Venezuela cuts three zeros off bolivar currency while I watched The Sopranos

I've spent most of the day watching The Sopranos' final season and thought of checking the Venezuelan news as Paulie handed Carmela a manila envelope with $100,000.

As it turns out, Hugo's starting the year with a bang - lopping off three zeros off the currency because we all know that's the most reasonable way to deal with that pesky inflation:
Venezuela cuts three zeros off bolivar currency

Venezuela opened the New Year on Tuesday by revamping its bolivar currency in an effort by the government of President Hugo Chavez to tackle the highest inflation in the Western Hemisphere.

The bolivar's official exchange rate is now 2.15 bolivars per dollar, compared with the previous official rate of 2,150 per dollar.

You think The Sopranos has magical realism? I'll give you magical realism:

The change does not constitute a devaluation since the prices of goods in bolivars are expected to be reduced by the same amount.

While Tony was in a coma he had a heart attack that was induced by Paulie's yammering. Well, that heart attack is what brought him out of a coma. Let's hope the Venezuelan economy doesn't have to go through something similar:

Economists said the monetary conversion will cause confusion and even fuel inflation as a result of rounding, and say the government must reduce burgeoning monetary liquidity and slow spending of record oil revenues to control consumer prices.

Not that there isn't enough to give Silvio an asthma attack:

Venezuela's 2006 inflation was 17 percent, and reached 18.6 between January and November of 2007.

That, my friends, is almost three times Brazil's rate of inflation.

As for the FARC hostages? Forgeddaboudit! Gateway Pundit quotes AM Mora y Leon

I get the feeling that FARC controls Chavez more than the other way around.

It's not just that they stood him up twice now – with the proof of life and now with the three hostages. Chavez may also be scared to kick out the farc bases on Venezuelan soil, and there are seven of them. So he prefers to make friends with them, they're what he likes anyway. Farc is one of the few groups who don't need chavez's money by the way, they have their own cash stream via drugs. That raises their leverage against chavez, and makes chavez only marginally useful to them anyway. They also are confident that chavez won't mind losing face each time they gull him, they know they can always gull him again, he is that credulous when it comes to farc. It's really creepy how much farc has chavez on their string rather than the other way around. Deep down, chavez wishes he had guerrilla credentials like farc, and like castro, he doesn't, all he has are democracy election credentials. He’d much rather be a guerrilla. Farc must know this. Weird how they can kick him around with no consequences!

In my opinion is also a matter of strategy: the Bolivarian Revolution is extremely expensive to export, and Hugo needs FARC as part of his strategy.

Sort like Tony does when dealing with Johnny Sack.

Hey, even Tony gets to break a sweat every now and then.



UPDATE, Wednesday January 2:
Holy Chavistas! Venezuela Violent Deaths Double Iraq's Numbers

For the last three months of 2007, a Venezuelan was twice as likely to lose his life to violence as an Iraqi.

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The insane "Mother of All Tax Bills"

Kevin Hassett discusses at Bloomberg

For those of you wondering what the details of taxing the rich to pay for Democratic spending proposals might look like, Rangel, a close ally of Hillary Clinton, has provided a tour of the abyss. If the ``mother of all reforms,'' as he calls his tax plan, had a name, it would be Mrs. Bates. But, unlike Norman's mother in the Alfred Hitchcock classic ``Psycho,'' this lady is very much alive.

In terms of revenue, Rangel's reform would be the biggest tax increase in history. Compared to a baseline where President George W. Bush's tax cuts are extended and the dreaded alternative minimum tax isn't allowed to swallow millions of taxpayers whole, the bill raises taxes by a whopping $3.5 trillion over the next 10 years, according to the office of Representative Jim McCrery of Louisiana, the top Republican on the Ways and Means Committee.

To put that in perspective, that's about $2 trillion more than the 10-year cost of the Bush tax cuts enacted back in 2001.

But the revenue grab isn't the scariest part. That honor belongs to the increase in marginal tax rates, which is almost unfathomable in its scale. Rangel's main objective is to repeal the alternative minimum tax, which was originally designed to capture taxes from wealthy individuals but over the years has taken in more and more middle-income families.

48% Tax Rate

To accomplish that, and still collect the AMT revenue, he would enact a surtax on the adjusted gross incomes of wealthy taxpayers. If your family's income is above $200,000, then your surtax is 4 percent. If it's above $500,000, it's 4.6 percent.

But the tax increase on the wealthy doesn't stop there. When the Bush tax cuts expire in 2010, the top marginal rate goes back to 39.6 percent. In addition, Rangel would restore the phase-out of itemized deductions and personal exemptions that was repealed in Bush's 2001 bill.

The accountants' lobby must have been knocking at Rangel's door.

Tom Blumer was saying,

This is why you will almost never, if ever, hear the Charlie Rangel/Hillary Clinton crowd, whom I am tentatively naming "Team Chillary" (in honor of what they will do to the economy if they get their way), actually say that they want to raise the highest federal bracket to 39% or so with their MOAT, and then to 44% or so if the tax system in place since 2003 otherwise goes back to where it was in 2000 (this is usually referred to as "repealing the Bush tax cuts," but should be seen as a big tax increase over what we've been used to now for many years). Instead they speak of tiny-sounding 4% surtaxes and the like.

As the old psychiatrist said to Carmela, "You've been told. Now you can't say nobody warned you."

ore from Betsy.


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