Let’s take a look-see at how wonderful Chavez’s economy is doing under socialism, shall we?
Hugo Chavez’s economy is starting to unravel in the currency market.
While Venezuela earns record proceeds from oil exports, consumers face shortages of meat, flour and cooking oil. Annual inflation has risen to 16 percent, the highest in Latin America, as President Chavez tripled government spending in four years. Exxon Mobil Corp. and ConocoPhillips are pulling out after Chavez demanded they cede control of joint venture projects.
The currency, the bolivar, has tumbled 30 percent this year to 4,850 per dollar on the black market, the only place it trades freely because of government controls on foreign exchange. That’s less than half the official rate of 2,150 set in 2005. Chavez may have to devalue the bolivar to reduce the gap and increase oil proceeds that make up half the state’s revenue.
“This has been the worst managed oil boom in Venezuela’s history,” said Ricardo Hausmann, a former government planning minister who now teaches economics at Harvard University in Cambridge, Massachusetts. “A devaluation is a foregone conclusion. The only question is when.”
Uh oh. Looks like Castro’s Mini-Me is in mighty big trouble!