Venezuela, The Starving Socialist Dystopia (Part 1)

[7437]

I am not seeing what this has to do with socialism. Their country was based entirely on oil, which cratered. They were flying high when oil was on.

 

[Arkain2K]

I am not seeing what this has to do with socialism. Their country was based entirely on oil, which cratered. They were flying high when oil was on.

Invaluable contributions like this post are generally what happens when Sherdoggers fail to read the thread before jumping in: they can't even grasp the most basic information in the debate, eventhough other people have already discussed the issues in great details.

Believe it or not, you're not the first, nor will you be the last, who automatically assumes low oil price is the reason why Venezuela no longer have the capability to grow their own food supply, or to manufacture essential household items like toilet paper.

The near-total destruction of that nation's privately-owned agriculture and manufacturing industries had EVERYTHING to do with Hugo Chavez's insane socialist policies, and that destruction is completed long before oil price plummets. Maduro just inherited the shithole created by his Socialist mentor, and he's too retarded to do anything to stop that freight train from going over the cliff.

We have thoroughly discussed the failings of Chavez's socialist dystopia very early on in the thread to educate the folks who are new to this topic, such as yourself. There are also many informative news articles (all linked in the OP's Thread Index) on the subject matter. Thus, any ignorant participants in this thread are purely intentional by their own choosing.

If you truly wants to catch up on the wonders that is Chavismo, you must first learn how to read the introductory information presented on front of you in the OP, just like everyone else. Only then you should begin posting, when your knowledge on the subject matter is up to par with everyone else.

PS: The summary on Page 4 is also a good place to start for the late-comers:

http://forums.sherdog.com/posts/117335005/

 

[Benjamin Burton]

venezuela women are beautiful.. if only they sat on our southern border

 

[kintana]

Not here to defend or even talk about socialism, cuz I think some of you have the wrong impression of the issues in Venezuela.

The main problem is corruption. I have family in Venezuela and I know for a fact it was a very strong and wealthy country not too long ago. Chavez took control and essentially made himself a totalitarian dictator and shit started going out of control.

The main problem is stupidity. Chavez was an idiot he thought shortages are made up stories by capitalists. The people he surrounded himself with were idiots. When china signed a 10 year deal to get oil at $40 a barrel well below the marketing price of $110 in early 2000s. The government thought they made awesome deal because the USA wanted that deal.

Well now venezuela lacks funds because they spent all the oil well in the wrong places. And the signed horrible deals with cuba, china, nicaragua, belarus and russia.

 

[uppercutbus]

How long before the US invades Venezuela?

Any military intervention is not gonna happen. The banks already have Venezuela.

Libya, Iraq and Afghanistan. . . dem dere "Rogue nations" had independent centralized banks. Only Syria and Iran are left in the entire world with independent centralized banks. That system was an anathema to the Western model of debt finance, which is based on fractional reserves and creates money out of nothing at interest.

 

[Limeade]

http://mobile.nytimes.com/2016/08/15/world/venezuela-malaria-mines.html?_r=0&referer=

Check out this story. It's so bad because of inflation and restricted markets, people are leaving the middle class office jobs and toil in the mines. I guess a salaried job and empty shelves . . . Doesn't cut it when you need hard currency and supplies.

 

[MyOwnSummer12]

What this all comes down to is how prone leftists and central planners are in thinking they have superior knowledge to design society in top down fashion. They don't appreciate the complex interplay of the free market, nor do they understand the role spontaneous order plays from the bottom up.

Short introduction to Spontaneous Order


Spontaneous Order vs. Centralized Control

 

[Rod1]

What this all comes down to is how prone leftists and central planners are in thinking they have superior knowledge to design society in top down fashion. They don't appreciate the complex interplay of the free market, nor do they understand the role spontaneous order plays from the bottom up.

The state is not the only entity that can distort the free market.
The individuals on those videos are just as dellusional as communists.

 

[MyOwnSummer12]

The state is not the only entity that can distort the free market.
The individuals on those videos are just as dellusional as communists.

What entity distorts the free market more than the state? What entity hindered voluntary exchange more than the Venezuelan government? Even their opposition parties are radical market interventionist and redistributionist. The major difference being those individuals in the video don't believe in using the force of the state to enact their ideas at gun point.

In free market countries bread waits for you on the shelf; in socialist countries the people wait for bread.

 

[Rod1]

What entity distorts the free market more than the state? What entity hindered voluntary exchange more than the Venezuelan government? Even their opposition parties are radical market interventionist and redistributionist. The major difference being those individuals in the video don't believe in using the force of the state to enact their ideas at gun point.

In free market countries bread waits for you on the shelf; in socialist countries the people wait for bread.

Which country follows a complete hand off system to the markets? absolutely none.

People like you pointing at Venezuela to promote radical ideas are like communists pointing at income inequality to promote their own.

As to which entity can distorts the markets? do you remember the 2008 crisis?

 

[Cuauhtemoc]

Any military intervention is not gonna happen. The banks already have Venezuela.

Libya, Iraq and Afghanistan. . . dem dere "Rogue nations" had independent centralized banks. Only Syria and Iran are left in the entire world with independent centralized banks. That system was an anathema to the Western model of debt finance, which is based on fractional reserves and creates money out of nothing at interest.

I don't think Taliban Afghanistan even had a bank lol.

 

[Arkain2K]

China is cutting off cash to Venezuela
by Patrick Gillespie
September 30, 2016

Chinese President Xi Jinping (R) shakes hands with Venezuela's President Nicolas Maduro before their meeting at the Great Hall of the People September 1, 2015 in Beijing, China.​

Venezuela can't pluck leaves off China's money tree anymore.

After pouring billions into Venezuela over the last decade, China is cutting off new loans to the Latin American nation. It's a major reversal of relations between the two nations, experts say. It also comes at the worst time for Venezuela, which is spiraling into an economic and humanitarian crisis.

"China is not especially interested in loaning more money to Venezuela," says Margaret Myers, a director at Inter-American Dialogue, a Washington research group that tracks loans between China and Latin America.

Since 2007, China's state banks loaned Venezuela $60 billion, according to the Inter-American Dialogue. That's more that it loaned to any other Latin American country. China is considered Venezuela's most important creditor.

Of that, Venezuela still owes China approximately $20 billion, experts say, and there's no sign that it can pay back the amount amid its crisis.

Venezuela pays back the vast majority of its loans to China with oil shipments. Last year, Venezuela's state-run oil company, PDVSA, shipped about 579,000 barrels of oil per day to China, according to the company's financial audit.

But this year, Venezuela -- which has the world's largest oil reserves -- has seen oil production crash to a 13-year low. Some of its service providers, such as Schlumberger (SLB), have dramatically lowered operations due to unpaid bills from the Venezuelan government.

Socialist president Nicolas Maduro has led a regime that mismanaged Venezuela's resources and pushed the economy into a crisis, experts say. China has now run out of patience.

"The Chinese have allowed the Venezuelans to be stupid," says Derek Scissors, a resident scholar at the American Enterprise Institute who tracks Chinese investment around the world. "The Chinese don't want to allow the Venezuelans to be stupid anymore."

China's Foreign Ministry did not respond to a request for comment. Venezuela's finance ministry did not respond either.

Like the government, Chinese companies too are losing interest interest in Venezuela. Since 2010, Chinese companies have invested $2.5 billion a year on average in projects in Venezuela. In the first half of this year, they only invested $300 million, according to AEI.

Scissors emphasizes that the data can change if China hands gives even one big loan to Venezuela before the end of the year. However, he too agrees China is in no mood to dole out more money.

That souring sentiment played out last year when the China Railway Engineering Company halted construction on a "bullet train" it had been working on in Venezuela. The train's construction sites, once a sign of blossoming relations, now sit abandoned.

China long saw Venezuela as one of its top allies in Latin America, experts say. In exchange for cash and infrastructure developments, China wanted a secure source of oil for years to come.

But China's ambitions have hit the reality of the crisis in Venezuela, where inflation is expected to skyrocket 700% and the economy is projected to shrink 8% this year, according to the IMF. Its currency has plummeted in value and many experts believe Venezuela could default on its debt.

With dwindling revenues, Venezuela can't pay for many imports of food and medicine, causing massive shortages in those items. Some Venezuelans, who can, are even traveling to the United States to buy basics like toilet paper and tuna fish.

Amid widespread protests for Maduro to resign, his government must now push on without China's help.

"In the specific case of Venezuela, it's true that [the Chinese] are not willing to continue acting as the lender of last resort," says Mauro Roca, a Latin American economist at Goldman Sachs. "The country is already in a deep crisis, but things can unravel even more."

http://money.cnn.com/2016/09/30/news/economy/china-venezuela-finance/

 

[Arkain2K]

Once well-paid, Venezuela's oil workers are now selling their uniforms for food
Alexandra Ulmer, Reuters
Oct. 5, 2016,

For decades, jobs at Venezuela’s state-run oil giant PDVSA were coveted for above average salaries, generous benefits and cheap credit that brought home ownership and vacationing abroad within reach for many workers.

Now, in Venezuela’s asphyxiating economy, even PDVSA employees are struggling to pay for everything from food and bus rides to school fees as triple-digit inflation eats away incomes.

They are pawning goods, maxing out credit cards, taking side jobs, and even selling PDVSA uniforms to buy food, according to Reuters’ interviews with two dozen workers, family members, and union leaders.

“Every day a PDVSA worker comes to sell his overall,” said Elmer, a hawker at the biggest market in the oil city of Maracaibo, as shoppers eyed pricey rice and flour imported from neighbouring Colombia.

“They also sell boots, trousers, gloves and masks.” The bulk of PDVSA’s roughly 150,000 workers make from $35 to $150 (Dh550.50) a month plus some $90 dollars in food tickets, as calculated at the black market exchange rate. It is still more than many Venezuelans, but not enough, employees say.

Brain drain

“Sometimes we let the kids sleep in until noon to save on breakfast,” said a maintenance worker who works on the shores of Maracaibo Lake, Venezuela’s traditional oil-producing area near the Colombian border. He said he has lost five kilos (11lb) this year because of scrimping on food.

The toll of the economic crisis is fuelling worker disillusionment, absenteeism, and a brain drain and is hurting efficiency in the industry which produces more than 90 per cent of Venezuela’s export revenue.

“Most of us aren’t as productive as we used to be, because we’re more focused on how to survive economically,” said the maintenance worker, speaking on condition of anonymity as he said he feared reprisals.

That adds to a wide array of problems caused by a cash shortfall — from underinvestment and part shortages to poor maintenance, theft and insufficient imports for blending.

As a result, the Opec member’s oil output tumbled this year, dealing another blow to the unpopular government of leftist President Nicolas Maduro, already under pressure due to low international oil prices. (Graphic: http://tmsnrt.rs/2doEN3w) PDVSA, which did not respond to a request for comment for this story, says its employees are happy and state television regularly shows crowds of cheering PDVSA workers in red overalls. The company talks of a right-wing media campaign to discredit late leader Hugo Chavez’s “21st century Socialism.” “While PDVSA does not escape the (oil) price situation, its workforce remains intact and ready to generate initiatives to boost major projects,” it said recently.

Bartering to eat

In Ciudad Ojeda, a hot oil town that hugs the shores of Lake Maracaibo, food lines and shuttered shops dot the city of roughly 92,000 and, for the first time, the opposition-led mayor’s office is organising soup kitchens.

A former PDVSA worker, who quit earlier this year because he could earn more driving a taxi, said that over the past months he sold four overalls and one pair of boots to feed his three children. He bartered another pair of boots for meat. He also sold his furniture, including his dining table, to buy food.

Further north at the massive Paraguana refining Centre, a mechanic and a father of two, recently offloaded new boots for roughly $7 — “cheap, so I could sell quickly and get food.” Despite their anger, workers say they are scared to protest.

Since Chavez opponents tried to oust him by shutting down the oil industry in a months-long strike that started in 2002, stoppages are considered sabotage.

Oil workers duck out of work to stand in food lines, and people at the Petrocedeno oil upgrader in eastern Venezuela say rowdy company cafeteria queues now start an hour before lunch as workers jostle before food runs out.

Quality of life

Maduro blames these shortages on US-backed businessmen he says are hoarding products to torpedo his government, an argument that still resounds with some workers.

“The situation is tough because of the ‘economic war’,” said PDVSA cook Moraima Reyes in Paraguana. “That’s why we’re defending the revolution more than ever.” But many speak of leaving PDVSA or Venezuela altogether, joining a brain drain that has seen professionals flock to Colombia, Spain or Panama.

“What’s the point of working? It’s impossible to have a good quality of life,” a former automation specialist at PDVSA said in a phone interview. Last year he moved to the United States, where he has to hold several jobs, including in a restaurant and a car dealership.

“I have no regrets. Whatever it takes to escape Venezuela’s communism."

http://www.businessinsider.com/venezuela-oil-workers-selling-uniforms-for-food-2016-10

 

[Arkain2K]

Venezuela Is Pawning Pieces of Iconic American Brand Citgo to Survive
Joe Carroll
October 6, 2016

The red triangle is just about everywhere, from the massive sign looming over Fenway Park’s Green Monster to the filling stations on seemingly every other corner in the eastern half of the U.S. to the heating oil donated to the poor in the winter.

Few foreign companies have the kind of footprint or brand recognition that Citgo Holding Inc. does in much of America, and yet most people know little about it or the drama surrounding it back home in Caracas. The company is owned by Venezuela’s socialist government, and is being offered up as a lifeline to stave off a default by Petroleos de Venezuela SA.

Like the country, PDVSA, as the state-run oil giant is known, is strapped for cash. So it’s asking bondholders to swap soon-to-mature notes for longer-term securities backed by a 50.1 percent stake in its best-performing asset, Citgo. PDVSA has estimated its value at $8.3 billion, a sum scoffed at by analysts who reckon the number’s likely well less than half that.

Holders have until Thursday evening to take the offer. (There will be a second chance later with slightly worse terms.) Nothing about Citgo makes it easy to decide whether accepting would make sense. For one thing, the refiner’s ultimate fate could be clouded by billions in outstanding claims against Venezuela by Exxon Mobil Corp. and other foreign companies seeking compensation for asset seizures going back a decade.

Cash Generator

“This is the first time I’ve ever encountered a situation like this,” said Hongtao Jiang, emerging markets strategist at Deutsche Bank AG. “It’s not clear to anyone whether this is 100 percent safe.”

Amid the worst crude-oil price slump in a generation, Venezuela’s economy is in free-fall, with food and medicine running short and crime exploding. Dependent on oil sales for almost half the national budget, the government is facing a dwindling cash hoard. Although PDVSA has yet to miss any interest or principal payments, investors are anxious -- with the bonds yielding more than 20 percent -- as Venezuela’s foreign currency reserves hover around a 13-year low of $12 billion. Four years ago, they were more than double that.

Revolutionary Aspirations

But there’s a crown jewel in Citgo. Unlike producers stung by the oil collapse, companies that turn crude into fuels are enjoying the reduction in a basic business cost. “They have been making tons of money,” said Brad Bell, a credit analyst at Fitch Ratings in Chicago.

A 106-year-old outfit -- it got its start in 1910 as Cities Service Co. -- Citgo was a target of corporate raider T. Boone Pickens in the early ’80s before being swallowed up by Armand Hammer’s Occidental Petroleum Corp. PDVSA bought a 50 percent stake in 1986 and has had complete control since 1990, later pressing it into service to help advance the Venezuelan ruling party’s revolutionary aspirations.

Every winter since 2005, Citgo has, under orders from Caracas, supplied free or cut-rate heating oil to homeless shelters and the needy through a Boston nonprofit run by Joseph P. Kennedy II. It was a way for the late Venezuelan leader Hugo Chavez to antagonize and show up the U.S. government and then-President George W. Bush, a man Chavez liked to call “the devil.”

Protected Status

Chavez’s hand-picked successor Nicolas Maduro has continued the program. During its first 10 years, annual donations averaged 23.5 million gallons, according to the Citgo-Venezuela Heating Oil Program website. Calls to the nonprofit weren’t answered. Fernando Garay, a Citgo spokesman in Houston, didn’t respond to phone messages or e-mails.

Meanwhile, in Caracas, the plan to use Citgo as collateral has raised a ruckus in Congress, as the opposition accelerates efforts to depose Maduro. PDVSA President Eulogio Del Pino was summoned to explain the debt swap amid calls for further investigation.

In the U.S., the triangular Citgo logo is probably best known in Boston. Cities Service erected a circle-shaped marketing sign featuring a shamrock atop its local office on Beacon Street in 1940, replacing it with the Citgo logo in 1965 when the brand was created. It’s of such local value -- an icon visible high above the Red Sox’s home field -- that the Boston Landmarks Commission is studying whether to give it protected status.

Appraising the company isn’t so easy, because its ownership means there are no public filings of financial data. And “private company valuations are traditionally and typically discounted,” said Thomas McNulty, director of the valuations and financial risk management practice at Navigant Consulting Inc.

The company, which can process about 750,000 barrels a day, saw earnings before income taxes, depreciation and amortization reach $2.4 billion last year. That’s more than double 2013’s results, according to Fitch. So, subtracting about $4 billion in debt, Citgo is probably worth $3 billion, McNulty said, basing the calculation on $1.5 billion in estimated annual Ebitda, multiplied by 4.5 -- the market value-to-Ebitda multiple at which many U.S. refiners are trading.

Whichever number is right, S&P Global Ratings is no fan of the bond swap. The company downgraded PDVSA on Sept. 19 and said if the swap goes through it would be “tantamount to default” because it’s coercive toward investors. Fitch put the refiner on negative watch after PDVSA’s Sept. 16 announcement of details about the swap offer.

One issue is that Citgo labors under an “overhang” of PDVSA-related issues, Fitch’s Bell said. Senior managers from the parent are cycled in and out of U.S. offices, creating a clash of corporate cultures and management styles between Venezuelan nationals and American employees, according to employees who asked not to be identified at the company’s refinery in suburban Chicago.

In the end, Navigant’s McNulty said, PDVSA should probably just break Citgo up, sell its pieces and take the much needed cash. “If the market says it’s not going to let you do this debt exchange,” he said, “you may gradually start to hear this sort of idea trickling out.” Assuming anyone would be interested in taking on the possible legal headaches.

http://www.bloomberg.com/news/artic...ng-its-iconic-american-brand-as-debts-pile-up

 

[ShinkanPo]

Quality of life

Maduro blames these shortages on US-backed businessmen he says are hoarding products to torpedo his government, an argument that still resounds with some workers.

Jesus H. Christ this people still haven't learned? That foreign companies cant be forced to operate in a country that have ecconomic policies that is not favorable to the the big corporations and yet they blame America for hoarding products.


God damn leftists if you want goo ole American goods why did they thrash and bash the US in the first place?


Fighting a revolution? Revolution for what what is the goal of this revolution that Venezuela will be able to produce everything they need to prosper so they dont have to suck up to America? Or a let us make our countey shit revolution and see who will give us handouts first?


Jesus H. Christ People just really want to burry their head in the sand.

These people needs to realize that trade and wealth does not just grow on trees.

Communism is really a religion people still believe in if despite not being very logical.


Oh lets wait for the communist/socialist appolgists here to say that it is Murica's fault why countries go to shit.

 

[Greoric]

@Arkain2K You make excellent OPs. Walls of text, but informational if you want more detail. Good shit.

 

[Greoric]

Which country follows a complete hand off system to the markets? absolutely none.

People like you pointing at Venezuela to promote radical ideas are like communists pointing at income inequality to promote their own.

As to which entity can distorts the markets? do you remember the 2008 crisis?

The federal reserve?.... an arm of the government?

The extent of those misallocations don't happen or continue for that long with appropriate price discovery.

 

[Greoric]

I am not seeing what this has to do with socialism. Their country was based entirely on oil, which cratered. They were flying high when oil was on.

You're a better poster than coming in with that.

 

[Rod1]

The federal reserve?.... an arm of the government?

The extent of those misallocated don't happen or continue for that long with appropriate price discovery.

Federal reserve is still privately held, and thats the illusion of the free marketers, just like "There is no real communism" you come with the "There is no real free market" as if the free market would be the natural evolution of an anarchist society.

If you need the government to enforce free market, by mere definition, its not free anymore.

 

[Gunny]

This is one of those cases where any US attempts at helping are denounced as imperialism. That being the case is there any reason we should just wash our hands of the whole situation?