8 ms·

> No it didn't. The foreign debt didn't move an inch. If you needed to sell 1.5 billion oil barrels to repay your foreign debt at $65/barrel, you still need to

> No it didn't. The foreign debt didn't move an inch. If you needed to sell 1.5 billion oil barrels to repay your foreign debt at $65/barrel, you still need to sell 1.5 billion oil barrel to repay your foreign debt. No change there. If you could produce so much oil, then you wouldn't have the debt in the first place. So the debt actually went up by the Bolivar devaluation, because now Venezuelans must create 20 times the value they created before in order to repay the debt.

IMTDb 8y ago
They definitely can produce so much oil. Venezuela produces around 2 million barrels / day and are ranked no1 by proven oil reserve (https://en.wikipedia.org/wiki/List_of_countries_by_proven_oil_reserves https://en.wikipedia.org/wiki/List_of_countries_by_proven_oi...) . So 1.5 billion barrels is completely in their range over several years ! No one said they need to repay the debt tomorrow, as long as they do not default on the foreign debt (which is the whole point of the move) they can restructure it and repay it at their own pace. The issue comes from the fact that during the last weeks/month, oil production has significantly dwindled due to political turmoil. Instead of defaulting on the foreign debt, they sacrificed their own population. They do not need to create 20x the value they created before. The USD price of a Kilogram of coffee did not change at all, so any amount of coffee they would be selling now will contribute the exact same amount towards foreign debt reduction than the same amount produced 3 month ago: they don't suddenly need to produce 20x more. On the other hand, if they did sell a significant amount of coffee 3 month ago and saved the profits in bolivars for their old days, or to invest in modernising the farm, their savings just got divided by 20.
- JoeAltmaier 8y ago
  Isn't it sulfur-laden oil, of no interest in the market unless there's a demand shortage? And in the current market, there's slumped demand, so they can't give it away. Also, renovation of the Venezuelan infrastructure was paid for but not accomplished (graft/corruption). So they're in a hole for efficient production? Finally, food production: they divided up farms and gave small holdings to the workers, who unfortunately had not the education, equipment nor capital to run them. So food supplies tanked, resulting in foreign exchange being used principally to import food. All this added up to, a total fail of the regime to pay for their socialist experiment? Never mind games with imaginary points (currency valuation). The country can't feed itself nor make its own food nor trade its resources for food. They're in a big hole.
  - curtisblaine 8y ago
    Their socialist experiment was unsustainable from the start, to be fair. They effectively killed their internal economy by capping the price of staple goods, driving business to failure and closure in the process.
    - 49para 8y ago
      That is just because they used the wrong version of Socialism. They just need to switch to a working version and they should be good. /s
      - gameswithgo 8y ago
        like denmark, germany, etc?
        antidesitter 8y ago
        Denmark and Germany are not socialist.
        arcticbull 8y ago
        Denmark is actually, literally, in the Merriam-Webster definition of Social Democracy / Democratic Socialism. [1] Your one-word denials are unhelpful and uninteresting. Cite some sources and make a case. [1] https://www.merriam-webster.com/dictionary/social%20democracy https://www.merriam-webster.com/dictionary/social%20democrac...
        antidesitter 8y ago
        You are confusing democratic socialism with social democracy. This is a common mistake, but you should understand the difference.
        TheCoelacanth 8y ago
- sonnyblarney 8y ago
  Their Oil is 'tarsands' type Oil and it's the most difficult to produce and requires a lot of processing = massive investment that few are willing to make because a) market volatility and b) government volatility. It's funny because 'stability and predictability' alone would yield them the kind of business climate and interest rates they would need to attract investment and they'd be much richer as a result.
  - meiraleal 8y ago
    > It's funny because 'stability and predictability' alone would yield them the kind of business climate and interest rates they would need to attract investment and they'd be much richer as a result. Mexico, Brazil, Argentina and Colombia proves that your point is not right.
    - antidesitter 8y ago
      > Mexico, Brazil, Argentina and Colombia proves that your point is not right. How so?
    - sonnyblarney 8y ago
      None of those countries have stable politics and economies, and certainly none of them have vast amounts of Oil Sands that require investment. If they were like Japan, or Germany, or Sweden - they would get tons of investment. Canada is the 'other country' that has vast Oil Sands and we get billions invested to extract it. The volatility is only in the market demand side, not the geopolitics side.
- 2trill2spill 8y ago
  The fact that this list puts the United States at 11th in Oil reserves is highly suspect. Also your source even says that the list is unreliable [1]. I personally wouldn't use this list as a source. Also if Venezuela starts increasing its production beyond 2 million barrels per day they could help to lower crude prices, which would probably have a negative effect on them and other OPEC countries. [1]: "Some statistics on this page are disputed and controversial. Different sources (OPEC, CIA World Factbook, oil companies) give different figures. Some of the differences reflect different types of oil included. Different estimates may or may not include oil shale, mined oil sands or natural gas liquids."
  - nostrademons 8y ago
    At $100/barrel the U.S. has the largest oil reserves in the world by far: https://en.wikipedia.org/wiki/Oil_shale_reserves https://en.wikipedia.org/wiki/Oil_shale_reserves https://en.wikipedia.org/wiki/Oil_shale_economics https://en.wikipedia.org/wiki/Oil_shale_economics Even with conventional oil, though, 11th place worldwide seems reasonable, particularly compared to neighboring countries (behind Nigeria and ahead of Kazakhstan, China, and Qatar). Don't forget that the U.S. still has very active oil production in Alaska, Southern California, Texas/Oklahoma, and the offshore Gulf of Mexico.
- cryptonector 8y ago
  Not 2 million barrels / day[0]. [0] https://tradingeconomics.com/venezuela/crude-oil-production https://tradingeconomics.com/venezuela/crude-oil-production
- jimmywanger 8y ago
  > They definitely can produce so much oil. Venezuela produces around 2 million barrels / day and are ranked no1 by proven oil reserve One thing I find interesting is that Venezuela might have the number 1 oil reserves, and that's repeated over and over. Their oil is garbage (extremely heavy) and requires the importation of dilutants paid for by foreign currency, as well as equipment and specialized engineers that are paid for by foreign currency as well. If the prices of oil are too low, it doesn't matter how much oil is under the land they're sitting on. It's going to stay there until kingdom come.
jjeaff 8y ago
The debt is denominated and must be repaid in USD. Nothing changed in Venezuela except some fantasy exchange rates than no one cares about except a handful of government cronies who are allowed to take advantage of those rates when they want to buy USD from the government using bolivars.
- stickfigure 8y ago
  This should be the top comment in this subthread. The 95% devaluation doesn't really change anything - unless you were specially connected, you couldn't change bolivars for USD at the official exchange rate. At most this devaluation just brings the official rate back in line with the black market rate, which is the real exchange rate because that's the only rate at which you can actually exchange currency. Folks holding bolivars (and creditors, and pensioners) were already screwed. This just makes it official.
  - nerfhammer 8y ago
    Ordinary people aren't legally allowed to exchange bolivars for foreign currencies at all.

IMTDb 8y ago

They definitely can produce so much oil. Venezuela produces around 2 million barrels / day and are ranked no1 by proven oil reserve (https://en.wikipedia.org/wiki/List_of_countries_by_proven_oil_reserves https://en.wikipedia.org/wiki/List_of_countries_by_proven_oi...) . So 1.5 billion barrels is completely in their range over several years ! No one said they need to repay the debt tomorrow, as long as they do not default on the foreign debt (which is the whole point of the move) they can restructure it and repay it at their own pace. The issue comes from the fact that during the last weeks/month, oil production has significantly dwindled due to political turmoil. Instead of defaulting on the foreign debt, they sacrificed their own population. They do not need to create 20x the value they created before. The USD price of a Kilogram of coffee did not change at all, so any amount of coffee they would be selling now will contribute the exact same amount towards foreign debt reduction than the same amount produced 3 month ago: they don't suddenly need to produce 20x more. On the other hand, if they did sell a significant amount of coffee 3 month ago and saved the profits in bolivars for their old days, or to invest in modernising the farm, their savings just got divided by 20.

JoeAltmaier 8y ago
Isn't it sulfur-laden oil, of no interest in the market unless there's a demand shortage? And in the current market, there's slumped demand, so they can't give it away. Also, renovation of the Venezuelan infrastructure was paid for but not accomplished (graft/corruption). So they're in a hole for efficient production? Finally, food production: they divided up farms and gave small holdings to the workers, who unfortunately had not the education, equipment nor capital to run them. So food supplies tanked, resulting in foreign exchange being used principally to import food. All this added up to, a total fail of the regime to pay for their socialist experiment? Never mind games with imaginary points (currency valuation). The country can't feed itself nor make its own food nor trade its resources for food. They're in a big hole.
- curtisblaine 8y ago
  Their socialist experiment was unsustainable from the start, to be fair. They effectively killed their internal economy by capping the price of staple goods, driving business to failure and closure in the process.
  - 49para 8y ago
    That is just because they used the wrong version of Socialism. They just need to switch to a working version and they should be good. /s
    - gameswithgo 8y ago
      like denmark, germany, etc?
      - antidesitter 8y ago
        Denmark and Germany are not socialist.
        arcticbull 8y ago
        Denmark is actually, literally, in the Merriam-Webster definition of Social Democracy / Democratic Socialism. [1] Your one-word denials are unhelpful and uninteresting. Cite some sources and make a case. [1] https://www.merriam-webster.com/dictionary/social%20democracy https://www.merriam-webster.com/dictionary/social%20democrac...
        antidesitter 8y ago
        You are confusing democratic socialism with social democracy. This is a common mistake, but you should understand the difference.
        TheCoelacanth 8y ago
sonnyblarney 8y ago
Their Oil is 'tarsands' type Oil and it's the most difficult to produce and requires a lot of processing = massive investment that few are willing to make because a) market volatility and b) government volatility. It's funny because 'stability and predictability' alone would yield them the kind of business climate and interest rates they would need to attract investment and they'd be much richer as a result.
- meiraleal 8y ago
  > It's funny because 'stability and predictability' alone would yield them the kind of business climate and interest rates they would need to attract investment and they'd be much richer as a result. Mexico, Brazil, Argentina and Colombia proves that your point is not right.
  - antidesitter 8y ago
    > Mexico, Brazil, Argentina and Colombia proves that your point is not right. How so?
  - sonnyblarney 8y ago
    None of those countries have stable politics and economies, and certainly none of them have vast amounts of Oil Sands that require investment. If they were like Japan, or Germany, or Sweden - they would get tons of investment. Canada is the 'other country' that has vast Oil Sands and we get billions invested to extract it. The volatility is only in the market demand side, not the geopolitics side.
2trill2spill 8y ago
The fact that this list puts the United States at 11th in Oil reserves is highly suspect. Also your source even says that the list is unreliable [1]. I personally wouldn't use this list as a source. Also if Venezuela starts increasing its production beyond 2 million barrels per day they could help to lower crude prices, which would probably have a negative effect on them and other OPEC countries. [1]: "Some statistics on this page are disputed and controversial. Different sources (OPEC, CIA World Factbook, oil companies) give different figures. Some of the differences reflect different types of oil included. Different estimates may or may not include oil shale, mined oil sands or natural gas liquids."
- nostrademons 8y ago
  At $100/barrel the U.S. has the largest oil reserves in the world by far: https://en.wikipedia.org/wiki/Oil_shale_reserves https://en.wikipedia.org/wiki/Oil_shale_reserves https://en.wikipedia.org/wiki/Oil_shale_economics https://en.wikipedia.org/wiki/Oil_shale_economics Even with conventional oil, though, 11th place worldwide seems reasonable, particularly compared to neighboring countries (behind Nigeria and ahead of Kazakhstan, China, and Qatar). Don't forget that the U.S. still has very active oil production in Alaska, Southern California, Texas/Oklahoma, and the offshore Gulf of Mexico.
cryptonector 8y ago
Not 2 million barrels / day[0]. [0] https://tradingeconomics.com/venezuela/crude-oil-production https://tradingeconomics.com/venezuela/crude-oil-production
jimmywanger 8y ago
> They definitely can produce so much oil. Venezuela produces around 2 million barrels / day and are ranked no1 by proven oil reserve One thing I find interesting is that Venezuela might have the number 1 oil reserves, and that's repeated over and over. Their oil is garbage (extremely heavy) and requires the importation of dilutants paid for by foreign currency, as well as equipment and specialized engineers that are paid for by foreign currency as well. If the prices of oil are too low, it doesn't matter how much oil is under the land they're sitting on. It's going to stay there until kingdom come.

jjeaff 8y ago

The debt is denominated and must be repaid in USD. Nothing changed in Venezuela except some fantasy exchange rates than no one cares about except a handful of government cronies who are allowed to take advantage of those rates when they want to buy USD from the government using bolivars.

stickfigure 8y ago
This should be the top comment in this subthread. The 95% devaluation doesn't really change anything - unless you were specially connected, you couldn't change bolivars for USD at the official exchange rate. At most this devaluation just brings the official rate back in line with the black market rate, which is the real exchange rate because that's the only rate at which you can actually exchange currency. Folks holding bolivars (and creditors, and pensioners) were already screwed. This just makes it official.
- nerfhammer 8y ago
  Ordinary people aren't legally allowed to exchange bolivars for foreign currencies at all.