Venezuela Just Defaulted

Venezuela, the Socialist Paradise of Equality, Truth, and Justice, just defaulted on its debt.

S&P  Global, the ratings agency for country-level bonds said that Venezuela  had been in a 30 day grace period that began in October.  That grace  period expired yesterday, yet the country did not make a loan payment.

A  debt default could exacerbate Venezuela's current problems, namely food  & medicine shortages (And at some point, the zoo animals are all  going to be eaten).  

If  enough holders of a particular bond demand full and immediate  repayment, it can prompt investors across all Venezuelan bonds to demand  the same thing. 

Since  Venezuela doesn't have the money to pay all its bondholders right now,  investors would then be entitled to seize the country's assets --  primarily barrels of oil -- outside its borders.  So, all the crude  that's currently shipping to Houston or China or whereever could become  the property of the bondholders.

The  only real liquid (pun not intended) that Venezuela has right now is oil;  and if the government can't sell the oil it has produced, then it can't  try to right the economy that arrogant, greedy Socialists have been  trying to run.

From CNN Money:

Venezuela  and its state-run oil company, PDVSA, owe more than $60 billion just to  bondholders. In total, the country owes far more: $196 billion,  according to a paper published by the Harvard Law Roundtable and  authored by lawyers Mark Walker and Richard Cooper.

Beyond  bond payments, Venezuela owes money to China, Russia, oil service  providers, U.S. airlines and many other entities. The nation's central  bank only has $9.6 billion in reserves because it has slowly drained its  bank account over the years to make payments.

The S&P default announcement Monday came after Venezuelan government officials met with bondholders in  Caracas. The meeting was reportedly brief and offered no clarity on how  the government plans to restructure its debt.

Venezuela  is rapidly running out of cash.  In 2011, the country had about $30  Billion in cash reserves.  In 2017, it's down to less than $10 B.

Venezuela  says that the country's problems lay at the feet of the United States.   But rational people point out that the Socialists have been in charge  of Venezuela since 1999, and the fact that the government tried to "run"  the economy to make it "affordable" has simply run it into the ground.

Hugo  Chavez started fixing prices for most goods and services from a cup of  coffee to the price of gas.  He also fixed the exchange rate of the  bolivar.  So, a farmer that grew guavas couldn't sell his product on the  open market when the price was low, because his production costs were  way out of line.  Importers also couldn't afford to ship in food,  knowing they would have to sell at much lower prices than what they paid  at the port.

The website tracks  the "unofficial" bolivar exchange rate.  At the beginning of 2017,  about 3200 Bolivars would buy you $1.  Today, that rate has jumped to  55,000 Bolivars to the dollar.

Over the course  of the last couple of years, the Maduro government has encouraged people  to engage in "urban farming" by growing vegetables in the cities and  raising rabbits for food.  Other socialists have pointed out the  "socialism diet" means that Venezuelanos are now about 20 lbs lighter  than they were at the beginning of 2016, ergo they won't have obesity  and the diabetes.

Yep.  Venezuelans may not die of obesity related illnesses.  They'll all just slowly starve to death.

The Pursuit of Happiness

The Pursuit of Happiness

Ken Webster Jr is a talk radio personality and producer from Houston, TX. He started his career in Chicago on the Mancow show and has since worked at dozens of radio stations all over the country. He’s currently the host of Pursuit of Happiness... Read more


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