SUBSIM Radio Room Forums - Venezuela sliding into anarchy

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Venezuela sliding into anarchy

Every day it gets worse for the South American country.

Quote:

Paying for even the most trivial of purchases requires carrying around huge, Pablo Escobar-style stacks of bank notes. A Coke, if you can find it, will set you back 1,200 bolivars — 12 of the biggest bills. Lunch at a simple restaurant? At least 40 of those bills. Even a subsidized school lunch costs you at least 20 top-denomination bills. You can see how the numbers get out of hand fast.

It wasn't long ago that many were applauding the leadership of this country.

Quote:

When a country goes socialist and it craters, it is laughed off as a harmless and forgettable cautionary tale about the perils of command economics. When, by contrast, a country goes socialist and its economy does what Venezuela’s did, it is not perceived to be a laughing matter – and it is not so easy to write off or to ignore. It suddenly looks like a threat to the corporate capitalism, especially when said country has valuable oil resources that global powerhouses like the United States rely on.

http://www.salon.com/2013/03/06/hugo...nomic_miracle/

Not so much of a threat now.

Karma. The inescapable causal link between cause and effect. You cannot bypass, declare void, ignore the market'S natural laws - you just cannot. The market always catches up with your fizzy intellectual acrobatics. It always has the final word on the bills's totals to be paid. It always makes you pay what you owe. Ideology never can break or distort it. You can delay - but you cannot hide.

People just do not want to believe that. They comfortably prefer to believe in angels and fairy tales relieving them of what is their karma. And that you can take more out of the pot without ever putting back similiar ammounts. But if you always take more than you put back, you end up in problems.

Its so simple but for many: so unwelcomed a truth.

Europe over the going of this century will go the same way like Venezuela - and maybe much earlier than many today think possible. The Euro, the EU - it all maybe could be over faster than most could imagine. Like 1989 - that also caught almost everybody by surprise - first, because it happened, and second: because of the breathtaking pace of events.

Regarding Venezuela, the market does what it is. The people will suffer what they must. The more things were off balance, the more painful any necessary (and in the end: unavoidable) correction will be.

"Credit is preceded consumption that thus will not be available in the future to come." - Ludwig von Mises. What is so difficult in this to understand...? (Kredit ist vorgezogener Konsum, der in der Zukunft ausfällt.)

“The problem with socialism is that you eventually run out of other people's money.”

― Margaret Thatcher

Quote:

Originally Posted by propbeanie (Post 2454496)

“The problem with socialism is that you eventually run out of other people's money.”

― Margaret Thatcher

The Iron Maiden was seldom wrong :yep:

Can't remember which year, month or day, when Swedish TV had a documentary about Venezuela and how great the politicians in Venezuela had done to the country, there where even some Swedish politicians who gave a big plus for this great experience. Today these Swedish people is silence

Markus

Quote:

Originally Posted by Jimbuna (Post 2454532)

The Iron Maiden was seldom wrong :yep:

Iron Maiden?
http://images5.fanpop.com/image/phot...93-500-313.jpg
I thought she was known as the Iron Lady.

Quote:

Originally Posted by Rockstar (Post 2454579)

Iron Maiden?

I thought she was known as the Iron Lady.

You are quite correct, my mistook :oops:

I wonder if the oil prices had anything to do with their problems.

By the way did anyone see estimates for other petrolstates (other than Russia that is) in terms of predicted economic performance (ie for Saudis&co)?

I dont believe its just the current fall in oil thats causing our southern neighbors such problems. Though Im sure some will be inclined to try fit and label the box for blame on far-right/left wing populist nationalist ideology and hitler, lol.

Quote:

Back in the late 1980s, the economists Rudiger Dornbusch & Sebastian Edwards described how countries such as Venezuela which pursue highly expansionary populist policies to the detriment of public finances typically go through four distinct phases in what might be called a “boom-bust” cycle. This is their description of Phase 3:

Phase III: Pervasive shortages, extreme acceleration of inflation, and an obvious foreign exchange gap lead to capital flight and demonetization of the economy. The budget deficit deteriorates violently because of a steep decline in tax collection and increasing subsidy costs. The government attempts to stabilize by cutting subsidies and by a real depreciation. Real wages fall massively, and politics become unstable. It becomes clear that the government has lost.

This is why Moody’s has been too generous to Venezuela. The balance of payments problem is merely the trigger for a massive fiscal, economic and ultimately political crisis that can only end in one way – the disorderly collapse of the regime. Whether this will take the form of a revolution, a military coup or simple chaos remains to be seen. But what we are witnessing is the destruction of Venezuela’s economy. And that destruction is not, fundamentally, because of external factors. It is a direct consequence of the economic policies pursued by the Chavez and Maduro regimes.

Over the last fifteen years, the Venezuelan government has nationalized hundreds of companies and seized assets on a massive scale. Many of those seizures have been the subject of expensive litigation in international courts: the most recent case was Exxon's award of $1.6bn in compensation for expropriation of its Venezuelan oil projects. Often, these nationalizations have come in response to falling production due to government price and exchange controls. For example, production in Venezuela's car industry dropped by 85% between January 2013 and January 2014: in February 2014, Toyota suspended production for six weeks citing inability to import parts, resulting in calls from trades unions for the industry to be nationalized. All too often, the Venezuelan government has given in to such calls, rather than addressing the underlying problems.

Widespread nationalization of private enterprises and seizure of assets discourages both domestic entrepreneurialism and foreign investment, and nationalized companies too often end up less efficient and less productive than they were when in private hands. The Venezuelan government has mismanaged its nationalized oil industry, resulting in revenues far below what would reasonably be expected from its vast oil reserves, and misallocated those disappointing revenues into the bargain: instead of using the revenues to diversify its economy and develop domestic production in other sectors, it has diverted them into politically popular but unproductive social programs and distortionary price controls and subsidies. Consequently, Venezuela has become far too dependent on oil revenues, its fiscal finances are in a parlous state and its industry is highly inefficient.

It was in a mess long before the present fall in oil prices.

Quote:

Originally Posted by Rockstar (Post 2454579)

Iron Maiden?
http://images5.fanpop.com/image/phot...93-500-313.jpg
I thought she was known as the Iron Lady.

man... I thought you were posting some tunes... sigh...

Quote:

Originally Posted by Jimbuna (Post 2454532)

The Iron Maiden was seldom wrong :yep:

The Iron Maiden was never wrong!:k_confused: https://i.kinja-img.com/gawker-media...asytgkizpo.jpg Especially when you've had a glass too many at Castile di Amorosa winery-NAPA... in the torture chamber! https://upload.wikimedia.org/wikiped...ron-maiden.jpg:Kaleun_Cheers: https://en.wikipedia.org/wiki/Castello_di_Amorosa

Please try to stay on topic.

For the sake of discussing the topic. We have plenty of joke threads.