Posted: Thu Apr 28, 2016 10:53 am Post subject: Venezuela Doesn't Have Enough Money to Pay for Its Money
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Venezuela’s epic shortages are nothing new at this point. No diapers or car parts or aspirin -- it’s all been well documented. But now the country is at risk of running out of money itself.
In a tale that highlights the chaos of unbridled inflation, Venezuela is scrambling to print new bills fast enough to keep up with the torrid pace of price increases. Most of the cash, like nearly everything else in the oil-exporting country, is imported. And with hard currency reserves sinking to critically low levels, the central bank is doling out payments so slowly to foreign providers that they are foregoing further business.
Venezuela, in other words, is now so broke that it may not have enough money to pay for its money.
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Last month, De La Rue, the world’s largest currency maker, sent a letter to the (Venezuelan) central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.
“It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s.
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Further complicating matters is the sheer amount of bills needed for basic transactions. Venezuela’s largest bill, the 100-bolivar note, today barely pays for a loose cigarette at a street kiosk.
Note: This is the result of hare-brained government policies and the fall in the price of oil, the latter of which holds the Venezuelan economy afloat (or at least capable of floating debt).
Two million public sector employees in Venezuela will only have to work two days a week, getting mandatory five-day weekends as part of the Venezuelan government's latest last-gasp attempt to save power.
The dry El Nino winter has caused a gargantuan electricity crisis in Venezuela: The Latin American country continues to deplete the water reserves in the country's hydroelectric dams, which are responsible for more than 60 percent of the country's power.
Vice-President Aristobulo Isturiz announced civil servants only need to come in on Mondays and Tuesdays, unless they have "fundamental and necessary tasks" on Wednesday.
The Venezuelan government has gradually rearranged the nation's schedule around the power crisis — even considering a special emergency version of daylight saving time:
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But the bigger story here is that Venezuela's socialist government has badly mismanaged the electric grid for years. Since 2000, the country has failed to add enough electric capacity to satisfy soaring demand, making it incredibly vulnerable to disruptions at its existing dams. Venezuela has been enduring periodic blackouts and rationing ever since 2009 — and there's no sign things will improve anytime soon.
The crisis has pushed the cost of a Venezuelan Mail Order Bride down to approx $59 us (plus transportation) _________________ I'm On point, On task, On message, and Off drugs. A Streetwise Smart Bomb, Out of rehab and In denial. Over the Top, On the edge, Under the Radar, and In Control. Behind the 8 ball, Ahead of the Curve and I've got a Love Child who sends me Hate mail.
I heard that the situation is really bad in there. People aren't earning much plus there is shortage for basically the daily needs such as milk, canned godos, bathroom tissues. My family got friends there and most them are leaving the country.
Joined: 31 Jan 2002 Posts: 6879 Location: Los Angeles/Barcelona
Posted: Fri Apr 29, 2016 7:45 am Post subject:
Wolverine wrote:
Reminds me of this bit by Louis C.K:
Oh man, I liove old Louie... he was really, really on point. I think his stand-up quality has gone down a bit because he's less hungry... but he's grown as an artist and his writing now (for TV) is fantastic... but his standup is not as good anymore I have to say.
I heard that the situation is really bad in there. People aren't earning much plus there is shortage for basically the daily needs such as milk, canned godos, bathroom tissues. My family got friends there and most them are leaving the country.
Is Venezuela becoming the new north Korea?
Thats pretty much what happens when you go overboard with redistribution of wealth....all the rich end up leaving the country and taking their capital with them. Also when these people leave there is also a brain drain as well. The problem is balancing taxing the rich while making them pay their fair share. Squeeze them too much and you end up getting 0% from taxes from that tax bracket.
Venezuela's issues really don't have much to do with socialism, at least in the conventional sense of the word. This is the culmination of a series of bizarre economic policies originating with Chavez, especially currency policies. Oil prices propped up the system for a few years, but the house of cards was collapsing even before oil prices tanked.
Venezuela's issues really don't have much to do with socialism, at least in the conventional sense of the word. This is the culmination of a series of bizarre economic policies originating with Chavez, especially currency policies. Oil prices propped up the system for a few years, but the house of cards was collapsing even before oil prices tanked.
I agree... Venezuela was in collapse, before oil prices tanked. That doesn't really mean it didn't have anything to do with the socialist utopia Chavez setup.
Even under Chavez, oil prices where high, but so were food shortages, so the writing was on the wall. It didn't matter, since he basically set the nation up to fail. Basically a interventionist model that just isn't sustainable and now were seeing the country get to the boiling point.
Pretty effed up. But I guess you're right, it wasn't EXACTLY socialism's fault.
Venezuela's issues really don't have much to do with socialism, at least in the conventional sense of the word. This is the culmination of a series of bizarre economic policies originating with Chavez, especially currency policies. Oil prices propped up the system for a few years, but the house of cards was collapsing even before oil prices tanked.
Under Chavez he confiscated numerous private companies and private property and made them state owned. Worked great for a couple of years since he was able to redistribute the wealth. Problem is once all those folks who made those companies successful were gone and no longer around they were screwed. Say what you will about capitalism, it has its flaws, but if anything production under the capitalist system is about optimization and efficiency.
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= Me after reading this thread title.
