Venezuela finally admits it: They’re broke – IOTW Report

Venezuela finally admits it: They’re broke

Thursday, 16 November 2017, 12:30 MJA Uncategorized 19

WaEx: Venezuela, given the odd detail of counterclaims, has finally admitted that it cannot pay back the debt it has. That is, the country is bankrupt. It’s worth leaving aside exactly what happens next in the halls of banking and asking how this all came to be? The answer being that they entirely wrecked the economy of the country with the world’s largest oil reserves. This happened not because the oil price fell, the problems started and were evident long before that.

They tried to create a non-market economy, and non-market economies simply do not work. For things just cost what they cost, something that we cannot sweep away in the pursuit of social or economic equality nor for any other reason. We can indeed change who pays but we can’t change what is paid, it just does not work.

 

The basic idea was that perhaps Venezuela’s poor should get more of the oil wealth. Well, why not? I might not, you might not, agree nor desire that but it’s a reasonable enough political goal. Promising it to them so as to get their votes isn’t any different from Sen. Bernie Sanders, I-Vt., promising free college, The Donald free money for rich people and Hillary Clinton — well, what was it she did in fact promise? What does matter though is how that promise is to be effected. And in Venezuela, the Bolivarian socialists decided that prices were just made up numbers that could be assigned at near random. This does not, to put it mildly, work.

We might, for example, think that cheap basic food for the masses is a good idea. Why wouldn’t we want all to have full bellies? In Venezuela that’s arepas (somewhere between cornbread and a tortilla, but not really). We could subsidize the farmers to grow the maize perhaps, or give poor people more money so they could buy them. Perhaps it’s not necessary to do either but they would work to an extent. What doesn’t work is shouting that since arepas should be cheap we’re going to fix the price of them nice and cheap.

19 Comments on Venezuela finally admits it: They’re broke

  3. This reminds me of an old joke about the Soviets, and I found a version of it here. Here it is:

    The Soviets had a broken window crisis. The problem was traced to glass factories where production quotas were based on square footage of glass. The glass commissars exceeded their quotas by producing vast quantities of ultra thin glass. To correct this, the head commies changed the quota from square footage to weight. The outcome is as predictable as it is farcical; the glass commissars switched to producing equally unuseable ultra thick glass. This is but a microcosm of what happens when there are no markets. It also proves the capitalist principle that people respond to incentives.

    One day the chief Soviet economist burst into the office of the head commie exclaiming “Congratulations comrade, we have conquered the entire world except for New Zealand.”

    The General Secretary was happy but perplexed; he asked, “Surely we are more powerful than New Zealand; why have we not conquered it as well?”

    The economist replied, “We must keep one place in the world where there are real prices.”

  5. Wait, how could it be that the foremost example of Socialism Utopia in our hemisphere went bankrupt and you never heard a word about it from our mainstream media? Does Bernie Sanders even know about this?

    Must’ve happened overnight!

  8. The frustrating thing here is that financial institutions gave money to an avowed communist dictator based solely on a temporary spike in oil prices.

    In the real world, would a bank give me a long term, unsecured loan for 2 billion dollars because I just won a lottery jackpot of 20 million dollars, and had already spent it, but I bought another lottery ticket, and bragged about how easy it would be to just declare bankruptcy?

    It’s that stupid — and these people run the world’s finances (and by that I mean they manage our savings).

    Don’t gloat over Venezuela’s insolvency. They spent your money. Ha, ha, ha, laughs Maduro as he chomps down another empanada.

    Oh yes, remember Chavez’ daughter is the wealthiest woman in Latin America. Its your money in her offshore accounts.

  10. Food For the Masses!

    !Nuevo, Improvado SOYLENTO VERDE!

    (yeah, yeah, I know “soy lento” means “I am slow”. My Venezuelan fishing buddy had a good laugh at my expense)

  11. @ACParker November 16, 2017 at 1:34 pm

    No, ACParker. It was never “our” money, to begin with. It was always their money. And if you accept those rules of the game, when you sit down at the table, well… rules is rules. Especially when you’ve got no say in them.

  14. There is a saying in Canada that “the NDP (our socialist party) couldn’t organize a “piss-up” in a brewery if they tried”. They are very good at being government workers earning lots of money for doing nothing.

  15. Maduro: Look at the sacrifice I make for the People: Spiritual, pure Venezuelan Arepas for you. But I must eat Yankee capitalist steak on your behalf. I do this willingly for my beloved Venezuela.

  17. I think his people will remember his interrupting his speech to take a bite of a sammich, while they just ate their pet parrot.
    They will remind him of this when he’s bargaining for his life on the gallows.
    If they are that formal with him.

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