Tuesday, January 12, 2010
It's hard to keep track of the goings-on in Argentina and Venezuela these days, what with central bank chiefs being fired for not allowing foreign exchange reserves to be used to service debt in the former and after radical currency devaluations in the latter cause panic in the streets as citizens rush to spend their money while it's still worth something.
The most memorable quote of the day so far comes from this WSJ story in which a harried Venezuelan shopper stops long enough to talk to a reporter:
At Caracas's middle-class Sambil shopping mall, lines at cashiers reached 50-deep. Carmen Blanco, a 28-year-old accountant, waited to buy a 42-inch flat-screen television she doesn't need because she already has one at home.Relative to the U.S. Dollar, President Chavez slashed the value of the local currency in half last week, however, in order to protect the buying power of the poor, for essential items such as food and medicine, only a modest devaluation was implemented.
"It doesn't make any sense to keep my savings," Ms. Blanco said Saturday. "I'd love to see how things work in a normal country."
Of course, black market exchange rates remain much different than the government's exchange rates, always a nagging problem for "command economies" such as North Korea and Venezuela. According to the report, black market exchange rates have the bolivar worth about a third less than the new "official" exchange rate and about two-thirds less than the exchange rate for essentials.