Economists see painful cuts coming for Venezuela

[hack89]

As perishable foodstuffs rotted on cargo ships that had waited three weeks to unload at Venezuela's largest port, unsettled consumers this week found shelves at Caracas' main downtown market devoid of rice, cooking oil, sugar and other items.

Widespread scarcities and chaos at the nation's main ports, including Puerto Cabello, are just some of the problems Vice President Nicolas Maduro will face as he takes the reins of power in the absence of President Hugo Chavez.

Other pressing issues include a 20% inflation rate, a ballooning government deficit and price controls that have created a thriving underground market in food staples. Despite an oil bonanza, U.S. dollars are scarce and worth four times the official rate on the foreign-currency black market.

Economists say Maduro will be forced to institute several unpleasant economic measures, possibly including spending cuts that would be especially hard on the poor, the Chavez government's chief beneficiaries. Alejandro Grisanti, head of Latin America research at Barclays in New York, said sharp spending cuts were necessary after an "unsustainable" 2012 budget deficit inflated by Chavez's election year giveaways, including apartments and appliances, that helped him to a resounding reelection victory in October.

http://www.latimes.com/news/nationworld/world/la-fg-venezuela-economy-20130112,0,7119438.story

Time to pay the piper in Venezuela

[Tempest]

1. Interesting

No mention of the U.S. economic sanctions on Venezuelan exports.

Ya don't think that played a part, do you?

[hack89]

2. What sanctions?

they can sell as much oil as they want to the US - which they do to the tune of tens of billions of dollars

[Tempest]

3. *Groan*

The sanctions the U.S. had put on Chavez's government.

A little research goes a long way.

[hack89]

5. There are no limits on oil exports

The United States hit Venezuelan state oil company PDVSA with sanctions on Tuesday in a more aggressive bid to starve Iran of fuel, prompting fury and warnings from Venezuelan President Hugo Chavez's government.

The sanctions are largely symbolic, since they do not limit the company's sale of oil to the United States and other global markets, or the activities of its U.S.-based CITGO subsidiary.

http://www.reuters.com/article/2011/05/24/us-iran-usa-sanctions-idUSTRE74N47R20110524

Those are not significant sanctions.

[Tempest]

8. And now for the rest of the story

"The sanctions will prohibit PDVSA from competing for U.S. government contracts, from securing financing from the Export-Import Bank of the United States, and from obtaining U.S. export licenses."

Read more: http://latino.foxnews.com/latino/news/2011/05/24/imposes-sanctions-venezuela-state-owned-oil-company-iran/#ixzz2HmRz4SpX

[hack89]

12. But PDVSA only exports oil to the US and that is untouched

so how exactly does this impact the Venezuelan economy? What real economic activity has been stopped? After all, it is only one company.

[Tempest]

14. You completely ignored my post. Good job. n/t

[hack89]

15. Those things don't impact oil exports and the billions of dollars they bring in

so show me how they impact PDVSA. Show me how they impact the economy as a hole. The article says the sanctions are symbolic - show us why they are not.

[Tempest]

16. What happens to infrastructure when you can't finance the costs of improvements?

Apparently you've never run a business.

[hack89]

17. And how does this stop PDVSA from improving infrastructure?

they are able to sell as much oil as they want and spend the profits as they see fit.

Show me where their revenue has been impacted. That is all I ask. Give me some hard facts instead of your opinions.

[Tempest]

18. *groan*

No company has the money to place outright the costs of improvements, nor is it good business practice to do so.

Your own local government does it for capital improvements.

And it's not good business sense to pay for improvements out of profits. And I'm not even going to tell you why, I'm going to hope you research it for yourself.

[hack89]

19. Export-Import Bank of the United States finances US exports

how does that impact PDVSA? The money is not used for infrastructure.

Wouldn't PDVSA borrow from commercial lenders to finance infrastructure? Don't you agree that such transactions are not sanctioned?

You are struggling here - you need to find some hard facts.

On edit:

The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States federal government. It was established in 1934 by an executive order, and made an independent agency in the Executive branch by Congress in 1945, for the purposes of financing and insuring foreign purchases of United States goods for customers unable or unwilling to accept credit risk. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers. The Bank is chartered as a government corporation by the Congress of the United States; it was last chartered for a two-year term in 2012.[1] Its Charter spells out the Bank's authorities and limitations. Among them is the principle that Ex-Im Bank does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not take place because commercial lenders are either unable or unwilling to accept the political or commercial risks inherent in the deal.

http://en.wikipedia.org/wiki/Export-Import_Bank_of_the_United_States

[Tempest]

20. You're not looking at the big picture

PDVSA's inability to get financing for their exports affects their ability to get loans worldwide.

Look at what the European Bank told PDVSA when they asked for capital improvement funding.

[hack89]

21. You misunderstand what the Export-Import bank does.

it would provide financing for PVDSA to purchase US exports. And only if they could not get commercial financing.

What is PVDSA importing from the US that they would need US financing for?

[tjwash]

4. Oy...it just came out that Chavez has cancer, and the austerity vultures are already circling

SMH

[Tempest]

10. Yup. With the IMF and World Bank leading the charge. n/t

[jwirr]

6. The people have had some good years - austerity will not be accepted easily. This will not end

peacefully. Let us hope the USA is done playing trickle down with the rest of the world.

[hack89]

7. You can't blame the US for this

we didn't force them to spend more than they made.

[jwirr]

9. I do not believe that your statement is the whole story. You need to read "The Shock Doctrine" by

Naomi Klein.

[Tempest]

11. He's also unaware of the U.S. strangling the country's ability to obtain financing. n/t

[jwirr]

13. And a lot of people are not aware if what Standard Oil (Exxon) did to that country for years before

they got kicked out of the country.