The "no comment" revolution

Left-leaning horse being added to this logo as we speak
Left-leaning horse being added to this logo as we speak

Financial markets are spooked about the last bastion of reason in the Venezuelan government finally falling, according to Bloomberg’s Anatoly Kurmanaev – whose work continues to be interesting and thought-provoking.

The money quote:

“A spokesman for the Finance Ministry declined to comment on potential bond sales …

A spokeswoman for the central bank declined to comment on the delays to economic reports and data credibility.”

No comment. Nothing to say. Can’t talk. It’s *always* the same with these folks.

Tell me again, why exactly does the government complain about its coverage in international media when it won’t/can’t answer simple questions?

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  1. As the author and his references make perfectly clear, you cannot hide the sun with your finger. Venezuela can continue to not meet target dates for key issues but the market knows the uncertainty with or without this data. The citations paint a very bleak picture indeed.

  2. Q. “Can you tell us whether the data you publish in your Official Report is credible? Should we believe it?”

    Bank Official: “I have no comment on that….”

  3. Very good article. The bets are on for a Venezuelan debt default:

    “The cost to protect Venezuelan bonds against non-payment for five years using credit-default swaps rose 195 basis points in the past three months to 1,176 basis points as of 9:43 a.m. in New York, according to data compiled by Bloomberg.”

  4. I have a journo friend who insists that most press officers in Venezuelan ministries aren’t actually authorized to say “no comment”…they actually get yelled at if they specifically decline to comment. The official policy isn’t so much saying “no comment” as just not picking up the phone.

    • I reckon one of the investments at Venezuelan ministries was the purchase of phones with caller display. Only a set of phone numbers are to be answered (and that of your cuaima, señora de servicio, psychiatrist or barragana).
      But what if journalists wait for the people to come out of ministries? Do they use the hounds or what?

  5. This must be at least the tenth year that doom and gloom is predicted for Venezuelas economy at the beginning of the year. All forecasts have been wrong so far and the country continues on its way.´……….not missing a payment. With a GDP that has grown from $90 billion in 1998 to $408 billion at end 2012 and consumer spending rising from $65 billion to $272 billion in the same period.

    So………doommongers……..let’s have a debate about WHEN the default will come! To make it easier you do not have to give a specific date but the end of the calendar month when you financial gurus see the default.

    Come on Quico – you Superior Ph.D Being – have a “guess” or forecast and either really be the guru you portend to be or end up with even more egg on your face than normal.

    My forecast is that there will not be a default no matter how the CDS performs.

    • I’d be glad to do that if they only published honest information about the economy. But its hard to unpack all the lies.

    • Arturo, when you’re right, you’re right. I’d like to ask you regarding one point: when you say “With a GDP that has grown from $90 billion in 1998 to $408 billion at end 2012 and consumer spending rising from $65 billion to $272 billion in the same period” do you imply that
      A) pre-chavez governments had no way to fund a better nation before, or that
      B) even with over 4 times the GDP and consumer spending chavismo has failed to achieve the same amount of improvement in the nation?

      Note that if the amount, X, is enough to have a healthy nation, 4X should translate to much, much more than 4X healthy, since all the initial costs are covered by the first X…

      Why, exactly, aren’t we seeing that level of improvement?

      • extorres – let’s stick to the point. We are talking about Venezuela defaulting. Why do you want to widen the discussion to what improvements have been made and then continue to murder rates and so on?

        The only comment I have about improvements is that all international indicators (CEPAL, FAO for example) is that poverty and hunger have been drastically reduced during the revolution. Maduro announced last night that latest figures show that poverty is now 19.6% and extyreme poverty 5.5%. You know that this is a HUGE improvement compared to 2003 (oil strike and lockout you all suppoerted – remember?) when poverty reached 55% and extreme poverty around 23%.

        I rest my case about improvements. extorres.

        Now – who is going to predict the month of the default which was the point of my comment and this post.

        • CEPAL and FAO data comes from Chavismo. It’s rubbish data, like your brain.
          Poverty levels are much higher than in the eighties. Any real – although temporal- decrease in poverty during the regime’s time (it doesn’t have anything to do with revolution, this is an utterly reactionary time) is inferior to the increase in oil prices.

        • Arturo,

          You say “poverty and hunger have been drastically reduced”. I asked you to explain away why the *amount* of reduction is way out of whack with respect to the amount of increased income and spending. Try again.

          As to the default, I thought I had addressed that with, when you’re right, you’re right. By that I mean that I agree with you that Venezuela has enough income from oil to not default any time soon so long as it’s rulers are willing to continue to devalue like crazy and other economic no-nos. Since I think they don’t wish the consequences of default, I agree with you that they won’t. So, please, address the question of my first paragraph without sidestepping.

    • In about 18 months. My f*cast is based on some rather dubious numbers because what’s available is so opaque. I’ve even factored in the opacity to some degree. They might hold out two years, but its going to be sketchy ceteris paribus. But then, I don’t know nuthin’. I just do this stuff for a living.

      What’s your forecast based on? A wing and a prayer? As long as the checks to shill for the regime continue to not bounce?

      Incidentally Arturo, please be honest when utilizing the GDP numbers. If you want to calculate the GDP for 2012 at PPP, then it is only fair and fitting to do the same for numbers from 15 years ago. Its intellectually dishonest to claim that they are apples and oranges. Comparable GDP data for 1998 would be 204.3 billion…so the GDP hasn’t quite doubled, as much as you’d like to think it has.

      Same goes for consumptive spending. I expect resident trolls to at least put some effort into their calculations.

      Oh, yes, I’m still curious: did your daughter ever get her fridge? Did she pay market or “just” price?

      • The “just price” is the market Price – and yes we did get the just jrice thanks to the revolution!

        The GDP figures are quoted all over the media and in the CIA world fact book. If you want to believe in your fairy tale numbers to support your political position of a loser, then be my guest.

        • Market price and just price are two different things. You know this.

          You can quote values of two separate years all you want, but you really should look at an apples-apples comparison, especially given the reliance of imports by Venezuela.

          These are the PPP numbers based off of current valuations from, no less a sort than the World Bank…which is where the CIA pulls some, if not most, of its economic data.

          Or try something with a bit more per capita flavor.

          I’m surprised, as a chavista, that you would not want to use PPP GDP (with or without per capita numbers). After all, it is a widely used method of examining national welfare more or less. Of course, the reality is that the numbers you cite don’t look nearly as good when you use that metric.

          Yup, that Fed per capita doesn’t look quite so good as your raw numbers. Right? Almost stagnant.

          Incidentally, my “fairy tale” numbers said three devaluations in 2013. For convenience sake, same sourcing. Unless these, too, are fairy tale numbers.

          1.) —- Surely you remember this. El Comandante wasn’t even cold in his grave yet. (Or maybe he was).
          2.) —- You know, that silly SICAD thing.
          3.) —- Hmmm, more tiered exchange rates?

          Your country is running out of money. How? Only through gross ineptness, given the revenues available, but it is what it is. At your burn rate and the tepid degree with which the government seems to want to adjust and the off-balance funds they can raid, the government has two options in a couple of years. A). They can do a radical adjustment that will burn the people of Venezuela and put people in the streets who have long supported the government. B). Default on their bonds and screw investors that are typically thousands of miles away. Think not? Look at the decline in reserves and your upcoming payment schedule over the next two years.

          Which do you think the government has the political fortitude to choose?

    • The economy has been on debt life support that will not last much longer. Certainly, it is not going to last five years! I believe this accumulated debt is secured by future oil production. The debt is small compared to the value of proven oil reserves. Therefore, the lenders have some assurance of being paid. The problem is one of production and cash management and spending. Eventually, payments fail to be paid as agreed, then international remedies take over. The regime has fewer options, and those options that remain demand measures of austerity and suffering! Any volunteers?

      • Gordo – the whole world is up to its neck in debt. The whole monetary system funcions on debt. No more gold standard. So – why should Venezuela be criticized whern its external debt to GDP ratio of about 25% compared to your favorite Paradise of the USA where the same ratio is 106%?

        Now if your arguments are sound give a month when the country will default?

        If you don’t then we will all know that you are just spouting bullshit for politifal reasons.

    • “With a GDP that has grown from $90 billion in 1998 to $408 billion at end 2012”

      Wow, What an accomplishment. The price of oil in 1998 averaged $17 (adjusted for inflation) and in 2012 it averaged $88. With that huge influx of free money, that had/has nothing to do with government policy, they have managed to decrease poverty somewhat…yet they have decreased poverty (according to their own figures) at a slower rate than any other country in south america over that same period.

      Absolutely no one speaks of the “Bolivarian revolution” as a model to follow. You are right in one respect. Venezuela can continue in its present state of 60% inflation, chronic shortages, electricity blackouts, massive corruption, massive deficits, and rampant violent crime for quite some time, due to its oil reserves. It won’t collapse, it will just keep on rotting and decaying.

      • Plus: “Only the much-maligned United States, which imports about 800,000 barrels of oil per day, pays in cash. Every other revenue stream is transformed into either a barter arrangement or a means of servicing the repayment of Venezuela’s enormous external debt, currently totaling close to $75 billion. China, which is emerging as the principal creditor of Venezuela’s oil sector, uses Venezuelan oil to pay off Venezuelan debts. Since 2007, the Chinese government through different mechanisms has lent Venezuela $42.5 billion, which means that Beijing receives close to 600,000 barrels of oil per day for repayment of the debt.”
        More here:

      • Gordo – now do you see the reality? To educate you a little more. PDVSA’s income was US$93 billion plus in 2012 and imports of all kinds inclyding government imports and Cadivi dollars cost US$59 billion. Add in the Bs. 272 billion collected by SENIAT and the situation is very promising and stable.

        The difference is enough to pay the US$10 billion and continue with social programs. The internal debt does not really matter as the government could just devalue its way out of it.

        So when is the country going to default?

        • If it is so promising, what is happening to reserves? If it is so promising, why the need to negotiate perpetually on loan terms in which you mortgage those future oil revenues, with the Chinese? See, there’s this silly thing about accounting that says if so much money comes in, it has to go somewhere else. I’ve heard rumors of such a thing on a macroeconomic scale…its called balance of payments. It shows positive, but all indicators seem to point to the fact that it is largely made up numbers.

          How does it feel to voluntarily elect to have China as your new colonial masters?

          • since that hit a vein, you won’t be hearing from Arturo any time soon. But it’s not only Arturo or other chavistas that are deluded into thinking that Venezuela is a net producer, generating strong cash inflows, you got some real alfalfa-sprout eaters visiting this blog and promoting their pet economic theory of give-aways, because, well Venezuela has the money.

            But wait! That’s not all. The cash give-aways (perhaps with peluchitos) will drastically cut crime, because well you know, malandros will be so-o-o grateful that they will reform overnight — at least until they re-start the cycle of violence.

            I wonder if there’ll be any money left over for a giant galpón. We need it for all the paja.

          • syd, sad how little you understand the difference between the anti-capitalist system Arturo endorses, and the pro-capitalist one other visitors on this blog promote.

            Sadder still is to think you won’t answer the direct question: what do you prefer, government officials wasting 40% of oil revenue, or 100% of the population wasting the same 40%?

        • $93 billion a year would mean Venezuela is selling every drop of 2 1/2 million barrels of oil a day, at a hundred bucks a barrel Now, we all know thats not true so if we know thats not true then we know…….. You see where this is going Arturito? Its just one lie compounded by another and another and so on. If they really were generating a $44 billion surplus every year, then why the hell are they still borrowing at credit card rates?

  6. The regimes policy is to control all economic information which comes from the govt so that only information which is favourable to the govt is released ( or reconstructed to make it look favourable to the govt) , and any information unfavourable to the govt is silenced , regardless of any established international custom or rule . Its the other side of the policy of communicational hegemony ..
    Ordinarily countries which depend on the financing of international market institutions cant do this because opacity is punished by the markets .but most of Venezuelas financing now a days comes from govt to govt financing ( China , Korea, Russia ) which is cheaper and tied to supra economic or geopolitical goals .
    This poses a problem to economist whose job is to asses economic data and interpret it .However its very difficult to close the doors to all information derived from the govts activities , leaks always happen and much can be gathered by looking for the information indirectly at non govt sources.
    Generally a withholding information leads to a lot of speculation which is never good for the govts that keep a tight lead on their information for speculation usually tends to see the witholding of information as a sign that there is something unpleasant to hide . ( which of course is normally the case)

      • No it did not but it has always tired hard to make bad news or non news look like good dressing it up or giving it an embellished twist or spin . The govt doesnt just withold information , it falsifies information,…. wholesale !!

        • bill bass – instead of chillando about the government’s information record maybe you should consider that if Venezuela does default on its international debt obligations, it will be reported by the banks to which it owes money.

          Thus your comment is completely irrelevant about whether information is withheld or even falsified. That is just your opinion that does not count for much.

          You just write this stuff to discredit the Venezuelan government and provide no real facts – just anecdotes and rumors.

          • jajaja. Risk, responsibility, civic inclusiveness, national productivity. Just a few words that lie somewhere on a poetic plan, and therefore have no need of a definition.

          • Arthur would be surprised at how much the banks know , moreover at what our Chinese and other international creditors know , thats why almost every dime that the Chinese lend us is secured by a mortgage on the income of future oil sales to third parties , thats why venezuelan bonds carry a yield much much higher than any other countries , thats why the credit rating on venezuelan debt is so miserably poor and falling , thats why our creditors have to pay such heavy price to hedge or insure their loans to the govt . Maduro thinks that because his followers are so idiotized by their fanatism every one else ‘sucks their thumb’. , how foolish of him !! , In fact by chance sometimes even I happen have direct knowledge of many of the regimes fibs and how hard the govt works to keep them from becoming public. . I dont think that the govt needs my modest little help to discredit itself , its something it does quite well on its own . I pity Arthur at having to make a credible case of such a lost case as defending the govts economic mafeasance and failures . But on a personal level good luck to him , may they reward his pitiful efforts well !!

  7. Arturo – You blind dumb fool. Just repeating your governments BS propaganda, you and unfortunately so many other chavistas will make the outcome of this chavista government only worse. By the time it fall´s, and It will, you and your co-believers will be held responsible for this disaster for you have believed and voted for it. Shame on all of you for enabling this disastrous regime. Enjoy your fridge!!!

  8. When people write about default they think of a financial default ,where a debtor such as the Venezuelan govt is no longer able to pay its international creditors. But there is another way of looking at a default , as when a govt is unable to meet its commitments to its people , to the part of Venezuela that produce the goods and services the people need to carry on with their lives by denying them the things they need to such purpose !! The govt doesnt have only international financial creditors , it also have other creditors , it owes all Venezuelans the capacity to feed it self , to access the goods they need to carry on with their normal lives in a satisfactory manner , when the govt creates conditions that make that either impossible or a hardship, its on default .
    Looking at default as if the govt only had financial creditors is a travesty of what a govt is and is politically and morally bound to do .


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