The Road to Socialism – Venezuelan Government Seizes Iron-Makers

posted by Nima

May 16, 2010 · Posted in Global Economics

What happened in the US to numerous banks, insurers, and car companies, is and has been going on in Venezuela in other fields:

President Hugo Chavez announced Saturday the expropriation of a group of iron, aluminum and transportation companies in Venezuela’s mining region.

Among the expropriated companies is Materiales Siderurgicos, or Matesi, which is the Venezuelan subsidiary of Luxembourg-based steel maker Tenaris SA.

Venezuela’s socialist president said in a televised that his government was going to take over Matesi because “we couldn’t reach an amicable and reasonable settlement with the owners.”

Chavez said production at the company has been paralyzed since midway through last year, when Venezuela’s president announced plans to nationalize it.

Chavez said he was also going to expropriate Venezuelan-owned Orinoco Iron and aluminum-maker Norpro de Venezuela C.A., which is an affiliate of the U.S. company Norpro in association with France’s Saint Gobain, among other companies.

As well, Venezuela will take over transport companies that ship raw materials in areas southeast of Caracas. He did not name the companies.

Since coming to power more than a decade ago, Chavez has nationalized major companies in the electricity, oil, steel and coffee sectors, as well as other private businesses.

This intelligent reader commented on reddit as follows:

Step 1: Nationalize businesses to take their profits, use money to buy public favor

Step 2: Run said business into the ground

Step 3: Call ensuing economic downturn a “crisis” and a “failure of capitalism” which requires even more nationalization/reform

Step 4: Go to 1

Well said, my friend! :)

Venezuela is in for some massive shortages in all those sectors that have been nationalized, along with price inflation and a currency crisis.