Venezuela's economy is imploding

[Bacchus4.0]

Source: CNN

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Put another way, one bolivar equals $0.002 -- less than a penny. The country's currency has lost nearly half its value since the beginning of May, according to dolartoday.com, a website that tracks the unofficial exchange rate.

It's another sign that Venezuela is arguably the world's worst economy. Venezuela primarily relies on oil exports to support its economy, which was already under pressure before oil prices tanked in the fall and winter.

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But the bolivar's implosion has only created more inequality. There's a growing divide between Venezuelans who can pay to exchange bolivars for dollars and those who can't. The gap is most glaring at the local grocery store.

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Maduro's government now barters in its trade deals. Uruguay pays Venezuela in beef for some of the Venezuelan oil it buys. In February, the prime minister of Trinidad and Tobago offered to exchange toilet paper for Venezuelan oil. Venezuelan officials declined to comment on the offer, according to Bloomberg.



Read more: Link to shttp://money.cnn.com/2015/06/03/investing/venezuela-bolivar-currency-imploding/index.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_latest+%28CNNMoney%3A+Latest+News%29ource

[COLGATE4]

1. The silence from the Maduro-Chavez cheerleaders

is deafening.

[ChairmanAgnostic]

2. Before Chavez, many reforms were necessary.

Unfortunately, he did not stop at the reforms, built a cult following, and Maduro has only made things much, much worse.

[Adrahil]

4. Chavez-style populism can't go on forever...

You can't build a sustainable economy based on seizing assets forever.... eventually, the assets will run out. You must be able to build an economy that can sustain itself. Populism is only the first step, and Chavez, and most especially Maduro, have never been able to get beyond it.

[COLGATE4]

11. One of the best descriptions I've seen yet. nt

[Myrina]

3. Why would they bother when they know folks like you are waiting to jump them?

[Adrahil]

5. How can one possibly defend the incredible bumbling of the VZ economy?

A major problem of the Chavistas is they can't even acknowledge the very obvious weaknesses in the Bolivar economic "plan." Anyone who supports it deserves a good thrubbing (rhetorically, of course) IMO.

[betterdemsonly]

9. I don't see anyone defending the fact that their economy is based on oil

It wasn't a condition created by Maduro. I don't see a right wing dictatorship as ending this.

[COLGATE4]

13. Not created by Maduro but exacerbated by him

after Chavez began the implosion of the Venezuelan economy. Instead of using the oil revenue bonanza to shore up and improve oil production he politicized the state oil company (known as a model in Latin America), firing or running out qualified people and filling important posts with acolytes. He expropriated large, productive agricultural holdings, transferring them to small farmers who had neither the training nor the means to exploit, reducing even farther Venezuela's lack of capacity to feed itself. Instead of investing in the one source of income - oil production - he let the physical assets deteriorate from lack of investment and maintenance to the point that oil production is actually down significantly. Then Chavez gave away billions of dollars in oil in order to curry favor and political support from other Caribbean and Latin American nations instead of using them for the benefit of the nation (and its people). Maduro is now presiding over the collapse of the Venezuelan economy and hasn't the preparation to have a clue as to what to do, aside from mouthing stupidities about planned assassination attempts, etc. But you're right on one thing - even a right wing dictatorship would be unable to reverse the damage done by these clowns, at least in the short term. Venezuela will continue to suffer the effects of Chavismo for many years to come.

[betterdemsonly]

40. Improving oil production would cause oil prices to collapse more.

Though this is the Pinochetist socalled solution. Chavez only expropriated uncultivated farm land.

[EX500rider]

43. "Chavez only expropriated uncultivated farm land." Not quite..

"The Chavez government has expropriated or nationalized numerous companies (no one seems to be able to count them all) involved in various sectors including aluminum, cement, gold, iron, steel, farming, transportation, electricity, food production, banking, paper and the media. The number of private companies in industry has dropped from 14,000 in 1998 to only 9,000 in 2011."

http://abcnews.go.com/ABC_Univision/News/ways-chavez-destroyed-venezuelan-economy/story?id=18239956

[betterdemsonly]

50. The economy was pretty good in 2011

so evidently they weren't productive companies. The crisis is because of the Saudi oil glut. They are trying to destablise Putin. Because Saudies are great defenders are freedom.

[EX500rider]

52. The economy in Venz has been imploding for a decade.

And the Saudi's could care less about the Russian's, they are after Iran's income.

[betterdemsonly]

54. If it has been a mess for ten years

why did Chavez get reelected at least 3 times, and Maduro 1 time? The elections were declared fair, by both the UN and Jimmy Carter.

The fact that they want to get Iran doesn't mean they aren't after Putin as well.

[EX500rider]

58. It has definitely been a mess for that long:

Rising inflation and shrinking GDP are bad.

[7962]

16. The country was failing when oil was $100+ a barrel. "Oil" is the newest excuse.

It will continue to fail if oil is again $100.00. Because it is a FAILED IDEA.

[betterdemsonly]

41. No it wasn't

Last edited Wed Jun 3, 2015, 07:12 PM - Edit history (2)

The poverty rates and illiteracy rates declined dramatically. Consumer spending was way up. That is why both Chavez and Maduro were repeatedly reelected in fair UN monitored elections.

[hack89]

46. There have been widespread shortages for at least two years

oil prices collapsed six months ago.

[Bacchus4.0]

64. Shortages a good while since Chavez put price controls in 2003 nt

[7962]

62. A pearl in a septic tank. Shortages & hoarding started in '03.

Spending went up because the govt redistributed wealth for a short term gain. And since the price of everything went up, of course spending went up with it. Inflation is sky high.
Oil production dropped 30% even when prices went up. GDP growth slowed even when oil revenues were at their highest.
Price controls caused high inflation and more shortages.
Nationalizing industry caused production to drop and MORE shortages since the middle part of Chavez term.
Nationalizing the electric companies now causes scheduled blackouts when there were few before.
Nationalization of the media now means heavy censorship.
Their tax system is ranked 188 out of 189 countries.

NO ONE wants to invest there because they know the govt is likely to steal whatever they build or produce. They are already holding millions owed to businesses from all over the world. I.E. airlines.
Most everything has been a failure for several years. At least now more people are able to read about those failures.

[Bacchus4.0]

6. I'd be happy to sell Venezuela some toilet paper n/t

[hack89]

7. Cuba is a big loser in all of this

the timing improved US-Cuba relationship is no coincidence - Cuba is facing the loss of billions in subsidies from Venezuela.

[betterdemsonly]

8. Bloomberg: such an objective source

You Maduro haters are basically siding with the Saudis and Texas fundies. Maduro is just terrible, and those guys are fine.

Not to mention the fact that your mostly republican sources continue to get caught lying. http://www.democraticunderground.com/?com=view_post&forum=1002&pid=6767975

[Bacchus4.0]

10. CNN is the source. Do you have some info on how fantastic Ven is doing you can share? nt

[7962]

17. Dont hold your breath!! nt

[betterdemsonly]

42. CNN is and always has been neocon "regime change" central. N/T

[GGJohn]

60. Fine, then provide a source that says different.

Fact is that the Chavistas, and now Maduro, have so screwed the economy that it's going to take unknown years to unscrew it.
Besides corruption at the highest levels of the Maduro govt., the economy is in the toilet without any paper, the crime rate is the highest in LA, the infrastructure is collapsing, the inflation rate is the highest in the world.
Maduro is so unpopular right now, he'll be lucky to get elected dog catcher, that is if he allows elections, he just might use the "national security" ploy to stay in power.

[snooper2]

31. LOL

methinks you are trying to hard

[Tarheel_Dem]

55. Not hard enough.

[Beauregard]

12. The US economy has enormous problems.

Remember the bailout of the banks and car manufacturers? Recall that the US is trillions of dollars in debt to its erstwhile mortal enemy, China? People who live in glass houses should not throw stones.

[COLGATE4]

15. If you're attempting to compare the US' economy

to that of Venezuela, you really need to read up on the situation in Venezuela.

[Beauregard]

19. Brilliant answer!

[COLGATE4]

20. About as brilliant as the post to

which I responded.

[hack89]

22. Let me know when there are massive shortages of food, medicine and other basic necessities

there is no comparison - our economy has grown steadily for several years. Their economy is imploding - the government has no money. Factories are closing left and right because they cannot import needed parts and material.

[Comrade Grumpy]

25. Meanwhile, here in capitalist paradise:

http://www.feedingamerica.org/hunger-in-america/impact-of-hunger/hunger-and-poverty/hunger-and-poverty-fact-sheet.html?referrer=https://www.google.com/

Hunger and Poverty Fact Sheet

Although related, food insecurity and poverty are not the same. Poverty in the United States is only one of many factors associated with food insecurity. In fact, higher unemployment, lower household assets, and certain demographic characteristics also lead to a lack of access to adequate, nutritious food.

Poverty

In 2013, 45.3 million people (14.5 percent) were in poverty.
In 2013, 26.4 million (13.6 percent) of people ages 18-64 were in poverty.
In 2013, 14.7 million (19.9 percent) children under the age of 18 were in poverty.
In 2013, 4.2 million (9.5 percent) seniors 65 and older were in poverty.
In 2013, the overall poverty rate according to the Supplemental Poverty Measure is 15.5 percent, as compared with the official poverty rate of 14.5 percent.[ii]
Under the Supplemental Poverty Measure, there are 48.7 million people living in poverty, nearly 3 million more than are represented by the official poverty measure (45 million).[iii]
Food Insecurity and Very Low Food Security[iv]

In 2013, 49.1 million Americans lived in food insecure households, including 33.3 million adults and 15.8 million children.
In 2013, 14 percent of households (17.5 million households) were food insecure.
In 2013, 6 percent of households (6.8 million households) experienced very low food security.
In 2013, households with children reported food insecurity at a significantly higher rate than those without children, 20 percent compared to 12 percent.
In 2013, households that had higher rates of food insecurity than the national average included households with children (20%), especially households with children headed by single women (34%) or single men (23%), Black non-Hispanic households (26%) and Hispanic households (24%).
In 2011, 4.8 million seniors (over age 60), or 8 percent of all seniors were food insecure.[v]
Food insecurity exists in every county in America, ranging from a low of 4 percent in Slope County, ND to a high of 33 percent in Humphreys County, MS.[vi]
Eight states exhibited statistically significantly higher household food insecurity rates than the U.S. national average of 14.6% between 2011-2013:[vii]

Arkansas 21.2%
Mississippi 21.1%
Texas 18.0%
Tennessee 17.4%
North Carolina 17.3%
Missouri 16.9%
Georgia 16.6%
Ohio 16.0%
Use of Charitable Food Assistance and Federal Food Assistance Programs

In 2013, 62 percent of food-insecure households participated in at least one of the three major federal food assistance programs –Supplemental Nutrition Assistance Program (SNAP-formerly Food Stamp Program), The National School Lunch Program (NSLP), and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).[viii]
Feeding America provides food assistance to an estimated 46.5 million people annually, including 12 million children and 7 million seniors. Based on annual income, 72 percent of all Feeding America client households live at or below 100 percent of the federal poverty level.[ix]
Among all Feeding America client households, 55 percent report receiving SNAP benefits.[x] Nearly one-quarter (24%) of Feeding America client households with children under the age of 18 report receiving benefits through WIC.[xi]
Nearly all Feeding America client households with school-aged children (94%) receive free or reduced-price school lunch through the National School Lunch Program, whereas less than half of the same population (46%) participate in the School Breakfast Program’s free or reduced-price breakfasts.[xii]

[hack89]

26. Now imagine things ten times worse

along with skyrocketing violent crime and a murder rate that dwarfs ours.

No one is saying our economy is perfect. But it is not collapsing.

[snooper2]

32. Our economy is doing better and better since Obama had to fix Bush's mess...your Maduro

is a massive fucking failure...

Maybe his comrade Putin will come save him! DOWN WITH THE WEST right!

[whatthehey]

35. Actually 1.2T, just slightly ahead of Japan. China owns much less US debt than people think

https://www.treasury.gov/ticdata/Publish/mfh.txt

[Ikonoklast]

59. China isn't the largest owner of U.S. offshore debt instruments.

The largest owner of non-domestic debt is currently Japan.

And those two countries together own less than 18% of all our debt anyway.

[PersonNumber503602]

61. Hey, may I ask where/how you got those numbers?

I'd look for it myself, but I really wouldn't know where to start. I suppose google, but ehnn.

*edit* Okay, I think I found something. http://www.treasury.gov/press-center/press-releases/pages/jl9983.ASPX

[blackspade]

14. The end result of unchecked corruption in a capitalist system.

And we are headed that way.....

[7962]

18. "Capitalism" that was stopped 15 yrs ago. Failure.

But you're certainly correct on the "unchecked corruption" part. Its just with the regime in charge

[blackspade]

21. How was 'capitalism' stopped 15 years ago?

[7962]

27. The govt took over most multi national businesses, refused to pay for services rendered, etc.

If you started up a business in VZ and became successful, the govt would then likely take it, unless of course you were one of their favorites, which returns to your corruption point
true capitalism is gone. Black market capitalism has replaced it.

[blackspade]

29. A government takeover does not mean that capitalism ended.

You seem to have a misunderstanding of what Capitalism is.
Capitalism is a system that extracts profit from labor and gives the proceeds to a select few.
Whether those few are the captains of free enterprise or government ministers makes no difference.

[One_Life_To_Give]

30. Which Dictionary or Economics Text is that Quoted from?

Websters

: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

[blackspade]

34. Writings of Richard Wolff among others

From Dr. Wolff's website: http://rdwolff.com/content/what-do-you-understand-capitalism-mean
Or check out his book Democracy at Work.

Capitalism, for me as for many others, refers to a system of production in which a small minority monopolizes the means of production requiring the mass of people to work for them in order to secure their means of life (food, clothing, shelter, etc.). The work is organized such that the workers produce more - a surplus - than they are paid, a surplus appropriated by the employers as profit. The employers then use that profit so as to reproduce the capitalist system and their favored position therein.

Notice that this definition of capitalism leaves open whether or not the state has a large or small role, whether enterprises are large or small, etc. All such variations simply mean different kinds of capitalism if and when the basic organization of production common to all variations is that described in the first paragraph above.

Lastly, in relation to the right-wing arguments you mention above, there is something sad and self-defeating in their arguments about "real capitalism." The trajectory of the capitalism that emerged in western Europe in the 17th and 18th centuries - and that has spread globally ever since - has always been movement from small-scale, not-financially dependent, largely private capitalism in the direction of large-scale, financialized, and state-connected capitalism. This latter capitalism is surely as "real" as the more primitive earlier capitalism that is always left behind. What the right-wingers celebrate is that kind of capitalism that is no longer "real," but has been everywhere shown to evolve (out of its own mechanisms) into the capitalism that is now "real" and hence quite rightly the object of criticism when it proves unbearably unstable as the crisis since 2007 only teaches us all yet again. Right-wingers' longing for a return to "real" capitalism is a utopian sort of nostalgia with limited contemporary relevance.

Another link: http://www.rdwolff.com/content/critics-capitalism-must-include-its-definition
Check out Emanuel Wallerstein as well

[fasttense]

38. There is a group of anti-Venezuela posters here at DU

They are like a gang, when one posts they all posts. I suspect some are the same person.

They use all the same tactics of paid trolls.

[fasttense]

48. So you admit your gang is anti-Venezuela

And yes I agree with you, I am PRO-Venezuela.

[EX500rider]

53. I don't have a "gang", sorry. Anybody with two eyes could tell 60% inflation..

....and one of the worst murder rates on the planet on top of massive consumer shortages were not things to be admired.

[7962]

63. I am certainly PRO- Venezuela. I'm anti-stupidity.

And anti- dragging a beautiful country into 3rd or 4th world status.
Anyone who thinks the current system in VZ is working and is whats best for the citizens must be anti-Venezuela

[Tarheel_Dem]

56. !!!

[snooper2]

33. I think we went to different schools

LOL

[fasttense]

37. Well put Black Spade

You can have several different types of economies going at the same time.

For example before the civil war we had a slave economy run on a capitalist system. We had people called slaves that were bought and sold like capitalist goods. Their stolen labor produced huge amounts of cotton that was bought and sold like capitalist goods.

So Venezuela is NOT a pure socialist economy and probably wont be for years. It would be almost impossible to get rid of capitalism and all the horrors it has created in just 15 years.

But you can bet the interference of the US (and all their funding) and the capitalist that were well established in Venezuela before Chavez are trying to wreck the economy for political gain.

[hack89]

23. They are a member of the largest capitalist cartel in the world. nt

[7962]

28. Well, the government is. Obviously its not trickling down!

They took over all the foreign oil production and kept it for themselves

[Android3.14]

24. When you call your unit of exchange a "bolivar"

Who wants a fistful of bolivars?

[Amishman]

36. I am growing to love Venezuela threads

The conspiracy theories and absurd mental gymnastics they bring out are almost up to the standards of 911 truthers

[fasttense]

39. So why did you join a liberal site?

Then turn around and bash liberals ideas?

Sounds like you should keep looking for a site that better suits you.

[EX500rider]

44. "Then turn around and bash liberals ideas?"

The government ruining the economy and letting the murder rate and inflation rate soar to one of the highest in the world is hardly a idea most liberals back.....maybe you meant "Maoist"?

[fasttense]

47. You sound just like the RepubliCON

Down the hill from me. He calls any socialist a Maoist too.

Socialism is a liberal idea. Cheering on capitalists as they attempt to destroy a socialist country is very neoconservative.

[EX500rider]

51. Democratic socialism as practiced in the Scandinavian countries is a liberal idea..

.....plain old socialism where the government owns the means of production is not. Even less so when they massively mismanage that like in Venz. with 60%+ inflation and shortages of consumer items and a horrible murder rate.

[Tarheel_Dem]

57. Yeah, let's emulate this.

Don't know about you, but I prefer not to have to stand in line all day for toilet paper, and other basic staples.

[seveneyes]

49. The official word

[StrongBad]

65. You mean a planned economy ended up self destructing? Shocker!

Who woulda thought?