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2017-11-15 Caribbean-Latin America
Venezuela Goes Bust
More on this story from yesterday.
[WSJ] Another lesson in the price of lending to a socialist regime.
aka, can't run a country on wishes, good thoughts and unicorn farts.
Milton Friedman once joked that if you put the government in charge of the Sahara Desert in five years there would be a shortage of sand. He could have been talking about Venezuela and its oil wealth. But it is no joke.
But still I'm laughing
On Monday Caracas missed interest payments due on two government bonds and one bond issued by the state-owned oil monopoly known by its Spanish initials PdVSA. Venezuela owed creditors $280 million, which it couldn't manage even after a 30-day grace period.

Venezuela is broke, which takes some doing. For much of the second half of the 20th century, a gusher of oil exports made dollars abundant in Venezuela and the country imported the finest of everything. There were rough patches in the 1980s and 1990s, but by 2001 Venezuela was the richest country in South America.

Then in 2005 the socialist Hugo Chávez declared that the central bank had "excessive reserves." He mandated that the executive take the excess from the bank without compensation. Today the central bank has at best $1 billion in reserves.

Falling oil prices are partly to blame, but the main problem is that chavismo has strangled entrepreneurship. Faced with expropriation, hyperinflation, price controls and rampant corruption, human and monetary capital has fled Venezuela.
Also the greed of humans that stripped the wealth of the country, aka communism/socialism
As of Tuesday evening, the Investment Swaps and Derivatives Association still had not declared Venezuela in default. That matters because this will trigger the insurance obligations inherent in the credit default swaps. But S&P Global Ratings declared the country in default Monday. On Tuesday morning the Luxembourg Stock Exchange issued a suspension notice for the bonds with missed payments.

President Nicolás Maduro has formed a commission to restructure up to $150 billion of the debt and put Vice President Tareck El Aissami ‐who is under U.S. sanctions for drug trafficking‐in charge. Mr. El Aissami called a meeting of creditors on Monday in Caracas, which most bondholders did not attend. Press reports said Mr. El Aissami delivered a monologue on Venezuela's intention to pay and took no questions. He argued that Trump Administration sanctions make it difficult for the dictatorship to arrange refinancing.

The real problem is that restructuring assumes the country can grow again. That's nearly impossible without a change in policy that will free the economy.

If Caracas doesn't find a way to settle with bondholders, they will soon ask authorities to seize Venezuelan assets such as oil shipments at sea and Citgo facilities in the U.S. Such are the wages socialism.
And remember, the people voted for this. They still bemoan the current leadership that failed the vision of the previous, just like they did with Stalin.

The previous leader set the stage for the current. They are simply a continuation of the path that was started. And the people voted for this.
Posted by DarthVader 2017-11-15 00:00|| || Front Page|| [11132 views ]  Top
 File under: Commies 

#1 Vene? vidi, ridi.
Posted by charger 2017-11-15 00:44||   2017-11-15 00:44|| Front Page Top

#2 This presents a pro-US political opportunity for the U.S. however the same anti-Democracy establishment disease exists and is growing in D.C.. So until or if our house is ever in order again other negative influences could take that political opportunity for themselves and run counter to US Gulf influence in a dangerous way for a generation to come.
Posted by Hupeting Sforza8196 2017-11-15 00:50||   2017-11-15 00:50|| Front Page Top

#3 "I know! We'll form a commission!"
Posted by Frank G 2017-11-15 10:18||   2017-11-15 10:18|| Front Page Top

#4 Bad Luck(tm)
Posted by Procopius2k 2017-11-15 11:37||   2017-11-15 11:37|| Front Page Top

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