Chavez threatens ‘bourgeoisie’ for economic woes

CARACAS (Reuters) – Venezuelan President Hugo Chavez  is promising tough measures against “bourgeois” speculators  whom he blames for the OPEC member nation’s runaway inflation  and ever-weaker bolivar currency.

“We need to stop this right now. The bourgeoisie do not  listen to appeals to their conscience. Let’s act with a firm  hand,” the fiery socialist told his Cabinet late yesterday,  in a familiar response to times of economic difficulty.
“We need to smash speculation.”

Already in recession and forecast to be the only nation in  Latin America with negative growth in 2010, Venezuela’s economy  had more bad news this week with the highest monthly inflation,  5.2 per cent, in years.

Fuelling the price rises and causing distortions throughout  the economy, the US dollar touched 8.0 bolivars on the  free-floating parallel market. That was nearly double the main  official rate of 4.3 bolivars and triple the government’s 2.6  level for essential imports.
Chavez, who calls himself a Marxist and has made a  political career out of attacking Venezuela’s traditional  elite, said his economic team and intelligence services would  give him a list of speculators and hoarders by today.
Then short-term and medium-term measures would be  announced, he said.

Dozens of butchers were arrested last week, accused of  hiking their prices illegally.
Chavez accused the rich of taking advantage of a recent  rise in the minimum wage and also seeking to cause him problems  before a September legislative election.

“I warn them: we are not going to be pushed around,” he  said. “We make an effort to raise salaries… then immediately  the capitalists raise everything, food, transport, clothes.  They’re trying to cause problems and we won’t allow it.”

‘Burning’ reserves
Venezuela’s April inflation spike appears to be a delayed  reaction to the impact of a January devaluation.
Stern warnings against retailers and the nationalization of  a supermarket chain on price-gouging charges chilled price  rises in the first two months after the devaluation.

Wall Street analysts say Chavez’s incompetent handling of  the economy — rather than unscrupulous speculations — is to  blame, with incoherent monetary policies and an anti-business  environment that has crushed productivity and investment.

“Inflation pressures are likely to remain high and the risk  of a currency crisis is rising by the day,” said Goldman Sachs  analyst Alberto Ramos, adding that Venezuela was now under  growing pressure to issue more debt despite official denials.

Chavez also lambasted speculation on the free-floating, or  parallel, currency market, saying state currency board CADIVI  was releasing billions of dollars at the official rates.

Businessmen say, however, that access to dollars at 4.3 or  2.6 bolivars is severely restricted — and rife with corruption  — meaning about half of imports rely on obtaining foreign  currency on the parallel market.

The Central Bank’s issuance of more than $450 million in  so-called “exchange bonds” since January has failed in its  stated aim of strengthening the bolivar’s parallel rate.

“Even if you, Nelson, burn all the international reserves,  we won’t get the parallel dollar down,” Chavez told his Central  Bank President Nelson Merentes.

“Because the bourgeoisie and those in charge of the trading  houses, the private banks and so on, they know everything,  they’ve been involved in this all their lives, they have  international connections.”

Speculation of impending government measures to control the  parallel market, and visits by officials to some trading houses  last week, were a factor in strengthening the dollar further to  its record level on Thursday and Friday.

Chavez, who has cast himself as Latin America’s heir to  Cuba’s Fidel Castro as the main critic of Washington-led  “imperialism,” said capitalism was bringing down Europe and the  United States “but here we have to stop it in time.”

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