Caracas Chronicles

The folks at the FT are worried. Very worried.

Two money quotes, given their annoying firewalls:

“In a report last week which was otherwise bullish on supplies, analysts at Citigroup called Venezuela “probably the biggest bull risk to the oil market in 2014 outside of the MENA [Middle East and north Africa] region.”

“The current regime is looking increasingly unstable, with rampant inflation, shortages of food and other basics. In the event of a coup the country’s production could collapse as it did back in 2002 [when PDVSA workers went on strike],” the bank’s analysts added.

Venezuela’s growing instability was also widely discussed at an oil industry conference in Mexico last week, according to participants.
Concern centres around two scenarios.

One fear is that municipal elections in December could be a trigger for civil unrest, encouraging elements within the army that oppose the regime to step in to secure the streets. Any coup could lead Chavistas to orchestrate a shutdown of production at PDVSA.”

And another one:

““It is a matter of time before Venezuela defaults on its loans to China and without more cash the government will struggle to pay wages and there will be chaos,” says one senior trader, who says the market should be factoring in a significant reduction in Venezuelan output next year.”

Wait, coup? Chaos? Defaulting to China? Oil shutdowns? Nonsense. Don’t they read Weisbrot? Everything’s great! We’re not Greece. Why, we’re getting a loan from Goldman Sachs!