Month: March 2019

Malaysian Prime Minister Mahathir Mohamad arrived Thursday in Pakistan on an official three-day visit, where his high-powered delegation is expected to finalize investment deals worth nearly $900 million, officials said. 

 

The Malaysian leader will also be the chief guest at the Pakistan Day military parade Saturday, the Foreign Ministry announced. 

 

Pakistani Prime Minister Imran Khan’s adviser on commerce told reporters that business leaders accompanying Mahathir would sign three memorandums of understanding on Friday covering up to $900 million worth of investments in information technology and telecom sectors.  

The adviser, Razak Dawood, said the deals with Malaysia would also provide Pakistan a new opening toward membership in the Association of South East Asian Nations. He said Malaysian businessmen had also indicated they would like to invest in other sectors, including energy and textiles, to help Pakistan improve its exports. 

 

Officials said that Malaysia’s Proton carmaker signed an agreement late last year with a Pakistani partner to set up an assembly plant in the southern city of Karachi that would be its first facility in South Asia. Khan and his Malaysian counterpart are expected to officiate at a symbolic groundbreaking of the Proton plant Friday.

Looking for investors

Since taking office last August, Khan has approached nations that have warm relations with Pakistan, including China, Saudi Arabia, the United Arab Emirates, Qatar and Malaysia, to bring investment and financial deposits to help reduce a widening current account deficit and shore up foreign reserves.  

Riyadh and Abu Dhabi have deposited or are in the process of depositing $6 billion in loans in recent months. The two countries have also agreed to allow Islamabad to import oil on deferred payments. China is expected to deposit more than $2 billion in the next few days. 

 

Beijing has invested more than $19 billion over the past six years in energy and infrastructure projects under what is known as the China-Pakistan Economic Corridor, as part of its global Belt and Road Initiative. 

 

Last month, Saudi Crown Prince Mohammad bin Salman visited Islamabad and signed investment agreements worth $20 billion, including a $10 billion refinery and petrochemicals complex in the southwestern port city of Gwadar. 

 

Pakistani officials say they are also close to securing a deal with the International Monetary Fund for a bailout package reportedly of up to $12 billion.
…

The number of Americans filing applications for unemployment benefits fell more than expected last week, pointing to still strong labor market conditions, though the pace of job growth has slowed after last year’s robust gains.

Other data on Thursday showed a measure of factory activity in the mid-Atlantic region rebounding sharply this month after falling into negative territory in February for the first time in more than 2-1/2 years. But manufacturers’ perceptions about the outlook were the least favorable in three years and their expectations for capital spending were also less upbeat.

These findings support the view that the manufacturing sector is slowing in line with softening economic growth.

The Federal Reserve held interest rates steady on Wednesday and its policymakers abandoned projections for further rate increases this year, noting that “growth of economic activity has slowed from its solid rate in the fourth quarter.”

“The U.S. economy has clearly slowed and will cause job growth to moderate, which isn’t alarming as long as it is orderly,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 221,000 for the week ended March 16, the Labor Department said on Thursday. Economists polled by Reuters had forecast claims falling to 225,000 in the latest week. Claims have been drifting in the middle of their 200,000-253,000 range this year.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 1,000 to 225,000 last week.

The claims data covered the survey week for the nonfarm payrolls portion of March’s employment. The four-week average of claims fell 11,000 between the February and March survey periods, suggesting a pickup in job growth after hiring almost stalled last month.

Nonfarm payrolls increased by only 20,000 jobs in February, the fewest since September 2017. The slowdown followed big gains in December and January. Average job growth has moderated to about 165,500 per month from 223,250 per month in 2018.

Despite the slowdown in employment growth, the labor market remains solid. The unemployment rate is at 3.8 percent and annual wage growth in February was the strongest since 2009.

The step-down in hiring reflects a shortage of workers and softening economic growth as the stimulus from a $1.5 trillion tax cut package fades. A trade war between the United States and China, slowing global growth and uncertainty over Britain’s exit from the European Union are also hurting domestic activity.

Ebbing momentum

The slow growth theme was also underscored by another report on Thursday from the Conference Board showing its leading economic index, which measures future U.S. economic activity, rose in February for the first time in five months.

February’s 0.2 percent increase in the leading indicator followed an unchanged reading in January.

The leading indicator’s growth rate has slowed in the past six months, which the Conference Board said suggested “that while the economy will continue to expand in the near-term, its pace of growth could decelerate by year end.”

Gross domestic product estimates for the first quarter are as low as a 0.4 percent annualized rate. The economy grew at a 2.6 percent pace in the fourth quarter.

The dollar firmed against a basket of currencies while stocks on Wall Street rose. U.S. Treasury prices were generally higher.

In a third report on Thursday, the Philadelphia Fed said its business conditions index jumped to 13.7 in March from -4.1 in February, which was the first negative reading since May 2016.

But the survey’s measure of new orders received by factories in the region, which covers eastern Pennsylvania, southern New Jersey and Delaware, rebounded moderately from negative territory in February and unsold goods piled up.

In addition, the survey’s six-month business conditions index dropped to a reading of 21.8 this month, the lowest since February 2016, from 31.3 in February. Its six-month capital expenditures index fell to a reading of 19.5 in March from 31.7 in the prior month. The index dropped below 20 for the first time since 2016.

“The details within the report were much more of a mixed bag, and more downbeat than one might think given the solid improvement in the headline reading,” said Daniel Silver, an economist at JPMorgan in New York.

These readings are in line with other surveys showing signs of slowing national factory activity. A report from the New York Fed last week showed a gauge of factory activity in New York state dropped to a two-year low in March.

The Philadelphia Fed survey also showed more factories experiencing difficulty finding workers, which could weigh on production in the future. Nearly 74 percent of the firms reported labor shortages, up from 63.8 percent last year.

Just over half of the companies also reported they had positions that have remained vacant for more than 90 days. That compared to 47.8 percent in 2018.
…

China says a high-ranking U.S. delegation will travel to Beijing next week to resume negotiations aimed at resolving the ongoing trade war between the world’s two leading economies.

Commerce Ministry spokesman Gao Feng announced Thursday that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will visit the Chinese capital next Thursday and Friday, March 28 & 29, followed by a trip to Washington in early April by Chinese Vice Premier Liu He.

The trade war between the United States and China began last year when President Donald Trump imposed punitive tariffs on $250 billion worth of Chinese imports to compel Beijing to change its trading practices.

China has retaliated with its own tariff increases on $110 billion of U.S. exports. The Trump administration is also pushing China to end its practice of forcing U.S. companies to transfer their technology advances to Chinese firms.

Trump had initially imposed a deadline of March 2 for both sides to reach a deal before imposing a hike in tariffs from 10 to 25 percent, but delayed the increase late last month citing “substantial progress” in the negotiations. But Chinese President Xi Jinping has reportedly cancelled tentative plans to visit Trump’s Mar-a-Lago estate in Florida next month to sign a final deal, a sign that the talks have stalled.

Trump issued a warning Wednesday that U.S. tariffs could remain in place for a “substantial period” to ensure that Beijing lives up to any agreement.

 
…

The Federal Reserve left its key interest rate unchanged Wednesday and projected no rate hikes in 2019, dramatically underscoring its plan to be “patient” about any further increases.

The Fed said it was keeping its benchmark rate — which can influence everything from mortgages to credit cards to home equity lines of credit — in a range of 2.25 percent to 2.5 percent. It also announced that it will stop shrinking its bond portfolio in September, a step that should help hold down long-term rates. It will begin slowing the runoff from its bond portfolio in May.

Combined, the moves signal no major increases in borrowing rates for consumers and businesses. And together with the Fed’s dimmer forecast for economic growth this year — 2.1 percent, down from a previous projection of 2.3 percent — the statement it issued Wednesday after its latest policy meeting suggests that it’s grown more concerned about the economy.

With the prospect of no rate hikes ahead anytime soon, the stock market reversed losses it had suffered before the Fed issued its statement and was up modestly soon after.

The Fed’s decision was approved on an 11-0 vote.

Economic activity slows

Some Fed watchers say they think the next rate move could be a cut later this year if the economy slows as much as some fear it might.

In signaling no rate increases at all this year, the Fed’s policymakers reduced their forecast from two that were previously predicted in December. They now project one rate hike in 2020 and none in 2021. The Fed had raised rates four times last year and a total of nine times since December 2015.

The Fed’s pause in credit tightening is a response, in part, to slowdowns in the U.S. and global economies. It says that while the job market remains strong, “growth of economic activity has slowed from its solid rate in the fourth quarter.”

The Fed laid out a plan for stemming the reduction of its balance sheet: In May, it will slow its monthly reductions in Treasurys from $30 billion to $15 billion and end the runoff altogether in September. Starting in October, the Fed will shift its runoff of mortgage bonds into Treasurys so its overall balance sheet won’t drop further.

Change in direction

The central bank’s new embrace of patience and flexibility reflects its calming response since the start of the year to slow growth at home and abroad, a nervous stock market and persistently mild inflation. The Fed executed an abrupt pivot when it met in January by signaling that it no longer expected to raise rates anytime soon. 

The shift toward a more hands-off Fed and away from a policy of steadily tightening credit has encouraged the view that the central bank is done raising rates for now and might even act this year to support rather than restrain the economy. Though the U.S. economy is on firm footing, it faces risks from slowing growth and trade conflicts. 

All of which suggests that the Fed may recognize that it went too far after it met in December. At that meeting, the Fed approved a fourth rate hike for 2018 and projected two additional rate increases in 2019. Chairman Jerome Powell also said he thought the balance sheet reduction would be on “automatic pilot.” 

That message spooked investors, who worried about the prospect of steadily higher borrowing rates for consumers and businesses and perhaps a further economic slowdown. The stock market had begun falling in early October and then accelerated after the Fed’s December meeting.

Trump weighs in

President Donald Trump, injecting himself not for the first time into the Fed’s ostensibly independent deliberations, made clear he wasn’t happy, calling the December rate hike wrong-headed. Reports emerged that Trump was even contemplating trying to fire Powell, who had been his hand-picked choice to lead the Fed. 

But after the December turmoil, the Fed in January began sending a more comforting message. At an economic conference soon after New Year’s, Powell stressed that the Fed would be “flexible” and “patient” in raising rates — a word he and other policymakers have invoked repeatedly since — and “wouldn’t hesitate” to change course if necessary. 

Powell, appearing last week on CBS’s “60 Minutes,” denied that pressure from Trump had influenced the Fed’s policy shift. Private economists generally agree that a slowing economy and a sinking stock market, which eased Fed worries about any possible stock bubble, were more decisive factors. 

Stocks have rallied

After sharply falling in December, stocks have rallied and recouped most of their late-year losses in trading since the start of 2019, a rebound credited larger to the Fed’s easier monetary stance. 

Some analysts say they think the Fed won’t raise rates at all this year if the outlook becomes as dim as they are forecasting. 

That view is supported by the CME Group, which tracks trading in futures contracts on the Fed’s benchmark rate. It says traders now put the probability of any Fed rate hike this year at just 1 percent and project a roughly one-in-four chance that the Fed will actually cut rates by year’s end to help prevent a slowing economy from toppling into a recession.

 

 
…

U.S. tariffs on China are likely to remain in place for a while, even if a trade deal is reached, President Donald Trump told reporters Wednesday. 

 

“The deal is coming along nicely,” the president said about the trade talks with Beijing, noting U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin would be heading to China within days to continue discussions.  

  

“We’re taking in billions and billions of dollars right now in tariff money, and for a period of time that will stay,” Trump said.

The president’s remarks indicated that Washington’s tariffs could stay in place until U.S. officials are convinced the Chinese are adhering to the terms of the agreement. 

 

“They’ve had a lot of problems living by certain deals,” the president noted on the White House South Lawn just before boarding the Marine One helicopter.   

China might accept a deal in which most of the U.S. tariffs are rolled back, according to Brookings Institution senior fellow David Dollar, but he said he expected President Xi Jinping would not accept any pact in which no tariffs were lifted. 

 

“It’s very hard for the Chinese president to agree to a deal that’s so clearly asymmetric. Chinese people are so active on the internet and social media, and President Xi will hear about it from the people if he makes a deal that looks bad for China,” Dollar told VOA.  

  

Tit-for-tat tariffs imposed last year ignited fears of a trade war between the United States and China, the world’s two largest economies, which annually trade more than a half-trillion dollars’ worth of goods.  

 

The value of Chinese products sold in the United States far outweighs the value of those sent to China, and that deficit alone represents about 80 percent of America’s overall trade gap in goods. 

A pillar of the Trump presidency has been reducing that huge gap by negotiating bilateral trade deals and rebuilding the U.S. manufacturing base.

Trump traveled Wednesday to an area in Ohio where General Motors is set to shutter a car assembly plant, affecting about 1,500 jobs and undercutting the president’s manufacturing revival message.  

 

“What’s going on with General Motors?” Trump asked during a speech. “Get that plant open or sell it to somebody and they’ll open it. Everybody wants it.”  

 

“Intervening to try to keep one factory open isn’t going to do much for the economy” at a time when manufacturing is declining as a share of the overall job market, said Dollar, of the Brookings Institution. “It’s a bad precedent for politicians to intervene like that.”  

 

A resident scholar at the American Enterprise Institute, Claude Barfield, agrees presidents should not intervene in individual corporate decisions.  

 

“The president is woefully ignorant about trade and this part of the economy. He thinks it does help. I don’t think it does at all help,” Barfield, a former consultant to the office of the U.S. trade representative, told VOA.  

The closure of the GM plant in Lordstown, according to a Cleveland State University study, will result in a total loss of 7,700 jobs in the region, including supply chain and consumer services employment tied to the auto plant, cutting 10 percent of the gross regional product in the greater Youngstown area. 

 

Trump, in his remarks on Wednesday, placed some of the blame on the United Auto Workers, the union representing the GM workers.  

 

“Your union leaders aren’t on our side,” Trump declared. “They could have kept General Motors” operating the Lordstown plant.  

Trump spoke at a facility in Lima that makes the M1 Abrams tank for the U.S. Army, about 300 kilometers from the idled auto factory.  

 

“You better love me. I kept this place open,” Trump told workers at the General Dynamics facility, which was nearly closed six years ago after Army officials told Congress they did not need the additional tanks.  

Ohio, which Trump won in the 2016 election by 8 percentage points, again will be a key battleground state in next year’s presidential election. 

 

Polls in the Buckeye State, where the president relies on a strong base of working-class voters, show his approval rating slipping. 

 

Trade and tariffs are “not even the core issue about retaining the manufacturing jobs in this region,” University of Akron associate professor Mahesh Srinivasan, who is director of the school’s Institute of Global Business, told VOA. 

 

Srinivasan said the focus by the Trump administration should not be so much on trade agreements as on “the inevitable march of automation and technology that has displaced workers from traditional jobs. The need of the hour is doubling down with even more emphasis on worker training and education to prepare the workforce for tomorrow’s jobs.”  

 

Tariffs on imported automobiles — as are being contemplated by the White House — “would be counterproductive, like we have seen with steel tariffs,” said Srinivasan, who was part of former President Barack Obama’s Advanced Manufacturing Partnership task force. “It could attract retaliatory tariffs that will negatively impact numerous automobile manufacturers in Ohio and other Midwestern states, which today are supplying to automobile manufacturers globally.”  

  

Some trade analysts agree that Trump’s metals tariffs on Canada and Mexico have hurt American manufacturing, including making U.S. auto plants less competitive.  

 

Patsy Widakuswara and Elizabeth Cherneff contributed to this report. 
…

German automaker BMW said Wednesday that profits in 2019 would be “well below” last year’s and that it planned to cut 12 billion euros ($13.6 billion) in costs by the end of 2022 to offset spending on new technology.

The company said profits would be eroded by higher raw materials prices, the costs of compliance with tougher emissions requirements and unfavorable shifts in currency exchange rates.

The Munich-based automaker also faces increased uncertainty due to international trade conflicts that could lead to higher tariffs.

The company forecast a profit margin of 6 to 8 percent for its automotive business, short of the long-term strategic target of 8 to 10 percent, which it said still “remains the ambition” for the company given “a stable business environment.”

BMW said it had no plans for layoffs even as it outlined cost saving measures that include dropping half of its engine variants as it seeks to reduce product complexity. The BMW, MINI and Rolls-Royce brands are to get a single sales division.

Chief Financial Officer Nicolas Peter said that given the headwinds to earnings, “we began to introduce countermeasures at an early stage and have taken a number of far-reaching decisions.”

The company said the measures were needed “to offset the ongoing high level of upfront expenditure required to embrace the mobility of the future.”

BMW shares were down 4.9 percent to 72.02 euros in Frankfurt.

Automakers around the world have faced heavy up-front costs for new technologies expected to change how people get from one place to another in the next decade. Those include electric cars and renting cars through smartphone apps. Yet the returns from such investments remain uncertain and auto companies face competition from tech firms such as Uber and Waymo.

BMW made 7.2 billion euros ($8.2 billion) in net profit last year, down 17 percent from 2017, when it booked a gain of $1 billion from U.S. tax changes. The company faced headwinds from increased tariffs on vehicles exported to China from the United States. It also suffered from turmoil on the German auto market when companies faced bottlenecks getting cars certified for new emissions rules.

BMW faces uncertainty from U.S.-China trade tensions that could result in new tariffs if talks do not result in an agreement. U.S. President Donald Trump has also threatened to impose auto import tariffs that would hit EU automakers, but has held off for now. BMW could also suffer disruption if Britain leaves the European Union without a negotiated departure agreement to address trade issues.
…

President Donald Trump shocked some last month when he suggested that the criminal charges against Chinese telecom giant Huawei Technologies and its chief financial officer, Meng Wanzhou, might be used as leverage in his administration’s ongoing trade talks with China.

 

“We’re going to be discussing all of that during the course of the next couple of weeks,” Trump told reporters at the White House Feb. 22 in response to a question about Meng’s case.  “We’ll be talking to the U.S. attorneys. We’ll be talking to the attorney general. We’ll be making that decision. Right now, it’s not something we’ve discussed.”

 

The president’s apparent willingness to possibly barter away the prosecution of Huawei and one of its executives in exchange for a favorable trade deal with China alarmed legal experts who say it could lead to pushback at the Justice Department. 

“If the White House told the Department of Justice that it wanted Justice to dismiss altogether the case against Huawei and Ms. Meng, I’d expect there to be mighty objections and resistance to that,” said David Laufman, who served as a senior national security official at the Justice Department until last year and is now in private practice. 

Ron Cheng, a former federal prosecutor who was the Justice Department’s sole resident envoy in Beijing, said it would be highly unusual for the criminal case against Meng to be affected by the trade talks. “There are a number of concerns about the precedent something like that would establish,” said Cheng, now a partner at the O’Melveny & Myers law firm.

The Justice Department unsealed criminal charges against Meng, Huawei and several subsidiaries on Jan. 29 for violating U.S. sanctions on Iran and stealing U.S. intellectual property, nearly two months after Meng was arrested in Canada at the request of U.S. authorities. 

The indictments exacerbated tensions with China, which called the case against Meng “political persecution.” That prompted Trump’s overture.

Trump, who prides himself on his negotiating skills, could well have been bluffing in hopes of enticing the Chinese into a trade agreement.But a quid pro quo deal as part of the trade talks is not without precedent.

Last year, Trump ordered the Commerce Department to lift a ban imposed on ZTE Corporation, Huawei’s smaller rival.  ZTE had violated the terms of an agreement with the department to settle charges that it had exported U.S. goods to Iran in violation of U.S. sanctions.   

In Huawei’s case, the extent of Trump’s personal involvement and the nature of any talks between the White House and the Justice Department about the company’s fate remain unclear.  After Meng’s arrest in December, a spokesman for National Security Adviser John Bolton said that neither Bolton nor Trump had been told about her detention in advance. Trump later said the White House had talked to the Justice Department about the Huawei case  

 

Senior Justice Department officials have sought to tamp down talk of any linkage between the Huawei case and the ongoing trade talks with China. Asked about the issue after the Justice Department unsealed the indictments in January, then acting attorney general Matt Whitaker said, “We do our cases independent from the federal government writ large because that’s the way the criminal system has to be.”

 

A spokesman for the Justice Department declined to say whether the White House had engaged the department in any discussions about Huawei since Trump’s latest comments.   The company has pleaded not guilty to the charges brought in New York and Seattle. Spokespeople for the U.S. Attorneys for those cities said the cases are proceeding.  

The charges against Huawei come as the Trump administration has stepped up a global campaign against the telecom behemoth, warning that the company founded by a former People’s Liberation Army official poses a national security threat and urging allies to keep it out of their 5-G networks. While Australia and New Zealand have imposed a ban, other U.S. allies have demurred.  

With business operations in more than 170 countries and annual revenues of $108 billion, Huawei is the world’s largest supplier of telecom equipment. Last year, the multinational company beat Apple to become the No. 2 manufacturer of smartphones and tablets in the world.

In national security related criminal cases, it is not uncommon for the Justice Department to notify the White House about impending law enforcement actions.This allows officials to deescalate conflict if necessary or weigh in on the timing of an announcement.  “It’s not to give the White House prior approval authority or veto authority,” Laufman said. 

Some experts see the real possibility that the White House crosses the line and intervenes in the criminal case.  Short of calling for a dismissal of the case, the White House could press the Justice Department to devise a resolution that would afford the agency a measure of vindication without appearing to let the company or Meng off the hook.

Such a resolution could involve Huawei admitting responsibility, paying a hefty fine, and agreeing to a stringent compliance regime and other conditions, according to Laufman. 

“But I think even there, that will likely engender concern throughout the Justice Department,” Laufman said.

 

That is how ZTE settled charges of violating U.S. sanctions. In 2017, ZTE pleaded guilty and paid $430 million for exporting U.S. goods and technology to Iran in violation of U.S. sanctions. 

The company later admitted to violating the terms of its settlement with the Commerce Department and faced near collapse after the department responded by forbidding U.S. companies from selling it crucial components. 

After Trump intervened, the Commerce Department lifted its ban, but not without imposing what it called the most “stringent compliance measures.”   

The Huawei case could well be settled under similar terms. But there is a hitch.  Because she faces criminal charges, Meng would have to appear in a U.S. court to enter a plea.  

“The only way to resolve a case like this with some sort of a formal disposition is to come to the United States,” Cheng said. 
…

Francibel Contreras brings her three malnourished children to a soup kitchen in the dangerous hillside Caracas slum of Petare where they scoop in spoonfuls of rice and scrambled eggs in what could be their only meal of the day.

 

Part of the tragedy of daily life in socialist Venezuela can be glimpsed in this small volunteer soup kitchen in the heart of one of Latin America’s biggest slums, which helps dozens of children as well as unemployed mothers who can no longer feed them.

 

Some Venezuelans manage to endure the nation’s economic meltdown by clinging to the shrinking number of well-paid jobs or by receiving some of the hundreds of millions of dollars sent home by friends and relatives abroad — a quantity that has swollen in recent years as millions of Venezuelans have fled.

 

But a growing percentage of people across the country, especially in slums like Petare, are struggling to cope.

 

Contreras’s husband, Jorge Flores, used to have a small stand at a local market selling things like bananas and yucca, eggs and lunchmeat — trying to scrape out a profit in a place where hyperinflation often made his wholesale costs double from day to day. Then he was robbed at gunpoint by a local gang. And his brother crashed the motorcycle he used to supply his stand.

So Flores abandoned the market stall and looked for other work. He does some plumbing jobs and the family has turned its living room into a barbershop, sheltered beneath a corrugated metal roof held down by loose bricks and planks. It’s decorated with origami-like stars that the family has made out Venezuela’s colorful but rapidly depreciating bolivar bills.

 

“Our currency is worthless,” Contreras said. “These days, I prefer trading a bag of flour for a manicure or a haircut.”

 

The scarcity of milk, medicine and other basics — along with routine violence —  has eroded support for socialist President Nicolas Maduro even in poor neighborhoods like Petare that once were his strongholds. Maduro says there’s an opposition-led plot to oust him from power and says U.S. economic sanctions and local opposition sabotage are responsible for the meltdown.

 

Various local polls show he retains support from roughly a fifth of the population, many of them ideological stalwarts, government-connected insiders or poor voters dependent on government handouts, including the so-called CLAP boxes of oil, flour, rice, pasta, canned tuna and other goods that arrive several times a year.

 

Contreras’ family of four gets those boxes, but it’s not enough to get by on for long. For months, they’ve been relying on the soup kitchen launched by opposition politicians as the main source of protein for their children. On a recent day, her 7-year-old son Jorbeicker played a pickup soccer game in the hilly, dusty streets in front of her home, while her husband practiced styling his mother’s hair.

 

“I’m barely getting by,” Flores said, scissors in hand.

 

The four-day power outage that brought most of Venezuela to a halt this month added to Flores’ misery. He wasn’t able to use the electric clippers needed to give customers the sort of trims they demand.

 

“It hit us in a big way,” he said. “You absolutely need the clippers.”

The couple estimates the power outage cost the family the equivalent of $11 in missed haircuts — a significant sum in a country where the minimum wage amounts to $6 a month, even if most people supplement that figure by working side jobs and pooling resources with friends and neighbors.

Contreras and Flores charge 2,500 bolivars — about 70 U.S. cents — for a trim. A government-subsidized kilogram of flour can cost almost three times that, and Contreras says that lines for the rationed goods can be endless and she sometimes comes back empty-handed. She also said she feels unsafe in the lines. Dozens of people have been killed in gang crossfires over the years, and some have been crushed to death when lines of shoppers turned into stampedes of desperate looters.

 

Next-door neighbor Dugleidi Salcedo sent her 4-year-old daughter to live with an aunt in the city of Maracay, two hours away, because she could no longer feed her. “My boys cry,” the single mother of four said. “But they resist more than her when I tell them that there’s no food.”

After walking back from the soup kitchen, she opened the rusty door to her home of scraped, mint-colored walls. Inside, her 11-year-old son Daniel, who was born partially paralyzed and with developmental disabilities, lay on a stained couch while flies flew over his twisted, uncovered legs.

 

When she took the lid off a plastic container to show her last bag of flour, a cockroach crawled out, making her jump back and scream.

 

“This is so tough,” she said. “I don’t have a job. I don’t have any money.”

 

Salcedo used to sell baked goods and juices to neighbors from the window of her kitchen. Then, her fridge broke down and she couldn’t find the money to fix it.

 

These days, she relies on the kindness of neighbors, or asks a friend who owns a small food shop for credit while she waits for loans from family members in other parts of Venezuela.

 

“This country has never been as bad,” the 28-year-old said. “Just buying some rice or flour is something so hard, so expensive, and often, they don’t even have any.”

 

A few days later, thieves broke into the soup kitchen and stole food. Then, a fire broke out in the slum, burning 17 homes to the ground. It was caused by candles that were apparently being used for light after a power outage — an almost everyday occurrence in many parts of Venezuela. Opposition lawmaker Manuela Bolivar, whose Nodriza Project runs the soup kitchen, said that when firefighters arrived, they lacked water and had to put out the blaze with dirt.

 

“It’s a social earthquake,” Bolivar said. “They lose their homes. They’re left in the open air. The soup kitchen was robbed. It’s so many adversities: It’s the infections, the lack of water and food.”

At an outdoor market a short distance from Petare in the middle-class district of Los Dos Caminos, Carmen Gimenez shopped for carrots and other vegetables for a stew. When her 14-year-old daughter Camila asked if they could take some other products, she told her that they would have to stick to the basics.

 

Although she has a job at a bank, she still struggles to make ends meet.

 

“It doesn’t matter where you live. The need is the same,” said Gimenez, 43.

 

“The poor, the rich, and the middle class — we’re all suffering somehow because the government has leveled us all downwards,” she adds with anger. “How did they dominate us? Through the stomach.”
…