The black market exchange rate blew past 17,280 VEF/$ today, evaporating two-thirds of the value our currency had on May 18th, when the rate was 5,760. That day, just 77 days ago, the exchange rate was up a million percent from Chavez’s swearing in on February 2nd, 1999. Today, it’s up three million percent.

My guess: the FX rate could be over 30-40 thousand VEF/$ by 2018 if there are no substantive changes in policy. Why? Venezuela’s Central Bank is creating Bolivares at an unprecedented rate to fund the government’s deficit, so other things equal, nominal variables in the economy like prices and the exchange rate should keep pace. Base money — the stock of currency the Central Bank creates — is up 666% in the last 12 months and rising fast. Just last week, it spiked 13%.Venezuela’s catastrophe is a gut-wrenching rerun of Latin America’s economic failures from the 20th century, only worse. It’s the the predictable, agonizing aftermath of macroeconomic populism. The story is well known:

In the beginning, the government stages a consumption and import boom with a large fiscal expansion and overvalued exchange rate. The whole thing is propped up with voodoo economic controls and funded by high commodity prices or debt or both. It works for a while.

In the middle, the economy begins to lose steam and shortages pop up. The controls to mitigate the bottlenecks only make things worse. The growth and gains are unsustainable, and eventually, they stop. Later, they reverse. 

In the end, there’s a shock or crisis that the system can’t weather (in our case lower oil prices), and the whole thing falls to pieces. Imports are gutted and per capita GDP craters. The currency is wiped out and real wages fall below their initial level. Poverty balloons. 

Maduro could end the nightmare as our Latin American peers did by visiting the IMF and rationalizing policy — but he doesn’t care to. Instead, he’s inviting U.S. sanctions and consolidating a malevolent totalitarian project while the crisis spirals out of control. For the economy to enter hyperinflation, prices have to rise more than 50% a month. Well, base money grew by 40% in the last 4 weeks. We’re getting there.

To be honest, I’m surprised it took so long for shit to hit the fan.

Even as late as 2009-2015 (green line below), inflation and Central Bank financing of the government’s deficit (i.e. money printing) was high but under control. The government would mostly monetize the deficit towards year-end to pay bonuses to three million people on the public payroll and keep Central Bank financing in low gear otherwise. Base money would spike in November and December but grow just 0-5% per month the rest of the year.That changed in May 2016 when the government started printing money like it was Christmas the whole year (blue line above). As imports, the economy and real tax collections tanked, the government doubled down on the Central Bank’s printing press to make up the difference. As a result, base money grew by 236% in 2016, four times the average growth in 2009-2015.

By 2017, the government was fully reliant on direct Central Bank financing. This June, just 39% of the budget was funded with ordinary tax collections and DICOM dollar sales, while the remaining 61% was funded with freshly printed cash. It’s crazy: the government now prints more money than it collects from dollar sales, VAT, income tax, and all other taxes combined, and not just in November/December but every month. We don’t have full July data yet, but my best guess is that the government printed a record three or four times as much money as it collected via taxes and DICOM dollar sales.

Absent significant changes, humanitarian and economic conditions in Venezuela will continue to deteriorate. A basic extrapolation of recent trends suggests monetary liquidity could rise to 100 trillion VEF by year-end from 27 trillion now, implying prices and the exchange rate might triple or quadruple through December. Wages won’t keep up, poverty and shortages will deepen, and people will die. This train-wreck is no longer in slow motion, and Maduro wants to drag it out all the way to hell.

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  1. If only the opposition wasn’t waging an economic war none of this would be happening.

    Seriously, every time a chavista says something about an economic war, I ask how that is possible when the government controls the dollars, the ports, the armed forces and police that man the alcabalas and has done so for almost two decades.

    I always get a deer in the headlights look in return.

    • They say that’s all a lie and that the opposition control EVERYTHING.

      You’ve simply found stupid chavistas, I’m tired of finding extremely hypocrite chavistas.

  2. Not sure if this is accurate but I read somewhere that hyper inflation in Vzla has been avoided not by Maduro boundless incompetence but the Money Print Houses refusal to ship more Money until they get paid the outstanding debt. In other words, the inflation has been kept “at bay” 700% given the lack of $ to buy more money.

    • Sorry, that’s not accurate. Money printing is a metaphor – the creation of money by the Central Bank is largely electronic. Unfortunately, that won’t save us.

      • Well, I read that from a serious publication, wish I had the link, you are correct about electronic creation but AFAIK Venezuelans still handle cash and in bigger and bigger bulks, that means printing real bills.

        • TV, as you know, the banks are giving out very little cash, because the already-insufficient cash printing can’t keep up with exploding prices, forcing some 90% of commercial retail transactions to be made with plastic.

  3. Now seriously, unless Maduro and his ANC give up a lot of skin (meaning oil and minerals) no one in his right mind will lend money to a dictator or to 500 intellectually challenged #tropicalmierda soviet.

    Remember this?, this was Chavez announcing exchange controls to rein over “capitales golondrina”. Shitfire!, 15 years ago and this is what we got. That is the price of accepting the Chavista BS like today’s ANC.

    Brace for the default, who needs economic sanctions when we have Maduro?

    • Wow that link is a throwback! Thanks!

      The government is out of dollars, sure. But as long as it keeps selling them way below their actual value, it will be out of bolivares too. That’s what is happening. You’ve got a massive balance of payments crisis (aka dollar shortage – didn’t talk about it much in this post) but you’ve also got a gaping fiscal deficit (not enough Bolivares). Either one could finish doing the government in, though its hard to tell which and when and if the catalyst will be economic at all.

    • Yeah, got into a taxi tonight. Base fare 5000 at night. Was 4000 a couple days ago. All the readers here know the basic economic reasons why this is happening, and it is all because these idiots shot themselves in the foot. Purely self inflicted.

      However, there is lots of misinformation going around on whatsapp (wish I could post pic) trying to slander dolar today and blame dolar today for all of this. I personally think it is a psyop.

      Everybody in the street is talking about the dolar rate and the high prices. The trick is to make everybody realize that this is purely the governments fault, and that the black market exchange rate is more or less supply and demand by money changers in Cucuta.

      This will be what ultimately breaks the back of this government, but everyone has to be made aware why this is happening– not any economic war bullshit…this is just flat up economic suicide. But when you talk to the average viliage idiot on the street, like MRubio said: deer in the headlight look.

      Easier for a hood rat to go along with a mob directed by colectivos to loot than it is to listen to the truth being told to you by an economist with a pocket protector and dorky glasses.

  4. Maduro…cuban security…..cuban dogs running your country into the ground…poor venezuela….this has always been the plan … should have known back when Chavez took his teeth out and knelt for castro….money doesn’t matter in cuba….so it’s a distraction in Venezuela……there was a quote from Lula I read… . If venezuela falls…is like Berlin wall…….the communists read history too people

    • Hi Mike, do research on the Foro de Sao Paulo. Yes, Fidel was shitting his pants in 1989 and would lose Soviet support. Plus he did not want himself to be relegated to the dustbins of history as another old fuddy duddy revolutionary from way back when.

      At the inaugural Foro de Sao Paulo, sponored by Lula, they basically were trying to revive a new Communist International based not in Moscow, but in Latin America and Cuba would be its Mecca. To fuel this new Communist International of course, was Venezuela, which would fund revolution across the Western Hemisphere. Interesting stuff and I still have lots more to research on this.

      In conclusion: the Constituyente was not only the second death of Chavez. It was also the last dying fart of Fidel Castro.

  5. Excellent piece, Frank. My sense of it (I’m in the US and only get texts all day from family in CCS) is that bad as it is, Venezuela can muddle along for quite a while longer, North Korea or Cubano style, owing to momentum and the fact that foreign countries will do little to nothing that costs them money or posits them as imperialists.

    Maduro’s one immediate weak spot is the money, and try as he will, when you live and die by way of exports, you have to have hard currency – which is unaffected by wonky currency controls in Vez. – and as Maduro’s quickly vanishes, a melt-down incident is bound to occur that could swiftly unseat him.

    When 3.1 billion dollars worth of bond payments comes due in what, a month, all the phony base money Maduro has cooked up will be of little value. Could this trigger the meld down moment? IF not – what?

    • Readers of CCS Chronicles all know this. Reading El Nacional tonight, they do not go this deep, and it is probably a journalist writing this who is not trained in economics (and thus lets the rhetoric get ahead of reasoning and thus focusing on bullshit that is street gossip rather than basic macroeconomics).

      You are totally on Juan. Great article Frank, would love to read more like this.

    • Could this trigger the meld down moment? IF not – what?

      Hello ! I don’t think a financial collapse would finish the regime because is a tight grip military dictatorship.
      The regime would let millions of Venezuelans flee the country in a refugee crisis first than abandon their positions of power. as long as they still have the oil $ flowing everything remains business as usual. Any other government would have collapsed long ago or just with yesterday electoral fraud, a military with a minimum of moral base would have stepped in. Even if Maduro resigns tomorrow, the regime will remain in control of Padrino and his proxies until removed by force.

      • Yes, true. And we know that Generals are generally granted mafias (cement, food, ports, airports, mining, whatever). If you ever see a house of a general, they literally live in a fortress worth around a million dollars here. They can stick around for ever.

        However, they are not paying for their army. If the government does not pay the soldiers, then the general has no power. You got to have soldiers to fight for you.

        As badass as Padrino tries to make himself out on youtube videos, its the soldiers who do the dirty work while he is drinking 18 year old whiskey with high society elites.

        You would think that if the gov actually had money, the soldiers would be doing pretty good on the FANB army barracks. The army barracks are like well… everything else in Venezuela. So just imagine what life is like for your average 18 year old soldier on your typical FANB base.

        Padrino however lives in a mansion. He is a millionaire, maybe billionaire, in Dollars, not measly Bolivares Fuertes. He wont pay the grunts out of his own pocket. That will never ever ever happen.

        At this point, I think we have to hope and pray that at least enough Chavistas will figure the ship is sinking fast and only a handful of hardliners will go down with the ship. Throw them some liferafts. Let the rest drown. The economy is in a complete, total and fatal tailspin and they can do nothing more than just double down on more “revolution”.

    • The problem is he keeps managing to borrow more money – last time was by using Citgo as collateral. I think they’ll be able to make the remaining bond payments this year, after that I’m not so sure

  6. Remember the 2017 Venezuela & PDVSA bond payments still due: $1.636 Billion in October 2017, $1.891 Billion in November 2017, which together amount to a bigger hurdle than the $2.967 Billion that were barely made this April.

  7. guacharaca – you gots to quit drinking the bong water. And Torro Volt, perhaps we forget that the Venezuelan security forces are in the million plus range, and a financial collapse – and if the B keeps devaluating at 18% every two days – would mean greatly reduced imports. The military will starve like all the rest and there is little in history to suggest an unpaid military in Latin America will not eventually revolt. And with billions due, and everything tanking around him, no macroeconomic voodoo can save Maduro so long as the wonky exchange rates and Homeric theft keep on.

    Point is, the petro dollars are bound to dry up (probably sanctions – the stronger as we go) the longer Maduro keeps on as a transparent dictator. Watch – as the hard currency vanishes by the day, the military, will make some kind of move.

    Perhaps being worse than broke won’t stop Maduro. But when world markets refuse to play with him, or to let him make transactions is their currency, he’s done. No socialist system has ever survived economic ruin. And the IMF ain’t gonna bail out the bus driver.

    • Cuba survived economic ruin, simply never paid its international hard currency debts, and this without oil, but with help from the Soviet Union/then Venezuela. Frank, what is the chance economically that: Venezuela defaults, finds a way of selling enough oil without being embargoed (triangulation/friendly buyers/etc.), cuts imports even more drastically, starves cowered population even more, with the better-educated/knowledgeable massively emigrating, eliminates oil giveaways to Alba countries, and keeps its relatively small 100m+ but effective military happy, thus muddling along Cuba-style for some time?

      • It’s difficult to assign probabilities to specific political/economic outcomes. There is a lot of uncertainty on every front: On the external front: how much hard currency/assets does the regime have in its various pockets? How much more is it willing to cut imports? Will oil/financial sector sanctions actually hit? On the political side: what will happen to the regime’s popularity? How unhappy the military is, if at all? On the fiscal side: what will the regime do with wages? Try to keep pace w/ inflation or let them sink in real terms? On the “institutional side”, will people care that presidential elections are supposed to happen in 2018? Will the regime be able to ignore that via ANC?

        Considering all of these question marks, it’s hard to make a serious guess. Still, my gut says it doesn’t look good at all… I lean more towards a Cuba-dictatorship or Somalia-anarchy scenario than a peaceful or violent transition scenario.

    • Juan, million plus security forces is nothing compared to maintain almost 20 million people with basic food bags and better if they leave or die. Also the BsF depreciation means nothing when the government income is actually in $. It only affect average Venezuelans with no access to US$
      What I am trying to say is that the regime would prove to be more resilient than assumed.
      After all the latest events, it can be said that the Cubans made an excellent job in keeping the troops blind loyalty to the government, even if Maduro announce tomorrow that eating babies alive is legal, their sheeps will keep clapping and laughing. Lets remember Cuba has 63 years in this business and this is what they do excell at, mass control.
      As always the opposition underestimated the regime despite Maduro infinite stupidities.
      Cubans are fighting for their survival too.
      So I insist for nth time. This regime won’t end unless pushed out by military force.

      The opposition should ask Maduro for a road made exclusively to protest so the MUD can hold protest marches 24/7 in an endless loop in their effort to depose the dictatorship, LOL. Calle y mas calle policy.
      Maduro meanwhile will keep deepening the “revolution”

    • @Juan Largo

      As Torro points out, the Bs exchange rate is irrelevant to the regime. It only a concern to the general population, who doesn’t have a choice but trade in this pretend currency.

      What matters are the hard currency from oil the regime has access to and to whom they need to distribute that money. As long the regime can keep its repressive apparatus happy – with cars, food, houses, etc. – the regime is fine and can keep going. The rest of the population doesn’t matter.

      As I wrote here nearly three years ago :

      ” All the regime cares about are two things :
      – To keep its hands on oil money, a concentrated source of wealth which is easy to control and divide between the members of the regime.
      – To destroy any existing actual or potential counter-power that may challenge its grasp on oil and prevent any new counter-power from emerging.

      The poorer the country, the better for the regime. Poor people are easy to control and repress. Poor people may revolt once in a while but they don’t run revolutions or overthrow regimes. As long the process of lumpenization of the population does not trig an insurrection too large to be contained or repressed, the poorer, the better. It only has to be done slowly, so people get progressively used to chaos, destitution and helplessness, just like the proverbial frog swimming in its pot on the stove, just like Venezuelans for the past 15 years.

      Remember, for an oppressive regime, when a large rent like oil is available, your countrymen are no longer a resource you need to control Soviet or Mao-style and make work at your benefit through coercion or conviction. They are just people you don’t care about and who just happen to stand on your oil. They are a mere hindrance, an encumbrance you just need to neutralize or eliminate. ”

      And, three years later, it is exactly this scenario we are seeing being played, one step at a time.

    • But, now, that piece of news may be true bad news for Maduro.

      ” HOUSTON (Reuters) – Venezuela’s supply of heavy crude to U.S. independent refiner Phillips 66 has dropped by more than two-thirds this year in part due to quality problems, and the company has cancelled at least one cargo in recent months, according to sources from state-run oil company PDVSA.

      Phillips 66 (PSX.N) has also asked for price discounts for other shipments of Venezuelan crude, according to the sources. ”

      With more technical details here :

      ” US refiner Phillips 66 rejected a cargo of Venezuelan crude last week for failing to meet quality standards.

      Phillips 66 booked the Zuma, an Aframax with a roughly 650,000 bl capacity, in mid-July for 24 July loading in Venezuela. The ship reached Venezuela but never loaded, said a US-based shipbroker today, because Phillips 66 cancelled the cargo because the crude was off spec. The Greek-flagged Zuma departed empty from the Venezuelan port of Puerto la Cruz on 29 July, according to vessel tracking data.

      This was the first time the shipbroker was aware of a tanker failing to load in Venezuela because of crude quality concerns. ”

      It looks like PDVSA’s infrastructure and production capabilities are decaying even faster than I thought.

      • That’s part of the debt the regime’s successors will have to pay. Include the oil workers Chavez summarily fired. Hopefully, one thing that is accumulating on the assets side of the balance sheet is contempt for socialism.

        • “…Include the oil workers Chavez summarily fired.”

          Good luck with that. One of my best friends from la Bolivar went to work for INTEVEP right after graduation. After Chavez left him without a job he went to the Emirates, where he is very happy earning more than he ever thought he was going to earn. He just bought a house in Algarve and at the rate he is building his nest egg he is planning to retire in about 10 years, before he is 50. When we talk and I ask him about going back to Venezuela he just laughs and laughs and laughs. I can hear the chorus of ñangaras calling him a vendepatria, as if that meant anything, but let me remind you, he didn’t leave, he was kicked out. I can’t even imagine what kind of incentive would have to be offered to somebody with his level of technical skill, and at his particular stage in live, for him to return to Venezuela. The country has to realize that for many people, once they are gone they are gone.

    • Illustrative. Too often it is that. There’s a guy proposing a new poem to replace the one currently associated with the Statue of Liberty. It begins with this memorable line:

      “Never in the course of human endeavor, has one nation risen up to declare that every citizen is their own sovereign, where the powers of government, are subservient to the rights of the individual.” (“The Restored Republic” Greg Penglis 2017.)

      The poem by Emma Lazarus is not any part of the U.S. Constitution, nor any part of U.S. policy. She was a poet, not a statesman. It was written in 1883, added to a pedestal in 1903. I don’t know if she originally intended it to be placed there, but it was written as part of a fund-raiser to get the statue there. France donated most of the funds.

      • P.S. Personally, I think the message to get across is that contained in the Preamble to the Constitution:

        “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

        The role of government is to provide an environment in which the individual is free to produce and prosper. It is up to the individual to produce and make his own life.

  8. No outside authority seems to dispute Venezuela’s foreign reserves numbers.
    I do not believe that the regime has the stated $10 billion.
    The Venny bond that they were trying to peddle at an 80% discount should have given people pause.
    If and it is a big if, oil production is at 2 million BPD, after oil going to repay loans, sold ridiculously cheap for domestic production and shipped to other countries at free or reduced prices, there at most is 1 million BPD for export.
    Venezuelan heavy crude sells for approximately $10 less per barrel than WTI. because half of the oil is leaving the country or being consumed domestically for little money, this has the effect of doubling the lift costs for the oil being sold in real dollars.
    On the high side of the equation there is about $15 billion per year in oil revenue coming into the government. Assuming 2.5 million employees, that works out to $6,000 per employee per annum.
    I understand that there are many other factors involved in the government’s income. Basically the Bolivar being worthless also renders tax collections worthless. I can not find accurate information regarding lift costs. The $3.8 billion owed to US oil service companies makes me think that it must run into the multi billion dollar per year category.
    The current exchange rates have the average Venezuelan living on much less than the $6,000 per year stated above. Oil revenue divided by the population is about $500 per person. That isn’t enough to buy food, let alone fund a military and allow billions to go to the corrupt officials.
    For all practical applications, the Venezuelan manufacturing sector is non existent and the farming sector produces about 1/3 of what it once produced.
    The only scenario that I see is an imminent default and incredible human suffering to follow.
    I was always critical of the US embargo against Cuba. The Soviet Union propping up the Castro regime allowed for the regime to meet basic needs and maintain control. In effect the people were in an endless poverty cycle.
    Maduro does not have a benefactor that is going to step in and give welfare to a country of 30 million people.
    Russia and China are more concerned about getting all they can from the regime before the collapse rather than investing in Venezuelan Socialism.
    The regime will not be able to pay the military and feed the people. A situation that supports the military to the (further) detriment of the people resulting in less food and medicine could possibly be maintained for a very long time.
    US, EU and other countries applying severe economic sanctions may be the only answer outside of direct military intervention.
    If the people are starving while the military and government officials are living good, the only recourse is to starve the military also.

    • Good post. Data and estimates. I kind of feel sorry for the guys in the U.S. crunching all the statistics, trying to dope out what the actual effects of a possible oil (or other) embargo or additional sanctions would be and the timing of chains of events, how long before those actions affect the regime, how it would affect the 80% or so not dependent on the regime, and all that, including other nations.

      Your number of the 1/3 of former production for the farming sector sounds about right. Do you have a source for your summary? I’m not demanding nor challenging – just asking if you have something handy. It seems to me that sector is going to be critical, going forwards – I adopt the optimistic scenario, going forwards, as the pessimistic one just involves Cambodia style eradication of 25% of the population and a world of misery, so it’s hardly worth considering from a “planning” point of view beyond estimating international reaction, and weighing out if inaction constitutes a crime against humanity, thus forcing an armed invasion.

  9. What could possible go wrong when millions of people vote for things they have no clue?
    —> Macroeconomic Populism

    Mechanism of action:
    Do I really have to explain it?

    Hey kids ! want to be President? No problem, experience and education are not required. ( it blows my mind !!)
    The craziest part is that none of these issues are challenged or even identified.

    Beyond Chavizmo, this is a systemic failure, the expected outcome of a bad “algorithm”.
    If you could run a virtual simulation of Venezuela in a computer program, it would end up crashing, time after time, Caudillos popping their heads as malware time after time.

  10. In Zimbabwe hyperinflation almost brought down Robert Mugabe’s regime a decade ago. But the wily old fox was resourceful. He formed a unity government with the opposition (where his party mostly controlled the power), dollarized the economy (with USD, the currency of his hated nemesis) and won international support. After the economy improved the opposition was kicked out of govt and Mugabe still sits on his throne.

    However Maduro will be too dumb to save himself. He really believes he is fighting an economic war. He pits the world against him with the ANC and his politics will never permit him to form a unity govt. He has no idea how to tame the hyperinflation beyond ranting against DolarToday.

    Hyperinflation can bring down Maduro where street protests failed. He can’t afford to pay the army and security forces in dollars. The wheels of repression will stop turning until the whole collapses.

    • Hyperinflation won’t bring Maduro down anytime soon as long as he has $$ coming in from oil revenue.
      In the context of Venezuela all Maduro has to do is to keep up the salaries in-sync with the inflation rate.
      $1 = BsF 999999999999 it doesn’t really mean anything as long as the salaries are increased accordingly.
      Oil revenue is large enough in Vzla to keep paying the armed forces for decades to come, no so for the general population but they would go elsewhere or die before forming a very strong rebellion against the regime.
      It is a Military Dictatorship like Cuba they take all the privileges, the small productive sector is subservient to them.

  11. Frank, if possible, I would be interested in your/associates’ opinion on my question to you under Juan Largo above. Great discussion by John/TV/others here. Once again, it may be feasible for the Regime to default now, or even pay $ debt payments this year and default next year, and still keep muddling on for some time. The U.S. coming economic sanctions are key, but must be skillfully crafted. The ANC installation means LOD/moderate-pragmatic Chavismo have lost to the corrupt/narco/Castro-Cuban-Communism strain. Ship-jumpers, instead of being on the Regime side, seem incredibly in effect to be on the Oppo side, with Treasonous HRA/AD, and who knows if Rosales/Falcon, saying they will participate in Regional/even 2018 Presidential elections, at the same time that the CNE/electoral process has been proven fraudulent. Meanwhile, literally, anarchy has begun, with last night nearby street small business kiosks broken into and all contents stolen, tires being stolen off parked cars, home invasions increasing, etc. Anarchy is fast becoming the rule, and a civil war does not necessarily mean armed vs. armed military, it can be armed vs. armed have-nots vs. haves civilians, as is beginning in Venezuela….

    • Net,

      I believe that there is a very real chance of the MUD losing the momentum and unity that need to desperately maintain
      Many people in Venezuela have problems with one or more of the MUD leaders and may abandon them if they feel that they are not being aggressive enough or if they see politicians jockeying for their own political gains rather than adhering to a single united resistance.

      The MUD has made big mistakes. They did not seize the opportunity they had immediately after the plebiscite to install a transitional government. Personally I feel that the people should have been asked if they supported a transitional government. Those 7 million votes in support of a transitional government would have given the MUD legitimacy to create a new government and request foreign intervention.

      The US has put the MUD on notice that Maduro is still recognized as the head of government. The chance to form a transitional government has passed.

      As it stands now a fractured MUD will result in a chaotic and fractured resistance movement with no clear spokesperson or leader. That can be the recipe for disaster. This was already on display when the students were not following MUD’s directives during some of the protests. Forcing the MUD leaders to follow rather than lead the protests.

      Severe economic sanctions may help the people. Maduro could be forced to allow NGO’s to distribute food. Perhaps it will be harder for the generals and guardsmen to steal when they don’t have complete control over imports. This would give Maduro an out regarding the imports. His refusal to allow aid has been blamed on his refusal to admit his regime is a failure. US sanctions would allow Maduro (in his twisted mind) to blame the US for the shortages. AS long as the starving people are given food and the criminal regime is denied Dollars, severe sanctions may be a win / win.

      • John, agree on lost opportunities/chance on transitional government, agree on fractured MUD disaster, but not so sure on Maduro’s unwillingness to starve general population further, so long as military remain cohesive/repressive (Pls. see interesting video above on dictatorships under Rafa).

        • The status quo means that the people will starve as all resources will go to corrupt individuals and the military.
          I hate to see anything that can do more damage to the people, than they already are suffering.
          With people starving now and the regime in compete denial, the sanctions may be what is needed.
          Denying the regime any more money is the only option short of military intervention.
          I still find it hard to believe that there are any foreign reserves left in the country. If the regime had access to those billions, they would have had more incentives for people to vote than just an extra CLAP bag.
          Just my opinion.

          • Almagro said in Sub-Committee that economic sanctions won’t hurt the Pueblo more than they’re now hurting/will be hurting. Sure, stated net reserves are probably a lie, but, the Regime can probably work around this, perhaps for a long time, as stated in my comments above–for intl. bondholders, good luck on collecting from this Pariah Regime, if not soon, then soon after.

      • Disagree (respectfully) on plebiscite to install transitional government. That would be redundant. They already have a supermajority in the AN and authority to replace the TSJ (and I don’t know what else – there was talk in 2016 of destitution of the president). The problem seems to be getting any traction against the realpolitik of money + army = dictatorship.

  12. guacharaca – apologies. I meant to say that Maduro needs to stop drinking the bong water.

    And Toro I hear you hermano, per the whole currency thing and Cuba muddling along but as someone else pointed out, Venezuela’s crushing debt and rapidly shrinking reserves and dwindling petro income could conspire to drive him out IMO. Why, because it is exactly that cash income – whether in dollars or Euros or ANY stable economy – that I believe will soon be targeted by foreign powers.

    Outright oil sanctions, it is currently believed, would bankrupt Maduro in days, but the estimated suffering to the pueblo is considered too high. So the question becomes: How to cut off the cash flow to Maduro without starving the population as well. Probably not possible to have it both ways. THAT’S a situation. And a tough one.

    I believe that unlike Cuba, Zimbabwe, etc., Venezuela was once a developing country with some hope for first world status. They won’t simply roll over once things get much worse, and there is no Soviet benefactor to keep bailing them out with new dough. And it seems unlikely that China will help when owed so much.

    Yes, so long as petro dollars are coming in, Maduro can keep paying the military, but it’s looking like those dollars are dwindling fast and a default, almost a certainty at this point, will only hasten the process. I just don’t believe that the military will hang in there without being payed off. But losing military backing DOES depend on cutting that cash flow. It all comes back to that it seems.

    The other issue is: How might they “drive out Maduro” with military force? What does that mean, in practical terms? No western army is going to intervene. No way. My sense is that once the economy totally tanks, and whatever dollars Maduro has left either goes to paying off bonds, or becomes outstanding debt by way of default, Maduro cannot survive.

    But again, much depends on international powers depriving Maduro of foreign currency by way of embargoes and making it illegal to deal in dollars, Euros, etc. I suspect that is coming. One thing for sure, the US won’t let Venezuela become another Cuba. But how to do that without starving the whole country. Not an easy thing to try and manage.

    • Agree with all, including not letting Venezuela become another Cuba, which means, if economic sanctions fail and/or the Regime aggravates Communist subversion/terrorism, then the military option will be used.

  13. So here is the big test, to see if all this talk of article 350 is just all hot air. My girlfriend is an accountant for a ferreteria and a panaderia. Seniat was harassing them yesterday for closing for national strike, all the ley de precios bullshit and everything.

    Now Maduro is going back to his usual war on Christmas bullshit and going after businesses that raise prices.

    What will be interesting to see is if business owners will get organized and go after the Seniat workers by any means necessary. How you break the government is to break their bank and not wait for the gringos to do it for you. Businesses need to step up and be a little more mafioso and not roll over.

    However, most Venezuelans are pretty pathetic and just take it in the ass. Thus you will have everybody bitching about prices, the government going around saying they are sanctioning price gougers for the good of el pueblo. And there might be a few fools who think that this is actually solving something.

    On the contrary, we need these guys to be publicly humiliated (at minimum) and let them know we have had it with this government and their bullshit revolution. Anyone who is complicit or is an oppressor will have hell to pay.

  14. Well i hope the people can hold out long enough to allow Maduros self destruction. it looks as if that’s what they are hoping for..We see how one man can cause so much suffering .If there wasn’t so much poverty there in the first place maybe those voters could not have been bought. If this country gets straightened out they should do two things, Stop depending on oil and make things to sell and do something about the poverty there.Or just expect the same thing to happen again. I hope they make these things a priority !


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