Venezuela defaulted but leaders seem willing to rule at all costs

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Venezuela has defaulted on two of its US dollar-denominated sovereign bond issues. S&P says that it expects Venezuela to default on other bond payments. This comes as absolutely no surprise. A further $420m of bond payments are already overdue: unless Venezuela finds some dollars in a hurry, these will also go into default very soon.

PDVSA, Venezuela’s state-owned oil company, has already been late on a payment and will also go into default.

A much, much bigger problem looming. Figures from the latest IMF World Economic Outlook database reveal that Venezuela is entering hyperinflation. The IMF forecasts that inflation will rise to 2,350% in 2018 and reach an astonishing 4,685% by 2022.

Venezuela needs massive international aid and help to reconstruct its wrecked economy. But first, Venezuela must agree to be helped.

The leadership in Venezuela have only been concerned about themselves as the people are starving and many forced into prostitution to earn money to survive.

In 1999, the social government fixed prices which drove forces behind the food shortages. Farmers couldn’t sell at low prices without going out of business because their cost of production was much higher. Importers couldn’t afford to ship in food, knowing they would have to sell at much lower prices than what they paid for at the port.

Venezuela and its state-run oil company, PDVSA, owe more than $60 billion just to bondholders. In total, the country owes far more: $196 billion, according to a paper published by the Harvard Law Roundtable and authored by lawyers Mark Walker and Richard Cooper.

Beyond bond payments, Venezuela owes money to China, Russia, oil service providers, U.S. airlines and many other entities. The nation’s central bank only has $9.6 billion in reserves because it has slowly drained its bank account over the years to make payments.

Recent Events

Nov 5-15 Venezuela’s government and opposition will resume efforts to hold dialogue, the third attempt in a year.

European Union ambassadors have agreed to ban the sale of weapons and surveillance technologies to Venezuela.

The US placed sanctions on Venezuela.

Oct 30- Nov 5 – Venezuelan lawmaker Freddy Guevara sought refuge in the Chilean ambassador’s residence in Caracas. The opposition and local media said that Sebin (Bolivarian National Intelligence Service) had surrounded Guevara’s house.

Oct 30- Nov 5 -Opposition parties to boycott elections. Three of Venezuela’s opposition parties: Justice First, Popular Will and Democratic Action, announced on Monday they will boycott municipal elections in December in protest against an election system they say is biased, and instead will focus on demanding reforms to the election board in anticipation of next year’s presidential poll.

38 thoughts on “Venezuela defaulted but leaders seem willing to rule at all costs”

  2. It is always essential to note that the US has been attempting to terminate Venezuela’s socialist revolution since Chavez was elected in 1998.

    “Make Chile’s economy scream” was the order from Washington that led to Allende’s overthrow and murder and the Pinochet dictatorship. The same regime change crap is US policy for Venezuela.

    It may be that the Venezuelan leadership has been ineffective in defending itself from US subversion, and it may also have bungled its conduct of the economy, but we will never know what the situation might have been if the US had not sought the destruction of Venezuelan socialism.

    The hard-core anti-communist ideologues will of course blame “evil socialism”, but ideological prejudice reduces their argument to little more than noise. China had a socialist/communist system that successfully transitioned to a state market economy, and they now are poised to become the dominant world power. So much for the “failure” of socialism.

  4. Let alone that Venezuela is not actually defaulted.
    And that even US news say that Venezuela is flirting with default
    https://www.voanews.com/a/flirting-with-default-venezuela-vows-debt-payment/4115621.html
    And US rating agencies say that it is in PARTIAL default
    And Forbes say Venezuela did not default
    https://www.forbes.com/sites/kenrapoza/2017/11/15/venezuela-did-not-default-but-risks-remain/
    Americans have been saying that Venezuela has been close to default for the last 5 years though..
    Let alone that Venezuela leaders were democtratically elected
    I wonder why Americans call as dictators leaders elected and do NOT call as dictators leaders of Saudi Arabia who were not elected.
    Why?
    And why Brian Wang always touts Venezuela as a role model for socialism and never, say, Norway, a democratic socialist country?
    Why?
    Just wondeirng..

    Hoping that this comment of mine passes Brians{ Soviet Style censor system

    • “And why Brian Wang always touts Venezuela as a role model for socialism and never, say, Norway, a democratic socialist country?”

      I don’t know maybe because Venezuela is the far more common ending of socialism. Of course as Norway and other successful northern european socialist countries get more and more diverse their system is failing also. Of course that has been going on for years.

      Also as a person who is aware of the state of ownership laws, taxes and whatnot I can say I will take our system instead. Both have flaws but I think in the long term the US is better for having its system.

      The problem with collective rights systems isn’t those ideologies so much as humanity and its interactions with them.

      • I love being brainwashed too. I owe everything I hold dear to welfare queens like Ayn Rand and propagandists like Edward Bernays. God Damn – thank fuck there’s no useful idiots in the US fricken A. Can I get a hoo-yar or a massive genocide that wipes out millions of natives or forces millions of africans into slavery or starts untold illegal wars or pollutes fucking everything.

        God damn I love muh free markets!!

  5. State owned industries usually crash and leave the country destitute. The more government clamps down on the economy and people the quicker the crash will come. Socialism never knows how to place value on goods with predictable results. Some of the largest economies in the world have state owned industries that will eventually leave the government on the hook when they fail. They become zombie companies dragging the reset of the country down with them.

    • It is establish fact that 50% of startups in the Western economies fails in the first year, 90% of new businesses fails by the 5th year of operation. Does it mean private owned businesses are worse than stated owned businesses?

      Besides the USA government, Japanese government, etc. i.e. state owned entities (a kind of service industry) owed debts in the trillions or hundreds of percentage of GDP, have they crashed even some of them defaulting their bonds year after year or are they destitute?

      In 2008, oil was $130 a barrel and gas was $3.25 a gallon at station in the US, in 2016 oil was $50 a barrel but gas was $3.50 a gallon at station in the US, if you call the 1% rip-off as knowing how to place value on goods, then indeed socialism does not know how to ripoff people.

      There are so many fallacies in such short paragraph, has it reached the level of fake news in the MSM yet?

      • The point about 90% of private businesses failing by the 5th year* is the whole point.
        That’s the beauty. Without the ability to stick it’s hand in the taxpayer’s pocket, the private businesses either work, or they go away.
        That’s the entire basis of the system. Only profitable businesses stay around. Unless they are being propped up by a government using someone else’s money.

        *It should be noted that some proportion of the 90% of businesses that don’t last 5 years were never intended to last. Sometimes a business just takes advantage of an opportunity with the full knowledge that this isn’t going to last. Think of someone setting up a coffee shop next to an Olympics venue.

      • What doctorpat said. Private businesses do fail. So do state industries. The difference is that private industry is not supposed to leave the government on the hook. The examples of state owned industries blowing back on government and the tax payers are legion. State owned industries are a form of government control, but they come with a high cost in the long run.

    • Fuck that shit – I want the idle class to extract my surplus value. It’s awesome, why should they work when I can do it for them. Hoo-ya!!!

  7. “Venezuela needs massive international aid and help to reconstruct its wrecked economy.”

    This is complete and utter horseshit. All the Venzuelan state need to do is stop interfering in the economy, i.e. stop extorting tariffs and taxes, stop controlling prices, let private companies buy and operate the petroleum assets etc.

    If they did this, the situation would work itself out rather quickly. No “aid” whatsoever is needed or would be beneficial. What is needed is economic freedom, in other words the cessation of hostilities from the state against peaceful trade relations.

    I also really hope socialists are paying attention. This kind of economic and human meltdown is what happens every time socialism is applied to any greater extent.

    • Great post and so true. There is no way that a government can competently manage an economy composed of many millions of buying and selling decisions made every day. Central planning, to the extent it’s applied, always leads economy wreckage and misery in it’s wake. You cannot have economic prosperity without economy freedom. The best thing Venezuela could do is to stop meddling in the economy. The Venezuela disaster is entirely government created.

      • And who created the disaster in Iraq in 2003?
        And who created the disaster by removing a democratically elected leader in Haiti?
        Look how cool is doing Haiti, micromanaged by the US in the last decades
        Look how good was doing Russia post 1991 after market was liberalized

    • Socialists never heed such things. For them all the many failures of socialism aren’t socialism.

      Besides what you say could only happen if Maduro and his party henchmen were dead or in exile.

      Which would also help make things work themselves out rather quickly.

      • Yeah man. America never interferes in the internal affairs of other countries – especially ones that are diametrically opposed to the supremacy of private capital and extractive exploitation.

    • Uh..
      Russia post 1991 did exactly what you said and the economy melted down
      Venezuela has deep problems but it is doing much much better than, say Haiti, a country which the US micromanaged in the last decades
      Just check out the US gdp per person of the two countries

      • The Soviet economy was already in shambles in the late 80s, early 90s, because of socialist policies. That’s why the USSR collapsed in the first place.

        Ergo the post-Soviet economy didn’t melt down because there was nothing to melt. It just didn’t become dramatically better immediately (like in a couple of years), which is probably to be expected when the people has been indoctrinated with communism for the better part of a century.

        The people of Venezuela, I think, has a better understanding of free markets and entrepreneurship, so should make the transition faster.

        Not sure why you consider being micromanaged by the US government as an example of a free market (it’s not).

    • …and it never will be. Human nature and Socialism are diametrically opposed to each other. If anything, that has been proved many times over in the past 100 years.

      • So true. It’s basic human nature for people to want to make their own decisions about the course of their lives. An economy is simply the aggregate of all the buying and selling decisions that people make. When the gov’t steps in and tries to override the natural desire for people to run their own lives, it’s no surprise that it leads to disaster. Collectivism/socialism/central planning/communism is 100% contrary to human nature, which is why it ALWAYS fails wherever it’s tried.

        Unfortunately, it’s also human nature to not learn from the mistakes of the past, which is why there’s always somebody out there who wants to try socialism yet again.

        • The other reason it keeps getting tried is the people in charge get to skim off vast sums of money into private offshore accounts. This happens in capitalist countries too, but competing interests tend to stop them from wrecking the economy in the process.

        • It’s human nature to want to believe in a free lunch. That’s what education is supposed to fix; instead it reinforces this drivel.

      • Not socialism. The cooperatives are privately owned companies. And not everyone who works for them are worker-owners, but rather employees.

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