May 27, 2016

Venezuela: how the socialist paradise turned into debt and hyperinflation hell

Socialism = slow poisoning.

LEFTIES eventually run out of other people's money.

Don't expect anything FREE from the Government

Saudi and Middle Eastern countries are next.

They call them bachaqueros. Venezuela’s army of black market shoppers descend every day at dawn outside Caracas’s biggest stores.

Named after the bachaco leaf-cutting ant that carries several times its weight, the men and women queue alongside hundreds of other Venezuelans for food, nappies, milk and other basic goods.

They stand for hours in the blistering heat, motivated not by hunger, but profit.

Half-empty shelves in most shops means goods bought at government-controlled prices can be sold at a significant mark-up.

Nicolás Maduro, Venezuela’s president, has described them as “human beings turned savage”.

But in a country where hyperinflation is quickly making the cash in people’s pockets worthless, it has become the only way to survive.

Some – dubbed bachaqueros 2.0 by the government –even resell goods on the internet.

“It happens more frequently now,” sighs Juan Carlos Bacalhau, a marketing manager who lives in the Venezuelan capital.

“There’s a lady that I pay 1,500 bolivars a day to clean my house, but recently she told me she’d rather queue and buy and sell products than work for me.”

It wasn’t always this way. Diego Moya-Ocampos, senior political risk analyst at IHS, says the current crisis is the result of years of “economic mismanagement” by the ruling socialist party.

Led by Hugo Chávez, the country’s firebrand former president, the country embarked on a wave of expropriation and redistribution with the charismatic leader offering  cut-price fridges, appliances and even new homes to poor Venezuelans.

Chávez wanted to create a socialist paradise, an ideology that has been reinforced by his successor Maduro following his death in 2013.

But the oil price collapse a year later served as a wake-up call for a country that chose profligacy over prudence in the hope that a rainy day would never come.

Oil accounts for 98pc of total exports and 59pc of fiscal revenues, but Moya-Ocampos says the price slide isn’t the country’s only problem.

“Even under Chavez and $100 a barrel oil, debt was rapidly rising and there were already food shortages,” he says, “This is ultimately to do with an interventionist model that is not sustainable and has reached a tipping point.”

Maduro’s declaration of a fresh three month state of emergency has sparked fears that the government will try to seize control of more private companies.

Many Venezuelans have already left the country, including Francisco Flores. “Venezuela has taken good working companies, given them to the poor but not equipped them with the skills to run them so they go bankrupt,” he says.

“That’s just a recipe for destroying a country.”

The NHS therapist, who now lives in London, says the regime is based on a principle of keeping everyone “equal but poor”.

“This way, the state becomes a nanny and everyone loses the power to do anything because they are so dependent on it.”

Venezuela is now suffering from the effects of a deep recession and hyperinflation as the government prints money to try to plug a gap between revenues and spending that is on course to hit 25pc of gross domestic product (GDP) next year.

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