Skip to comments.Things that will happen if Venezuela implodes
Posted on 03/25/2015 2:33:39 PM PDT by Citizen Zed
An economic implosion is becoming increasingly likely in Venezuela , and the country's debtholders, trade partners and neighbors are bracing for the fallout.
The country's energy-dependent economy requires oil prices above $100 per barrel in order to sustain itself. Oil accounts for 95 percent of the country's export earnings, and combined with gas, it's 25 percent of the country's gross domestic product. Internationally traded Brent crude prices have fallen more than 48 percent in the past year.
Meanwhile, a combination of inflation and currency controls have generated scarcity of basic needs such as flour, toilet paper and medicine. Venezuelans stand in lines for hours waiting to buy whatever may be available. Shortages have even diminished the country's ability to provide medical care.
The government of President Nicholas Maduro has been scrambling to find cash. China , Venezuela's biggest creditor, has loaned it more than $50 billion in the last eight years.
Venezuela pays China with oil, and about half of the oil shipped to China goes to paying existing debt. So as the price of oil declines, the number of barrels it needs to send to China increases.
"Venezuela is committed to amortize its loans with oil. To amortize the loans, you have to multiply volume by price. If the price drops, you have to up the number of barrels shipped," said Pedro Mario Burelli, former member of the executive board of PDVSA, Venezuela's state-run oil company.
(Excerpt) Read more at mob.cnbc.com ...
Venezuela is proof that even if your country is drowning in oil that socialism will find a way to make you poor.
Communism doesn’t work.
“... about half of the oil shipped to China goes to paying existing debt....”
So you have resources, just piss them away. Easy. Damned shame.
The left never learns.
Mr. President,tear down that wall!
BTTT, good post!
More freeloaders will cross the border.
Looks like radical socialism failed again.
Wow. The biggest hedge-fund collapse since the USSR.
companies and countries have been reducing their exposure to Venezuelan debts for years. An implosion will be regionally problematic.
China and Fidel get Venezuelan oil on the very cheap. Oil prices have plummeted and 95% of Venz’s economy relies on oil revenues. What could possibly go wrong? El Puerco Hugo crossed the River Styx without feeling the pain of his failed economic, tyrannical legacy. The big moustachioed stump of a dope is hanging on by a thread.
Besides the clinking glasses, laughter, and viral reappearance of Obama laughing and talking with Chavez? ;') Thanks Citizen Zed.
No one will notice again?
China agrees to invest $20bn in Venezuela to help offset effects of oil price slump
8 January 2015
UPDATE 3-China to lend Venezuela $10 bln in coming months
Mar 19, 2015
—yes—and having spent six months there , even though it was thirty years ago, I can assure everyone there won’t be any “conservative”or “small “l” libertarians in the hordes-—
“If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.” -Milton Friedman
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