Updated: The Wall Street Journal editorial begins with a bit of humor from Milton Friedman who once joked that if you put the government in charge of the Sahara Desert in five years there would be a shortage of sand.
He could have been talking about Venezuela and its oil wealth. But it is no joke. This is important for Tulsans to consider as so many are engaged in the oil industry with ties to Venezuela and as our elitist entitled Mayor G.T. Bynum drives socialism in city governance.
On Monday Caracas missed interest payments due on two government bonds and one bond issued by the state-owned oil monopoly known by its Spanish initials PdVSA. Venezuela owed creditors $280 million, which it couldn’t manage even after a 30-day grace period.
Venezuela is broke, which takes some doing. For much of the second half of the 20th century, a gusher of oil exports made dollars abundant in Venezuela and the country imported the finest of everything. There were rough patches in the 1980s and 1990s, but by 2001 Venezuela was the richest country in South America.
Then in 2005 the socialist Hugo Chávez declared that the central bank had “excessive reserves.” He mandated that the executive take the excess from the bank without compensation. Today the central bank has at best $1 billion in reserves.
Falling oil prices are partly to blame, but the main problem is that chavismo has strangled entrepreneurship. Faced with expropriation, hyperinflation, price controls and rampant corruption, human and monetary capital has fled Venezuela.
As of Tuesday evening, the Investment Swaps and Derivatives Association still had not declared Venezuela in default. That matters because this will trigger the insurance obligations inherent in the credit default swaps. But S&P Global Ratings declared the country in default Monday. On Tuesday morning the Luxembourg Stock Exchange issued a suspension notice for the bonds with missed payments.
This is just the latest crisis in Venezuela, a true humanitarian crisis happening now and very near our borders. As much as it is the fault of Socialism, Marxism, and Cuban Communism – once again, American Capitalism should aid and comfort the victims. Previous Tulsa Today stories include:
If you ever wonder why this publication may express distain for lying loony leftists (including leftist media – may they rot in hell), the evil done to the people of Venezuela is one clear fracking (the breaking apart to find value) answer. Thank you Olivia for your comment below and the reminder to include more of our full body of work on issues of such great concern. This story has been updated to include those links. The Editors