All communist regimes are characterized by shortages. In Venzuela, the government suddenly announced it was suspending all steel exports, creating a new commodity shortage on world markets.

But the export gate might not be where the real shortage is. I am wondering if investment-starved Venezuela simply cannot produce the steel it used to produce. It’s only a matter of time before this happens, it may be happening now.

Veneconomy sees something more sinister and directional – they argue that Venezuela cannot possibly use the extra steel it produces, at least not for awhile, and will probably end up with stacks of surplus. Such are the glories of state planning – the USSR used to have surpluses of left shoes piling up outside the factory gates.

The government says that the steel will go to local development instead of terrible exploitative foreigners who give hard currency for Venezuela’s steel exports. Veneconomy thinks the steel will probably end up in Fidel Castro’s hands, in another step toward full colonization by Cuba.

Either way, the result is very bad for Venezuela. Alek Boyd has more here.

http://www.vcrisis.com/index.php?content=letters/200508010709