• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Chavez’s Devaluation Leaves Venezuelans Jittery About His “Socialism of the 21st Century”

    ptsphotoshot267741-U950-147

    President Hugo Chavez, architect of Latin America’s so-called “Socialism of the 21st Century,” roiled Venezuela’s economic waters with his decision to devalue the Bolivar, the national currency, on January 8.

    Under a new exchange regime, the first devaluation in five years, Venezuela will operate a three-tiered exchanges rate system. For the average consumer of imported goods, prices will automatically double. Imported foods and medicines get an exemption. Reuters reports that Venezuelans are responding to Chavez’s edict with panic buying and hoarding.

    The Venezuelan economy, despite its massive reserves of petroleum, continues to struggle to invest in its future and sustain populist policies of subsidies, wealth redistribution, government-run enterprises, and foreign giveaways that have become the hallmarks of Chavez’s 11th years as president. The devaluation comes on the heals of ever-more-frequent power outages due to drought and the Chavez regime’s mismanagement of Venezuela’s hydroelectric generation system.

    Venezuela’s populist caudillo [strong man] vowed to protect the poor’s purchasing power and promised new money for his struggling national oil company, PdVSA, and stimulus for ailing local industries. Under Chavez, Venezuela’s relies on oil exports for 90% of its export and foreign exchange earnings. The forces of socialism, economic mismanagement, and political cronyism will continue to make Venezuela one of Latin America’s chronic economic underachievers. Its economy contracted 2.9% in 2009. Inflation is already the highest in Latin America and will likely grow.

    Last year’s Wall Street Journal/Heritage Foundation Index of Economic Freedom placed 174th out of 179 ranked countries. This year’s ranking, due out next week, is not likely to show any improvement.

    As in the past, Chavez threatened to confiscate any businesses that violates his arbitrary edicts and called out the National Guard, an ill-organized, unprofessional military arm of his regime, to enforce the new price edicts and punish speculators. The devaluation means more local currency [Bolivars] for every barrel of crude sold in Chavez’s pocket and will give him a larger war chest to propping up his socialist spending programs before legislative elections in September.

    Posted in International [slideshow_deploy]

    6 Responses to Chavez’s Devaluation Leaves Venezuelans Jittery About His “Socialism of the 21st Century”

    1. randy, sa tx says:

      whats wrong with another point of view? its way better than neoliberalism (that exactly what we r).

    2. Pingback: Stocks Seesaw Ahead of Earnings Season Kickoff – January 11, 2010

    3. Pingback: Fausta’s Blog » Blog Archive » The devalued currency Carnival of Latin America and the Caribbean

    4. stirling, Pennsylvan says:

      chavez is a real "piece of work," and it amazes me why anyone would want to live under that kind of dictator. I guess if you have nothing and want everything for free then sure move there, but if you are successful and don't want to be taken over or bankrupt (from Government) then you go elsewhere to live. It's a travesty that in the year 2010 we still have these abuses of freedoms going on in the world. Watch out america Chavez policies and Obama policies (so far) are very similar in what is being done to the private sector.

    5. joel says:

      me parece que la guerra mediatica es mucho mayor que la realidad de Venezuela,una Nacion muy prospera..la realida es quie no existe ningun indicio de dictadura al contrario aqui hace todo el mundo lo se le da la gana. los empresarios de transnacionales evaden los impuestos, los medios de comunicacion pertenecen a una elite de millonarios que gobernaban en el pais y que perdieron sus privilegios por abusos de poder mediatico..el preidente chavez simple y llanamente no se les rindio a los pies a los que estaban apoderados del pais y los que tenian todo privatizado,,,actualmente en Venezuela se respeta el derecho de opinion,la salud es gratuita,la educacion universitaria y escolar son gratuitas,,se otorgan mas becas de estudios a los jovenes, se esta modificando el COPP codigo organico procesal penal el cual fue aprobado bajo el gobierno del difunto rafael caldera,donde se le da beneficio al delincuente y a muchos delitos,,la verdad lo heredo el gobierno de chavez,,el deporte es financiado por el gobierno y es evidente en las numerosas representaciones internacioales, se toma en cuenta la cultura, se estan implementado sistemas de fabricacion de viviendas masivas para acabar con la falta de vivienda que dejaron los adecos y copeyanos en su momento de saqueo de la nacion…ahora señores criticos a distancia..no podemos dejarnos llevar por el rumor….los invito a que visiten de verdad nuestro pais Venezuela para que vean con sus propios ojos la realidad de esta gran nacion….a los opositores financiados les doy un consejo dejense de saboteos que es a lo que estan acostumbrados todos ustedes y presnten un proyecto de pais por que su unico proyecto es golpe de estado y vender su patria para enriqueserce unos cuantos y los demas que se mueran de hambre…con todo el respetome disculpan los ofendidos pero esta es la realidad.

    6. joel says:

      I think that the mediatica war is much greater than the reality of Venezuela, a renown very prosperous..the realities is who there is any indication of dictatorship to the opposite here does everything the world it is given the WINS. employers of transnational evade taxes, the media belonging to an elite of millionaires who ruled in the country and who have lost their privileges by abuse of media power…preidente simple chavez and simply not is them rindio at the foot to those proxy of the country and which had all privatized, currently in Venezuela respects the right of opinion, health is free, school and university education are free, are granted more scholarships at young, is this by modifying the COPP code organic criminal procedural. which was approved under the Government of the deceased rafael caldera, where profit is given to the offender and to many crimes, truth inherited it the Government of chavez, sport is funded by the Government and is evident in the numerous representations internacioales, takes account of culture, are are implemented massive to ending homelessness that left the adecos and copeyanos at its pillage of the nation… now gentlemen critical distance housing manufacturing systems..We can not get carried away by the rumor I call…. you to visit our country Venezuela of truth to make with their own eyes the reality of this great nation…. funded opponents I give a saboteos dejense Council which is what are accustomed you all and presnten a project country that his unique project is coup and sell their homeland to enriqueserce a few and others dying of hunger… with all the respetome excuse the offended but this is the reality.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×