Hugo Chavez, hero to the perpetual lower class and general gadfly on the face of history, has continued his tradition of running his country into the ground spreading freedom to the masses. Just a few years ago, with oil at record levels and Venezuela's coffers filled with evil American money that proves even a socialist like Chavez isn't above capitalism when it suits his interests much needed funds to finance his Bolivarian revolution, he seemed like the future of South America. But a drop in oil prices put a damper on his once proud attempt to subvert the U.S. as the economic superpower of the Western Hemisphere. Chavez can be fun of course, like when he accuses the U.S. of being an occupying force in Haiti while it's trying to deliver aid (namely subverting Venezuela and Cuba's own actions in the country) or getting mad at video games that present fantasy invasion scenarios of his country as being propaganda intended to encourage the real thing. But he's more dangerous then silly when it comes to economic policies. Here's a few of his plans for 2010: 1. Virtual currency: Time to get out your Monopoly money, we're playing capitalism! Chavez wants to introduce a currency for Venezuela and other South American countries for stock trading to avoid U.S. domination in the region. Nice to know the $20B a year we send that way is going to be converted into something that economic powerhouses like Antigua and Barbuda and Bolivia can trade amongst themselves. 2. Three-tiered currency: Speaking of "virtual" currency, get a load of this. Never much of a history buff, Hugo Chavez has revitalized an economic policy from the 1980s that will not bode well for Venezuela.

He set a rate of 2.6 for imports of items such as food and medicine, a rate of 4.3 for “non-essential” products and committed to defend the bolivar in the unregulated market, where it traded today at 6.25.
Before you start screaming "sign me up!" for this genius plan, realize that Venezuela tried this previously during the last major recession in the 1980s. They called the day it went into effect as "Black Friday." Doesn't bode well. Ricardo Hausmann, who runs Harvard’s Center for International Development, said:
“Latin America learned in the 1980s that policies like this do not work. It’s too easy a game to steal money through a multi-tiered exchange rate. You make a bundle just on the exchange differential.”
3. That Kooky War With Colombia: Did you forget that Chavez is ramping up security along the Colombian border, sending his wind-up tanks to repel the coming invasion of his country by everyon's favorite coffee-producing nation? I'm reminded of Michael Moore's film [i]Canadian Bacon[/i], where an ineffectual U.S. president in the midst of a recession decides to concoct a fake Cold War with Canada in order to stimulate a weakening military and also to distract and pacify a population worried about unemployment and national security. Welcome to [i]Canadian Bacon: The Reality Series[/i]. Every weak we tune in to see if Colombian president Álvaro Uribe will actual step across the border for fun and guns! 4. Power rationing: Take your hands off the thermostat, Junior! That's treason! The Venezuelan electricity minister has begun a nationwide power-rationing plan to stop "irresponsible consumption" of energy. Namely, the concern is that Venezuelans' actions are draining the water level at Guri Dam, which powers plants that generate 70% of Venezuela's electricity and could cause serious problems by the end of February. Civil servants are already working just 5-hour days to cut down on energy use, but the government had to cave in when citizens complained about "restricted electricity consumption in shopping centres and forced establishments such as movie theaters to turn off their lights well before their usual closing time." 5. Nationalization You guys didn't think Chavez was through with the oil and gas companies, did you? After going after the tin industry and several of sectors, Chavez is now aiming his guns at retail stores and automobile plants. Ouch. In both cases, Chavez accused foreign-owned businesses of taking advantage of his citizens. He specifically demanded that Toyota share its technology with Venezuela or face expropriation of its assets (Toyota, like many foreign car companies, develops technology at its headquarters and then ships parts to be assembled worldwide). Ford is reportedly nervous as well. So where does this leave us? Well, you can't really talk sense with this man. Chavez got into office running on a revenge campaign, appealing to native Venezuelans to overthrow their European and American persecutors and whatnot. My best bet: Foreign investors, pull out now. I can understand several companies with long-term contracts not wanting to abandon their claims in Venezuela in case the winds of change blow, but it does not look like Chavez will be going anywhere for a while. Look, the dude can conceivably run his country into the ground and get voted out of office, but still, no sense in holding onto that dream any time soon. This whole currency trick is just a joke. Chavez is trying to bait-and-switch his population, distracting them from the fact that his new bolívar fuerte currency is a joke. Oh, also it's illegal to publish reports telling that its exchange rate against the U.S. dollar is completely whack. As for the war against Colombia and the power rationing? Rearranging deck chairs on the Titanic, my friend. Chavez can argue about invasions and evil capitalist behavior all he wants, but at the end of the day, he remains on a sinking ship, and you can only distract your audience for so long. Why do you think magicians keep their tricks under 5 minutes in duration. Even sleight-of-hand has its limits on our attention span. I predict 2010 to be exactly like the last 8 years Chavez has been in office, but only now sadder and more desperate. Chavez overplayed his hand and now is stuck with threatening to nationalize foreign-owned department stores. Not exactly a strong hand to have at the negotiating table. Plus, he lost his favorite punching bag. He doesn't score the same browning points going after Obama the way he did targeting Bush. This will all end not with a bang, but with a whimper. Question is, will it just be Chavez's administration, or Venezuela as a whole? -Stephen Payne, Editor, Oil and Gas Investor This Week; www.OilandGasInvestor.com; spayne@hartenergy.com