Venezuela


#201

Wouldn’t think any vulture fund would… cause you ain’t ever getting that money back.

That country’s a failed state at this point. It’s eventually just gonna collapse, and all that debt is going to be worthless.


#202

This is how vulture funds work. They just sue the successor government.


#203

I thought they worked by suing really weak governments that were kind of in the process of economic collapse, not ones which had already totally failed.

I don’t see how suing a previous government is really ever going to work.


#204

I should have used the word state, not government. The country itself is a legal entity.


#205

Ya, but the country itself doesn’t really exist in a form that can be sued, separate from the government, can it?

Really, the only way to get money from a country like this, is by suing the government in some other juristdiction (like the US) and try to get their assets which are held in that jurisdiction. Like, for instance, freezing that government’s assets which are held in the US.

In a case like Venezuela, I’m not sure such assets actually exist right now.

Like any other debtor, if they finally default, a vulture fund will try to get their assets… If they had things like gold reserves held in the US, you could get those. But if those assets don’t exist in some other legal system’s jurisdiction, I don’t think you have any means by which you get payment after they default.

I’m thinking that Venezuela is a mighty bad bet at this point.


#206

Bonds are issued by the Ministry of Finance or the Treasury (or Debt Office or similar statutory body), which remain as is no matter the sitting government.

The only way not to pay them out is a sovereign default, which will cripple the countries abilities to raise funds and engage in FX and trade for decades.


#207

Yeah, but that’s exactly what is gonna happen at the end of this.


#208

The vulture funds might try to do what they did to Argentina: when the next government comes along and tries to pick up the pieces, they will need international financing and issue bonds, and the vulture fund will sue in U.S. court and say that no creditor of the new bonds can get paid until they are paid for the old bonds they hold.


#209

Venezuelans turn to gold farming to survive.


#210

Online gold is almost certainly more stable than any aspect of Venezuela’s economy today.


#211

It’s also readily convertible to dollars (or other stable, foreign currencies), also almost certainly more readily than any aspect of Venezuela’s economy today.


#212

Any pretense to democracy in Venezuela is officially dead. Anyone that ever thought “21st century socialism” would end up any other way is a mouthbreathing idiot.


#213

Hopefully, Venezuela will provide enough of a cautionary tale to prevent things from swinging too far to the left in response to the overt corruption, cronyism, and authoritarianism being pushed by the GOP.

I fear though that what we are going to get is a choice between two authoritarian options.


#214

I think we’ll get more of a Pinochet, less Chavez. And Malathor will be out there chanting his name in the streets.


#215

Actually, what they’re doing in Venezuela is going after the nationalised oil company, which does have assets outside the country. So far, though, that company has not defaulted, so people (at the moment, not the debt funds, but resource companies whose Venezuelan assets were expropriated) are using some rather torturous legal arguments to claim that they can enforce on PdVSA in lieu of the government.


#216

There are certainly cases of ‘socialist’ countries ending up as authoritarian hellholes. On the other hand, Sweden (and much of Europe) are often cited by conservatives as socialist countries, and their standard of living matches or exceeds ours.

I would also argue that Venezuela isn’t actually socialism. If you’re nationalizing industries in order to give them to cronies or loot them, that’s just authoritarian kleptocracy. Socialism/ Populism are just disguises these assholes wear for a while.


#217

What Oghier said, but ruder.


#218

Authoritarianism fails. Any sort of socialism that employs it, is doomed to fail.


#219

There is no socialist country in Europe, Sweden is Social Democratic at most. Socialism is government ownership/control of the means of production. Apart from a high tax rate Sweden a great place to be a capitalist.

Venezuela on the other hand has total state control of the economy. The parts that haven’t been nationalized are controlled by the government’s complete control over access to dollars (since the local currency is worthless), and orwellian regulations and the lack of rule of law that allow the government to shut down any business they want whenever they want.


#220

OK, then we agree. I was not certain what definition of ‘socialism’ you were using, as many in the GOP toss it around with reference to anyone more than an inch left of Ayn Rand (e.g., Canada, Sweden, Bernie Sanders, Obama – all ‘socialists’).

Actual socialism doesn’t seem to work in practice.