The Chavez economic policy four offenses

Chavez in what the financial sector, he was so disgusted? Author see Chavez's economic policies, summed up in four main "crime":

First, despite the international practice and commercial contracts, arbitrary expropriation of private property, forcibly nationalized. Just one example, in 2007, due to the oil companies (Exxon Mobil), the US-owned ExxonMobil and Conoco Phillips  do not want to be controlling stake sold to the Commission at the Commission subsidiaries Petroleum (PDVSA), the appointment of government ordered the estimate the forced nationalization value of nearly $ 12 billion of assets, only to Exxon Mobil compensation $ 255 million and $ 420 million to compensate for ConocoPhillips.

Second, the witch hunt, misappropriation of state-owned enterprises profit to pay for the government spending. According to the the Commission Government Petroleum Minister appointed oil company main Rafael Ramirez 2010 revealed that from 2004 to 2010, the government appointed a total of commissioned oil from non-listed companies took $ 61.4 billion to pay various social welfare costs . The money is equivalent to appoint 43% of the total assets of the oil, the 14-year net profit.

According to Bloomberg statistics, Venezuelan gasoline retail price per gallon, 9 cents, the lowest in the world (about RMB per liter of the iceberg fifth), and one of the huge subsidies to oil, chosen by Committee commitments. No wonder news Chavez likely has resigned, the appointment of oil bond prices rose sharply.

Third, the economy is highly regulated the distorted market principles. Venezuela since February 2003 Abolition of freely convertible currency and free movement of capital requirements, foreign exchange controls. Mr Ma noted the implementation of the dual exchange rate system in January 2010, provides that "urgently needed supplies Import and Export of Settlement to one U.S. dollar to 2.6 Bolivar , urgently needed supplies to 4.3 Bolivar exchange settlement. Food, medicine and education as a "much-needed" priority foreign exchange settlement and sales, and other materials imported often no exchange led to a shortage of commercial and corporate materials, grumbling.

Fourth, the lack of fiscal discipline, mid living beyond. Despite Venezuela being the world's fifth largest exporter of crude oil, oil revenues and their oil exports up to $ 88.1 billion in 2011, but to meet not Chavez welfare spending appetite. Venezuela deficit deteriorated year by year since 2006 and in 2011 reached 11.6 percent of  GDP, much higher than 3% of the internationally recognized warning line . In addition, the dual exchange rate system, the government of crude oil classified as "non-urgent" to 4.3 settlement, so that each export of one U.S. dollar crude oil, will be able to exchange for 1.7 Bolivar expenses. This practice. In essence no different from printing money and government overhead.

So in vain to Gu market principles and the law of value, such a lack of respect for the rule of law, private property rights and the autonomy of enterprises, the long-term damage to the economy is self-evident. Available from 2004 to 2008, the appointment of the economy has ushered in a period of Indian summer to average annual double-digit rate of growth in five years, GDP increased by 64% . This side thanks to the sharp rise in international oil prices, thanks to the side of Chavez's social welfare policy change to increase the income of the bottom of people, the release of certain bonus and promote consumption. However, an international financial crisis in 2008, yet the Venezuela hit back prototype economy for two consecutive years face a recession.

Gradual recovery since 2011, but all sorts of irrational policy has undermined the economy's potential growth, GDP can only be hovering in the 4-5% range, while inflation is a long period between 20-30%. A very important reason, private business owners face the uncertainty of the policy is expected, the enthusiasm for production dropped significantly and do not want to increase the supply, even if the economic situation improves under. Been unable to improve the situation as a pick-up in demand and supply, prices are bound to rise.