The Republic and PDVSA’s failure to make recent debt payments on time won’t trigger legal action from bondholders if the regime keeps dishing out the petrodollars to Wall Street, even if late. And while everyone is distracted, the bottom is falling out of Venezuela’s currency and oil sector.

The black market rate blew past 60,000 today. It’s now up over ten million percent since Chavez became president in February 1999. That’s a one with seven zeros and a % sign: 10,000,000%. The black market rate is up by a factor of 10x since May 18th this year. All the while, the government’s putting the pedal to the metal with the monetary accelerator, fueling an unprecedented expansion in the supply of bolivares.

The government will try to engineer a consumption boom for municipal elections scheduled for December 10th. That plus the usual year-end Christmas bonuses will likely make November record breaking for money printing and push monthly inflation past the traditional 50% threshold for hyperinflation. As the economy tanks and the government funds more and more of its spending with monopoly money from the BCV, base money will grow faster and faster and faster, locking in hyperinflation.

If nothing changes, all prices but especially food prices will continue to rise at an accelerating rate and outpace wages, fewer and fewer price controlled goods will be available, the cash shortage and problems with electronic payments will intensify, and life for Venezuelans will become yet more chaotic and desperate. Things are horrible now, but they can and will get worse.

And it’s not just the domestic situation that’s deteriorating: oil production at PDVSA is falling faster than pessimists thought possible just a year ago. So far in 2017, in addition to crude quality declining, production is down 14% to under two million barrels according to OPEC, the lowest level in three decades. Secondary sources say production is even lower. And it’s oil from PDVSA’s solely operated fields that’s falling the most, not the joint-ventures where production has been at least holding steady. So the decline in PDVSA’s production of cash-generating barrels is bigger than 14%.

The price of Venezuela’s oil export basket is up 30% this year versus 2016, but it’s not enough. Between the lower production, higher debt service and depletion of financing sources, there’s still less money leftover for imports. Less money to invest to curb PDVSA’s production decline, less money for critical production inputs for the private sector, and less money to import food and medicine keep people from starving and dying. On the plus side, there’s also fewer dollars left to steal.

Production is down 14% to under two million barrels according to OPEC, the lowest level in three decades. Secondary sources say production is even lower.

Sometimes, I’m tempted to think the regime doesn’t understand how damaging its policies are. But that’s naive: they just don’t care. Maduro brushes off Venezuela’s misery just like he gave the world the middle finger by appointing a U.S. designated drug kingpin to lead debt restructuring negotiations. Oceanic corruption and total impunity are not just a features of Chavez and Maduro’s clientelist politics, they are its lifeblood. The crackpot economic distortions, authoritarianism and dysfunction are central for military and narco support. Maduro could give a damn the country is going into hyperinflation, he just crushed the opposition in regional “elections”.

Every day without a change the country’s suffering deepens. If three quarters of Venezuelans lost, on average, almost 9 kg of weight involuntarily in 2016 according to the ENCOVI survey, I can’t imagine what ghastly weight loss figures the survey will turn up this year.

If 82% of Venezuelans were income-poor in 2016, how much farther into poverty will Venezuela have fallen in 2017? If 93% of Venezuelans reported not having enough food for their family to eat last year, how hungry must people be at this very moment? How many have left the country for good? 100,000? 200,000?

Who knows…

Things look bleak for Venezuela. It’s too late for the country to climb out of the hole it’s in without concerted effort from the international community. Whatever the E.U. and Latin American countries are doing, whatever the government and what’s left of the opposition are negotiating, whatever the U.S. is plotting by sanctioning most high ranking regime officials but not Diosdado Cabello, I hope it works. It has to work. It needs to work.

52 COMMENTS

  1. “On the plus side, there’s also fewer dollars left to steal.”

    LOL, so true.

    “Maduro could give a damn the country is going into hyperinflation, he just crushed the opposition in regional “elections”.”

    Finally, “elections”, thank you Frank.

  2. Today’s WSJ reaches the same conclusion that the recent bond defaults won’t trigger legal action at least in the short term. See Venezuela Goes Bust. Another WSJ story, is even more depressing. It looked at the graduating class of 1994 from a Caracas high school,Ceapuv, and found that about 2/3rd of the class had emigrated and claimed that 2 million Venezuelans had emigrated since 1999.

  3. But, Frank, it won’t work, unless the military cracks, a la Zimbabwe (10% chance for the near future?). The corruption /narco deals are just too good (“How sweet it is!”-Jackie Gleason, dixit ), the Petro-State Peons are just too docile/cowered, the international sanctions so far are just too weak, and the MUD leadership just too corrupt (Julio Borges was recently revealed by ICIJ investigative reports in “Le Monde” to have HSBC accounts over ONE BILLION EUROS–and, I’m sure HRA’s personal wealth would make him look like a piker–there’s even talk of the AN helping the Govt.by supporting a financial “restructuring” plan, which, reportedly the U.S. would MISTAKENLY support if given the AN’s blessing….

          • Ok, look. Twitter is hell right now, full of impertinent conspiracy theorists and radicals that are being retweeted like crazy because the traditional oppo ain’t doing shit right now to speak out against the regime.

            That doesn’t mean we believe everything on there.

            The story @aemartinn tweeted re: Borges is here: https://www.vtactual.com/es/sepa-cuanto-dinero-tiene-el-presidente-de-la-asamblea-nacional-de-venezuela-en-paraisos-fiscales-fotos/

            It’s not Le Monde, it’s some left-leaning crap website that posts other stories like this one: https://www.vtactual.com/es/chile-acepta-lider-no-sus-seguidores/

            The screenshot of Borge’s bank account looks incredibly fake. Why would a bank account display somebody’s cedula #? Why are there decimal commas AND points? Why is the date format MONTH/DAY/YEAR, when in Hong Kong (top right, HK website version) and the UK (on the right, “Tweet at us @HSBC_UK) the date format is DAY/MONTH/YEAR

            When will we stop falling for this crap? A dozen people want to be the next President of Venezuela, and they abuse people’s right to information just as much as the regime does… So much of that crap on Twitter is fake.

          • @ Frente anit-madurista precisely why I asked for the link, I had the suspicion it was bogus.

            Information is only as good as its source

          • Ada Martin is right, not left. Maria’s reference is to Lefty gobbledygook. The Martin reference is to Falciani’s HSBC revelations as mentioned in “Le Monde”, and the HSBC Borges financial statement may be phony, but not because of dates (right order day/month/year), or commas/ decimals (right order), or even ID (CI/bank code no.?), but because of deliberate Govt. disinformation/cut-paste campaign–only Falciani/his original list know for sure. Even so, the Oppo led by Borges/HRA/even HC have done a wonderful/suspicious job of sabotaging the Resistance in Venezuela, and, as they say, “if at first you don’t succeed, try, try again”….

        • Why are you propagating this information? it’s obviously bogus, you are either too naif to realize this or have a special interest in making others believe this.

          • Neither. When Net posted the info, I did some research and that is what I found. I noticed the same inconsistencies….

          • Maria, you are neither naif nor mal-intentioned. The real inconsistencies are the amount ($ 1 bill. +, reserved virtually only for REAL enchufados), and the date on the HSBC statement (9 yrs. after Falciani’s original leak)–both making the information probably bogus.

  4. The people who run Vz are not interested in anything but power, your happiness or unhappiness mean nothing. If everyone is losing weight and struggling to survive the hold on power is stronger not weaker.

    Mugabe ran Zim into the ground. Cuba is a basket case. So long as they can pay the men with guns enough to make them better off than their peers, they will stay in power.

    I know Ayn Rand is not universally loved, but she makes some good points about how the most pampered Pasha in India lived in luxury while the peasants who supported him were lucky to live to 40.. Maduro will eat his Desk Empenadas till he dies of overeating. The fact that his country’s citizens are lucky to live past 40 wont enter his mind except to cast blame on what ever outside boogeyman he can scapegoat.

    Many of the complaints on this blog seem to wonder why the Vz government doesn’t seem to understand how their policies hurt people. Don’t wonder, this is about power and control, not policy errors. Every professional and motivated Vz who leaves cements the hold on power.

    The fun part for the Vz diaspora will be when their children go to university and are given the same load of poop that Cuban kids get. Your family must have been gangsters, it’s the USAs fault etc., sure they are poor but, free health care, great education…

    • “Every professional and motivated Vz who leaves cements the hold on power.”

      My wife (expat) has a few remaining distant relatives in Venezuela. They are Chavista through and through. A branch of the family who came to Venezuela in the 1940’s and decided to take a hard left turn. To say that family reunions were “animated” is dismissive. Anyway, these Chavista relatives are only too happy to see their Exploiter Class relatives leave Venezuela, as these Capitalist oppressors are the problem, not the solution. “Venezuela will be better off without you!” was the farewell message they heard, though more euphemistically.

      So, Chavismo gets to have the branch of the family that cares more about fornicating and getting drunk than they do about earning an income and improving their life. Chavismo can have them. And when the last achiever leaves VZ, and not a bit of wealth is created, they will STILL blame the vile Capitalist Oppressors.

      The future looks grim for VZ if my wife’s distant relatives are all that will remain.

    • “The fun part for the Vz diaspora will be when their children go to university and are given the same load of poop that Cuban kids get.”

      Emphasis on poop. (And all the kids are given said load of poop, not just the Cubans).

    • BTW, just found this nugget of wisdom on another story about Zimbabwe and Mugabe..

      Life expectancy in 1978 60 years,
      today 38…

  5. “whatever the U.S. is plotting by sanctioning most high ranking regime officials but not Diosdado Cabello,”

    Frank, I’m pretty sure that Godgiven Hair has been under sanctions since the Obama administration. Please verify.

    • Frank, I’m pretty sure that Godgiven Hair has been under sanctions since the Obama administration. Please verify.
      August 9 news: U.S. sanctions 8 more Venezuelans tied to Maduro government

      The Trump administration had threatened to sanction all 545 assembly delegates. But many are lowly socialist party members, including students, with no public profile to speak of. Still unsanctioned are the biggest names in the assembly, including President Delcy Rodríguez, top deputies Aristóbulo Istúriz and Isaías Rodríguez, powerful delegate Diosdado Cabello and delegate Cilia Flores, who is Maduro’s wife. The White House declined to comment as to why.

      Read more here: http://www.mcclatchydc.com/news/nation-world/world/article166261347.html#storylink=cpy

      • “Still unsanctioned are the biggest names in the assembly, including […] powerful delegate Diosdado Cabello and delegate Cilia Flores, who is Maduro’s wife.”

    • Canada has sanctioned Diosdado Cabello.Canada sanctions 40 Venezuelans with links to political, economic crisis.

      A partial list: The list of senior Venezuelan government officials and individuals Canada is sanctioning:
      1. Nicolas Maduro Moros, President of Venezuela
      2. Tibisay Lucena Ramirez, President of the National Electoral Council
      3. Elias Jose Jaua Milano, Head of the Presidential Commission for the Constituent Assembly
      4. Tareck Zaidan El Aissami Maddah, Vice-president of Venezuela
      5. Tarek Willians Saab Halabi, Ombudsman of Venezuela
      6. Nestor Luis Reverol Torres, Minister of Interior, Justice and Peace
      7. Roy Antonio Maria Chaderton Matos, Politician, lawyer, and senior diplomat
      8. Maria Iris Varela Rangel, Member of the Presidential Commission for the Constituent Assembly
      9. Pedro Miguel Carreno Escobar, Member of the Presidential Commission for the Constituent Assembly
      10. Diosdado Cabello Rondon, Member of the Presidential Commission for the Constituent Assembly
      11. Susana Virgina Barreiros Rodriguez, Judge
      12. Freddy Alirio Bernal Rosales, Member of the United Socialist Party of Venezuela

      • Canadian sanctions are symbolic, but they ultimately don’t matter. Diosdado et al have their money in USD and properties in the U.S.

        • Frank, doubtfully they have much in the U. S., considering the risk/massive amount of their wealth. I don’t see a deal being cut here, and, if done, would be a great travesty of justice, and an even greater stimulation for other international transgressors.

          • Justice is sometimes the price you have have to pay for a transition, especially if transitioning from an authoritarian system to democracy. I would gladly let Diosdado (and many others) off the hook for free and fair elections, and a chance to end the bolivarian cataclysm.

        • Why in the world would Godgiven Hair not be sanctioned by the US? It doesn’t make sense unless they think he’s going to waltz in there one day to check his accounts and they’ll nab him.

          A head scratcher.

          • Cabello is also accused of being involved in drug trafficking.
            It is possible that a sealed indictment is waiting for him when the opportunity arises.
            Should he travel to a country that cooperates with US authorities, he may get a big surprise.

          • John, good point. That could explain the First Combatant’s lack of sanctions as well……..narco-sobrinos perhaps singing like canaries.

            BTW, your email is no “in-hand”. Let’s see what happens on Friday.

            Thanks for everything my friend!

          • John, upon further review of the Warehouse Receipt, I see no address or phone number for Total Cargo Express in Caracas. Tomorrow morning I’ll call Vicky (it’s 10:30 PM here right now and too late to call) and ask for a phone number for Maria at Total Cargo and an their address in Caracas just in case Vicky’s got it on hand. If not, Maria will surely provide those details.

            I’ll pass all of this along to the step-son. He too has your email in hand but speaks zero English.

            I’ll keep you posted on progress.

          • MR
            The first e-mail that I sent to everyone, has the link for Total Cargo.
            The link has all of the info.
            Customer service schedule Caracas
            Monday to Friday 8:00 a.m. – 12:00 m
            1:00 p.m. – 6:00 p.m.
            Saturdays – Sundays closed.

            Customer service Miami
            Vzla: 0212-771-3112 (free call Vzla-Miami)
            USA: 305-599-2920
            305-594-9544
            305-594-9435
            Fax: 305-599-2921 Customer service

            Maria is familiar with this shipment. The reason for the second e-mail was just the update to the receipt. For me to use the shipping credit, it needed the destination address of the lost shipment on it.

          • MR
            Another thought,
            Do shipments travel from Brazil to Venezuela without the hassles of US to Vzla?
            I have friends in Sao Paulo that I could ask about shipping things to you for me. The chemicals may be easier to ship this way. Possibly antibiotics.
            I am thinking of shipments simply going overland.
            Could your stepson inquire if the shipping company that he has a business relationship with has a presence in Brazil?
            I can’t ship things into Brazil. The import tariffs are extremely high.
            If I could transfer the money to them or order through Amazon and use a freight forwarder, this may create an another avenue to get supplies into Vzla.

  6. … fewer and fewer price controlled goods will be available, the cash shortage and problems with electronic payments will intensify.

    When subsidized comida becomes unavailable or the options further dwindle, and there is little money to buy it anyway, dire become desperate. Dios…

    • If he hasn’t, then that’s a very good question. From what I recall there are claims he’s been named in an indictment as a drug trafficking kingpin. Would one somehow affect the other? I’ll slip into my google jockey outfit and see what I can find.

  7. The relationship of Venezuela with Chavismo is that of an alcoholic with the bottle. It is the addict that must hit rock bottom and make firm purpose of amendment. Likewise, Venezuela has to firmly change its way, in this case reject Chavismo as the lethal crap it has become. I mean, el pueblo has to really reject them, colectivos-clap-carnet de la patria and all, and in many ways, one saw this during the protest and reading Aporrea.

    Now, la piedra de tranca is the military which over 18 years has been built to the image of Chavismo, corrupt and dictatorial. But history shows, that regardless of their stubbornness, they too cannot stop what Chavismo has brought over Venezuela. For example the Argentine dictatorship even started a war to distract from the mess they had built, and then, this wasn’t enough (thanks the Brits for reclaiming the Falklands).

    • “Venezuelans, enrolled in the Carnet de La Patria system, have received notification of the allocation of the special Christmas bonus of 500,000 bolivars”

      A little more the US $8 at today’s exchange rates. How much lower can you go?

      • I saw a line in front of a neighbor’s house the other day and asked about it. They told me they were signing up people for the Carnet de La Patria. What’s the big deal, they’ve been signing people up for a year or two now, I commented. The neighbor told me it was because of the promise of a Christmas bonus…..300,000 bs he claimed.

        I was kinda surprised Naky or someone else hadn’t reported on it. Nothing inflationary about giving every man, woman, and child who has a carnet de la patria 300,000 bs or more for Christmas. LOL

        Now they’ll all be shown to have voted in both the municipal and presidential “elections” as well.

        These people fall for anything shiny.

  8. Fuck Maduro, fuck Diosdado, fuck politician, fuck Fede industria and fuck all the corrupt Venezuelan partners worldwide. Including all the fucking people whom received money in the exchange market and fuck the creator of the Structured Bonds, I hope he dies slowly.

  9. The economist dice que en Zimbabwe “At one point in 2008 inflation hit the rate of 231,000,000%”. Venezuela tiene todavía mucho recorrido hacia abajo por delante.

  10. Well well…So we ended up getting paid and in FULL. Regardless of what was written here and all the bla bla bla. You guys should at least have some decency and issue some sort of rectification? And now, I am off to enjoy the rest of the year and a Merry Christmas to you all! Over and out.

      • NET. Always the same thing…At this point in time I don’t care as long as I get paid my interest (regardless of whether it is 10 days or 20 days late). Also, bear in mind that at this stage initial investments have been paid back in full so it’s all profits from here. But obviously I would prefer to get 100 back as opposed to 30-40.

        I love the word pichache! I haven’t heard it in a loooong time.

  11. “whatever the U.S. is plotting by sanctioning most high ranking regime officials but not Diosdado Cabello”

    Because maybe that`s the ace on the sleeves of the CIA and just the guy with military power they want to take the reigns an topple Maduro. Wink wink*

    Its gonna come form within chavismo, real opposition has become a non entity and Allup, Falcon and Rosales are part of the regime.

    The U.S has backed worst people than Diosdado, so as far as conspiracy theories go, there`s my two cents.

    • Or how about this Vero? By not sanctioning Godgiven Hair, the US is sowing seeds of doubt about him with Maduro and other chavistas who have been sanctioned.

  12. FM: ” …Sometimes, I’m tempted to think the regime doesn’t understand how damaging its policies are. But that’s naive: they just don’t care. …”

    You are wrong Frank.

    Respectfully, I ask you to understand is not negligence or lack of standard of care, fiduaciary responsibility etc. Its INTENTIONAL and its systematic.

    Breaking down venezuelan society and will to resist is the social control maxim the ocupation force has employed since day 1. Remember plan Bolivar 2000? maybe you were too young to remember but it was an intentional corrupting campaign to purge the military of any Non-corruptible elements….

    Fast forward almost 20 years and the results are in front of us.

    I am disappointed at engaged authors and commenters like you and many others in CC who fail to understand the reality, or at least consciously still write in terms I find unacceptable.

    For example, your quoted line. (kudos to you, at least you have incorporated “regime” for “government”, a good sign)

    Thanks for keeping up the resistance!

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