Either way, after years and years of slow bleeding getting increasingly worse, now the patient is going into septic shock.

The Bolivar no longer has a floor underneath it. Last Friday was at around 10.000 to 1 Euro. Now it is at 21.000+, in five days down over 50%... 8.000 per USD on July 29, now at 18.000 per 1 USD. Just last two days it went down about 7.000 units. A new wave of inflation is imminent and this one probably will be hyperinflation.

Most people think the elections were not only manipulated, but the voting choice registered through a new document to punish post-fact anyone who voted "incorrectly". The opposition claims that dissenters are now being carted out in the night all over the country.

Most western nations are refusing to recognize the results, which would effectively leave the country isolated with only China, Russia, Iran, Cuba as partners. The two conservative governments in the western hemisphere want to go much further: The United States under Trump wants to impose oil sanctions, which would further cripple the economy of Venezuela. Argentina's Macri is now pushing hard for Venezuela's complete expulsion from Mercosur, which has not occurred yet because Brazil and Paraguay have demurred. This could cut what is becoming a major escape valve for Venezuelans trying to leave the country, since the process is far quicker for members. Meanwhile, more airlines are cancelling operations to Caracas.

The economy cannot continue like this too long without a complete social explosion. Then again, Zimbabwe just seemed to bleed until the formal economy was simply destroyed, which brought the end to the crisis effectively, like a fire running out of forest, since everyone had jumped out of the system and was operating under another. But politically, either a full dictatorship takes shapes in the next weeks, or some major change takes place peacefully or through violence. Sadly, only the first option would restore order quicker, the second option would surely not be without huge pushback. The third (less likely) outcome is a civil war.

If the shit really hits the fan and people start dying by the thousands on television I wonder if people in LA will look to the US to "step in" in some way. The UN is powerless with Russia and China holding vetoes and neither caring one iota whether 10 million people die in a social/military implosion. I'm with you Derico, I say Venezuela cast its lot and they need to suffer the full consequences and figure it out themselves. But yet when the tv screens start filling up with the bodies of women and children ripped apart by tank treads the calls for intervention will get shrill indeed. My honest opinion, one aircraft carrier group off the coast and 5000 marines ashore would have Maduro's head rolling in 24 hours. I can't see the Venezuelan officer corps sacrificing all of their ill gotten gains from the past 15 years just to defend this asshole. It's a tragedy whatever happens and it's going to get much worse before it gets any better.

wingman wrote:

My honest opinion, one aircraft carrier group off the coast and 5000 marines ashore would have Maduro's head rolling in 24 hours.

Slow down there slick you have no earthly idea what is going on with Maduro.
You do realize that Maduro is in tight with Putin and is his basic source of petroleum imports and arms. Maduro sold off/traded 40% of the oil to Russia so he could have access to arms and oil imports because he has no US Dollars to buy oil and arms.

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Maduro is going to last as long as Igor Sechin head of Rosneft, known as Darth Vader, wants him there.
Maduro is not running the show in Venezuela. Russia is in charge, an attack on Venezuela would be equal to attacking Moscow. Good Luck with that.

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The people in Venezuela have zero as in no choice in their fate at this point. They are just in for the ride.

Okie

I don't think people need to suffer needlessly, I never said that. I do admit however that it seems like an intractable problem. I guess a wild card would be if oil surged in price back to the peak period in the next 12 months for whatever reason. The likelihood is that will not happen, and Venezuela even before all this was very oil-centered. Now it is far worse because other economic sectors have been battered or even dismantled over the last few years. Argentina had a huge crisis almost 20 years ago, but it pales to this. More importantly, once the economic shock was made by a new government, the country had the industry, agro, and service sector to rebound sharply, so it went from -8% GDP one year to 11% growth the next. One saw the same pattern in the Asian financial crisis of huge GDP decline one year and big growth after the adjustment. In Europe you have seen the other way of adjusting: no huge GDP shock but a very slow bottoming out, since monetary policy cannot be used in the Eurozone by individual members. But all those countries also had much more diversified economies than Venezuela.

My question is forgetting the poitical side can Venezuela even under the best economic recipes recover quickly if oil stays low? Is there enough of other sectors left to lift the economy?

It seems that Venezuelan socialists are about to run out of other people's money, which in a country literally soaked in oil is quite an "achievement".

Sad seeing a country like Venezuela hurtling towards the abyss.

Hopefully, America won't intervene, that can not end well. They need more political stability, but with Maduro at the helm and taking Venezuela towards kind of a Cuban style of government. Venezuela is potentially a prosperous country, they didn't invest their oil money wisely.

Most of the world does not have oil based economies, well technically no, we all suffer the high prices that the oil cartels charge, which make our electricity expensive and has a knock on effect on all other industries which have to rely on power. Most of the world has slowly benefited from the lower prices as the oil infrastructure has done its best to ensure that the falls we see on the oil market is not readily translated to lower prices.

Venezuela is now out of the boat and floating in the ocean like most of the rest of the world, what I do not understand is why the powers that be don't try an artificial oil embargo, if they have a major interruption of oil supply, what happens in the Caribbean and South and Central America, Europe and the US will not rush to replace the lost content, prices will rise for at least 6 months or more, with little to no increase in the USA or Europe.
Fact is that only a quick return to high oil prices will stabilize the country.

High prices of oil wont stabilize the country one bit. Maduro and his cronies have bled and neglected the petro industry too long. Now other countries are hesitant to even allow their tankers to dock due to disrepair.

High oil will allow Maduro to pander to and stabilize his base, there are two countries involved here, his and what the rest of the world thinks it should be, and at present, he is in charge and doing what he wants to do, let's see what the rest of the world does when his new assembly puts in place a constitution that he wants.

L410Turbolet wrote:

It seems that Venezuelan socialists are about to run out of other people's money, which in a country literally soaked in oil is quite an "achievement".

Venezuela and Saudi Arabia are pretty much the same when it comes to their economies: both have massive oil reserves, have national oil companies, and invest the profits onto welfare to the people. Both economies are also susceptible to wild changes in oil prices.

The difference is that whereas Saudi Arabia was able to hoard cash like there was no tomorrow and has been on the US's good side, Venezuela didn't do the same. When Hugo Chavez became elected and started denouncing US imperialism, that frayed relations with the US (even though the US was and still is the largest buyer of Venezuelan crude).

What Venezuela's economy is going through is the same as a household whose monthly check suddenly shrank but racked up expenses and put many things on credit to make home improvements. The actions of the government are inexcusable, but let's not pretend this is only a "socialist" situation; other socialist countries seem to do fine and other capitalist countries also entered recession as a result of high and low oil prices.

par13del wrote:

High oil will allow Maduro to pander to and stabilize his base

Many countries have tried to get high oil prices in order to satisfy their citizens, but the oil drop led by Saudi Arabia was not gonna be eliminated to easily. Even then, during the beginning of the crisis, it was thought that Venezuela needed prices above $100 in order to break even in its budget, and that was something that the Gulf monarchies were probably not gonna allow to happen (and even if they could, shale oil and more oil independence from several countries would have prevented crude from going anywhere near that price). Maduro can whine all he wants, but he's only denying a reality in order to appear in control.

einsteinboricua wrote:

Many countries have tried to get high oil prices in order to satisfy their citizens, but the oil drop led by Saudi Arabia was not gonna be eliminated to easily. Even then, during the beginning of the crisis, it was thought that Venezuela needed prices above $100 in order to break even in its budget, and that was something that the Gulf monarchies were probably not gonna allow to happen (and even if they could, shale oil and more oil independence from several countries would have prevented crude from going anywhere near that price). Maduro can whine all he wants, but he's only denying a reality in order to appear in control.

Correct, although it is for Brent crude, which is the benchmark index:
http://graphics.wsj.com/oil-producers-b ... en-prices/

Different types of oil command different prices; Venezuela's oil is a very heavy oil type with a fairly high sulfur, which has a significant price discount attached to it compared to the North American standard, West Texas Intermediate.

The problem is that Venezuela also has to import lighter crude to blend with their heavy oil; without imports of heavy naphtha and U.S. light crude, the Venezuelan's can't export their oil. With Venezuelan foreign currency reserves being depleted, they can barely pay for the oil they are importing so they can blend it for export, along with not being able to pay for equipment and parts to keep their oil fields and refineries running.

Depressed oil prices are going to remain for the foreseeable future; the Saudi's really can't do much about it, and with the glut of Iranian oil and the recovery of Iraqi oil supplies hitting the market, they will continue to stay depressed.

ThePointblank wrote:

along with not being able to pay for equipment and parts to keep their oil fields and refineries running.

I remember reading an article about how during the oil price boom, Chavez employed a Mugabe-style reform with its oil refineries: it replaced competent engineers and administrators with people inexperienced but loyal to Chavez to man the refineries and rigs. In addition, funds that should have gone to modernizing them went to other things. The net result is refineries in poor conditions (if they're even operating) with people who know zilch about running them.

It's the old socialist dictatorship game, first the toilet paper becomes scarce and then everything else. Venezuela has been ruined by the corrupt Chavez/Maduro Regime beyond repair.

These guys have led a war against their own Venezuelan Population and the final stroke was yesterday by firing the attorney General.. Now there is no longer not even a pretended token Division of powers, Venezuela has finally become a socialist dictatorship with a so called constitution which is not worth the paper it is printed on.. All that with the friendly help of the Castro Regime in Cuba.
Venezuela has the most oil reserves but it is ot an oil economy. There is no economy at all in that Country. They have to peddle the oil for the fraction of the cost it takes to get it out of the ground.

I doubt that the US will intervene with Military. But it would be a blessing for Venezuela if they did. The Country is in the Hands of criminals and the US are the Police.

einsteinboricua wrote:

I remember reading an article about how during the oil price boom, Chavez employed a Mugabe-style reform with its oil refineries: it replaced competent engineers and administrators with people inexperienced but loyal to Chavez to man the refineries and rigs

It was every industry including farming, manufacturing as well as petroleum. Chavez had a big hoopla when taking over the Aban Pearl semi submersible off shore rig and within weeks sinking it because of no experienced operators or engineers was a prime example. It was shortly after the Deepwater Horizon incident as well.

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They did keep Canada busy building G550's on up providing airplanes for the loyal Chavez supporters. That money had to go somewhere.

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The real question is if the how the US handles Citgo refineries on US soil if the US calls for an embargo. (Citgo is Venezuelan owned)
Stopping imports of Venezuelan crude is one issue that can easily be replaced within a couple of weeks with other sourced base stocks.
The big issue would be if the refineries were shut down by Maduro or the US. That would be a major issue those refineries by my best guess provide about 20% of the distillates for the southern and east coasts.

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I personally do not think that Maduro would try much involving the refineries on US soil because that is his basic source of USD which he needs to buy anything on the global market. Food being a major problem since Venezuela does not produce any significant quantity of agricultural products anymore.

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I really feel sorry for the people of Venezuela. The election that they voted for to basically throw out their constitution which purpose was to limit what the government could do, has now made the citizens irrelevant.
The Venezuelan citizens have changed their own status from being an asset to being a liability for the government.
I suspect it will not be long before Maduro starts treating them as such.


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I think we are down to about a 12 to 15 months left before Venezuela totally collapses.


Okie