That depends on the size of the bank.
It might work with a local savings and loan, if they made the mistake of being owed that much by one account holder.
Not so much if the banks involved are global behemoths, each of which has revenues within an order of magnitude of your entire country’s GDP.
And it doesn’t help when you poke the most powerful country in the world by sending them “aid”, (referring to the free heating oil Chavez sent to Florida).
I’ve occasionally thought that nothing more clearly illustrates the moral bankruptcy of an administration than the refusal to allow foreign aid associations to assist suffering people.
When Bush minor refused to allow Venezuela and Cuba to send help after Katrina, I remember thinking that.
I’d imagine that, in the case of assets stored abroad, there won’t be much of a show. Anything the Venezuelan government is storing abroad is already protected more or less only by adherence to legal norms, and if those norms say ‘your creditors own this now’ the country the stuff is stored in is likely to go with that; and the handful of security guards aren’t going to try anything heroic over it.
The potential for things to get messy only really arises over assets that Venezuela retains possession of; since in that case their refusal will actually mean something. One can’t rule out the possibility of that going badly, ‘banana republic’ is a cliche for a reason; but given the tendency of violence to destroy assets, it wouldn’t be too surprising if the creditors prefer to just wait for the unpopular populist to take his natural course and spend the time jockeying for favorable positions against the likely successor government.
Dutch disease, but also It is completely man-made. Chavez decided that he would set the value of the Bolivar vs the Dollar, and anyone wanting to bring in any imports has to use US $ but request government permission to do the exchange. The consequence was nearly empty flights leaving Venezuela with all the seats paid for but it was still worthwhile for those making the exchange as the value was so far out.
Venezuela is in technical default because of additional requirements the US has imposed on its payments. Venezuelas bankers are not allowed to make the payment vene has given them to pay interest in a prompt manner. Among US sanctions on the current venezuelan goverments are a restriction on venezuela selling new debt.
Do you think the bankers are the only vultures in this equation?
Well, I give you some small credit for asking it as a question, rhetorical and absurd though it was. No, of course I don’t think the banksters are the only villains, but they’re the one’s who are going to feed on the country’s economic implosion, exacerbating stagflation, locking down the remaining natural resources, and entrenching the economy against any chance of recovery. Also, I didn’t say bankers, I said banksters. The latter is a subset consisting of predatory financial institutions and practices.
How do I know it will happen? Because it has many dozens of times over in the last century alone.
How about the government that created the situation in the first place, bankrupting a country after a decade of colosal oil revenues? Ever wondered about that?
I get that you want to have a conversation about the demagogue Chávez. I’m not a fan and never have been. I see from your bio that you reject his politics and possibly once embraced it. Good for you, really. I find that people who are reevaluating their worldview are often the most eager to try to open the eyes of others, and political discussions on the internet tend to attract that. I don’t begrudge anyone that.
But I’m also not going to provide you with a foil for your planned didactic dialectic. It won’t go the way you expect anyway; you don’t know my views on economics and politics, and if you tried to guess you’d almost certainly be way off the mark. As much as I’d love to spend time explaining them in detail to you (that was a little friendly sarcasm BTW), I have dinner to finish making and work to prepare for tomorrow and no time for a prolonged discussion of a topic that is too complex to skim the surface of. Economics is the sort of topic where I find a little quick snark or a long detailed discussion work fine, but anything in between has the illusion of depth but the confusion of superficiality.
I wish you well.
Which is a very convenient excuse for Maduro and company given that everybody in the know knew they could not be paying forever and a default was going to come sooner or later. But now it is the US fault.
And all that noise about “the banksters”… jesus christ people.
The “banksters”, in particularly well connected to the chavistas banksters, have been making a KILLING on Venezuelan debt for YEARS. Everybody knew Venezuela cant pay the debt, and has known this for years, and yet the debt bonds of PDVSA have been trading hotly in Wall Street for years! Why? Because of the “suicidical will” (thats how it has been described by bondholders!) of the Maduro government to pay. An austerity program that leaves what happened in Greece in the shadow, deployed by a far-left, “socialist” goverment, willing to have people eating garbage or dying for lack of medicine to find ways to keep paying debts that would be bad with the oil at 100$ when it is now at less than half. They should have renegociated the debt YEARS ago, before any of the sanctions, but didnt.
And the supposed “right” opposition had shammed investors dealing with what they have called “hunger bonds”, cases in which the oh-so-for-the-people “XXI Century Socialism” government sold people like GOLDMAN SACHS bonds at ridiculous discounts in opaque and in all probability corrupt deals.
But no, lets talk “shock doctrine” (this would be the first case of it being applied by a supposedly far-left goverment against itself to do … fucking no change whatsoever in economical policies), Chile, banksters, bla bla bla. Lets talk from the cliches and the kneejerk reactions and the absolute conviction that being ignorant but parroting ideology will give you.
Venezuela is not being destroyed by the US, the “banksters”, or anybody but the Chavistas. All the rest are just accesories. Nobody has gone and destroyed the Venezuelan oil industries (last month production dipped to less than 2 million barrels per day, putting production in 2017 on par with production in 1989) but the Chávez and Maduro governments that ran it. Nobody forced them into so much debt for absolutely no tangible results at all, except some “bolibourgoise” becoming incredibly rich.
The bullshit “meeting” with investors will now be used as a smokescreen about how it is because of US sanctions that the debt cant be fixed, while ignoring why in hell are the sanctions there and more importantly, who put the humongous, impossible to pay, you had to be crazy to get that much of it debt there.
Depends on how keen Venezuela’s soldiers are to work for free.
No they didn’t, and it didn’t. The financial crisis in the 80s was caused by an external debt crisis, though was worsened in Chile due to monetarism and the pace at which reforms had been implemented. Monetarism was just one aspect of the reforms though, the rest of which mostly continued on afterwards and helped the country’s recovery, with some of them being rolled back, to a degree, and a small amount of re-nationalization (including a few banks, one of which is still nationalized I think, the continued general trend was for privatization however).
They still have central control of their largest industries, and spend massively on social programs.
They don’t have central control of their largest industries, services represent the largest aspect of their economy now, and there is substantial foreign investment in their industrial export sector (copper in particular, the largest copper company is nationalized, but it was never privatised by Pinochet in the first place).
Spending lots of money on social programs isn’t at all incompatible with neoliberal economic policies either (see Ireland for another good example of that). As long as you have growth you have spare money to spend as you see fit. Not every neoliberal economist advocated high spending in those situations (and in Ireland’s example you can certainly see their point), but it’s not in any way incompatible.
The main lesson to learn from instances of very rapid liberal economic reforms was to not make them so rapid (Russia is another good example of this going wrong). You can’t force an economy to skip the intervening steps of development, you have to let it evolve far more organically.
So yes BUT. Well connected insiders have been making good money buying up short dated debt near redemption payment dates with the additional comfort of being assured by their cronies that default wasnt coming this time. Very true. But there are a whole bunch of way bigger US banks and hedge funds that are and have been playing the same game. Why worry about the odd billion of debt owned by Maduro cronies when PDVSA has 100bns outstanding? I suggest you look up Gramercy Partners etc and see what they have been saying about Vene debt.
There have been various sanctions on Venezuela for years. Decades. It doesnt mean that Chavistas have been running the country well, but the sanctions have not helped. Plus I knew Venezuela before and after Chavez, and I supported him. It stuck in the throat visiting a 95% black/mixed race country in the 80s where for some reason everything was owned by white Europeans. Everything. And then when you questioned how that was some white Venezuelan would explain that the “jungle bunnies” weren’t good at doing stuff and were very lazy.
So now you have Chavista’s thieving rather than the previous white aristocracy thieving. Clearly not good governance but dont tell me Venezuela is poor cos of socialism. Its been doing crap since the end of the oil crisis in the 1970s.
PDVSA was hotbed of corruption before. Yes its been badly run, but Im not surprised they have trouble getting good managers. And they cant borrow new money for plant and equipment. However, lets not pretend that the US was neutral in this. The US has been very keen to see Chavez and Maduro fail. Its not happening in a vacuum.
This is silly. You must have missed the Griesa decision on Argentine debt. Thats why the Maduro administration doesnt want to restructure. US vulture funds are circling PDVSA and every asset the country owns will end up swallowed. There is no sensible restructuring possible in this environment which is why Maduro and co and playing for time. However I agree that the strategy is stupid and they should honor the PDVSA debt and force restructuring of the sovereign debt. As for the crappy GS deal - well thats what happens when you restrict what the heavily indebted can borrow against. So now CITGO gets taken for pennies if they default on the PDVSA debt.
Sanctions in Venezuela for “years, decades”: aha. name them. What are they. Because so far and till a few months ago, there were no sanctions on individuals, no sanctions on financial operations, etc.
“PDVSA was badly managed before”: aha. Which I dont see how it excuses almost 2 decades of “revolutionary” mismanagement, which left it as it is now.
CITGO being taken for pennies, etc… well… we all knew that was going to happen. That was a risk. That was a risk the “revolutionary”, “XXI Century Socialist” goverment not only ignored, but basically played Russian Roulette with all bullets in the revolver. When many of us were saying that the mirage of incredible poverty reduction in Venezuela was that, just a mirage cause by just washing the country in subsidies (and syphoning a great deal of that in corruption for the Chavistas) while not only not doing any real work in actual economic development and self-sustainability but undoing all that already existed, we were either ignored or insulted. When people warned about the humongous debts contracted by all means, transparent and opaque, with everybody from Wall Street to China, without any actual tangible result for all that money in terms of anything that could generate revenew in the future, we were “neoliberal squalids that wanted people to go hungry”.
By all means, it will be a great disaster for the country when bondholders come and demand assets to be forfeited. And the blame is going to be 100% on the idiots and thieves that signed those debts and wasted the money thinking oil was going to be at 150 or 200$ forever and ever. That they will now try to present themselves as victims is just vomit-inducing.
Although I would also support an argument to consider a lot of this debt odious. Only not by Maduro and his gang itself, of course.
You mention Chile, It is interesting to note that Chile which has a lot of copper exports actually put money aside and invested it in education etc, whereas Venezuela thought the good times would last forever and didn’t even maintain the oil industry components. I do applaud the literacy programs etc, but they killed the golden goose in the end.
I also don’t expect oil to be ever going back to the $100 barrel, given the increased efficiency of the US frackers. At one point they shut down 70% of the US fracking rigs and production went up by the same amount. (They are also much closer to the refineries).
What if you admitted you were wrong, but no one believed you were wrong?
On March 9, 2015, the United States president, Barack Obama, signed and issued a presidential order declaring Venezuela a threat to its national security and ordered sanctions against seven Venezuelan officials. Venezuelan president, Maduro, denounced the sanctions as an attempt to topple his socialist government. Washington said that the sanctions targeted individuals who were involved in the violation of Venezuelans’ human rights, saying that “we are deeply concerned by the Venezuelan government’s efforts to escalate intimidation of its political opponents”.[68]
In December 2014, the US Congress passed Senate 2142 (the “Venezuela Defense of Human Rights and Civil Society Act of 2014”)[66]
2006 was the year the first sanctions were imposed but they were primarily on military equipment and services sales.
It doesnt.
So it is clearly the case that Vene had very substantial debts prior to the election of Chavez. The Chavistas are not the first thieves Vene has had to put up with.
I dont know how putting the prior bunch of ladrones back in charge will help anyone except them and their cronys. Oh and the US companies who are lobbying for most favored nation terms of trade.
One of the things which frustrates me in considering the news coverage of Vene, is that the death of policemen at the hands of opposition “protesters” is not well reported. How many US police would need to be killed before you have a serious violent crack down on the groups promoting civic disturbances?
For what little my opinion is worth.
Everyone, especially those who totally espouse the free market should watch Greenspan’s address to Congress
where he admits his entire life’s belief system was wrong - that markets could fix themselves. (PBS Frontline “The Warning”) But again it is not just one guy who is responsible - but rather a complex system where everyone may make individually rational decisions but together they may have undesired consequences. I tend to believe more in Mark Blyth’s Global Trumpism view that the economic software which ran in the 30 postwar years which targeted full employment and restricted capital movement, and was great for everyone (except Capital) ultimately led to the inflation and strikes of the 70s and the subsequent Neo-Liberal market revolution of Reagan and Thatcher for the next 30 years. Note that the main target for that time was inflation, but the top came out like bandits and the rest either stagnated or became a precariat.
