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Chavez Threatens To Confiscate Banks, Steel Producers
Comrade Chavez of Venezuela, not content with nationalizing oil companies, is now making noises that he intends to confiscate private banks and the steel industry. The message he is sending is clear to me: don't invest in Venezuela, as you'll be a target for confiscation.
From myway.com:
Venezuelan President Hugo Chavez on Thursday threatened to nationalize the country's banks and largest steel producer, accusing them of unscrupulous practices."Private banks have to give priority to financing the industrial sectors of Venezuela at low cost," Chavez said. "If banks don't agree with this, it's better that they go, that they turn over the banks to me, that we nationalize them and get all the banks to work for the development of the country and not to speculate and produce huge profits."
As I understand the way banks operate, they use the money from their depositors (that would be folks like you and me) to loan to other people to finance their projects, whether it is for mortgages, business or consumer loans, etc. Part of the profits realized from the loans is used to pay the depositors for the use of their money. Interest is based on the amount of risk involved. If someone wants to borrow $200 Million dollars to build a new facility, and the company's revenues are miniscule, then there would be substantial risk involved. Okay, we know all of this. Apparently, though, Chavez doesn't.
Banking according to Chavez is: if you make a decent return on your investment, you are bad and not helping out your country.
As for the steel producers (Sidor is the main target), it looks like he is targeting them due to their selling Venezuelan steel overseas, where they can get a better price for their product than they can domestically, and then steel users have to rely on imported steel so that they can get a better price for their needs than using locally produced. It may be inefficient, but, hey, that's called capitalism. Buy low, sell high. Probably the local market price steel is kept low du to the imports from China making the price of locally produced steel uncompetitive, thus the need to export it to countries that will pay a price high enough to make operating steel mills profitable.
"Sidor has to produce and give priority to our national industries ... and at low cost," he said.
Of course Chavez, being a hard-core progressive, doesn't like capitalism, and wants to force the steel producers to sell at a price below the cost to produce, or force the construction industry to pay substantially more for the steel and thus raising the cost of construction.
Chavez is pushing hard to turn Venezuela into a communist country, doing it one piece at a time. As he has stated on many occasions, this is all part of his plan: to make Venezuela more like Cuba.
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