Yes, Venezuela could collapse if oil keeps dropping

American Thinker ^ | 12/17/2014 | Silvio Canto Jr.

[SeekAndFind]

The drop in gasoline prices is a wonderful Christmas present for U.S. consumers.  It's great up here, but keep an eye on Venezuela.  The country could collapse if prices keep dropping.

TIME magazine has a good summary about the mess in Caracas:

The economic dysfunction and falling price of oil leaves Maduro in a tough spot. He lacks both the political will and popularity to push through meaningful reforms to push Venezuela’s economic house in order. At the same time, he is being increasingly squeezed by the weakness in the oil price. Hugo Chávez was luckier. At the height of his powers, he commanded widespread domestic acclaim, and was buoyed by rising oil prices on the world markets (he was also adept at showmanship, hosting, for example, OPEC heads of state in Caracas soon after he first came to power). Maduro faces an altogether more challenging environment.

“Ordinary Venezuelans are starting to get tired of slogans and socialist rhetoric and no concrete actions on any front,” says Moya-Ocampos. “As the economy deteriorates, so will the political situation in Venezuela.”

There are several reasons that make Venezuela acutely vulnerable to a drop in oil prices:

1) The extremely inefficient public sector paid for by high oil prices.

2) the domestic subsidies, from cheap gasoline to giving Cuba cheap oil.  These subsidies have bought votes for the Chavez-Maduro regimes.  My guess is that these subsidies would have to be curtailed substantially if oil prices keeps dropping.

3) Maduro is in a very weak political position.  He is not Chavez, a more popular figure who got to govern at a time when oil prices could finance every scheme and ambitious project.

There is a perfect storm brewing in Venezuela, and the leadership looks totally unprepared for it.

[PapaBear3625]

True. Venezuela should be one of the richest countries in the Americas. But -- as with all government-run enterprises -- the money that should have gone to exploration and basic maintenance of its equipment was instead siphoned off to bloat the government and buy votes.

If Venezuela was run efficiently, the Venezuelan middle class would be prosperous. The Communists do not want the middle-class to be prosperous. They want the middle class to be poor, with the underclass being paid to keep them down.

The Communists don't care if the country is poor, as long as the people who keep them in power are content.

[PapaBear3625]

The extremely inefficient public sector paid for by high oil prices.... the domestic subsidies,

Public employment provides income to people who would not have a job in the private sector. Subsidies allow the underclass to have a tolerable standard of living.

Once the unproductive are no longer subsidized, they will erupt in violence and civil war.

[St_Thomas_Aquinas]

-— Who will pay Joe Kennedy’s $400K salary -—

Mae that 700,000 His wife taes home another $100,000 Together, they earn almost $1 million annually from this “harity” (Sorry, having eyboard problems)

[BfloGuy]

They want the middle class to be poor, with the underclass being paid to keep them down.

Yes. the Marxists have always understood that both the rich and the poor could be co-opted, and that it was the dreaded middle class, the strivers (the bourgeoisie) that must be destroyed.

Obama understands that, too.