Chavez lashes "bourgeoisie" for economic woes

* Record monthly price rise for Venezuela in April

* Bolivar trading in free-floating market at historic low

* Chavez blames speculators, Wall Street blames him

By Andrew Cawthorne

CARACAS, May 9 (BestGrowthStock) – President Hugo Chavez blamed
“bourgeois” speculators for Venezuela’s runaway inflation and
ever-weaker bolivar currency and promised strong action in
coming days to control the OPEC member’s economy.

“We need to stop this right now. The bourgeoisie do not
listen to appeals to their conscience. Let’s act with a firm
hand,” the fiery Venezuelan socialist said at a televised
cabinet meeting late Saturday, in a familiar response to times
of economic difficulty.

“We need to smash speculation.”

Already in recession and forecast to be the only nation in
Latin America with negative growth in 2010, Venezuela’s economy
had more bad news this week with the highest monthly inflation,
5.2 percent, in years. [ID:nN07213073]

Felling the price rises and causing distortions throughout
the economy, the U.S. dollar touched 8.0 bolivars on the
free-floating parallel market. That was nearly double the main
official rate of 4.3 bolivars and triple the government’s 2.6
level for essential imports. [ID:nN06111503]

Chavez, who now calls himself Marxist and has made a
political career out of attacking Venezuela’s traditional
elite, said the rich were taking advantage of a recent rise in
the minimum wage, and also wanted to cause him problems before
a September legislative election.

“I have no doubt there is a high speculative and political
component” in Venezuela’s inflation, he said.

“The bourgeoisie are very involved in the running of the
economy. I warn them: we are not going to be pushed around …
We make an effort to raise salaries … then immediately the
capitalists raise everything, food, transport, clothes. They’re
trying to cause problems and we won’t allow it.”

BURNING RESERVES

The president said by Monday his economic team would give
him a list of speculators who needed to be tackled.

Venezuela’s April inflation spike appears to be a delayed
reaction to the impact of a January devaluation.

Stern warnings against retailers and the nationalization of
a supermarket chain on price-gouging charges chilled price
rises in the first two months after the devaluation.

Wall Street analysts say Chavez’s incompetent handling of
the economy — rather than unscrupulous speculators — is to
blame, with incoherent monetary policies and an anti-business
environment that has crushed investment.

Chavez also lambasted speculation on the free-floating, or
parallel, currency market, saying state currency board CADIVI
was releasing billions of dollars at the official rates.

Businessmen say, however, that access to dollars at 4.3 or
2.6 bolivars is severely restricted — and rife with corruption
— meaning about half of imports rely on obtaining foreign
currency on the parallel market.

The Central Bank’s issuance of more than $450 million in
so-called “exchange bonds” since January has failed in its
stated aim of strengthening the bolivar’s parallel rate.

“Even if you, Nelson, burn all the international reserves,
we won’t get the parallel dollar down,” Chavez told his Central
Bank president Nelson Merentes.

“Because the bourgeoisie and those in charge of the trading
houses, the private banks and so on, they know everything,
they’ve been involved in this all their lives, they have
international connections.”

Speculation of impending government measures to control the
parallel market, and visits by officials to some trading houses
last week, were a factor in strengthening the dollar further to
its record level on Thursday and Friday.

Chavez, who has cast himself as Latin America’s heir to
Cuba’s Fidel Castro as the main critic of Washington-led
“imperialism,” said capitalism was bringing down Europe and the
United States “but here we have to stop it in time.”

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(Additional reporting by Eyanir Chinea; Editing by Bill
Trott)

Chavez lashes “bourgeoisie” for economic woes