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 ...
True. Probably why nobody would take that route.
Via Panama, about 10,000 miles.
Via Cape Horn, about 15,000 miles.
Via S. Africa, about 12,500 miles.
Interesting site. http://www.sea-distances.org/
The funny part about a lot of the comments on this thread is that people don’t seem to see the very large elephant sitting there.
“Communism never works” because Venezuela is selling out to China.
Yet China has for 60+ years been a fully Communist country. At least in theory and name.
And China has gone from waaay below Venezuela to gaining on the USA.
Either China isn’t “really” Communist, or Communism CAN work.
China is getting to the point where both Mao Zedong and Josef Stalin would be horrified at what the country has become. Communism in that country is more like a veneer than anything else.
It is still ruled by commies, real wealth comes from cronyism, the vast majority are still poor
I quite agree. I think modern China has a lot more in common with its old dynastic system. The Party members stand in for the mandarins, and since Mao there has been no Emperor.
Historically, without an Emperor China falls apart due to spectacular corruption in the mandarinate (Party).
We’ll get another example of how communism screws up a country...which will be blamed on capitalism.
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