Venezuela Meltdown

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Re: Venezuela Meltdown

Post by Doctor X » Wed Aug 29, 2018 9:58 am

Anaxagoras wrote:
Wed Aug 29, 2018 9:46 am
The real question is, "will you actually ever be able to receive your physical gold?" If not, the value is highly questionable.
Today, your piece of paper is worth one ounce of gold.

Tomorrow, it is worth a half an ounce.

What are you going to do about it?

No one will accept the piece of paper. So you will sell it in a month at significant loss to places backed by government cronies who can claim it represents actual gold.

Another thing to consider: I claim to have 37 ["37?!"--Ed.] tons of gold worth a billionventy. Unfortunately, I now owe creditors all over the world ten times that.

Is it "my gold?"

Does the paper I issue based on it represent anything? Even with tentacles?

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Re: Venezuela Meltdown

Post by Anaxagoras » Wed Aug 29, 2018 10:18 am

Basically those risks and others fall under the heading "counterparty risk" also known as default risk. The risk that the other party to your transaction will not live up to the contractual obligations of the transaction. If your counterparty is the government of Venezuela, you better believe that there is a lot of counterparty risk.
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Re: Venezuela Meltdown

Post by Doctor X » Wed Aug 29, 2018 10:26 am

Exactly, which is my point.

The Dictator could not even come up with a bar of gold. Nigerian Lads can at least send stolen pictures of piles of bullion.

--J.D.
Mob of the Mean: Free beanie, cattle-prod and Charley Fan Club!
"Doctor X is just treating you the way he treats everyone--as subhuman crap too dumb to breathe in after you breathe out."--Don
DocX: FTW.--sparks
"Doctor X wins again."--Pyrrho
"Never sorry to make a racist Fucktard cry."--His Humble MagNIfIcence
"It was the criticisms of Doc X, actually, that let me see more clearly how far the hypocrisy had gone."--clarsct
"I'd leave it up to Doctor X who has been a benevolent tyrant so far."--Grammatron
"Indeed you are a river to your people.
Shit. That's going to end up in your sig."--Pyrrho
"Try a twelve step program and accept Doctor X as your High Power."--asthmatic camel
"just like Doc X said." --gnome

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Re: Venezuela Meltdown

Post by ed » Wed Aug 29, 2018 10:45 am

Could some one answer two questiions for me?

1 How did this happen? I mean not theoretically but practically, mechanically, how did this occur?

2 how is it fixable?

Keep it simple. Avoid bullshit economic jargon.

Than you.
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Re: Venezuela Meltdown

Post by Anaxagoras » Wed Aug 29, 2018 11:28 am

ed wrote:
Wed Aug 29, 2018 10:45 am
Could some one answer two questiions for me?

1 How did this happen? I mean not theoretically but practically, mechanically, how did this occur?

2 how is it fixable?

Keep it simple. Avoid bullshit economic jargon.

Than you.
There is a Wikipedia article about it, if you're interested. Just search for "Crisis in Venezuela".

But I'll attempt to summarize some of the big reasons.

The economy of Venezuela has always been heavily dependent on oil exports. And since Hugo Chavez took over, the country had used its oil money to fund a lot of giveaways to the poor. They also practically give away gasoline, I'm talking less than 10 cents per gallon, less than it costs to produce the stuff. But it's popular with the people of course. Who doesn't want free stuff from the government, right?

In the past,
the government could pay for all of this populist stuff (barely) because they also exported a lot of oil. So with the dollars they received by selling their oil to other countries, they could import enough goods to make up for any shortfalls at home.

Anyway, long story short, they neglected other industries and other sectors of the economy because the oil was their goose that laid golden eggs. Then, the price of oil fell to like half a few years ago, and since then, they haven't been able to sell enough oil to pay for all their stupid policies and corruption.

Add to that terrible economic and monetary policies (price controls, exchange rate fixing, and so on) and you see the results.
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Re: Venezuela Meltdown

Post by ed » Wed Aug 29, 2018 11:55 am

Yeah but ... it's like that cartoon "and then a miracle occurred"
Anyway, long story short, they neglected other industries and other sectors of the economy because the oil was their goose that laid golden eggs. Then, the price of oil fell to like half a few years ago, and since then, they haven't been able to sell enough oil to pay for all their stupid policies and corruption.
so they kept spending, got it. Printed money presumably. Got it. Then it caved in.

Why? Mechanically, what happened? Their money became progressively more worthless (why "progressively" is unclear though) but in a self contained system, what is the difference? It's like a token economy, if we all agree that a dollar has a certain level of buying power, it does. Why inflation? I suspect jews but I'd like that confirmed. But even if "jews" how did/does it occur?
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Re: Venezuela Meltdown

Post by Anaxagoras » Wed Aug 29, 2018 12:10 pm

Well it isn't a self contained system.
On a "mechanical" level, they need to import a lot of basic necessities and other countries aren't going to accept "bolivars" as payment so they need some kind of foreign currency or export good to pay for these items. Oil is basically all they have to trade and they are actually producing less of it than before because they can't afford to invest in their oil company.

https://tradingeconomics.com/venezuela/balance-of-trade

It looks like they stopped reporting the numbers back in 2015.
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Re: Venezuela Meltdown

Post by ed » Wed Aug 29, 2018 12:50 pm

Sounds like fake news to me.
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Re: Venezuela Meltdown

Post by Abdul Alhazred » Wed Aug 29, 2018 1:40 pm

ed wrote:
Wed Aug 29, 2018 12:31 am
seems that what he is saying is that work, production and remuneration are related. Is that a deep thought?
Deep or not, the "labor theory of value" was the centerpiece of Marxism. Though not original with Marx in itself (Adam Smith mentions something of the sort), it was the basis for all of Marx's additional reasoning on economics.

But sometime in the 1990's, self-so-called Marxists switched to the "magic cargo theory of value".
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Re: Venezuela Meltdown

Post by Skeeve » Wed Aug 29, 2018 1:59 pm

Image
Then Skank Of America could start in...

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Re: Venezuela Meltdown

Post by shuize » Wed Aug 29, 2018 9:06 pm

ed wrote:
Wed Aug 29, 2018 11:55 am
Yeah but ... it's like that cartoon "and then a miracle occurred"
Anyway, long story short, they neglected other industries and other sectors of the economy because the oil was their goose that laid golden eggs. Then, the price of oil fell to like half a few years ago, and since then, they haven't been able to sell enough oil to pay for all their stupid policies and corruption.
so they kept spending, got it. Printed money presumably. Got it. Then it caved in.

Why? Mechanically, what happened? Their money became progressively more worthless (why "progressively" is unclear though) but in a self contained system, what is the difference? It's like a token economy, if we all agree that a dollar has a certain level of buying power, it does. Why inflation? I suspect jews but I'd like that confirmed. But even if "jews" how did/does it occur?
I'm not an expert. But I seem to recall there was also a lot of debt as well. I'm not sure they even needed to borrow when things were good and oil prices high. But Chavismo giveaways (and corruption) are so much more revoluntionary than boring old Norwegian style oil funds. Then those mean foreigners bankers and exporters expected to be paid.

So borrowing and printing. Currency controls and black markets. More paper money chasing fewer goods in an economy that was almost completely dependent on oil with a price collapse in oil. I also seem to recall they grabbed the oil companies and either arrested or drove out most of the experts.

Why did the money become "progressively" worthless? My off the cuff guess would be a progressive lack of confidence that came with the ever increasing flood of paper money.

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Re: Venezuela Meltdown

Post by Doctor X » Wed Aug 29, 2018 9:25 pm

I suspect they also expected the oil prices to continue to soar like any bubble.

Why propaganda does not replace reality. Like Joe Paterno, Chavez died before the true reckoning fell on him. Another reason to believe in a Loving and Merciful Big Daddy!

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"Doctor X wins again."--Pyrrho
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"It was the criticisms of Doc X, actually, that let me see more clearly how far the hypocrisy had gone."--clarsct
"I'd leave it up to Doctor X who has been a benevolent tyrant so far."--Grammatron
"Indeed you are a river to your people.
Shit. That's going to end up in your sig."--Pyrrho
"Try a twelve step program and accept Doctor X as your High Power."--asthmatic camel
"just like Doc X said." --gnome

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Re: Venezuela Meltdown

Post by Witness » Wed Aug 29, 2018 10:16 pm

Venezuelan President Orders Banks to Adopt Petro

n an effort to fight back against the ill-effects of his presidency’s economic policy, Nicolás Maduro has ordered Venezuela’s banks to accept the petro digital currency as a unit of account. The Venezuelan President has also increased public’s minimum wage, price of petrol, and VAT in his latest bout of economic reforms.
https://www.newsbtc.com/2018/08/28/vene ... opt-petro/

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Re: Venezuela Meltdown

Post by shuize » Wed Aug 29, 2018 10:40 pm

Witness wrote:
Wed Aug 29, 2018 10:16 pm
Venezuelan President Orders Banks to Adopt Petro

n an effort to fight back against the ill-effects of his presidency’s economic policy, Nicolás Maduro has ordered Venezuela’s banks to accept the petro digital currency as a unit of account. The Venezuelan President has also increased public’s minimum wage, price of petrol, and VAT in his latest bout of economic reforms.
https://www.newsbtc.com/2018/08/28/vene ... opt-petro/
My first thought was that they are apparently desperate to find something, anything which will hold value.

Not desperate enough to give up power, of course. But still very desperate.

It will be interesting to see if this will even act as a small speed bump on the hyperinflation highway. As with the gold ingots mentioned above, I think it's a question of redeemability. No redeemability means no trust. The banks are being ordered to accept them. Will that change anything?

On second thought, my inner cynic says this is probably just another way to loot the banks.
Last edited by shuize on Wed Aug 29, 2018 10:57 pm, edited 1 time in total.

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Re: Venezuela Meltdown

Post by Anaxagoras » Fri Aug 31, 2018 1:39 am

Perhaps the clearest evidence for how bad things have gotten there is the number of people fleeing the country. Things usually have to get pretty bad for people to decide that "being a refugee is better than this."

Venezuela’s Neighbors Join Forces to Contain Crushing Flow of Refugees
Venezuela’s accelerating slide toward mass starvation has become a continental disaster and South American governments this week began trying to manage it together.

With thousands of migrants pouring over the border -- an outflow equal to the Mediterranean refugee crisis -- government officials are meeting in Colombia, Peru and Ecuador to coordinate a response that so far has been haphazard. On the agenda are measures to prevent epidemics, harmonize identification requirements and share the burden of relief.

“The migration crisis is putting Venezuela squarely on the table in a way we haven’t seen so far,” said Geoff Ramsey, an analyst at the Washington Office on Latin America, a research organization that works for human rights. “It’s no longer an internal affair.”

In all, 2.3 million Venezuelans live outside the country, with more than 1.6 million fleeing the ravaged petrostate since 2015, according to the United Nations High Commissioner for Refugees. That’s roughly equal to the flow of migrants to Europe in the same period. The crisis looks likely to worsen as oil output plunges thanks to mismanagement, and hyperinflation defies attempts to rein it in.
Open Question

There’s another discussion on what to do about Venezuelan President Nicolas Maduro, a socialist autocrat who has withstood protests, coup and assassination attempts and U.S. sanctions. Peru and Argentina said this month that they will join Chile, Colombia and Paraguay to accuse Maduro of crimes against humanity at the International Criminal Court in the Hague. Leaders have called for elections and the restoration of Venezuela’s nullified National Assembly, but U.S. President Donald Trump’s suggestions of military intervention have few backers. Instead, neighboring countries are contending with the burden Maduro has handed them.

In Boa Vista, Brazil, the capital of impoverished Roraima state, the situation is desperate. Dom Mario Antonio da Silva, the state’s Catholic bishop, said Wednesday that about 25,000 refugees have reached the city, and as many as 4,000 sleep on the streets. The church is offering food baskets, serving breakfast to 1,200 people and teaching migrants Portuguese.

"What we need are effective immigration policies,” da Silva said. “At the moment, we have no immigration policies. What Brazil is doing at the moment is just first aid, emergency measures."
Common Cause

This week, officials from Colombia, Peru, Ecuador and Brazil met in Bogota to discuss joint strategies on health care, schooling and employment for migrants. On Wednesday, there were further meetings in Lima to formulate a request to organizations including the UN and the Red Cross to step up financial and logistical support, said Enrique Bustamante, head of policy at Peru’s immigration agency.

“The number of Venezuelan migrants in the region is unprecedented,” he said. “There’s never been a migratory flow like this in such a short time.”

Ministers from as many as 14 countries and 10 international organizations are to meet Sept. 3-4 in Quito, Ecuador, to discuss the crisis more broadly.
Meanwhile, how clueless is Maduro?
Venezuela's President Nicolas Maduro tells people fleeing country: 'Stop cleaning toilets abroad and come back'
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Re: Venezuela Meltdown

Post by Doctor X » Fri Aug 31, 2018 1:45 am

I thought South Americans believed in open boarders. . . .

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Re: Venezuela Meltdown

Post by Grammatron » Fri Aug 31, 2018 7:42 am

Only between non-shithole countries.

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Re: Venezuela Meltdown

Post by Giz » Fri Aug 31, 2018 12:37 pm

Now the whole country is a toilet, it’s a brave new land of opportunity for toilet cleaners!

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Re: Venezuela Meltdown

Post by Doctor X » Fri Aug 31, 2018 8:54 pm

But Venezuela is not flush. . . .

--J.D.
Mob of the Mean: Free beanie, cattle-prod and Charley Fan Club!
"Doctor X is just treating you the way he treats everyone--as subhuman crap too dumb to breathe in after you breathe out."--Don
DocX: FTW.--sparks
"Doctor X wins again."--Pyrrho
"Never sorry to make a racist Fucktard cry."--His Humble MagNIfIcence
"It was the criticisms of Doc X, actually, that let me see more clearly how far the hypocrisy had gone."--clarsct
"I'd leave it up to Doctor X who has been a benevolent tyrant so far."--Grammatron
"Indeed you are a river to your people.
Shit. That's going to end up in your sig."--Pyrrho
"Try a twelve step program and accept Doctor X as your High Power."--asthmatic camel
"just like Doc X said." --gnome

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Re: Venezuela Meltdown

Post by shuize » Fri Aug 31, 2018 9:37 pm

Not quite the same category as Venezuela, but speaking of Latin American currency issues:
The [Argentine] peso is down more than 45 percent against the greenback this year, exacerbating pre-existing fears over the country's weakening economy while inflation is running at 25.4 percent this year.

https://www.cnbc.com/2018/08/30/argenti ... -plea.html