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Me too. I worked on some good projects there a few years ago and now this. Is there somewhere a “for dummies” analysis / explanation of the chain of events and

by crocal 8y ago

Me too. I worked on some good projects there a few years ago and now this. Is there somewhere a “for dummies” analysis / explanation of the chain of events and decisions that led to the current situation in Venezuela? I can’t fathom how it is possible even in the most corrupt place in the world to reach such a sorry state.

jayess 8y ago
https://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch%C3%A1vez_administration https://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch... In short: price controls, nationalization, high taxation, corruption, Cuban economic influence (read socialism/marxism), economic malinvestment, overspending, debt, and then printing money...
scythe 8y ago
The crucial mistake was the firing of tens of thousands of employees of the state oil company, PDVSA. Eviscerating the state oil business in an economy that depends on oil exports is, um, bad. With half of their employees replaced by Chavez yes-men, PDVSA made poor strategic decisions that left them with (almost) no new oil wells when the ones they had been using ran dry. To be specific, money that should have been used to dig new oil wells was diverted to poverty-reduction initiatives by the central government. Venezuela today has the world's largest proven oil reserves (thanks to recent offshore discoveries) and yet ranks low by exports.
- wonthegame 8y ago
  The firing wasn’t the issue. It was a controversial move but it is not what caused the ongoing collapse. The exchange rates being in their favour is how the govt paid for the social programs. Now that the rate is not in their favour and oil prices have crashed... now it makes it difficult to pay for your debt. The US smelled blood and decided to help speed up the inevitable by adding sanctions. This increased the cost of their debt. Maduro is attempting to avoid further economic harm with the petro coin.
  - scythe 8y ago
    >The firing wasn’t the issue. It was a controversial move but it is not what caused the ongoing collapse. The exchange rates being in their favour is how the govt paid for the social programs. Now that the rate is not in their favour and oil prices have crashed... now it makes it difficult to pay for your debt. The "exchange rates" never could have made the government's pilfering of PDVSA revenues sustainable. Any properly-run business would save money for the possibility of a change in commodity prices. PDVSA under Chavez did not. Exchange rates did not cause the collapse of Venezuela. Hugo Chavez's decision to ignore economic reality and substitute his own is what caused the collapse of Venezuela. No other oil-based economy got hit as hard as Venezuela by the oil price collapse because they maintained sustainable business practices. >The US smelled blood and decided to help speed up the inevitable by adding sanctions This is a joke, right? The US did not even sanction Venezuelan businesses, only the officials involved in looting the oil industry revenues. From Wiki: >On March 9, 2015, the United States President, Barack Obama, signed and issued a presidential order declaring Venezuela a "threat to its national security" and ordered sanctions against seven Venezuelan officials. Venezuelan President Nicolás Maduro denounced the sanctions as an attempt to topple his socialist government. Washington said that the sanctions targeted individuals who were involved in the violation of Venezuelans' human rights, saying that "we are deeply concerned by the Venezuelan government's efforts to escalate intimidation of its political opponents". The notion that US sanctions played any role in the collapse of Venezuela is an utter fantasy promulgated by the Venezuelan government and perpetuated by credulous Western champagne socialists.
natecham 8y ago
I this article did a good job of summarizing the collapse (from the formation of OPEC in the early 60's to the present) https://foreignpolicy.com/2018/07/16/how-venezuela-struck-it-poor-oil-energy-chavez/ https://foreignpolicy.com/2018/07/16/how-venezuela-struck-it... Essentially they believed the oil price surge of the 70s would continue and failed the diversify the economy. This allowed Chavez to come along and take over in the late 90's on a socialist platform with promises to restore the economy. Chavez ignorant to production of oil and fighting to stay in power, gutted the state run PDVSA and severely inhibited production by diverting profits to fund his social programs. Eventually production and profits dipped, with the government deciding to print more money to keep social programs running.

by crocal 8y ago

jayess 8y ago

https://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch%C3%A1vez_administration https://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch... In short: price controls, nationalization, high taxation, corruption, Cuban economic influence (read socialism/marxism), economic malinvestment, overspending, debt, and then printing money...

scythe 8y ago

The crucial mistake was the firing of tens of thousands of employees of the state oil company, PDVSA. Eviscerating the state oil business in an economy that depends on oil exports is, um, bad. With half of their employees replaced by Chavez yes-men, PDVSA made poor strategic decisions that left them with (almost) no new oil wells when the ones they had been using ran dry. To be specific, money that should have been used to dig new oil wells was diverted to poverty-reduction initiatives by the central government. Venezuela today has the world's largest proven oil reserves (thanks to recent offshore discoveries) and yet ranks low by exports.

wonthegame 8y ago
The firing wasn’t the issue. It was a controversial move but it is not what caused the ongoing collapse. The exchange rates being in their favour is how the govt paid for the social programs. Now that the rate is not in their favour and oil prices have crashed... now it makes it difficult to pay for your debt. The US smelled blood and decided to help speed up the inevitable by adding sanctions. This increased the cost of their debt. Maduro is attempting to avoid further economic harm with the petro coin.
- scythe 8y ago
  >The firing wasn’t the issue. It was a controversial move but it is not what caused the ongoing collapse. The exchange rates being in their favour is how the govt paid for the social programs. Now that the rate is not in their favour and oil prices have crashed... now it makes it difficult to pay for your debt. The "exchange rates" never could have made the government's pilfering of PDVSA revenues sustainable. Any properly-run business would save money for the possibility of a change in commodity prices. PDVSA under Chavez did not. Exchange rates did not cause the collapse of Venezuela. Hugo Chavez's decision to ignore economic reality and substitute his own is what caused the collapse of Venezuela. No other oil-based economy got hit as hard as Venezuela by the oil price collapse because they maintained sustainable business practices. >The US smelled blood and decided to help speed up the inevitable by adding sanctions This is a joke, right? The US did not even sanction Venezuelan businesses, only the officials involved in looting the oil industry revenues. From Wiki: >On March 9, 2015, the United States President, Barack Obama, signed and issued a presidential order declaring Venezuela a "threat to its national security" and ordered sanctions against seven Venezuelan officials. Venezuelan President Nicolás Maduro denounced the sanctions as an attempt to topple his socialist government. Washington said that the sanctions targeted individuals who were involved in the violation of Venezuelans' human rights, saying that "we are deeply concerned by the Venezuelan government's efforts to escalate intimidation of its political opponents". The notion that US sanctions played any role in the collapse of Venezuela is an utter fantasy promulgated by the Venezuelan government and perpetuated by credulous Western champagne socialists.

natecham 8y ago

I this article did a good job of summarizing the collapse (from the formation of OPEC in the early 60's to the present) https://foreignpolicy.com/2018/07/16/how-venezuela-struck-it-poor-oil-energy-chavez/ https://foreignpolicy.com/2018/07/16/how-venezuela-struck-it... Essentially they believed the oil price surge of the 70s would continue and failed the diversify the economy. This allowed Chavez to come along and take over in the late 90's on a socialist platform with promises to restore the economy. Chavez ignorant to production of oil and fighting to stay in power, gutted the state run PDVSA and severely inhibited production by diverting profits to fund his social programs. Eventually production and profits dipped, with the government deciding to print more money to keep social programs running.