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  • Venezuela's death spiral

    Venezuela’s never-ending downward spiral
    By Ana Vanessa Herrero

    IRIN Contributor
    CARACAS, 28 June 2016

    Raquel Díaz spends most of her time waiting in long lines outside supermarkets in Venezuela’s chaotic capital city, Caracas. The unemployed, 32-year-old single mother is constantly trying to find something to feed her six children. “We used to find food after hours waiting in line, but not anymore,” she said.

    Like many other Venezuelans, if Díaz does manage to find food these days, she then struggles to pay for it: prices have soared. Her son Brayan, 14, suffers from malnutrition and sometimes misses school for weeks at a time. “He is too skinny,” said Díaz, as she drops him off at class. “He is now having problems learning new things. Here in Venezuela, this is happening everywhere. No one can study on an empty stomach.”

    Former president Hugo Chávez, who died in 2013, used the country’s oil wealth to lift millions of Venezuelans out of poverty with generous social programmes and subsidised food. But low oil prices have contributed to the empty supermarket shelves as the government has been forced to slash imports.

    Venezuela rarely publishes economic data, but Henkel García, a financial analyst and director of Econométrica, a centre for economic studies, predicts that inflation will reach 700 percent by the end of 2016 (it is already estimated to have reached nearly 500 percent). “Whatever food we find in stores will cost more than today,” he said.

    Poverty rates have risen sharply from around 30 percent before the oil price crash in 2014, with one 2015 study by ENCOVI, an academic group that studies the country’s quality of life, calculating that a staggering 81 percent of Venezuelans were living in poverty last year. The situation has only deteriorated further in 2016.

    Household fridges often contain only water and families have to decide when to eat their one meal of the day, and who gets to eat.

    Margarita Lorenzo, a 56-year-old living with her two grandchildren, says the situation is the worst she can remember. “We are now all the same; we all have the same economic problems. Supermarkets are closed because there is no food.”
    Venezuela's crisis
    Who is to blame?

    Antonio Ecarri, a professor and opposition leader, known for his work with poor communities in Caracas, said the reasons why hunger is now common in most families can be traced back to Chávez’s policies. “For us, the imposition of an economic model that destroyed national production through expropriations [of local companies] and made us dependent on the state, which had only one source to finance itself – oil – has condemned us to what we are living today."

    Chávez’s successor, President Nicolas Maduro, has continued to blame the current crisis on an “economic war” being waged by the United States and other foreign powers to provoke a backlash against the government’s socialist policies. The president´s popularity had dropped to 15 percent by April of this year and the opposition is pushing for a recall referendum before the end of the year, which would make a change in the administration possible. If Maduro manages to hang on until 2017, he will be allowed to appoint a vice-president to succeed him.

    Hunger is leading to social unrest, which the government is struggling to contain. In the month of May, 52 lootings of shops were reported by the Venezuelan Observatory of Social Conflict. Out of 641 protests, 172 were because of food. At least three people have died in the lootings and nearly 100 have been wounded.

    The government has rejected offers of humanitarian assistance from the United States, Brazil and NGOs and refused to seek out international financing from multilateral agencies that would allow it to resume imports of food and medicines. However, a meeting between Maduro and US under-secretary of state, Thomas Shannon, last week could open the way for Venezuela to request help from the international community.
    Urgent health problems

    At the J.M. De los Ríos, a paediatric hospital, Doctor Ingrid Soto is worried about the numbers of children suffering from malnutrition. “We find that 58 percent of severe malnutrition [cases] are in patients under the age of two,” she told IRIN.

    Health facilities grappling with dwindling supplies of medicines and equipment are not immune to the food shortages. At Hospital Clínico Universitario in Caracas, one of the largest in the country and a national referral facility, a worker who declined to be named said patients received one piece of bread or a banana “and sometimes that is the only thing they are going to eat in an entire day”.

    According to a study by CENDAS-FVM, a federation of professors dedicated to social investigations, by April Venezuelans had to be earning 16 times the minimum wage in order to afford the cost of basic groceries needed to sustain a family. For Díaz, this is simply “impossible”. Not only is she struggling to feed her children, but also to afford diapers for her two-year-old. “I have to use cloth diapers that I can´t wash because I don´t have any soap or water at my house,” she said. “We are suffering.”
    Meridith Kohut/IRIN
    Shoppers wait in line for five hours to buy a ration of bread from a small bakery in Cumaná

    Adding to the humanitarian crisis is a severe water shortage – the result of several years of drought that has also hit hydropower facilities and contributed to rolling blackouts. Some houses in Caracas receive only 30 minutes of water a day. In the rest of the country, households often go without running water for days or even weeks. Yomar Tebo, a local leader in the coastal state of Vargas, said people in his area have been forced to make do with river water, which has led to an outbreak of scabies cases.

    Venezuela’s political and economic crisis has left young people like Brayan with an uncertain future. His mother is thinking about sending him and her mother to the United States, where two relatives are already living in Miami. “He is my son. I know I will miss him, but I think I have no option.”

    As the bell rings, Díaz takes Brayan’s hand and walks him to the classroom, past a canteen where Lissete Araque, 45, prepares small snacks to give to children that come to school with empty stomachs. “This never happened before. I´ve been working here for more than 20 years and I have never seen anything like this,” Araque said. “It´s hard to see a hungry child.”

    President Maduro of Venezuela says he's lifting power rationing
    Published July 02, 2016Fox News Latino

    CARACAS, Venezuela (AP) – Venezuelan President Nicolas Maduro says he is lifting electricity rationing that began more than two months ago because a drought had caused low water levels at the hydroelectric dam that provides most of the country's power.

    Maduro announced that beginning Monday the government will no longer cut off electricity to much of the country for four hours a day. Only the capital of Caracas and four other states had been spared from the power cuts that were instituted April 25.

    Officials had previously reported that a resumption of rain was improving the water level behind the Guri dam, which produces 60 percent of Venezuela's electricity. On June 14, the government ended a two-day work week for civil workers ordered for power conservation and it suspended power cuts on weekends.
    To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway

  • #2
    87% of Venezuelans say they don't have money to buy enough food

    Elena Holodny

    Jun. 20, 2016, 2:27 PM 13,448 21


    rtx2g9x1A man shouts during a protest over food shortage and against Venezuela's government in Caracas on June 14.Marco Bello/Reuters

    Venezuela's economic collapse has led to mass hunger in the country.

    In a bombshell New York Times report, Nicholas Casey notes that, according to the most recent assessment of living standards by Simón Bolívar University, a whopping 87% of Venezuelans now say that they don't have money to buy enough food.

    Moreover, he reports that 72% of monthly wages are being allocated just to food, according to the Center for Documentation and Social Analysis.

    And these numbers are translating into action. Casey reports that, over the last two weeks, there have been over 50 food riots, protests, and mass lootings in the country.

    "During Carnival, we used to throw eggs at each other just to have some fun," 24-year-old Gabriel Márquez told The Times. "Now an egg is like gold."

    food protest venezuelaPeople shout during a protest over food shortage and against Venezuela's government in Caracas on June 14.Marco Bello/Reuters

    The Times report comes at a time when Venezuela continues to struggle with an economic crisis resulting from a deadly cocktail of a mismanaged economy and lower oil prices.

    Venezuela, an OPEC member and keeper of the largest oil reserves in the world, heavily relies on the commodity for its export revenues. Things went south after oil prices collapsed in 2014, especially because higher prices previously funded many of the government's social programs.

    Screen Shot 2016 06 20 at 2.09.16

    Over the last few months, President Nicolás Maduro has tried out some unorthodox things in response to the economic catastrophe, including changing the time zone to make more favorable daylight hours, urging women to cut use of hair dryers to save electricity, and forcing holidays for state employees.

    He also declared a 60-day state of emergency in mid-May because of "what he called plots from Venezuela and the United States to subvert him," according to Reuters.

    Notably, Venezuela's economic future is not looking very bright. Central-bank data suggests that Venezuela's gross domestic product contracted by 5.7% in 2015, and International Monetary Fund figures forecast that it will shrink by 8% in 2016.

    Inflation is around 180.9% — the second highest in the world — and is expected to rise to a mind-blowing 720% in 2016, according to a January estimate from the IMF.

    Plus, RBC Capital Markets' Helima Croft previously noted that the country is also flirting with a potential debt crisis.

    "Perhaps no country in OPEC has suffered such a severe economic shock amid the collapse in oil prices as Venezuela," she wrote in February.

    "Political challenges and mounting debt continue to stress an already challenging situation and there appears to be no end in sight," she added later in May.
    To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway


    • #3
      Dan Liljenquist: Ignoring basic economics in Venezuela

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      By Dan Liljenquist, For the Deseret News

      Published: Thursday, June 23 2016 12:00 a.m. MDT

      On paper, Venezuela should be a prosperous country. It has huge oil reserves, rich agricultural land, vast mineral wealth and a literate population. So what happened?

      I have been fascinated by neoclassical economics since 1992 when, as a freshman at BYU, I serendipitously enrolled in Economics 110. Microeconomics frameworks, which help explain complex human interactions, hooked me. I made economics my major, and then spent five semesters as an economics teaching assistant, trying to help confused and frustrated students see the beauty in demand and supply curves, price elasticity, market externalities and other microeconomic concepts. I found something valuable in economics — a lens through which to analyze and understand both economic conditions and the policy choices that produced them.

      This week, the New York Times reported on the tragic humanitarian crisis in Venezuela. The Venezuelan people are starving; 87 percent of Venezuelans don’t have enough money to buy food, and that percentage will only go up as 2016 inflation is soaring by over 400 percent. Unemployment has reached 17 percent, and government safety net programs are folding. The Venezuelan government has instituted food, water and electricity rationing, trying to stretch too few resources over too many desperate people. Food riots, protests and mass looting are breaking out all over the country. Crime is rampant, and the murder rate is the second highest in the world. We are witnessing — and Venezuelans are living through — one of the worst economic and societal collapses in modern history.

      It wasn’t supposed to be this way. On paper, Venezuela should be a prosperous country. It has huge oil reserves, rich agricultural land, vast mineral wealth and a literate population. So what happened?

      Venezuela’s societal collapse can be traced directly to the policies enacted by populist demagogue and neo-socialist Hugo Chavez and his successor. Nearly a decade ago, Chavez adopted as his official economic policy “socialism of the 21st century,” which involved aggressive “wealth redistribution,” “land reform,” “fair prices” and “foreign currency control.” Each of these policies was touted with persuasive rhetoric, and most Venezuelans seemed to welcome the new approach.

      To redistribute wealth, Chavez seized and nationalized private businesses. To enact land reform, Chavez confiscated 5 million acres of farmland from large industrial farms, broke up the parcels, and gave the land to the poor. To enact fair prices, Chavez set and enforced aggressive price controls on food, stimulating consumer demand by keeping prices artificially low while at the same time constraining supply by making it impossible for farmers to make money farming. To enact foreign currency controls, Chavez prohibited ownership of foreign currencies, denying Venezuelans the ability to protect their personal savings from runaway inflation by hedging against other currencies.

      Each one of these disastrous policies contributed to Venezuela’s collapse. Production plummeted, inflation soared, and black markets proliferated. For a time, Chavez and his successor were able to delay the inevitable collapse thanks to high oil prices. As the Venezuelan general economic conditions worsened, the government-owned oil company pumped more and more oil until 96 percent of Venezuela’s government revenues — the revenues that supported the social programs that replaced the market economy — came from oil. Then the price of oil collapsed, and Chavez’ 21st century socialist utopia with it.

      The famed economist Friedrich Hayek postulated, “the curious task of economics is to demonstrate to men how little they know about what they imagine they can design.” I learned back in my Economics 110 days that economic principles are as immutable as the laws of physics. Economies are self-organizing, responding to the constraints imposed on them by exogenous forces, especially government policies. Chavez imagined that he could design a socialist utopia while ignoring basic economic principles, and his people are now suffering for it. We must be careful not to make similar mistakes.

      Dan Liljenquist is a former Republican state senator from Utah and former U.S. Senate candidate. He is nationally recognized for work on entitlement reform.
      To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway


      • #4
        ^ that article shows how you can make both true and wrongheaded statements all at the same time.
        There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov


        • #5
          Thankfully the NYT is on point.

          A U.S. Policy of Non-intervention in Venezuela Would Be a Welcome Change
          Mark Weisbrot

          Mark Weisbrot is co-director of the Center for Economic and Policy Research in Washington. He is also the author of “Failed: What the ‘Experts’ Got Wrong About the Global Economy.”

          Updated June 30, 2016, 7:16 AM

          The best thing that the United States government could do with regard to Venezuela, regardless of political outcomes there, would be to end its intervention there.

          U.S. intervention in Venezuela, as in other countries, has contributed to political polarization and conflict over the years.

          Washington has caused enormous damage to Venezuela in its relentless pursuit of “regime change” for the last 15 years. In March, President Obama once again absurdly declared Venezuela to be an "unusual and extraordinary threat to the national security and foreign policy of the United States,” and extended economic sanctions against the country. Although the sanctions themselves are narrow, they have a considerable impact on investment decisions, as investors know what often happens to countries that Washington targets as an unusual and extraordinary threat to U.S. national security. The sanctions, as well as pressure from the U.S. government, helped convince major financial institutions not to make otherwise low-risk loans, collateralized by gold, to the Venezuelan government.

          Washington was involved in the short-lived 2002 military coup against the elected government of Venezuela, and the U.S. government acknowledged providing “training, institution building and other support to individuals and organizations” who carried out the coup. Afterwards, it stepped up funding to opposition groups and has continued to this day to give them millions of dollars. In 2013, Washington was again isolated in the region and the world when it refused to recognize the presidential election results (even though there was no doubt about the outcome); the U.S. thereby lent its support to violent street protests that were seeking to topple the government. Washington gave political support to similar efforts in 2014.

          All this is well-documented and well-known to journalists covering Venezuela, but try finding one at a major news outlet who has the courage to write about it. It’s a bit like reporting on Ukraine and never mentioning Russia.

          U.S. intervention in Venezuela, as in other countries, has contributed to political polarization and conflict over the years, as it encouraged elements of the opposition at numerous junctures to also pursue a strategy of regime change, rather than seeking peaceful political change.

          A switch to a policy of non-intervention in Venezuela would be a sea change for Washington, and would set a healthy precedent. After all, the world is awash in bloodshed and refugees as a result of the U.S. pursuit of “regime change” in Afghanistan, Iraq, Libya, Syria and other countries. Why not try something different in the Western Hemisphere?
          Community Organizations in Venezuela Are Fighting the Good Fight
          Tamara Pearson

          Tamara Pearson is a Latin America based journalist and the author of "The Butterfly Prison." She was a community activist in Venezuela for almost a decade.

          Updated June 28, 2016, 3:22 AM

          Should the Venezuelan people vote President Maduro out of office before his term ends (a democratic right that it's worth remembering was an initiative put in place by former President Hugo Chávez), community organizations must be allowed to continue to do their good work.

          If Maduro is voted out and a right-wing or anti-socialist government comes to power, we can't allow these local councils to suffer or be demonized.

          Because community organizations (local councils and communes) receive little coverage in the news media, most people outside Venezuela are unaware of their existence. But it is often these groups that are, on their own accord, countering product shortages by organizing deliveries, sending trucks to the countryside to bring back vegetables and other goods.

          And while those seeking big profits are charging ridiculous rates for these products on the black market, community organizations are doing their best to look after their neighbors in this difficult time. It is also the communities that are setting up collective urban gardens and teaching people how to plant their own food. It is among these people that we can see the antidote to corruption: both corporate and institutional, and the building of a fair system of goods distribution, without the middlemen controlling supplies and raising prices.

          Often when a right-wing or anti-socialist government comes to power, such grassroots activists are the first to suffer: either through direct repression or through austerity measures and demonization in the news media. Were there to be attacks against these community organizations, I would hope and encourage international groups to speak out in solidarity.

          Venezuela should oppose intervention from the International Monetary Fund and the austerity measures that it would bring. Venezuelans still benefit from free health care, cultural activities and higher education and almost-free water, gas and electricity; attempts by the government to deny these benefits would hurt the poor majority the most.
          Last edited by troung; 04 Jul 16,, 17:40.
          To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway


          • #6
            Yo, troung, you were doing so well until you posted two opinion pieces by noted Chavez ass kissers blaming everybody but Chavez for the predicament Venezuela is in right now.


            • #7
              So, predictions on how long before Maduro dangles from a noose?


              • #8
                So, predictions on how long before Maduro dangles from a noose?
                So far he can still find the money to import tear gas and bullets.

                Originally posted by YellowFever View Post
                Yo, troung, you were doing so well until you posted two opinion pieces by noted Chavez ass kissers blaming everybody but Chavez for the predicament Venezuela is in right now.
                The NYT clearly knows the fault lies with the American capitalist regime.

                Voices: Venezuela's food shortage is daunting
                Peter Wilson, Special for USA TODAY 1:02 p.m. EDT June 23, 2016
                AFP 552402092 I FIN VEN


                LA VICTORIA, VENEZUELA – I am surrounded by a sea of salt, and I’m not even at the beach. The supermarket in this city of 150,000 souls where I do most of my shopping has filled up nearly an entire aisle of shelves with salt, to disguise the fact that they have little else to sell.

                The supermarket usually has a long line of desperate shoppers outside, waiting hours to enter to buy whatever is available. This morning, there is no one waiting, and I know why.

                “They have nothing,” says a middle-age woman to no one in particular as I enter the door.

                Oh, there are some things to buy. Besides salt, there are fresh vegetables and fruits, dairy products but no milk, some cereal, lots of snacks and a few canned goods.

                The only meat is sausages; there are three kinds of cheese. The only problem: A kilogram of each costs more than a fourth of our monthly minimum wage of 15,050 bolivars.

                But basic foodstuffs – the things most Venezuelans want to eat such as corn meal, wheat flour, pasta, rice, milk, eggs, sugar, coffee, chicken, mayonnaise, margarine, cooking oil and beef – are conspicuous by their absence. And there is no toilet paper, no sanitary napkins, no disposable baby diapers, no shampoo, no toothpaste, no hand soap and no deodorant.

                Shopping in Venezuela is a daily nightmare, requiring hours each day, patience, luck and a good sense of logistics. Many days impromptu protests over the lack of food and cooking gas, or growing lawlessness, close main thoroughfares as residents barricade streets in protests, blocking access to stores.

                And lines often start at 3 a.m., making it difficult for me and my immediate neighbors, who live in a mountain village 40 minutes outside La Victoria, to arrive in time to have a chance to acquire hard to find items. Sometimes, a few intrepid neighbors spend the night sleeping on the sidewalks in front of the supermarkets, braving rain, thugs and rats, to have a chance at gaining a favorable position in line.

                Venezuela's economic collapse is due to many factors: falling oil prices that have reduced the country's revenue, but also a socialist revolution that has resulted in the expropriation of more than 1,200 companies and the imposition of stifling price and foreign exchange controls that have crushed businesses and slashed national production.

                My neighbors and I find ways to cope. Given the absence of wheat flour and corn meal, many are experimenting. The ubiquitous arepa, or cornmeal patty that is the national dish, is being replaced by less tasty substitutes made of yucca or green bananas.

                Many of my urban friends are now planting vegetables in their outdoor spaces – if they have any – or in pots. Another friend, who is a hairdresser, is charging clients food to do their hair. For a shampoo and dry, she charges a kilo of corn meal, saying that she doesn’t have time to stand in line like some of her clients.

                Venezuelans are resourceful. Many have posted entries on Facebook and other social media venues, giving hints as to how to make deodorant from foot talc, toothpaste from blue laundry soap bars.

                But in the face of such shortages, the only option for many is to eat less.

                Making matters worse is the fact that all of the country, save the capital of Caracas, has daily three-hour power cuts to prevent a nationwide blackout. Government offices are only open four mornings a week, again to save power.

                Still, there are those who continue to believe the government’s claims that the economy, which is expected to contract 8% for a second consecutive year, is improving.

                President Nicolas Maduro knows what he is doing, and things are getting better, says one elderly man who is standing in a line with me and 10 others to buy bread. The others ignore him, collectively rolling their eyes as he continues talking to himself.

                Datanalysis, the best-known Venezuelan polling agency, now estimates that more than 80% of basic foodstuffs are unavailable in the country.

                That has forced many to look for essentials from bachaqueros, Venezuelan slang for food speculators who are often in league with corrupt government officials seeking to cash in on the crisis. That means paying a premium for anything they sell.

                So although the official price for one kg. of corn meal is 190 bolivars, bachaqueros – whose name derives from the Spanish word for ant -- are selling the same item for up to 1,500 bolivars.

                At least there is plenty of salt to rub in our wounds.

                Wilson is a journalist who has lived in Venezuela since 1992.
                Venezuela 'willing' to restore diplomatic ties with US
                AFP•July 4, 2016

                Caracas (AFP) - Crisis-hit Venezuela is willing to restore diplomatic relations with the United States after a six-year freeze, the socialist government said Monday.

                The foreign ministry's announcement came two weeks after top US diplomat Thomas Shannon met with Venezuela's President Nicolas Maduro in a bid to help tackle the country's economic and political crisis.

                In a message congratulating the United States on its Independence Day commemoration, the ministry expressed its "willingness to establish respectful bilateral diplomatic relations."

                The two countries have not exchanged ambassadors since 2010 due to tensions between Washington and the government of Hugo Chavez, Maduro's mentor and late predecessor.

                Like Chavez before him, Maduro has frequently accused Washington of interfering in Venezuela's internal affairs and seeking his overthrow.

                The United States has expressed concern over the crisis in Venezuela, saying Maduro's opponents have a right to organize a referendum on removing him from power, which they hope to do this year.

                Future diplomatic relations should be guided by international law and "principles such as sovereign equality of states and the people's right to self-determination," the ministry's statement said.
                Last edited by troung; 05 Jul 16,, 02:23.
                To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway


                • #9
                  Causes of Venezuela’s Hyper-Inflation
                  BGASC Metals
                  BGASC Metals
                  Posted: Jun 07, 2016 12:01 AM
                  Causes of Venezuela’s Hyper-Inflation

                  Shopping in Venezuela: $150 for a dozen eggs, toilet paper, soap, beer, diaper, aspirin, car parts, milk, sugar, flour and other essential items are in short supply or unavailable.

                  Venezuela’s price inflation is and has been the highest in the world for three years. Price inflation was about 150% during the fiscal year ending September 2015. The cost of goods and service in Venezuela increased to nearly 500% in 2016 and is projected by the International Monetary Fund to increase to 1,600% next year.

                  Why is Venezuela Experiencing Massive Price Inflation?

                  Price inflation at the national level can occur from a variety of sources including central bank actions, (increases in the money supply or interest rate policies) government actions (higher taxes, excessive regulation, minimum wage laws, tariffs or mandates) or for economic reasons, that may or may not be caused by central bank or government actions (decline in the value of a nation’s currency vs. the currencies of its trading partners, shortages, or an increase or decrease in the price(s) of key commodities such as oil).

                  Venezuela currently has a potent mix of nearly all of the above factors.

                  Decline in the value of Venezuela’s currency vs. the currencies of its trading partners

                  The Venezuelan Bolivar Collapse

                  Venezuela has a government set two tier exchange rate system for its national currency, the Bolivar. The Bolivar has one exchange rate for what the government determines to be ‘essential goods’ and another for ‘non-essential’ goods. Essential imported goods (food, health, education) get a a better rate of Bolivares to the U.S. Dollar than non-essential goods. While no official statistics are kept, the black market (free market) values the Bolivar at near worthless, irrespective of where the Venezuelan government sets the Bolivar exchange rate.

                  The Venezuelan Bolivar is at its state of near worthlessness because the government is broke and has been talking about explicitly defaulting on its estimated $185 billion in external debt. Venezuela no longer has the option of just printing more Bolivares to pay off its debt as their currency is already near worthless. Defaulting might eliminate a source of financial stress, but would result in a further loss in confidence in the Bolivar and ensure that the Bolivar remains near worthless.

                  Venezuela’s foreign reserves which consist of U.S. Treasury Bonds and gold are valued at around $12 billion, down from about $42 billion in 2008. Since current government revenues, mostly derived from its oil exports are not sufficient to meet its debt obligations, Venezuela has been forced to sell most of its reserves, including its gold reserves.

                  The decline in the value of the Bolivar has made it prohibitively expensive or impossible for the government to pay for products, causing shortages and consumer prices to skyrocket.

                  Economic Reasons

                  World-wide economic conditions have exacerbated the state of Venezuela’s already deteriorating economy.

                  Lower Oil Prices

                  Rising oil prices are generally associated with price inflation. In Venezuela’s case, however, lower oil prices are causing price inflation. Venezuela is the fifth largest oil exporter and member of the Organization of the Petroleum Exporting Countries (OPEC). The bulk of the Venezuelan budget is derived from oil revenues. Lower oil prices over the past year have significantly reduced revenues associated with Venezuela’s oil exports. With lower oil prices, and lower revenues Venezuela has great difficulty servicing its foreign debt obligations, running its bureaucracy and paying for goods.


                  Lack of ability to pay for imports with Bolivares and declining oil revenues has led to shortage of goods and government rationing of the limited amount of products available. Venezuelans have grown used to standing in long lines waiting for the opportunity to buy daily essentials. The black market has managed to provide some goods to Venezuelans but at an even higher price than the government set prices. Black market purchases are illegal and participating in the market provides the risk of government arrest or perhaps worse, kidnapping and robbery by market participants.

                  Ironically, Venezuela is so broke, that according to a Bloomberg report, the government is short of money to print money so a cash shortage is also developing.

                  Government Action

                  Government Intervention

                  Officious government meddling has made a bad situation worse. The desire of the Venezuelan government to control all aspects of economic life (under the ostensible guise of creating equality) doesn’t allow a private economy to develop in Venezuela that might be able to better provide goods and services to the people.

                  A Cautionary Tale

                  What is happening in Venezuela should serve as a cautionary tale regarding government action and its ability to cause price inflation. Gold acts as insurance against bad monetary and fiscal policies that operate to destroy a currency’s value. If the people of Venezuela held their savings in gold instead of the Bolivar their purchasing power would have been retained. Having purchasing power, however, isn’t worth much if, as is the case in Venezuela, there isn’t anything to buy.
                  To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway


                  • #10
                    OIL REHAB
                    These are the brutal emergency measures it would take to pull Venezuela back from total collapse right now
                    Grocery shopping. (Reuters/Carlos Garcia Rawlins)
                    Written by
                    Ana Campoy
                    July 06, 2016

                    Venezuela, the world’s most oil-rich nation, is currently also the world’s biggest economic basket case.

                    Coca-Cola has stopped Coke production because there is no sugar. International airlines—including Aeromexico last month (paywall)—are halting flights to and from Caracas because currency controls make it nearly impossible to ship profits back home. Venezuelans are looting supermarkets to feed themselves.

                    By late last year 73% of the population (pdf, Spanish) lived in poverty, up from less than half a year earlier, according to a survey by several Venezuelan universities. Meanwhile, inflation is set to close the year at more than 700%, and GDP to tumble by 8%, according to the IMF.

                    In the neat realm of economic theory, the solution is clear, say economists within and outside of Venezuela. Bring the market back into the economy. Get rid of price and exchange-rate controls, as well as subsidies. Get international help.

                    But that would essentially mean reverting 17 years of policies followed by president Nicolás Maduro and his predecessor, Hugo Chávez, to keep the ruling party in power. Worse still, the necessary rescue measures would brutally raise the cost of living, making life in Venezuela even bleaker than it is today.

                    Which means two things: One, Maduro is unlikely to do much to halt the spiral. And two, if and when a true reformist ever takes over, he or she will have to resort to some extremely unpleasant medicine. Here’s what the economists we consulted say it would take.
                    Brutal step #1: Abolish price controls

                    First, let’s understand how things got this bad.

                    The root of Venezuela’s distorted economy is its nearly 300 billion barrels (pdf) of oil reserves, or 18% of the world’s total. When oil prices are high, there’s profligate government spending; when prices take a nosedive, so does the Venezuelan economy.

                    “It’s like a shopaholic,” says Raúl Gallegos, author of the recent Crude Nation: How Oil Riches Ruined Venezuela. “You give them a credit card and they go crazy. At the end you have nothing.”
                    Venezuelans have failed to manage their oil wealth.(Reuters/Ivan Alvarado)

                    To Venezuelans, this boom and bust cycle is excruciatingly familiar. Today’s economic crisis is largely a repeat of the one in 1986, the last time oil prices tanked—except now the damage is arguably worse because the country’s oil dependence has increased. Back then oil made up around 80% of Venezuela’s exports; today it’s closer to 95%, because Chávez’s economic policies largely focused on distributing wealth, not creating it. From 2000 to 2015, the manufacturing sector contracted by 14% (Spanish), and agriculture and services such as restaurants and hotels by 9%, according to data compiled by researchers at Harvard University’s Center for International Development.

                    Even though the fallout of the previous oil crisis was what catapulted Chávez into politics, once in power he did exactly what his predecessors had: ramped up government spending and borrowed as oil prices climbed to record-high levels.

                    That was the source of Venezuela’s economic original sin. When the tsunami of petrodollars started fueling inflation, Chávez tamed it by artificially curbing prices of basic goods. That kept citizens happy, but it was devastating for the local industry. At the fixed prices, Venezuelan producers could no longer make a profit, so many shut down.

                    That didn’t affect the government much as long as the oil windfall flowed in, because it could afford to bring in whatever Venezuelans needed from abroad. But now, with Venezuelan oil at around $40 a barrel (Spanish) and old debts coming due, the government has drastically cut imports, leading to the shortages and looting.

                    Price controls have also spawned an expansive black market where goods fetch many times the official price. That costs the government precious resources to police.
                    Supermarket shelves lay empty as the government curbed imports.(Reuters/Mariana Bazo)

                    So the first step, say economists of all stripes (Spanish), is to get rid of price controls. Prices, of course, will jump. How much will vary by product, says Gallegos, the author. Another factor is whether officials release controls gradually and in conjunction with other needed policy changes (see below).

                    Still, hikes (Spanish) to price-controlled products in May offer a glimpse of how bad it could be. A kilo of the corn flour used to make the staple food, arepas, was marked up 900%, to 190 bolivars a kilo, while chicken increased by 1207%, to 850 bolivars a kilo. At the official fixed exchange rate, that would be some $38 per pound.
                    Brutal step #2: Free the bolívar

                    As he did with prices, Chávez fixed the exchange rate to prop up Venezuela’s currency, the bolívar. While cheap prices were a political tool to earn the support of the people, access to foreign currency became a way to get support from companies, says Gallegos. Supporters got dollars at official exchange rates, an indirect subsidy; detractors didn’t, choking their ability to import raw materials.

                    For multinationals, that has meant they can’t easily ship their profits back home. This has made doing business incredibly complicated and risky. Several international companies have either scaled back their operations there, or packed up their bags and left altogether.
                    Venezuela’s foreign exchange system has become so distorted that the same restaurant meal costs over $2,000 at the official exchange and $20 at the black-market rate.(Reuters/Carlos Garcia Rawlins)

                    So like price controls, currency controls have to be removed, economists say. Again, the degree of pain would depend on how the government goes about it. Lifting the controls from one day to the next would make the bolívar plummet, and the prices of imported goods, on which Venezuelans now depend, would shoot up.

                    Therefore, economists advocate for a more gradual release of the exchange-rate peg. To do that, Venezuela needs plentiful foreign-currency reserves to prop up the bolívar as it slumps. But the country’s reserves have been steadily shrinking since the collapse of oil prices in 2014. They now stand at at $12 billion, their lowest level since the mid-1990s, data from Venezuela’s central bank shows.

                    Another way to ease the effects of a weaker bolívar is to supplement the incomes of poor families to help them pay the higher prices. But that, again, would require cash Venezuela doesn’t have.

                    Venezuela could make things much easier on itself by coming up with a convincing plan to overhaul its economy, says Aldo Musacchio, a professor at Brandeis University’s international business school. That would encourage foreign investors to pour capital into the country, bolstering the bolívar. Argentina, which lifted its currency controls last year, has had some luck (paywall) with that, though Argentines have been hit hard by rising inflation.

                    But given the distorted state of the Venezuelan economy, even in the best case, it could take a couple of years for prices to stabilize, says Musacchio. That’s two years of people not knowing what they’ll be able to afford from one day to the next.
                    Brutal step #3: Abolish subsidies

                    To increase government revenue, experts say, Venezuela must start unwinding the policies that have made it an economic weakling. That means ratcheting back subsidies. Today, the government spends more on subsidizing electricity and gasoline than on healthcare and education, says Brett House, chief economist at Alignvest Investment Management.

                    Dismantling subsidies isn’t as simple as just redirecting money, though. It also means dismantling a patronage apparatus the subsidies created. They became a way for the government to reward its allies, regardless of how well they managed their businesses, leading to corruption and decay instead of stimulating growth. Chávez also nationalized a slew of firms in a variety of sectors, and didn’t run them much better. “The productivity of these companies has been destroyed,” says House.
                    Hugo Chávez’s drive to put the state at the center of all economic activity resulted in a less productive Venezuela.(Reuters/Miraflores Palace)

                    Removing subsidies and forcing businesses to operate by market rules will no doubt result in painful cutbacks in a country that already has a 17% unemployment rate, according to the IMF. On the plus side, the higher prices brought on by brutal steps #1 and #2 should make it easier for companies to turn a profit. Reducing spending should also help shrink Venezuela’s gaping budget deficit, estimated at 20% of GDP at the end of last year.

                    Maduro’s administration has already started taking baby steps to address the current economic disaster. It’s pared down its bewildering foreign-exchange system from three different rates to only two: a fixed, artificially strong rate of 10 bolívars to the dollar for the purchase of basic goods, and a floating rate, currently around 630 bolívars to the dollar. He also announced gasoline price hikes for consumers, and is trying to renegotiate debt terms (paywall) with Venezuela’s creditors. But, most observers agree, Venezuelans are going to need aid from abroad to switch economic gears.
                    Brutal step #4: go begging

                    Some economists advocate (paywall) going for a loan to an international agency, such as the International Monetary Fund. That would give the country not only cash, but much needed expertise, as well as confidence that Venezuela will follow through with the harsh measures described above. As things stand now, the country has been essentially shut out of international credit markets.

                    There’s just one problem: Bringing in the IMF is politically a non-starter in Venezuela. The bloody clashes in 1989 known as the Caracazo were sparked by public anger over an IMF bailout that drove up public-transit prices.
                    Venezuela’s crisis is already generating social unrest, which makes it more difficult to implement the tough measures economists recommend.(Reuters/Ivan Alvarado)

                    So other experts are instead recommending doing what Venezuela has been doing all along: using oil as collateral to get more loans, and to help fund the government’s shortfalls. “Venezuela is in the economic emergency room, but thank God it’s not terminally ill,” said Francisco Rodríguez, a widely-followed Venezuelan economist, at recent forum. Terminal illness is insolvency, he added, and his country has plenty of resources below ground.

                    Others, however, argue that leaning so heavily on oil, even if it’s just a temporary measure to jumpstart the economy, could set off Venezuela on the same path that led to the current crisis. “The state becomes dependent on the extractive model and it goes deeper and deeper into that,” Edgardo Lander, a well-known Venezuelan sociologist, said back in 2014, well before the effects of the country’s latest bout of oil intoxication were fully apparent.

                    Either way, any rescue plan will need to be cautious and well-orchestrated to avoid a stampede of Venezuelans exchanging all their bolívars into dollars once the currency controls are lifted, or worse yet, another Caracazo. First though, there has to be someone in charge willing to implement changes, no matter how hard they are. “It’s as much a political problem as it is an economic problem,” says Reggie Thompson, a Latin America analyst at Stratfor, a risk-assessment firm.

                    And once it gets out of its latest oil-induced crisis, Venezuela needs to seriously deal with its oil addiction. A first step, says Gallegos, would be to follow the lead of places like Alaska, and lock away its oil windfall when prices are high to keep itself from spending it all. But that requires a degree of prudence and foresight no Venezuelan leader has shown in at least a couple of generations.

                    Venezuela Refuses to Default. Few People Seem to Understand Why.
                    Sebastian Boyd
                    July 4, 2016 — 7:00 PM EDT
                    Updated on July 5, 2016 — 2:26 PM EDT

                    As Venezuelans suffer, bond investors getting all they’re owed
                    ‘Fairly shocking’ country continues to pay, Eurasia Group says

                    It’s been almost two years now since the renowned Harvard economist Ricardo Hausmann caused a stir in his native Venezuela by posing an uncomfortable question.

                    Why does a country that’s so starved for cash keep honoring its foreign debts? In other words, how does it justify shelling out precious hard currency to wealthy bondholders in New York when it can’t pay for basic food and medicine imports desperately needed by millions of impoverished citizens? “I find the moral choice odd,” Hausmann concluded.

                    He was, predictably, skewered by the administration back in Caracas -- President Nicolas Maduro labeled him a “financial hitman” and an “outlaw” on national television -- but today the question feels more urgent than ever. Prices for oil, Venezuela’s lifeblood, have fallen almost by half since Hausmann first spoke out and the country’s cash squeeze has deepened dramatically. The chaos has reached unprecedented levels -- food rationing, looting, mob lynchings, collapsing medical care -- yet through it all, bond traders have received every dime they were owed, billions and billions of dollars in all.

                    “There are two worlds,” said Francisco Ghersi, a managing director of Knossos Asset Management in Caracas. “The world of the bondholders and the world of what’s happening in Venezuela.”

                    The 21st century has produced a slew of government defaults across the globe, from Argentina to Ecuador to Ukraine. In almost every instance, the country in crisis hit the default button long before the situation got as dire as it has in Venezuela. The only similar case that economists point to is Zimbabwe back in the early 2000s. But even that comparison is flawed, says American University professor Arturo Porzecanski, because Venezuela was significantly wealthier than Zimbabwe before crisis struck and so the South American country’s collapse has been of a much greater magnitude.

                    What makes this pay-the-debt-at-any-cost approach all the more curious is that it comes in a country run by self-proclaimed socialists who have railed for the better part of two decades against foreign capitalist powers. There are endless theories, spawned in part by Hausmann’s public pronouncement, as to why the Maduro administration has stuck so doggedly to this policy. The main ones fall into three rough categories.
                    Food Riots

                    The first of them is an argument that’s been floated publicly by high-ranking government officials themselves. It states that Venezuela can wait it out till oil prices rebound. Why rock the boat, the thinking goes, if salvation is potentially just weeks away? (Prices have been rallying of late, climbing to near $50 a barrel.)

                    The next argument is something of a conspiracy theory born in part out of the opaque nature of the country’s finances. It posits that close associates of the administration are major holders of the country’s bonds and that the government fears it’d lose their much-needed support if the payments stopped coming in. Efforts to obtain comment from government press officials on this and other aspects of the story were unsuccessful.

                    The third theory, and it’s one that ties back into the first idea, states that even though Venezuela lost access to international capital markets a long time ago, a default could still deepen the government’s cash squeeze by triggering legal action from creditors that would undermine the country’s ability to export. If fewer petro-dollars flow into the country, the savings from the default could be washed away, making the situation on the ground even worse.

                    It’s frankly hard to imagine what a further deterioration would look like. After shrinking an estimated 7.5 percent in 2015, the economy is forecast to post an even bigger contraction this year. Food shortages are now so acute, and lines outside stores so long, that spontaneous protests are popping up everywhere. In one episode in the 500-year-old coastal city of Cumana, hundreds were arrested and a middle-aged man was shot to death, one of three fatalities at food-related demonstrations in June alone. There have been so many vigilante justice-style lynchings -- more than 70 in the first four months of this year -- that the supreme court has banned Venezuelans from sharing video recordings of the gruesome events on social media.
                    Default’s Benefits

                    To Hausmann and to legal experts who have studied the country’s oil operations, the risk of angry creditors blocking exports after a default is actually small. The way that PDVSA, as the state oil company is known, structured sales contracts makes it difficult for them to be interrupted by a legal challenge, according to Francesca Odell, a partner at Cleary Gottlieb in New York. What Hausmann and others see instead from a default is the opportunity to free up a big chunk of cash that could be re-directed toward imports.

                    The government is due to make $1.5 billion in foreign debt payments in the second half of this year. Include PDVSA’s tab and the figure swells to $5.8 billion. It’s a staggering sum of money in a nation that has bled its hard currency reserves down to just $12 billion. And while few, if any, bondholders would embrace a default, they certainly wouldn’t be caught off-guard by it. For the better part of the past 18 months, the government’s benchmark bonds have been trading under 50 cents on the dollar, a price that in essence signals to a debtor: “We’re prepared for a restructuring, go ahead and do it if you must.”

                    “It’s fairly shocking that they have decided to service the debt over all else,” said Risa Grais-Targow, an analyst at Eurasia Group in Washington. “But I do think the commitment is fairly strong.”

                    Venezuela’s bonds due in 2027 fell 0.37 cents to 48.48 cents on the dollar as of 2:24 p.m. today in New York.

                    Maduro, the man handpicked by the late Hugo Chavez to succeed him, has spoken frequently about his determination to keep paying the debt. In a speech back in May, he proudly explained how the country had doled out $36 billion to creditors -- “a huge amount of money” -- over the previous 20 months. The payments were made, he went on to say, “with dignity, without accepting preconditions from anyone, maintaining the country’s independence despite the pain.” These are references to multilateral lenders like the International Monetary Fund and World Bank, institutions that are despised by the Latin American left.

                    As long as Maduro continues to pay, there will be investors willing to own the debt. Venezuela’s bonds are among the highest-paying investments in emerging markets, offering today an average yield of 26 percent. That’s in dollars -- in a world where many developed-nation bonds are yielding close to zero (or even less). And since Chavez swept into office 17 years ago, the country’s bonds have handed investors a total return of 517 percent.

                    “It is one of the most miserable, mismanaged, hopeless countries on the planet,” said Jan Dehn, head of research at Ashmore Group Plc, which manages $50 billion of emerging-market assets. “But that doesn’t mean you can’t make money.”

                    Hausmann, meanwhile, is more incensed than ever.

                    In a recent interview, he called the government’s insistence on paying the debt, coupled with a church’s claim that it rejected offers of international aid, “a crime against humanity.” There’s a history here, it should be noted, between the professor and the Chavistas. Some two decades ago, he served in the business-friendly government that Chavez tried to overthrow in a coup attempt that effectively launched his political career. Perhaps that explains some of the enmity between the two sides. Regardless, this is what Hausmann wants to ask the folks on the other side: How can they sleep at night? “It’s beyond belief.”
                    Last edited by troung; 07 Jul 16,, 01:45.
                    To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway


                    • #11
                      ul 21, 2016 @ 11:36 AM 1,014 views
                      Venezuela Might Be Worse Country In Latin America, But Its Bonds Look Great

                      Kenneth Rapoza ,


                      I cover business and investing in emerging markets.

                      Opinions expressed by Forbes Contributors are their own.
                      Venezuelan bond spreads have been rising for the last two years as Nicolas Maduro takes his country down one disastrous path after another. (Bloomberg)

                      Venezuelan bond spreads have been rising for the last two years as Nicolas Maduro takes his country down one disastrous path after another. (Bloomberg)

                      Venezuela might be the worst country in all of the Americas today, but for bond lords from New York to London, this country is one of the biggest bangs for your buck on the planet.

                      Say what you will about Socialist Party autocrat Nicolas Maduro in Caracas, he may be a fail at getting food to his people, but he has not defaulted on its estimated $277 billion debt. While this surely is not a comfort to those that have to trek hundreds of miles into Colombia to buy food, the country is not insolvent. It may avoid a default after all, even as Fitch Ratings says one is imminent.

                      Maduro’s government has a high willingness to pay its debts, meaning as bad as things are, Venezuela might not become Argentina. Argentina defaults almost every 10 years, making it harder for the country to attract foreign capital, and forcing middle income and the wealthy to distrust their own currency. All of this has negative impacts on the economy. If Venezuela doesn’t default, it avoids blowing a bazooka sized whole through the chest of a nation that appears to be either a heartbeat away from a full blown coup detat, or shutting the doors to the world.

                      The good news: Venezuela is fundamentally solvent.

                      If Saudi Arabia’s state owned oil firm ARAMCO is worth about $3 trillion with some 310 billion of oil reserves then, Venezuela’s comparable oil major PDVSA is worth nearly the same with around 510 billion barrels of estimated recoverable oil reserves there.

                      “The price of bonds is so low that under most scenarios there is upside on the bonds even in the event of a default,” says Jan Dehn, head of research and an emerging markets bond analyst for Ashmore Group, a London-based investment bank. “The calculation has many moving parts, but we think recovery value will be high because Venezuela should quickly be able to raise money by auctioning reserves to oil companies.”

                      A change in government is likely within the next 12 months due to a recall referendum that even Maduro said is likely to happen next year. The opposition parties wanted once this year to coincide with the October gubernatorial elections. That is now unlikely.
                      Recommended by Forbes

                      A new government is likely to be more pragmatic given the fact that the country can barely feed its citizenry.

                      PDVSA, Venezuela’s preferred bond for foreign investors, is unlikely to default. It has a constant need to access capital credit lines for working credit. A default would cut off those credit lines. Oil production would be threatened and this is Venezuela’s prime source of revenue. Shutting that spigot off would result in widespread rage against Maduro even if he spun it to lay the blame on Yankee imperialists in the U.S. somehow.

                      Neither Maduro nor anyone in the Socialist Party want to be seen as Venezuela’s grim ripper. They’ll keep paying.

                      And regime change is coming.

                      “The dollar debt market in Venezuela is quite the most interesting opportunity in the world,” Dehn says. “But obviously not without risk.”

                      The Venezuela EMBI Global Diversified index bond spread is currently 2,419 basis points over U.S. treasuries. Duration is about 3.42 years so that spread is compared to the U.S. 3 year. Investors who can buy speculative grade debt and hold it long term will be paid more than 24% in yield, and that doesn’t count the capital gains they’ll get when spreads tighten and bond prices rise on the news that Maduro is a goner.

                      Venezuelan bonds are the lowest priced bonds in the emerging markets by a country mile. Total return year-to-date for the 2019s are 31.5% in dollars, so far.
                      To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway


                      • #12
                        Venezuela is selling oil for food to Jamaica
                        by Patrick Gillespie @CNNMoney August 2, 2016: 2:41 PM ET
                        Venezuela government could force people to work on farms
                        Venezuela is selling oil to Jamaica in exchange for food, medicine, farming materials and building supplies.

                        Jamaica announced last week that it would provide up to $4 million in the form of goods and services to Venezuela.

                        "You could say that it's goods and services for oil," Dr. Wesley Hughes, CEO of the Jamaican government's PetroCaribe Development Fund, told CNNMoney on Tuesday. "It's going to be up to Venezuela to decide what they need."

                        This form of payment is part of a trade pact between the two nations.

                        Venezuela is desperately short on food and medicine. People wait hours outside supermarkets to buy basic goods like milk, eggs and flour, often only to find empty shelves. Others are dying in ill-equipped hospitals.

                        Despite the chronic shortages, the Venezuelan government has refused the help of international humanitarian groups like United Nations and Amnesty International.

                        Related: Venezuela decree 'amounts to forced labor'

                        "For them, accepting the humanitarian assistance is in some way recognizing that the crisis is being created by the government," Erika Guevara Rosas, Americas director at Amnesty International, told CNNMoney's Maggie Lake on Monday.

                        Yet, it is accepting goods as a form of payment from Jamaica, a country that is recovering from its own economic downturn, which required a bailout from the IMF as recently as 2013.

                        "They're probably shipping rice and beans to pay off," the oil shipments, says Russ Dallen, managing partner at Caracas Capital, an investing firm based in Miami. "Jamaica can't really pay them the money so they'll send Venezuela food."

                        Hughes said Venezuela has not yet said what specific goods they want but confirmed that they're available immediately and would be equivalent to $4 million.

                        Related: Venezuela decree gives military more power, says Amnesty International

                        It's not the first time Venezuela has done non-cash transactions.

                        China has loaned Venezuela $65 billion since 2007, according to the Inter-American Dialogue, a Washington think tank.

                        Some of those loans are being repaid to China in oil. Venezuela's state-run oil company, PDVSA, sent about 579,000 barrels of oil a day to China on average last year, according to its audited financial statement. Venezuela has one of the world's largest proven reserves of oil -- likely its only available currency at a time when its foreign exchange reserves are running very low.

                        Last year, Bloomberg reported that the Trinidad & Tobago Prime Minister suggested a tissue paper-for-oil trade during a press conference with Venezuela's President Nicolas Maduro. It's unclear if that deal ever went through.
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                        The food-for-oil deal with Jamaica comes as Venezuela's food shortages have become extremely severe.

                        Related: Hungry Venezuelans cry at sight of food

                        In July, Maduro temporarily reopened the border between Colombia and Venezuela to allow citizens to cross to the other side to buy basic items. Colombian officials estimated that over 100,000 Venezuelans crossed the border. Some cried at the sight of fully stocked supermarket shelves.

                        Venezuela's economy is the worst in the world, according to IMF projections. Its economy is estimated to contract 10% this year and inflation could skyrocket by 700%. Years of heavy government spending, and the recent decline of oil prices, have left the government without enough cash to import basic foods.

                        To tackle food shortages, Venezuela recently issued a decree that would force citizens to work on farms for 60-day periods and perhaps longer "if circumstances merit," the decree said. Amnesty International said the decree "amounts to forced labor."
                        Venezuela's young women opting for sterilization amid brutal recession

                        Alexandra Ulmer

                        CARACAS — Reuters

                        Published Thursday, Aug. 04, 2016 10:15AM EDT

                        Last updated Thursday, Aug. 04, 2016 2:47PM EDT






                        Venezuela’s food shortages, inflation and crumbling medical sector have become such a source of anguish that a growing number of young women are reluctantly opting for sterilizations rather than face the hardship of pregnancy and child-rearing.

                        Traditional contraceptives like condoms or birth control pills have virtually vanished from store shelves, pushing women toward the hard-to-reverse surgery.

                        “Having a child now means making him suffer,” said Milagros Martinez, waiting on a park bench on a recent morning ahead of her sterilization at a nearby Caracas municipal health center.

                        The 28-year-old butcher from the poor outskirts of Caracas decided on the operation after having an unplanned second child because she could not find birth control pills.

                        In Photos: Young Venezuelan women choose sterilization during brutal recession

                        Her daily life revolves around finding food: she gets up in the middle of the night to stand in long lines outside supermarkets, sometimes with no choice but to bring along her baby son, who has been sunburnt during hours-long waits.

                        “I’m a little scared about being sterilized but I prefer that to having more children,” said Martinez, who with dozens of other women took a bus from the slums at 4 a.m. to attend a special “sterilization day” in this wealthy area of Caracas.

                        While no recent national statistics on sterilizations are available, doctors and health workers say demand for the procedure is growing.

                        The local health program for women in Miranda state, which includes parts of Caracas, offers 40 spots during these “sterilization days” but as recently as last year did not usually fill them.

                        Now all the slots are scooped up and some 500 women are on the waiting list, according to program director Deliana Torres.

                        “Before, the conditions for this program were that the women be low-income and have at least four kids. Now we have women with one or two kids who want to be tied up,” she said.

                        Health workers at a national family planning organization and at three government hospitals in the states of Falcon, Tachira and Merida echoed her view that demand for sterilizations had grown in recent months.

                        The trend highlights how the oil-rich nation’s brutal recession is forcing people to make difficult choices.

                        Venezuela is a largely Roman Catholic country where Church doctrine rejects all forms of contraception and abortion is banned unless a woman’s life is at risk. The Archbishop of Merida, Baltazar Porras, told Reuters an increase in sterilizations would be a “barbarity.”

                        But Venezuela’s crisis has triggered almost daily riots for food and slammed a shrinking middle class as well as the poor who were once a bastion of support for late leftist leader Hugo Chavez’s self-styled “beautiful revolution.”

                        Pregnant women are particularly affected as they struggle to find adequate food and supplements, give birth in crowded and under-equipped hospitals, and have to spend hours in lines for scarce diapers, baby food and medicines.

                        The government ministries for health, women and information did not respond to requests for comment.

                        Sterilizations are usually straightforward procedures that involve closing or blocking a woman’s fallopian tubes, known as tubal ligation.

                        “I heard about these free sterilization days on the radio. Immediately I showered, dressed, and went out (to find out about them),” said Rosmary Teran, 32, who had her second child two months ago and also came to the health center from a poor neighborhood before dawn.

                        Some health workers fear the economic meltdown is putting pressure on women to make a choice they may come to regret if the crisis eases.

                        “Sometimes we hear: ‘My husband told me to get sterilized because another child now wouldn’t be practical’,” said social worker Ania Rodriguez at family planning group PLAFAM in central Caracas.

                        Rodriguez says she meets with up to five women a day seeking sterilizations, up from one or two per week about a year ago. When women seem unsure or pressured into sterilizations, Rodriguez tries to steer them toward contraceptives like intra-uterine devices, which are somewhat more available and affordable than birth control pills or condoms.

                        When they have them, pharmacies sell a pack of three condoms for around 600 bolivars, only 60 U.S. cents at the black market rate but a big expense for those who earn the minimum wage of some 33,000 bolivars per month. On the Caracas re-sale market, those same condoms fetch around 2,000 bolivars.

                        Venezuela’s elite can afford those prices but the ailing middle class and poor are increasingly stuck.

                        “I couldn’t find the (contraceptive) injections, the pill, nothing. It’s very expensive on the black market, and now you can’t even find stuff there anymore,” said Yecsenis Ginez, 31, who has one son and decided to get sterilized.

                        “I thought I would have up to five kids, I had loads of names in mind. But it would be crazy to fall pregnant now.”

                        Still, some women have had to wait for months to be sterilized because there are limited spots at state-led hospitals and private clinics can charge about 12 times the monthly minimum wage. And some health centers are unable to provide sterilizations at all due to a lack of equipment or specialists.

                        Amid what now feels like a distant oil boom, Chavez built thousands of Cuban-staffed health centers in poor neighborhoods and also launched popular maternity-health programs during his 1999-2013 rule.

                        But with Venezuela’s state-led economic model decaying and oil prices depressed, hospitals have deteriorated sharply under his successor Nicolas Maduro.

                        Medicine shortages hover around 85 percent, according to a leading pharmaceutical association. Equipment ranging from surgical gloves to incubators is scarce, and many underpaid doctors have left the public sector or emigrated.

                        The government still says it has one of the world’s best health systems and accuses detractors of waging a smear campaign. It has stopped releasing timely health data, though.

                        The World Health Organization says Venezuela’s neo-natal mortality rate was 8.9 per 1,000 live births last year, above the Americas region’s average of 7.7. It says Venezuela’s maternal mortality rate was 95 per 100,000 live births in 2015, one of the worst rates in Latin America and up from 90 in 2000.

                        The nation of 30 million people has one of Latin America’s highest rates of teenage pregnancies and large numbers of single-parent households, U.N. data shows.

                        As they waited to be called into the operating room for their sterilizations, women in blue scrubs and hairnets wistfully recalled happier times in once-booming Venezuela.

                        “Before, when you got pregnant, everyone was happy,” said mother-of-two Yessy Ascanio, 38, as she sat on a bed in a side room. “Now when a woman says ‘I’m pregnant’, everyone scolds you. It makes me sad for young women.”

                        As some of her peers nervously looked out at patients being wheeled out after their sterilization, Ascanio advised: “If you get scared, just remember those food lines.”
                        Last edited by troung; 06 Aug 16,, 22:15.
                        To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway


                        • #13
                          . Spanish Marxist Professor Alfredo Serrano Is the Man Behind Venezuela’s Economic Mess

                          Maduro Places Confidence in a Spanish Marxist Professor He Calls 'the Jesus Christ of the Economy

                          AUGUST 16, 2016 AT 1:07 PM

                          "The fact that the government continues to insist with the XXI century socialism can be attributed to A Alfredo Serrano (Misión verdad)
                          “The fact that the government continues to insist on 21 century socialism can be attributed to Alfredo Serrano” (Misión verdad)
                          The main culprits of the most radical measures taken by the Venezuelan government come from Spanish politician Alfredo Serrano Mancilla, according to Spanish Adviser to President Nicolás Maduro Deputy Carlos Valero.

                          Valero told the newspaper ABC in Spain that Serrano “is the author of the latest and most radical economic measures undertaken by the Chavistas, who have only managed to impoverish the country.”

                          Expropriations, the seizure of businesses, “urban agriculture” on balconies, the soviet supply system and forced employment in the public agriculture sector are all a result of Serrano’s influence.

                          Earlier this year, the newspaper El Nacional reported about “Alfredo Serrano Mancilla, the Spaniard who pulls the strings of the Venezuelan economy.” The newspaper pointed out the Podemos member is one of the most influential figures in Maduro’s economic cabinet.

                          “The fact that the government continues to insist on the economic model of socialism in the 21st century, despite the queues, shortages and inflation is entirely from him,” the paper claimed.

                          Read more: Why Socialists Deny Scarcity, even in Today’s Venezuela
                          Read more:Venezuelan Electoral Authorities Postpone Recall Vote against Maduro
                          Who is Alfredo Serrano Mancilla?

                          Mancilla “is the last redoubt that the Spanish populist left keeps in Venezuela,” according to ABC.

                          He is the coordinator of the Center for Political and Social Studies (CEPS), a Spanish anti-capitalist organization that provides political consulting. He has consulted for the governments of Spain, Venezuela, Ecuador, El Salvador and Bolivia. CEPS is currently listed as an “appendix” of Podemos. Several of its leaders operate within the Spanish leftist party (most notably Podemos leaders Pablo Iglesias and Iñigo Errejón).

                          Mancilla studied economics in Barcelona, Spain and in Quebec, Canada. He arrived in Venezuela 10 years ago with a group of leftist Spanish teachers (Juan Carlos Monedero, Pablo Iglesias, Luis Alegre, Roberto Viciano Pastor) who were attracted to the idealistic thought of Hugo Chavez.

                          Mancilla began a friendly relationship with the Marxist political intelligentsia of Venezuela until meeting with then-Planning Minister Ricardo Menendez, after which he began rubbing shoulders with even more important higher-ups.

                          In 2014, he presented the paper The Economic thought of Hugo Chavez, for which President Nicolás Maduro praised him and introduced him to the elite of the regime. Mancilla immediately became an advisor to Maduro.

                          From there, Mancilla became a kind of ideologue of Chavismo. He wrote speeches for President Maduro, including the most important ones presented to the National Assembly.

                          Mancilla, according to El Nacional, has solidified the idea that the socialist economic model of the 21st century is unquestionable, and that any failure is the result of attacks from the opposition.

                          “Clinging to the hope of an economic miracle to save his country, Maduro has placed his trust in a dark Spanish Marxist professor whom he calls ‘the Jesus Christ of the economy,'” The Wall Street Journal recently reported.

                          ABC noted Alfredo Serrano Mancilla is the man behind the Maduro’s constant refusal to allow humanitarian aid into Venezuela.

                          “Serrano said he wanted to hide the crisis and not allow the entry of humanitarian aid. Even NGOs like Doctors Without Borders cannot act in Venezuela without asking permission from authorities
                          To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway


                          • #14
                            military might
                            It's not just about Maduro – Venezuela's army has been getting stronger since Hugo Chávez's days
                            by Rebecca Jarman, The Conversation
                            Published Yesterday · 11:30 pm.
                            Some onlookers are suspicious that a clandestine coup is in the making against the president – but the country has been militarising itself for decades.
                            It's not just about Maduro – Venezuela's army has been getting stronger since Hugo Chávez's days
                            Image credit: Federico Parra/ AFP

                            When General Néstor Reverol was appointed Venezuela’s new home secretary, much of the world interpreted it as an ominous sign of growing military influence. The appointment was a strange one in itself: just one day after Reverol was indicted in the US on charges of drug trafficking, president Nicolás Maduro called him “an exemplary officer”, “a brave man”, and the ideal candidate to stake out the mafioso gangs supposedly holding Venezuela to ransom.

                            This was the latest in a growing number of military appointments to Maduro’s government. Only a fortnight before, the incumbent defence minister, General Vladimir Padrino López, was given control of a national distribution network that oversees the administration of food, medicine and basic goods in an attempt to ease the country’s notorious shortages.

                            From here on, all other ministers will answer to López as the second-in-command of Venezuela’s so-called “economic war” on hoarding, speculation and neo-imperialist forces, embodied on the ground by black marketeers and small-time capitalists.

                            That so many army officials are being nominated for political positions has not gone unnoticed. Some onlookers are speculating that it amounts to a clandestine coup against the increasingly unstable Venezuelan president, who seems increasingly unable or unwilling to tackle the hyperinflation that has brought the country to paralysis.

                            All this concern, however, is long overdue. A much longer and slower process of militarisation has been underway for some time.

                            The Venezuelan military has been extending its influence ever since Hugo Chávez was elected president in 1998. An iconic and deeply controversial leftist president, Chávez experienced a political awakening when undergoing training in military sciences and humanism. During his presidency, the armed forces in their many different guises steadily crept into all areas of Venezuelan society.
                            Joining forces

                            This began when Chávez announced the start of “Plan Bolívar 2000”, the first of several much-celebrated welfare “missions” designed to rehabilitate the military’s image, which had never recovered from the shanty town massacres of the 1989 Caracazo riots.

                            As part of the plan, soldiers were sent door-to-door to deliver vaccinations and repair schools, homes and churches, as well as co-ordinating educational programmes and improving sanitation.

                            This humane face of the army found special occasion for display in the aftermath of the massive 1999 landslides, when military officials managed rescue operations, distributed humanitarian aid, and protected the local population. Checkpoints and curfews were introduced to curb theft and looting.

                            So the advent of military figures in ministerial posts does not signal the start of a new regime: it’s the apotheosis of an old one. And Maduro has been talking about it for some time.

                            He has often spoken of a “civic-military union”, an idea that Chávez picked up from Cuba’s Fidel Castro. Maduro himself is Chávez’s hand-picked successor, but he’s also a civilian often deemed less qualified for the role of president than certain of his military counterparts. As the crises in finance, energy, and food scarcity have worsened, this union has become more pronounced in the everyday lives of Venezuelans.

                            Motorway tolls are manned by Kalashnikov-brandishing cadets, supermarket queues and state-run markets are controlled by high-ranking officers, petrol stations and oil refineries are guarded by men in uniform and young recruits search through passengers’ luggage before they are permitted to leave the international airport. This constant and consistent surveillance helps to intercept dissent before it reaches its fullest expression, and reminds Venezuela that power remains highly concentrated within the state – albeit not necessarily around its president elect.

                            If required, this power will be implemented with violence. Earlier this year, at least 21 illegal miners disappeared in the south-east state of Bolívar. Some Venezuelans suspect they were killed as part of an operation to make way for the Orinoco Mining Arch, a project for the extraction of minerals that’s partially funded by Chinese investors.

                            Analysts have claimed that the army provides such widespread mechanisms of social control to the Venezuelan government in exchange for privileged access to imported goods and subsidised petrodollars procured at rock-bottom prices. This would explain why Maduro still refuses to drop the country’s remaining currency controls in spite of the abundant evidence they are wrecking the economy.

                            That the armed forces have already asserted themselves in some of the most precarious sectors of Venezuelan society points towards fairly solid foundations for a full-blown political takeover, perhaps under the aegis of Padrino López. He was a close ally of Chávez, particularly after coming to his defence during the failed 2002 coup attempt, and has long been an influential force in the high echelons of government.

                            Yet so long as Maduro manages to stave off the recall referendum for a little longer, such a move might not be necessary. If the referendum can’t be held before the spring of 2017, when Maduro will celebrate four years in office, his elected mandate will pass automatically to Aristóbulo Istúriz, the ruling chavista vice-president.

                            Should that happen, the army may well remain backstage for the time being. But it will remain omniscient, and its mostly latent power will scarcely be undermined.
                            Rebecca Jarman, Teaching Fellow in Latin American Studies, University of Leeds.

                            This article first appeared on The Conversation.
                            We welcome your comments at
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                            To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway


                            • #15
                              Sounds as though the opposition has called for massive protests in advance of a 30 July proposed vote that would essentially re-write Venezuela's constitution giving the Government sweeping powers which would undercut any and all democratic reforms.

                              This week should be front and center as the majority of Venezuelans have nothing else to lose as their country most likely slips in bankruptcy and hyper-inflation.

                              Thank you Truong for your posts above ...given a year has elapsed.
                              Real eyes realize real lies.