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Given how crazy the hyperinflation has been, that could easily be just a factories payroll, sadly. Frankly, I'm dubious about anything the Venezuelan governmen
by petertodd 10y ago
Given how crazy the hyperinflation has been, that could easily be just a factories payroll, sadly.
Frankly, I'm dubious about anything the Venezuelan government says, as are my Venezuelan friends.
Seems much more likely that this is a classic case of a oil export dependent government being hit by low oil prices and being unable to implement spending cuts (understandable given the political consequences).
- briandear 10y agoIt's more than that: it's the government doing anti-market things such as forcing stores to sell products below cost, then lamenting that shortages are happening. That government has no concept of basic economics. Central planning has never worked -- ever. They need to read more Adam Smith and less Karl Marx.
- petertodd 10y agoSure, those are problems too, but my understanding is the bulk of that happened after oil prices dropped. Of course, the root cause here is definitely getting dependent on that in the first place.
- toss1941 10y agoThat may be true, but many other countries are weathering the storm of falling oil prices just fine. Venezuela simply doesn't have enough of a free or business friendly economy to allow them to diversify enough. If Maduro came out today and said "all price controls are off, all taxes are cut in half, all business regulations are on hold for 1 year", things would rebound very quickly. It would take awhile to generate food but once that trains starts, to the extent that the government and crime don't interfere with it their people will have no problem finding food.
- petertodd 10y agoYes, I think I agree with you on all that personally; I was trying too hard to avoid making my comments overtly political.
- mullen 10y ago> Venezuela simply doesn't have enough of a free or business friendly economy to allow them to diversify enough. If Maduro came out today and said "all price controls are off, all taxes are cut in half, all business regulations are on hold for 1 year", things would rebound very quickly. This is not Venezuela's problem. The problem is that Maduro is trying to control capital flight by fixing the exchange rate. The currency is not free floating and when companies want to buy goods overseas, they have to go to the government and ask permission to exchange their Bolivars to Dollars. This causes two problems, the government is really slow to approve the conversion of Bolivars to Dollars and the exchange rate does not reflect the real world value of Bolivars. Every time someone exchanges Bolivars to Dollars, the government loses a lot of money. The government does not want this to happen so they are not approving a lot of outbound capital. The import business has ground to a halt because of this.
- onli 10y agoIt's not that easy. Venezuela was blocked from access to the financial market by an US-american Hedgefond together with a private court in the aftermatch of the 2008 crash. Add to that the failing oil price. While Venezuela strived to be a socialist country before, part of what happened later was pure necessity.
- ethbro 10y ago> Venezuela was blocked from access to the financial market by an US-american Hedgefond together with a private court in the aftermatch of the 2008 crash. Citation?
- rafaelm 10y agoI really haven't read anything about that. In fact, Venezuela has been issuing debt bonds without any blocks. Are you sure you are talking about Venezuela?
- onli 10y agoOh. That's embarrassing, I think I mixed it up with the situation in Argentina. Venezuela did have problems to access the financial market and it does explain some recent anti-capitalist measures, but that was not directly related to an earlier hedge fond ruling as I was convinced, it was a more simple case of not paying because of having too much debt. It it related to the argentinian situation, but not the same. Source: https://www.weforum.org/agenda/2016/10/restructuring-venezuelan-debt-navigating-new-rules https://www.weforum.org/agenda/2016/10/restructuring-venezue... I wonder whether there was an earlier situation like that for Venezuela that got resolved beforehand, which would explain why I remember differently, but I found no source for that. Maybe the ISDS rulings against it. I'd delete the comment above if I could.
- Lazare 10y agoThat's absurdly wrong. I think you may be thinking of Argentina? (Not that you're describing events in Argentina correctly either, but at least some of the bits are right.)
- ZenoArrow 10y agoI can appreciate the cynicism your Venezuelan friends have about their government, they don't seem particularly competent or completely trustworthy. However, if you put yourself if Maduro's shoes, what would you do differently? We're not going to make things better until we start thinking of the problems in that way.
- petertodd 10y agoMaduro would be better off telling the truth rather than destroying what trust is left in government via silly lies: Venezuela has relied too heavily on oil exports, and the drop in oil prices is bankrupting the country.
- ZenoArrow 10y agoOkay, so he tells the truth. What should he do next?
- tim333 10y agoResign and allow an economically sane government instead of a communist former bus driver to run things. I know he loves power but you'd think he could look at the food lines and horrific hospitals and admit someone else might be better qualified.