Venezuela: Now its getting ugly

[OnMyWayID 1,489]

So early this week American Airlines (the carrier with the most international flights to Venezuela) announced it will cut 80% of its flight starting July 1st.. The latest in a long line of airlines to cut back or stop flying completely to this country.

And today this story:

Beauty-Obsessed Venezuelans Dealing With Another Shortage: Personal Hygiene Products

CARACAS, VENEZUELA – It’s something many women take for granted, while others might dismiss it as frivolous. But for Ana María Matute, a Venezuelan journalist, it was like being tossed a life preserver after falling off a boat.

“My daughter found it for me!” Matute tweeted along with a picture of a bottle of nail polish remover.

Venezuela, a country that takes great pride in its looks, is dealing with an issue that has the country in a major tizzy – shortages in beauty products. That means women and men so accustomed to looking their best are now having to do without shampoo, cosmetics and, hold your breath, even deodorant.

Beauty is such serious business in Venezuela that beauty pageants are often the country’s most watched TV shows. Last year, the research firm Kantar Media TGI released a study, “The Beauty Market in Latin America” showing that Venezuela leads all of Latin America in cosmetic consumption.

That’s what makes the current situation, at least for many Venezuelans, so dire.

“You can't buy what you want,” said José Alvarez, a chauffeur. “I haven't been able to find any shampoo.”

Shortages in Venezuela have been growing steadily during the last decade. But since February of last year, the cash-strapped government has been dealing with all sorts of scarcities – from staples like milk to medical supplies – because the country has put controls on the purchase of hard currency. The problem has gotten worse with the Venezuelan Central Bank Scarcity Index surging and hovering at more than 20 percent.

And while certain shortages have been more critical – like diapers and coffins – Venezuelans are still taking the beauty supply crisis seriously.

Shelves in drug stores are virtually empty. Items like nail polish and baby wipes are hard to come by.

“There used to be up to 87 different kinds of retail packaging of shampoos available from several brands and now there are less than 10,” said Roberto León Parilli, president of the Venezuelan Alliance of Users and Consumers (ANAUCO). “Another good example are deodorants. Currently in most shops you can find only one kind of product which comes with a fragrance for ladies, though many men are using it because they can't get a gentleman's product.”

Scarcity reached 29.4% on goods for personal care last March, according to the latest official data available from Venezuelan Central Bank.

Francisco Allen, chief of the Economic Analysis Unit of Datanalisis, a consulting firm, warns that the Venezuelan Central Bank reports are based on an absolute lack of the products.

“If the Scarcity Index shows a 30 percent for a given product it means that in 30 out of a 100 shops you can't find it in any of its packaging or brands,” he said.

But cold statistics translate into a virtual hell for daily consumers.

“I can't find wet wipes or baby powder for my child. Even though you work hard and earn good money, you can't have a normal life because after leaving the office you have to spend the rest of your day waiting in line on supermarkets trying to buy scarce products,” Lelys, an advertising executive interviewed while doing her shopping who asked not to be identified by her full name, told Fox News Latino.

http://latino.foxnews.com/latino/money/2014/06/19/beauty-obsessed-venezuela-dealing-with-crisis-sorts-shortage-personal-hygiene/

Edited June 20, 2014 by OnMyWayID

[Operator 1,927]

Maybe we will see an emerging cottage industry coming out of Venezuela? And then maybe a good ol' fashion revolucion.

[TBoneTX 46,294]

I foresee the development of a black market.

[OnMyWayID 1,489]

I foresee the development of a black market.

The market there is like bizarro-land - even though there is scarcity of goods there is still heavy price controls. Maybe due to the cash crunch there is less of a black market (I would think there *has* to be some but it doesn't get much mention in the press) they are having some hefty smuggling problems. The economist had an article about a truck full of flour and milk heading towards a city near the boarder with Colombia. Somebody tweeted about it and they had to set up barricades for the lines at the stores two hours before they even opened - for flour, milk, and vegetable oil.

The price controls allow for selling a kilo of corn flour for 14 cents. If the driver takes the truck another few miles over the border the Colombians will pay $1.25 a Kilo and they will pay in Pesos or Dollars instead of Bolivars. Black market dollars get 60-70 Bolivars while the official exchange rate is 6.2..

So what you have is lines of people on one side waiting for food while on the other side of the boarder there are piles of goods for sale that were in effect paid for by the people waiting in those lines on the other side. In the first three months this year they confiscated 14,000 tons of food at the border..

A photo from the Colombian side of the border where all this stuff is landing:

A vendor sells diapers from Venezuela on the street in Cúcuta, Colombia. "Everything you see on

this street is Venezuelan," says Alejandro Valbuena, a 32-year-old merchant.

The wall street Journal had an excellent article on it:

Venezuela Pays Price for Smuggling

CÚCUTA, Colombia — Venezuelan President Nicolás Maduro's sliding popularity amid persistent street protests can be partly blamed on the humming smuggling market on this border, which shows how Colombia's unbridled free-market capitalism is eclipsing Venezuela's socialism and hurting ordinary Venezuelans.

When Norbis Berrocal, a homemaker on the Colombian side, buys baby formula in a bustling street market here in Cúcuta for a fraction of the usual retail price, Venezuela indirectly pays the rest.

"We're lucky to have Venezuela so close by," said Ms. Berrocal, as she bought a case of infant formula for shipment to relatives in Colombia's interior.

She is one of many Colombian consumers who benefit from a massive smuggling trade involving subsidized and price-controlled goods from oil-rich Venezuela—including near-free gasoline, car parts, corn flour and deodorant, all bought cheap in Venezuela and marked up before being sold here.

With its heavy intervention in the economy, Venezuela now imports three-quarters of what it consumes but loses a third of its goods to illegal cross-border trade, its government estimates. Some economists say Caracas exaggerates the smuggling problem to mask its own inability to keep supermarkets stocked.

The rest of the article is here: http://online.wsj.com/articles/venezuela-pays-price-for-smuggling-1402271308

Edited June 21, 2014 by OnMyWayID

[Jacque67 7,328]

Wow!

[LibCampFireClub 635]

They are in desperate need of larger mom jeans!

[OnMyWayID 1,489]

A mention of the internal black market in a story from Business week:

Venezuela's Prostitutes Cash In as Currency Traders

The Blue House brothel in Puerto Cabello is clean and well-kept, with a patio and kitchen where women get three meals a day. Outside, the smell of sewage pervades the city’s squares and cobblestoned streets, littered with piles of garbage. In Venezuela’s biggest port, prostitution, which is legal, is a boom industry because the residents at the Blue House—and other sex workers—have become dealers in currency exchange. The prostitutes are paid in dollars by visiting foreign sailors.

Venezuela’s contracting economy has led to a free fall of the bolivar—the local currency—and steep inflation. Prostitutes more than double their earnings by moonlighting as currency traders. “We got dollars to afford the things our families need, but we have to sell our bodies for it,” says Elena, who uses an alias to protect her identity. She crosses the legal line, however, when she sells the dollars she earns from sailors to local businessmen, who stop by the brothel to get hard currency they need for trips abroad. With the extra bolivars, Elena can afford to go to black market street vendors for cooking oil, flour, nail varnish, and other products that are out of stock in shops.

The illegal currency trade in greenbacks can fetch 11 times more than the official rate as dollars become more scarce in an economy that imports 70 percent of the goods it consumes. When President Nicolás Maduro took office in April 2013—succeeding the late Hugo Chávez—the bolivar was 23 to the U.S. dollar. Today it has collapsed to 71 to the dollar. The government has tightened the supply of dollars to commercial banks to preserve reserves in the treasury. The official exchange rate, reserved for imports of food and medicine, is 6.3 bolivars per dollar.

The dollar shortage is turning Venezuela into a two-tier society similar to the Soviet Union and Cuba, says Steve Hanke, a professor of applied economics at Johns Hopkins University. Those with access to dollars, such as prostitutes, taxi drivers, and other Venezuelans who interact with foreigners, can shield themselves from inflation by trading their dollars at ever higher rates. Those without are seeing their living standards decline. “We can make more in two hours here than working in a shop in a month,” says a prostitute at the Blue House who calls herself Giselle.

Prostitutes in the port city charge sailors a fixed rate of $60 per hour for sex, or about 4,200 bolivars—equal to the minimum monthly wage in Venezuela. The women also help book rooms and taxis for foreigners, charging them in dollars, then paying the landlords and drivers in bolivars. Providing those services to dollar-paying foreigners can earn a prostitute the equivalent of about 6,800 bolivars on the black market; the same service paid in bolivars would bring in less than half that amount.

Rest of the article is here: http://www.businessweek.com/articles/2014-06-19/venezuelas-prostitutes-cash-in-as-currency-traders

[The Nature Boy 4,224]

where is Sean Penn when we need him

[Jacque67 7,328]

where is Sean Penn when we need him

Busy with Charlize according to the gossip!

[TBoneTX 46,294]

Those articles are fascinating insights.

[spookyturtle 9,466]

Those articles are fascinating insights.

And sad at the same time. The general population is really struggling.

[TBoneTX 46,294]

Si and sigh, man.