Category Archives: Venezuela

Venezuela is on the brink of a complete economic collapse – The Washington Post

The only question now is whether Venezuela’s government or economy will completely collapse first.

The key word there is “completely.” Both are well into their death throes. Indeed, Venezuela’s ruling party just lost congressional elections that gave the opposition a veto-proof majority, and it’s hard to see that getting any better for them any time soon — or ever. Incumbents, after all, don’t tend to do too well when, according to the International Monetary Fund, their economy shrinks 10 percent one year, an additional 6 percent the next, and inflation explodes to 720 percent. It’s no wonder, then, that markets expect Venezuela to default on its debt in the very near future. The country is basically bankrupt.

Venezuela is on the brink of a complete economic collapse – The Washington Post

Nicolás Maduro unveils economic crisis decree – FT.com

Venezuela’s embattled socialist president Nicolás Maduro has declared a 60-day economic emergency to tackle a shrinking economy and surging inflation, which the central bank said had hit 141.5 per cent in the year to September.

The decree would empower the executive to access budget and off-budget funds, intervene in companies to boost production, and limit access to currency, which trades on the black market at more than 130-times the official US dollar exchange rate.

Nicolás Maduro unveils economic crisis decree – FT.com

Bringing Venezuela’s Economic Crisis Into Focus | Stratfor

Summary

Satellite images of Puerto Cabello, Venezuela’s main port of entry for imported goods, show just how far the country has fallen into economic disrepair. Reliable economic statistics are difficult to come by, so comparing imagery taken years apart can provide some insight that the government does not, particularly as legislative elections draw near.

Analysis

The images below were taken in February 2012 and June 2015, respectively. The first image came as Venezuelan imports, financed in part by high oil prices, were almost as high as they ever were in recent years. In February 2012, Puerto Cabello was bustling with activity. Container yards were stacked high, a result of the government’s oil-fueled spending spree ahead of the November presidential election.

But in 2013, the pace of Venezuela’s imports began to slow. When global oil prices plunged in the latter part of 2014, Venezuelan imports dropped precipitously, a trend that has continued to this day. The second image, taken only a few months ago, shows a much different picture: Container yards are far emptier because the government simply has much less money to import goods.

Bringing Venezuela’s Economic Crisis Into Focus | Stratfor via Google Search

Venezuela’s Food Shortages Trigger Long Lines, Hunger and Looting – WSJ

LA SIBUCARA, Venezuela—Hours after they looted and set fire to a National Guard command post in this sun-baked corner of Venezuela earlier this month, a mob infuriated by worsening food shortages rammed trucks into the smoldering edifice, reducing it mostly to rubble.

The incident was just one of numerous violent clashes that have flared in pockets around the country in recent weeks as Venezuelans wait for hours in long supermarket lines for basics like milk and rice. Shortages have made hunger a palpable concern for many Wayuu Indians who live here at the northern tip of Venezuela’s 1,300-mile border with Colombia.

Venezuela’s Food Shortages Trigger Long Lines, Hunger and Looting – WSJ

Russia, Venezuela Hold Anarchy at Bay | Stratfor

Unless Venezuela and Russia get an economic lifeline from a willing sponsor or the price of oil significantly rebounds, both Caracas and Moscow are likely heading toward a very rough period of unrest and subsequent crackdowns in the months ahead. We will have our eyes peeled and our ears to the ground for the early warning signs.

Trouble on the Horizon for Russia

The second country on our radar is Russia. The Russian economy has slipped into its second recession in six years, leaving the Kremlin with no choice but to slash the budget by 10 percent (save for defense). Tensions with the West have led direct foreign investment to drop by 50 percent over the past year, while capital flight from Russia is set to follow a similar course as last year, when the country was sapped of $151 billion. Hundreds of Russian banks across the country are in danger of collapsing. Of the country’s 83 regional governments, 63 are estimated to be nearing bankruptcy or defaulting on their debts. In addition, hundreds of towns throughout Russia, where populations are specifically trained for one industry, now face industrial collapse and bankruptcy. And with their now unemployed residents unable to move anywhere else, economic downturn is planting the seeds for social unrest.

In Venezuela, a Glimpse of Popular Discontent

The first is Venezuela, where even the most optimistic of government-manufactured statistics should give observers a feeling of deep foreboding. Venezuela burns through its oil reserves at a dizzying rate of roughly $1 billion per month. Not only that, but the country is actually down to about $16.9 billion in total reserves, with only a fraction of that amount — estimated at less than $1 billion — held in liquid reserves. Given the country’s heavy dependence on oil revenue, it hardly takes an expert statistician to see that Venezuela is in an untenable financial situation. The lack of foreign exchange to finance imports has led to severe food shortages. And the Dec. 6 legislative election only complicates matters, as an already hamstrung government is going to be all the more resistant to imposing structural economic reforms that are as unpopular among voters as they are necessary to the country’s financial viability.

Russia, Venezuela Hold Anarchy at Bay | Stratfor

Why Venezuela wants to annex two-thirds of the country next door – The Washington Post

It might come as something of a surprise, then, to see that the Venezuelan president’s most pressing concern in recent days is not a shortage of milk, surgical supplies or contraceptives. It is a vigorous and noisy campaign to take control of a large swath of South American savannah and jungle, known as the Esequibo, that belongs to neighboring Guyana.

For the past several days, Maduro has been assuring Venezuelans, many of whom are busy queuing up for groceries and basic goods, that his government is working to achieve a “great victory” and take control of the disputed Esequibo, an area equal to two-thirds of Guyanese territory.

Possession of the Esequibo — named for the big jungle river flowing through it — was granted to Guyana, then a British colony, by an arbitration judge in 1899. Venezuela challenged the ruling as unfair in 1962, and the dispute has been quietly simmering ever since.

Why Venezuela wants to annex two-thirds of the country next door – The Washington Post

Oil Prices Pushing Venezuela To Economic Collapse?

According to OPEC’s estimations, the global supply of oil will exceed demand by more than a million barrels per day in the first half of 2015, with demand slightly growing by less than 1 percent. This could result in extreme scarcity in Venezuela in 2015, resulting in further political and economic unrest and instability, especially since OPEC’s decision is unlikely to change and there are no indications that oil prices will increase back to the June 2014 levels.

Oil Prices Pushing Venezuela To Economic Collapse?

Wall Street bets on Russia and Venezuela defaults

Wall Street is betting that Russia and Venezuela are getting closer to defaulting on their debt.

Plunging oil prices have slammed the economies of both countries, which are highly dependent on oil revenue.

On Wall Street currently, the cost to insure Russia’s five-year bonds have surged to the highest levels since 2009.

The fears stem from the fact that the Russian government gets half of its revenue from oil and gas exports. Recently, the ruble has gone into a tailspin and the Russian central bank has hiked interest rates five times this year in an attempt to prop its currency.

Wall Street bets on Russia and Venezuela defaults

Venezuela: The Protesters’ Power Is Rising | The National Interest

It’s hard to know just how long it will take for Venezuelans to rid themselves of this fifteen-year tyranny. But the process has begun. The government is desperately on the defensive and the opposition has finally reached critical mass. The economy is in free fall, with inflation at more than 60 percent, GDP growth at zero and acute shortages affecting nineteen basic products. As a result, whatever faith the people of the barrios had in the Chavez mystique is quickly eroding.

These are the hallmarks of a “fin de siècle” in Venezuela.

Venezuela: The Protesters’ Power Is Rising | The National Interest

Venezuela crippled by 56% inflation and social unrest, but filling a car with gas still ‘cheaper than a bus ticket’ | National Post

One undeniable reason for Venezuela’s dire straits is the way that oil windfall has been used — or misused. Much of the fuel is, in essence, being given away.

Domestic subsidies make filling a car with gasoline “cheaper than a bus ticket.” This deprives the state-owned oil firm of billions, while Venezuela is indirectly underwriting the cost of oil it sells to Cuba, Jamaica and a host of other Caribbean countries, to the tune of billions more dollars.

“The guy with an unstabilized economy is subsidizing the guy that has better roads, better inflation and better fiscal figures,” said Alejandro Grisanti, an oil analyst with Barclay’s Capital in New York.

“This does not make any sense. The economic and political cost for Venezuela … is huge.”

Venezuela crippled by 56% inflation and social unrest, but filling a car with gas still ‘cheaper than a bus ticket’ | National Post