Rick Rule, who is a somewhat famous international investor, said people tend to overestimate political risk and underestimate financial risk. Looking at the numbers, there is no way Venezuela should be selling at the price it is compared to other South American countries which have far more financial risk.

Miguel, I read your post on the GDP:debt ratio, and I agree with what you wrote. I was reacting to an El Universal which tripled Ven’s GDP:debt ratio from 20% to 60% using the parallel market conversion. The El Universal article not your post was disingenuous.

As for buying back the bonds, I don’t get why you say they have to pay 100%. Yes, they do if the bonds are not bought back, but the asking price for the 2014 bonds this morning is $770 and that is an effective yield of 16%. I am not sure where Venezuela has its cash stashed at the moment, but buying back their bonds for 77 cents on the dollar has to be one of the safest and best returns the country can make. And I say that not owning any of these 2014 bonds.

As for bankers and the government, of course, government should be held to the highest standard both here and in Venezuela. Maybe the problems are different in the U.S. than with Venezuela, but I think that a comment element has to involve banking balance sheets which are very difficult to understand.

And I’d like to add something I forgot to mention earlier. Mark my words, Chavez isn’t leaving power via the ballot box.

Never. Gonna. Happen.

So while I support Victor’s idea, I realize that people are going to have to do more than simply vote to rid themselves of Chavez and his narcissistic comrades.

As to the higher standard, sorry, I disagree with that. Fernandez and his buddies have been ripping off the country with Chavez’ backing, they got rich with Chavez’ help, I dont think the US Central bankers used the supbrime crisis for political gain. But in any case, yes, I would like to have my Government officials held to the highest standards, why not? I would like to have the best country in the world, no malnutrition, everyone wealthy and with the rule of the law, instead we have the worst.

The crisis here was allowed to be continued not by negligent officials, but for political reasons, Chavez thought his new class of bankers would replace the old one until they started ripping the country off and even then he did nothing.

And now things are “complicated” this is not over, the cross connections and currents are there and the Government has no clue as to what to do.

And while I dont feel sorry for them, I do feel sorry for Venezuelans, who will pay for this with more inflation and poverty. Thanks to the robolution.

To be sure, seeing bankers use depositor’s money in inappropriate ways is disgusting, but the truth is that I am not so sure it is that much worse than what we have in the U.S. And I would have been much more in favor of the Swedish (and now Venezuelan) plan of nationalizing troublesome banks instead of bailout them out which was the case in Japan and now the U.S.

As for whether Chavez knew or should have known, all I can say moctavio is that you are holding Chavez to a higher standard than I would. So Venezuela got ripped off by bankers? Welcome to the club. If Bernanke and Greenspan were fooled, I don’t see how you could hold expect Chavez to know.

Besides the move to nationalize, I sure wish our government had the balls to throw some of these crooked bankers in jail.

With regards to the debt, moctavio, you and others have used the parallel market as a means to discredit the debt to GDP ratio Venezuela has. The flaw with doing so is that much of Venezuela’s revenue comes from oil exports, and those dollars are converted not at the now almost 6:1 Bolivar to dollar rate but at the official 2.15:1 rate. The point is the parallel market conversion is a two way street.

In addition, the debt is not being market to market. Thanks to Chavez’s threats to nationalize banks, the 2014, 2027, and 2034 bonds have tumbled and are selling at an average of around 70 cents on the dollar and yielding close to 16%. If Venezuela can access the debt market for a lower rate like it has already or use some of its cash on hand to buy back said debt, the ratio would be reduced even further. Cheap debt reduction may be the silver lining in this fiasco.

When you apply the concepts of a two way street with regards to the parallel market and mark Venezuela’s debt to market, things are far more pleasant with Venezuela’s economy than at first glance.

It is unbelievable to me that some of the world’s specialists on debt have concluded Venezuela is the country most likely to default. See the link: http://www.businessinsider.com/the-worlds-greatest-sovereign-risks-2009-12

Perhaps “es nuestro dinero”…give it to us!

The only way to beat a populist among an uneducated electoriate is to promise MORE. Or spend the time educating them. With this single platform, you can accomplish BOTH.

Because no matter how Chavez responds, the government as middleman not only consumes, but is most often corrupt (power corrupts us all).