Originally published at: https://boingboing.net/2017/11/14/venezuela-just-defaulted-on-it.html
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Cue the banksters…
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How can this be? I’ve been told for decades that all problems in Venezuela would be permanently solved just as soon as Hugo Chavez was disposed of. That place should be a capitalist wonderland by now!
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it boggles the mind what could happen next."
See every dystopian movie ever made. That should cover it nicely.
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It turns out that Maduro is even more incompetent and corrupt than Chavez, only without any of Chavez’s charisma or flair (or good luck).
Of course, as I understand it, Venezuela’s economy has been horribly mismanaged for a long time now, whether the leftists or the right-wingers have been in power. It’s a near-terminal example of the Dutch Disease.
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It’s still doesn’t really “do” capitalism.
The problem is they put all their eggs in one basket and when those eggs became worthless, they were screwed.
Couple decent vids on whats going on (though probably dated some.)
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I bet oil prices will shoot up as soon as Maduro us removed and PDVSA is privatized.
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Sigh…
(The book, not the movie)
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Nah. They need a good stiff shot of Chicago Boys-approved economic theory that’ll be transforming their society into a free-market utopia in no time at all. Why, look at how well it worked in… um… in… how well it worked with… ah…
…um.
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Romania.
Romania is the poster child because the gamble paid off.
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Chile.
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Maduro’s delusion that he has Chavez’s chops for heading up a cult of personality probably means he’ll stick around until the mobs storm the presidential palace instead of planning for a hasty exile abroad (like Chavez’s daughter).
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Or as it’s known in the reality-based community, ‘taking sensible decisions when you’ve tried all the stupid answers’
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So what happens when investors try to take assets that the government of Venezuela refuses to turn over? Will other governments go to war with Venezuela to enforce contracts with private interests?
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The Shock Doctrine is a somewhat laboured read with it’s unnecessary parallels to and descriptions of the MKUltra program, but the support of it’s economic premise is nonetheless spot on, it’s a fascinating read and highly recommended. As an interesting afterward, a BBC Money Program documentary short series entitled “The Love Of Money” is a fantastic account of the fall of Lehman Brothers, the economic decisions that led up to it over the decades and the mad scramble to fix the problem afterwards. It includes interview footage with Alan Greenspan in which he admits for all the world to hear that the chief assumption (long term survival trumps all decision making) his entire version of ultra-liberal capitalism is based on is incorrect, that this version of free market capitalism doesn’t work and that it is regrettable that there is nothing better. However much damage this guy inflicted on the world, it’s impossible not to respect a guy who can watch those kind of events, hold up his hands and say admit his was wrong.
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“You! Yes you, you horrible man! We own that tank, get out! You lot, pile are our guns over there!!”
Let others boast of martial dash
For we have boldly fought with cash
We own all your helmets, we own all your shoes
We own all your generals - touch us and you’ll lose.
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Chile almost immediately rebuffed neoliberal policy after it immediately tanked their economy. They still have central control of their largest industries, and spend massively on social programs.
And that was in the 80s and 90s.
Under the influence of the Chicago Boys the Pinochet regime made of Chile a leading country in establishing neoliberal policies. These policies allowed large corporations to consolidate their power over the Chilean economy, leading to increases in unemployment and real wages whilst failing to achieve long-term economic growth.[26] Income inequality, which had fallen during the presidency of socialist Salvador Allende, rose substantially during the reign of Pinochet as neoliberal free market policies were implemented.[27] The crisis of 1982 caused the appointment of Hernán Büchi as minister of finance and a sharp revision of economic policy. Despite a general selling of state property and contrary to neoliberal prescriptions, the regime retained the lucrative state owned mining company CODELCO which stands for about 30% of government income.
According to the CIA World Factbook, during the early 1990s, Chile’s “reputation as a role model for economic reform” was strengthened when the democratic government of Patricio Aylwin, who took over from the military in 1990, deepened the economic reform initiated by the military government. It should be noted, however, that the Aylwin government departed significantly from the neoliberal doctrine of the Chicago boys, as evidenced by high government spending on social programs to tackle poverty and poor quality housing.
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I don’t know the answer to your question regarding foreign military intervention on behalf of private interests, but Venezuela will see less foreign investment and higher costs of capital as a result of the default.
“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” —J. Paul Getty
(Yes, I understand this actually will create problems for Venezuela as well)
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I doubt that banks haven’t secured themselves against this loss. It was looming for well over a decade.
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