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The “no comment” revolution

Financial markets are spooked about the last bastion of reason in the Venezuelan government finally falling, according to Bloomberg’s Anatoly Kurmanaev – whose work continues to be interesting and thought-provoking. The money quote: “A spokesman for the Finance Ministry declined to comment on potential bond sales … A spokeswoman for the central bank declined to…

Tail-between-my-legs Chronicles

Venezuela is now the riskiest country in the world. This damning-yet-not-completely-unexpected development is not unrelated with what is happening in Buenos Aires. Argentina, who for years has been the international financial community’s “enemigo público número uno,” has lost a string of court battles in the World Bank’s ICSID arbitration court. They have even lost battles…

The Lexical Innovations of the Revolution

Let us all thank Jorge Giordani that this phrase is now in a Bloomberg headline. From the piece itself… One dollar buys 41.2 bolivars on the black market, compared with 6.3 bolivars at the official rate… 41.20! que bolas… Update: But as a commenter points out, the best of this too-fun-for-a-proper-business-wire story is this borderline…

Baby steps toward freedom?

This is huge. Apparently, if you’re a person (not a company) and you buy currency through the new SICAD dollar auctions, you can buy as many dollars as you want as long as they are for traveling, education, or health purposes. Regardless of how we all agree this dual exchange rate system is boneheaded (it…

S&P to Maduro: down you go

Standard & Poor’s downgraded Venezuela’s debt from junk to useless junk. Why should you care? Because the lower our debt rating, the higher the interest rates we have to pay when we take out loans to pay for election binge spending. In other words, your grandchildren just got poorer, courtesy of S&P.

Money down the toilet

Bloomberg’s Charlie Devereux, Corina Pons, and Sebastian Boyd are reporting that Venezuelan Finance Minister Nelson Merentes will soon hit the road to see what appetite there is for new Venezuelan bonds. Apparently, the Maduro government needs fresh cash because it doesn’t have enough on hand to import toilet paper. The title of the post is…

The China connection

Over at Foreign Policy’s Transitions blog (apologies, but you need to log in to read the piece), I take a break from my vacation to discuss the link between last week’s devaluation and Elías Jaua’s ill-fated trip to China: In the last few weeks, reports have surfaced that the Chinese, the main underwriters of last…

Venezuela is a Ponzi scheme

(Posted on Foreign Policy´s Transitions blog) A pyramid scheme called Venezuela By Juan Cristobal Nagel Hugo Chávez, Venezuela’s embattled president, is living on borrowed time. The real problem for Venezuelans, though, is that their economy is also living on borrowed time, and the day of fiscal reckoning may be near. Venezuela has an enormous fiscal…

Princess of China

El Nacional continues with its reporting on the push to get China to provide new financing for the Bolivarian Revolution. In a rambling article by Andrés Rojas, we learn, among other things, that:

Hugo Chávez, darling of Wall Street

Bloomberg’s Ye Xie and Nathan Crooks have a very interesting article profiling the cozy relationship between Hugo Chávez and his bondholders. They make the case that, in spite of all his rhetoric, Chávez has never missed a bond payment, and the 14.7 percent per year Venezuelan bonds have yielded in the last 13 years or…

Chávez owes his re-election to the people

I mean, literally. You and me are going to have to pay for his reelection … out of our own pockets. Ultimas Noticias reports on numbers from the Ministry of Finance saying that, just the last year, Venezuela’s foreign debt increased from roughly $80 billion to about $100 billion. That increase, divided by Venezuela’s population,…

A closer look at Maduro’s superpowers

Press reports about Nicolás Maduro’s new powers on economic issues don’t really do justice to what is going on. When you scratch beneath the surface and actually read the text, you realize chavismo is getting ready for an election. The timing of the decree – and its announcement – suggests the President’s health is worsening.…

Opportunism, or socialist cronyism?

Bloomberg’s Alex Cuadros has a thoughtful profile of Venezuelan banks. While it lays down the facts without sounding shrill, the facts are alarming enough in themselves. In the end the article can’t help but be a brutal indictment of a corrupt industry. His basic point? Banks make money for nothing. In telling the story, he…

Schrödinger’s Bond

Did Chávez have his “you didn’t build that” moment after the Amuay disaster when he said that, accident or no accident, “as some philosopher whose name I don’t remember said, The Show Must Go On“? Both were gaffes, and the attacks each spawned are arguably unfair. But both seem to transcend questions of context by…