Comments on: The Chavez bubble: The increasing probability of the country’s default http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/ Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that. Mon, 28 May 2012 00:37:03 +0000 hourly 1 http://wordpress.com/ By: ed http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/#comment-528 Thu, 21 May 2009 03:58:02 +0000 http://devilsexcrement.com/?p=5906#comment-528 You all keep applying academics when analizing Chavez.
Although academis will catch him sooner or later, it dosen;t lead one to the right conclusion.
Chavez, through political maneuvers, will easily make it through 2009. Hardship is still 15-18 months away.
The parallel exchange rate is and will continue to, help him in the months to come.
Bet the farm on that!!

]]> By: Fausta’s Blog » Blog Archive » The Guatemalan revolution Carnival of Latin America and the Caribbean http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/#comment-516 Tue, 19 May 2009 21:25:03 +0000 http://devilsexcrement.com/?p=5906#comment-516 [...] VENEZUELA The Chavez bubble: The increasing probability of the country’s default [...]

]]> By: moctavio http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/#comment-512 Mon, 18 May 2009 15:18:01 +0000 http://devilsexcrement.com/?p=5906#comment-512 I think the probability is higher and increasing daily. Right now I would say 30% only because I believe oil prices will move up.

]]> By: concerned http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/#comment-511 Mon, 18 May 2009 15:13:45 +0000 http://devilsexcrement.com/?p=5906#comment-511 The track record for Chavez indicates that he feels he is above the law and not responsible for any past debt. If he were to start over with a clean slate, he would still only honor the contracts of his closest allies. The debt amassed over the last ten years is insurmountable as most requires special terms, rates or all out ‘in exchange for’ future shipments of oil. With PDVSA’s dismal production and spiralling lower each month, it will be impossible to meet these deadlines for payment, past due or coming due. The only way to live for another day are the takeovers of the areas screaming the loudest for payment. This is only temporary as these debts are still there. Any investment in Venezuela would be a crapshoot with a 95% chance of a future defalt. The only people making money now are the ones manipulating the foreign exchange.

]]> By: Mr Danger http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/#comment-510 Mon, 18 May 2009 14:24:03 +0000 http://devilsexcrement.com/?p=5906#comment-510 CDS spreads tell the story – even though Venezuela’s spreads have fallen sharply, they remain very high at around 1,500 for the 5 year contract, implying a 12% annual probability of default. That’s only a little lower than Ukraine, and multiples of Brazil (2.8% PD) and Mexico (3.2%).

Astonishing numbers for a country which basically won oil lotto and squandered the lot of it, and then some.

Personally, I think it should be trading wider – i think the chance of default is more than 20%.

]]> By: revbob22 http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/#comment-509 Mon, 18 May 2009 10:41:49 +0000 http://devilsexcrement.com/?p=5906#comment-509 I seriously doubt the US is going to hammer Iran. Obama has enough on his plate, and it’s not his style either. Unless Iran is doing something so horrific that the entire world would ask the US to intervene ipso facto.

Nor do I think a blockade is in the cards either, just say Cuba.

]]> By: HalfEmpty http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/#comment-507 Mon, 18 May 2009 01:02:43 +0000 http://devilsexcrement.com/?p=5906#comment-507 an act of war in itself which could be met with air and sea blockade of Venezuela’s northern, western and eastern flanks basically cuttting it off from the world

While I hugely respect the US Navy, short of nuclear weapons they cannot hold a candle to Hugo’s destruction of Vz.

]]> By: Casper the friendly spook http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/#comment-506 Mon, 18 May 2009 00:48:55 +0000 http://devilsexcrement.com/?p=5906#comment-506 there is another angle which will bring oil prices back up and that is war with Iran. The pieces are being put into place for such a contingency: Israel accepting Palestinian statehood and Obama’s upcoming trip to Russia. Iran is going to get hammered and the U.S. will likely go along for Israel cannot permanently stop Iran’s military nuclear ambitions unless they pre-emptively use tactical nuclear weapons.

What will Chavez do when this happens? Oil will spike but will the U.S. be a recipient? That depends on what Chavez does. There will be plenty of surplus this year and there’s also the strategic reserves. How Chavez sides with Iran will determine the U.S. response. A symbolic gesture will elicit little if no response but anything beyond that could be considered aiding and abetting an enemy in a time of war, an act of war in itself which could be met with air and sea blockade of Venezuela’s northern, western and eastern flanks basically cuttting it off from the world.

Thus I think that many of the events currently happening in Venezuela are with an eye towards this future when Chavez will need to be in firm control of the country as his hold on power will be certainly challenged with Iran is bombed.

]]> By: KA http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/#comment-505 Mon, 18 May 2009 00:40:06 +0000 http://devilsexcrement.com/?p=5906#comment-505 What is the likelihood some of the these take overs, particularly the oil services can be offset by awarding them to China? Brazil? or some other state oil company? In other words you nationalize then resell the rights to a more favorable partner. Wouldn’t this greatly diminish the liability of nationalization?

]]> By: Gringo http://devilsexcrement.com/2009/05/17/the-chavez-bubble-the-increasing-probability-of-the-country%e2%80%99s-default/#comment-504 Mon, 18 May 2009 00:28:34 +0000 http://devilsexcrement.com/?p=5906#comment-504 Chavez’s spending of past, present and future petrodollars brings forth the crack that Washington Redskins owner Edward Bennett Williams made about George Allen, his coach. Williams joked that he had given Allen an unlimited budget, but Allen had exceeded it.

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