#357 – The Expat Files: Johnny Mueller on Venezuela’s Economic and Political Crisis

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border, down Mexico way That's where I fell in love when the stars above came out to play And now as I wander Hello there all you expat wannabes I'm Johnny Mueller and you're listening to The Expat Files, living in Latin America The show that tells you just what it's like to live, work, play and or retire down here in Latin America It's a mix of the good, the bad, the ugly and the great And it's all right here so let's get started A lot of people have been wondering what happened to me during the last two shows Since they were repeats Well I've been out on the high seas, South America way So I just wasn't able to put together any shows So all in all since I've been on PRN radio for almost four years now

[00:49] I guess missing three shows in all that time isn't so bad Anyway right now I'm broadcasting from guess where? Venezuela, one of my favorite countries to diss And I know in past shows I mentioned I'd never go back again Since I was shot at the last time I was down here You might remember that story when I got the tires shot out of my rental car And a few bullets whizzed by my head And I can tell you when they buzz by really close to your ear like that It's an experience you don't want to have So why am I down here now? Well amongst other things I can tell you it's because of that dollar situation that I've spoken about on past shows You know I mentioned that if you have dollars and you're in Venezuela There's such a huge difference between the black market rate on the dollar If you change it to boulevards

[01:35] Versus the dollar when you change it at the official rate in the bank That anyone who's got dollars down here is king of the mountain And I mean just a small amount of dollars too Because for example right now If I walk into any one of the Venezuelan banks I can get between 11 and 30 boulevards to the dollar However as soon as I walk across the street Or down to the next store in the mall I can get from 60 to 70 boulevards to the dollar At minimum twice the rate However that's never done right up front in plain view Because it is plastered all over the place that taking dollars is illegal Which makes them all the more desirable And everyone, I mean everyone, would love to have them So as long as no one in uniform or from the government is looking

[02:20] Everyone will take them And it's been working for me like this I go into a Venezuelan store of some kind And let's say I want to buy a shirt Which is priced at 300 boulevards Well after I try it on and take it to the counter And I shrug and say I'm sorry I have no boulevards I only have dollars They say oh well I'm sorry We can't accept dollars It's illegal to accept dollars here Now note that they're obliged to say that Then it seems you'll always notice that the clerks in the stores Look around to see if there's anybody official outside Or in the hallway or near the door Anyone in some kind of uniform that is Because there are so many cops and military types Walking around in Venezuela You wouldn't believe it Even in the malls

[03:05] Anyway, soon enough and it almost never fails That someone in the store Will wave you over and do the deal with you in dollars At usually 60 to 70 boulevards on the dollar The black market or the street rate Now a shirt that costs 300 boulevards Is the equivalent of about 25 US dollars At the official exchange rate And that's for the average Venezuelan Who could only change his boulevards to dollars At the rate of about 10 to 30 boulevards in the bank Like I said, the official rate But of course Venezuelans do not have dollars They're paid in boulevards And if they do happen to get their hands on dollars They'll never go to the bank with it They'll walk outside on the street And get someone to change it for 60 or 70 on the dollar Anyway, in the store At the official rate That shirt would cost them anywhere from 12 to 30 bucks

[03:53] And me? A gringo? Or anyone with dollars? Buys that shirt for around 4 bucks Oh and by the way, I'm in Caracas right now The capital of Venezuela Which has about 4 million people And looks basically like a big slum All except that is for government and military buildings In fact, anything that's official or national Has a nice bright sheen to it And spotlights on it all night And generally a sharp military guard marching around it Pathetic actually But with socialism That's what you get And you know It's an awful lot like a huge version of Cuba With more money Because you know They do have unlimited amounts of oil Which Cuba doesn't But even so With all that petrol wealth There's so much corruption up at the top

[04:41] That everything non-governmental Is in dingy grimy disrepair Remember, we're talking about Chavez socialism here And believe me, every chance I get I ask the people I meet What's really happening in Venezuela Because I saw Oliver Stone's South of the Border documentary too Where he interviews Chavez personally And actually is kind of friendly with him And in that documentary Chavez and Oliver Stone Eluded to the fact that US and US imperialism Were at fault For most of Venezuela's internal disturbances And social problems You know the drill US alphabet agencies In the country Clandestinely fomenting riots And strikes And sit-ins And social unrest

[05:27] Etc Well I'll tell you Sitting here right now And knowing how to speak Spanish to these people I can tell you that If those alphabet agencies are here And I think they are too They might as well go home There's plenty of home grown social unrest To go around They sure don't need any clandestine help From US organizations That's for sure And you know I get the occasional email from people And people sending me links To certain articles And YouTube stuff Saying the same thing That the US is fomenting street demonstrations Amongst radicals and stuff Which is another reason why I'm here in Caracas To see if that's bullshit or not And you know Venezuelans of all stripes Are not afraid to talk to a gringo about it either They're not Like the Cubans When you make a visit to their country They're afraid to talk about their government

[06:13] They'd just rather avoid the subject altogether But you see Down here in Venezuela The socialism experiment Has only been going on for 10 or 20 years Not at all like Cuba Who've been under that system for generations 50 or so years And they went through a bloody revolution to prove it Venezuela never had that And you know what Everyone I talked to From taxi drivers To shoeshine boys To tour operators Even businessmen Who've got the money to live decently Say it's been a complete disaster The socialism experiment is just crumbling And there's dark evidence of it everywhere Oh and by the way The Venezuelan government owns all property So you can't really own your own house Or business or lot If for example The Venezuelan government

[06:59] Or some corrupt official Feels they have a better use For your land Or your house Or your property They can just take it But I digress as usual Now first of all You gotta know This is way off the gringo tourist trail In fact Every time I'd go into a restaurant Or a lunch counter Someone, usually a worker Would point to me and say You're a gringo aren't you? Not in a bad or accusing way at all But in a happy friendly excited way They just never saw one before So with all Chavez's anti-gringo Blatherings over the last 20 years He still couldn't manage to kill The gringo advantage here It's stronger here Than I ever thought it would be Just judge by what happens When you hold dollars here

[07:45] It's like this Venezuelans really dislike And distrust the US government But who doesn't? Though like most Latins Individually they love us gringos So like I said Right now I'm in Caracas A place where 999 out of 1000 gringos Feared a tread And believe me I don't recommend it And you'll see why But if you know you're Spanish enough Like I do You are such a rare commodity That your gringo advantage is intense Now with Caracas I'm talking about a huge city Of 4 million people In fact the entire time I've been here I haven't seen a single gringo either But you know I was warned More than once As soon as I got off the boat Never to pull out US dollars in public They say it's a sure way

[08:31] To get tagged and mugged later on Because someone will spot you out And then tell his friends You see What this broken economic system down here Has done to the people Because they have to survive It's kind of turned them all into Sort of petty crooks I mean they have to eat too, right? For example I was talking to a young lady tour guide Who told me that The monthly minimum wage in Venezuela Is 3500 boulevards a month If you convert that to dollars On the black market You know divide it by about 70 That works out to about 50 US dollars a month And believe it or not About 90% of the Venezuelan population Makes minimum wage Think about that 50 bucks a month And since an apartment with working utilities One that would be slightly lower

[09:16] Middle class up in the states But totally middle class Or upper middle class to Venezuela Something like that for a family Runs about 15,000 boulevards a month Yes I said 15,000 About four times the monthly minimum wage That means not only everyone in the family Let's say there's a family of four Has to go out and work and make minimum wage Thus four people in the family working Would just about cover rent On a decent apartment They also have to then Somehow scrape up extra money For food, utilities And your day to day living expenses All except for gas Because remember in Venezuela They have the lowest gas prices on earth In fact I took a private bus tour Through parts of the city where Normal people fear to tread

[10:02] A place where gringos never go I assure you that Now this was a nice Relatively new High on day 25 passenger bus Air conditioned and all that And the bus driver told me He leaves it running all day He never turns the engine off Even though on his route It sits for up to six hours a day In parking lots Still he leaves it running Just so he's got the air conditioning all day Because Caracas is pretty damn hot In fact today As I do this show It's about 88 degrees And very humid So how can bus drivers, taxis And everyone down here in fact Afford to keep their cars Buses and trucks running Even when they're sitting in parking lots For hours and hours Just to get the advantage of the air conditioning Well that's because As the bus driver admitted to me

[10:48] No matter what kind of vehicle you have They'll fill your tank For around five boulevards That's no matter how big a tank you have In fact he said Because the government owns all the gas stations No one really cares to monitor How much gas gets pumped They just pump it And charge you five boulevards Which even at the cheapest US dollar bank rate The crummiest rate you can get That's only 50 cents And if you're lucky enough To have a dollar or two To convert at the black market rates On the streets That means a whole tank of gas No matter how big your vehicle is Will only set you back around five cents US That's five cents And that's why this bus driver told me So many people who live near the frontiers

[11:34] That's the borders of Colombia Have had double and triple sized tanks Welded underneath their cars and trucks So they can drive across the Colombian border And make a killing at world prices On the extra gas they're carrying So then you might ask What about that 90% of Venezuelans Who make minimum wage 3,500 boulevards a month When rents are like 15,000 Especially in the big city Well, they have to make extra money somehow And I've found out There are hundreds of ways they do it And it usually involves some kind of petty swindle For example One of the very coolest things you could do When you're in Caracas Is to take this gigantic chair lift Up the side of a mountain It's actually an enclosed tram That holds six people at a time And the ride is so long and spectacular

[12:21] That you might call it One of the wonders of the world Again, one of the wonders Gringos never get to see It truly is both scary and spectacular Now you also might ask Why would I take such a scary trip like that When nothing really works in Venezuela When I say that in the rest of Latin America Maintenance is a word not in the dictionary Well, when in Venezuela You can second that emotion I'm not saying things don't work at all New things work of course But after they get a year or so old They have to be pasted back together With chicken wire and duct tape I mean after all I talked to a guy who had a light new Ford Explorer that was broken down And he said he was still waiting Six months to get parts Even though get this Ford has three manufacturing plants in Venezuela

[13:08] As it turns out The Ford manufacturing plants Cannot get parts To fix the machines That make the parts At their manufacturing plants You got that? The machines that make the parts Need parts that they can't get Sounds a bit like a Monty Python sketch Doesn't it? Oh and speaking of cars and parts I walked into Caracas's biggest Toyota dealership Walked into the showroom Where there should have been like Twenty cars on display And there were Get this Zero cars in the showroom Completely empty Though all those little sales cubicles You'll see in any dealership Were filled with guys in their white shirts and ties Ready to take orders Only they had no cars to sell Even though again note this

[13:54] Toyota has a manufacturing plant in Venezuela So then I walked into Caracas's biggest Jeep dealership Again Not a single Jeep in the showroom Completely empty Though all the workers were there You know these new car showrooms Are as big as basketball courts They're the same as they are up in the states Based on the same model In fact if the science weren't all in Spanish You'd think you were at a Jeep dealer in Cleveland A Jeep dealer in Cleveland In the twilight zone that is Though come to think of it maybe it is Anyway Then after walking down the same avenue For a couple of blocks I ran into a gigantic Kia and Nissan dealership Again Not a single car in the showroom So at that point I had to ask one of the salesmen in there

[14:39] What the hell was going on? And you know it's not like they were a mum about it Or trying to keep secrets I was the gringle The first gringle they'd ever seen in fact And believe me all of them wanted to talk to me Which goes to show Even in the epicenter of economic and social disasters You've got that gringle advantage going for you However do remember Almost no one in Venezuela speaks English So if you don't know a spattering of Spanish The locals are still going to want to talk to you and meet you But you won't get too much of a meaningful conversation going That's for sure And another thing I met a lot of Venezuelans And none of them have any relatives up in the States And man is that a refreshing change Because you see For Venezuelans who are in South America There's no way to get up to Central America and slip through Mexico

[15:26] There's like a 200 mile swamp Called Darien South of Panama that no one can cross Or swim Too many crocodiles Called crocodillos down here And don't think some haven't tried Anyway talking to the car dealer Who was just sitting around reading the paper And occasionally glancing up at the soccer game on TV And shouting with the rest of his dealer buddies Goal! Like an idiot every time a score was made Well he told me that over the last year All the big car manufacturers have taken a huge hit Starting with two boulevard devaluations in the last year Along with 40 to 50 percent inflation per year Which is the highest in all of Latin America In fact the highest inflation rate in the world

[16:11] Is sold if you don't count a couple of countries in Africa He said because of that As soon as they get a shipment of cars in They're all sold before they even get a chance to put them in the showroom Because you see every day they sit in the showroom They get more expensive Since they can't be bought in dollars only in boulevards And when you're looking at 4 or 5 percent inflation per month Not year If a new car sits in the showroom for a month They have to increase the price every month by 4 or 5 percent Just to keep up with inflation And as a consequence there just is no such thing as bank financing Because no bank can finance during 40 and 50 percent inflation And because of those horrific currency uncertainties There's no such thing as dealer financing either

[16:57] Meaning only people with cash can buy a new car Which is why almost all new cars go to crooked politicians That's what the salesman told me anyway Surprise surprise huh? Now note that everyone I spoke to in Caracas Agrees that all politicians are crooks Except it seems they're always holding back About saying bad things about Chavez Who's been dead for a couple of years now But it doesn't seem that way Because you see his face and his statues And his paintings and his TV show And his coloring books everywhere And this will blow your mind Every single large shopping mall I stopped into There was a sort of an army navy store That was basically a Hugo Chavez store Where you could buy pictures and mugs and statues And puzzles and uniforms

[17:42] And even coloring books and crayons For those tiny socialist kitties of course Along with toy jeeps and tanks and buses With Chavez waving out of the window Not to mention Chavez dolls with heads that bob That you can put in your car How cool? Almost bought one of those myself But they wouldn't take dollars Now remember down here It's all based on the so called Chavez Mythology Here in Venezuela it's an awful lot like How Cuba mythologizes Che You know Che Guevara If you've ever been to Cuba I've been a couple times You see his statues and pictures and paintings And puzzles everywhere too And you know Che was scruffy and ugly looking A revolutionary gorilla type And that's his image you know

[18:28] But Chavez now There's a guy whose monkey ass mug Will never be ready for prime time Then again neither will mine I've got what you might call a face Just made for radio But you know you can't buy statues Paintings or coloring books of Johnny Mueller In malls and department stores in Venezuela Thank God for that huh? But I digress as usual Now the thing is we all know that Chavez died a couple years back But it's as if he hasn't died at all When you're in Venezuela What do I mean by that? Well here's something else you'll never Read about in the first world media And I don't know why because it's really good copy I'm sure you never knew that The huge presidential mansion And government residences for the president And these things are located throughout the country

[19:15] And believe me there's a giant presidential palace right in Caracas Anyway the sitting president President Maduro He does not live in any of the presidential palaces He lives in an apartment complex Because guess what? When he got elected or took over the dictatorship Whichever way you want to look at it He did not have the balls or the popular support To kick all the Chavez family hangers on Out of those buildings So guess who lives in the presidential palaces? Not him or his relatives But relatives of Hugo who got the last name Chavez And if you check out the names of all the Diplomatic appointments and cabinet members They're also family members of Not Maduro Chavez Basically the Chavez family is still in control of the country

[20:03] And they're all sucking off the government tit as usual And it's a mighty big tit because remember They're the third largest oil producer in the world But let's get back to that empty Jeep car dealership And that salesman I was talking to about it He said the Venezuelan branch of his car company Had to take a three quarter of a billion dollar write off In the last year just due to the currency problems alone So All the new car dealerships have turned into Basically repair shops It's the mechanics and the service departments that are Keeping the doors open And as far as parts Well like I said they have factories here But they're only just limping along and sporadically open They need parts too So that makes for a booming black market business For truckers who drive to Colombia And buy the parts there in dollars

[20:50] Then take them out of the boxes Take the tags off and rough them up a bit To make them look used Bring them back across the border into Venezuela as used items And thus pay almost no duty And then mark them up about 400% And sell them back to the dealerships And still because there's such a demand And cars break down all the time obviously There's a six month or so wait for simple parts And even so you'll pay five times the price That's on Amazon So let's take a look at this This is basically how it works out Gas is virtually free down here You pay about ten cents for a tank full So in effect everyone treats it like a waste product Like it's air Meaning there's absolutely no conservation of fuel at all

[21:37] So people who've got vehicles Sit around in them all day and use the air conditioning Why? Because it's too damn expensive to air condition your house And believe me you do need air conditioning down here Now before I go on I like to say that I sound like I have a lisp I know But that's just because I'm not at my regular recording facility And I guess I'm stuck I have to suffer with some Venezuelan equipment this time So bear with me If I sound like I have a lisp well it's just temporary And not intentional So let me get back to the point with my artificial lisp Okay where was I? Oh yeah About that constant need for air conditioning Since so many of the major cities are on or at sea level And we're close to the equator So you're looking at 90 degree temperatures every day

[22:24] At least Now you do see air conditioning units in windows all over the place here But almost no one uses them Because electricity is way too expensive for the average citizen Even though it's only 3 to 5 cents per kilowatt hour About a half to a third as much as it is up in the states And about half to a third as much as it is in the neighboring countries of Colombia and Brazil But you see the thing is they have such a terrible infrastructure that there are power outages every day In fact since I've been here now there have been 3 of them And I was told that about a month ago 70% of the entire country went dead for about 16 hours So how could that happen to a country that's the third largest producer of oil in the world? Easy They don't spend any money on infrastructure so they don't build any power plants

[23:14] Instead they just trade oil to adjacent countries in exchange for electricity Now they could build power plants that run on oil But those are not the best choices They really can't be scaled up to huge operations like power plants that run on natural gas, coal, thermal or hydro power Which they have plenty of but don't care to invest in So Venezuela ends up buying about half of its power from Colombia believe it or not Anyway it's a complicated situation and even at 3 to 5 cents a kilowatt hour The average Homer office when an air conditioner would use at minimum 500 kilowatt hours a month I mean go ahead and check your own bill out and you'll see what I mean Which would result in a bill of about 20 to 25 bucks a month for the average Venezuelan family that used air conditioning

[24:03] Which is about half the salary of your average worker So you can see Venezuelans prefer to sweat and eat rather than stay cool and starve But let me get back to that little tour I took up the mountainside on one of those big ski lifts Now I mentioned before that nothing is really dependable or works correctly in Venezuela So why would I risk taking a 15 or 20 minute ride up the side of a mountain on that thing? Well because the lift was made in Switzerland And the Venezuelans have a long term maintenance contract with the Swiss Making that very cool tram ride the exception to the rule And I tell you if you're ever down here which you probably will never be and I don't really recommend it But if you are you have to take that ride So why am I mentioning this?

[24:50] It's because it relates to the fact that most city dwelling Venezuelans have become petty crooks and small time con artists They have to be due to the corrupt socialist system they live under It's the only way city folks anyway can survive Like I said earlier even four family members making minimum wage Could only just about pay for a decent apartment With not a cent or a bolivar left over so how do they eat and survive? Well they found a thousand and one ways to weasel money and work the system as usual When living under that kind of chaos For example when my nice air-conditioned bus that was running all the time Stopped in the parking lot of this famous mountain tram Called a telefetico down here by the way every skylift is called a telefetico

[25:37] Anyway when the nice cool bus pulled into the parking lot A lady in the bus who was a registered tour operator Announced to all 25 or 30 passengers None of whom were Venezuelans by the way Nearly all Brazilians and Colombians She announced that the telefetico the lift was five bucks And that she'll collect it in dollars or bolivars at the rate of 40 bolivars per dollar Which was a lot better than the bank rate but still only about half of the street rate Now officially it's illegal to buy anything in Venezuela with dollars You have to go to the bank and change the money first So here you have a government registered tour company and tour operator With the tags and uniforms at all Taking dollars And giving you half of the black market rate

[26:24] Okay so everyone gave her five bucks Since all the people on the bus were foreigners and didn't have bolivars So she jumped off the bus and ran over to the ticket counter about a block away Came back and handed us all our tickets Now since I've been around and have been to Venezuela before I knew they were always trying to gouge you So I jumped off the bus and ran up to the ticket counter I was the only one who did that And I asked the lady at the counter how much for a ticket And she said 100 bolivars So anyway you look at it that's two bucks or less right? So in fact our tour guide and bus driver Proceeded to rip us all off for at least three bucks a piece Plus it was a double whammy because she gave us half the street rate in bolivars

[27:10] Oops I see I'm getting towards the end of the show now So I'll have to continue with that next time And believe me it's worth listening to But before we end I'd like to remind you that you can still sign up For my Latin American seminar off the tourist trail in July Just go to www.xpatwisdom.com And click on the Latin seminar link at the top of the page You've been listening to The Expat Files Living in Latin America Coming to you twice a week from somewhere south of the border Email me, theexpatfiles at gmail.com And don't forget to check out expatwisdom.com To sign up for your free reports on Latin America See you next time, nos vemos!