Comment by thnnb | Hacker News Reader

Comment by thnnb | Hacker News Reader

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Man, our intelligence service (SEBIN) -really- should spend a bit more on English classes.

Just kidding. But seriously, what I can't understand is how this comment misses the -actual- news here. Here's the other side of the picture: The actual, recent ground news have been reported mostly on Twitter because our media is intervened by the goverment.

A small sample:

A bank, looted. https://twitter.com/AndrewsAbreu/status/809937243280441344 Another. https://twitter.com/guasdualitotv/status/809918995512037376 Protests on a government bank. With smoke. https://twitter.com/MiguelCardoza/status/809892935181496320

The people are angry and despairing on the streets. This measure essentially makes 100 Bolívares bills useless, which were becoming scarce in previous months, so people naturally stockpiled them. You can't even buy a small pack of chewing gum with the highest denomination bill, so obviosly these stockpiles were big. This was done especially by the elderly, who don't understand / have trouble understanding ATM machines and electronic operations.

People are doing street-spanning queues to exchange those bills.

A queue for exchanging banknotes at 10PM. https://twitter.com/fmonroy/status/809955687333789696 Another photo: https://twitter.com/AleReportando/status/809981094925860864

I've heard about people crying on the streets, afraid of their savings dissapearing in thin air.

> "the gov is finally accepting that we have a huge inflation"

No, it isn't. There's ZERO recognition of the goverment on this. The party line is that this measure was necessary to "attack bill trafficking mafias on Colombia and other countries" https://www.theguardian.com/world/2016/dec/12/venezuela-pull...

> "this is actual good news for venezuelans because even tho we still suffer all the problems we have"

Problems which were caused by the government to begin with. This is essentially a ham-fisted solution to a problem the bolivarian revolution created out of ideological dogma and fiscal irresponsability. Foreign exchange controls, printing money like if there were no tomorrow during previous years, institutionalized corruption, nationalizing industry and then crashing production.

This is our situation here. I'm usually just a lurker on HN, but your apologist tone makes my blood boil. If other HN netizens have questions or want more details I'm willing to answer them.

Thank you for showing another side to this.

Just to get a fuller picture of the situation in your country, if you were the President, what actions would you take to stabilise the economy? I'd like to find out if you think there are practical measures that are being overlooked in the current chaos.

That's a heavy question, indeed. I'm no economics buff, keep that in mind, but I'll try to sketch what I think should be done.

I'd say that the main problem is the multi-tiered foreign exchange system we have in place. There's an "official, protected, preferential" rate of 10 Bolívares per dollar, the SIMADI rate (674,34) and the parallel/black market rate (approximately at 2500 Bolívares this december right now). This system is what essentially makes our economy a mess. So called revolutionaries are just new burgueoisie wearing red shirts who import goods we no longer produce (food, medicine, industrial supplies, etc) with the cheap dollar and sell them as if they had used the black market rate (bemoaning "capitalism" as they do). The private sector is barred from the protected-cheap rate and has an extremely obscure access to the middle system (SIMADI), and that's if they're friendly with the government. Individual citizens can only use the black market rate, which is illegal. Solving this problem is conceptually easy: The foreign exchange should be unified, there should be only one rate for everyone to exchange Bolívares for foreign currencies. The public sector, the private sector and individual citizens should pay the same to get foreign currency. This looks evident, but there are many interests and people in power who benefit from the current system's corruption, stunting production, foreign investment and general trust in our currency.

Besides the foreign exchange rate there are a lot of subsidies in place that should be partially removed, progressively. Gasoline here is still dirt cheap (world's cheapest oil and that), sold below production cost. We still send oil to Cuba at a price below market rate out of "national friendship", even when our oil production is decreasing and some people scour thrash cans for food to eat. To say we get no economic benefit from giving away oil out of "national friendship" is putting it mildly. Given that we're primarily an oil exporting country, removing gas subsidies (progressively) and eliminating foreign gifts would alleviate some stress. Cooking gas, electricity and internet access are also subsidized. This is hard for me to say, but the price should also go up there. These public services have sporadic failures out of lack of investment, bad maintenance and lack of supplies to make repairs. It rains, the lights and the internet might go out, for example. If the situation remains as it is the public service infrastructure might go beyond obsolete and underfunded to outright useless due to lack of maintenance, which would be even worse.

Also, the government should stop intervening media and demonizing the private sector to blame it from the policies the revolution has implemented. This demonizing scares foreign investment, decreases production and, frankly, makes our people more stupid, which overall decreases our ability to make informed choices at everything. This is highly unlikely today, though. They want the people to be angry, looting local grocery stores and blaming "capitalists" for the scarcity of goods instead of the government that implements the policies that cause the scarcity itself.

There's more stuff, but that's the main course to begin changing things, I think.

Thank you for your response, those sound like some sensible reforms to me. Are there any local political groups currently pushing for any of these reforms? If not, can you see this type of political movement emerging as things get worse?

Also, do you think there's any chance of doing what Ecuador did in similar circumstances by making the US Dollar the national currency? At least until the fundamental problems are sorted out.

For groups pushing any of those reforms you need to start by omitting the largest opposition coalition (MUD). They propose no such reforms, just that the government should "do things better" and be "less cynical". Implicitly, the message is that they would do a better job, but nowadays no one believes them.

So far, two politicians come to mind. Leopoldo López (who is in prison) and María Corina Machado (who has been removed from mainstream MUD and derided as a "divisionist" by the MUD themselves). Their reach is extremely limited, though. No access to goverment-controlled media and conveniently forgotten or shunned by mainstream opposition.

Regarding Ecuador, I'm not sure. I do not have a full picture of the economic circumstances Ecuador considered then and how they relate to ours, right now. If anything, --if-- we were going to try that measure it should be after we try other methods to increase trust on our currency and then find them to be insufficient, I think.

To give some idea what happened in Ecuador...

https://en.m.wikipedia.org/wiki/Currency_of_Ecuador

"The sucre maintained a fairly stable exchange rate against the US dollar until 1983, when it was devalued to 42 per dollar and a crawling peg was adopted. Depreciation gained momentum and the free market rate was over 800 per dollar by 1990 and almost 3000 per in 1995.

The sucre lost 67% of its foreign exchange value during 1999, then in one week nosedived 17%, ending at 25,000/US$1 on January 7, 2000. On January 9, President Jamil Mahuad announced that the US dollar would be adopted as Ecuador's official currency. Protests led to his removal. Vice President Gustavo Noboa became president, only to confirm the government's commitment to dollarization.

On March 9, 2000, Noboa signed a law passed by Congress, replacing the sucre with the United States dollar at an official exchange rate of 25,000 sucres per US$1. Both currencies were to circulate, the dollar being used for all but the smallest transactions. Only coins would continue in the local currency."

Some kind of new political organization might come out of all the worsening things that are happening as people lose trust on an ineffective mainstream opposition, but I haven't seen it as of yet. So far all I see are people trying to get by at the levels of the individual and the family.

Those are fine points - but - it's way beyond policy at this point.

The only thing that will start to restore confidence is the removal of the current regime.

If there is a 'new entity' that has some credibility, and it basically stops the most obvious forms of totalitarianism ... then you could move back into a 'very bad but stable' situation. From there - it would take massive re-working of all levels of government because ultimately it's the culture of corruption, cronyism that is the root of all those 'bad policies'. If the systematic corruption is entrenched (i.e. government insiders holding large chunks of debt, insiders making money off the exchange process) - then there's no hope.

But step 1 has to be Maduro out. There's nothing he can do.

This is an accurate impression. The actual implementation of those measures I outlined is beyond what I can conceive right now. When it comes to short and mid term I've got no hope at all.

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