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To: TobagoJack who wrote (18599)	5/1/2002 10:13:18 PM
From: Box-By-The-Riviera™	Respond to of 74559

wow! my mistake. i thought it was still more fluid than that. wow x 2.

To: TobagoJack who wrote (18599)	5/1/2002 11:20:07 PM
From: TobagoJack	Respond to of 74559

Hi Joel, This item from my friend at ING Investment under e-mail heading "Fun Facts": "It is estimated that the 45th largest holder of Worldcom debt owns US$100 million" Chugs, Jay stratfor.com P.S. Democract crowds are about to vote on the minimum acceptable price of oil: Venezuela: Economic Crisis Adds to Chavez's Woes 1 May 2002 Summary Venezuelan President Hugo Chavez survived a mid-April military coup, but his regime was weakened considerably. Now Chavez confronts a major financial crisis that likely will hasten the demise of his presidency before the end of 2002. Analysis Three weeks after a military coup toppled and restored Venezuelan President Hugo Chavez to power over a three-day period, the Bolivarian Revolution has been shelved while he seeks to prop up his weakened regime. However, the policy reforms and Cabinet changes Chavez actually has announced or implemented so far are analogous to moving deck chairs around on the Titanic. Chavez's primary goal now is to survive in power. His conciliatory post-coup rhetoric and cosmetic reforms -- such as naming then-Defense Minister Jose Vicente Rangel as his new vice president -- are meant to buy time while he tries to repair the cracked foundations of his regime. However, the armed forces (FAN) now have significantly more influence over Chavez, and the political opposition already has started to criticize his offers of a national conciliatory dialogue as lacking both credibility and substance. Meanwhile, barring a dramatic rise in oil prices, Venezuela is confronting an economic crisis that likely will further destabilize Chavez's politically weakened regime in a matter of weeks. As the economic crisis deepens, Chavez's hold on power will start to slip again. This will give the FAN more influence over Chavez and embolden opponents to intensify efforts to force his early departure from office. Moreover, the economic crisis will fuel more popular discontent in coming months, aggravating Venezuela's political instability and likely hastening Chavez's removal from the presidency by fair means or foul before the end of the year. In fact, the economic downturn already is gathering momentum although the Chavez regime seems blithely unaware of the approaching storm. Since January, the Central Bank's international reserves have declined by more than $3 billion, deposits in the private banking system have dropped 20 percent, unemployment has risen above 17 percent and inflation in March jumped to a 50.4 percent annualized rate, according to private economists in Caracas. These sources also predict the economy will contract by at least 4 percent in 2002, and the government's fiscal deficit likely will run over 6 percent of GDP. However, these estimates could worsen in coming weeks as the government's cash crunch bites more deeply into economic growth and stirs up public- and private-sector workers. For example, the central government still owes state governments hundreds of millions of dollars in fiscal transfers that were supposed to be made last year, and it has not made any transfers budgeted for fiscal 2002. As a result, state governments are finding it increasingly difficult to pay their employees and suppliers. The public university system, which is controlled directly by the Education Ministry, is collapsing because workers and professors at some universities have not been paid for the past three months. A complete shutdown of the country's public universities could trigger anti-Chavez protests across the country by hundreds of thousands of students. Chavez also faces potential confrontations with organized labor in coming weeks. After declaring that the government lacks the financial resources to pay for a compulsory wage hike for public workers, Chavez in late April decreed a 20 percent wage increase -- of which half went into effect May 1 -- while urging private employers to make similar increases. However, several central and state government sources in Venezuela told STRATFOR May 1 that the government indeed lacks the liquid cash reserves to pay the decreed wage hike. Moreover, the wage increase did not affect the upcoming renegotiation of more than 500 government union contracts, in which union leaders will be pressing for even heftier wage increases plus the repayment of the government's accumulated past-due debts to workers. Some Caracas economists estimate conservatively that these debts have topped $15 billion, including principal and interest accumulated over the past 40 years. Meanwhile, private investment and productive activity in Venezuela is declining instead of expanding. Private companies are firing workers and scaling back production to match slumping consumer demand, while capital flight is intensifying. In fact, according to estimates from private Caracas economists, since Chavez assumed the presidency in early 1999, more than $20 billion in private savings have left the country as investors lost confidence in the economy. The drop in private economic activity and investment has caused a corresponding decline in the Chavez regime's non-oil tax revenues. The regime still has some financial maneuvering room that could buy another three or four months of time. For example, the government has about $12 billion in total liquid cash reserves at the Central Bank and the exchange stabilization fund, which was created to serve as a rainy-day fund for emergencies. It also is likely that the government will try to milk Petroleos de Venezuela for higher dividends, despite the state-owned oil company's falling revenues. However, the government also faces debt principal and interest payments over the next three months that will place even more pressure on its depleted liquid cash position. Chavez could prolong his regime if he manages to assemble a first-class economic team in coming weeks and makes the political and economic concessions demanded by military and civilian opponents. However, these reforms would amount to a 180-degree reversal of his economic and foreign policies, which Chavez is unlikely to accept.