Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

bloomberg.com

Post reply on HN
Print view View original

121–130 of 142 posts

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

#121

Post by mistermann »

ArkyBeagle wrote: post #59
roymurdock wrote: post #25

The 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…

Just as a first-order guess of your second half, what you describe sounds highly illegal. The first part makes more sense - and it's not a conspiracy theory - they want to keep access to bond markets.

There's illegal, and then there's "illegal". You'd think with what we see in the news today you wouldn't have as many people saying public officials can't do something because it's illegal.

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

#122

Post by ptaipale »

Alupis wrote: post #38
roymurdock wrote: post #35

Earlier quoted context omitted.

Or a noose. Debt is a double-edged sword - it all depends on if it's structured in a reasonable fashion, and if it used in a productive manner that can pay down promised future payments.

> it all depends on if it's structured in a reasonable fashion And the ability to structure reasonable debt is contingent on perceived risk to outside investors. If Venezuela defaults and becomes very high risk, it's unlikely future debts will be favorable towards Venezuela, impacting Venezuela's ability to climb out of the hole, so-to-speak.

Markets tend to think ahead of that. At least I think Venezuelan debt is already now very high risk; after a default, I would not necessarily think it were higher - I would look at the policies adopted by the government and think whether they are consistent and responsible.

In other words, with the current government, it doesn't really matter whether they default or not. They are not very believable in any case.

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

#123

Post by junto »

roymurdock wrote: post #25

The 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…

Venezuela is one of those classic south American countries politically. It either has a government that is extremely socialist or extremely oligarchic.

Venezuela has traditionally been governed by people tied closely to the media empires in the country. Extremely powerful and rich people that use the counter as their plaything. The poor suffer and the upper class prosper. The gap between rich and poor grows.

At some point the balance tips and you get a coup d'etat. They promise the poor that they will take care of them and fuck the rich. Slowly the country turns into a dictatorship.

The US doesn't like socialist governance in their back yard, so they look for ways to turn the screws on that country to flip it back to the rich capitalist trickle down economics ideology.

In the old days they would just send the CIA down there and have a few people assassinated, or provoke unrest and supply weapons to right wing paramilitaries.

Today it is easier to starve then out financially and since both Russia and Venezuela both truly rely on raw material resource exports, especially oil and gas, persuading OPEC to crush the price of oil has been damaging to both of the US's enemies.

In Venezuela's case, it still had huge oil reserves and cash, so the US is just playing the waiting game.

I find both typical political models in south American politics bad, but the US foreign policy doesn't help matters either way.

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

#124

Post by pvaldes »

For some reason Venezuela is not a problem anymore in Spain after the last elections. Conservative politicians talking louder each five minutes or so about "all is chaos and flames, crying children and vulcano lava in Venezuela", happily forget venezuelan people suffering in just one night. The theme basically vanished from both newspapers and TV since 26 june.

Perhaps things in Venezuela aren't exactly how some newspapers tell?... Who knows? All I remember for the country is that people were super-nice and the nature was gorgeous.

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

#126

Post by [deleted] »

rafaelm wrote: post #85
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 opp…

[deleted]

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

#127

Post by lando2319 »

rafaelm wrote: post #102
Pyxl101 wrote: post #94

Earlier quoted context omitted.

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?

Well, I've basically just been eating what I can find the easiest. I don't really go to the lines. I cannot afford to waste a whole day in a line where I don't even know what they are going to hand out or if I'm even going to be able to buy something. I just came back from a friends place and he told me he almost got stuck in a dangerous looting situation because people got pissed because they've been in line for 10…

> The government tried to regulate the price of eggs. Next day, you could not find a single egg anywhere.

If the results are so glaringly ineffective, why do you think the Government keeps pursuing price controls?

Is this Hubris, do they not see the effect on supply from their insulated mansions, or do they just think they can get it right this next time?

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

#128

Post by rasz_pl »

ptaipale wrote: post #112
rasz_pl wrote: post #106

Earlier quoted context omitted.

I know reality you are describing very well. This was Poland under Russian occupation in the seventies and eighties: http://bi.gazeta.pl/im/3/5275/z5275403Q,Puste-polki-w-sklepi... http://bi.gazeta.pl/im/e6/f6/f2/z15922918Q,Tak-wygladaly-skl... http://i.iplsc.com/puste-polki-w-sklepie-miesnym-typowy-wido... http://chrisniedenthal.com/public/upload/works/big/54bd379cc... http://d.polskatimes.pl/k/r/11/a2/d3/4dca472ebf…

To lighten up: under Soviet rule, which shop did not have empty shelves? The shelf shop. Compare then to http://www.bbc.com/news/blogs-trending-30710014 - the Polish in 80's did not have Twitter.

We didnt need twitter, mainstream TV series (subs, alternatywy 4) and movies (mis, co mi zrobisz jak mnie zlapiesz) pretty much celebrated Polish ingenuity in the face of economic reality :/ examples:

https://www.youtube.com/watch?v=8qWnnuaSS4k

https://www.youtube.com/watch?v=37A9YAhNPyI

https://www.youtube.com/watch?v=sqiXby24Yvo

https://www.youtube.com/watch?v=57r5dqtnyAU

You can even play a monopoly inspired board game designed to educate about life with constant queues https://en.wikipedia.org/wiki/Kolejka_(game)

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

#129

Post by al_chemist »

fovc wrote: post #88
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?

Assets are worth more to Venezuela than anyone else is willing to pay. In case of defaulting, creditors can takeover those assets cheaper than they could buy them otherwise.

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

#130

Post by rafaelm »

lando2319 wrote: post #127
rafaelm wrote: post #102

Earlier quoted context omitted.

Well, I've basically just been eating what I can find the easiest. I don't really go to the lines. I cannot afford to waste a whole day in a line where I don't even know what they are going to hand out or if I'm even going to be able to buy something. I just came back from a friends place and he told me he almost got stuck in a dangerous looting situation because people got pissed because they've been in line for 10…

> The government tried to regulate the price of eggs. Next day, you could not find a single egg anywhere. If the results are so glaringly ineffective, why do you think the Government keeps pursuing price controls? Is this Hubris, do they not see the effect on supply from their insulated mansions, or do they just think they can get it right this next time?

I think it's just plain old populism. They go on TV screaming about having to "defend the poor from the big bad private sectors that want to topple the government with their economic war with artificially induced high prices. The price of eggs has to be Bs.500 a carton!"

Meanwhile , just the cardboard for producing the packaging for the eggs costs Bs.200, chicken feed Bs. 300, the govt increases the minimum wage 4 times a year to fight "the economic war",etc.

Of course, anyone producing eggs is now working at a loss, so they just produce less and move part of the production to the black market.

I really have no idea what their endgame is. Maybe the idea is to actually try to finish off the private producers that are left in the country.

Post reply on HN