What an amazing misconception of economics! First Chavez devalues the bolivar by 50%, and then declares that no price increases are permitted, imagining that by simple fiat he can change the entire market system. Obama must have felt a Matthews-like thrill go up his leg when Chavez then nationalized the French-owned chain Exito, because Exito had to raise prices in response to product cost.

Read the WSJ article here. Read the Reuters news item here.

Venezuela Nationalizes French-Colombian Retailer Exito

CARACAS (Dow Jones)--President Hugo Chavez ordered Sunday the seizure of a French-owned retail chain on accusations that it raised prices after Venezuela devalued the currency by half.

"Until when are we going to allow this to happen?" Chavez asked during his Sunday television program in reference to the alleged price hike by Almacenes Exito, headquartered in Colombia and controlled by French retailer Casino Guichard-Perrachon S.A. (CO.FR).

The Venezuelan leader said that new law may need to be approved to carry out the nationalization. "I'm waiting for the new law to begin the expropriation process," he said. "There's no going back," he added.

Almacenes Exito saw some of its stores closed this week by government authorities on accusations that it was increasing prices regardless of Chavez's orders that retailers were not to adjust prices after he devalued the currency to 4.3 bolivars per dollar from the previous rate of VEF2.15.

Almacenes Exito, which also runs a large retail chain in Colombia, controls six hypermarkets and around 32 supermarkets in Venezuela. It was not possible to reach the company for comment.

Separately, Chavez also ordered the nationalization of a large shopping-mall recently built in a downtown district in Caracas. The stores controlled by Exito and the shopping mall will be used to build up Comerso, a new government-run retail chain which seeks to sell its products at "socialist" prices, according to the president.

During his 11 years in power Chavez has nationalized large swaths of the Venezuelan economy, including a Spanish-owned bank and an Argentine-controlled steel-mill.

In some cases the government has reached a compensation agreement with the owners, while other companies, including Cemex SA (CX, CEMEX.MX) and Exxon Mobil (XOM) , are mired in international arbitration proceedings to secure payment for their nationalized assets.

-By Darcy Crowe, Dow Jones Newswires; (58) 414 249 6821; darcy.crowe@dowjones.com