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Venezuela Refuses to Default, and Few People Seem to Understand Why

bloomberg.com

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Re: Venezuela Refuses to Default, and Few People Seem to Understand Why

#81

Post by rmsaksida »

rdiddly wrote: post #68

When a nation defaults it becomes the IMF/World Bank's bitch. "Austerity" is imposed, well-connected foreign interests get to run roughshod, and that nation is systematically (oh I mean coincidentally) looted. If you ever needed proof that these loans were designed to accomplish precisely that (a way for lenders to extract wealth from those nations), look no further than the fact that here you have an article that se…

Well, if you put it that way, the chavista governments have been doing a tremendous job at looting the country. If defaulting means having the country looted by the IMF and friends, I'm pretty sure the citizens would rather default; I can't recall the last time the IMF ran a country down to food and medicine shortages, so they're not nearly as good at this looting thing as Maduro and his lackeys have proven to be.

Re: Venezuela Refuses to Default, and Few People Seem to Understand Why

#82

Post by PantaloonFlames »

danharaj wrote: post #26

The article is fixated on the economic benefits of default, as if economic decisions were only ever decided by economics! Maduro's government is authoritarian and violently imposed. What internal political factors does this dictatorship think preclude the possibility of default? Would default be signaling weakness to competing forces within the country? Is humiliation on the international stage a threat to the ruling…

> to submit to foreign capital and governmental institutions

Wat.

Venezuela ALREADY taps the bond market for money. That's why they're sending billions of hard currency to bondholders. They're already submitting. That's the point.

Re: Venezuela Refuses to Default, and Few People Seem to Understand Why

#83

Post by dragonwriter »

rmsaksida wrote: post #81
rdiddly wrote: post #68

When a nation defaults it becomes the IMF/World Bank's bitch. "Austerity" is imposed, well-connected foreign interests get to run roughshod, and that nation is systematically (oh I mean coincidentally) looted. If you ever needed proof that these loans were designed to accomplish precisely that (a way for lenders to extract wealth from those nations), look no further than the fact that here you have an article that se…

Well, if you put it that way, the chavista governments have been doing a tremendous job at looting the country. If defaulting means having the country looted by the IMF and friends, I'm pretty sure the citizens would rather default; I can't recall the last time the IMF ran a country down to food and medicine shortages, so they're not nearly as good at this looting thing as Maduro and his lackeys have proven to be.

> I can't recall the last time the IMF ran a country down to food and medicine shortages

Among the cases where it has been argued that IMF-driven austerity measures did that are Romania in the mid 1980s, Malawi in the early 2000s, and, most recently, Egypt earlier this decade. There are probably others.

Re: Venezuela Refuses to Default, and Few People Seem to Understand Why

#84

Post by spikels »

bobwaycott wrote: post #70
hourislate wrote: post #61

Earlier quoted context omitted.

Interesting that you would think Maduro and his Government have any honor. How could they possibly have any face left in the International world? Communist/Socialist Governments typically use such financial vehicles among many others to systematically remove and transfer some/most of their countries wealth into their own/friends coffers through various arrangements with financial institutions et al all the time. Just…

> Communist/Socialist Governments typically use such financial vehicles among many others to systematically remove and transfer some/most of their countries wealth into their own/friends coffers through various arrangements with financial institutions et al all the time. Oh, come on. Such activities happen the world and history over regardless of the ostensible public political veneer.

While all governments are funded by their citizen's wealth Communists almost always take it to the extreme. Read up on the aftermath of almost any communist takeover: currency exchanges, assets seizures, wage controls and/or outright murder of the former elite. The almost all the nations wealth is quickly transfered to the government/party/leaders.

Socialists practice the same - just in moderation - but it is how all governments are funded. The trick is just to not go full retard like Venezuela and kill the golden goose.

Re: Venezuela Refuses to Default, and Few People Seem to Understand Why

#85

Post by rafaelm »

cperciva wrote: post #34

There's another possibility which wasn't mentioned in the article: Maybe the government is quite happy with the food shortages. They have used control of the food supply to reward their supporters and to punish their opponents; this gives them tremendous power, and why should they give up that power just for the sake of a few million starving citizens?

Of course the food shortages affect everyone, but cperciva is right, the government is handing out bags with food in the poorest sectors of the population. When these people are faced with the food shortage, and then they receive a handout from the government, they are being controlled and manipulated.

The government has stated before that these handouts (called CLAPS) are not for the middle class (which has been opposing the government), only for the lower classes. Of course, they claim that the middle class can afford food and that they are defending the poor.

Guess what? The rapidly shrinking middle class is also suffering from the huge lines which start as early as 6pm the day before outside the supermarkets to buy a bit of food. Those of us that cannot go to the lines (because we need to work to actually afford food) need to buy in the black market (called "bachaqueros", almost always someone with govt connections) at 10x the regular prices.

We have the exact same situation with medicine. Patients are dying in hospitals because there's no medicine. Something as simple as Acetaminophen is incredibly hard to find.

I have a newborn daughter and she was supposed to get her 2 month vaccinations and I cannot find them anywhere.

The situation here is just incredibly difficult.

Re: Venezuela Refuses to Default, and Few People Seem to Understand Why

#86

Post by wahern »

Alupis wrote: post #2

If Venezuela defaulted on foreign debts, it will be very difficult (and/or expensive) to borrow again in the future. Venezuela is essentially hedging their situation is temporary (however temporary, temporary is), and having a good economic standing in the future may depend heavily on foreign investments (particularly since Venezuela is a petroleum based economy). Burning those bridges now could cripple Venezuela per…

You're basically saying that Venezuelan officials understand good market and monetary policy. And yet their domestic price controls, which are the _direct_ cause of the country's current dire straits (and not the price of oil) suggests that they don't understand or accept the most basic of economic rules which even market skeptics (like Malaysia's Mahathir Mohamad, credited rightly or wrongly for Malaysia avoiding the worst of the 1997 Asian financial crisis) grudgingly accept.

So it's really quite a puzzle. I tend to think all the explanations play a part: 1) maintaining kickbacks and cash flow to powerful players, 2) keeping face wrt Chavism, and 3) ensuring that the national oil company remains (at least in their eyes) a global player.

Re: Venezuela Refuses to Default, and Few People Seem to Understand Why

#87

Post by gozur88 »

cperciva wrote: post #34

There's another possibility which wasn't mentioned in the article: Maybe the government is quite happy with the food shortages. They have used control of the food supply to reward their supporters and to punish their opponents; this gives them tremendous power, and why should they give up that power just for the sake of a few million starving citizens?

Because desperate people tend to do desperate things like hanging government officials from lamp posts. I agree governments like to capitalize on uncertainty, but Venezuela is way, way past the point where it works in the government's favor. If this goes on for much longer they're going to have a bona fide revolution.

Re: Venezuela Refuses to Default, and Few People Seem to Understand Why

#88

Post by fovc »

countrybama24 wrote: post #80

I'm surprised the article did not mention the theory that they have not defaulted because of the numerous state-owned assets they possess abroad which could be seized by creditors. "Caracas fears a default could open up claims to PdVSA assets, such as rigs, refineries and oil shipments. One target by creditors could be the company’s Houston-based subsidiary, Citgo Petroleum Corp., which has three U.S. refineries that…

How much are those assets worth? Wouldn't the bonds be worth more if these assets were that substantial?

Re: Venezuela Refuses to Default, and Few People Seem to Understand Why

#89

Post by protomyth »

apo wrote: post #75
oldmanjay wrote: post #69

Earlier quoted context omitted.

What could we evil rich white people loot from Venezuela at this point?

https://en.m.wikipedia.org/wiki/Oil_reserves_in_Venezuela

We have better oil in the US that is much cheaper to extract. Their oil is pretty low quality.

Re: Venezuela Refuses to Default, and Few People Seem to Understand Why

#90

Post by oh_sigh »

venomsnake wrote: post #21
redstripe wrote: post #6

Earlier quoted context omitted.

Can you give some examples of where a country defaulted and was worse off? I think most recently Iceland defaulted and they seem to be doing alright - but maybe given it's size it doesn't really count.

Iceland didn't default. They let their commercial banks die without intervention from the government. Also known as what the US Treasury should have done in 2008. If something is too big to fail - it must be killed immediately.

And in their situation, it helps that it was mostly the wealth of foreigners that was lost. Iceland would have been much much worse off if most of the country was involved with those banks in a meaningful manner.
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