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[Ripclawe]

http://abcnews.go.com/International/wireStory/venezuela-cuts-dollar-allowance-florida-trips-21651426

Tempers flared at airline offices in Caracas on Friday as Venezuelans reacted angrily to international carriers' refusal to sell tickets after the government devalued the bolivar for flights abroad.

The offices of American Airlines, Delta, United and Panama's Copa were all either closed or had halted sales for several hours on Friday as the higher exchange rate took effect, adding to uncertainty as carriers try to collect $3.3 billion they say they're owed by the socialist government.

Airlines are also losing patience.

For the past few months they've been locked in a battle with President Nicolas Maduro's cash-strapped government to repatriate $3.3 billion that it says is trapped inside the country by rigid currency controls. The situation worsened this week when the government said that revenue from ticket sales in bolivars would now be converted at a new exchange rate almost twice as high as the official 6.3 bolivar per dollar exchange rate.

That nominally makes flying costlier for the vast majority of Venezuelans. But tickets purchased in the country are still a bargain, in dollar terms, given the bolivar's plunge to less than a tenth of its official value on the flourishing black market.

Weeks of closed-door meetings have so far failed to produce a deal, with airlines balking at the government's offer to honor the debt with a combination of bonds, cash and jet fuel, which is cheaper to produce in the oil-rich nation.

On Thursday, United Chief Financial Officer John Rainey said the airline has about $80 million in cash "trapped" in Venezuela while it waits to find out which exchange rate the government will make it use to bring the money back to the U.S. The airline said it works to adjust prices for tickets sold in Venezuela to account for the changes in currency exchange rates.

In the meantime, the travel plans of millions of Venezuelans are in doubt amid fears that some airlines could follow the example of Ecuador's TAME airline, which this week announced it was suspending its daily flights to Venezuela until the government pays it $43 million it says it is owed for ticket sales in the country.

Adding to travelers' misery are tighter restrictions on the amount of US dollars Venezuelans can spend abroad in Florida and other international destinations that have been inundated by Venezuelans desperately trying to shuttle abroad as much hard currency as they can under the rigid foreign currency exchange system.

Travelers just to Florida will be allowed to charge a maximum of $700 annually on their Venezuelan credit cards and will be allowed to buy no more than $300 in cash, according to the rules published in the Official Gazette on Friday. That compares with limits of $2,500 in credit and $500 in cash they were previously allowed for trips to Florida, an amount that will be maintained for the remaining 49 US states. Cash allowances were also reduced for Costa Rica, Colombia, Panama and Peru.

The socialist government hopes that the tighter restrictions will help cool capital flight, which has drained central bank reserves by 30 percent over the past year.

 

[TomServo]

Endgame of socialism, even with oil wealth.

 

[ScottSullivan]

This kind of stuff is really fascinating to read about. I don't know a whole lot about exchange rates and inter-national monetary policies. Is there a good primer on that kind of stuff and how moving money between countries works in a commerce setting?

 

[zero shift]

Endgame of socialism, even with oil wealth.

More like that Chavez and Maduro and the PSUV in general have no idea how to run a country. Their economic decisions literally resemble that South Park episode with the headless chicken running around the board. The fact that they hardly used the oil money to invest in infrastructure or that all of their increased food production is stolen due to mass corruption and "corruption" says it all really. They keep devaluing the currency while not doing shit hoping that things will change. Yes the confidence fairy even exists in socialism.

I feel really bad for the country though. From what I keep hearing is that the opposition to the PSUV is also hilariously incompetent. The more I hear from Venezuelans the more it sounds like the country just needs competent and caring leadership.

endgame for Norway?

Only 1/3rd of Norway's workforce is employed in the public sector, compare that to, I believe its close to 1/2 of Venezuela's. Though that doesn't include self-employed which is where most people there work (from what I've been told). Venezuela also works in a different context, it allows private businesses of course but it clearly wants to limit them. The dream for PSUV supporters is for the country to be Cuba-Lite.

Norway is social democracy in which government uses funds from private businesses to fund huge social programs. Though it is part socialist in that many (most?) of the big industries such as energy and banks are nationalized to have further control from the people. Venezuela's aim seems to be nationalizing as much as possible, while throwing in some cooperatives here and there. How far do they want to go? Its anybody's guess.

 

[gutter_trash]

Endgame of socialism, even with oil wealth.

endgame for Norway?

 

[lazorexplosion]

Venezuela continues the utterly predictable (and predicted) arc its economic policies cause.

 

[speculawyer]

endgame for Norway?

LOL. No.

 

[alejob]

More like that Chavez and Maduro and the PSUV in general have no idea how to run a country. Their economic decisions literally resemble that South Park episode with the headless chicken running around the board. The fact that they hardly used the oil money to invest in infrastructure or that all of their increased food production is stolen due to mass corruption and "corruption" says it all really. They keep devaluing the currency while not doing shit hoping that things will change. Yes the confidence fairy even exists in socialism.

Sigh.

 

[robochimp]

Sigh.

Used incorrectly so much that it is now considered a correct usage.

 

[CyclopsRock]

Sigh.

I don't even think that's incorrect - he said "literally resemble", as opposed to "literally are". Resemblance is a state of similarity, not being identical to. So the "metaphor" element that the word "literally" typically strips out is put back in by the word "resemblance". I think.

Anyway, yeah, you can't really blame the airlines for this, and it's only going to hurt Venezuala more when their people can't fly anywhere.

 

[MacNille]

Don't they also have a shortage of toilet paper there as well? I have read about it. Socialism is a fucking joke and it have always been that way.

 

[Ty4on]

Don't they also have a shortage of toilet paper there as well? I have read about it. Socialism is a fucking joke and it have always been that way.

The state kept prices too low which is why they ran out of toilet paper and a bunch of other stuff. We did run out of butter though

 

[mre]

Sigh.

You've lost that war. Meriam-Webster, Oxford, Cambridge, etc. have all accepted the "incorrect" definition of literally.

 

[BajiBoxer]

Don't they also have a shortage of toilet paper there as well? I have read about it. Socialism is a fucking joke and it have always been that way.

I think the greater problem is people who have an extremely simple minded view of economics.

 

[And_Gignac]

Sometimes I wonder if Maduro isn't just the puppet president of an United States' council of capitalists who put him there just to give a bad reputation to the obviously superior social-economic system that socialism is.

 

[TomServo]

The state kept prices too low which is why they ran out of toilet paper and a bunch of other stuff. We did run out of butter though

They tried to implement capital controls to keep the effects of hyperinflation away, but it just didn't work. Look at the difference in official VEF:USD rate versus the real (read: black market) rate; you'll start to understand that the government is desperately trying to fend of the reality that their currency is worthless.

Retailers were raising prices to compensate for the diminished real value of the VEF, and what did the government do? They blamed the retailers, ordered prices down with a cap on margin that itself was based on their fantasy valuation of the VEF, and then sent in the military to stand guard while people mobbed stores and cleared the shelves. Viva la revolution! Right? Yeah, except now retailers are less willing to restock, because they have to get dollars off of the black market to buy new stock from overseas and at government-mandated margins they'll lose money.

The scary thing is that it's affecting the availability of food there, not just flat-screen TVs and iShit. That's the government's faults as well - land seizures that started a decade ago destroyed their agriculture industry, and they've been importing food because it's cheaper to import than to produce domestically.

How does a country with oil wealth get to that point? Sure, they're not exporting light, sweet crude but roughly a decade ago the consensus was that as long as oil stayed about $50 a barrel they were profitable. According to Maduro, it's the CIA. Fortunately for Venezuelans he's created a council to inspect private companies to ensure that they're not deliberately sabotaging production. I'm sure that'll fix things right up.