Tuesday, January 26, 2010

Chavez Currency ‘Burn’ Failing as $93 Billion Leave the Country.

This is what happens when you have an mental midget as your leader and the public is foolish enough to support him for the crumbs he throws their way.

Venezuelan President Hugo Chavez is selling dollars from central bank reserves for the first time in six years in what Goldman Sachs Group Inc. and Barclays Plc say is a futile bid to shore up the bolivar in unregulated trading.

The central bank, under orders from Chavez to “burn the hands” of speculators betting against the bolivar, said it sold $179 million since Jan. 13, the first dollar auctions since trading restrictions imposed in 2003 spawned the unofficial market. Chavez said on Jan. 15 he wanted to strengthen the bolivar more than 30 percent in unregulated trading, where it fetches 6.2 per dollar, to contain inflation after he devalued the official rate as much as 50 percent to 4.3.

The plan will fail because Chavez’s nationalizations and land seizures are prompting Venezuelans to pull money from the country, said Alberto Ramos, a Goldman Sachs economist. More than $93 billion has left the South American nation since 2005, according to the central bank’s capital account data.

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