yes, refined products could be up to a million barrels of that (though in the last full financial on the web it was only 500k - remember inrreasing amounts of refined gasoline is used internally). It fetches a price of a few dollars higher. Re-do the calculations and you'll see it doesn't materially change the numbers. And I actually left something out ('cause this was too long already); that being the non-PDVSA part of the Orinoco projects that don't get counted in these numbers. That will easily offset the refining premium.
"It also includes the profits from refining at Citgo, Hovensa, Veba Oel and Isla, all of which are international. "
Nope, those show up under the second column, from international sources. The number I used was the first column from national exports.
The true bogey of Venezulean exports of all petroleum products is about $60 billion. The reason is it really exported something like $58 billion and imported around $5 billion for NET exports of $55 billion. Slice and dice that that any way you want and you will come up with over 3 MBPD of exports and most likely exactly what Venezuela says it is 3.2 MBPD.
So the calculations stand. And you'll notice even other agencies like the one I linked to above are trying to get more realistic in their numbers.
"Según esto, la motivación de la reforma constitucional, tal como se ha presentado es llevar al pueblo venezolano hacia un proceso de transición, hacia algo que se denomina de manera genérica “socialismo” sin indicar claramente a que se refiere este término. Como ya indique en otra ocasión cuando entregue el Ministerio de la Defensa, la palabra socialismo no tiene un significado uniforme y puede incluir regímenes como el de Pol Pot en Camboya y la Unión Soviética Estalinista, hasta el llamado Socialismo Nórdico o el Socialismo Democrático Europeo. ¿A que socialismo se nos quiere llevar? ¿Por qué no se le dice al pueblo claramente hacia donde se piensa conducir a la nación? Tenemos como pueblo que exigir que se nos diga claramente el destino de nuestro futuro y no se nos mienta con un supuesto socialismo a la venezolana."
LeChuck | 11.05.07 - 9:40 pm | #
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After reading these silly words, one can only repeat: good riddance! Obviously this guy doesn't know "donde esta parado". Hay varios modelos de socialismo, pero no son aquellos que menciona el ignorante de Baduel, quien obviamente carece de las credenciales y capacidades intelectuales que se requieren para dilucidar un tema tan espinoso. Pretender que existe un "socialismo nórdico" (que vulgaridad conceptual y que lenguaje tan mediocre!) o un "socialismo democrático europeo", indican el nivel de ignorancia que maneja este señor. A lo más podría pensarse que esos son sistemas capitalistas dotados de algún aparataje de protección social en educación, medicina y desempleo, pero nada más. Son Estados benefactores (welfare states) además en decadencia y que estan siendo gradualmente erosionados por políticas neoliberales cada vez más agresivas. Por lo tanto, ninguno de ellos cuenta como ejemplo de socialismo. Socialismo consiste en un sistema donde la propiedad de los medios de producción pertenece en forma total y absoluta a la sociedad en su conjunto. Esa es la única definición válida, y cuyo origen histórico se remonta a los origenes precisamente del movimiento socialista en el siglo XIX. Ahora bien, de qué posibles modelos alternativos estamos hablando? Basicamente de dos: el Socialismo de Estado (como Cuba, China, la Unión Soviética, Corea del Norte, etc.) en los medios de producción pertenecen al Estado (razón de su nombre), o Socialismo Libertario, en el cual los medios de producción pertenecen a los productores y ciudadanos mismos, organizados en consejos comunales. Es precisamente esta segunada vía, la que seguiremos en Venezuela, aunque habrán numerosos intentos por desviarnos hacia la ya probada y archi-fracasada primera fórmula del Socialismo de Estado. Por ello, es necesaria la reforma, para impedir que la burocracia y la tecnocracia desvíen el proceso hacia ese modelo completamente fracasado.
Finally Moyhabin said something I agree with 100%: That the people of Venezuela crave stability. But is that really why Chavez hasn't devalued? If he respects stability so much, why does he want to change time zones, tax systems, constitutions, place names and regulatory regimes, often with less than 2 weeks' notice?
stabilityguy | 11.06.07 - 5:49 am | #
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One has to be truly challenged on the intellectual front to come up with such stupid remarks. I mean, please explain to us how can those different changes compare in terms of major turbulence with a devaluation?
"I want to see this for 05 and 06."
I understand. But if you look at it for 2004 and see that PDVSA was right and those other agencies were off by the same amount then that tells you something doesn't it. It looks like you are ducking on this.
"Exports? local consumption is about .6. You mean production right? I think you do.
So do the usual adjustment you get 2.7 MBRD of 'oil production' (=crude oil production). If Ven is making the Orinoco mistake (see my other post) then this may explain part of it. "
yes, I meant production, not exports. My mistake. Those numbers on the financials included everything (they listed everything they included) so there is no mistake in what they presented. Total national production was about 3.1 MBPD.
"Where do you get 1.6? OPEC is claiming 2.4 + other oil products. Take out the stuff PDVSA did not get. How much is that? They held about 40% of the Orinoco fields so take out .36. I think the operating agreements were mostly assumed in 2006. So PDVSA gets about 2 MBPD. Add some 0.4 of inferior stuff. "
No, no, no. Here you are mixing things up. First, we are talking about total national production. Now, the numbers the IEA and OPEC give (and btw way people keep thinking that OPEC really comes up with those numbers - it doesn't, they are third party sources) are about 2.4 MBPD of production. Subtract domestic consumption of about 600k and you get rought 1.8 MBPD of EXPORTS. Now multiply that by 365 days and by the average price for 2006 which was $56 and I get almost $37 billion dollars. That is not even close to what the country got in export revenues ( a net of about $55 billion) or what PDVSA itself got from exporting petroleum and petroleum products. It's not even ballpark - it is almost $20 billion off.
And you can't come with non-sense about CITGO, etc. PDVSA on this financial statement broke out revenues from domestic and foriegn operations - so their $53 billion number is verly clearly from petroleum and petroleum product exports from Venezuela and nothing else.
It is very clear and black and white. For these other numbers that people quote to be right PDVSA has to be pulling off a $20 billion scam and its auditors aren't catching it.
"2. All industry experts are wrong. Note that all these guys are (1) generally reliable, (2) have access to filing and audited statements and (3) have no incentive to lie."
This is not true. As I pointed out not all of them even come up with their own numbers. the IEA does but they don't include all oil in what they publish each month. When they do include everything, as we saw when they did a special report on Venezuela, we saw that even they said Venezuela was producing 3.1 MBPD - ie very close to what Venezuela itself says.
Finally, if they are going to err they ARE probably going to err on the side of undercounting. Please remember who the IEA is - they are the consuming nations counterpart to OPEC. They always complain that OPEC is not producing enough and calling on it to boost output. So if they want to help make that case they are probably going to try to show people producing less rather than more.
BTW, Tor, did you see the El Universal article on output I linked to above?
BTW Tor, you still haven't said what you thought of Tina Rosenberg's article.
Personally, the more I think about it the more I think it really is the case that she wasn't going there with any agenda but she just didn't do enough research before speaking to people and therefore didn't know enough to properly sort through what people were saying and ask the right questions. For gosh sakes, she doesn't even know what the primary debate with respect to oil in Venezuela has been about for the past 40 years!!
Also, I find it incredible that her only real conclusion, that Venezuela might be better off with heavily taxed private oil companies rather than a state owned one, has nothing to do with all the maladies that she listed oil producing nations as having at the beginning of the article.
Having private companies would do nothing to reduce corruption, patranage, and overvalued currency, destruction of other export industries, etc. because those problems result from all the money winding up in the hands of the government - it doesn't matter if the companies that paid the money to the government were public or private.
It this had been a term paper it would have to have been re-written as their is no logical flow to it and the conclusions she comes to at the end don't have anything to do with the questions she posed at the beginning.
"It this had been a term paper it would have to have been re-written as their is no logical flow to it and the conclusions she comes to at the end don't have anything to do with the questions she posed at the beginning."
a sage comment on the state of education in usa!!
{chuckles} To this ancient budget analyst it is a bit amusing to see a group of policy hounds yapping at the heels of a fellow that knows how to run a spreadsheet.
Moyhabin said: "What you have to understand Jim, is that many economic decisions in Venezuela are being impinged upon by the difficult political circumstances that prevail today. Devaluation right now would send all the wrong message. What most people want at this moment is stability and security, after many years of political and economic turmoil."
I agree completely that instability - social, political, and economic - has to be avoided in making currency valuation adjustments, as in many other changes, including taxation. Within the field of Public Finance there is a significant area of study for "announcement effects" of policy changes that attempts to provide theoretical gounding for minimizing the destabilizing effects of changes in policy.
Governmental opacity in this area may be as justifiable (despite our general and well founded distaste for opacity on public policy) as it ever can be in military strategy and tactics. This is because poorly handled changes in policy, or inappropriate, exaggerated public responses to incipient policy changes, can destroy the effectiveness of the change and introduce devastating side effects without any positive effect accruing.
Clearly, stability is an important value in management of the economy. Management of the processes leading to reduction of overvaluation of the Bolivar must be measured, thoughtful, and carefully designed to increase the public perception of stability and good judgement on the part of the government in managing the nation's economy.
I suggest though that the Venezuelan people, in this case, are paying a very high price in lost opportunity for economic development by being so attached to overvaluation of thier currency.
I suggest that the political leadership of Venezuela, without exciting fears of sudden or dislocating changes in the exchange value of the Bolivar, should be working to educate the populace about the adverse effect of this overvaluation, the weight if places on the people and the nation, and the need for an eventual correction - using sound policy instruments and careful judgement in executing the change.
Expressing an intention to gradually reduce the difference between the official and black market exchange rate by carefully considered and announced changes to the rate at which the Bolivar is pegged to the Dollar would be a start.
Accompanying such an announcement with establishment of a formal and (semi) transparent mechanism for making the necessary adjustments, it could minimize the possibility of "panic" and increase the sense of the people that the government is providing stable and sound administration of the exchange rate and the economy.
(Such a mechanism might be modeled on the processes the US Federal Reserve used to decide upon and announce changes to the US interest rate structuture.)
So - while recognizing the need for stability, and the people's strong preference for stability, I am suggesting that leade
Moyhabin said: "What you have to understand Jim, is that many economic decisions in Venezuela are being impinged upon by the difficult political circumstances that prevail today. Devaluation right now would send all the wrong message. What most people want at this moment is stability and security, after many years of political and economic turmoil."
So - while recognizing the need for stability, and the people's strong preference for stability, I am suggesting that leadership must:
(1) provice political leadership in informing the people of the costs they are suffering due to overvaluation of the currency, and
(2) provide sound public management processes for making appropriate adjustments to the exchange valuation of the currency which over time will eliminate that overvaluation.
"Markets fear banks have $1 trillion in toxic debt"...
http://tinyurl.com/3ydkbp
"Anatomy of a credit crisis"...
http://tinyurl.com/27cxlf
"How Millions of American Will Lose Their Homes"...
http://www.youtube.com/watch?v=b...h?
v=biP2JOf5euo
"The financial website MoneyExpert.com said 3.27 million people had had credit-card applications rejected in the six months to the end of September - 17 per cent more than in the previous six months."
"Esther James, of Moneyfacts.co.uk, said: "Its seems as if the credit crunch is beginning to cause credit card chaos - 125 fee and rate increases inside two months is staggering."
http://tinyurl.com/2u6lvv
"More than a million households have had to pay their mortgage or rent using a credit card in the last year alone, new research shows."
"According to housing charity Shelter, around six per cent of people have had to use credit to pay for the roof over their heads, with younger people the most likely to fall into the trap"...
http://tinyurl.com/3bdk3n
A naive question, OW:
If you factor in the second-order effects of a high oil price on the world economy -- e.g. shift towards alternative energy sources, inflation, contraction, etc. -- is meeting the OPEC quota still the best policy for Venezuela?
I'm sympathetic of Chavez's policies and, from a distance, I even consider some of your criticisms unfair. I think he has to be very political and pick his battles very very carefully.
Finally, great work you're doing, OW!
"If you factor in the second-order effects of a high oil price on the world economy -- e.g. shift towards alternative energy sources, inflation, contraction, etc. -- is meeting the OPEC quota still the best policy for Venezuela?"
I don't think I understand the quesion. Are you asking if Venezuela should think about exceeding the quota to help bring prices down?
"I don't think I understand the quesion. Are you asking if Venezuela should think about exceeding the quota to help bring prices down?"
You suggest that Venezuela's policy of restricting output (and lobbying for other countries to do same within OPEC) to raise the price did accomplish the goal. So, presumably Venezuela (including here its ability to persuade other OPEC members) has some market power. Right?
So my question is, how sustainable is the current price? I'm not suggesting that Venezuela should act as an OPEC scab and expand output on its own. But if Venezuelan leaders got to think that the current prices are not sustainable, then they'd want to persuade the rest of OPEC to expand output (and the quotas). No?
So, I'm asking you (since you're obviously on top of oil matters), what your take is on whether the price is sustainable or not. I don't have a clue as to the elasticities involved and I'm hoping to get a sense of the orders of magnitude involved by picking your brain.
I think the current prices are fairly sustainable. Of course, a lot depends on world events many of which are not within VEnezuela's or OPEC's control.
First it should be said that the current prices are sustainable in the sense that they do not impose any undo burden on consumers that would cause consumers to radically alter their behaviour or go into a recession. Gasoline is still fairly competative in price with bottled water after all!! Historically speaking and relative to peoples income prices are not all that high and so I think in that sense prices are sustainable.
Now the other part of the question is are supply and deman likely to stay balanced. If supply were to grow more rapidly than demand prices would tumble.
If Iraq were to be subdued I think the US would ramp up production there to break OPEC.. In fact that was their plan all along - it just didn't work.
But failing subdueing Iraq they have a problem. Most non-OPEC sources are rapidly depleting and so as time goes by OPEC gets stronger and stronger. Of course, maintaining a cartel is never easy, but the balance of power is steadily tipping in OPECs favor. And ten years from now it will be even more in their favor.
The end result is that OPEC should continue with its current policy of very moderate production increases and with constant readiness to make cuts should the market soften. Their handling of last years market softening was superb and hopefully they'll keep the good work up. And hopefully the US doesn't win in Iraq
"Dollar hits 26-year low against pound"
"Analysts said today's falls had been sparked by comments made by Cheng Siwei, vice chairman of China's National People's Congress. He told a Beijing conference on Tuesday that China would "favour stronger currencies over weaker ones, and readjust accordingly"."...
http://tinyurl.com/2u6ezj
"Wen warns China will do what it takes to rein in stock market"
http://tinyurl.com/39vn4j
"General Motors makes record $39bn writedown"...
http://tinyurl.com/3yt2ly
"Northern Rock shares in new slide"...
http://tinyurl.com/2dcu4s
""However what might be troubling was the way he said it, urging the armed forces to remain vigilant, and calling the way the reform took place as a self coup de etat based entirely on procedure.
The reform process may have its flaws inherent in content, but the opposition claiming that a constituent assembly was needed is painfully interpretive of the constitution (something only the Supreme Court can do) and also irrelevant (as if the govt would not win the majority of the seats in the new assembly) meaning it is an archane procedural process designed to stall and therefore crash the reform, entirely non-democratic way of dealing with it.
But to actually call on the armed forces to remain vigilant is the worst scenario possible, they have no role outside their constitutional borders and evidently politics is outside of it.""
The above comment made about General Baduel's pronouncement is quite disingenuous for someone constantly praising the very person who most alludes to the armed forces to do the very same thing but on his behalf--president Chavez. Chavez is constantly pounding the table on what he calls the new role of the armed forces, by which he means being active in non-military matters, such as politics, social activities, etc. He often calls for their political standing on behalf of his project. So to deny the same right to Baduel is like manipulating the cards or dice in the game of chance.
Chavez is constantly pounding the table on what he calls the new role of the armed forces, by which he means being active in non-military matters, such as politics, social activities, etc. He often calls for their political standing on behalf of his project. So to deny the same right to Baduel is like manipulating the cards or dice in the game of chance.
Anonymous | 11.08.07 - 9:21 am | #
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Chavez is the elected President leading a progressive process, whatever its flaws and warts might be. As is not unusual in third world societies the military is the most well organized and capable single institution in the country. When I was in Venezuela I saw a soldier assisting in a Mission Identification activity that was helping individuals and the country too. My wife was able to replace a lost cedula (national identification card) with no fuss, no muss, no fraud, no bribe, no "come back tomorrow." She was very happily surprised. She had corroborating documents and her unalterable finger prints. That's all she needed. It's good for soldiers to assist in such things, isn't it?
Your remark about Baduel remains biased and prejudiced, since you are denying him the same right you applaud about Chavez.
No way can the flaws and warts be ignored, no matter that I may agree about the progressivenes of the process, since the end do not justify the means. Quite the contrary, the means define the quality and perfectness of the end.
Regarding the soldier who helped you wife, his assistance is to be applauded, but it would have been much more praiseworthy had he been a civilian no taking orders.
As to the well organized and capable military of third world countries, perhaps they are third world countries precisely because of that characteristic about the military, which in many many cases maintain their countries subjugated through dictatorships, ignorant and unhealthy.
But you are wrong in that the church is even better organized and capable than the military in third world countries, with the added positive that they never appropriate themselves of governmet, do not kill and torture those they dislike.
I do not wish to abuse your generosity of allowing strangers to use your blog space, but I find myself obligated to seek clarification of what I consider misleading and diverting remarks regarding what's going on in Venezuela.
In this regard, I find it incomprehensible that you seem to be nonchalant and perhaps consider irrelevant the fact that Chavez twice tried to overthrow a democratically elected President by force causing the deaths of innocent people, that he has more than once violated the very Constitution he set in place through popular vote to concentrate power in himself as not even the most severe dictators have ever had in Venezuela or elsewhere.
Rather than just pass over Baduel's opposition to the constitutional reform and wrongly criticize his legitimate and rightful calling to the military, which is what Chavez does every day, why don't you analyze and discuss the REASONS given by Baduel for his position? Why do you think he accuses Chavez of a coup? Why don't you go back to his address when he retired from government and analyzed what he said to Chavez? Why don't you look into the fact that Baduel finds himself opposing the same man he saved from shame and returned to power on April 2?
Let me get this straight:
Pre-Chavez, quota busting by Venezuela is solely responsible for low oil prices worldwide, hence Venezuela's economic decline in early 90's,
After Chavez, b/c of his actions oil prices tripled. Hooray for Hugo!
Pre-Chavez PDVSA Corrupt.
Post Chavez PDVSA - Weeeeee!
pre-Chavez PDVSA wanted to cheat OPEC out of quotas, that is why they hated Chavez so much. Chavez came in and fought them to restore quotas. YAY CHAVEZ!!!!!
LMAO.......that is fine comedy.
OPEC: EVERYONE CHEATS, PERIOD!!!! Keeping the price high, and setting a cap, is a powerful incentive to squeeze just a little more out and fudge the numbers.
PRICES OF OIL THROUGHOUT THE PAST 20 YEARS, FELL AND ROSE MOSTLY DUE TO FACTORS OUTSIDE OF OPEC's CONTROL. Wars in Middle East, Katrina, US Strategic Reserve. CHAVEZ DID AFFECT it, when he provoked the PDVSA strikes - and arguably....arguably in 98, but it went down again. .
The only country that historically can make a real difference is Saudi Arabia.
PDVSA was autonomous and operated as a private oil company. As such it operated reasonably efficiently and was a meritocracy, . It was fairly transparent as a state company, and as a modern company, subject to both SEC filings and required to deposit money in Venezuelas Central Bank. It reinvested prudently to keep production levels, and also developed some technologies. Was there corruption, Politics, favoritism. OF COURSE! Nothing like what was to come.
So Chavez destroys autonomy, brings it under his thumb, super ministry. fires 18,000 workers, many who were educated at State expense in some of the
best schools in the world. LOSING VALUABLE HUMAN CAPITAL. WHOM THE COUNTRY HAD INVESTED IN. CHAVEZ CRONIES placed in top management positions, some with low level industry experience - if that.
He creates exceptions to the Bank requirement, creates a huge slush fund.
THERE IS NO OVERSIGHT...in unparalled boom, billions of dollars are disapearing. Million dollar "commercialization" contracts, payable in foreign banks, to pay off opposition people. Multi-Million dollar contracts "A dedo" to companies with one employee - related of course to people close to managers. Crazy over-payments for equipment. Bags of money flying around in PDVSA planes. Investments???? None. PDVSA in an "operational crisis" according to a top manager a couple months ago.
NO, the real issue in Venezuela is not about production quotas, it is about having an idiot squandering away tens of billions of dollars
Boli-Nica wrote
PDVSA was autonomous and operated as a private oil company.
PDVSA was never autonomous to the point of operating independently from government policies and priorities. It was always a public company subject to government. Government controlled its Board of Directors who had the obligation of supervising and controlling the president of the company. The fact that the Board and government did nothing to this effect does not make independent.
PDVSA did operate as a private oil company and thus contrary to the best interest of the owners of the oil and in contradiction to its purpose and obligations. The fact that the government allowed it to do so does not make it right.
in conclusion, PDVSA operated against the interestt of the nation, but more important against the interest of the owners, since it was never in their best interest to increase production at any cost in order to sell it at any price, which was the philosophy and strategy of PDVSA in those years. That is why many sensible veneuelans repeatedly wrote in newspapers and elsewhere criticizing PDVSA and the government on these matters of production and pricing--ie, oil policy.
some anonymous person said
"No way can the flaws and warts be ignored, no matter that I may agree about the progressivenes of the process, since the end do not justify the means. Quite the contrary, the means define the quality and perfectness of the end. "
I agree that the flaws cannot be ignored. I see lots of free flowing denunciations, complaints, suggestions, back and forth discussion taking place on aporrea. Also it is taking place on the streets, job locations, in the schools all over Venezuela. Now, I am a New Yorker, of a Jewish hreitage, from an older time. I am not culturally Venezuelan. What might strike me as something quite serious might not even come up on the radar of most Venezuelans, and vice versa. What I always come back to, even though I do sometimes express an opinion about events in Venezuela is that Venezuela must have the space to work its problems and dissareements out without meddling and interference especially from the USA. Since no person is perfect, since a revolution involves millions of people in social and political motion, it will often appear to be incoherent, especially to an outsider. So I take my exceptions to what I understand is going on with a grain of salt.
Like I always say, "let Venezuela be Venezuela."
Whether PDVSA got so caught up in behaving as a "company" - versus providing revenue to the state during the 90's, and whether its production levels were affecting overall revenue in the 90's, ultimately has nothing to do with the deliberate decisions Chavez made to provoke a conflict (he says so himself) in order not only to kick out a few directors, but to fire and blacklist the core of the companys technical competence and efficiency. It was about control and ideology, and not on OPEC quotas. "decentralization is neo-liberal nonsense" as he has said himself. He wanted it all under his thumb, to fund social programs (good) and for industrilization schemes (stupid), to pay Evo and Fidel (bad, and stupid).
Regardless of how the money is spent, you are still left with the issue of competence. This issue was not addressed and it is critical. If you are State owned or private, you still have to keep your expenses down. You can keep production at a certain level, but if your costs get higher, you don't make as much. There are multiple ways to mess up with crude - and I am not talking about the obvious environmental ones. If your people have no clue what they are doing, there can be hell to pay. The NYT article pretty much illustrates this well. And it is a huge problem.
Venezuela according to Transparency International is one of the most corrupt governments in the world, the most corrupt in Latin America besides Haiti. There is little oversight for government expenditures, and transparency in issuing government contracts. Venezuela is also receiving a windfall of billions of billions of dollars - in real dollar terms arguably the biggest boom ever. SO WHAT HAPPENS when you get a corrupt state, which runs the biggest industry, which is making billions of dollars of revenue? Theft on a huge scale.
"ultimately has nothing to do with the deliberate decisions Chavez made to provoke a conflict (he says so himself) in order not only to kick out a few directors, but to fire and blacklist the core of the companys technical competence and efficiency."
Sorry but the conflict was provoked by the PDVSA management, not Chavez. They went on strike in 2001 and again in 2002, even having played a role in the A11 coup through a strike. Chavez's mistake was to have indulged them for so long and not having fired them earlier.
As to what they wanted - they are very clear. Go to the Gente De Petroleo web-site and you can read what all their demands were - Chavez's resignation, the firing of Ali Rodriguez,etc. They also have articles against OPEC.
Right now PDVSA is well past what the old PDVSA did. They are not only running their own business but have taken over the operating agreement fields and not the Orinoco belt fields. Running those shows a level of competance (and desire to hold down expenses) that the old PDVSA clearly never had.
And you say theft on a huge scale? Where? Certainly not in PDVSA. They have been audited and got a clean bill of health.
I will comment on the last three messages from Weixel, Boli-Nica and OW.
I agree that Venezuela should be left to itself to resolve its own issues, but today this is almost impossible to do, as we have seen repeatedly in many other countries. And its even more complicated when one side goes international or has foreigners participating (or meddling) for the other side not to do the same. The moment Chavez went to Cuba and began using Castro, he internationalized the process and ever since then has been even more effective than the opposition by spending the tons of money he has improperly appropriated from oil revenues to argue his case outside. And with the intervention of Cuba, its impossible to prevent the US and others from intervening as well.
Regrding PDVSA, I fully agree that a company must be efficient regardless of its nature and ownership. The issue, however, is to define efficiency because its not a universal concept to be applied universally in all cases. Efficiency for a private for profit company is not the same as for a non-profit company nor for a public company. Even cost reductions are not the same either. So we must be clear what we mean when we accuse PDVSA of being inefficient today. I don't support what Chavez did, but I also do not support what the employees did. PDVSA operates what is the life-blood of the country and cannot be left to the whims and desires of its employees even if they are right in their fears and anticipations. By the same token, the President is not free to do with PDVSA what he wills, because only the will of the owners (all venezuelans) is what counts. As public servants, both have a bigger responsibility to the citizenry, an accountability that has not been exercised by either side. In the case of Chavez, the issue is even more critical because he is the elected President. Unfortunately, Chavez is even more guilty than the employees in disrespecting his constitutional obligations and responsibilities toward the nation, and particularly in using the Treasury for his own personal gain --ie., power. This business that he is only promoting the welfare of the poor is nonsense. No military extract in history has ever been a true democrat. The dictatorship of the proletariat is not to be interpreted in a literal sense to justify the concentration of power any openminded, objective and neutral observer can easily see is taking place in the person of Chavez, not the presidency, not the State, not even the military, but Chavez. In addition to seeing how he managed to get control of the Supreme Court, as one example, just look at the contents of the constitutional reform he is now pushing.
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