Wednesday, January 20, 2010

A 'National Broadband Plan'

One more solution in search of a problem.


The Federal Communications Commission recently told Congress that it will miss a February deadline for delivering a "national broadband plan" and requested a one-month extension. If it keeps missing deadlines, nearly everyone in the U.S. might soon have high-speed Internet.
As part of last year's stimulus package, Congress asked the FCC for a plan to ensure that everybody in the country has access to broadband. That's a worthy goal, but the idea of a government plan is based on a false presumption that the spread of broadband is stalled. The reality is that broadband adoption continues apace, as does the quality and speed of Internet connections.
Between 2000 and 2008, residential broadband subscribers grew to 80 million from five million, according to a study by Bret Swanson of Entropy Economics. Broadband penetration among active Internet users at home is 94%, and nearly 99% of U.S. workers connect to the Internet with broadband. A typical cable modem today is 10 times faster than a decade ago. Wireless bandwidth growth per capita has been no less impressive, showing a 500-fold increase since 2000.
Meanwhile, U.S. information and communications technology investment in 2008 alone totalled $455 billion, or 22% of all U.S. capital investment. Nominal capital investment in telecom between 2000 and 2008 was more than $3.5 trillion.
Those who favor more government control of the Internet ignore this private progress and point to international rankings. According to OECD estimates, the U.S. ranks 15th in the world in broadband penetration per capita. But because household sizes differ from country to country, and the U.S. has relatively large households, the per capita figures can be misleading. A better way to gauge wired broadband connections is per household, not per person. By that measure the U.S. ranks somewhere between 8th and 10th.
Such comparisons will soon be moot in any case because broadband penetration is growing rapidly in all OECD countries. The Technology Policy Institute notes that "at the current rates of broadband adoption the U.S. is behind the leaders only by a number of months, and all wealthy OECD countries will reach a saturation point within the next few years."
Even the Obama Justice Department seems to reject the broadband market failure thesis. "In any industry subject to significant technological change, it is important that the evaluation of competition be forward-looking rather than based on static definitions of products and services," said the Antitrust Division in a January 4 filing to the FCC. "In the case of broadband services, it's clear that the market is shifting generally in the direction of faster speeds and additional mobility."
Justice concludes that while "enacting some form of regulation to prevent certain providers from exercising monopoly control may be tempting . . . care must be taken to avoid stifling the infrastructure investments needed to expand broadband access."
No matter, the default position of the Obama Administration is that little useful happens without government, so the FCC is busy planning. Chairman Julius Genachowski is sympathetic to net neutrality regulations that would prevent Internet service providers from using differentiated pricing to manage Web traffic. Liberal interest groups like Public Knowledge and Harvard's Berkman Center for the Internet and Society are urging the agency to reinstitute "open access" mandates that would force cable operators and phone companies to share their infrastructure with rivals at government-set prices.
The irony is that the private investment and innovation of recent years have occurred in the wake of the FCC rolling back similar rules that held back telecom in the 1990s. Consumers continue to have access to more and more broadband services, while Google, YouTube, iTunes, Facebook and Netflix originated in the U.S.
Doesn't the Obama Administration have enough to do than mess with a part of the U.S. economy that is working well?

Tuesday, January 19, 2010

US accused of 'occupying' Haiti as troops flood in

France accused the US of "occupying" Haiti on Monday as thousands of American troops flooded into the country to take charge of aid efforts and security. 

Bill Clinton helps to unload a delivery of medical supplies : US accused of 'occupying' Haiti as troops flood in
Bill Clinton helps to unload a delivery of medical supplies in Port-au-Prince Photo: GETTY
The French minister in charge of humanitarian relief called on the UN to "clarify" the American role amid claims the military build up was hampering aid efforts.
Alain Joyandet admitted he had been involved in a scuffle with a US commander in the airport's control tower over the flight plan for a French evacuation flight.
"This is about helping Haiti, not about occupying Haiti," Mr Joyandet said.
Geneva-based charity Medecins Sans Frontieres backed his calls saying hundreds of lives were being put at risk as planes carrying vital medical supplies were being turned away by American air traffic controllers.
But US commanders insisted their forces' focus was on humanitarian work and last night agreed to prioritise aid arrivals to the airport over military flights, after the intervention of the UN.
The diplomatic row came amid heightened frustrations that hundreds of tons of aid was still not getting through. Charities reported violence was also worsening as desperate Haitians took matters into their own hands.
The death toll is now estimated at up to 200,000 lives. Around three million Haitians – a third of the country's population – have been affected by Tuesday's earthquake and two million require food assistance.
While food and water was gradually arriving at the makeshift camps which have sprung up around the city, riots have broken out in other areas where supplies have still not materialised.
Haiti was occupied by the US between 1915 and 1935, and historical sensitivities together with friction with other countries over the relief effort has made the Americans cautious about their role in the operation.
American military commanders have repeatedly stressed that they are not entering the country as an occupying force.
US soldiers in Port-au-Prince said they had been told to be discreet about how they carry their M4 assault rifles.
A paratrooper sergeant said they were authorised to use "deadly force" if they see anyone's life in danger but only as a "last resort".
Capt John Kirby, a spokesman for the joint task force at the airport, said the US recognised it was only one of a number of countries contributing to a UN-led mission.
He also emphasised the US troops, which he said would rise to 10,000 by Wednesday would principally be assisting in humanitarian relief and the evacuation of people needing medical attention.
The main responsibility for security rests with the UN, which is to add a further 3,000 troops to its force of 9,000.
However, it was agreed on Sunday night that the Americans would take over security at the four main food and water distribution points being set up in the city, Capt Kirby said.
"Security here is in a fluid situation," he said. "If the Haitian government asked us to provide security downtown, we would do that." He played down the threat of violence, saying: "What we're seeing is that there are isolated incidents of violence and some pockets where it's been more restive, but overall it's calm."


Friday, January 15, 2010

Fear Factor

The ideologues in Washington are scaring Americans.


BY Gary Andres

The candidate of hope and change has now become a president of fear and doubt. This is hampering the economy and the American people's sense of security.
The fear factor manifests itself in several ways. Consider what was formerly known as the “war on terror.” Whatever the president wants to call it these days, we’re losing. This is a scary thought.  It’s deeply frightening when an al-Qaeda operative nearly blows up an airliner filled with American citizens, over an American city. Yet when that same terrorist gets treated like someone who just robbed a bank, the people's fear becomes widespread doubt – skepticism emerges about this administration’s capacity and commitment to protect its people.

Umar Farouk Abdulmutallab is a terrorist and enemy combatant, not a common criminal. He should not enjoy the constitutional protections belonging to American citizens. Period. Allowing the military to hold and interrogate him could have yielded critical real-time intelligence about persons and plans to kill more Americans. We missed that opportunity and now could pay a catastrophic price.

Unfortunately, Mr. Obama seems like a naïve college professor, more committed to a theoretical ideal of preserving Miranda rights than to defending America. 

This perception is growing, and it’s contributing to the fear factor.  Writing recently in the Wall Street Journal, former Attorney General Michael Mukasey observes:
What the gaffes, the almost comically strained avoidance of such direct terms as "war" and "Islamist terrorism," and the failure to think of Abdulmutallab as a potential source of intelligence rather than simply as a criminal defendant seem to reflect is that some in the executive branch are focused more on not sounding like their predecessors than they are on finding and neutralizing people who believe it is their religious duty to kill us. That's too bad, because the Constitution vests "the executive power"—not some of it, all of it—in the president. He, and those acting at his direction, are responsible for protecting us.

Mukasey understands the fear factor nexus. He concludes his piece by arguing, "There is much to worry about if they think that the principal challenge of the day is detecting bombs at the airport rather than actively searching out, finding and neutralizing terrorists before they get there."

Fear also hampers the economic recovery. And Mr. Obama’s domestic policies are causing angst here, as well. Growing choruses of economic analysts recognize this point. Larry Kudlow, writing in National Review Online last week, argues the collective weight of all these measures – the “stimulus monster,” cap and trade, government takeover of health care, increases in marginal tax rates and capital gains tax rates – is dragging the economy down. “It’s creating so much uncertainty that even profitable businesses are afraid to hire new workers and expand,” Kudlow writes.

He’s right. Instead of injecting confidence, Mr. Obama seems like a risky gambler, doubling down on doubt.

University of Chicago economists Gary S. Becker, Steven J. Davis, and Kevin M. Murphy make a similar point in last week’s Wall Street Journal. They argue that introducing a host of economic changes on the heels of a recession is a mistake and contributing to our economic woes. "By failing to adopt a measured approach, Congress and the president may be slowing the economic recovery, and thereby prolonging the distress from the recession," they write.

The Democratic leadership is exacerbating the fear factor, hurling the party into a political death spiral.  Veteran political analyst Charlie Cook says, "Watching Democrats over the last 6 months is a bit like watching a car wreck in slow motion.”

No one knows all the reasons underlying voter trepidation with Mr. Obama and the Democrats. Americans clearly desired “change” in the 2008 election.  So now are they saying “no,” “too much,” or "not this kind of change?" Probably a little of each. The Democrats seek to promote change with a host of party-line votes on everything from the stimulus to cap and trade to health care. Americans are connecting the dots – on everything from fighting terrorism to domestic policy – and the picture emerging from Mr. Obama and the Democrats in Washington is scaring them.

Bottom line: Americans want political leaders to solve problems with common sense, not politicians who act like ideologues on a mission.



D.C. Witness Protection Program

A financial inquiry hits the bankers, ignores the Fed and Fannie Mae.

Law enforcers normally use the witness protection program to shield people willing to provide testimony. So far, the Financial Crisis Inquiry Commission seems determined to protect a political class willing to do almost anything to avoid testifying.
That's the message of the commission's first week of hearings, which focused on repeating the Beltway's pet theory of what caused the credit mania and subsequent panic. To wit, the greedy bankers did it, abetted by Bush Administration deregulators and perhaps, a little, by the Clinton Treasury when it agreed to repeal the Glass-Steagall Act. If the commission is merely going to reinforce this laughably narrow and politicized view, this is going to be a waste of money and time.
Created by Congress and due to report by December 15, the commission is chaired by Phil Angelides, a former chairman of California's Democratic Party. His first group of witnesses on Wednesday were the CEOs of Bank of America, Goldman Sachs and JPMorgan Chase, plus the Chairman of Morgan Stanley.
Associated Press
Phil Angelides

Mr. Angelides delivered what you would expect of a political hearing, accusing Goldman of "selling a used car with faulty brakes" when it sold mortgage-backed securities. He demanded that the executives accept blame for the crisis and then said he "was troubled by the inability to take responsibility." On day one, Mr. Angelides appeared to have reached his conclusion.
Yesterday, on day two, the commission loaded up on details about "current investigations into the financial crisis" by state, local and federal law enforcers. Attorney General Eric Holder was there, along with Lanny Breuer, head of the Criminal Division, and a lawyer for the Miami-Dade County police department. The theme seemed to be how many banker miscreants will end up in jail.


Our point isn't that bankers didn't make stupendous blunders. It is that the roots of the mania and panic are so much larger than any single financial security, compensation practice or regulation. And those roots are found as much in Washington as on Wall Street.
Start with the Federal Reserve, which for years kept interest rates below the rate of inflation and thus created a global subsidy for credit. Bankers and investors had an incentive to sell and take on more debt. A Journal survey of economists this week found that a majority now think Fed policy was a major culprit. Providing a rare source of wisdom at yesterday's hearing was FDIC Chairman Sheila Bair, who explained how the Fed's monetary policy helped inflate the housing bubble.
If the commissioners are looking for historical guidance, they might consult the late Charles Kindleberger's classic, "Manias, Panics, and Crashes: A History of Financial Crises." On page 10 of the Fifth Edition paperback, the good professor declares that "The thesis of this book is that the cycle of manias and panics results from the pro-cyclical changes in the supply of credit." (Our emphasis.) An inquiry that ignores the sources of credit that fed the mania is like a history of the Civil War that ignores slavery.
Also missing this week was anyone from Fannie Mae and Freddie Mac, the mortgage giants that turbocharged the housing boom. With their implicit taxpayer backing, Fan and Fred held or guaranteed more subprime and Alt-A loans than anyone—much more than the combined holdings of the four bankers represented this week.
So long as Fan and Fred kept increasing mortgages to low-income borrowers, the dynamic duo's political protectors kept fighting off efforts to cap the size of Fan and Fred's mortgage portfolios. The pair would ultimately hold or guarantee mortgages amounting to more than $5 trillion. That sum is greater than the annual GDP of Japan, the world's third largest economy, and yes, a whole lot bigger than the balance sheet of Goldman Sachs. A serious inquiry will examine the business practices of Fan and Fred, the long battle to rein them in, and the Members of Congress who blocked reform.
We'll admit we don't have much hope for any inquiry led by Mr. Angelides, who is about as partisan a chairman as one can imagine. As California treasurer and board member at Calpers, the giant pension fund for state employees, Mr. Angelides led the movement to invest to advance political goals. He pushed Calpers to invest in "environmentally screened" funds and helped pressure companies like Safeway and countries like the Philippines to embrace union labor. While at Calpers, he was dogged by questions about investment funds managing Calpers cash whose executives coincidentally were backers of his political campaigns.
Also on the panel is Brooksley Born, who has already been widely portrayed in the media as the lonely regulator who blew the whistle on derivatives but was crushed by other Clinton-era officials. By all means, Ms. Born should be a witness and her story considered. But as heavily invested as she already is in a narrative that blames derivatives and lax regulation, she is another odd choice for a disinterested inquiry.


The greatest oddity of the commission may be that its report is set to arrive after Congress and the Administration hope to pass the most far-reaching reform of financial laws since the 1930s. So prescription first, diagnosis later. Perhaps the commission will surprise us, but the evidence of the first week is that this exercise is less about getting to the truth than about reinforcing Democratic theories about whom to blame.


Wednesday, January 13, 2010

Venezuela plans blackouts in Caracas, oil town

CARACAS (Reuters) - Venezuela will switch off lights for hours at a time in Caracas and other cities such as oil town Maracaibo in planned blackouts to tackle power shortages that threaten President Hugo Chavez's support.
Officials announced the nationwide electricity rationing lasting at least until May on Tuesday and said even schools and small health clinics would be hit in South America's top oil exporter.
Venezuela mostly depends on hydroelectricity for its power and has been hard hit by a drought Chavez blames on the El Nino weather phenomenon.
"The rationing is at a national level and is for four hours every 48 hours," said Javier Alvarado, president of the Caracas Electricity corporation, which was nationalized in 2007 and previously belonged to U.S. company AES.
One of the cities to be hit by the new electricity rationing is Maracaibo, the country's second largest town and the capital of oil heartland Zulia.
Lights went out there on Tuesday from 3 p.m. (2:30 p.m. EST). The blackouts are planned by city district.
However, they should not affect vital oil fields and refineries, which mostly have their own generators. Major city services, like hospitals and trains, will also not be affected.
Venezuelans are already suffering widespread water rationing and increased power cuts and could punish the socialist president for the problems in September elections for lawmakers.
Chavez must navigate a number of issues, including price rises after a devaluation and high crime, if he is to maintain his approval ratings above 50 percent this year.
Venezuela enlisted Cuban help to "bomb" clouds with chemicals last month in an attempt to artificially trigger rainfall over the South American nation's largest reservoir and main power source, the vast Guri Dam.
Alvarado said water levels at the Dam dropped by 9 meters (30 feet) to 261 meters above sea level last year. Energy production is diminished as the water level falls. The dams turbines are located at 240 meters above sea level.
Critics blame the government for not investing enough in the national grid since Chavez took office 11 years ago.
The president say previous government made critical errors by building most of the nations energy infrastructure on one river that is affected by rainfall.
(Reporting by Frank Jack Daniel; Editing by Marguerita Choy)

Sunday, January 10, 2010

Devaluation ups stakes in Venezuela election year

Chavez popularity could suffer after devaluation
* Venezuelans rush to shops anticipating price hikes
* Inflation will jump this year (Recasts with color, adds details, background)
By Frank Jack Daniel and Eyanir Chinea
CARACAS, Jan 9 (Reuters) - Venezuelans rushed to the shops on Saturday, fearful of price rises after a currency devaluation that will let President Hugo Chavez boost government spending ahead of an election but feeds opposition charges of economic mismanagement.
In a bid to jump-start the recession-hit economy of South America's top oil exporter, Chavez on Friday announced a dual system for the fixed rate bolivar.
It devalues the currency to 4.3 and 2.6 against the dollar, from a rate of 2.15 per dollar in place since 2005, giving the better rate for basic goods in an attempt to limit the impact of the measure on consumer prices.
The opposition seized on fears that prices for imported goods will double as shoppers formed lines of more than a hundred people outside some stores in the capital Caracas.
"It was a Black Friday, tinted red," said sales executive Diana Sevillana in reference to the crimson color of Chavez's socialist party. She stood in a line of 30 people outside an electrical goods store in a middle class neighborhood.
The socialist Chavez believes the state should have a weighty role in managing the economy. During his 11 years in office he has nationalized most heavy industry, and business and finance are tightly regulated.
The devaluation is politically risky but means every dollar of oil revenue puts more bolivars in government coffers. That allows Chavez to lavish cash on social projects and fund salary increases ahead of parliamentary elections in September.
Opponents were quick to criticize the socialist, who a year ago promised the global financial crisis would not touch "a hair" of Venezuela's economy. He announced the devaluation on Friday night during an important baseball game.
"By establishing the exchange rate at 4.3 bolivars per dollar, the quality of life for Venezuelans is automatically devalued since we now have half the money we had before," said Caracas Mayor Antonio Ledezma, a Chavez opponent.
Opposition parties, emboldened by public dissatisfaction at frequent blackouts and water shortages and a 2.9 percent economic contraction in 2009, hope to strip Chavez of his legislative majority in September.
The devaluation is embarrassing for Chavez, who resisted calls from economists and many government allies to make the move last year when oil prices were at their lowest and elections a long way off.
"Venezuela's decision to devalue the Bolivar culminates an event that the market has been anticipating for a long time," said Walter Molano, an analyst at BCP Securities. "It helps alleviate the country's fiscal woes and puts it on a sounder macroeconomic footing."
The measure is a relief for state oil company PDVSA, which has struggled to pay service providers and meet requirements to fund social projects since crude prices dropped sharply last year. It also makes Venezuelan businesses more competitive.
Holders of Venezuela's foreign debt are also pleased, since the devaluation improves government finances and lessens the need to issue more bonds.
However, Chavez risks taking a blow to his popularity ratings, which are about 50 percent, as prices for many products inevitably will rise in the country of 28 million people, which relies on imports for much of its consumption.
Finance Minister Ali Rodriguez said the devaluation will add 3 percent to 5 percent to inflation, already the highest in the Americas at 25 percent last year.
"The popularity of the government is obviously going to be sharply and negatively affected," said economist Pedro Palma. "The inflationary impact of the measure diminishes the real income of people. People can consume less."
The new two-tiered exchange system offers the 2.6/dollar rate for goods deemed essential including food, medicine and industrial machinery. Other products, including cars and telephones, will be imported at the higher 4.3 rate.
Last month, BMO Capital Markets cut ratings on Colgate-Palmolive Co (CL.N), Avon Products Inc (AVP.N) and Kimberly-Clark Corp (KMB.N) to "market perform" saying a possible devaluation in Venezuela could hurt the U.S. consumer goods makers' profits.
Economist Pavel Gomez of the IESA economic school said the new system will increase opportunities for graft in a country that already is corruption-ridden.
"Multiple exchange schemes are incentives for corruption, more so if they are applied in the Venezuela way," he said. "Those who have good contacts can buy at 2.6 and sell at 4.3."
Chavez, whose popularity usually rises in correlation with public spending, also said on Friday that the Central Bank had transferred $7 billion of foreign reserves to a development fund used to finance investment projects.
(Additional reporting by Hugh Bronstein in Bogota, editing by Vicki Allen)

Saturday, January 9, 2010

Venezuela Says Its Jets Intercepted U.S. Plane

CARACAS -- President Hugo Chávez said he ordered two F-16 jets to intercept a U.S. military plane that twice violated Venezuelan airspace on Friday in what he called the latest provocation in the South American nation's skies.
Brandishing a photo of the plane, which he described as a P-3, Mr. Chávez said the overflight was the latest incursion in Venezuelan skies by the U.S. military from its bases on the Netherlands' Caribbean islands and from neighboring Colombia.
There was no immediate response from the U.S. Defense Department or the White House.
Separately, Mr. Chávez announced a currency devaluation for the first time since 2005. The president said Venezuela's currency, the bolivar, will now have two government-set rates depending on the use, either 2.60 to the dollar for transactions deemed priorities by the government or 4.30 to the dollar for other transactions. The currency's official exchange rate has been held by the government at 2.15 bolivars to the dollar.
On the plane interception, Mr. Chávez said the F-16s escorted the U.S. plane away after two incursions lasting 15 and 19 minutes each.
The perceived threat of U.S. intervention has become a central element of Mr. Chávez's political discourse and a rallying cry for his supporters.
Foes say the president is hyping the idea of a foreign threat to distract Venezuelans from domestic problems such as a recession and inadequate public services. Mr. Chávez surprised the diplomatic world in December when he accused the Netherlands of abetting potential offensive action against his government by granting U.S. troops access to its islands close to Venezuela.
The Dutch government says the U.S. presence is only for counternarcotics and surveillance operations over Caribbean smuggling routes.

Friday, January 8, 2010

BIG SIS Wants To See Under Your Clothes

WASHINGTON (Reuters) – Janet Napolitano, the U.S. secretary for homeland security, said on Thursday she will travel to Spain this month to meet with her international counterparts to seek tougher international aviation security measures.
She also told reporters during a briefing that the United States is scheduled to deploy 300 additional advanced imaging scanners at U.S. airports in 2010, and may deploy more.
(Editing by Mohammad Zargham)

Thursday, January 7, 2010

Unions v. Race to the Top

States are waiting for Arne Duncan.

Is the Obama Administration going to side with school reformers, or will it reward state and local teachers union affiliates that defend the status quo? This is a question states are asking as they prepare their applications for $4.35 billion in Race to the Top competitive grants. Some guidance from Education Secretary Arne Duncan would be helpful.
Teachers unions in Minnesota and Florida are currently threatening to withhold support for their state Race to the Top applications, which are due later this month. So is the school boards association in Louisiana. This matters because the Administration has placed a premium on states garnering "local school district support" in order to win a grant. Not having union buy-in isn't fatal, but it definitely hurts a state's chances of getting federal funds.
States will be evaluated on a 500-point system, with the largest number of points (138) going to states that improve teacher effectiveness by using student performance to help rate instructors. States are awarded 45 additional points for getting "local education agencies" to sign off on their applications—about the same number of points they get for turning around failing schools.
Unions are mainly opposed to teacher accountability reforms. Both Florida and Minnesota want to implement or expand systems that tie teacher pay to student test scores. The irony is that both President Obama and Secretary Duncan have expressed support for such programs, yet Race to the Top is giving leverage to reform opponents who would eliminate or weaken these policies, and it punishes states that want to expand them over union objections.
Collective-bargaining agreements that protect bad teachers also harm children. Unions, which put the interests of their members above those of students, aren't bothered by this. But state reformers who are trying to correct the problem don't deserve to be penalized on their Race to the Top applications. They deserve some political cover from "the top," meaning Mr. Duncan.
Race to the Top awards are supposed to go to states demonstrating "a coordinated and deep-seated commitment to reform." Letting unions undermine state reform applications is a race to nowhere.


Monday, January 4, 2010

Venezuela begins 2010 with electricity rationing

Oil-rich Venezuela ushered in 2010 with new measures rationing electricity use in malls, businesses and billboards, as Hugo Chavez's government aimed to save power amid a crippling drought.

The new regulations came into effect January 1, with businesses required to comply with reduced consumption limits and authorities warning of forced power cuts and rate hikes if the measures are not followed.

A decree published on Christmas Eve states that commercial centers may operate from 11:00 am to 9:00 pm on the electricity grid, but beyond that establishments would have to operate off-grid, using their own generators.

Venezuela is flush with oil -- the country's primary export -- and natural gas, but relies mainly on hydroelectric generation to meet domestic energy demand.

With the country in a widespread drought, late last year Chavez announced a sweeping campaign to reduce widespread energy "waste," stressing that rationing was necessary to avoid a systemic "collapse."

Shopping centers in Caracas Saturday opened at the appointed new hour, although industry representatives called for extending the time frame, arguing that night-time energy consumption is less than 10 percent of the total.

The power crunch is expected to have an impact on a wide variety of businesses, including cinemas, casinos and bingo halls.

Establishments failing to comply with the measures could face outages for a period of 24 hours, and up to 72-hour suspensions "in case of recidivism," according to the decree.

The regulation also orders businesses to institute savings plans aimed at shedding consumption by at least 20 percent, a measure that will be evaluated monthly by the newly-created ministry of electricity.

Tariff surcharges of up to 20 percent could be imposed on violators.

Rationing is also to apply to lighted advertisements.

Introductory measures were evident in Caracas last month, with the neon signs that traditionally welcome Christmas left unlit.

The state-controlled aluminum and steel industries halted some of their production lines in order to reduce energy consumption by some 560 megawatts (MW).

Electricity demand in Venezuela is more than 16,500 MW, far higher than what is currently generated. Experts say the power sector requires 18 billion dollars in investment through 2014.

In 2009 there were four nationwide blackouts, with daily failures common in several cities.