There are two Venezuelas. One is the Socialist thugocracy of Chavez’s cronies that attracts lefties like Sean Penn. And there is the real Venezuela, which despite its massive oil deposits, is a failed state where everyone is waiting to ride out the coming economic collapse.
Black-market dealers operating on the thriving underground market sell greenbacks at more than four times the official, government-set rate of 6.3 bolivars to the dollar. And the price they’re getting these days — 28 per dollar — is more than three times what it was just eight months ago.
Because the bolivar is artificially overvalued and practically worthless outside Venezuela, everyone here is desperate for dollars, from auto-part importers to supermarkets to ordinary Venezuelans planning to travel abroad. Even government officials and the politically connected businessmen who have made fortunes off the free-spending state search out and trade in dollars.
Chavez’s attempts at controlling every aspect of the economy, drew most of the country into the black market economy where the only way to get fair value is to sell illegally and trade in dollars.
“We depend completely on the dollar,” said one black-market dollar dealer who asked that he be identified only by his first name, Fernando, for fear of winding up in jail. “Buying dollars is practically the national sport.”
Hundreds of state-run companies are moribund, and private industry has been paralyzed by state interventions. Rolling blackouts leave much of the country in the dark. Crime is so rampant that Venezuela is more violent than many countries at war, crimping investment. Hamstrung by byzantine currency controls and a dearth of dollars, foreign companies — among the few employers to create jobs here — struggle to repatriate profits.
Meanwhile the domestic currency and the official economy with it are headed off a cliff.
And then there’s inflation, driven by profligate spending, coupled with an economy starved for dollars. It hit 4.3 percent in April, about equal to the annual inflation rate for some of Venezuela’s neighbors, and could easily top 30 percent for the year.
It’s said that Socialists can lose money running a casino. They can also lose money selling oil.
Oil production fell sharply during Chavez’s 14 years in power. Aside from exports to the United States and China, much of the oil pumped here is practically given away to Venezuelan motorists or traded at subsidized prices to Cuba or other countries.
On the store shelves, it means that one out of every five products consumers need is now missing, according to Central Bank data. Lately, consumers have been particularly irritated about one vital but scarce product, toilet paper, the commerce minister blamed on “excessive demand” generated by the media.
Maria Sanchez, who runs a truck dealership, said her business is unable to plan for the future.
“It’s been months since I had trucks, because of the dollar problem,” she said. “And I have to pay my workers. If this keeps up, I’ll have to let go of people and close dealerships.”
Venezuelans facing such challenges — as well as those simply trying to prop up the value of their earnings — search out dollars on the black market.
“The only way your savings are really savings is by turning them into dollars,” said Fernando, the black-market dealer. “If you have them as bolivars, they will devalue so utterly fast that there’s just no point.”
But what happens when Obama does to America, what Chavez did to Venezuela?