[Onkel Neal]

Venezuela: We can't pay our debts anymore

Maduro said in a televised speech Thursday that Venezuela and its state-run oil company, PDVSA, will seek to restructure their debt payments.
The oil company made a $1.1 billion payment on Thursday, he said, a sizable amount for a country with only $10 billion left in the bank. "But after this payment, starting today, I decree a refinancing and a restructuring of the external debt," Maduro told the country.

Venezuela is already deep into a humanitarian crisis, with people suffering from food and medical shortages. Many can't afford to buy basic items because prices are skyrocketing faster than wages. The country's currency, the bolivar, is worth less than a tenth of a U.S. penny.

If Maduro's government can't reach a new agreement with bondholders over the debt restructuring -- which often means trying to pay less money -- it will end up defaulting.

That would trigger a potentially ugly series of events.

Investors in the U.S. and elsewhere could seize Venezuelan oil as collateral.
Oil is the government's only significant source of external revenue and therefore its only way to buy food and medicine for its 30 million citizens. Because the government mismanaged vast swaths of farmland, it must import almost all food.

Socialism. You get what you pay for.