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description=10 posts published by moctavio during February 2011;

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the, devil, in, venezuela, for, blog, all, blogs, by, gdp, excrement, archive, february, 2011, unknown, feed, subscribe, to, via, email, categories, miguel, octavio, blogroll, venezuelans, recent, posts, archives, pages, meta, stats, griping, about, students, hunger, strike, despite, oil, windfall, per, capita, is, only, up, over, last, twelve, years, mystery, of, giordani, 18, debt, ratio, thank, you, from, does, not, live, here, anymore, hugo, tell, me, who, your, friends, are, brisas, de, oriente, when, anarchy, and, chaos, become, routine, chavez, becomes, blameless, on, wasteful, gasoline, use, his, solution, rationing, bolivarian, bond, arbitrage, dummies, gets, stunned, at, supermarket,

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the (405), and (148), that (96), you (74), #venezuela (57), this (53), was (53), for (52), are (51), not (49), but (43), will (40), have (39), bond (38), has (37), from (34), with (33), pdvsa (31), 2011 (30), february (29), government (29), they (29), there (27), years (24), all (23), debt (23), bonds (22), about (21), can (20), one (20), would (20), which (20), may (19), then (19), billion (19), 2010 (18), get (18), when (17), what (17), some (17), more (17), now (16), chavez (16), november (16), january (16), march (16), two (16), price (16), many (16), 2022 (16), country (16), very (16), august (15), october (15), april (15), 2009 (15), 2014 (15), time (15), had (15), dollars (15), risk (15), pay (15), coupon (15), last (15), comments (14), devil (14), his (14), september (14), december (14), june (14), july (14), per (14), only (14), these (14), could (14), because (14), 2003 (13), 2006 (13), 2015 (13), how (13), even (13), year (13), much (13), around (13), people (13), were (13), gdp (13), 2004 (12), 2005 (12), 2007 (12), 2008 (12), 2012 (12), 2013 (12), back (12), them (12), well (12), who (12), its (12), value (12), simply (12), why (11), high (11), down (11), fact (11), over (11), same (11), gasoline (11), venezuelan (10), bank (10), your (10), posted (10), just (10), also (10), don (10), been (10), things (10), out (10), than (10), where (10), other (9), 2016 (9), work (9), right (9), oil (9), arbitrage (9), while (9), goes (9), face (9), money (9), issued (9), 100 (9), thus (9), since (9), take (9), brisas (9), oriente (9), blog (8), tell (8), day (8), bolivarian (8), inflation (8), markets (8), buy (8), did (8), students (8), give (7), uncategorized (7), new (7), good (7), lots (7), still (7), almost (7), first (7), know (7), way (7), after (7), few (7), trade (7), like (7), each (7), companies (7), post (7), week (7), little (7), barrio (7), giordani (7), excrement (6), another (6), 2002 (6), find (6), such (6), going (6), sell (6), world (6), either 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clear (4), company (4), having (4), order (4), began (4), trading (4), yield (4), three (4), actually (4), use (4), stop (4), someone (4), reasons (4), hugo (4), next (4), food (4), rather (4), simple (4), crime (4), live (4), minister (4), total (4), quite (4), thank (4), hunger (4), website (3), name (3), log (3), wordpress (3), account (3), control (3), something (3), blogs (3), venezuelans (3), excremento (3), del (3), diablo (3), miguel (3), orchids (3), opposition (3), revolution (3), shortages (3), paying (3), shelf (3), getting (3), made (3), subject (3), everything (3), market (3), look (3), brand (3), today (3), looked (3), worse (3), ready (3), weeks (3), topic (3), office (3), went (3), gets (3), crazy (3), come (3), set (3), end (3), investors (3), done (3), telling (3), part (3), months (3), abroad (3), without (3), different (3), lot (3), their (3), expect (3), announced (3), petrobono (3), less (3), complicated (3), built (3), large (3), international (3), given (3), 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able to get more got grants in venezuela and abroad my career took off i also helped start an engineering research institute then came el viernes negro black friday when the country s economy had its first large devaluation in decades this was february 18th 1983 within months the venezuelan currency had lost almost 60 of its value things got more difficult it was a sign of things to come things began to oscillate a lot there were good years and bad years not much new funding i was working in a field that required ever more sophisticated equipment lots of running expenses it was hard to stay at the edge but i gave it my best try for quite a while then politics got in the way technical employees where i worked began demanding the same perks as researchers without being willing to assume all of the duties and responsibilities then there was a tough strike and i decided i had to either leave the country to do physics or switch fields staying in the country where my extended family resided was important to me i stayed i was then consulting for a small local broker on how to construct indexes for markets they had actually started by offering me a job i decided to give it a try see how things developed maybe there would be improvements at the institute where i had worked since i was 18 years old it was downhill at that place from there by now the revolution has insured that what was once one of the top scientific institutes in latin america has slid down into an irreversible path to complete mediocrity the new job went well there were ups and downs but the ups were always exhilarating i learned so much new stuff along the way we did lots of things all of them quite well and with professionalism then last year chavez decided to blame someone for his economic mismanagement and targeted one of the companies of the group that i worked for it was the equivalent of our farm being illegally taken over by the government it was time to go thus this weekend i moved with my family to another country i will go back periodically for work reasons but my main residence will be elsewhere there were two main reasons for this tough decision one that came from the mind not the heart crime and the absence of the rule of law i stared at both of these in the face and it is something i don t wish on anyone you feel like you are not playing on a level field if the crooks don t get you the other crooks will and you have no way to defend yourself there are no instances no appeals you have no rights time to leave and so it goes it s called self preservation the blog will continue i started this eight and a half years ago and will continue to document the absurdity of it all as long as it continues i think quico alex daniel and i have played an important role over the years in telling the story of chavez outside the country that job is mostly done but as blogs have lost some sex appeal there are lots of stories still to tell about what is going in venezuela which can not be tweeted or facebooked clearly not being on the ground will deny me some of the insights one gets from being there but i will go back regularly and hope to compensate partially with it i hope to sustain the quality if i don t let me know in private of course so the devil will continue to be around i won many battles in my dear venezuela during the last three decades but i lost the overall war time to move on with some sorrow but in the end semper diabolus vincit posted in uncategorized venezuela 146 comments hugo tell me who your friends are february 20 2011 from la patilla this magnificent collage of hugo and his lybian buddy as the saying goes dime con quien andas y te dire quien eres tell me who your friends are and i will tell you who you are posted in venezuela 51 comments brisas de oriente when anarchy and chaos become routine in venezuela february 19 2011 yesterday there was an eight hour protest near los teques right outside caracas neighbors of the brisas de oriente barrio a barrio that sits on the ridge of a hill right next to the panamerican highway near km 21 right before los teques blocked the road for eight hours this wasn t even huge news they are part of the routine anarchic and chaotic life these days in venezuela while an indifferent and indolent government claims everything is fine these people were mad that the police and the national guard did not even dare to stop them from blocking the traffic for such a long time i estimate this affected some 100 000 people who simply could not move on the highway during that time or chose to stay home rather than try to find a way to get down to caracas to work or go to school to most venezuelans the name brisas de oriente means very little but many people that live in or near caracas have actually been at the entrance of that barrio the barrio grew out of a food stop on the highway first came the food stop then a news stand then someone built a very simple house almost but not quite a rancho behind it and before you knew it brisas de oriente was born by now brisas de oriente is a long road along the ridge and down from which other roads a minority of them unpaved branch out in between the dense concentration of rudimentary houses the further you go out the closer they are to a rancho or shack while the closer to the road you are the closer to the now famous food store that goes by the name of los golfeados de los teques the more developed the houses are the people that live in brisas de oriente are poor but they most likely have one or two people that work at home kids that go to school and even the university a well constructed house in the barrio costs around five to ten thousand us dollars rentals are about 50 dollars a month for years residents of brisas de oriente have known that you have to arrive before 10 pm and leave after 6 am to go to work in between the malandros hoodlums take control of the barrio and either rob you outright or charge a fee just to be allowed to go by the spot where they are hanging out so you better have an alternate place to sleep if you don t want to get mugged when you get home late or have to leave early lately however crime has taken a turn for the worse from no murders five years ago the number of homicides has picked up at a fast pace the crooks have gotten younger they are now mostly underage and armed with loaded guns while their style has changed this week two residents of brisas de oriente were murdered in two separate incidents a total of sixteen have been killed so far this year this is what led to the protests when the protests began the police did little some of them even live there and are victims themselves all part of an anarchy that just grows by the day and so do the protests and to the media it becomes almost normal and simply boring ask the minister of the interior and he will likely spew out some made up statistics about how he has reduced crime in the last six months despite the fact that each year the number of murders beats the record from the prior and government media does not show the protest and the non government media minimizes it too for fear of retribution from the government and there is no policy response from the government they would not know where to start and chaos and anarchy just grow much like crime around the country probably at the same rate you may wonder how i know about brisas de oriente for almost 20 years i lived not two kilometers away from it had breakfast at los golfeados daily and got to know and even work with a number of its residents the barrio was heavily pro chavez until 2006 and by now according to my friends it has become mostly opposition except they could care little about politics now they only worry about survival posted in uncategorized 37 comments chavez becomes blameless on wasteful gasoline use in venezuela his solution rationing february 15 2011 yesterday i sincerely could not believe the dictator when he started talking and pontificating about the problem with cheap gasoline in venezuela you are filling your tank with the cheapest gasoline in the world said the president speaking with his scolding tone as if saying you bad guys have been doing this behind my back then as if his inauguration was just last week rather than twelve years ago chavez told us in his pedagogical tone that the government subsidizes 90 of the price of gasoline a topic we have covered many times wow when did he find this out because for twelve years hugo chavez has done very little to change the price of gasoline in fact he forced former president rafael caldera in 1997 not to increase the price of gasoline to take advantage of that populist stance in 2000 his cronies at pdvsa cancelled the natural gas car program for vehicles which was rapidly expanding and they have now tried to revive without much success surprise and it was chavez himself in alo presidente the fact that he had not built major roads because that would only attract more people to cities and it was also chavez who sent oil and gasoline to iran london petrocaribe cuba argentina central america and uruguay the latter a country with a much higher standard of living than venezuela but rather than eliminate these subsidies and or increase the prce of gasoline chavez solution is very simple gasoline rationing the government will force us to consume in 2011 100 000 barrels less a day than in 2010 what s next rationing sand because after all we have had water and electricity rationing food shortages and now gasoline rationing all once abundant in venezuela but it is the paradox of venezuela chavez the revolution and gasoline after twelve years of inaction he puts his angelic and pedagogic face and blames us for his incompetence even managing to scold us we should feel guilty but not him like the cartoon above chavez is well meaning generous and smart it is the venezuelan people who are simply very dumb to continue to put up with chavez charade the yo no fui parade of his own incompetence posted in uncategorized venezuela 79 comments bolivarian bond arbitrage for dummies february 13 2011 i the question i have been getting some emails asking about why it is that the pdvsa bond issued last week the so called pdvsa 2022 has a price that is so much below the identical global 2022 venezuela bond issued by the republic last summer ii bonds in general but to understand why this is relevant let me start at the beginning typically when a country or a company issues a bond it has a price and a yield to maturity which depends on the perceived risk associated with the issuer such a bond is simply a promise that i will pay the annual payments the coupon and at maturity the day the bond ends you will get 100 of the nominal or face value of the bond iii venezuela s bonds and risk venezuela currently is perceived as being high risk in fact very high risk there are two reasons for that one is simply political the feeling that one day hugo may wake up and decide not to pay the country s debt the second one is that venezuela has been issuing more and more debt and at some point this can t go on the country has to pay at maturity as well as the increasing annual or coupon payments to the bond holders which are already near us 5 billion per year as this risk has increased over the last few years this coupon has gotten higher meaning that the country or pdvsa has to pay more to convince someone to buy your bond as an example in 2009 pdvsa issued bonds maturing in 2014 2015 and 2016 with coupons around 5 that means that if you hold 100 000 of the bond pdvsa has to pay you 5 000 per year and then at maturity give you back your money iv how venezuela issues bonds this is where things get complicated because of exchange controls these bonds are not issued internationally where they would trade very close to each other but instead are sold to venezuelan individuals or companies for bs that is you pay so many bolivars for each dollar face value of the bond at bs 4 3 per us but you know based of the coupon that the bond will not trade at 100 but at a lower value why because venezuela would have to pay coupons of 14 16 for the bond to trade near 100 if issued in us directly instead what the government or pdvsa do is to set a lower coupon knowing that the bond will trade below 100 thus if you are a venezuelan and you pay say bs 4 300 per 1 000 of a bond that should trade around 70 you buy it sell the bond for 70 of its face value you get 700 and then you are simply buying dollars at bs 4 300 700 or bs 6 14 per us since exchange controls are so strict now people love these bond issues because other than what the foreign exchange control office sells you at bs 4 3 there is no way for an individual to buy dollars as it is completely illegal to do so since last may the same applies to companies if the government does not give them dollars for imports they have to either use their own money or simply stop importing it is illegal to buy foreign currency other than from the government v the venezuela global 2022 bond last summer venezuela issued a bond maturing in 2022 it actually matures in three parts one third in each of 2020 2021 and 2022 with a coupon of 12 75 this is a very high coupon very few companies or countries in the world issue at such high coupons even worse these bonds trade at a discount in order to equilibrate with what investors expect from venezuela last week for example this global 2022 bond as it is called was trading at 88 of its face value just before pdvsa announced its bond at that price it was yielding around 15 3 the difference between coupon and yield is that coupon is what you get paid every year over the face value yield to maturity is what your annual return will be if you keep the bond until it matures vi the pdvsa 2022 bond and here is where the bolivarian arbitrage and the topic of this post begins you see this week pdvsa announced an issue of a bond also maturing in 2022 also having a coupon of 12 75 and also having maturity in three parts in 2020 2021 2022 that means the two bonds are identical given that pdvsa and venezuela are so inter twinned you would think they should have very similar prices and very similar yields right well yes and no because of all of the artificialities in the venezuelan economy due to the controls at the beginning of the trading of a bonds this does not happen in time they will be very close but it will take time in fact last thursday when the pdvsa 2022 began trading it was being sold at 74 of its face value while the global 2022 essentially the same risk same yield same coupon was trading at 86 4 a full 12 4 points above the new pdvsa 2022 issue illogical right vii the bolivarian arbitrage you would think these two prices would become the same immediately but they don t this is the bolivarian arbitrage the subject of this post and the question i have been getting from readers why are they different why doesn t the gap close immediately how can it make sense...