Venezuela in 2015: The Insecurity Explained (Part 1)

For a better understanding of this post, please read exchange rates and social classes articles.
http://venezuela2015crisis.blogspot.com/2015/09/cencoex-sicad-simadi-and-dolartoday.html
http://venezuela2015crisis.blogspot.com/2015/09/the-social-classes-in-venezuela.html


The rise of the black market dollar is a main source of the social crisis in Venezuela. Most Venezuelan do not know it, as they haven't lived abroad. As many of goods (clothes, electronics, some food etc) are imported and/or sold using the black market rate, the effectiveness of the salary of a Venezuelan is reduced by... 100 times or more, since the black market $ is more than 100 times the CENCOEX rate. Take the example of a Snickers bar. It costs 0.8-1$ in the USA or Panama. You would find it at 600-800 Bsf (Sept 2015) in Venezuela, which is much more than what a local person would earn per day. Let's take a more detailed example.


A junior engineer would earn around 12000 Bsf per month until last few months. Now this engineer would earn 15000 Bsf (increase due to inflation). This engineer has studied hard at least 5 years to get his degree. But what is 15000 Bsf?

15000 Bsf = 2380$ on CENCOEX rate. But his salary is not an essential importation good.
15000 Bsf = 1111$ on SICAD rate. But this rate practically doesn't exist anymore.
15000 Bsf = 75$ on SIMADI rate. You need hours of discussion with the bank to trade Bsf to SIMADI and there are rules and restrictions. But wait, 75$/month? Are we in the poorest country in the world or what? Oh but anyways, that's not even the rate they use for most goods.

15000 Bsf = ~21$ on the black market rate in September 2015. Don't be surprised if it becomes 18$ in October. So yea, a junior engineer practically earns 21$/month in Venezuela.

With 15000 Bsf/month without any additional financial support, you are in the lower-middle class. You barely (or don't) get bonuses from the government, you have to wait hours on weekends or before work in the morning (starting at 3AM in some cases) in the line to perhaps get your subsidized allowed ration of sugar, flour, coffee etc. and maybe some chicken, and cheese, and if you're lucky diapers for the baby you will have in 4 months, because you know that in 4 months diapers will become as rare and expensive as diamonds. And how much does the newest (650$) iPhone cost? 31 months of salary without inflation. Way too elusive.

So basically a pair of shoes can cost 4 months of salary, a t-shirt half his salary, a dinner at a restaurant 1/8  of  his salary. A small McDonald's burger is more than a day of work for minimum wagers who earn ~8000 Bsf/month.


Now what causes the insecurity?

Why would any person study 5 years in university to get that miserable salary which will never be able to get him an iPhone, when he can just steal one iPhone per month from some rich guy walking on the street and sell that iPhone for a lot more than what he could have earned in 3 years, and rest and live like a king for the rest of the month? Well thank God the (99%) good and kind people of the lower-middle class do not think like that. But (most of) the poor people of the barrios? Well that's what they do! The insecurity used to be present only in those barrios a few years back, but because of the huge rise of the black market dollar value, the "malandros" started coming to any richer areas where they would steal or even kidnap and shoot any person for what he has or can represent $ (watch, phone, car, gold etc). So basically, a tourist walking on the street is someone with a giant $ marked on his face.