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Comment by powera | Hacker News Reader

Here's the worst part: "Venezuela has maintained strict currency controls since 2003 and currently has two legal exchange rates -- known as the Dipro and Dicom rates -- of 10 and 661 bolivars per dollar used for priority imports. On the black market, where people and businesses turn when they can’t obtain government approval to purchase dollars at the legal rates, the bolivar has weakened 69 percent over the past year."

Whoever is buying dollars (or dollar-denominated goods) at the "official" exchange rate is making a killing. And will do so for about 6-9 months, before the entire thing collapses.

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The ones controlling the import of goods at the official exchange rate are multi-millionaire by now, mostly military.

Before getting dollars at the official rate for importing, your company needs to get approved and jump through all kinds of burocratic stuff that could take ages and never get approved. Here in my state there was a huge cartel of military officers involved in the sale of pre-approved companies for importing. It was like buying companies off the shelf.

A bunch of people bought these companies at a very high price, but the returns were huge. You bought one company for say $50k, but then you imported at the official rate. There are 20 year old kids that are now living in Miami with $15-20 million dollars in their accounts, money they made through these companies. They had a small office with 5 or 6 assistants, one for each company doing all the paperwork for the constant fake importing of goods.

This is just one of the ways the country has lost more than $50 billion dollars to corruption in just two years, according to one of Chavez's former ministers, Giordani.

Can you walk through the situation in a bit more detail? I'm not fully seeing how they make money.

This is likely why the controls and multi-tier currency rates exist. To reward insiders. Nothing like a starving opposition to remind you of the benefits of being on the inside.

>Whoever is buying dollars (or dollar-denominated goods) at the "official" exchange rate is making a killing. And will do so for about 6-9 months, before the entire thing collapses.

It's been like that ever since the currency controls were implemented in 2003, it is fairly well known that most if not all of the high ranked government officials (who have unlimited access to preferencial exchange rates) are behind the currency "black" market. The same government officials have their fair share of cash stashed away in tax havens.

This is beyond hope, corruption is not only endemic anymore but a neccessity for survival, unfortunately this will only end with blood, I believe international interference is a must in this case.

Err no, we can actually solve this issue ourselves. It was about to happen about 3 weeks ago actually. We just need the massive street demonstrations again and it will end.

I think international interference in this kind of issues end up causing more trouble than solutions. It ends up becoming a contest of whose side is supporting who. Just look at Syria.

Yes. We're literally reading a Bloomberg article reporting on the black market rates. It means the black market is so huge that prices have a centralized market with a unique, well-known rate, information chains to communicate that rate and third parties monitoring it through Bloomberg. I would be joking if I asked Bloomberg about bribe rates variations for IPOs in China or the indexed cost of obtaining the presidency of a country, if only it didn't mean a major governance issue.

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