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Venezuela should increase Euro, Yen and Yuan sales; reduce US$ exposure

Published: Friday, February 11, 2005 Bylined to: Chris Herz commentarist Chris Herz writes: No one in our business has a crystal ball or magical tarot cards to foretell what is to come. But we do have long experience in analyzing the imperial project by its past actions, the words and actions of its managers, and, best of all, its budget. And this new budget, just introduced by our President Bush, is an excellent field upon which the journalist may graze.

While I have not yet had time to fully read through the sections relevant to us, several things are immediately clear on a brief over-view.

First and foremost:  The needs of every other section of our society will be further starved in order to continue the financing of the military expansion of the empire.

Second: No realistic moves will be made to shore up the increasingly precarious state of governmental finance. Deficits and trade imbalances will grow at increasingly uncontrollable rates.

The military budget will be increased by a further 5% from its already astronomical levels — 15 times higher than the next ten countries put together! New atomic weapons will be constructed, new bio-war facilities will be constructed in my own hometown, and a new aircraft carrier, the USS George H.W. Bush, will soon be launched.

This 5% does NOT include operational costs of expeditionary forces abroad; not in Iraq, not in Afghanistan, and not, most importantly to Venezuela in countries on your periphery.

  • This is probably as much money as the presently sized military forces can absorb without going to a significant up-sizing by means of conscription. That’s the good news.

But the bad news is that numerous other, secret, contingency funds in the area of both Defense Department and Central Intelligence Agency will be increased and it is these funds which can be used, via Colombia, for the subversion, even for limited attacks, on the physical and social integrity of the Bolivarian State. The details will become apparent only over time, as we see what new provocations the Empire unleashes.

And apropos, no one should put it past our misleaders to have the USA itself, or by allowing Israel to over-fly our new Iraqi colony, arrange an attack upon the Iranian nuclear facilities. The thinking, if you want to call it that, being should this touch off more war in the Mideast there would then be a pretext to re-establish conscription. Unless the USA can unleash a greater war, and thereby place its entire economy on a war footing, its bankruptcy cannot be avoided.

This brings us to the second matter, the deficits. Anyone, be he a manager of a foreign central bank or a corporate comptroller should be in no doubt that the USA expects to begin the process of default on its own bonds with a massive overhaul of its Social Security System designed to reduce significantly the retirement and medical benefits hitherto expected by our own people. This is such a difficult political sell here that the mere fact that it has been launched must be alone an indicator of just how badly state finances are unraveling. To fail to consider this fact of financial life would be the very apogee of financial imprudence. All should act accordingly.

Venezuela should act quickly to reduce its dollar exposure, especially in the light of feckless moves by US and other speculators to drive down the Bolivar for other than financial reasons. Any further attempts to back Venezuela’s own currency with dollars merely transfers to you the inflation which should actually focus here. China and other producing countries still trading in dollars will have the same inflationary pressures.

Venezuela should rapidly increase its Euro, Yen and Yuan sales, encouraging its trading partners to reduce their dollar exposure as well.

Unfortunately, since its assets are both dollar-denominated and exposed to seizure by the USA, CITGO should be sold whilst it is still possible to do so. As an aside, I am frankly surprised that, since our Overseas Private Investment Corporation has paid claims by SAIC for the expropriation of its Venezuelan assets, that CITGO or other Venezuelan assets held here have not already been legally attacked.

Interestingly the recent visit of the Chinese leadership to Venezuela was followed by their departure for Trinidad and Tobago. This country having like yourselves a significant energy sector. And again like yourselves, it is a nation abused both by a rapidly depreciating dollar and by fixed, sub-par prices for that energy.

Brazil is also, in a different manner exposed to machinations by the International Monetary Fund, acting on Washington’s behalf, to limit her diplomatic space abroad and her possibilities for reform at home.

Both these nations present significant diplomatic opportunities to the Bolivarian State. Take advantage of the situation. Certainly the USA will.

Chris Herz

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