You know things are horribly bad when the New York Times and Washington Post are frequently reporting on the economic devastation in the socialist paradise of Venezuela.
(Cross-post from my other blog, Outrun Change.)
11/25 – New York Times – Venezuelans Flee in Boats to Escape Economic Collapse – Mass numbers of people are fleeing Venezuela by foot, air, and now on rickety boats. The lack of food, water, electricity, and medical care is driving people away, reminiscent of the flood of people paddling away from Cuba on tied-together inner tubes.
I will paraphrase one quoted person: it is better to say farewell to your children and never to see them again at the airport compared to doing the same at the cemetery.
One industrial engineer who made his way to Brazil is cooking in a restaurant. He makes $400 a month, which gives him a better life that he had in Venezuela. Imagine the economic devastation when being a cook in Brazil results in a higher standard of living than being an industrial engineer in Venezuela.
In a tremendous shock to me, this article actually acknowledges that Hugo Chavez’s socialism-driven plan to take away wealth from the rich has succeeded in destroying the rich and the middle class, leaving everyone in the country cold and hungry, starving even.
Perhaps that is the biggest news in the article.
10/31 – Bloomberg – Venezuelans Give Up on Counting Piles of Cash and Start Weighing It – emerging trend is retail stores weighing currency instead of taking the time to count it. In order to pretend the severe inflation doesn’t exist, the government has not printed larger bills. As a result purchases are paid in currency were the largest bill is worth about $.10. Imagine going out to dinner with your family and paying the bill in dimes.
One of the indicators of severe inflation is retailers having multiple trash bags of currency stashed around the store until you have a chance to put it in lots of boxes to carry to the bank.
The government is finally asking discreetly for companies to submit bids for much larger currency, 1000, 10,000, or perhaps 20,000 bolivar notes. That would not slow down inflation obviously but would make it easier to buy things if you could use one 10,000 bolivar note instead of a hundred 100 bolivar notes.
As another indicator of distress, ATM machines are restocked every few hours instead of every few days, as was the case until recently.
12/2 – Bloomberg – Want Groceries in Venezuela? First Stop at Six ATMs – To keep from running out of cash quite so fast, many ATMs are set for a daily limit of 6,000 bolivars.
That is not quite enough to buy two bags of rice.
The 100 bolivar note, the largest in circulation, is worth about 2 U.S. cents.
11/27 – Washington Post – Venezuela’s currency is so devalued it no longer fits in ordinary wallets – Article describes the devastating effect of severe inflation on everyday transactions. Buy a pack of cigarettes takes 20 of the 100-bolivar notes. A quoted taxi driver gets paid with 100 20-bolivar notes.
That volume of currency means kiosk owners carry home a large volume of currency at the end of the day. Some make a couple runs home to reduce the risks from holdups. ATM machines need to be refilled every few hours because they can’t hold enough currency.
Articles in the local papers are saying the government will start printing notes ranging from 500 bolivar up to 20,000. I will believe that when it happens, because doing so would acknowledge inflation is out of control.
11/3 – Fox News Latino – Venezuelan military to take over distribution of medical and surgical supplies amid shortages – All medicines and even basic supplies are scarce in Venezuela. In order to more efficiently distribute all such supplies, the military will take over distribution.
Yes, the military will now handle all the medicines, surgical supplies, and medical supplies for all hospitals in the country.
The government has refused any humanitarian aid.
Might be time to change that policy. The article says the government says that out of all people admitted to hospitals last year, one-third of them died.