Marathons, money and the usual madness from Caracas

So the xmas part 2 didn’t arrive. Sadly as often happens life got in the way. Suffice to say christmas in Caracas was rather different than in Scotland. 3 generations of Caropresso’s (Carla’s mothers side) all squeezed into a modest sized apartment. Things kicked off at around 20:30 on the 24th, Venezuelans do their celebrating on xmas eve. The food came out at about 23:00. Some time after midnight one of the uncles took it upon himself to start handing out the gifts which were all piled under the tree. Equipped with a loud voice and a santa hat he attacked the mountain with gusto. It seemed that everyone had brought everyone else a gift which meant that by 02:00 the marathon was almost over and people could think about tumbling to bed. I was told that due to the tough times the mound of ‘regalitos’ was a lot smaller than previous years, just as well or else we’d still be there! My enduring memories are of great openness and warmth, generously poured cuba libres and of the youngest (about 2 years old) getting salsaed around the small piece of small floor space between the xmas tree and sofa for hours on end. I think in that moment it dawned on me why we will never be able to dance like the latinos.

Another marathon that has happened recently was the CAF Marathon, Venezuela’s showpiece international running event. With it being my last year in Venezuela and having put off running 42k up until this point I thought it seemed as good a time as any to check this off my bucket list. Aided by a stellar group of training mates I made it round in a better than anticipated 2:22:40.

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The dream team (Dan Hazelwood, yours truly, Andy Cawthorne & Adrian Dunn) plus my number one fan (Carla Tacoa)

This was particularly surprising having been savaged by a street dog two weeks prior to race day and then being bed ridden the weekend before with a dodgy stomach and frequent trips to ‘los banos’. The event was staggeringly well organised particularly when compared to the rest of this catastrophically coordinated  country. The joke going around has been that whoever ran the marathon should be running the country, which all joking aside seems like a fabulous alternative to ‘el presidente’ Maduro who seems to be putting all his limited intelligence to full use in devising the most effective way to destroy the country. Like putting the ball wide from half a metre out it seems that there is genuine thought and skill in how he is able to continually plumb new depths in inefficiency and ways to torment his people. A good example of this is the economy which really displays the ingenious lengths he will go to to really balls things up bad…

Today there are (I think) four different exchange rates. It is simultaneously the cheapest and most expensive country in the world and the rate of inflation is hovering somewhere around 800%. Venezuela has the largest oil reserves in the world and yet it’s people are literally starving.

So how does this happen? The Chavista recipe to follow, if you’re interested in destroying your economy is a complicated concoction which seems to get better over time, however the three main ingredients are; controlling your exchange rate, nationalising production and as much corruption as you can get your hands on and then throw in some more for good measure.

This article provides a more in-depth analysis: https://mises.rog/library/venezuelas-bizarre-system-exchange-rates

So what is the reality for people in Venezuela?

I am the lead PE teacher / school sports coordinator at an international school in the capital city of Caracas and get paid a generous local salary. This, like all Venezuelans is a combination of my monthly salary paid into a Venezuelan bank plus an amount put on a food card that can only be spent in food shops. This is my ‘Maduro card’, a gift from the government to make sure I can eat. Or that I think is the idea…

Monthly Salary (in Bolivares) Value at official exchange rate Value at current black market rate (5500 Bs. per $)
Me 155,329.35 Bs. $15,557.59 $28.27
Minimum salary 65,021 Bs. $6,513.83 $11.82

My Total Monthly Salary in Bs.155,329.35 (100,069.2 base salary + 55260.15 Maduro card)

At the black market rate (market value) I changed last week (5500Bs. per $) it is worth only $28.27. The government imposed minimum salary which is what the majority of employees get paid, this includes most of the local employees in my school, is currently 65,021 Bs. worth a shocking $11.82.

All exchange rates apart from theScreen Shot 2017-06-05 at 21.30.07 black market rate are inaccessible for normal people, hence why it is this rate that locals have to use. Dolar Today is generally the most accurate source.

So what can you buy with 65,021 Bs.?

Today i’ve bought the following items…

A loaf of bread = 6,500 Bs. it’s a bit strange as it’s sweet ‘pan andino’ although it’s all I, or actually my novia preciosa Carla has been able to find in the last month.

A crate of beer = 31,000Bs.File_000 (13) I’m going to be 29 tomorrow so i’ve invited some people around for a polarcita, decent national lager.

A selection of fruit and veg from the local fruteria plus a big bit of cheese = 18,524 Bs.The mangos are incredible but it’s all super fresh and really tasty.

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I’ve also had a coffee (2,800), cachito (4.000) and a yoghurt (3,800) making my total spend today 61,124 Bs. meaning if I was on the minimum salary i’d be be left with a little less than 4,000 Bs. for the rest of the month. With this i’d need to pay rent, get the bus to work, pay for my child’s school and all the other myriad of costs one has to deal with. Most people make around 3,000 Bs. per day. This is not even enough to buy a can of coca cola. If you work a 9 hour shift you receive about $0.06 an hour.

I usually spend my monthly salary in about two days, just on living. How a local stretches theirs (which is half of mine) to last the month I have genuinely no idea.

Of course when you change these prices into the $ equivalent it is ridiculously cheap. The crate of beers is about $6, or $0.17 per bottle. So if you can change a couple of hundred $ a month then life is pretty sweet, you can enjoy the fresh mangos, buen frio cervezas and the year round sunshine.

How do you end up in a situation where an expat earning dollars can earn more in a day than a local doing the same job for three months? One word. Inflation. Or maybe it is hyperinflation. At a rate of somewhere approaching 1000% annually Venezuela has one of the highest rates of inflation anywhere in the world. The Bolivar is so worthless you can’t even change it anywhere in the world outside of Venezuela. This is a great website shows how the value of the Bolivar has fallen in the cost of a cup of coffee with milk.

File_000

This app VenezuelaEcon created by Reuters journalist and friend Gurish Gupta shows pretty clearly the rapid devaluing of the Venezuelan Bolivar.

So where does this end for Venezuelans? Often it ends by leaving Venezuela and earning a currency that is worth enough to live on. Or it ends if they can gain free elections and force out  Nicolas ‘Dictadura’ Maduro and his ruling PSUV party. If only this buffoon could channel his ingenious ability to destroy the countries economy into improving it, Venezuela would once again be one of the richest countries in the world.

 

 

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