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Venezuela After Chavez
The passing away of president Chávez has important implications ranging from the political spectrum to the economical spectrum. These implications will be crucial in assessments of the future of the country. Stratfor's Karen Hooper provides a succinct summary of the short-term (who will be the interim president until new elections take place? When will the elections take place, and what is the most likely result of the election), medium-to-long-term (Uncertainty about future economic management creates an additional downward bias in macroeconomic performance in a 1–2 year horizon), and Citi, despite the uncertainty-removing finality of Chavez' death, maintain an underweight as while neither political unrest nor a near-term default are likely, markets are also not pricing in much risk of either.
And Via Citi:
Chavismo without Chávez: What Is Next for Venezuela?
On Tuesday afternoon, Venezuela’s Vice-president, Nicolás Maduro, announced that President Chávez had died at 16:45 local time, after almost two years fighting cancer (it was initially diagnosed in June 2011). The passing away of president Chávez has important implications ranging from the political spectrum to the economical spectrum. These implications will be crucial to assess the future of the country.
The Short Term
There are three elements to consider over the short run: 1) who will be the interim president until new elections take place? 2) When will the elections take place, and 3) what is the most likely result of the election. According to the Venezuelan Constitution, if the president dies before the swearing-in ceremony, the National Assembly president will be the interim president. If the president dies after the swearing-in ceremony but before the fourth year of his mandate, the vice-president will be the interim president until new elections are held. Bearing that in mind, and given the previous Venezuelan Supreme Court (TSJ) ruling that a swearing-in ceremony was unnecessary for a reelected president, we think that Mr. Maduro will be the interim president until the new elections are held. At the time of this writing, Venezuelan Chancellor Elías Jaua has said that is the case, but we expect the National Assembly (AN) and the TSJ to make similar announcements to confirm this in the days to come. Regarding the date of the elections, the Constitution specifies that new elections will have to take place in 30 days independently of who is appointed as interim president. That means that we could see new elections in early April. As for the election outcome, we believe this has to be analyzed in two parts. First, from the opposition side, the most likely and natural candidate will be Henrique Capriles. How fast and coordinated the announcement of Mr. Capriles candidacy is made will be important elements to assess the unity within the opposition. Second, the candidate within chavismo will probably be Mr. Maduro, although we continue to believe that the power will be shared within “Chavismo’s power triangle” : Nicolás Maduro, Diosdado Cabello, and Rafael Ramirez.
In our view, the most likely election will be between Mr. Maduro and Mr. Capriles, with Mr. Maduro as the likely winner. The fact that Mr. Maduro was named by Mr. Chávez as his political heir during his last public appearance back in December, along with PSUV’s strong political base and the sympathy that Mr. Chávez’s passing away will create among the electorate, will most likely make Mr. Maduro the winner of the presidential election against Mr. Capriles. Also, we expect the government to make economic announcements that could boost popularity, such as an increase in the minimum wage and additional announcements regarding FX flexibility.
The Medium to Long Term
Maduro’s pragmatism won’t be enough to sustain economic growth, reduce inflation, or improve the fiscal accounts... Despite Mr. Maduro’s speech today, we believe his presidency will take a more pragmatic approach down the road. But initially, we expect him to show a continuation of Mr. Chávez’s policies and close political ties with Cuba. Mr. Maduro will have to be pragmatic over the medium term in order to avoid further macroeconomic unbalances, inflation, and scarcity. Nevertheless, we expect GDP growth, consumer prices, and fiscal accounts to continue with the expected path of deterioration. Also, uncertainty about future economic management creates an additional downward bias in macroeconomic performance over the 1–2 year horizon.
President Chávez’s death represents an inflection point in Venezuela’s political history. The importance, relevance, and impact of Mr. Chávez in Venezuela’s political arena are unquestionable. The chavismo movement and the PSUV are the strongest political forces in the country, and how strong they remain will determine if Venezuela continues in a socialist-driven policy mode or not. Also, the eventual degree of the power balance between chavismo and the opposition will be crucial for the future performance of the country.
Investment Implications
Venezuela bonds are likely to rally given the removal of the uncertainty surrounding President Chavez's health. Indeed, bonds had rallied on Tuesday morning on speculation that news was forthcoming, before Maduro disappointed markets by failing to make an announcement when he first spoke on Tuesday. Bonds gave up their gains on this disappointment, combined with the rambling message in Maduro's speech.
Despite the likely rally on the news, we maintain our underweight recommendation, especially as it would be impossible to purchase bonds before capturing the move - which as the chart shows was a great call...
We believe the resultant rally will be short-lived as investors who were positive on Venezuela in a post-Chavez scenario are likely already long. The passing of Chavez has certainly not caught any investor off-guard as it had been expected for some time. The only question was when, and few expected it would not occur soon. As such, we would recommend selling into any rally. We do not expect a worst-case scenario, but we do not believe that current spreads reflect the risks.
Venezuela spreads are certainly high relative to other sovereigns, especially as many traditional EM investors no longer consider Argentina bonds an investable asset at the moment. A primary rationale for investing in Venezuela seems to be that there are few places to obtain yield in EM bonds. However, considering the recent weakness in technicals (EPFR data show EM hard currency funds have experienced outflows in 3 of the past 4 weeks), that may no longer be enough to sustain the rally. Neither political unrest nor a near-term default are likely, but markets are also not pricing in much risk of either.
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unless a primary dealer is on the wrong end of a lot of venezuelian cds this just seems like another disappearing headline.
Venezuelans will vote themselves another iron-fisted nanny now that the gravy train is underway. They will choose free lunch over liberty every time, you watch.
well said
Yep they can’t seem to figure out that paying $15 for a Big Mac meal is directly related to their free shit.
Le Big Mac is $15 in Venezuela? They must be rich, these socialists.
viva la gold-dispatriation
the bullion banks say that want it back. all of them. at the same time. from every direction. multiply spit-roasted gold.
music to my ears (I hope they also want the silver miners back)
"Americans will vote themselves another iron-fisted nanny now that the gravy train is underway. They will choose free lunch over liberty every time, you watch."
Just sayin'.
well said
and who would have thought
"They will choose free lunch over liberty every time, you watch."
Instead of voting for a free-market liberty loving guy (like Pinochet)
Voting is an act of violence.
So will Oakland,Newark and Cleveland, every time.
And how is that different from the US?
We did choose "free cell phone Obama".
Fonz: I was waiting to hear from two people that I know who are usually very "aware" of what is going on the world these days. Neither one mentioned the death of Chavez. The headlines of his death are disappearing faster than I can type this. You are right again.
The oil, on the other hand, is still present and accounted for.
huge story in a place that used to be one of America's closest friends. think the President has handled this one well. The USA is about to become the biggest oil producing nation in the world...if it's not already. "Chavismo's" policies vis a vis the United States have been nothing short absolutely catastrophic. Thanks to him he probably accelerated America's advancement to oil super state by ten years. I'm still unclear what Venezuelans have to show for all his theatrics but no doubt he one of the USA's best "opposition leaders" during the war on terror. Ironically there is much to oppose here but i can't say i found him inspirational in that regard. http://www.youtube.com/watch?v=lRm7j2UL3YY
Their farms back.
they should have killed chavez when the coup failed back in 2002(?). letting him live another 10 years has made sure the people of vnezuela will kill any gs/cia/exxon guy they want to put in his place. venezuela is the grand prize in south america. orinoco makes oil men cum at the mere mention of the word.
Just waiting for Obama to spot a terrorist or a US Citizen in Venezuela so he can send in the drones!
The guy who lost the last election is a banker tool who no doubt will be leading the takeover charge again
You're right. I blame Romney. lulz...
Dennis Miller had the best comment on Chavez:
With Chavez dying before Castro my brackets are already screwed.
Not sure where all the Hillary Clinton exuberance is coming from.
Just like in the US, parasites always favor anyone who promises to redistribute capital to those who haven't worked for it. Annexing foreign own property to given to the indigenous, millionaires and thousandaires paying their fair share, Obama phones for medicaid dependents...same difference.
Maybe Venezuela should just vote to become a US protectorate and re-elect Obama king-4-life.
Whereas you prefer those who haven't worked for it to those who promise to redistribute capital.
Where do you think the foreign nationals got the land from in the first place?
How about I sell your house to Richard Branson?
It's all the same, only the names will change
Everyday it seems we're wasting away
~Bon Jovi, Dead or Alive
.
Meet the New Boss,
Same as the Old Boss
~The Who, Wont Get Fooled Again
.
Same as it Ever Was,
Same as it ever was
~The talking Heads, Once in a Lifetime
.
No escape from the mass mind rape
Play it again jack and then rewind the tape
And then play it again and again and again
Until ya mind is locked in
Believin' all the lies that they're tellin' ya
Buyin' all the products that they're sellin' ya
They say jump and ya say how high
Ya brain-dead
Ya gotta fuckin' bullet in ya head
-RATM, Bullet in the Head
.
(although not a song, still the mack daddy of them all)
What has been will be again,
what has been done will be done again;
there is nothing new under the sun.
~King Solomon
Just victims of the inhouse drive-by, they say jump you say how high.
Terror rains drenchin', quenchin' tha thirst of tha power dons, that five sided fist-a-gon, tha rotten sore on tha face of mother earth gets bigger, tha triggers cold empty ya purse.
Hello Darkness my old friend
"they say, 'let's kill them off, take their land, then go there for vacation!"
"Shedding light on the darkness of greed"
No doubt a new central bank will be installed and "foreign investment" will skyrocket.
No opinion of Chavez, but he had some clever lines. The brimstone one was great.
I think long term the nation will be picked clean like the rest of SA by the same people the "Confessions of an Economic Hitman" worked for.
pods
RIP Chavez.
Stick it to Uncle Sam all these years.
Maybe, one day, us Gringos will wise up and stop trying to steal, rape and kill everything in our paths.
I can't wait to fly direct to Havana.
for the whores?
Havana, a short boat ride from Mexico. Toda la noche can run you $50 max. Rent a house and fill it with whores for the day and night, less than a night at the Ritz in Miami Beach. Plus you don't need a Ferrari to impress the whores, USD are enough to get their panties wet.
Venezula, Argentina world class whores, but you definitely need bodyguards because they'll kidnap your ass. Especially now. Caracas and Buenos Aires are tempting right now, but my sources down there are telling me it's better flying to Barcelona for the whoring right now. I don't fuck with Costa Rica anymore, seems like every broke ass american is there trying to shoot his wad.
Funny to see how far some schmucks have to go to get laid!
I'm on the road more than I'm at home. Good deals in Commercial Real Estate are hard to come by in the USA. Bank is lending me shit tons of non-recourse debt at 3%. I've got enough airline miles to fly around the world a few times in first class maybe three or four times. Got to live it up while you still can.
Plus these American bitches get real prudish when you pull out an HD camera and start recording.
I think they are alittle more concerned about the colombians....but nice try
Commies and America-hating traitors all over the world are sobbing for this mini-Castro.
You can't fault someone for giving the middle finger to Bush and America in general, but it's the traitors at home who worship minor dictators like this that need a good hard smack.
michelle's Bush?
Yeah! Take that you commies.
No, a dictator is a dictator, especially after they squash the free press, but I'm not crying any tears for the right-wing exploiter club either.
Any thoughts on Crystallex and PM mining in Venezuela?
Send the secret service and Menedez down to do a bunch of coke and fuck a bunch of 14 year old prostitutes. That should solve their problems and boost their economy.
This was posted yesterday on the Asian Times by Pepe Escobar
Now that would be some movie; the story of a man of the people who rises against all odds to become the political Elvis of Latin America. Bigger than Elvis, actually; a president who won 13 out of 14 national democratic elections. No chance you will ever see such a movie winning an Oscar - much less produced in Hollywood. Unless, of course, Oliver Stone convinces HBO about a cable/DVD special.
How enlightening to watch world leaders' reactions to the death of Venezuela's El Comandante Hugo Chavez. Uruguay's President Jose Mujica - a man who actually shuns 90% of his salary because he insists he covers his basic necessities with much less - once again reminded everyone how he qualified Chavez as
"the most generous leader I ever met", while praising the "fortress of democracy" of which Chavez was a great builder.
Compare it with US President Barack Obama - in what sounds like a dormant cut and paste by some White House intern - reaffirming US support for "the Venezuelan people". Would that be "the people" who have been electing and re-electing Chavez non-stop since the late 1990s? Or would that be "the people" who trade Martinis in Miami demonizing him as an evil communist?
El Comandante may have left the building - his body defeated by cancer - but the post-mortem demonization will go on forever. One key reason stands out. Venezuela holds the largest oil reserves in the world. Washington and that crumbling Kafkaesque citadel also known as the European Union sing All You Need is Love non-stop to those ghastly, feudal Persian Gulf petro-monarchs (but not to "the people") in return for their oil. By contrast, in Venezuela El Comandante came up with the subversive idea of using oil wealth to at least alleviate the problems of most of his people. Western turbo-capitalism, as is well known, does not do redistribution of wealth and empowerment of communitarian values.
I hate you, cabron
According to the Foreign Ministry, Vice-President Nicolas Maduro - and not the leader of the National Assembly, Diosdado Cabello, very close to top military leaders - will be temporarily in power before new elections to be held within the next 30 days. Maduro is bound to win them handily; the Venezuelan political opposition is a fragmented joke. This spells out Chavismo without Chavez - much to the chagrin of the immense pan-American and pan-European Chavez-hating cottage industry
It's not an accident that El Comandante became immensely popular among "the people" of not only vast swathes of Latin America but also all across the Global South. These "people" - not in the Barack Obama sense - clearly saw the direct correlation between neoliberalism and the expansion of poverty (now millions of Europeans are also tasting it). Especially in South America, it was popular reaction against neoliberalism that led - via democratic elections - to a wave of leftist governments in the past decade, from Venezuela to Bolivia, Ecuador and Uruguay.
The Bush administration - to say the least - abhorred it. They could not do anything about Lula in Brazil - a clever operator who adopted neoliberal clothes (Wall Street loved him) but remained a progressive at heart. Washington - incapable of getting rid of the coup after coup reflexes of the 1960s and 1970s - thought that Chavez was a weak link. Thus came the April 2002 coup led by a military faction, with power given to a wealthy entrepreneur. The US-backed coup lasted less than 48 hours; Chavez was duly restored to power, supported by "the people" (the real thing) and most of the army.
So there's nothing unexpected in the announcement by Maduro, a few hours before El Comandante's death, that two US embassy employees would be expelled in 24 hours; Air Attache David Delmonaco, and assistant Air Attache Devlin Costal. Delmonaco was accused of fomenting - what else - a coup with some factions of the Venezuelan military. Those gringos never learn.
Immense suspicion among Chavistas that El Comandante may have been poisoned - a convoluted replay of what happened to Yasser Arafat in 2004 - is also predictable. It could have been highly radioactive polonium-210, as in Arafat's case. The Hollywood-friendly CIA may have some ideas about that.
All shook up
The verdict is now open on what exact brand of revolutionary was Chavez. He always praised everyone from Mao to Che in the revolutionary pantheon. He certainly was a very skillful popular leader with a fine geopolitical eye to identify centuries-old patterns of subjugation of Latin America. Thus his constant reference to the Hispanic revolutionary tradition from Bolivar to Marti.
Chavez's mantra was that the only way out for Latin America would be better integration; thus his impulsion of myriad mechanisms, from ALBA (the Bolivarian Alliance) to Petrocaribe, from the Banco del Sur (the Bank of the South) to UNASUR (the Union of South American countries).
As for his "socialism of the 21st century", beyond all ideological straitjackets he did more to explore the true spirit of common values - as an antidote to the putrefaction of turbo-charged, financial capitalism - than tons of neo-Marxist academic analyses.
No wonder the Goldman Sachs gang and cohorts saw him as worse than the Black Plague. Venezuela bought Sukhoi fighter jets; entered strategic relationships with BRICS members Russia and China - not to mention other Global South actors; maintains over 30,000 Cuban doctors practicing preventive medicine living in poor communities - what led to a boom of young Venezuelans studying medicine.
Stark numbers tell most of the story that needs to be known. Venezuelan public deficit is a mere 7,4% of GDP. Public debt is 51,3% of GDP - much less than the European Union average. The public sector - defying apocalyptic "communist" accusations - accounts for only 18,4% of the economy; less than state-oriented France and even the whole of Scandinavia. In terms of geopolitics of oil, quotas are established by OPEC; so the fact that Venezuela is exporting less to the US means it's diversifying its customers (and exporting more and more to strategic partner China).
And here's the clincher; poverty accounted for 71% of Venezuelan citizens in 1996. In 2010, the percentage had been reduced to 21%. For a serious analysis of the Venezuelan economy in the Chavez era, see here.
Years ago, it took a superb novelist like Garcia Marquez to reveal El Comandante's secret as The Great Communicator; he was one of them (his "people", in the not-Barack Obama sense), from the physical appearance to the mannerisms, convivial attitude and language (the same applied to Lula in relation to most Brazilians).
So while Oliver Stone surveys the film market, one will be waiting for a Garcia Marquez to elevate Chavez to novelistic Walhalla. One thing is sure; in terms of a Global South narrative, history will record that El Comandante may have left the building; but then, after him the building was never the same again.
really? the great socialist died worth 2 billion while his subjects waited in line for bread and milk. thug, skillfull liar, scapegoater, and theif, little else.
Everyone quotes 2 billion but none of you cheney fans have any links...............
funny this cult of personality, most of these chavez lovers are no better than those slobs watching "stars" give each other awards and on about the same level...a cold clear eye sees him for what he was: another snake another tin pot dictator.
Say what you will about the guy, but at least he gave a giant middle finger to the banking cartel.
And he had the sense to bring Venezuela's gold reserves back to Venezuela.
This is an opportunity for the ex-patriot Venezuelans to stir the pot and get the socialists fighting amongst them selves over all that oil money, the winner no matter which will not be regarded as heroes, just thugs and then a real democratic option can be offered and accepted. The bloodier the battle the better.
A reality check from Eva Golinger (http://www.chavezcode.com/):
Most of what you read or hear in mass media about President Hugo Chavez is always negative, his faults exaggerated, his discourse distorted and his achievements ignored. The reality is quite different.Hugo Chavez was beloved by millions around the world. He changed the course of a continent and led a collective awakening of a people once silenced, once exploited and ignored. Chavez was a grandiose visionary and a maker of dreams.
An honest man from a humble background who lived in a mud hut as a child and sold candies on the streets to make money for his family, Chavez dreamed of building a strong, sovereign nation, independent of foreign influence and dignified on the world scene. He dreamed of improving the lives of his people, of eradicating the misery of poverty and of offering everyone the chance of a better life – the “good life” (el buenvivir), as he called it.
President Chavez made those dreams come true. During his nearly fourteen years of governance, elected to three full six-year terms but only serving two due to his untimely death, Chavez’s policies reduced extreme poverty in Venezuela by more than 75%, from 25% to less than 7% in a decade. Overall poverty was reduced by more than 50%, from 60% in 1998 when Chavez first won office to 27% by 2008. This is not just numbers, this translates into profound changes in the lives of millions of Venezuelans who today eat three meals a day, own their homes and have jobs or access to financial aid.
But the dreams don’t stop there. Chavez dreamt of a nation filled with educated, healthy people, and so he established free, quality public education from preschool through doctoral studies, accessible to all. In fact, for those in remote areas or places without educational facilities, schools were built and mobile educational facilities were created to bring education to the people. Chavez also created a national public health system offering universal, free health care to all, with the help and solidarity of Cuba, which sent thousands of doctors and medical workers to provide quality services to the Venezuelan people, many who had never received medical care in their lives.
To strengthen and empower communities, Chavez propelled policies of inclusion and participatory governance, giving voice to those previously excluded from politics. He created grassroots community councils and networks to attend to local needs in neighborhoods across the nation, placing the power to govern in the joint hands of community groups. His vision of diversifying his nation and developing its full potential transformed into railways, new industries, satellite cities and innovative transport, such as MetroCable Cars soaring high into the mountains of Caracas to connect people with their steep hillside homes and the bustling city.
The centuries-old dream of Independence hero Simon Bolivar to build a unified “Patria Grande” (Grand Homeland) in South America became Chavez’s guiding light and he held it high, illuminating the path he paved. Chavez was a driving force in unifying Latin America, creating new regional organizations like the Union of South American Nations (UNASUR), the Bolivarian Alliance for the Peoples of Our America (ALBA) and the Community of Latin American and Caribbean States (CELAC). These entities have embraced integration, cooperation and solidarity as their principal method of exchange, rejecting competition, exploitation and domination, the main principles of US and western foreign policy.
Chavez inspired a twenty-first century world to fight for justice, to stand with dignity before bullying powers that seek to impose their will on others. He raised his voice when no others would and had no fear of consequence, because he knew that truth was on his side.
Chavez was a maker of dreams. He recognized the rights of the disabled, of indigenous peoples, all genders and sexualities. He broke down barriers of racism and classism and declared himself a socialist feminist. He not only made his own dreams come true, but he inspired us all to achieve our fullest potential.
Don’t get me wrong, things are not perfect in Venezuela by any stretch, but no one can honestly deny that they are much better than before Hugo Chavez became President. And no one could deny that President Hugo Chavez was larger than life.
The first time I flew on President Chavez’s airplane he invited me to breakfast in his private room. It was just me and him. I was nervous and felt anxious and rushed to tell him about the results of my investigations into the United States government role in the coup d’etat against him in 2002. After all, that’s why I was on the plane in the first place. I had been invited to participate in his regular Sunday television show, Alo Presidente (Hello Mr. President) to present the hundreds of declassified documents I had obtained from US government agencies through the Freedom of Information Act (FOIA) that exposed US funding of coup participants. The date was April 11, 2004, exactly two years after the coup that nearly killed him and sent the nation into spiraling chaos.
As I began pulling out papers and spreading documents on the table that separated us, he stopped me. “Have you had breakfast yet”, he asked. “No”, I said, and continued fiddling with the revealing paper before me. “We can discuss that later”, he said, “for now, tell me about yourself”. “How is your mother”, he asked me, as though we were old friends.
A flight attendant came through the door of his private room with two trays and placed them on the table. I quickly gathered up the documents. “Let’s eat”, he said. I started to protest, trying to explain that his time was so limited I wanted to take advantage of every minute. He stopped me and said, “This is a humble breakfast, a breakfast from the barracks, what I most love”. I looked at the tray for the first time. On it was a small plate with an arepa, a typical Venezuelan corn patty, a few shreads of white cheese, a couple of pieces of canteloupe and some anchovies. Beside the plate was a small cup of black coffee. No frills and not what you would expect on a presidential airplane.
“After all, I am just a soldier”, he added. Yes, Chavez, you are a soldier, a glorious soldier of a dignified, proud and kind people. And you are a maker of dreams for millions around the world.
Goes to show that socialism/communism WILL create Utopia if only the RIGHT people are in charge.
Venezuelan gold can be liberated as easy as the Lybian one?
"But it wasn't the cancer that laid him to rest, was the gold spark of Wall Street boyz..."
+1 for great taste in music