Sunday, April 27, 2014

Some questions on Time Magazine naming Nicolás Maduro as one of the 100 most influential

"Last year, as Nicolás Maduro ran for the Venezuelan presidency, he received a visitor from the beyond. He was praying in a chapel when a bird flew in, circled him three times and began to whistle. Maduro said he felt the spirit of the late Hugo Chávez, his mentor and former President, who had come to bless his bid for high office.

The Maduro campaign frequently invoked Chávez during the contest, and perhaps it helped. Maduro won — but only just, and not without the opposition alleging electoral irregularities. A year on, lacking Chávez’s firm grip on power, Maduro is struggling as a litany of ills, from soaring inflation to food shortages, fans popular discontent. All this in a country that many in the region trade with or depend on for cheap oil. Whether it collapses now depends on Maduro — and on whether he can step out of the shadow of his pugnacious predecessor and compromise with his opponents."

Some questions:

From the description above should Time not have included the bird that whistled or the spirit of Chávez instead of Maduro?

How can one name as "influential" one who cannot convince his own people to pay more than US$ 1 cent per gallon of gas? Allowing the price of milk, when it is to be found, to be 278 times the price of gas?

Could the being able to convince by sheer use of force a criteria to make into this list of influential?

How come TIME magazine, knowing how split Venezuela is, can take a side like this in favor of the regime? Intellectual or vanilla corruption?

Thursday, April 24, 2014

Let us avoid the merchants of poverty

I admire those who help the poor. Not so those who use the poor to help themselves.

Even though there has been a considerable reduction in the number of poor in the world (not necessarily sustainable), inequality, in terms of differences in income and wealth between the richest and the poorest has increased considerably during the last decades ... and that's not healthy, to say the least.

And accordingly, opportunistically, those who argue that everything is solved redistributing, meaning taking from the rich and giving it to the poor, now appear on the scene. How easy it would be if everything was just that easy. It is not. It is our duty to make sure that merchants of poverty, with their insidious sowing of envy and hatred, makes it even more difficult to help solve the poor’s already sufficient precarious situation.

The proposed solution is based on the illusion that it is possible to take away purchasing power from the rich and hand it over to the poor; and that the poor can then go with that purchasing power to the grocery store. False!

First, the rich have their wealth invested in assets, houses, stocks, paintings, yachts, etc. And so, to transform those assets into money, you have to sell them. To whom? Without wealthy buyers around, the sale would only translates into a reduction in the value of the assets ...resulting in a lower amount than estimated to be delivered to the poor. How does it help the poor that a Picasso valued at $50 million, is then only worth $1 million? 

Second, assuming you could sell the assets and give the money to the poor, will there be sufficient supply to satisfy the needs of the poor? No! The unexpected new demand will result in much inflation.

Does this mean that there is nothing to do? Not at all! What is clear is that instead of attacking the results of the inequitable distribution of income and wealth, we must concentrate on attacking its causes ... especially the artificial ones, those not based on the natural reality that we are not all equal.

What are these artificial causes? Each economy has them, in different degrees, but their most frequent common denominator is state interference. Licenses leading to monopolies (intellectual property rights?), foreign exchange controls, transparent and non-transparent subsidies, corruption, discriminatory regulations, etc. For example, in Venezuela, how much more could you have benefited the poorest if the government had not insisted on giving away gasoline at US$ 4 cents a liter... or selling foreign exchange cheaply to those vacationing abroad?

A seemingly easy way out like re-distribution, is simply not enough, nor is it sustainable, and it is the poor who most need to know that. It cannot be that the final result of the redistribution of wealth and income in Venezuela would be to concentrate even more income and wealth in the hands of our Boligarchs of turn… whatever political color they wear. 

But Kurowski! Have you not for years insisted in distributing all of Venezuela´s net oil revenues to the citizens­? Yes! But with that, much more than a redistribution of purchasing power, I mean the redistribution of powers and opportunities... from petrocrats to citizens.

And if the rich want to help, welcome, but perhaps they better deliver that help directly to the poor, instead of going through the politicians who so often are only acting as the merchants of poverty.

In other countries, where for the .01% plutocrats what the 99% holds seems not to suffice they are now looking for the other 0.99 %. Tax the wealth and, at the end of the day, without further changes, most of it will come back to fewer and fewer Plutocrats.

Monday, April 14, 2014

Thomas Piketty. Would you tax wealth if this only benefited even more some few oligarchs?

We begin to hear proposals about taxing wealth, like that presented by Thomas Piketty in “Capital in the Twenty First Century

Taxing wealth might reduce the fever of inequality, but it does not attack its causes. In fact, forcing the sale of assets, which is where wealth is stored, in order to increase the consumption of the less well off, might direction the funds away from those who have earned their wealth naturally, to those who earn it thanks to market imperfections, or to outright crony capitalism. An in such a way it could undermine even more the meritocratic values on which democratic societies are based, something that Piketty himself would seem to abhor.

In other words, if in Russia, would you tax wealth if that benefited the oligarchs?

I believe it would be better to concentrate on what is causing unjust artificial inequality and in this respect I could mention the following possibilities.

Like to eliminate the concept of risk weighted capital requirements for banks which channels bank credit away from “the risky”, in much a proxy for the poor, to “the infallible”, in much a proxy for the wealthy.

Like to increase the tax on all those profits which have originated under the protection of intellectual property rights. There is no reason for these to be taxed at the same rate as profits obtained from competing naked in the markets.

Finally, let´s give it a thought to what would have happened to all that unequally accumulated wealth, had not TARP and Quantitative Easing come to its rescue.

Just the fact that, except for religious considerations, when in the grave, we’re all equal, and the Gini coefficient is zero, should not mean we should hurry to get there... I think.

Saturday, April 12, 2014

3 weaknesses of the Gini coefficient when measuring inequality

  1. It does value a dollar earned the same as a dollar received in transfers, and we know that is just not true.
  2. It cannot consider all the unregistered wealth or income that is siphoned away by corruption.
  3. It does not make it clear when an increased equality is primarily the result of many turning poorer.
Considering those 3 factors alone would shed the supposed reduction in inequality produced by the Chavez Revolution in Venezuela in a completely different light.

If we are to foster equality, let’s do it right, and concentrate foremost on the equality of opportunities, whatever that might entail.

Thursday, April 03, 2014

Creditors of Venezuela, read our Constitution!

In the same way there are international conventions that help foreign investors to collect what governments duly owe them, there should be agreements that help citizens not to be saddled with the payment of debts incurred by governments who violate their constitutions.

If the articles of incorporation of a company stated that it was not allowed to borrow more than 50 % of its assets, but its president is asking for loans that would take its debt to 100% ... it should be difficult to get a reputable law firm to issue a legal opinion stating that there will be no problem.

And, if constitutions are the statutes by which citizens defend themselves from the excesses of their governments; and if creditors expect citizens to sacrifice themselves honoring the debts of their country to which their governments have subscribed... I think citizens should be able to expect from potential creditors, to at least throw a glimpse at their constitutions, to see if these are met.

And it does not matter where the creditors come from, whether Wall Street, San Cristóbal or Cochinchina.

And it is not that I expect creditors to be aware of everything in our Constitution, such as if the expressed rights of indigenous people are complied with but, as a minimum minimorum, sophisticated financiers should be able to tell, detail, whether there is compliance of an Article 320 which states:

"The State shall promote and defend economic stability, prevent the vulnerability of the economy and ensure monetary and price stability, to ensure social welfare. The Ministry of Finance, and the Central Bank of Venezuela, will contribute to the harmonization of fiscal policy and monetary policy, facilitating the achievement of macroeconomic objectives. In exercising its functions, the Central Bank of Venezuela will not be subject to directives of the Executive and may not endorse or finance fiscal deficits."

and so! Can anyone who knows anything about finance, argue that our Constitution has been complied with? Of course not! And so, as a citizen, I here inform our creditors they better not come crying to me tomorrow looking for my support to get paid.

And all citizens of the world, messed up by their bad governments, should all take the same attitude ... and we should all show solidarity amongst us all.

And I'm not throwing out warnings after the fact... like would a bad payer. In "Odious Debt", March 2004, and "OdiousCredit", April 2004, I begged creditors to collaborate with citizens ...and nothing! And as salt in the wound Venezuela has paid them exorbitant interests. Well guess what? You can begin applying those high risk premiums to the principal owed... in order for us to at least confirm you your risk assessment.

And what fault of mine is it that the creditors did not read it? They should follow me on Twitter!

Having us Venezuela citizens recently been mocked by the OAS, that clubhouse of governments where constitutions are not even read, it is clear that we need the OCA, the Organization of American Citizens.

PS. There are many polls, but the one I would most like to see, is one that asks the participants of the 4F-1992 Hugo Chavez coup, whether what we now have in Venezuela is what they dreamed about.

PS. I am seeking a democratic dictator who would be willing to rip our oil revenues out of the hands of our Petro-state, and hand these over to the citizens. That would earn him a place in history, as the one who achieved the true independence of Venezuela.

PS.When reading in the Financial Times an article by Michael Holman titled “Investors incorrupt ‘new Africa’ repeat old errors”, April 9 2014, I immediately sent FT aletter which concluded: “More than sovereign credit ratings we might need sovereign ethic ratings … and to make these count”

Who needs a tax or an asset haven the most? The rich or the middle class?

Dear Jo Marie.

The other day, on the radio, I heard the following advice: “If you are going to rent your house, put it in the name of a company and leverage that company up to the tilt with debt. Otherwise the lessee, for whatever happens, might sue you and clean you out.”

Is this not one as good as it comes recommendations to you, the middle class, to find yourself a little safe haven?

The rich can afford things to happen… and so perhaps it is the paying for it all middle class who is in most need of safe havens, of any kind.

As to me, as you know, I wish I lived and paid taxes in a tax paradise

This might not be about the 99% against the 1% but about the 51% against the 49%



Dear Jo Marie

I have a serious problem with the 1%-99% debate!

It is sending message that it is ok to be in the 99%

Because I want my kids, and grandchildren to know, that if they do not make it into the 1% top, I want them to at least make it into the range of 09% 19% 29% 39% 49% top… and absolutely nothing less!