The New York Times and Venezuelan inflation
By Joaquin Bustelo
Mar 27, 2007, 02:02
The NY Times writes, “But demagoguery and showmanship will do nothing to solve Venezuela’s 20 percent inflation rate…. Venezuela’s currency, the bolívar, has lost about a fifth of its value since January”
Nice to see the Gray Lady up to her old tricks.
I haven’t been covering economic affairs for a couple of weeks, so I thought on reading this that perhaps I had missed the news of Venezuela’s devaluation, though I didn’t think so. And a quick check of Google News (in Spanish, the English language press coverage of Venezuela is worthless) tells me that in fact I didn’t miss it. It did not happen.
Because Venezuela operates with a system of foreign currency controls and allocations on the basis of a fixed exchange rate set by the Central Bank, if there had been a devaluation, to honestly report on it, the NYT would have had to tell us when the last time was that the Bolívar’s official exchange rate changed, but of course that is impossible since the *truth* is that Bolívar’s exchange rate has not changed.
What has changed is the black market exchange rate used by wealthy Venezuelans to turn the local currency into dollars for smuggling out of the country. And I know that bourgeois journalists are true experts on black market currency operations. Because operating in the black market is banned by journalistic ethical standards AND the business practices and policies of reputable bourgeois rags like the NY Times. This brings you a very nice profit if you’re in a country like Venezuela, because you buy all your local currency on the black market, but report all your local expenses at the official rate, and it can get so extreme that every penny you spend in the country comes back to you dressed as a nickel — though Venezuela is far from there yet.
However, unlike other countries in the midst of a revolution where the black market dollar became for all practical purposes the only rate, in Venezuela’s case the official rate is the dominant one because of the billions of dollars a month the country receives from oil exports.
So what the NY Times is telling us is really that the rich are growing increasing desperate about their prospects in revolutionary Venezuela. So they are willing to take growing exchange losses just to cash out. After telling us for years that Chavez is a wild man, a clown, with no coherent plan or policy, adopting this random measure and that arbitrary decision, all of a sudden it dawns on them that there IS a plan … a strategic perspective … of transforming Venezuela’s economy from one moved by increasing the private profits of the few to one moved by serving the needs of the many. And the recent nationalizations of several imperialist concerns shows them that the Revolution has both the political will and political power to increasingly take the country on that road.
That leaves only the question of how to present matters abroad to people who do not and cannot possibly know for themselves what’s really going on. And hence the Big Lie: Venezuela’s currency has dropped 20% since the beginning of the year.
And there will be plenty more reporting and editorializing along the lines of the Venezuelan economic “catastrophe” in coming months and years. For what is coming will be catastrophic for the bourgeoisie and upper layers of the middle classes. Prices will skyrocket in the shops they frequent, full of imported luxury goods which will be priced at the black market exchange rate plus a hefty markup. Many of the stores will fail. It may even get so bad you won’t even be able to get Prada handbags anymore in Caracas. And you can be sure you’ll be able to read all about it in the lying pages of the New York Times.
So it goes …