August 20, 2020
We are thrilled to welcome Trish Regan to American Consequences…
You perhaps know her best as the anchor of Trish Regan Primetime on Fox Business – a daily program dedicated to economic and political truth – as well as her time hosting market-focused shows at Bloomberg TV and CNBC.
An outspoken advocate for the First Amendment, Trish stresses the importance of intellectual diversity and the ability for all voices to be heard.
Throughout her career, Trish has interviewed numerous heads of state, including multiple U.S. presidents, vice presidents, Fortune 500 CEOs, and other institutional, charitable, and government leaders.
And here, with her debut article from our August magazine, she details a reporting trip to Venezuela as a way of explaining why and how America may be headed down a similar and terrible path.
The Great American Meritocracy at Risk
We are currently on a path to ending up like Venezuela in two decades’ time.
My TV makeup was melting in the Venezuelan summer heat…
That’s not an easy feat. This particular makeup is what I like to call “industrial strength.” It’s specifically designed to withstand bright studio lights.
But what worked in New York City was no match for the sweltering June air of this small town on the outskirts of Caracas.
With no fans in sight, and certainly no air conditioning, the air inside the church where I was seated felt sticky and stagnant. The only motion came from the pulpit where two hands were waving enthusiastically at the hundreds of people seated alongside me.
The heat didn’t bother the rest of the crowd. They were here to see their savior.
“1522 – the year Spain colonized YOU,” he bellowed in Spanish, his voice reaching a crescendo as he pointed to my row. “The great, indigenous people of Venezuela!”
Technically speaking, there were a lot of Cubans in the room, a Japanese TV crew, and me and my American news team. But, hey – who’s counting?
Certainly not the man of the moment, Hugo Rafael Chavez… who fashioned himself as Venezuela’s messiah and bragged that the nation, under his socialist leadership, was “born again.”
Tensions were high in Venezuela at the time. With oil prices at $66 a barrel and climbing, the Chavez administration was busy vilifying foreign oil companies. Indeed, within months of my visit, Chavez embarked on a massive push to nationalize businesses and properties, kicking most foreign oil companies out of Venezuela.
I had traveled to Caracas that summer on assignment to cover the 2006 OPEC meeting for the CBS Evening News. And after speaking with numerous dignitaries, including the Venezuelan OPEC minister, I hoped to return home with an interview from the then-president of Venezuela.
His office had given the go-ahead for the interview. And my contacts at the Caracas presidential palace, called Miraflores Palace, promised something as early as the next day. I wrote down the time and place, then unpacked my last suit. After several days of reporting from OPEC, it was the only clean one I had left.
“I’ll be there!” I promised as I hung up the phone. “In a red suit.”
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‘Prudent Economic Policies’
Four days later, I had still not spoken a word to Chavez…
Instead, I followed him from place to place, speech to speech, as he carried on from his pulpit. Forty minutes into his historical catalogue of the nation, we had made it to the 1700s.
I’ll give him this – Chavez was a gifted orator. He punctuated his themes with humor, with storied vignettes and emotion, utilizing his full range of voice… all while playing to the crowd, like an old-fashioned, charismatic televangelist. One of the best I’d seen.
But once again, his handlers had explained that the interview would only happen if he finished on time. And if not, “tomorrow.”
As I looked at my watch, I realized that would take a near miracle. I’d been hearing variations of his speech over the last several days… each time praying he’d end on time..
After all, this wasn’t the first time I had heard this “tomorrow, tomorrow” refrain from the office at Miraflores.
Seven years earlier, my Goldman Sachs colleagues had tried to secure a meeting with the newly elected president…
It was my first job in finance on Wall Street. And my emerging markets group was trading sovereign debt securities. This is effectively a measurement of a country’s credit worthiness… so it’s heavily reliant on the country’s politics and policies.
We focused on Asia and Latin America – primarily Argentina, Brazil, Mexico, and Venezuela.
I was tasked with gathering and discerning all the political and economic news out of Latin America in order to help clients determine how the events would affect where sovereign debt was trading.
And in the summer of 1999, one of the stories we paid a lot of attention to was the newly elected Venezuelan president, Hugo Chavez. As the Washington Post reported at the time:
“Venezuela is being born again,” Chavez, 44, declared as soon as the election results were reported. As his supporters blared car horns and set off fireworks in the streets of this capital, he made an appeal for calm and vowed to pursue prudent economic policies.
Prudent. Economic. Policies.
To sovereign debt traders like us, those words were encouraging.
I was too junior to be included in the team that went to Caracas, but I was super exited that my colleagues might meet the new president.
Once there… they heard the now-familiar refrain from Miraflores. “Tomorrow,” they were told. Then, “tomorrow” again.
At that point, the words “prudent economic policy” had less meaning…
Effectively, we’d been forewarned. This was a politician who talked a good game about prudent economic policies – but they were prudent only to him, his friends, and his family… all of whom benefited financially.
At the time, Venezuela was riding high… enjoying the highest per-capita income in all of Latin America. It was a wealthy nation with massive resources. The Orinoco region, located in the northern part of the country, is now considered the largest source of proven oil reserves in the world, rivaling Saudi Arabia. And back then, there was much excitement over its potential.
But Hugo Chavez was on a crusade, leading his country into a socialist dictatorship that would ultimately destroy his country’s economy… a path encouraged by his mentor, Fidel Castro, that focused on providing people with just enough to keep them dependent.
Citizens could receive a nominal living, subsidized housing, monthly food rations… but only so long as they supported him and his regime. Gangs known as “colectivos” were imported from Cuba to spy on and intimidate Venezuelans to ensure that no one stepped out of line in their support for Hugo Chavez. Those who did faced violent consequences.
Too Good a Deal?
These memories came flooding back to me at that moment inside the hot, sweltering church…
An hour into Chavez’s speech, we were all the way back to 1830, the year his homeland became independent. “Finally!” I thought.
Then came the U-turn… Or as I like to call it, the point of no return.
“Una vez, en Venezuela, en 1680,” he bellowed dramatically, waving his hands and bringing his colorful historical analysis back even further than in prior speeches.
Outside, street vendors hawked Chavez-embossed trinkets, snow-globes, and keychains. Everywhere you went, from suburban towns to city centers, supporters had plastered posters on street corners, billboards, and bus stops depicting the country’s leader in a bright red button-down shirt.
“Well, apparently you chose the right color, Trish.” I joked to myself and stared down at my red patent-leather high heels that matched my skirt-suit… the same suit I’d worn the day before, and the day before that, and the day before that.
It was time to cut my losses and head back to the States.
Still, that trip was enlightening. When you consider what Chavez and his successor, Nicolas Maduro, stand for… it’s an important parallel to the direction that many in this country would like to take the United States of America.
Earlier that week, the Venezuelans, anxious to show off their oil, flew me and my crew in an old heavy plane – complete with open windows – to the middle of the Orinoco region that provided so much excitement for Goldman when Chavez assumed power. The plane looked a lot like the broken-down penguin plane in the popular kids movie Madagascar… I consider myself lucky to have made it to and from the Orinoco Basin in one piece.
In 2006, foreign oil companies – including some major American energy companies – were still trying to turn this thick, heavy, tar-like crude into a refined product ready for widespread use. I remember holding a full cup of the unrefined sludge in my hand, turning it upside down, and not a drop spilling out!
It was clear Venezuela desperately needed both technology and foreign investment to get the oil out of the ground and to refine it… But Chavez – apparently fearing that the Europeans and Americans were getting too good a deal – soon forced all foreign oil companies out of the country.
With no brain power from abroad, no technology, and no equipment to extract the oil, the country’s only real revenue source was about to dry up.
How to Ruin a Strong Economy
Nearly 15 years later, Venezuela has been transformed…
The nation is grappling with hyperinflation that’s so bad that its bolivar currency is seen as worthless. Thousands of bolivars litter the streets, and they’re so worthless that locals have even resorted to making them into crafts.
People are starving. The latest data that we have, from 2018, showed that the average Venezuelan lost 24 pounds in a year. Food is an increasingly scarce commodity that they cannot afford. Indeed, 90% of the population lacks regular access to food.
Meanwhile, failure to maintain the country’s infrastructure has resulted in an electrical grid that suffers from constant outages. The government blamed one major outage last year – one that left people without clean water – entirely on the U.S., with Maduro specifically citing U.S. intelligence operatives and Florida Senator Marco Rubio as the instigators. “The electricity war declared and directed by U.S. imperialism against our people will be defeated,” he claimed. “Nothing and nobody will vanquish the people of Bolivar and Chavez.” In other words, it’s imperialism and capitalism that are to blame – always.
Looting, meanwhile, is now rampant. And thanks to the government’s confiscation of all firearms, it’s mostly the aforementioned colectivo gangs – a kind of paramilitary group courtesy of Cuba – that have the guns. The rest of society runs the risk of arrest if they’re caught with a firearm.
Venezuela’s lawless economy should serve as an ominous, real-time case study in how to ruin a strong economy in 20 years.
It’s a class warfare story that Americans should pay close attention to right now as we watch the likes of Alexandria Ocasio-Cortez, Elizabeth Warren, Bernie Sanders, Ilhan Omar, and even Joe Biden – who is defenseless against his party’s rabid progressive (and I’d argue oppressive) wing of the party – promote a form of economic populism that emphasizes higher taxes for those who work and free stuff for those who don’t.
Today, our entire American system is under attack…
Bernie Sanders, the socialist from Vermont who honeymooned in the former Soviet Union as then-mayor of Burlington, was nearly the Democrat nominee for president.
Now, Joe Biden has lost all sense of self as he attempts to appease the uber left wing of his party who demand a new economic order. In their socialist utopia, work and investment is penalized through higher income and capital gains taxes, while the poorest members of society are provided with free college, free health care, free childcare, free everything… through far-reaching government programs.
Sounds familiar? Chavez, too, offered freebies… freebies that ultimately proved too costly.
Today, the Venezuelan economy is in an official state of misery.
Chavez’s successor has been criticized for creating a criminal regime – one that openly permits drug trafficking in and out of its ports. According to some reports, he may have even siphoned off the Venezuelan Central Bank’s gold, possibly shipping it out of the country’s vaults in the middle of the night.
Sound economic policy doesn’t need to be political…
After all, John F. Kennedy cut taxes.
So I say this as someone who is motivated not by party: We must focus on what is best for our economy, for our jobs, and for our markets.
Recent chatter on Capitol Hill from both sides has me questioning what is happening to the great American meritocracy that, despite many challenges, still enabled us to become the biggest, most successful economy in the world.
It is clear that the party of JFK, a party that once believed in empowering every American to achieve the American Dream, is increasingly being led astray by the siren call of class warfare.
Higher taxes on individuals and corporations will spell economic disaster by suppressing incentives to work and grow. Combined with free health care and free college, it’s unclear how our population will support itself in 20 years.
Meanwhile, President Donald Trump himself is pushing stimulus checks that will provide jobless Americans with $400 a week. It’s politically helpful and may even boost the economy and markets in the near term… However, there are long-term consequences associated with weekly handouts from the government that should not be forgotten. Both fiscally, in terms of what we can and cannot afford, and culturally. Why go to work if one can earn as much staying at home? A recent survey by the University of Chicago determined that 68% of jobless Americans made more money as a result of federal and state stimulus checks than they did in their previous jobs.
If we continue with a weekly $400 or $600 handout for a prolonged period, we may soon embark on a downward socialism spiral similar to the failed stories of Venezuela, Cuba, and other miserable economies.
No one wants to say it, so I will: This is the economic outcome that certain lawmakers desire. Some in Washington, D.C. actually want our economy to struggle for their own political positioning.
As a result of this politically motivated environment and increasingly broken government, too many lawmakers seem intent on stalling growth… all under the difficult-to-argue-with rationale that if you go to work, you might die.
It may be dramatic… But there is some truth to it, which is what makes this entire issue so terrifying. There are definitely at-risk groups – particularly the elderly and those with preexisting conditions that are, indeed, at risk.
So here’s an idea: Why not help those who are older or with preexisting conditions who need it, while encouraging the rest of our society not in high-risk categories to find a way back to work?
We’re a resilient society. We’re a creative society. We can manage this.
So why won’t Washington let us?
Because many leaders don’t trust us as individuals.
Consider the recent issue with masks. Last month, Joe Biden told a reporter in Pittsburgh that he would agree to an executive order to mandate everyone wear masks nationwide. But shouldn’t this issue be left up to individual communities who can better assess their risk level than the federal government? I doubt that someone out for a hike in Montana has the same exposure risk as a New York City subway rider.
There are politicians who don’t believe individual communities can and will figure this out and rebuild on their own. More alarming, I believe, are the politicians who don’t entirely want us to rebuild. Because if we do, it weakens their political hand.
The key to the success of America has always been, and always will be, our economy. We cannot allow it to be taken from us. We are entrepreneurs, we are workers, we are creative thinkers. Let’s use our entrepreneurial spirit, our work ethic, and our creativity to rebuild the greatest economy in the world. Politics be damned.
As we watch riots in the streets of Portland and a massive breakdown between Democrats and Republicans on Capitol Hill, our fragility is exposed.
We are currently on a path to ending up like Venezuela in two decades’ time.
‘Freedom Can Be Fleeting’
But even in the nightmare that is Venezuela, there is hope.
Unlike their progressive counterparts in the U.S., who have been indoctrinated into group-think by too many overly political academic institutions, the young people of Venezuela recognize the dangers of socialism. They’ve seen for themselves how it destroyed their country.
As such, you’ll encounter young people in Venezuela that are attracted to capitalism because they see capitalism for what it is: freedom.
Last year, I traveled to Bogota, Colombia to interview Vice President Mike Pence. The VP was in the region to meet with Latin American leaders… including the former speaker of the National Assembly – and now, internationally recognized new Venezuelan president – Juan Guaidó. (His presidency, was and still is, disputed by Venezuelan dictator Maduro, and the dispute of power has further descended the country into chaos.)
Guaidó and his wife had risked their lives, traveling across the Venezuela-Colombia border in Cucuta for a chance to sit down with Pence and encourage other regional leaders to proactively distance themselves from Maduro – the former bus driver turned Chavez appointee who assumed the presidency upon Chavez’s death in the spring of 2013. The Guaidós had left their toddler daughter at home with family and, when I spoke with them, were not yet sure how they would return home as Maduro had ordered it illegal for Guaidó to leave the country. As such, they risked being jailed upon their return.
But as freedom fighters, they both shared an optimism for what their country could be, if only the right policies were in place.
“What is your advice to those us of in the United States who are contemplating a socialist regime here?” I asked Guaidó, the man seen as the future of his country.
“Never forget how fragile freedom is,” he told me. “Freedom can be fleeting.”
And isn’t that the truth.
We must always protect our freedoms… Our freedom of speech, our freedom to protect ourselves, our freedom to earn and become prosperous. The stronger American freedom is, the stronger our economy is… and thus, the stronger our nation is.
“Live Free or Die” is the motto on the license plates of the state I still call home, New Hampshire. Those words speak truth.
Our freedom is all we have.
Trish Regan is one of America’s brightest and most recognized conservative economic thought leaders. An award-winning journalist, Trish is the host of Trish Intel, a daily show dedicated to economic and political truth, as well as a columnist for several publications.
Now here are some of the stories we’re reading…
Listen to Trish Regan’s new show, Trish Intel, right here
I set the record straight on the Dems’ failure to pack an economic punch. Plus, the left can’t do math… and, our post office is paying the price! Gold in play as the Fed signals its “okay” with inflation and, tech poised to move even higher.
Last year, we compared the costs of the leading Democratic candidates’ promises. At that time, Biden, to his credit, proposed the least new spending. Kamala Harris promised the most. She wanted to add $4.2 trillion to America’s debt. Her lavish promises didn’t win her supporters; she dropped out soon after. But now she’s Biden’s running mate, and Biden promises to spend more.
Venezuela central bank gold reserves fall to lowest level in 50 years
The drop comes as Venezuela, whose key oil industry is under U.S. sanctions, sells its gold abroad to obtain foreign currency amid an economic crisis. The central bank maintained reserves above 350 tonnes until 2015, when the increasingly cash-strapped government began to use gold as a collateral for loans.
How can Wall Street be so healthy when Main Street isn’t?
An amazing, monthslong rally has put the S&P 500 back to where it was before the coronavirus slammed the U.S, even though millions of workers are still getting unemployment benefits and businesses continue to shutter across the country.
The stock market’s comeuppance is coming, as bullishness gets extreme
There is almost always a market decline over the three months prior to presidential elections… If the stock market experiences a similar pullback, that means that the Dow between now and early November will be 1,400 points lower than where it stands today. That’s just the average. The worst correction in this mid-August-to-Election-Day period came in 2008, when the Dow dropped 30% from mid-August to its low prior to Election Day.
And let us know what you’re reading at [email protected].
Publisher, American Consequences
With P.J. O’Rourke and the Editorial Staff
August 20, 2020