Prediction: Venezuela To Have A Coup In 3 Weeks

And Then They Came For The Beer

Forget the food riots. Forget the blackouts. Forget the 2 day work week and lack of medical care and medicines. This is serious.

Venezuela is running out of beer.

Venezuela Is Running Out Of Beer Amid Severe Economic Crisis

May 31, 20163:35 PM ET
Heard on All Things Considered
Mendoza is the chief executive of Venezuelan food giant Empresas Polar, which was founded in 1941 and is now the largest private company in this socialist country.

But Polar has come upon tough times. Many of its processing plants are running at half-speed, and thousands of employees have been furloughed since April, when all four of the company’s breweries were shut down by a barley shortage.

The government controls access to foreign currency, and Mendoza says it has refused to provide the dollars Polar needs to import barley, which doesn’t grow in Venezuela’s tropical climate.

You can make hooch, but not beer, without barley. No barley, no hops, no beer.

The Government controls the access to foreign exchange with which to buy the barley. It says “no”. So no beer. Who’s fault is that?

But in a bizarre twist, President Nicolás Maduro is trying to pin the crisis on Polar. Government TV spots claim — without evidence — that the company is deliberately scaling back food production and hiding inventories to sabotage the economy.

In a February speech, Maduro called Polar’s Mendoza “a thief and a traitor,” saying, “If you can’t run your company, turn it over to the people and they will run it.”

Oh, that’s right, in a Socialist Workers Paradise, it is never the Benevolent Dictator that is at fault… it simply must be the business manager. Never mind that the Government Workers who must hand out the foreign exchange and vet your need for it have been put on a 2 day work week to save electricity demand. Never mind that over the top borrowing has caused Venezuela to need almost all of their present foreign reserve earnings to be dedicated to debt service. No, it simply can’t be those bad decisions by government.

Venezuela also likes to blame the USA. Nevermind that they own Citgo and through it sell boatloads of refined products into the USA. That flood of “foreign exchange” back to Venezuela is just what the Government and Empresas Polar are arguing over. (At this point I would promise myself I would stop buying Citgo gas, except I already don’t and there are no stations near me… Oh Well, it’s the thought that counts ;-)

In a rational market based world, US Drivers would by tanker loads of Venezuelan gasoline, that money would go to Venezuela, where the oil company employees would spend it on beer, and Polar would use some of it buy American barley. We get gas, they get beer, we all get jobs. But no. In Socialism, The Government has to be smack dab in the middle of everything “making decisions”. Which is fine, I suppose, right up until the people making the decisions are told to work only 2/5 of the week and go home the rest. It is hard to have a Central Planning Economy when the Central isn’t functioning.

In general, government workers make much worse decisions about economics than do folks with “skin in the game”. So it ought to come as no surprise (yet somehow it does) that they can’t even do things like supply their major export (oil) to a facility that they half own (a refinery) in the USA. Hey, they stole their oil industry fair and square via nationalizing, you’d think they would want to make a profit from it… especially when desperate for foreign exchange.

posted 8-September-2015

Venezuela loses US refinery as ConocoPhillips ICC award enforced in US court

NEW YORK — A U.S. Federal Court has upheld U.S. enforcement of an International Chamber of Commerce (ICC) arbitration agreeing that U.S. oil giant ConocoPhillips has the right to take Venezuela state oil company PDVSA’s 50% stake in a delayed coking unit at the Sweeny refinery in Old Ocean, Texas.

The 70,000 barrel-per-day coking unit was originally owned by Merey Sweeny LP, a joint venture between PDVSA and Phillips. When Venezuela failed to supply its contractually agreed amount of crude, ConocoPhillips announced it was exercising its right to buy out its deficient partner.
After four years of arbitration, an International Chamber of Commerce (ICC) arbitration panel ruled in April 2014 that Phillips 66 could exercise its right to acquire PDVSA’s 50%, since PDVSA had indeed violated the supply and investment contribution agreements.

“Because Venezuela had breached the contract by not supplying crude and also not contributing further investment to the venture, ConocoPhillips was able to take PDVSA’s share of the refinery for literally zero — free —
as a result of the way the contract was written,” says Russ Dallen, an international lawyer who follows Venezuela’s cases as head of investment bank Caracas Capital Markets. “Venezuela’s 50% stake in Sweeney had been valued at between $352 million and $540 million.

“Two things happened: once Venezuela had breached its obligation to supply crude and/or pay the penalty, ConocoPhillips had the option to buy them out and chose to exercise that option. According to the contract, there were 2 ways to value the breaching party’s half of the business,” Dallen explained. “ConocoPhillips elected to buy the PDVSA share of the joint venture according to the second contractual formula, which required ConocoPhillips to pay 80% of PDVSA’s capital contributions MINUS ALL CAPITAL DISTRIBUTIONS to them. Since PDVSA had already received dividends totaling over $1.1 billion — far in excess of their capital contribution of just $270 million — the formula yielded a purchase price of zero.”

After losing at the ICC, Venezuela took the matter to the U.S. Federal Court in New York to try to block enforcement of the arbitration award, while ConocoPhillips counter-claimed for enforcement of the arbitral award. Venezuela argued that it was against “public policy” to penalize it to such an extent.

“The Award validates the forfeiture of Petitioners’ entire joint venture interest, conceded by Respondents to be worth hundreds of millions of dollars, as the remedy for a delay in the payment of a liquidated sum of just over $6.9 million,”
Venezuela wrote in its July 2014 petition to the US Federal court. “That result violates the public policy of New York, the governing law of the contract,” Venezuela claimed.

U.S. Federal District Judge Alison J. Nathan did not agree with Venezuela’s lawyers and decided for ConocoPhillips.

So the Government in Venezuela couldn’t be bothered with getting the required crude to their own joint venture, then screws up the process so much that they lose a $ 1/3 to $ 1/2 Billion over a $6 Million payment. Nice that… Then again, since PDVSA was made via expropriation and nationalization of other companies and their assets in Venezuela, it isn’t like they lost anything they had actually made…

Oh, and they get to blow off the future dividends of $Billion or so (based on passed dividends)… But hey, it isn’t like they need the money… /sarc;

Then there is this gem:

Venezuela has more oil than any other country on the planet.

But it just bought a bunch of American crude.

A ship carrying half a million barrels of oil that was pumped in the U.S. docked at a terminal owned by Venezuela last week,
according to oil data research firm ClipperData. The shipment was sent to a facility located on the Dutch island of Curacao in the Caribbean.

The fact that Venezuela is importing American oil is raising eyebrows because Venezuela has 298 billion barrels of proven oil reserves, according to the Energy Information Administration. That’s more than Saudi Arabia, Russia or Iran and eight times the reserves of the United States.

But the oil extracted in Venezuela is very heavy and hard to refine and then sell to other countries. Venezuela needs to first mix its heavy oil with lighter types of crude to balance out the quality,
according to Nilofar Saidi, an oil market analyst at ClipperData.

Saidi said Venezuela had already been importing lighter types of crude oil from Russia, Angola and Nigeria.

Well, in reality you can make refineries that refine heavy oil directly. Valero was growing like crazy for a bunch of years due to having done that before other refiners, so getting to use cheaper feedstock. BUT, it is hard to upgrade your refinery and add advanced equipment when you have nationalized prior investments, and your own government is on 2 hour work weeks so can’t do the work either. As it stands, they must import oil to make gas from their own oil. Oooops!

Back At Beer

But, in the end, it is the end of that first article that is, IMHO, critical:

For Venezuelans who want to unplug from all these problems by popping open a beer, that’s no longer possible. Polar used to produce 80 percent of Venezuela’s beer, and now the supply is rapidly drying up.

As he fills a refrigerator with beer at his bodega in downtown Caracas, Leonardo Cordero says he has placed a purchase limit of three 9-ounce bottles per customer.

“I still have 50 cases. But that’s nothing,” he says. “That will be gone in two weeks.”

So in two weeks the beer runs dry. Last time the USA was dry, we had a world war…

I’m figuring it will take a week after that for folks to get Royally Pissed. So I’m looking for a full on coup change of government about then.

Maybe they could do it on July 4th… that has a nice ring to it ;-)

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Humor, News Related, World Economics and tagged , , . Bookmark the permalink.

35 Responses to Prediction: Venezuela To Have A Coup In 3 Weeks

  1. M Simon says:

    In the US dry celebrated the end of WW1. The US was wet again in 1933. WW2 didn’t start in Europe until 1939. At the earliest.

  2. Jimmy Haigh says:

    And Polar was a bloody good beer too. One of the best.

  3. Oliver K. Manuel says:

    I suspect we are on the verge of a social revolution. Social scientists are just now awakening to the experimental confirmation of George Orwell’s predictions in the futuristic novel he started writing in 1946: “Nineteen Eighty-Four”

    Confirmation that science became a tool of totalitarian propaganda after WWII is evident in well-documented discrepancies between Standard Models of the Climate, Cosmos, Nucleus and Sun and the most precise experimental measurements.

    E.g., precise experimental rest mass measurements at the Brookhaven National Laboratory of the 3,000 types of atoms that compromise all matter falsifies the very foundations of the Standard Models of the Sun, Nucleus, Cosmos and Earth’s Climate.

  4. Clay Marley says:

    Apparently Polar has just secured a 35 million dollar loan from a Spanish bank and should resume production next month. Will it be soon enough? Stay tuned.

    Of course, with 700% inflation, does one buy beer or cooking oil?

    In the end it won’t matter. All experiments in socialism lead down the same path to tragedy.

  5. u.k(us) says:

    You’re a funny guy.

  6. E.M.Smith says:


    Glad you noticed! M. Simon took it way to seriously…. I have Mum’s sense of British Humor. The best is delivered entirely deadpan and leaves you wondering if the person was serious, or not… I can’t quite do that (American Dad) but can get close enough Americans often miss it. Brits are never fooled, though.

    I did “give in” and put one /sarc; tag (that I now regret) to “humor signal”… But without it folks might do things like notice the last line of the next to last section, where the “2 day work week” mysteriously changes to a “2 hour work week” and ask me to “fix it”… I was in the “slow escalation of hyperbole” part where you give just enough clue to “humor signal”… But it must be way overdone for the Americans, which kind of spoils the effect for the British… Oh Well….

    @Clay Marley:

    Oh Dear! We are in a race condition between Barley ships and Revolution! with Revolution! slightly in the lead. One wonders where the nearest supply of Barley is located, and the fastest ships at sea… Perhaps they can air freight in just enough to prevent a revolution… Or we could ship them a massive cargo of Budweiser and assure a revolt… ( do I really need a ;-0 added?)

    Per beer vs cooking oil: Surely you jest? It would always be beer. Cooking oil is only needed for frying and baking. With no imported grains, there’s nothing to bake, and why fry when you can BBQ with beer? Clear as day, the answer is…


    Still fixated a bit I see. Being a little bit serious for a moment: Mankind is always on the edge of destruction, social upheaval, domination by Evil Dictators, governments run amok and social collapse. That’s how it has always been. Even in places like the USA where it’s been pretty darned stable, we have had social chaos galore. The South had the upheaval of losing the plantation system, the North had a “Civil” War. There were “bank panics” throughout the 1800s. In the 1700s we had our currency fail entirely, and fought a battle against an Empire. In the 1900s we had both the Roaring 20’s and the Great Depression. Then 2 world wars. Then the Cold War.

    This is nothing new, and it really doesn’t deserve to consume your life. Don’t let it win. Find some place, some time, some thing, that is joyous and let that consume your life. It is a much better way to go…

    Basically, once you know that:
    a) There is an evil at work.
    b) You can’t change it.
    c) Others already know this.

    The best thing to do is “move on” to something more fun. No, you don’t need to just ignore it forever. Like a mugger in the neighborhood, you keep an eye out for it; maybe tell someone if they are about to get mugged. But if there is a nice Block Party of folks, there isn’t really a need to make everyone feel uneasy by talking about the mugger the whole time. He’s not at the Party…

    Sanity is the art of being selectively insane and ignoring the crushing weight of pain and absurdity and injustice and lies and deceit that is life; while finding happiness in the good bits. Family and friends, parties and sunshine, tasty food and even funny videos of cats… because if you do pay close and rational attention to all the evil and horrors in the world, it really does drive anyone around the bend. So the only “sane” course is to selectively ignore it, even though that’s a bit batty…

    In short, to quote a song: “Don’t Worry, Be Happy!” It really is the best way.

    @Jimmy Haigh:

    I’ve never had it. Don’t suppose BevMo will have any now… When you look into other really good beer around the world, you find a root that reaches back to Germany or Czech often near Bavaria. The Chinese beer Tsing Tao has German roots, as does Corona. Wonder if the founders of Polar originated from Germany… a tiny “dig here” perhaps best done in the afternoon with a cool one… But there really is a remarkable connection of global beer making roots back to a German / Czech diaspora of sorts. Somehow the British Ale didn’t take over the world in quite the same way (though I like it more than lager…)

    @M. Simon:


    Or “close enough when seen from 100 years on”… I could have said “we had a Great Depression” leading to war and it would have been true, but not as “punchy” for reasons that if explained lose the plot…

  7. Gail Combs says:

    E.M. I love the British sense of humor. Mom could pull it off beautifully. She could keep a tall tale going for hours and never crack a smile. The one that still sticks in my head was the one spun after driving by the sparkling white Scott Paper Company building in Philadephia in the mid 1950s

    She convinced my brother and I it was made of a kind of ‘fossilized’/ coated toilet paper. She even went into the process and everything. I really wish I had that tale on tape.

  8. Larry Ledwick says:

    where the “2 day work week” mysteriously changes to a “2 hour work week” and ask me to “fix it”

    Actually that is not at all a problem, you ever work in a union shop?
    Two hours of real work during a day is a major accomplishment in some shops.

  9. M Simon says:

    After a few hundred years things do get a bit indistinct.

    Now about my obsession….

  10. AndrewZ says:

    “with 700% inflation, does one buy beer or cooking oil?”

    When your money is losing value that fast you have to spend it as quickly as possible, so you buy the first thing you see. Even if you can’t find anything that you actually want or need it’s still better to buy something that you might be able to trade than to just watch your money disappear. The informal barter economy becomes essential for everybody outside of the ruling elite.

  11. Another Ian says:


    I just heard that beer is being smuggled in from Colombia – rumour hath it that they should be able to manage that!

  12. E.M.Smith says:

    @M. Simon:

    Well it IS a weekend…

    @Another Ian:

    The Revolt may yet be postponed…
    Maybe we need an emergency “Beer For Peace” program…

  13. Gail Combs says:

    Moonbattery » Sep 10, 2015 Nailed Smuggling Milk in Socialist Utopia of Venezuela

    Can beer smuggling be far behind?

  14. John F. Hultquist says:

    Not having one of the major food groups is a tragedy.

  15. David A says:

    “Then again, since PDVSA was made via expropriation and nationalization of other companies and their assets in Venezuela, it isn’t like they lost anything they had actually made…”
    I guess Obama could say, “you didn’t build that”

  16. omanuel says:

    @E.M. Smith Thanks!

  17. E.M.Smith says:


    Milk smuggling? Oh, the horrors of crime!! ;-)


    You are most welcome.

    @David A:

    Well, in that case he would be right!

    @John F:

    Not only one of the major food groups, but one of the essential nutrients:

    sugar, salt, grease, caffeine and alcohol.

    Without which life might be possible (though any time experiments have been done removing one of them the society collapses…), but not not worth living ;-)

  18. omanuel says:

    @E.M. Smith

    Please elaborate on differences/similarities in your sage advice and the 3rd of 12 Steps:

    “Came to believe that a power greater than ourselves could restore us to sanity.”

  19. John Silver says:

    Where they are smuggling milk, they will soon be smuggling babies.
    The opposite direction.

  20. omanuel says:


    Please elaborate on differences/similarities in your sage advice and the 2nd of 12 Steps:

    “Came to believe that a Power greater than ourselves could restore us to sanity.”

    Is not “Solar energy” a “Power greater than ourselves?”

  21. E.M.Smith says:


    No need to “expedite”, I was just doing dishes and making lunch for SWMBO ;-)

    I don’t know how “sage” my advice is, but it works for me.

    Difference? Well, I’m not really conversant in the “12 steps”, but looking at your listing of the (2nd or?) 3rd one, the first thing I notice is that I said nothing at all about a “Power greater than ourselves”.

    I see no reason to resort to one, nor depend on one, to realize what makes my life better and both more comfortable and more functional. All it takes is understanding of me.

    Take death. We’re all going to do it. I don’t like it or want it. It isn’t going to go away. I can’t “fix it”. It is constantly thrust into my awareness against my will by everything from the Nightly News to “life events” around me.

    Now I could let that ‘get to me’ and be all balled up in the corner fretting about it; or, I can get on with the job of enjoying what life I have. I choose the latter.

    I have no need to resort to a comforting ‘here after’ or a white bearded guy in the sky busy counting the hairs on my head to reach the conclusion that obsessing about death is not as pleasant as getting on with gardening, beach time, some wine and beer and cheese “comparative study”, and even blogging with friends.

    At one time I did obsess about death and God and all, but after about a year of it, decided it wasn’t worth the time and I’d find out soon enough who was right. I can assure you that “Do what you can, ignore what you can’t, and the wisdom to know the difference” really is the best policy. I’d only add “Know what you can, ignore what you can’t, and the skill to find the difference.”

    In short:

    “Life is too short to drink bad wine!” does not need a Power. Only a few samples of wine, some good and one bad, and a bit of self reflection…

    Once that one is firmly in mind, realizing it generalizes to all sorts of unpleasantry in life is a short stroll…

  22. omanuel says:

    Thanks, E.M., for your reply. This is a Power greater than ourselves:

    Click to access Solar_Energy_published.pdf

  23. philjourdan says:

    Actually, you may be jesting, but you are close to the truth. Dictators like to keep the price of booze low as it quiets the population for all the other issues. However, that would beget a revolution, not a coup.

    A coup however is more likely and has been opined about because Maduro was never a military man like Chavez was.

  24. E.M.Smith says:


    I didn’t say there is, or isn’t, a greater power.

    I only said one is not needed to reach my conclusions.

    Big Difference.

    Knowing what matters to a particular problem lets you toss out distractions. There is a whole section in the GMAT test devoted just to that. The question of God or a Greater power will consume lots of time, but not yield an answer. It is best to leave it out as the answer to the other question rises without it.

    That does not mean I’m anti-anything. Only that I want an accurate answer from minimal effort.

  25. tomo says:

    It’s only the peons that will have a beer shortage. The Chavez family will no doubt have their supplies ferried in by private ( or perhaps even military) jet. – they can certainly afford it

  26. chrism56 says:

    EM I didn’t know Rumpole had much of a following in the US – or do you go right back to Haggard?

  27. omanuel says:

    This is an issue that we each resolve to our own satisfaction. It seems, from a scientific point of view, that my life and every atom, life and planet in the solar system are sustained by continuous conversion of neutrons in the Sun into interstellar hydrogen atoms. But the solar system is a tiny part of the expanding universe.

    I personally suspect the same type of process occurs in ordinary stars and living organisms may exist around many others if conditions are favorable. Again, this is the type of issue that we each resolve to our own satisfaction.

  28. E.M.Smith says:


    All of which is a fine POV and belief system, but irrelevant to answering the question “Should I talk about this here and now?” which depends mostly on others and what the topic is that they are following; and more importantly, that belief is irrelevant to answering the question “Does worrying this particular issue so much improve my life?”.

    “Life is too short to drink bad wine” doesn’t discuss WHICH wine. Is only says focus on the pleasant in life for most happiness.

    This is a common understanding. People write songs about it. “Don’t Worry, Be Happy” is one of my favorites. “Accentuate the Positive” is another

    Hit the link and look at the long list of folks who recorded it. Billions of people loved the song. For a reason.

    It doesn’t need any belief (or non-belief) in any Greater Power nor even any awareness of the issue of Greater Power to “get it” when listening to the song. It is about more personal happiness, nothing more.

    You’ve got to accentuate the positive
    Eliminate the negative
    Latch on to the affirmative
    Don’t mess with Mister In-Between

    You’ve got to spread joy up to the maximum
    Bring gloom down to the minimum
    Have faith or pandemonium
    Liable to walk upon the scene

    To illustrate his last remark
    Jonah in the whale, Noah in the ark
    What did they do
    Just when everything looked so dark

    Man, they said we better, accentuate the positive
    Eliminate the negative
    Latch on to the affirmative
    Don’t mess with Mister In-Between
    No, do not mess with Mister In-Between
    Do you hear me?

    Oh, listen to me children and-a you will hear
    About the elininatin’ of the negative
    And the accent on the positive
    And gather ’round me children if you’re willin’
    And sit tight while I start reviewin’
    The attitude of doin’ right

    You’ve gotta accentuate the positive
    Eliminate the negative
    Latch on to the affirmative
    Don’t mess with Mister In-Between

    You’ve got to spread joy up to the maximum
    Bring gloom, down to the minimum
    Otherwise pandemonium
    Liable to walk upon the scene

    To illustrate my last remark
    Jonah in the whale, Noah in the ark
    What did they say
    Say when everything looked so dark

    Man, they said we better accentuate the positive
    Eliminate the negative
    Latch on to the affirmative
    Don’t mess with Mister In-Between
    No, don’t mess with Mister In-Between


  29. omanuel says:

    Thanks, E.M. Smith. We agree on the need to accentuate the positive. For example, I am grateful for this coincidence:

    1. Copernicus started the most recent scientific in 1543, almost 400 years before I was born;

    2. I was allowed to complete Kuroda’s 1960 research assignment before another super-solar flare reset civilization.

  30. E.M.Smith says:


    I loved Rumpole of the Bailey. .. Don’t know which Haggard you reference, presumably not Merl, so I guess not… Regularly watched The BBC until they became Propaganda Lite. Yes Minister and Are You Being Served and Faulty Towers as favorites. Also fondly remember Star Cop and more…

    @Tomo: Interesting… somehow The People’s Leaders aways end up rich… on a public servant salary…

  31. chrism56 says:

    You can’t like Rumpole enough to be an obsessive – SWMBO comes from HR Haggard book “She”

  32. E.M.Smith says:

    Ah, Rider Haggard and print. He of She and King Soloman’s Mines . Yes, loved them too… IIRC read at about 12?… maybe earlier… been too long. About the time I last read Kipling, too…

  33. Larry Ledwick says:

    It is not looking good down there, new piece in NYT about hunger riots in Venezuela.

  34. E.M.Smith says:

    Well… that sure looks like collapse is on schedule.

    The big failure I see is the Central Authority making bad decisions from policy based thinking notfunction based (as is always the failure mode…)

    So in a food shortage, they don’t import fertilizer, but do have a show military exercise.

    They have enough land, and shoreline for fishing, to more than feed themselves, but didn’t prioritize food production.

    Basically, a hierarchical central authority structure can never process as much data, do it anywhere near as fast, or get results as good, as the distributed mesh network decision process of markets with millions of independent agents. Works for a while, until something unexpected pushes the decision outside the static bounds of the Central Authority.

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