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Bill Bonner
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Bill Bonner is an American author of books and articles on economic and financial subjects. He is the founder and president of Agora Publishing, and the principal author of a daily financial column, Inside Investing Daily.
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Bonner & Partners
  • Hugo Chavez R.I.P. 0 comments
    Mar 8, 2013 10:49 AM

    Today, we struggle to hold back tears. Another world leader has bit the dust. This time Venezuela's big chief. Some bleak corner of Hell took him in on Tuesday, if not before.

    Chavez was a great entertainer. Real life was too small for him. He had to stretch the truth out... bend the real world into a larger, more fantastic shape... and puff it up with hot air until it could hold him.

    In real life people go about their business, taking what fortune sends their way and doing their best with it. That stage was much too restricted for Chavez. He aimed to play a more important role under a much bigger proscenium arch. Naturally, he took up politics (the refuge of all fantasists) and tried to overthrow the Venezuelan government; he landed in jail.

    The authorities let him out after a couple of years. He went right back to his mischief. A few years later and he was elected president of the country. But even that wasn't enough. He conspired to twist the nation's constitution to make himself "President for Life," which, in an act of divine mercy toward the Venezuelan people, ended this week.

    Chavez was a great showman. He kept TV audiences entertained for hours, concocting a larger-than-life fairy tale about how terrible the foreign capitalists were and how his "Bolivarian Revolution" was setting things straight.

    Alas, his lines were written by hacks; perhaps he wrote them himself. It took a real A-list actor to deliver his speeches with a straight face. The idea of a 21st Century Socialism, for example, that he claimed to have invented himself, was so transparently hollow and self-serving that a lesser thespian would have been laughed off stage.

    A Magisterial Presence

    Chavez followed in a long South American tradition of crowd-pleasing strongmen. Like Peron, Castro and Melgarejo, he was not only a leader the masses could adore, but he was also one they deserved.

    Melgarejo has been largely forgotten. But he was one of the great standup guys of Bolivian politics. In 1854, like Chavez, he attempted a coup d'etat against the legitimate dictatorship of the time. He was captured. He was tried and found guilty. That should have been the end of him, but he came out with a convincing argument for clemency: that he was drunk at the time and not responsible for his actions.

    President Belzu pardoned Melgarejo. A few years later, just to show his gratitude, Melgarejo murdered Belzu. Then came a real tour de force of political theatre, illustrating not only Melgarejo's magisterial stage presence, but also the masses' deep attachment to their leaders.

    A crowd had gathered in front of the presidential palace demanding the return of Belzu. "Viva Belzu," they chanted.

    Melgarejo appeared on the balcony. He had the dead body brought out and displayed to the crowd.

    "Who lives now?" he asked them.

    "Viva Melgarejo," they replied.

    Having whacked his rival, Melgarejo soon became perhaps the most disastrous leader in the history of South America - a hotly contested title. He is said to have signed the Treaty of Ayacucho with Brazil, in which he traded millions of acres of Bolivian territory for a "magnificent white horse."

    In 1870, France and Germany went to war. Hearing reports of the German assault on Paris, Melgarejo rushed to defend the City of Lights.

    He reputedly could not locate it on a map, but he was fascinated by what he had heard of it. So, he told his army to march to Europe. His military commanders informed him that they had no means to cross the Atlantic Ocean. Melgarejo replied: "Don't be stupid! We will take a shortcut through the brush!"

    Cash and Claptrap

    That was the sort of Bolivarian tradition to which Chavez was heir.

    But Melgarejo was hardly the only legator. Chavez learned from Juan Peron too. Argentina had been one of the richest countries in the world, in the early 20th century. You can see the residue of it here today - broad, tree-lined avenues and beautiful beaux arts, belle époque and arts nouveaux private buildings and public monuments. (The Argentines were great admirers of the French too!)

    Now, Argentina is way down the list of the world's richest countries. Today, it is No. 54 on the CIA Factbook list - with Trinidad and Tobago, Equatorial Guinea and Greece far ahead of it. That, along with periodic financial crises, massive strikes, disappearances and pointless wars, is the legacy given Argentina by Peron and his Peronist successors.

    You'd think the gauchos and the porteños would have had enough of it by now. But they still elect Cristina Fernandez de Kirchner, a Peronist candidate, just as they voted for Chavez in Venezuela despite an economic record worthy of Mariano Melgarejo.

    That's what makes the masses so attractive to leaders like Chavez: They are incredibly stupid. Consumer prices rise even faster in Caracas than in Buenos Aires. The power goes out, too. Despite being one of the world's top oil producers, supplies are so tight people are urged to take "socialist showers" to conserve energy. And the murder rate is among the highest in the world - so high that even people from Baltimore are afraid to go there.

    Chavez made their lives more miserable, but the masses still loved him. Of course, he paid for their affection. He took $100 million in annual oil revenues and spread it around. Realizing that it would go further in poor neighborhoods than in rich ones, he built his popular support on cash and claptrap.

    And now he is gone. The performances have come to an end. The show's over.

    "Now he belongs to the ages," said Secretary of War Edwin M. Stanton when Abe Lincoln died. Now Chavez belongs to the ages too... like Peron and Melgarejo.

    Good riddance.

    Regards,

    Bill Bonner

    Bill

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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