Venezuela Refuses to Default, and Few People Seem to Understand Why

A false pretense when there is little respect outside of those receiving payments beyond their borders. Perhaps they think they would be admitting defeat and that would cause the coup to occur overnight?

The first part makes more sense - and it's not a conspiracy theory - they want to keep access to bond markets.

Venezuela has traditionally been governed by people tied closely to the media empires in the country. Extremely powerful and rich people that use the counter as their plaything. The poor suffer and the upper class prosper. The gap between rich and poor grows.

At some point the balance tips and you get a coup d'etat. They promise the poor that they will take care of them and fuck the rich. Slowly the country turns into a dictatorship.

The US doesn't like socialist governance in their back yard, so they look for ways to turn the screws on that country to flip it back to the rich capitalist trickle down economics ideology.

In the old days they would just send the CIA down there and have a few people assassinated, or provoke unrest and supply weapons to right wing paramilitaries.

Today it is easier to starve then out financially and since both Russia and Venezuela both truly rely on raw material resource exports, especially oil and gas, persuading OPEC to crush the price of oil has been damaging to both of the US's enemies.

In Venezuela's case, it still had huge oil reserves and cash, so the US is just playing the waiting game.

I find both typical political models in south American politics bad, but the US foreign policy doesn't help matters either way.

The starving public aren't meaningfully pro or anti any faction in government, they are civilians trying to scratch by.

[1] https://www.theguardian.com/world/2014/feb/14/venezuela-viol...

The government has stated before that these handouts (called CLAPS) are not for the middle class (which has been opposing the government), only for the lower classes. Of course, they claim that the middle class can afford food and that they are defending the poor.

Guess what? The rapidly shrinking middle class is also suffering from the huge lines which start as early as 6pm the day before outside the supermarkets to buy a bit of food. Those of us that cannot go to the lines (because we need to work to actually afford food) need to buy in the black market (called "bachaqueros", almost always someone with govt connections) at 10x the regular prices.

We have the exact same situation with medicine. Patients are dying in hospitals because there's no medicine. Something as simple as Acetaminophen is incredibly hard to find.

I have a newborn daughter and she was supposed to get her 2 month vaccinations and I cannot find them anywhere.

The situation here is just incredibly difficult.

I'm more likely to believe that influential Venezuelans are exposed to the current bond market and are seeking to delay the reckoning.

There's not a lot of evidence for this. It's not like no country has ever defaulted before, it happens all the time, and they were able to borrow again once they got themselves functional. Defaulting is bad but certainly not a death sentence.

It's especially weird when, as the article points out, bondholders are practically expecting default - and charging interest to match! At a time when it has very little cash, Venezuela is paying extra to avoid a situation that bondholders have already resigned themselves to.

> Simply put, the trade-off is not worth it.

That's not a sure thing. It could be worth it, depending on how they use the newfound money. It doesn't just have to be buying food, as important as that is. What if they use it to get some functional power plants? The massive brownouts right now are hobbling the economy; there would be much better growth prospects if people had reliable power.

Venezuela is very dependent on financing for its oil exploration and infrastructure. The reality is that they simply need to hold the fort until oil rebounds in a year or two. Otherwise a huge portion of their future oil extraction will go to financing as opposed to Venezuela. It is certainly a risk but to say the opposite is not a huge risk with serious consequences is pretty naive.

So it's really quite a puzzle. I tend to think all the explanations play a part: 1) maintaining kickbacks and cash flow to powerful players, 2) keeping face wrt Chavism, and 3) ensuring that the national oil company remains (at least in their eyes) a global player.

Several governments in a row tried the same idea to contain inflation, unsuccessfully. So it is not surprising that, decades later, another government is making the sames mistakes.

Well, they're often rational within their own framework (either an ideological framework or merely the framework of violence and power). That looks irrational to the rest of the world, but it has its own logic.

> This article is also written with the tacit acceptance of neoliberal ideology: The only rational choice for an impoverished nation is to submit to foreign capital and governmental institutions and sell the country for the chance to become another dependent market that will bear the brunt of the next global credit crisis and coercive trade deal.

Will submitting be better or worse than the current situation in Venezuela? If anyone claims that it will be worse, I'd like to see their justification for that statement.

Wat.

Venezuela ALREADY taps the bond market for money. That's why they're sending billions of hard currency to bondholders. They're already submitting. That's the point.

> The next argument is something of a conspiracy theory born in part out of the opaque nature of the country’s finances. It posits that close associates of the administration are major holders of the country’s bonds and that the government fears it’d lose their much-needed support if the payments stopped coming in. Efforts to obtain comment from government press officials on this and other aspects of the story were unsuccessful.