on Venezuelan economy. See the link: http://4.bp.blogspot.com/_iHLs_Wf3Ohs/SWdXuN4av5I/AAAAAAAACMA/xiqn5b2BbW4/s1600-h/oil+and+non+oil.gif
Venezuela is having its export revenue cut from $100 billion in 2008 to an estimated $30 billion in 2009.
Given how dependent Venezuela is on oil revenues, it has two options: cheat on OPEC quotas and sell the rights of oil producing properties to international oil companies. As I stated previously, it doesn't take much to turn on the heavy oil spigot in the Orinco oil belt/tar sands. With enough investment, Venezuela could easily go up to 5 million bpd of production, and that could send up the world's spare capacity of oil from the 3 to 6 million bpd we have right now (depending on who you believe) to the 6 to 9 million bpd range, and that is not including planned increases in Iraq and Saudi Arabia.
A lot of oil traders are hanging their hat on a cut in OPEC production, but I see enormous potential for some of its members to cheat.
<Why would anyone want to follow a megalomaniac bufoon down the deeply pot-holed road to charismatic-communist dictatorship?>
Chavez won re-election in 2006, which was the last election he can enter per the Constitution. He then tried to change the Constitution so he could run again, and voters rejected the change.
In addition, he tried to put in enforcing laws, the same type of laws Hitler put in to change Germany from a democracy to dictatorship, and the legislature stalled on passing said law.
In 2002, Chavez issued a decree to his generals to shoot those protesting in the street. The generals took out Chavez for ordering an illegal act and put in a new leader, Pedro Carmona. Carmona then did some incredibly stupid things, so stupid the generals decided to allow Chavez back into power 36 hours later. The nickname for Carmona may be my favorite of all time. In Ven, he is known as Carmona the Brief.
<But a society also has the government it deserves.> Absolutely. And Chavez represents a people who think they are rich and are not. When Chavez bought out the farms of wealthy foreigners and gave them to the "poor" peasants, the first thing the peasants did was put up no trespassing signs.
Chavez is not a cause but a symptom of Venezuelan self-delusion. Now, would I lend to those people without a gun to their head? No way. And the gun to Ven's head is that they are completely dependent on international trade for everything including their own food. Without international trade, Ven starves.
What I find so interesting Musk is that Colombia has way more total debt than Ven does, a much higher debt:GDP ratio, and way fewer natural resources, and the yields there are 9 to 11%. And you know what Colombia's #1 (legal) export is? Oil.
"People with savings lost 2/3 of what they had when the Peso was devalued."
Ah, yes. Silly me, though I was thinking about a more recent period, say, the Kirchner era. My point, if I remember correctly, was that if conditions can deteriorate in a place like Argentina, in principal, they can also deteriorate in a place like Venzuela. Nevertheless, I defer to your understanding of Ven. -- which I don't understand at all.
Yes, deperately poor people do desperate things. But a society also has the government it deserves... Why would anyone want to follow a megalomaniac bufoon down the deeply pot-holed road to charismatic-communist dictatorship??
Doc, try Costa Rica for those Spanish lessons. Nice place to live and not much crime there, although I hear they are hurting big time, due to the fact that tourism as gone down so much. Many people go to Antigua, Guatelmala to learn Spanish, they have a lot of Gringos´s and Inrernational´s there. But, Guate., is a very dangerous place to be in. Police are just as corrupt as Mexico.
That´s what I am hearing Musk, it is cheap there, comapred to getting a USA education at least. Mind you, these girls who are going to Argentina do not have US passports, so for them to study in the USA it would be on average $1,000 a class plus books. My kids are all US citizens, but that does not matter. You have to be a resident of that State, but they can become one after one year being there, if they meet the State´s requirements. So, I am thinking the parents of these kids are weighing the USA cost for education to the Argentina cost. I guess the differnce is big. Oh, other´s are studying in Mexico also.
Yeah, I knew Argentina has very sky high real estate. It´s high here also, way to high.
<Argentina's economy and attitude toward bond-holders may make it the laughing stock of the Americas, but they seem not to have suffered serious consequences -- so far.>
Musk, you gotta be kidding me. People with savings lost 2/3 of what they had when the Peso was devalued. Ironically, those in debt (many of whom were the farmers you mentioned) got lucky and saw 2/3 of their debt go away, but there were a lot more people with savings than debt.
I personally think given how much the Argentines suffered there really wasn't much left for bond holders to take. Buenos Aires has gone from one of the most expensive cities in the world in 2000 to one of the cheapest today.
As far as whether Argentina is cheap now, what is cheap there is personal labor/services. The cost of a meal in 2007 was double or triple what I paid in 2004. The wages in Argentina have not kept pace with prices and every day we saw some group marching in the street for more money.
I was taking a look at going to a school to bone up on my Spanish, and BA was as competitve as Mexico.
Lil... I'm thinking that Argentina WAS so cheap, that even with 25% inflation, it's STILL cheap... for now. Friends who returned recently say restaurants are absurdly cheap, but that real estate is absurdly expensive.
Another thought: teachers are under-payed everywhere and I'll bet that Argentina's educational system is quite inexpensive, particularly in comparison to USA or dollar-denominated educational systems.
You probably know more about Argentina than I do. All I can tell you is that so many of my daughter´s friends are going there to study and they say it is cheap, maybe the Univ and dorm are cheap?. About Spain, half of my husband´s relatives live there. A nephew and niece came back from Spain in Oct. of last year. They were in Sevilla, they lost their jobs, could not find another one and say the situation if getting really bad there. They were both students and have a Spanish passports. My daughter also has freinds they returned here from Spain that were studying there and are studying here now. So something is up in Spain.
Argentina is NOT cheap because they have inflation of around 25% (real inflation, not officially reported inflation). While the dollar has strengthened against most currencies, the peso has NOT devalued very much... so Argentina is actually relatively expensive now, 25% more expensive than last year. Real estate (which is quoted in dollars) and has appreciated beyond all reason.
My Spanish friends, who are admittedly biased, say that, unless you are in real estate or construction, there is no evidence of an economic crisis in Spain. I find this hard to believe, but that is what they say.
Argentina's economy and attitude toward bond-holders may make it the laughing stock of the Americas, but they seem not to have suffered serious consequences -- so far. Time will tell. Meanwhile, if Argentina can default on it's debt and get away with it, why can't Venezuela which is rich in energy and belligerent in attitude?
You ask anyone who knows anything in Latin America snd they will tell you Argentina´s economy is a big joke. It has to be dirt cheap there to live now. That´s why half of my daughter´s friends are going to Argentina to study in Univ. A lot of her friends went to Spain last August, they have all come back. Spain´s economy is really bad. Now they are going to Argentina. Not my daughter though, in May she is headed for the Unin. of Fl. (God willing).