Venezuela's Boom and Petra's bust

A story appearing in The New York Times today describes the booming Venezuelan economy, fueled as it has been by an huge influx of petrodollars. While American free marketeers decried Chavez's use of oil profits for social programs, this has not affected the Venezuelan stock market, which has risen 129% this past year and stands as one of the best performing markets in the world. The boom has also infused Venezuelan banks with deposits of cash that have grown 84% in the past 12 months.

One passage jumped out at me, though, and given its context within the pages of The New York Times, struck me as entirely ironic:

The boom is evident in an economy that has put financial speculation and conspicuous consumption ahead of domestic manufacturing. For instance, foreign automobile companies Ford and General Motors will sell 300,000 cars in the country this year. Economists describe Venezuela as a “harbor economy” because of its lust for imported goods.

That could be a paragraph describing the American economy. If it were not for the appearance of the word, "Venezuela," one might be sure that the United States was the subject of this faint ridicule. Indeed, an enormous cognitive dissonance is required to read this paragraph, buried as it was within pages of The New York Times that were splattered with advertisements encouraging consumption of the most conspicuous and imported kind, and not recognize a vast irony.

One page before this story, a full two-page layout delivers a photo-matrix of high-end watch porn describing "The "Tourneau Advantage," wherein a dizzying array of expensive foreign made watches -- Hublot, Rado, Tissot, Festina, Piaget, Chopard, Breitling, Jaeger-LeCoultre, Maurice Lacroix -- is presented to a Times page turner as a smorgasbord of enticing opportunities for frivolous expenditure. On the full page before this, Movado watch porn makes its appearance. Other surrounding pages are filled with ads for Chanel, Tiffany, Gucci, Mikimoto, Geoffrey Bean cufflinks for "my future CEO," Swedish Hästings beds, Tag-Heuer watch porn, more Gucci, a BMW 328i for "your Christimas wish list," and yet more Burberry watch porn. Further along, Petra Nemcova smiles enticingly, bejeweled in Fortunoff finery; yes, you too can either look like Petra or have a girlfriend who looks like Petra and all it will take is a little cold, hard, conspicuous cash (or, more likely, credit.) The mind reels at the possibilities for increased debt.

It hardly seems necessary to delve into the 'financial speculation" aspect of the cited paragraph, considering that the US economy has been chugging along on a goodly amount of this for sometime, our own dot-com foolishness being a prime example as well as this millennium's bubble, the real estate market, which has taken a decided downturn in recent months and whose effects are about shake out the hallucinated wealth many people had used to fuel spending on the kind of crap just listed above.

Of course, any booming economy, whether under watch of a "socialist" or not, undertakes these adventures in irrational financial glee all the time. But it is the United States, not Venezuela, that has shown the world just how to do that. And the one thing helping all of that to continue is that, for the most part, the world is still using US dollars as the fiat currency for world trade. When that circumstance falters, as it inevitably must, the conspicuous consumption so encouraged on the pages of The New York Times will probably become a little harder to sell. Petra may have to get naked.