Venezuela's Maduro Averts Military Coup, Arrests Three Air Force Generals
Submitted by Tyler Durden on 03/25/2014 15:28 -0400
A day after Venezuela formally devalued its currency by way of the new and improved FX central planning system SICAD II, which sent the official value of the Bolivar 89% lower, the government desperately needed a distraction. It got just that when earlier today Socialist par excellence Nicolas Maduro announced that he had narrowly avoided a coup after he arrested three air force generals suspected of plotting an uprising against the leftist government.
Maduro told a meeting of South American foreign ministers that the three generals, who were not identified, had been in contact with the opposition and "were trying to rise up against the legitimately constituted government.""This group that was captured has direct links with sectors of the opposition and they were saying that this week was the decisive week," Maduro said.He said the generals had already been summoned before a court martial, adding that the plot was discovered because other officers had come forward to say they were being recruited.The disclosure comes amid a broadening government crackdown against Maduro's opponents after weeks of street protests that have left at least 34 dead.On Monday, National Assembly president Diosdado Cabello announced that a prominent opposition deputy, Maria Corina Machado, had lost her seat and parliamentary immunity, and could be arrested at any moment.Last week, two opposition mayors were arrested, and another prominent opposition leader has been in jailed for a month, accused of inciting violence.
Ironically, while the entire international community was fuming over the "crackdown" on peaceful, if CIA-funded, Ukraine protesters nobody has anything at all to say about the daily beatings and/or murders of civilians protesting Maduro's cabinet. Why? Perhaps because while the west has already alienated Putin and his natural resources, the last thing it can afford is to tell another oil rich country, Venezuela, to take a hike.
As for the local population, it may need greater and more dazzling spectacles than this particular distraction if it is to avoid noticing that its currency just lost 90% of its official value overnight. At least the Caracas stock market continues to put even the US market bubble to shame. Finally, if the socialist paradise fails, one can always use stock certificates as toilet paper, single ply.
Venezuela Bolivar Devalues 89% in Start of New FX Market
Submitted by Tyler Durden on 03/24/2014 14:49 -0400
Venezuela's exchange rate is a Gordian Knot of rules and regulations meant to baffle onlookers with bullshit and, we suspect, hide the hyperinflation from prying eyes just a little longer.
Today's launch of SICAD II, a new currency market which allows the free-market to bid for USD (in Bolivars), appears to be an effort to provide liquidity to a black-market for dollars. SICAD II priced at 55 Bolivars today - an 89% devaluation from the official rate of 6.29 (and another auction-based rate SICAD I - applicable to some firms - of 10.8).
This new SICAD II rate will replace SICAD I as the official tourist rate.
Confused? You should be - the bottom line is that Maduro and his cronies continue to suppress the reality of a hyperinflating currency as student marches grow ever more popular and outspoken.
The positive 'spin' is that SICAD II has lowered the black market rate but simply due to the additional liquidity and transparency that the platform provides -an 88% devaluation is nothing to be too excited about!!
"It is going to cover 7, 8 percent of real (dollar) demands, seeking equilibrium as regards the flow of foreign currency necessary for the functioning of the economy," Maduro said in a speech on Friday.Sicad 2 essentially revives a previous system, known locally as the "permuta" or "swap" market, which Chavez shuttered in 2010 after accusing speculators of manipulating it.Opposition politicians have long criticized the government's currency controls. Still, they are lambasting Maduro for what they call a "stealth devaluation" via the new system."Today will be 'black Monday'. Sicad 2 is another devaluation for our currency," Tweeted opposition leader Henrique Capriles. "Nicolas has also finished off the bolivar. Another blow to the poor."Venezuela's annual inflation rate, currently at more than 56 percent, is the highest in the Americas.
As Bloomberg adds,
“This is a devaluation any way you look at this,”Tamara Herrera, chief economist at financial research firm Sintesis Financiera, said by phone. “The government is trying to bring down the black market rate with this new market, with the consensus that the dollar should be trading for about 50 bolivars.”
This was not an entirely unexpected move and we suspect a large number of players in today's auction were arbitrageurs who positioned in CDS for this platform's boost in liquidity and have profited from the move...
Bear in mind that most of the risk in VENZ CDS is devaluation risk (since its priced in USD) as opposed to credit risk - which for a very weak sovereign such as this is the same issue when it comes down to it...
A pregnant woman was shot dead near Caracas and a soldier was killed in the western state of Merida, officials said, as the death toll from weeks of anti-government protests in Venezuela rose to 36 on Monday.
Supporters of both sides and members of the security forces are among those killed in the nation's worst unrest in a decade, due to demonstrations against socialist President Nicolas Maduro that kicked off last month.
Francisco Garces, mayor of Guaicaipuro municipality near the capital and a member of the ruling Socialist Party, said the 28-year-old pregnant woman was shot dead on Sunday during a protest.
"We categorically reject the demonstrations that caused this death," Garces told reporters.
More from GlobalPost: Venezuela: Why they protest
The state prosecutor's office said the woman, Adriana Urquiola, was shot after getting off a public bus halted by a barricade set up by protesters.
In the western state of Merida, a senior military source and hospital officials said a National Guard sergeant died on Monday after being shot in the neck during clashes there.
Streets barriers have become flash points for violence between radical supporters of both sides, who sometimes carry firearms. Members of the security forces have also come under fire from nearby buildings as they try to dismantle them.
Merida and neighboring Tachira state, by the border with Colombia, have been harder hit by the violence than anywhere else since the protests began. Last week, intelligence agents arrested the opposition mayor of San Cristobal city in Tachira and accused him of fomenting "civil rebellion."
The protests began in February with sporadic demonstrations by university students. They intensified after three people were killed following a February 12 rally in downtown Caracas.
The demonstrators want political change and an end to high inflation, shortages of basic foods, and one of the highest rates of violent crime in the world.
The main opposition leaders have repeatedly declined offers by Maduro for dialogue, saying they refuse to take part in meetings that will provide little more than photo-ops.
The demonstrators are demanding the president resign, while Maduro says they want a coup like the one 12 years ago that briefly ousted his predecessor, the late Hugo Chavez.
The numbers of protesters are far fewer than those who turned out against Chavez in 2002, and there have been no signs that the current unrest threatens to topple Maduro.