While
we were focused on dumping Boehner, refugee resettlement, the Omnibus Bill, the
prospect of sovereign suicide with TPA and the Republicans in Congress voting
like Democrats, Venezuela got worse. See articles below:
Venezuela Is Adding
More Zeroes to Its Currency to Deal With Hyperinflation, By Noris Soto and Nathan Crooks, August 26, 2015
Venezuela is preparing
to issue bank notes in higher denominations next year as rampant inflation
reduces the value of a 100-bolivar bill to just 14 cents on the black market.
The new notes -- of
500 and possibly 1,000 bolivars -- are expected to be released sometime after
congressional elections are held on Dec. 6, said a senior government official
who isn’t authorized to talk about the plans publicly.
Many Venezuelans have
to carry wads of cash in bags instead of wallets as soaring inflation and a
declining currency increase the number of bills needed for everyday purchases.
The situation is set to get worse. Inflation, already the fastest in the world,
could end the year at 150 percent, said the official.
The government stopped
releasing regular economic statistics in December, when it reported inflation
had reached 69 percent.
A customer would need
at least 1,280 bank notes to purchase a 24-inch Samsung television on sale at a
mall in eastern Caracas for 128,000 bolivars. Some banks, meanwhile, have
reduced daily withdrawal limits at ATMs because of shortages of the highest denominated notes.
Exchange Rates
The country is not
planning to change it’s three-tiered exchange rate system in the short term,
said the official, adding that the government is working on plans to increase
dollar revenue by developing mining and petrochemical projects and reduce its
dependence on oil.
One dollar is
currently worth 725 bolivars on the black market, which Venezuelans use when
they can’t get government approval to purchase foreign currency at the three
official exchange rates of 6.3, 12.8 and 200.
Venezuela’s monthly
minimum wage of 7,422 bolivars equates to about $37 at the weakest legal
exchange rate and is only $10 at the black market rate.
A unified exchange
rate would not be possible until the economy becomes more diversified and
domestic production rises, said the official.
Press officials at the
central bank and finance ministry declined to comment when contacted by
telephone Wednesday.
Market Manipulation
The black market rate
is being manipulated by traders in Cucuta, Colombia and the Miami-based website
dolartoday.com, the official added. While the rate has become a reference for
some minor sectors of the economy, it’s a small market and not representative
of the overall economy, the official said.
Venezuela maintains
its willingness to pay foreign debt and is buying back bonds when it can, said
the official, adding that the government could consider selling or swapping
gold reserves if it needed to. Gold currently held in Caracas could easily be
transported abroad if the need arose, the official said.
The country’s foreign
reserves fell to a 12-year low of $15.4 billion on July 27 and have since
rebounded to about $16.5 billion, according to data compiled by Bloomberg. New
loans from China will slowly be reflected in the country’s reserves, the
official said.
Five reasons why Venezuela may be the world's worst economy @CNNMoney February 20, 2015
Venezuela might be the
world's worst economy. With 68% inflation, the highest
across the globe, Venezuela comes in just ahead of war-torn Sudan and
heavily-sanctioned Iran.
U.S. companies like Ford (F) and
Pepsi (PEP) are
quickly losing profits there due to inflation. U.S. airlines have drastically
reduced their flights to the capital, Caracas. Some European airlines have
already stopped flying there altogether.
Here are five reasons why
Venezuela's economy is spiraling down.
Political instability: The Venezuelan government, led by Nicolas Maduro, who
succeeded Hugo Chavez after his death, has become increasingly authoritarian.
In February his government has taken
over a supermarket chain, and arrested the mayor of Caracas, Antonio
Ledezma. Maduro alleges that Ledezma was
trying to overthrow him. Ledezma, a vocal critic of the government, joins
Leopoldo López, another incarcerated opposition leader in Venezuela.
A food crisis: Venezuelans wait for hours in lines outside supermarkets
to buy milk, sugar and flour. There are food shortages at grocery stores across
the country because the government can't pay to import food. Sugar,
flour and other basic imports, account for 70% of Venezuela's consumer goods,
according to the Brookings Institution. McDonalds (MCD) in
Venezuela ran out of french fries in January and offered yucca fries instead.
Maduro's government took over the
supermarket chain Dia Dia two weeks ago after the president accused the chain's
owner of hoarding food to hurt the economy. The owner, Jose Vicente
Aguerrevere, denied the accusations.
Oil: From riches to rags: Venezuela is getting crushed by low oil prices. A barrel
of oil now costs about $51 on the global market, losing about half its value
from just six months ago. That's exacerbating the economy's acute problems.
Venezuela has the largest oil reserves in the world, and once flourished on its
treasure chest of crude.
Now Maduro appears to be hitting the
panic button. He recently visited China, Russia and several OPEC nations,
asking for funds to shore up his government. Maduro said on Venezuela's state-owned
television that China has offered aid. But in return, Venezuela is giving China
free oil. Experts say that Venezuela isn't selling enough of its oil for
profit, given these agreements. Plus, Venezuelans pay next to nothing for gas.
One U.S. penny now pays for about five gallons of gas in Venezuela.
Dead money: Venezuela's currency is losing value faster than any other
in the world. Most Venezuelans now exchange money on the unofficial black
market. One U.S. dollar equaled about 88 bolivars a year ago. Today, one dollar
is worth 190 bolivars, according to dolartoday.com, a website that tracks the
black market exchange rate.
The process of simply exchanging
money is very confusing. Venezuela has four exchange rates: two that the
government uses to pay for its imports, the unofficial (black market) rate and
a new one Maduro introduced Thursday.
The latest exchange rate allows
Venezuelans to legally buy U.S. dollar for the first time in over a decade. But
there's a limit: Venezuelans can only buy $2,000 dollars a month.
Default: The country owes $11 billion in debt payment this year. Some experts see Venezuela defaulting in
October, when the country must pay $5
billion.
Comments
Venezuela
had been an “oil dependent” socialist dictatorship and welfare state. Now that oil is under $40 / bbl. And the
government took over the food industry, things got worse. They quickly became
the new Greece by defaulting on their government debt payments. Hyperinflation is the result of too much
money printing, so it looks like they stepped on that rake as well. Apparently their national government is both
stupid and stubborn. Let that be a
lesson to us in the US.
Norb
Leahy, Dunwoody GA Tea Party Leader
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