6 ms·

Venezuelan here, the current problems related to our currency losing 70% of its value in only 3-4 days are directly related to media manipulation. Black market

by firekvz 10y ago

Venezuelan here, the current problems related to our currency losing 70% of its value in only 3-4 days are directly related to media manipulation. Black market was totally stable in the 1000:1 mark for months, until the actions from the gov to stop the presidential referendum made again the rich unhappy and they decided to attack with all they have and this includes the media. 95% of the imports in Venezuela are made using the official rates and thats a bit complicated to explain, there is 2 rates wich are 1usd:13bsf (a price fully subsided used mostly for food and items that are considered "basic") and 1usd:658 for everything else and then there was the black market dollar wich is now 1usd:1758bsf The thing is you can sit here and say the dolar is 1:2000 but it doesn't really mean thats the cost, thats where everyone fails, because neither the venezuelans have the money to pay for it or people want our currency, there is an special case of people doing this kind of trades and are the ones that are fleing the country, emigrating to other places and are desperated in need of USD In the other hand, is somehow totally fake that we are paying this prices, in fact, noone imports anymore since gov barely gives USD at subsided price thus this is why we are now under scarcity problems.... so there you go.. offer and demand sets the prices but theres actually not really demand, I mean there is an insane demand but not demand for the 2000:1 price, thats just a political fight.

toomuchtodo 10y ago
What can I, as a US citizen commoner, do to help?
- firekvz 10y ago
  well there are ways to help but are somehow complicated and they dont really affect directly to the normal citizen, like for example you could send medicines or food to someone or even money but it does not help at all, the problem persist. Your best bet is to donate to some NGO like https://transparencia.org.ve/ https://transparencia.org.ve/ that tries to implement a better transparency system in our country. Venezuela problem is not socialism or w.e method, we actually had everything. Our all time problem was corruption and we had it during our whole story, is not something that came with chavez or with socialism, we had this very same problems 30,40,50,60 years ago.
  - JohnyBolivar 10y ago
    True we had corruption history from many years ago, but to put it in context and more in financial impact rather than "by the law", its very different what "thousands or millions of dollars corruption" (before chavez) will do to the economy than "billions of dollars corruption" (during chavez and Maduro)... This has been The All-Star, MVP, Nro.1 Corrupt Gov of all time. They literally took it all and they still are taking it all... No mercy for this Masters of Misery!
    - rafaelm 10y ago
      Yep, there has never been corruption of this magnitude in they history of this country. And it's such sad excuse when the few people left that still support the govt say that this has always been a corrupt country... Wasn't the Bolivarian Revolution supposed to eradicate everything that was wrong with the previous governments? They've only made every single problem worse.
      - gaius 10y ago
        Well Bolivar himself believed in the concept of a president-for-life so the seeds were sowed early on.
  - JohnyBolivar 10y ago
    True we had corruption history from many years ago, but to put it in context and more in financial impact rather than "by the law", its very different what "thousands or millions of dollars corruption" (before chavez) will do to the economy than "billions of dollars corruption" (during chavez and Maduro)... This has been The All-Star, MVP, Nro.1 Corrupt Gov of all time. They literally took it all and they still are taking it all... No mercy for this Masters of Misery!
  - gpvos 10y ago
    Please expand the abbreviation "w.e method" for me.
    - deleted 10y ago
woodandsteel 10y ago
> made again the rich unhappy and they decided to attack with all they have and this includes the media. From what I understand, the government has pretty much eliminated the independent media. More generally, are you saying that the government has done a good job of managing the oil industry, and also developing the rest of the economy so it is not so dependent on oil?
- eyko 10y ago
  > From what I understand, the government has pretty much eliminated the independent media. There's no shortage of independent media in Venezuela, both press and TV.
jimmywanger 10y ago
What media manipulation are you talking about? I heard that you can still get the 1USD:13bsf price only if you have connections, and then make insane profits using the black market to exchange the dollars back to bolivars. Rinse, repeat. And what do you mean no demand for the 2000:1 price? People aren't willing to trade 2000 bolivars for 1 dollar or people aren't willing to trade 1 dollar for 2000 bolivars?
- firekvz 10y ago
  No, it used to work like that when black market was around 10x-15x the value of official rate. Nowdays, the money got so devaluated that they dont really even need to trade back into BSF. The way corruption works now is the following: I as a importer, go to my Chinese friend and ask him a quote for 100 pair of shoes, my chinese provider tells me the 100 pair of shoes are worth 1.000 USD, then I create a company in Panama and Quote myself the shoes for 10.000 USD, I use the new quote to request gov an USD sale of 10.000 using official 1:13 rate. Govs aproves it (by using my connections). I pay the gov 130.000 BsF for the 10.000 USD wich are paid to my panama company (they never give the money directly to the company who is trading the usd but they actually pay to the provider, but remember, the provider is myself in panama) then I use 1.000 to actually buy the shoes and 9.000 as profit. When the shoes finally arrive to venezuela, marketer does the same, hes supose to sell the shoes at the very same rate he purchased so if you got 100 pair of shoes for 10.000 USD that means each pair of shoe is 100 USD right? that means 1.300 Bsf (using 1:13) thats cool right? beacuse even if they stole 9k, at least the final consumer would pay the 1:13 rate.. but guess what, they also have some child company in here, that would buy all the shoes at 1:13 rate and then chain it over and over to the moment you lose track of the sell/purchase chain and then the shoe is sold at 1:1700 rate to the final consumer. At the end, the merchant ends up selling 1 single pair of shoes for 170.000 BsF that is even more than he needed to pay for the 10.000 usd at start. Thats how bad it is. SO yea, as I said it, they dont need to even get BsF anymore, with just 1 time usd exchange they already profit. And yes there is no real demand for 1700:1 or 2000:1 or w.e u name because is not sustainable for anyone, ofc unless you really really need it, like if you are cashing out all your stuff because you leave the country or if u are like super sick and cant find medicines etc. But if you think that people is just normal trading at those prices, that just does not happen. Even tho there is scarcity and a big one, you can still find subsides things, so either people cant afford to pay for expensive items (at black market) or they just complete ignore the need of USD because how expensive it is.
rafaelm 10y ago
Unfortunately, the price of the Bolivar is set in Cucuta, Colombia, the only place where people buy and sell Bolivares. You can change bolivares for pesos and pesos for dollars. It's a tiny, tiny market, but because the government is set on this stupidity that is called the currency exchange restriction, that tiny market decides how much our worthless currency is worth.
gnipgnip 10y ago
Isn't agriculture well-developed in Venezuela ? Any historical reason for why this is ?
- snrplfth 10y ago
  It was well-developed, but when you can't import machinery and fertilizer, your agricultural production is quickly limited. And when the prices of the products that you sell are price-controlled, there's no reason to expand production because you're losing money on any investment you make in agriculture.
  - gnipgnip 10y ago
    That makes sense; speaks a lot for the criminal mismanagement of a clueless state (largely true of India before the 90s, kind of true even today).
    - snrplfth 10y ago
      I think cluelessness has a lot to do with it - though it's increasingly hard to believe that people are still unaware that price controls generate shortages. Maybe some policies just have that property of being politically feasible enough to overcome the fact that they're useless.
  - pvaldes 10y ago
    Don't forget also the disdain for environmental problems that always bite you hard in return a few years later. In the Chavez presidency, the Lake Maracaibo protection was neglected, leading to serious pillage and contamination episodes by Hidrolago, Petrol companies, etc... The old ecosystem, plenty of fishes was destroyed and displaced by another ecosystem, one that is very ill. You can't use this water anymore to provide food for the people. Most fishes are gone and duckweeds poison the water regularly. You can easily create fertilizer processing organic residues, after all is a "subproduct of humans", but the government decided instead to simply trow all to the lake without any processing, that is a criminal movement.
macspoofing 10y ago
I'm not sure what you're arguing for. What is happening to your country is a typical result anytime any government tries to control the currency exchange rate and prices of goods. This also has the bonus effect of increasing corruption because it incentivises paying a bribe to a government official rather than dealing with the regulations. Venezuela got away with it, somewhat, when you had oil money coming in. Even then your average standard of living was low. Now that oil prices have collapsed, you are where you are and absolutely nobody is surprised. Your government simply needs to let go and allow your currency and prices of goods float freely according to supply and demand. Is anyone in your government even considering it?
wtbob 10y ago
> The thing is you can sit here and say the dolar is 1:2000 but it doesn't really mean thats the cost, thats where everyone fails, because neither the venezuelans have the money to pay for it or people want our currency, there is an special case of people doing this kind of trades and are the ones that are fleing the country, emigrating to other places and are desperated in need of USD That's what a price is: the point at which twp parties are willing to trade ownership of their goods and both feel that they have come out ahead of the exchange. If there's very little demand for Venezuelan currency, then of course it will be very cheap in terms of dollars (and high-demand currency, e.g. the dollar, will be very expensive in terms of bolivars).

by firekvz 10y ago

toomuchtodo 10y ago

What can I, as a US citizen commoner, do to help?

firekvz 10y ago
well there are ways to help but are somehow complicated and they dont really affect directly to the normal citizen, like for example you could send medicines or food to someone or even money but it does not help at all, the problem persist. Your best bet is to donate to some NGO like https://transparencia.org.ve/ https://transparencia.org.ve/ that tries to implement a better transparency system in our country. Venezuela problem is not socialism or w.e method, we actually had everything. Our all time problem was corruption and we had it during our whole story, is not something that came with chavez or with socialism, we had this very same problems 30,40,50,60 years ago.
- JohnyBolivar 10y ago
  True we had corruption history from many years ago, but to put it in context and more in financial impact rather than "by the law", its very different what "thousands or millions of dollars corruption" (before chavez) will do to the economy than "billions of dollars corruption" (during chavez and Maduro)... This has been The All-Star, MVP, Nro.1 Corrupt Gov of all time. They literally took it all and they still are taking it all... No mercy for this Masters of Misery!
  - rafaelm 10y ago
    Yep, there has never been corruption of this magnitude in they history of this country. And it's such sad excuse when the few people left that still support the govt say that this has always been a corrupt country... Wasn't the Bolivarian Revolution supposed to eradicate everything that was wrong with the previous governments? They've only made every single problem worse.
    - gaius 10y ago
      Well Bolivar himself believed in the concept of a president-for-life so the seeds were sowed early on.
- JohnyBolivar 10y ago
  True we had corruption history from many years ago, but to put it in context and more in financial impact rather than "by the law", its very different what "thousands or millions of dollars corruption" (before chavez) will do to the economy than "billions of dollars corruption" (during chavez and Maduro)... This has been The All-Star, MVP, Nro.1 Corrupt Gov of all time. They literally took it all and they still are taking it all... No mercy for this Masters of Misery!
- gpvos 10y ago
  Please expand the abbreviation "w.e method" for me.
  - deleted 10y ago

woodandsteel 10y ago

> made again the rich unhappy and they decided to attack with all they have and this includes the media. From what I understand, the government has pretty much eliminated the independent media. More generally, are you saying that the government has done a good job of managing the oil industry, and also developing the rest of the economy so it is not so dependent on oil?

eyko 10y ago
> From what I understand, the government has pretty much eliminated the independent media. There's no shortage of independent media in Venezuela, both press and TV.

jimmywanger 10y ago

What media manipulation are you talking about? I heard that you can still get the 1USD:13bsf price only if you have connections, and then make insane profits using the black market to exchange the dollars back to bolivars. Rinse, repeat. And what do you mean no demand for the 2000:1 price? People aren't willing to trade 2000 bolivars for 1 dollar or people aren't willing to trade 1 dollar for 2000 bolivars?

firekvz 10y ago
No, it used to work like that when black market was around 10x-15x the value of official rate. Nowdays, the money got so devaluated that they dont really even need to trade back into BSF. The way corruption works now is the following: I as a importer, go to my Chinese friend and ask him a quote for 100 pair of shoes, my chinese provider tells me the 100 pair of shoes are worth 1.000 USD, then I create a company in Panama and Quote myself the shoes for 10.000 USD, I use the new quote to request gov an USD sale of 10.000 using official 1:13 rate. Govs aproves it (by using my connections). I pay the gov 130.000 BsF for the 10.000 USD wich are paid to my panama company (they never give the money directly to the company who is trading the usd but they actually pay to the provider, but remember, the provider is myself in panama) then I use 1.000 to actually buy the shoes and 9.000 as profit. When the shoes finally arrive to venezuela, marketer does the same, hes supose to sell the shoes at the very same rate he purchased so if you got 100 pair of shoes for 10.000 USD that means each pair of shoe is 100 USD right? that means 1.300 Bsf (using 1:13) thats cool right? beacuse even if they stole 9k, at least the final consumer would pay the 1:13 rate.. but guess what, they also have some child company in here, that would buy all the shoes at 1:13 rate and then chain it over and over to the moment you lose track of the sell/purchase chain and then the shoe is sold at 1:1700 rate to the final consumer. At the end, the merchant ends up selling 1 single pair of shoes for 170.000 BsF that is even more than he needed to pay for the 10.000 usd at start. Thats how bad it is. SO yea, as I said it, they dont need to even get BsF anymore, with just 1 time usd exchange they already profit. And yes there is no real demand for 1700:1 or 2000:1 or w.e u name because is not sustainable for anyone, ofc unless you really really need it, like if you are cashing out all your stuff because you leave the country or if u are like super sick and cant find medicines etc. But if you think that people is just normal trading at those prices, that just does not happen. Even tho there is scarcity and a big one, you can still find subsides things, so either people cant afford to pay for expensive items (at black market) or they just complete ignore the need of USD because how expensive it is.

rafaelm 10y ago

Unfortunately, the price of the Bolivar is set in Cucuta, Colombia, the only place where people buy and sell Bolivares. You can change bolivares for pesos and pesos for dollars. It's a tiny, tiny market, but because the government is set on this stupidity that is called the currency exchange restriction, that tiny market decides how much our worthless currency is worth.

gnipgnip 10y ago

Isn't agriculture well-developed in Venezuela ? Any historical reason for why this is ?

snrplfth 10y ago
It was well-developed, but when you can't import machinery and fertilizer, your agricultural production is quickly limited. And when the prices of the products that you sell are price-controlled, there's no reason to expand production because you're losing money on any investment you make in agriculture.
- gnipgnip 10y ago
  That makes sense; speaks a lot for the criminal mismanagement of a clueless state (largely true of India before the 90s, kind of true even today).
  - snrplfth 10y ago
    I think cluelessness has a lot to do with it - though it's increasingly hard to believe that people are still unaware that price controls generate shortages. Maybe some policies just have that property of being politically feasible enough to overcome the fact that they're useless.
- pvaldes 10y ago
  Don't forget also the disdain for environmental problems that always bite you hard in return a few years later. In the Chavez presidency, the Lake Maracaibo protection was neglected, leading to serious pillage and contamination episodes by Hidrolago, Petrol companies, etc... The old ecosystem, plenty of fishes was destroyed and displaced by another ecosystem, one that is very ill. You can't use this water anymore to provide food for the people. Most fishes are gone and duckweeds poison the water regularly. You can easily create fertilizer processing organic residues, after all is a "subproduct of humans", but the government decided instead to simply trow all to the lake without any processing, that is a criminal movement.

macspoofing 10y ago

I'm not sure what you're arguing for. What is happening to your country is a typical result anytime any government tries to control the currency exchange rate and prices of goods. This also has the bonus effect of increasing corruption because it incentivises paying a bribe to a government official rather than dealing with the regulations. Venezuela got away with it, somewhat, when you had oil money coming in. Even then your average standard of living was low. Now that oil prices have collapsed, you are where you are and absolutely nobody is surprised. Your government simply needs to let go and allow your currency and prices of goods float freely according to supply and demand. Is anyone in your government even considering it?

wtbob 10y ago

> The thing is you can sit here and say the dolar is 1:2000 but it doesn't really mean thats the cost, thats where everyone fails, because neither the venezuelans have the money to pay for it or people want our currency, there is an special case of people doing this kind of trades and are the ones that are fleing the country, emigrating to other places and are desperated in need of USD That's what a price is: the point at which twp parties are willing to trade ownership of their goods and both feel that they have come out ahead of the exchange. If there's very little demand for Venezuelan currency, then of course it will be very cheap in terms of dollars (and high-demand currency, e.g. the dollar, will be very expensive in terms of bolivars).