it's insteresting
Venezuela Refuses to Default, and Few People Seem to Understand Why
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Re: Venezuela Refuses to Default, and Few People Seem to Understand Why
#92odd
Re: Venezuela Refuses to Default, and Few People Seem to Understand Why
#93"Never assume malice when stupidity will suffice" The government, especially under Maduro, has done so much dumb stuff that I lean toward the stupidity explanation. The main reason there is no food / goods is they try to set the price hugely under market so no one can supply at that price. Plus a huge bunch of other similar issues.
During hyperinflation times, the Brazilian government tried to make illegal to increase prices. Obviously, people and companies could not afford, or refused to, sell at the fixed prices for long. So supermarkets went empty.
Several governments in a row tried the same idea to contain inflation, unsuccessfully. So it is not surprising that, decades later, another government is making the sames mistakes.
Re: Venezuela Refuses to Default, and Few People Seem to Understand Why
#94There'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 opp…
I'm sorry to hear that. What has the experience been like for you to buy food? Are you stuck in the lines as well? How do restaurants obtain raw ingredients with which to cook?
Re: Venezuela Refuses to Default, and Few People Seem to Understand Why
#95The second "conspiracy theory" explanation presented in the article seems the simplest and most plausible: Close associates of the administration are major holders of the country’s bonds and...the government fears it’d lose their much-needed support if the payments stopped coming in. Efforts to obtain comment from government press officials on this and other aspects of the story were unsuccessful. Either that, or deb…
To be fair, the guy quoted in the article, who is urging Venezuela to default, probably has a huge bet placed that Venezuela will default.
Re: Venezuela Refuses to Default, and Few People Seem to Understand Why
#96The 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…
> Violent dictatorships are seldom rational. Well, they're often rational within their own framework (either an ideological framework or merely the framework of violence and power). That looks irrational to the rest of the world, but it has its own logic. > This article is also written with the tacit acceptance of neoliberal ideology: The only rational choice for an impoverished nation is to submit to foreign capital…
Having internal consistency or logic does not mean the framework is rational. If you're destroying your menas of living beyond repair, causing misery, you're irrational, even if there's internal consistency as in communist regimes
Re: Venezuela Refuses to Default, and Few People Seem to Understand Why
#97"Never assume malice when stupidity will suffice" The government, especially under Maduro, has done so much dumb stuff that I lean toward the stupidity explanation. The main reason there is no food / goods is they try to set the price hugely under market so no one can supply at that price. Plus a huge bunch of other similar issues.
During hyperinflation times, the Brazilian government tried to make illegal to increase prices. Obviously, people and companies could not afford, or refused to, sell at the fixed prices for long. So supermarkets went empty. Several governments in a row tried the same idea to contain inflation, unsuccessfully. So it is not surprising that, decades later, another government is making the sames mistakes.
The United States tried the same thing in the 70s after the Nixon Shock. Same result: shortages.
Re: Venezuela Refuses to Default, and Few People Seem to Understand Why
#98Venezuela has a lot of overseas holdings [1] which, thanks to nationalization, are wholly-owned by the Venezuelan government. Those will be liquidated by creditors.
I've seen arguments that say otherwise, but there is precedent for liquidating the holdings of a government which fails to pay.[2]
[1] https://en.wikipedia.org/wiki/Citgo
[2] http://www.npr.org/sections/money/2012/10/22/163384810/why-a...
Re: Venezuela Refuses to Default, and Few People Seem to Understand Why
#99Earlier quoted context omitted.
>Not sure how that's an argument in favor of paying the Danegeld though. Because not paying it would likely have tipped an already precarious global economy further towards depression, and that's not acceptable. So you pay the Danes off until you can actually kill them without killing yourself in the process.
Just so we're on the same page, do you understand the logic behind not paying extortionists? The "later" doesn't come, and the payment only makes them better at extorting you, and draws in more people to try the same. You typically won't get a better opportunity. If you come up with a rationalization for how you absolutely must defer the reckoning today , why won't you come up with one tomorrow as well?
To be fair, if you are a weak medieval kingdom, militarily unable to fight off the vikings, the optimial strategy is some mix doing what it takes to stay alive while offering resistance where you can. Wessex paid Danegeld, but later won important victories. (But even later, England paid Danegeld before handed the whole country to Sweyn Forkbeard).
In the case of banks, a big problem is agency; governments and banks are co-dependent, and can evolve into a conspirancy to extract wealth from the public by whatever combination of tricks works.
Money is the main way in which modern humans collaborate to do useful work for each other. Governments and banks are both necessary for that system to function, and have co-evolved to rake off a (large!) fraction of that useful work in order to power their own operations. Neither side can afford to offend the other.
Re: Venezuela Refuses to Default, and Few People Seem to Understand Why
#100"Never assume malice when stupidity will suffice" The government, especially under Maduro, has done so much dumb stuff that I lean toward the stupidity explanation. The main reason there is no food / goods is they try to set the price hugely under market so no one can supply at that price. Plus a huge bunch of other similar issues.
Malice and stupidity are not mutually exclusive.