Skip to main content

Venezuela: A Fine Example of Big Government

Venezuela is collapsing.  Society there is breaking down.  Food, medicine, toilet paper, and other essentials are in increasingly short supply.  Replacement parts for cars are nearly impossible to find. The official inflation rate exceeds 50% and private estimates have the rate as being substantially higher.  The currency, the bolivar, is worth very little and life savings have been destroyed.   Dollars are nearly impossible to come by.  Government has taken over every television station, and has recently blocked access to the Columbian station that was broadcasting there unedited until this past week.  There are mass protests in the streets.  Not surprisingly, government militia has taken to violence.  The ability to use guns and violence with impunity tends to attract those in society who derive joy from these activities, just as government leadership roles often attract those who desire to control others.

This disaster, like the ones in Ukraine or in Syria, have nothing to do with the private sector.  Again, while government surely attracts some wonderful people and the private sector is filled with the same mix of good and bad as the public, I strongly prefer that power reside largely with the unarmed.

For my wife Marisol, a native Venezuelan, this is obviously a very personal matter.  She and I were wondering what has brought about this situation.  Is it that because of its tremendous oil resources Venezuela was a country ripe for corruption?  Could it be something cultural, given that Venezuela has had more than its fair share of corrupt leaders?

We have been communicating with people there, who tell us that upwards of 60% of the population gets all of their needs met by the government, who has bought their votes.  This majority has no desire for things to change, has no ambition, and cannot comprehend why anything should change given the many years of being fed populist messages about “fair” allocation of the nation’s oil wealth.  One of the apocryphal stories that Venezuelans recall with a sort of gallows humor was how in the most recent presidential election the young would-be reformer Henrique Capriles pronounced at a speech that were he to win every Venezuelan would have jobs, to which the reply from the masses came “Now I surely won’t vote for him.”

This Venezuela crisis needs to serve as clarion calls for all of us to carefully assess our own society and make sure that we do not follow the same footsteps.  Frighteningly, as most of you already know, too large a percentage of Americans already don’t pay taxes, and more and more receive government support with no strings attached.  The rhetoric about inequality and fair allocation of wealth and income only serve to reinforce an entitlement and victim mentality.  And, our disastrous education system is doing little to birth independent analytical thought.

For the record, I’m neither a Republican nor a Democrat.  I defy that as a false choice.  It is time for independent American thinkers to insist upon a system that is both compassionate and inspiring.  I am certain that compassion alone will lead to a repeat of the Venezuelan situation, just as I would grant that it is too late in the game to rely on tough love to save things.

If you wish to see some of the videos that depict what a collapsed society looks like there are many these days, emanating from both Venezuela and Syria.  Here are a few sent to me by a friend still living in Caracas, who has implored all of her friends to heighten awareness to the plight of her nation in the hope of attracting help.  God bless her and all peace-loving Venezuelans and Syrians.

Check these out:

Popular posts from this blog

Greed & Laziness

In this most contentious and fascinating of election cycles, when nearly each conversation leads to politics, and when polarization runs so high, I ask myself - what is the essence of the debate between left and right?  What does it really mean to be a Conservative or a Liberal?

Why Rates Must Remain Low

There is an old bond trader joke that I first heard in the 1980’s when I traded mortgage-backed securities at Drexel Burnham Lambert.  It went like this:  “Upon dying, Albert Einstein finds himself in what he is told is heaven.  He encounters another individual there and asks him what his IQ is.  When he is told that it is 175 he is overjoyed, knowing that he’s found an intellectual peer with whom he can share much.  Upon meeting another, he discovers that person’s IQ is 140 and is pleased to have met another highly intelligent person with whom he can enjoy chess and other pursuits.  He is feeling pretty good about heaven, when he comes across a person who tells him that his IQ is a mere 90, and he is flummoxed.  What, he wonders, is this guy doing in my heaven and what can I even say to this person?  Then it comes to him.  ‘Where,’ he asks, ‘do you think interest rates are heading?’”

CMBS In Flux

The CMBS market has been in a period of upheaval, with dramatic spread widening on bonds and a resulting much more expensive cost of capital for real estate borrowers who depend upon this channel for their debt financing.Market participants today wonder whether we’ve entered a period like the summer of 2011, when spreads on bonds last widened this dramatically and then snapped back within a year to provide tremendous returns for those who were courageous enough to purchase bonds at the time when there was panic selling.Or, people wonder, is this recent downturn a prelude to a structural or systemic problem, like what was experienced in 2007, when spreads widened and sucked investors in, only to punish those early responders with a much more dramatic price collapse in the next 24 months.