When governments attempt to manipulate capital markets and control prices, terrible things result. Hugo Chavez' Venezuela is only the latest example. Inflation reached more than 32% during June, and the worse things get, the more Chavez tries to manipulate. If the price of crude oil continues to fall, and remain lower for a sustained period, I predict that Hugo Chavez' days as president of Venezuela are numbered. Good riddance!
Here is an excerpt from Bloomberg:
Read the entire Bloomberg article:"Annual inflation quickened to 32.2 percent in June, a five- year record and the fastest increase in prices among the 79 economies tracked by Bloomberg...
"Foreign direct investment has dropped 90 percent since 1997, the year before Chavez was elected...
"That puts Venezuela... on par with Guatemala, a nation without any oil and an economy less than a quarter the size."
Chavez Pleads for Investment as Falling Output Fuels Inflation
Congress, the Fed's Bernanke, the SEC, and Treasury Secretary Paulson should all take caution, because the more they attempt to manipulate and interfere with the financial markets, the more unintended consequences there will be. The more frequently they engage in such machinations, the more likely those unintended consequences are to amplify in negative ways and with catastrophic effects. Why is it that these people never seem to learn this lesson? I'd like to introduce them all to George Santayana, who famously said that, "those who fail to learn the lessons of history, are doomed to repeat them." May they learn from the catastrophe that Hugo Chavez is making of Venezuela!
