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Are Price Controls Coming To Venezuela, Where "Nymphomania" For Dollars Is The Next Big Thing

Tyler Durden's picture


In typical 'crazy-talk' ways, Venezuela is 'pledging' that its currency devaluation will not increase inflation in the country and, as The FT reports, has warned it will crack down on businesses that raise prices. Hot on the heels of Argentina's ignoration of inflation and recent price controls (and advertising bans), it would appear Venezuela is next as grey market dollars are changing hands for 22 Bolivars - massively lower than the official (just devalued) 6.3 Bolivars per USD rate. An 'equilibrium' rate is believed to be around 9 Bolivars but with Chavez still MIA and Maduro running the show, the 'nymphomania' for dollars - as Venezuela's finance minister called it - continues as businesses are simply unable to find tenable USD to use for imports. Contagion is also spreading as Colombia's FinMin Cardenas fears goods being smuggled across the border - creating inflation there too.


Via The FT,

Venezuela’s government warned that it would crack down on businesses that raise prices as it pledged that a devaluation of its currency would not increase inflation.


The black market price for dollars in the country has risen to a record high, at more than 22 bolivars. That compares to the new official exchange rate of 6.3 bolivars per dollar, with the old 4.3 rate eliminated last Friday. Economists said that at 6.3 bolivars to the dollar, Venezuela’s currency remains overvalued, with the “equilibrium” price believed to be about 9 bolivars.




Finance minister Jorge Giordani spoke of “nymphomania” for dollars in Venezuela this week. But businesses criticised his failure to announce alternative sources of foreign currency for importers after a central bank-run system known as the Sitme was scrapped last Friday. Businesses had been able to obtain dollars for 5.3 bolivars through the Sitme.


Fears are growing that businesses will find it increasingly hard to obtain dollars to import goods, possibly forcing them to resort to the more expensive black market for foreign currency, with about a third of consumption in Venezuela supplied by imports.


Mauricio Cárdenas, the finance minister in neighbouring Colombia, expressed concern that the devaluation could lead to an increase in goods being smuggled across the border. A rise in inflation in Venezuela and other distortions caused by price controls could create an incentive for some goods to be sold illegally in Colombia.


Mr Chávez cracked down on businesses after the government’s previous devaluation in January 2010, expropriating supermarkets deemed to be raising prices excessively. There are signs that Mr Maduro will be no less severe.

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Thu, 02/14/2013 - 21:04 | 3245024 world_debt_slave
world_debt_slave's picture

Coming to a country near you.

Thu, 02/14/2013 - 21:15 | 3245042 Jam Akin
Jam Akin's picture

Nymphomania for dollars?

Thu, 02/14/2013 - 21:20 | 3245049 VonManstein
VonManstein's picture

as in "the Dollar is a dead corpse" !

Thu, 02/14/2013 - 21:41 | 3245087 Muppet Pimp
Muppet Pimp's picture

Will Brazil show the leadership the South American continent needs?  This is the question.  Brazil getting once again given a huge opportunity to shine, the ball is squarely in their court on the leadership front. 

Para o Brasil direito, a abordagem correta é para a direita. O mundo está contando com você para levar seus irmãos sul-americanos e irmãs. Abraçar os mercados e provar ao mundo que você pode ser um bastião da liberdade dos mercados, à liberdade e aberto. Vamos ver todos vocês em breve em sua casa!

Os brasileiros são da América do Sul uma grande esperança. Fazendo garantir as acomodações e acolhendo a prosperidade que os eventos trazem é de extrema importância. Ensine o seu povo para abraçar o capitalismo, o livre mercado e da liberdade. Por sua prosperidade no futuro depende da execução bem sucedida destas coisas. Nós não temos tempo não é desculpa.

Thu, 02/14/2013 - 21:43 | 3245109 ParkAveFlasher
ParkAveFlasher's picture

I don't know about you guys but when I read "South American leadership" I think "ex-presidente fleeing the country with suitcases of cash, destination: Miami."

Thu, 02/14/2013 - 22:36 | 3245240 olto
olto's picture

Hey, Park Ave.----

Those were the Batista banksters with every cent they could steal as Fidel and los companeros rode into Havana-----



Fri, 02/15/2013 - 01:13 | 3245517 economics9698
economics9698's picture

Chavez is working on that 50% inflation rate before he takes the dirt nap.

Fri, 02/15/2013 - 01:30 | 3245538 Freddie
Freddie's picture

Hopefully Warner Buffert and Charlie Mungo will join Hugo in that dirt nap.

Thu, 02/14/2013 - 21:36 | 3245089 Freewheelin Franklin
Freewheelin Franklin's picture

No. That's necrophilia.



Thu, 02/14/2013 - 21:33 | 3245090 Jam Akin
Jam Akin's picture

Wouldn't that be necrophilia for dollars?

Thu, 02/14/2013 - 22:03 | 3245153 booboo
booboo's picture

I think he meant Necrophilia

Thu, 02/14/2013 - 22:36 | 3245244 NoDebt
NoDebt's picture

Some kind of perversion for sure when you're looking at the Dollar as your "safe haven" for store-of-value.  Have they heard of gold?  Perhaps it's illegal to own gold down there.

Dunno.  Could be worse.  Could be me.

Oh, wait....



Thu, 02/14/2013 - 21:20 | 3245056 Stuffs And Stuff
Stuffs And Stuff's picture

Yes. She'll have whatever condition you want for a small fee.

Thu, 02/14/2013 - 21:08 | 3245027 fonzannoon
fonzannoon's picture

the world is flooded with dollars and starving for dollars....

Thu, 02/14/2013 - 22:51 | 3245288 Matt
Matt's picture

Quite a paradox; time to start importing more goods from the dollar-hungry nations and less from the dollar-stuffed ones, perhaps?

Fri, 02/15/2013 - 00:01 | 3245423 AUD
AUD's picture

No paradox. Money is special, it's the one thing you just can't have too much of.

If the $US is money then it doesn't matter how many there are, because there will never be enough.

Fri, 02/15/2013 - 05:06 | 3245680 Sudden Debt
Sudden Debt's picture

With the fall of the dollar, all other linked currencies will fall also.


 it pledged that a devaluation of its currency would not increase inflation.

Bernanke did about the same I guess...

Thu, 02/14/2013 - 21:08 | 3245028 lineskis
lineskis's picture

"unable to find tenable USD" by these days and times, we just redefined irony...

Thu, 02/14/2013 - 21:11 | 3245032 disabledvet
disabledvet's picture

We'll see if Mexico is next on the "devaluation express." a hyper-inflation is another way to declare war on your own people.

Thu, 02/14/2013 - 21:22 | 3245064 chump666
chump666's picture

The Narcos are probably also responsible for the stabilization of the DXY spread last 6mths.  They hate the peso, so it's truck load of USDs.  It's sad how much America gets played.

Thu, 02/14/2013 - 21:36 | 3245095 SheepleLOVEched...
SheepleLOVEcheddarbaybiscuits's picture

America is the one playing other countries. Why do you think everyone is devaluing? Because they are rapidly losing exports to US and China, the two biggest currency manipulators. America has the upper hand, even on China. Sure they hold all US debt, but it is getting eviscerated by inflation. This was the goal; inflate the debt away. The US will continue to devalue until USD is worth zero. It's quite comical, all these countries trying to compete in the currency wars against the Fed. It is a battle which they will not win.

Thu, 02/14/2013 - 22:01 | 3245149 chump666
chump666's picture

No America is being played backwards, beautiful irony actually.  See Iran is buying USDs, hell even Japan is (oilers).  Eventually, say if Japan and China go at it, I got that locked for 2013, USTs are going through the roof, will slam America into the pain it should have taken and cause the Fed to meltdown, hopefully the press will attack it relentlessly.  You can devalue a currency to nothing, but it has to offset by something, countries that are now going all out FX war know and allow the USD black-markets.  Look at your DXY chart, then look at the S&P.  The DXY should be sub 75.  It's not.

There is no escape the fate of a recession/deflation  beat-down.  We have inflation now, its only offset by Obama 'pay later use credit now' policy. 

We are f*cked.

And so is the world.

Thu, 02/14/2013 - 21:14 | 3245040 unrulian
unrulian's picture

Dollars eh??...must be some gold in them thar hills

Thu, 02/14/2013 - 21:17 | 3245048 Venerability
Venerability's picture

Once again - for the zillionth time! - there is no difference between Venezuela's currency efforts and Japan's, except for the fact that nobody in the world really trades Bolivars, whereas everybody in the world trades Yen.

Venezuela took this action for one reason only: It strengthens their Exporters - i.e. the Oil industry.

This should make the world business community very happy, not the opposite, because it cements the fact that despite neverending criticism from the wealthy Venezuelan expat community and its supporters in the US and UK, Venezuela has actually been SIGNIFICANTLY opening up its energy sector for the past two years.

Under the surface of the propaganda camouflage, a new Venezuelan energy boom is beginning, with new deals being made right and left. Venezuela will calm down its "resource nationalization" rhetoric, as it becomes a more influential member of Mercosur over the next several years. And this will in turn cool down "resource war" rhetoric throughout Latin America, much of which follows Venezuela's lead.

This presents a wonderful opportunity for the US in its backyard, its real, actual, where-we-should-be Sphere of Influence. 


Thu, 02/14/2013 - 21:31 | 3245084 TotalCarp
TotalCarp's picture

BS... There is a very big difference - oil is a commodity for which a price is set independantly of labour costs in venezuela.

Jap cars/electronics/chemicals and whatever else the fack they make is not a commodity with an independent price setting mechanism. That creates a very different dynamic.

Venezuela is a dump with no money to subsidise its great unwashed who all vote for chavez and his social programs just like welfare states voting for barakhussein. The issue is he promissed so much, he has no bolivars to deliver.

Japanese govt is not attached to a natural resource. For them the game is obviously very different.

Fri, 02/15/2013 - 02:30 | 3245602 Richard Chesler
Richard Chesler's picture

I want what the socialist bitch is smoking.

Thu, 02/14/2013 - 21:39 | 3245102 ParkAveFlasher
ParkAveFlasher's picture

I'm sorry, come again?  I didn't read you the first zillion-1 times.

Thu, 02/14/2013 - 21:50 | 3245130 Ignorance is bliss
Ignorance is bliss's picture

Venezuela nationalizes productivity centers throughout their economy, including the oil industry. The people that once produced oil have left the country to pursue opportunities in places such as Africa. Drilling, finding, refining, and producing oil requires a lot of highly skilled labor. My understanding is that Chavez and team are having difficulty producing enough oil to get the dollars they require to import goods. Chavez has a real problem, if they can't produce enough oil then the country will implode. Big money will wait to pick up the pieces, anyone taking a chance on Venezuela takes a chance on getting their assets nationalized. 

Note: I have family that live in Caracas. They are telling me that all the food has been purchased from the grocery stores and that prices for everything has doubled if you can find it. 

Thu, 02/14/2013 - 22:40 | 3245259 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Prayers for your family. I hope they are able to stay safe.

Thu, 02/14/2013 - 23:36 | 3245374 FEDbuster
FEDbuster's picture

I hope they were "preppers" , and bought some food (and silver/gold) prior to the crisis.

For those whom haven't been to a gun store lately, the shelves are empty.  The time to buy a guns and ammo was before the gun grabbers started their latest campaign.   At coin stores around here there is a shortage of "junk" silver coins.  Look at the premiums being paid on Ebay.   Now is a good time to stock up on food, before a currency crisis hits and the shelves are emptied.

Fri, 02/15/2013 - 01:46 | 3245559 Freddie
Freddie's picture

I once a young man from Venez.  He was trying to get a job in the USA.  His English was perfect and he had impeccable manners.  I think the family background was Austrian.  The family was middle class and the parents were trying to get the kids out.  This was around 1999 before Chavez got worse.

That piece of sh*t Jimmy Carter said there were fair elections which was a lie.  Sad for the Venez people.  We have the same thing with Obummer.

Fri, 02/15/2013 - 01:46 | 3245560 Freddie
Freddie's picture

I once a young man from Venez.  He was trying to get a job in the USA.  His English was perfect and he had impeccable manners.  I think the family background was Austrian.  The family was middle class and the parents were trying to get the kids out.  This was around 1999 before Chavez got worse.

That piece of sh*t Jimmy Carter said there were fair elections which was a lie.  Sad for the Venez people.  We have the same thing with Obummer.

Thu, 02/14/2013 - 22:01 | 3245143 CunnyFunt
CunnyFunt's picture

What utter crap.

The world is moving inexorably away from rules-based systems and developed countries are losing their power to insist on observance of such systems.

Fri, 02/15/2013 - 08:01 | 3245783 Venerability
Venerability's picture

Giving thumbs down by rote to an accurate and intelligent post because of pure bias helps no one and nothing.

"Sticks" don't work in Latin America anymore. "Carrots" do. Venezuela finally joining Mercosur is a very big deal.

You don't understand that yet - fine with me.


Fri, 02/15/2013 - 16:03 | 3247479 gallistic
gallistic's picture

Venerability, lighten up.

Arrows up or down are just a popularity contest judged by a mob who have little understanding of Venezuela. Venezuela is a fascinating case study of transformation that not too many people understand or take the time to learn about.

Thu, 02/14/2013 - 21:19 | 3245054 chump666
chump666's picture

Awesome, the Fed will struggle with this, you've got billions of people (Asia and South America) buying USDs on the black market or otherwise, pushing up rates and tightening liquidity. So say we get a stock crash, i know, i know..but it's coming and hell is coming with it...then rates blow out and the Fed gets it in the neck.  You couldn't wish a a better revenge on such an arrogant and disgusting entity

Anyways brothers and sisters...a tight jam for you.  Have a drink and forget the world...for a few mins or so.


Thu, 02/14/2013 - 21:26 | 3245075 Clover
Clover's picture

Almost 23 Bolivar to the USD now: http://www.lechugaverde.com


Thu, 02/14/2013 - 21:36 | 3245098 Shizzmoney
Shizzmoney's picture

The silly thing about assassinations is that you don't need to assassinate leaders of countries. 

Just slowly inflate their currency and watch the noose wrap around their neck like a phython.

Thu, 02/14/2013 - 21:38 | 3245101 ParkAveFlasher
ParkAveFlasher's picture

Venezuelan nymphos, bitchez!

Thu, 02/14/2013 - 22:05 | 3245156 booboo
booboo's picture

I think Obama read Chavez' book, be careful, he bowed to him too.

Thu, 02/14/2013 - 22:14 | 3245179 DESMO_RR
DESMO_RR's picture

Gold closed at roughly 7000 Bolivar on the 12th and 10400 on the 13th. +34% in hours!

Thu, 02/14/2013 - 22:34 | 3245237 W74
W74's picture

Roughly in line with their overnight 32% currency devaluation.  The extra 2% was from either mania, speculation, the sudden increase in demand vs a corresponding sudden decerase in supply, or some combination of all three.

Thu, 02/14/2013 - 22:26 | 3245209 Gene Parmesan
Gene Parmesan's picture

Time to open that Dollars for Gold franchise in Caracas that I've been thinking about. How much grease should I pack for the government palms?

Thu, 02/14/2013 - 22:32 | 3245229 W74
W74's picture

You know you're in a bad way when your country's currency is so bad you think Dollars will bring you stability and protect your wealth.

Thu, 02/14/2013 - 22:43 | 3245269 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Chavez could always ask for help from Iran. What are friends for?

Thu, 02/14/2013 - 22:48 | 3245283 Angus McHugepenis
Angus McHugepenis's picture

I wonder which worthless fiat Chavez is paying for his medical needs.

Thu, 02/14/2013 - 22:50 | 3245286 goldenbuddha454
goldenbuddha454's picture

So through all this currency devaluation why would a country like Switzerland who makes very little of anything continue to peg their currency to the Euro?  Makes no sense to me.  If I was Swiss I'd just be sitting back watching my money catapult til one day be so strong they could buy whatever they want.  Why fight for the bottom when you can relax and be on top?

Thu, 02/14/2013 - 23:26 | 3245353 cynicalskeptic
cynicalskeptic's picture

Switzerland makes a great deal - and depends on those exports NOT being priced out of reach.  The flight to Swiss Francs was making Swiss goods unaffordable - hence the peg to the Euro.

Fri, 02/15/2013 - 00:25 | 3245454 Opinionated Ass
Opinionated Ass's picture

...so Switzerland would really be fucked if they used gold as money instead of FonyFranc paper, eh?

Bullshit CS. If an exporter wants to sell cheaper, he can simply lower his prices. He don't need no central banker asshole to debase the currency to "help".

Fri, 02/15/2013 - 00:27 | 3245458 Burnbright
Burnbright's picture

The reason being that cheap exports is really just an excuse to steal other people's money when you debase the currency.

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