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  1. 26 May '16 20:17
    http://www.theatlantic.com/international/archive/2016/05/venezuela-is-falling-apart/481755/

    Venezuela, could be coming to you next if you live under socialism.

    Save us Bernie!

  2. 26 May '16 20:22
    When a Venezuelan entrepreneur we know launched a manufacturing company in western Venezuela two decades ago, he never imagined he’d one day find himself facing jail time over the toilet paper in the factory’s restrooms. But Venezuela has a way of turning yesterday’s unimaginable into today’s normal.

    The entrepreneur’s ordeal started about a year ago, when the factory union began to insist on enforcing an obscure clause in its collective-bargaining agreement requiring the factory’s restrooms to be stocked with toilet paper at all times. The problem was that, amid deepening shortages of virtually all basic products (from rice and milk to deodorant and condoms) finding even one roll of toilet paper was nearly impossible in Venezuela—let alone finding enough for hundreds of workers. When the entrepreneur did manage to find some TP, his workers, understandably, took it home: It was just as hard for them to find it as it was for him.


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    Related Story



    Venezuela: A Dictatorship Masquerading as a Democracy

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    Toilet-paper theft may sound like a farce, but it’s a serious matter for the entrepreneur: Failing to stock the restrooms puts him in violation of his agreement with the union, and that puts his factory at risk of a prolonged strike, which in turn could lead to its being seized by the socialist government under the increasingly unpopular President Nicolas Maduro. So the entrepreneur turned to the black market, where he found an apparent solution: a supplier able to deliver, all at once, enough TP to last a few months. (We’re not naming the entrepreneur lest the government retaliate against him.) The price was steep but he had no other option—his company was at risk.

    But the problem wasn’t solved.

    No sooner had the TP delivery reached the factory than the secret police swept in. Seizing the toilet paper, they claimed they had busted a major hoarding operation, part of a U.S.-backed “economic war” the Maduro government holds responsible for creating Venezuela’s shortages in the first place. The entrepreneur and three of his top managers faced criminal prosecution and possible jail time.

    All of this over toilet paper.

    The entrepreneur is one of the real people behind those zany “there’s no toilet paper in Venezuela” stories that play up the crisis for laughs, and clicks. But to Venezuelans like the present writers, and the entrepreneur, there’s nothing funny about the dark turn our country has taken. The experiment with “21st-century socialism” as introduced by the late President Hugo Chavez, a self-described champion of the poor who vowed to distribute the country’s wealth among the masses, and instead steered the nation toward the catastrophe the world is witnessing under his handpicked successor Maduro, has been a cruel failure.

    Anatomy of a Collapse

    Developing countries, like teenagers, are prone to accidents. One pretty much expects them to suffer an economic crash, a political crisis, or both, with some regularity. The news coming from Venezuela—including shortages as well as, most recently, riots over blackouts; the imposition of a two-day workweek for government employees, supposedly aimed at saving electricity; and an accelerating drive to recall the president—is dire, but also easy to dismiss as representing just one more of these recurrent episodes.

    That would be a mistake. What our country is going through is monstrously unique: It’s nothing less than the collapse of a large, wealthy, seemingly modern, seemingly democratic nation just a few hours’ flight from the United States.

    In the last two years Venezuela has experienced the kind of implosion that hardly ever occurs in a middle-income country like it outside of war. Mortality rates are skyrocketing; one public service after another is collapsing; triple-digit inflation has left more than 70 percent of the population in poverty; an unmanageable crime wave keeps people locked indoors at night; shoppers have to stand in line for hours to buy food; babies die in large numbers for lack of simple, inexpensive medicines and equipment in hospitals, as do the elderly and those suffering from chronic illnesses.

    But why? It’s not that the country lacked money. Sitting atop the world’s largest reserves of oil at the tail end of a frenzied oil boom, the government led first by Chavez and, since 2013, by Maduro, received over a trillion dollars in oil revenues over the last 17 years. It faced virtually no institutional constraints on how to spend that unprecedented bonanza. It’s true that oil prices have since fallen—a risk many people foresaw, and one that the government made no provision for—but that can hardly explain what’s happened: Venezuela’s garish implosion began well before the price of oil plummeted. Back in 2014, when oil was still trading north of $100 per barrel, Venezuelans were already facing acute shortages of basic things like bread or toiletries.

    The real culprit is chavismo, the ruling philosophy named for Chavez and carried forward by Maduro, and its truly breathtaking propensity for mismanagement (the government plowed state money arbitrarily into foolish investments); institutional destruction (as Chavez and then Maduro became more authoritarian and crippled the country’s democratic institutions); nonsense policy-making (like price and currency controls); and plain thievery (as corruption has proliferated among unaccountable officials and their friends and families).

    A case in point is the price controls, which have expanded to apply to more and more goods: food and vital medicines, yes, but also car batteries, essential medical services, deodorant, diapers, and, of course, toilet paper. The ostensible goal was to check inflation and keep goods affordable for the poor, but anyone with a basic grasp of economics could have foreseen the consequences: When prices are set below production costs, sellers can’t afford to keep the shelves stocked. Official prices are low, but it’s a mirage: The products have disappeared.

    When a state is in the process of collapse, dimensions of decay feed back on each other in an intractable cycle. Populist giveaways, for example, have fed the country’s ruinous flirtation with hyperinflation; the International Monetary Fund now projects that prices will rise by 720 percent this year and 2,200 percent in 2017. The government virtually gives away gasoline for free, even after having raised the price earlier this year. As a result of this and similar policies, the state is chronically short of funds, forced to print ever more money to finance its spending. Consumers, flush with cash and chasing a dwindling supply of goods, are caught in an inflationary spiral.

    There are many theories about the deeper forces that have destroyed Venezuela’s economy, torn apart its society and devastated its institutions, but their result is ultimately a human tragedy representing one of the most severe humanitarian crises facing the Western hemisphere. Here we offer, through a few vignettes, a glimpse of what it’s like for some of the individuals who are living the collapse and seeing no one held accountable.

    Finding the basic requirements of daily life has become the main preoccupation of Venezuelan families—and it can be a matter of life and death. At 14 years old, Maikel Mancilla Peña had been battling epilepsy for six years. His condition was under control, just about, thanks to a common anti-convulsive prescription drug called Lamotrigine. It had long been a struggle for his family to get it, but as the gap between the real cost of the drugs and the maximum pharmacies were allowed to charge for them grew, it became impossible to find them.

    On February 11th this year, Maikel’s mom Yamaris gave him the last Lamotrigine tablet in their stash. None of Yamaris’s usual pharmacies had any anti-convulsants in stock. She worked social media— which in Venezuela these days is filled with desperate people trying to source scarce medicines—but no luck. She drove hours to track down a lead, but came up empty-handed.

    In the following days, Maikel experienced a series of increasingly violent epileptic seizures, as his family watched helplessly. On February 20th, he suffered respiratory failure and died.

    Maikel’s case is not unique. The collapse of the health-care system and the scarcity of medicine is costing lives every day. Psychiatric patients struggling with schizophrenia have to go without anti-psychotic meds. Tens of thousands of HIV-positive people struggle to find the anti-retrovirals they need, forcing them into the kind of stop-and-go treatment patterns that doctors warn risk bringing on AIDS. Cancer patients can’t find chemotherapy drugs. Even malaria—which had essentially disappeared from Venezuela a generation ago and is easily treatable with inexpensive medicines—is making a deadly comeback.

    While Venezuelans were dying for lack of simple, inexpensive pills, their radical socialist government was spending tens of millions a year to keep a native son, Pastor Maldonado, competing in the Formula 1 global auto-racing circuit. You could be forgiven for not having heard of Maldonado—a mediocre driver who managed to win a single race in five years in the sport. Still, Venezuela’s state-owned oil company, PDVSA, spent some $45 million each year to keep Maldonado racing under its logo. Why an oil company without a retail arm and with monopoly rights to Venezuelan oil needs to advertise in the first place was never clear.

    Yet Maldonado, whose habit of crashing in race after race earned him the nickname “Crashtor,” was only forced out of the F1 circuit this year, when PDVSA, hit by the oil crash, failed to come up with the sponsorship money.

    Venezuelan oil largesse has been scattered around the globe, fro...
  3. 26 May '16 20:23
    Venezuelan oil largesse has been scattered around the globe, from the $18 million handed to the American actor Danny Glover in 2007 to produce an ideologically appropriate film (still to be delivered), to the millions of Venezuelan dollars spent financing leftist parties and movements from El Salvador to Argentina to Spain and beyond.

    Stealing Lunch

    Meanwhile, the Venezuelan government can no longer afford to provide even rudimentary law and order, making Caracas, the capital, by some calculations one of the most murderous cities in the world. Drug traffickers run large sections of the countryside. Prison gang leaders keep military-style weapons on hand, and while grenade attacks still make the news, they are nothing new. Recently, the police captured an AT4 antitank rocket launcher—basically, a bazooka—from a suspect.

    The breakdown of law and order is so severe that even children are being robbed. At Nuestra Señora del Carmen school in El Cortijo, a struggling neighborhood of Caracas, supplies for the school-lunch program have been stolen twice this year already: Thugs have broken into the school’s pantry late at night after fresh food is delivered. The second burglary meant the school couldn’t feed the kids for at least a week.




    Resident of El Hatillo line up outside of a bakery to buy bread just outside of Caracas. (Fernando Llano / AP)


    Elsewhere, school food programs have simply stopped working, because the government apparently can’t keep them supplied. In poorer communities, parents often respond to this by taking their kids out of school: They’re more useful standing in line outside a grocery store than sitting in a classroom. The regime has long put education at the center of its propaganda, yet the reality today is that a generation of underprivileged kids is being denied an education through straightforward hunger.


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    Still, some politicians seem to have found the bright side of their citizens’ hunger: The opposition-controlled National Assembly alleges that government officials or their cronies stole some $200 billion in food-import scams alone since 2003.

    The Crime Outbreak Feeds the Zika Outbreak

    In the midst of all this, Venezuela is facing one of the worst Zika outbreaks in South America, and it’s an epidemic the country can hardly measure, much less respond to. The Universidad Central de Venezuela’s Institute for Tropical Medicine is where the crime and public-health crises collide. The institute—ground zero in the country’s response to tropical epidemics—was burglarized a shocking 11 times in the first two months of 2016. The last two break-ins took place within 48 hours of one another, leaving the lab without a single microscope. Burglars rampaged through the lab, scattering samples of highly dangerous viruses and toxic fungal spores into the air.

    Conditions like those make it virtually impossible for institute researchers to do their work, crippling the country’s response to the Zika outbreak. And attempts to repair the damage are undercut by the same dysfunctions that afflict the rest of the economy: There’s just no money to replace the expensive imported equipment criminals have stolen.




    A woman holds her sick baby as she waits to see a doctor at a medical center near the Petare neighborhood in Caracas. (Fernando Llano / AP)


    Other aspects of state collapse feed back on the Zika crisis as well. Venezuelan cities’ water infrastructure is crumbling after nearly two decades of neglect. That would be hard at the best of times, but this year’s El Niño has brought an acute drought to most of the country. Water utilities have responded to falling reservoir levels with harsh rationing measures.

    Neighborhoods and shantytowns can go for days and even weeks with no piped water. Most people adapt by filling several buckets when service is provided, in preparation for the dry periods. Of course, storing water in buckets is precisely what you shouldn’t do when facing a mosquito-borne epidemic: The containers double as breeding grounds for the bugs that transmit the Zika virus, as well as others like Chikungunya, dengue, even malaria.


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  4. 26 May '16 20:24 / 2 edits
    So what went wrong?

    Obviously, the free market should be blamed but how?
  5. 26 May '16 20:36
    Originally posted by whodey
    So what went wrong?

    Obviously, the free market should be blamed but how?
    Price of oil dropped?

    Everyone knows that a Socialist state runs best when it can make money on oil.
  6. 26 May '16 20:41
    Originally posted by Eladar
    Price of oil dropped?

    Everyone knows that a Socialist state runs best when it can make money on oil.
    That must explain why the Norwegian economy is in a state of deep crisis right now.
  7. 26 May '16 20:45
    Originally posted by KazetNagorra
    That must explain why the Norwegian economy is in a state of deep crisis right now.
    Does the government run all manner of production in Norway?
  8. 26 May '16 21:24
    Originally posted by whodey
    Does the government run all manner of production in Norway?
    Does the government run all manner of production in Venezuela?
  9. 26 May '16 23:09
    Originally posted by KazetNagorra
    Does the government run all manner of production in Venezuela?
    The government took over pretty much everything.

    If not, how is it socialism?
  10. 26 May '16 23:11
    Originally posted by Eladar
    Price of oil dropped?

    Everyone knows that a Socialist state runs best when it can make money on oil.
    Venezuela’s garish implosion began well before the price of oil plummeted. Back in 2014, when oil was still trading north of $100 per barrel, Venezuelans were already facing acute shortages of basic things like bread or toiletries.
  11. 27 May '16 06:20
    Originally posted by whodey
    The government took over pretty much everything.

    If not, how is it socialism?
    The government took over pretty much everything.

    No, it didn't.

    If not, how is it socialism?

    Then by your definition nothing is. Why did you open this thread again?
  12. 27 May '16 12:41 / 2 edits
    Originally posted by KazetNagorra
    [b]The government took over pretty much everything.

    No, it didn't.

    If not, how is it socialism?

    Then by your definition nothing is. Why did you open this thread again?[/b]
    Venezuela has nationalized many things.

    ------------------------------------------------------------------------------
    Venezuelan President Hugo Chavez ordered his government to repatriate $11 billion in gold held in banks abroad to safeguard the country from the economic crisis and said he’ll nationalize the local gold industry.

    Venezuela has about 211 tons of its 365 tons of gold reserves held abroad at institutions including the Bank of England, JPMorgan Chase & Co., Barclays Plc, Standard Chartered Plc and the Bank of Nova Scotia, according to a government document.

    “We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home,” Chavez said today on state television. “It’s a healthy decision.”




    Chavez, who has said he wants to eliminate the “dictatorship” of the U.S. dollar, has called on Venezuela’s central bank to diversify its $28.7 billion in reserves away from U.S. institutions. Some cash reserves, which total $6.3 billion, will be shifted into currencies from emerging markets including China, Russia, Brazil and India, central bank President Nelson Merentes said today at a news conference.

    ‘Brutal Place’

    Earlier today Chavez said he plans to take control of the country’s gold industry to halt illegal mining and boost reserves.

    The government is preparing a decree to stop illegal miners exploiting deposits of gold and coltan, an ore containing tantalum, used in mobile phones and video-game consoles, he said.

    Venezuela faces international arbitration over nationalized gold assets from three companies including Crystallex International Corp., a Canadian gold producer whose Las Cristinas mine was taken over by the government in February. Chavez has increased state control over the economy since 2006 by nationalizing companies in the oil, petrochemicals, cement, metal, mining and telecommunications industries.




    “Venezuela has established its position as a brutal place to do business,” Tom Winmill, who manages the Midas Fund in New York, said today in a telephone interview.

    “Whether it’s a small cap like Crystallex or a large cap like Barrick or Anglo Gold, it doesn’t really make any difference because no one is going to put another nickel into that country,” he said.

    Relaxed Restrictions

    The South American country, in an effort to boost stalled production and take advantage of rising prices, last year relaxed restrictions on gold exports to allow some companies and joint ventures with the government to send as much as 50 percent of their output abroad.

    Venezuela state gold producer Minerven has been shut for 15 days amid a strike, newspaper El Mundo reported today, citing company President Luis Herrera.

    “The area is run by the mafia,” Chavez said of the gold industry today. “We’re going to nationalize gold. We can’t keep allowing them to take it away.”

    Rusoro Mining Ltd., the only publicly traded gold miner still in Venezuela, is in talks with the government to increase gold exports, Chief Executive Officer Andre Agapov said today in a telephone interview.

    “We can sell gold in the local market, but we want to sell as much gold as possible at international prices,” Agapov said. He said he didn’t have any information on a possible nationalization.

    Stock Falls

    The company’s stock fell 17 percent to 12.5 Canadian cents on the Toronto Stock Exchange today. It’s fallen 69 percent this year.

    Venezuela produces 11 metric tons of gold a year, and illegal miners extract an additional 10 to 11 tons a year, Chavez said in May.

    Venezuela’s National Guard first seized control of the Las Cristinas mine, which has reserves of about 27 million ounces, in November 2001 from Canada’s Vanessa Ventures.

    Venezuela’s 365.8 metric tons of gold reserves makes it the 15th-largest holder of the precious metal in the world, according to an August report from the World Gold Council. Venezuela’s gold holdings accounted for about 61 percent of the nation’s international reserves, according to the report.

    Gold futures for December delivery rose $8.80, or 0.5 percent, to $1,793.80 an ounce on the Comex in New York. Prices touched a record $1,817.60 on Aug. 11.
  13. 27 May '16 12:44
    Originally posted by KazetNagorra
    [b]The government took over pretty much everything.

    No, it didn't.

    If not, how is it socialism?

    Then by your definition nothing is. Why did you open this thread again?[/b]
    So what would you say was the down fall of the economy of Venezuela?
  14. 27 May '16 12:49
    Originally posted by KazetNagorra
    That must explain why the Norwegian economy is in a state of deep crisis right now.
    So what in your estimation is the difference between "socialism" in Norway and that in Venezuela? Is this not important to know? After all, it is the difference between eating out of garbage cans or having enough food to live on.
  15. 27 May '16 12:53
    Here is an article that shows those in both academia and elsewhere who praised Chavez and his brave new socialist economy.

    Dead Socialist Venezuelan dictator Hugo Chavez was praised throughout his life by many figures in academia, journalism and Hollywood despite his brutal regime.

    This praise included Salon writer David Sirota’s piece after the leader’s death, titled “Hugo Chavez’s economic miracle.” In British publication The New Statesman, a headline as Chavez was nearing death in January 2013 was “Hugo Chavez: Man against the world,” and its sub-headline read “As illness ends Hugo Chavez’s rule in Venezuela, what will his legacy be? Richard Gott argues he brought hope to a continent.”

    This praise of Chavez by so many who enjoyed the benefits of living in a capitalist society while looking at the economic record of the late leader, as well as what his succcesor President Nicolas Maduro, has come undone.

    Mexican NGO, the Citizens’ Council for Public Security and Criminal Justice, published its annual ranking of urban crime in January 2016, and found that in 2015, Caracas, the capital of Venezuela, was the most murderous place on Earth. Caracas has 119.87 murders per 100,000 people. Other than personal concerns for safety, Venezuelans suffer from lacking economic opportunity due to low oil prices and government mismanagement of the state-owned oil firm.

    From 1998, when Chavez was elected, up until he died in March 2013, “oil output at Pdvsa [the state-owned oil firm] has fallen 25% from 3 million to 2.4 million barrels per day, despite the fact that Venezuela has arguably the biggest hoard of oil reserves in the world, at more than 500 billion barrels,” according to Forbes’ Christopher Helman.

    OPEC reports that Venezuela has 24.9 percent of proven crude oil reserves as of the end of 2014 — Saudi Arabia comes in a close second with 22.1 percent. When comparing GDP per capita, however, Venezuela’s economic problems become devastatingly clear. Venezuela’s GDP per capita is $12,771.6 as of 2012, while Saudi Arabia’s GDP per capita is almost double at $24,883.2 for that same year.

    Venezuela’s GDP, it’s fair to assume, has only gone down significantly since 2012 (since Venezuela has not provided The World Bank with more recent data), while Saudi Arabia’s 2014 data demonstrates only a slight dip of $24,406.5. An even more damning contrast is the small oil-rich Arab Gulf state of Qatar, which only has 2.1 percent of the world’s proven crude oil reserves, boasts a 2012 and 2014 GDP per capita of $94,407.4 and $96,732.4 respectively.

    The economy will only get worse for Venezuela since the country will remain in a recession through the end of 2017, according to the country’s Vice President for the Economy Miguel Perez. The country’s economy shrank by 5.7 percent in 2015 alone, the second year of what will be a long-running economic downturn.

    Despite the irrefutable evidence that Venezuela finds itself in an incredible economic hole entirely of its own making, several writers such as Wired’s Linda Poon, continue to peddle headlines like “Venezuela’s Economic Success Fueled Its Electricity Crisis.”

    Meanwhile, the Venezuelan workweek for government employees was limited to four days a week and then two days a week in April to deal with electricity shortages. Daily four-hour blackouts across most of Venezuela was another policy implemented in April by the socialist government to deal with its self-made crisis.

    Economic problems aside, Venezuela has faced a long-running political crisis. Mass protests in February 2014 were halted through repression and fear-mongering by government forces that arrested the U.S.-educated opposition leader Leopoldo Lopez. Venezuelans elected the conservative opposition coalition in December 2015 to take control of the country’s National Assembly, Venezuela’s equivalent of Congress, and it has been in a standoff with the government since.

    Socialist Maduro has done everything in his power to stop conservative lawmakers. The power grab by Maduro has led to mass unrest in recent months, which has only further fueled the economic crisis, as oil markets have not reacted well to the potential instability.

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