This Is What $100 Buys You In Venezuela

Authored by Simon Black via SovereignMan.com,

The gunfire on the streets near my hotel started around 9pm last night.

The sound is unmistakable, especially at night on an otherwise quiet city street.

I had recently returned to the hotel after a few evening meetings. And coming back after dark it was as if they had rolled the sidewalks up — restaurants with no patrons, bars and clubs that were totally empty.

There was an incredibly striking woman I remember, standing in front of her restaurant playing hostess to absolutely nobody.

And with few people on the streets, it felt like some sort of zombie apocalypse.

Amazingly enough this country used to be THE wealthiest in the region. And not too long ago.

Throughout the 1950s, 60s, and 70s, Venezuela enjoyed robust growth. Low inflation. Substantial foreign investment. High wages. It was the envy of Latin America.

It was all based on one industry: oil. Venezuela has effectively been a one-trick pony for decades.

And when oil prices were strong, the government was swimming in cash. Even as recently as 2007, the Venezuelan government’s oil revenue was so high that they PAID OFF ALL FOREIGN DEBT.

Think about that: only ten years ago Venezuela had ZERO foreign debt.

But at the same time the government here had a long history of excessive spending. Social programs. Military. Fuel and electricity subsidies. Whatever it took to remain in power.

The government spent so much money that, even when oil prices exceeded $100 per barrel between 2011 and 2013, they STILL couldn’t break even.

Then oil prices collapsed. By early 2016, a barrel of oil was fetching less than $30.

Venezuela’s public finances were in shambles… so the government resorted to the same old tactics that nearly every bankrupt government has relied on throughout history.

For one, they started spending their foreign reserves– essentially burning through the public savings account.

Today Venezuela has its lowest level of foreign reserves in decades, less than $10 billion, compared to $42 billion in December 2008.

They’ve also sold off a huge portion of their gold reserves.

In late 2015 Venezuela held 373 metric tons of gold. Today that’s down to 188 metric tons, a nearly 50% drop in less than two years.

More importantly, though, the government has resorted to printing incomprehensible quantities of paper currency and vastly expanding the central bank balance sheet.

This chart is really amazing to see– the Venezuelan central bank’s balance sheet literally TRIPLED in a SINGLE MONTH between April and May of this year.

They keep printing more and more money, to the point that the currency has become totally worthless.

I remember coming here a few years ago when the black-market rate was around 8 bolivars per US dollar.

On my next trip, it took 100 bolivars to buy a dollar in the black market. And the rate kept dropping with each trip.

This time I exchanged dollars at around 27,000 per US dollar. Meanwhile the ‘official’ rate is a laughable 10:1. It’s a nearly 3000x difference.

So, depending on which exchange rate you use, Venezuela is either absurdly expensive or absurdly cheap.

A ride from the airport was about 80,000 bolivars. At official rates that’s EIGHT THOUSAND DOLLARS. For a taxi ride.

But at black market rates it’s less than three bucks. Quite a difference.

Last night I exchanged $100 and received this brick of cash in exchange.

Needless to say this monetary insanity makes life extremely difficult.

Anything imported is prohibitively expensive. And with the economy collapsing, domestic production is also grinding to a halt.

There’s very little economic activity. People are sitting in their homes trying to survive. Medicine is scarce. And even staples like food are running out… which is totally nuts.

Venezuela is a vast country with rich, fertile soil and abundant sources of water. There is absolutely no reason why there should be food shortages here.

Chalk up another victory for socialism and central planning.

In their desperation, people are turning to crime, prostitution… anything they have to do to make ends meet. I routinely see people picking through garbage cans eating scraps, anything they can find.

Incredibly there is still a hint of normalcy in the city, at least during the daytime.

People are out on the streets going about their lives… heading to work, taking their kids to school, playing sports, chatting with their friends.

I find it remarkable how well this place has held itself together. Venezuelans constantly display ingenuity and resilience in their ability to deal with such an epic crisis.

And the good news is that this will one day get better.

The government has nearly run out of money and is dangerously close to defaulting on its debts. At some point they’ll no longer be able to pay the armed thugs who keep the population in line.

It’s inevitable. Totalitarian governments almost invariably fall when they run out of resources to sustain themselves.

It may get worse before it gets better. But eventually this madness and oppression WILL come to an end, whether through war, revolution, peaceful means.

What I find so strange is how little optimism there is for Venezuela.

By comparison, investors are perennially excited about Cuba. People have been saying for decades that Cuba will be an investment paradise once the authoritarian regime comes to an end.

Sure, great. I’ve been to Cuba. I like it. And there will certainly be great opportunities there.

But few people apply this same logic to Venezuela. And I find that strange.

This place is huge. There is SO MUCH opportunity here. 30+ million people. Enormous reserves of natural resources. Plenty of coastline. Ports. Infrastructure. Manufacturing capacity. Strategic geography. Renewable energy.

Whether it’s next year or ten years from now, this country has the potential to some day become one of the most exciting places in the world. 

Do you have a Plan B?

"Then True Hunger Crept In Where I Live" - An AP Reporter's 3 Year Nightmare In Venezuela

Authored by Hannah Dreier via APNews.com,

The first thing the muscled-up men did was take my cellphone. They had stopped me on the street as I left an interview in the hometown of the late President Hugo Chavez and wrangled me into a black SUV.

Heart pounding in the back seat with the men and two women, I watched the low cinderblock homes zoom by and tried to remember the anti-kidnapping class I’d taken in preparation for moving to Venezuela. The advice had been to try to humanize yourself.

“What should we do with her?” the driver asked. The man next to me pulled his own head up by the hair and made a slitting gesture across his throat.

What might a humanizing reaction to that be?

I had thought that being a foreign reporter protected me from the growing chaos in Venezuela. But with the country unraveling so fast, I was about to learn there was no way to remain insulated.

I came to Caracas as a correspondent for The Associated Press in 2014, just in time to witness the country’s accelerating descent into a humanitarian catastrophe.

Venezuela had been a rising nation, buoyed by the world’s largest oil reserves, but by the time I arrived, even high global oil prices couldn’t keep shortages and rapid inflation at bay.

Life in Caracas was still often marked by optimism and ambition. My friends were buying apartments and cars and making lofty plans for their careers. On weekends, we’d go to pristine Caribbean beaches and drink imported whiskey at nightclubs that stayed open until dawn. There was still so much affordable food that one of my first stories was about a growing obesity epidemic.

Over the course of three years, I said good-bye to most of those friends, as well as regular long-distance phone service and six international airline carriers. I got used to carrying bricks of rapidly devaluing cash in tote bags to pay for meals. We still drove to the beach, but began hurrying back early to get off the highway before bandits came out. Stoplights became purely ornamental because of the risk of carjackings.

There was no war or natural disaster. Just ruinous mismanagement that turned the collapse of prices for the country’s oil in 2015 into a national catastrophe.

As things got worse, the socialist administration leaned on anti-imperialist rhetoric. The day I was put into the black SUV in Chavez’s hometown of Barinas coincided with a government-stoked wave of anti-American sentiment. The Drug Enforcement Administration had just jailed the first lady’s nephews in New York on drug trafficking charges, and graffiti saying “Gringo, go home” went up around the country overnight. An image of then-President Barack Obama with Mickey Mouse ears appeared on the AP office building.

I was trying to make small talk with the men who had grabbed me when we pulled past a high, barbed wire-topped wall, and I glimpsed the logo of the secret police. Flooded with relief, I realized I hadn’t been kidnapped, just detained.

Inside, the men trained a camera on me for an interrogation. One said that I would end up like the American journalist who had recently been beheaded in Syria. Another said if I gave him a kiss I could go free.

The man who had been driving said they would be keeping me until the DEA agreed on a swap for the first lady’s nephews. He accused me of helping sabotage the economy. “How much does the U.S. pay you to be their spy?” he asked.

The government of President Nicolas Maduro blames the U.S. and right-wing business interests for the economic collapse, but most economists say it actually stems from government-imposed price and currency distortions. There often seemed to be a direct line between economic policy and daily hardship. One week, the administration declared that eggs would now be sold for no more than 30 cents a carton. The next week, eggs had disappeared from supermarkets, and still have not come back.

In the early days, the shortages seemed almost whimsical. My Venezuelan friends were used to going on Miami shopping sprees. When I made trips home, they asked me to bring back perfume, leather jackets, iPhones and condoms. I usually took two near-empty suitcases to carry back the requests, plus food and toiletries for myself. As the crisis deepened, the requests became harder to fill, and traced the outlines of darker personal dramas: Medication for heart failure. Pediatric epilepsy drugs. Pills to trigger an abortion. Gas masks.

And things were still somehow getting worse. The first time I saw people line up outside the bakery near my apartment, I stopped to take photos. How crazy: A literal bread line.

Then true hunger crept into where I lived. People started digging through the trash at all hours, pulling out vegetable peelings and soggy pizza crusts and eating them on the spot. That seemed like rock bottom. Until my local bakery started organizing lines each morning, not to buy bread but to eat trash.

People waited for their turn to hunt through black bags of bakery garbage. A young woman found a box of muffin crumbs. A teenage boy focused on finding juice containers and drinking whatever remained.

The collapse has been so quick that the trappings of flusher times have not yet disappeared. The capital is still filled with fine restaurants, though tables are often empty. Luxury car dealerships still line the streets and lure people with access to dollars or who have gotten rich off corruption. Many Venezuelans have bodies sculpted by plastic surgery and movie star smiles from years of braces and professional whitening.

At the same time, crime has become so pervasive that it fades into the background of even the swankiest places. One afternoon, I walked past two men in motorcycle helmets talking with customers on a restaurant patio. When I asked the cashier inside for a bottle of water, she gave me a funny look. Once the men left, she explained that they had just robbed everyone outside at gunpoint. Hadn’t I noticed?

People rarely call for help, and with the murder rate surging to become the highest in the world, it’s easy to understand why. Thugs killed a young doctor at the end of my block when he accidentally dropped his cellphone during a daylight robbery. Mindful of the doctor’s fate, I handed over my whole purse when I was mugged a few months later.

In the end, the secret police cut me loose a few hours after they arrested me, with a warning not to return to the city of Barinas. The burly men put me in the same black SUV and drove me to the airport, then watched with crossed arms as I boarded the plane to Caracas.

Finally, this summer, I decided to leave the country on my own accord, heading to the airport with full suitcases instead of empty ones.

This is where I should mention the gorgeous gold and blue parrots that fly in pods over the capital. Or quote Gabriel Garcia Marquez, who once wrote of Caracas, “It is one of the beautiful frustrations of my life that I did not stay forever in that infernal city.” Or tell of the joy that comes with unexpectedly finding milk at the store, or having running water all day.

Instead, I’m thinking of Nubia Gomez, who does cleaning and maintenance in my apartment building and cried when I told her I was leaving. Sadness is just under the surface for so many here. Gomez’s daughter has moved to Spain, and her friends and clients are also departing. Trying to say something comforting, I suggested things might get back to normal before too long.

“They won’t,” Gomez said as she wept. “Not for a long time.”

"It's Madness" - Massive Anti-Government Protests In Venezuela Worsen, Patterns Emerge

Authoired by Mac Slavo via SHTFplan.com,

As protests against Venezuela’s “democratic socialist” government roll into their third month, Dr. Henrique Montbrun, who oversees the triage post in the municipality of Baruta, says the violence in the country has reached unprecedented levels. “It’s madness,” he says.

As more people take to the streets to demand their freedom back in a nation where tyranny took a firm hold shortly after the election of self-proclaimed socialist, Nicolaus Maduro, the country descended into complete government control, and the only people with money, are now those in the government.  Socialism is fair that way; as no system more equally distributes poverty, except maybe communism. But a pattern is now emerging in the battle for basic human rights and minimal freedoms.

The clashes between the demonstrators and security forces are entering their third month, and even doctors say that they can no longer predict the type of violence to prepare for, but they can predict that there will be increasing numbers of injuries and death.

The only pattern emerging is one of even more violence.

Dr. Montbrun says that the injuries sustained at the beginning of protests were largely superficial, usually buckshot wounds. More recently, however, as protesters have gone up against an increasingly desperate government, protestors have been treated for 5cm-deep holes caused by metal marbles shot at close range.

“Violence doesn’t surprise me but the level of hatred security forces are showing towards average citizens and the use of non-conventional weapons like loading tear gas canisters with nails and marbles does take me aback,” Dr. Montbrun says.

According to the public defender’s office, 67 people (including minors, students, passersby, and national guards) have died during or as a result of the protests. On Wednesday, an 18-year-old died of an explosive-related wound to the chest and a national guard was murdered causing a rash of even more anti-government protests. And yet, despite the escalation of violence, protesters remain in the streets trying to demand their freedom.

“I am not afraid,” says Rosmery Indare, 19, who arrived barely conscious at the triage post. “They threw several gas bombs and we all ran. I tried to go into a nearby mall but most shops had closed and I was cornered.”

Rosmery described how two national guards clubbed her in the legs and knees while threatening to jail her. “They’re not going to stop me from marching,” she says.

“I haven’t had a chance to enjoy my country because they stole it from us but this time, I am sure, we will recover [it].” –The Guardian

As the Venezuelan government continues to starve its own people through regulations and kill for protesting their own starvation, the resolves of those living under the oppression of socialism seem to continue to harden. Venezuela destroyed their own economy with socialist policies, which are carryovers from Hugo Chavez’s reign of terror. With inflation rising by 800% in 2016 while the economy shrank by 18.6% over the same period, according to the central bank, crime has soared with over 28,479 homicides in 2016.  That leaves Venezuela with one of the highest murder rates in the world, and the worst economy. Finding food or medicine has become nearly impossible, except for the very few who can afford black market prices and the risk of death.

Unfortunately, it looks as though Venezuela’s situation will worsen before it improves.

Is This The Worst Guy On The Planet?

Authored by Simon Black via SovereignMan.com,

Jose Rafael Torrealba wins the award for biggest scumbag on the planet today.

Torrealba is a Venezuelan army general who was featured in a leaked audio recording that was just published yesterday.

The recording is of a meeting that took place a few weeks ago in Venezuela in which he and his fellow generals discuss how to keep the civilian population under control.

Torrealba’s solution? Use snipers against his own people.

“There will come a time when we will have to employ them [the snipers] and I want us to be ready for the moment that we have to employ them because the president will not remain at a green [preparation] phase, gentlemen.”

One general at the meeting who could not be identified voiced opposition to the plan, saying that “if we keep going with the issue of the snipers, all of us here will end up in jail.”

Apparently the obvious moral reasons for not using lethal force against your own people didn’t factor into their logic.

Torrealba indicated that he didn’t care for public perception. And even after admitting it was unconstitutional, he ordered everyone at the meeting to make preparations to use snipers.

That was back in April. Since then dozens of people have died, including a 17-year old kid who was shot in the head earlier this week.

Bear in mind that Venezuelans are literally starving; the food shortages that have plagued the country are getting worse, and people have resorted to digging through garbage cans and eating tree bark.

They’ve also taken to the streets to voice their disgust.

Naturally, the government has rolled out the full force of its military to crush any political dissent and anti-government activism.

This is a country that has some of the most abundant resources in the world– massive oil reserves, huge manufacturing capacity, abundant farmland and fresh water supplies, deep water ports, diamonds, gold, natural gas, hydropower, etc.

They have everything. Few nations on this planet are blessed with as much raw potential as Venezuela has.

In fact Venezuela should be, by far, the wealthiest, most advanced country in Latin America.

You have to work REALLY, REALLY hard to screw up something with THAT much potential.

But that’s precisely what’s happened. Frankly it’s astounding to see how much the Venezuelan government’s corruption and socialist bullshit has devastated the country.

And now they’re just flat-out killing people in order to maintain power.

It’s terrible to see so many millions of people suffering and trapped with no way out. And it truly underscores the importance of having a Plan B.

Hopefully wherever you live in the world never turns into Venezuela where murderous thugs like Torrealba are in power.

But if history is any indication, sometimes the world surprises us. Political instability, financial crises, terror attacks, etc. can change everything overnight.

Two days ago Brazil was relatively calm. Then yesterday a major political crisis struck. Within minutes the stock market and currency crashed.

Four years ago in Cyprus, everything was pretty normal. Then everyone woke up the next morning to find that their banks were insolvent and their accounts were frozen.

We unfortunately live in a world where even some of the most advanced, developed countries in the world, including the US, UK, France, Italy, Japan, etc. are buried under mountains of debt.

US government debt is now unofficially north of $20 trillion (officially it’s at $19.9 trillion, but only because of the debt ceiling nonsense…) and household debt just hit another record high.

These aren’t healthy indicators that make for a consequence-free environment.

Acknowledging obvious risks, especially big macro risks that stem from the pitiful, long-term political decisions, is a totally rational thing to do.

Look at the US retirement system–

Social Security’s Board of Trustees, which includes the Treasury Secretary of the United States, publishes a written report each year telling the world that Social Security is running out of money.

The government has completely screwed up this program, and the Trustees are candid about its dire finances.

It’s not crazy to acknowledge this obvious risk to your retirement and take basic steps to protect yourself from the consequences.

This could mean establishing a more flexible, robust retirement account where you can set aside more money and invest in more attractive asset classes.

Simply setting aside an extra $1,000 per year and boosting your returns by just 1% could mean hundreds of thousands of dollars in extra retirement savings.

So when Social Security runs out of cash, you’ll be just fine.

And if by some miracle they’re able to save the program, you’ll still be OK.

It’s hard to imagine you’ll be worse off for having a few hundred thousand dollars in extra retirement savings.

You can extend that same logic to so many other aspects of your life.

It’s hard to imagine you’ll be worse off because your savings is in a safer, better capitalized bank… or a portion of it is held in physical cash in your safe.

It’s hard to imagine you’ll be worse off for having a second citizenship, allowing you and your family the freedom to live, work, travel, and do business in another part of the world, with future generations able to inherit those same benefits.

It’s hard to imagine you’ll be worse off for taking completely legitimate steps to reduce the amount of tax that you owe.

And that’s the whole point of a Plan B: taking rational steps that make sense regardless of what happens or doesn’t happen next.

Venezuela is obviously an extreme example.

But anyone who takes an objective look at the numbers, even in the supposedly ‘wealthiest’ countries in the world, can see that there are far too many threats to your long-term wealth and prosperity to ignore.

The solutions are simple, and many of them require almost no investment… simply a little bit of education, and the will to take action.

Do you have a Plan B?

As Venezuelan "Bread War" Escalates, Maduro Warns Bakers "You Will Pay, I Swear"

With its people resorting to eating flamingoes, the Venezuelan government has decided to find yet another thing to blame for the collapse of the socialist utopia - the bakers!

As The BBC reports, the Venezuelan government says it will expropriate bakeries which fail to abide by new government regulations aimed at tackling bread shortages.

In a growing row between the government and bakers, officials said that bakeries could face fines if people had to queue to get their bread. Severe shortages of basic goods mean that Venezuelans often have to queue for hours to buy essential items.

The government says the shortages are caused by an "economic war".

Venezuela does not produce wheat and relies on imports bought in by the government which it then sends to mills where it is ground and then distributed.

The government blames bakers for the bread shortages, accusing them of using the flour allocated to them to bake pastries rather than simple baguette-style bread in order to maximise their profits.

Croissants and other sweet baked goods are more expensive than baguettes and French-style breads, as the prices for the latter are controlled by the socialist government.

So the government has decided that more price controls will fix the problem and has unveiled new rules for bakers...

• Use 90% of flour to bake savoury bread and only 10% for pastries and cakes


• Provide a constant supply of bread throughout the day from 07:00 to 19:00


• Ensure next day"s supply by holding over bread from the previous day

And the rules will be strictly enforced...

On Sunday, President Nicolas Maduro announced that inspectors would be sent to 709 bakeries in the capital, Caracas, to ensure they were complying with the new rules.

He said that those "speculators who hide the bread from the people will face the weight of the law".

"They"re going to pay, I swear. Those responsible for the bread war are going to pay and they better not complain that it was a political persecution," he added.

Vice-President Tareck El Aissami warned that "bakeries which do not follow [the rules] will be occupied by the government".

As The Miami Herald notes, two bakeries were already seized for 90 days for breaking a number of rules, including selling overpriced bread.

Juan Crespo, the president of the Industrial Flour Union called Sintra-Harina, which represents 9,000 bakeries nationwide, said the government’s heavy hand isn’t going to solve the problem. “The government isn’t importing enough wheat,” he said. “If you don’t have wheat, you don’t have flour, and if you don’t have flour, you don’t have bread.” He said the country needs four, 30-ton boats of wheat every month to cover basic demand.

The notion that bread could become an issue in Venezuela is yet another indictment of a socialist economic system gone bust.

As Millions Of Venezuelans Try To Flee The Country They Run Into A Problem

While shortages of basic foods, medicines, and toilet paper may be a major societal problem, the people of Venezuela face an even more existential problem: the nation now lacks the materials to meet the soaring demand for new passports – making it almost impossible to leave the socialist utopia.

"People used to move to Venezuela from all over the Americas, Europe and Asia and now they are all trying to leave," Sonia Schott, the former Washington, D.C., correspondent for Venezuelan news network Globovisión, told Fox News.

While estimates of how many passport requests the socialist government received last year vary from between 1.8 million to 3 million, only 300,000 of the elusive documents were doled out.

Everyday, hundreds of people line up outside the passport agency, known as Saime, in the capital of Caracas in the hopes of obtaining one.

It’s an ironic, and yet sad situation, for a country that used to be one of Latin America’s wealthiest and one that was used to seeing people flock to, not away from.

Tomás Páez – author of “The Voice of the Venezuelan Diaspora” – told Bloomberg that since Chávez took power in 1999 nearly 2 million Venezuelans have fled the country and hundreds of thousands are marking their time until they obtains the funds and the passport that will allow them to leave.

Maduro has acknowledged the issue of the chronic shortages in passports and last week launched a new “online” option that will rush a passport to customers within 72 hours for about double the price of waiting in line. The website, however, has crashed numerous times and it is unclear how many passports have been expedited through this process. Saime has stated that the backup in processing passport applications is because the agency lacks enough “materials,” but did not specify what that means. Observers say that while the government may not be able to afford the paper to make the passport. Paper products in the country, including toilet paper, are in short supply in Venezuela. But skeptics think the Maduro government may also be trying to keep people from leaving the beleaguered nation.

“People with the means to get out want to, but the problem is you need a passport and you can’t get it,” Cynthia Arnson, the director of the Latin American Program at the Woodrow Wilson Center told Fox News.

“It’s kind of an excuse by the Venezuelan government that they don’t have materials, because they know the real reason people want a passport is to leave the country.”

Most of Venezuela’s 30 million resident, however, don’t have that kind of money as the monthly minimum wage in the country comes to less than $30 a month on the black market.