Venezuela just went full dictatorship

[Loren Pechtel]

What happens when millions of ticks cover a milk cow? The cow becomes emaciated and dies slowly.

What happens when some of the overseer ticks are larger than the cow? The cow abruptly falls over dead.

Reports are that Venezuela's Oil Company cow is on its last legs, likely to be sent to be butchered by October unless oil prices have a dramatic turnaround.

Before 2016 is out, PDVSA may be forced to file for bankruptcy. It’s hard for a Venezuelan to even read those words without flinching. The image of PDVSA as a bottomless barrel out of which you can always get more and more cash is so deeply burned onto the Venezuelan political psyche that the words “bankrupt PDVSA” seem oxymoronic – like “dry water” or “moderate chavista.”

PDVSA can’t go bankrupt. I mean, surely that’s just impossible…or is it?

What seems like plain lunacy to normal people has become a live debate inside the legal profession. Bond markets have just about concluded PDVSA will not make its October bond payments. With some PDVSA bonds now yielding north of 130% – the kind of interest rate that would make your neighborhood payday lender blush – for Wall St, it’s a foregone conclusion: barring a dramatic surge in oil prices, PDVSA will default.

As we’ve long discussed on this blog, PDVSA bonds have no Collective Action Clauses. There is no way to negotiate an “orderly” default of PDVSA’s debt: even a large majority of bondholders can’t compel a small minority to accept it....

http://caracaschronicles.com/2016/02/15/pdvsa/

Back to our scheduled denial...

It won't go bankrupt because that can't be. Arrest those who are siphoning off the money, nationalize the company.

Of course that won't make for any more milk....

 

[Loren Pechtel]

You are a broken record. As has already been explained, the oil boom is the reason for that, not Chavez. Any monkey in office would've been at least as effective in reducing poverty, if not more so, with an oil boom like that. Once again comparable developing countries with an economic boom like that typically have _greater_ poverty reduction. In other words, Chavez gets poor ratings on effectively reducing poverty given the size of the economic boom. Why do you not even attempt to rebut this? Are you conceding the point?

No. Chavez did a better job of reducing poverty when he was buying support than business as usual would have. It's just the redistribution approach is unsustainable, we are seeing the inevitable downside to his approach.

 

[dismal]

What happens when millions of ticks cover a milk cow? The cow becomes emaciated and dies slowly.

What happens when some of the overseer ticks are larger than the cow? The cow abruptly falls over dead.

Reports are that Venezuela's Oil Company cow is on its last legs, likely to be sent to be butchered by October unless oil prices have a dramatic turnaround.



http://caracaschronicles.com/2016/02/15/pdvsa/

Back to our scheduled denial...

It won't go bankrupt because that can't be. Arrest those who are siphoning off the money, nationalize the company.

Of course that won't make for any more milk....

PDVSA is the national oil company. As such there is no further need to nationalize it.

PDVSA does however have outstanding private bonds. Not paying those bonds will cause it to be in default, and possibly to be hauled into bankruptcy court outside Venezuela where its foreign assets (e.g., Citgo) could be seized and liquidated.

 

[whichphilosophy]

It won't go bankrupt because that can't be. Arrest those who are siphoning off the money, nationalize the company.

Of course that won't make for any more milk....

PDVSA is the national oil company. As such there is no further need to nationalize it.

PDVSA does however have outstanding private bonds. Not paying those bonds will cause it to be in default, and possibly to be hauled into bankruptcy court outside Venezuela where its foreign assets (e.g., Citgo) could be seized and liquidated.

Petroleo Brasileiro SA (PETROBRAS) from Brazil who are a major partner in Joint ventures is also facing problems with current oil prices. This company operates globally.
PDVSA also has undertaken a series of joint ventures with CNPC and its subsiduries where oil production facilities have been established in each others own countries. CNPC doesn’t mind waiting if it sees profitability on the horizon. With cash reserve in its own bank estimate at around one trillion US dollars a billion or so dollars will seem like peanuts.

Even during good times, the PSVSA does not have a good record of payments, even in boom times.
See
https://wikileaks.org/plusd/cables/09CARACAS827_a.html

The oil companies are notoriously bad for paying off bill. When I worked for Amerada Hess (Hess Oil) some years ago, it power was cut off when if failed to pay the electricity bills.
Besides, a lot what monies that could be frozen may already have been squirreled away somewhere. In such instances, once the Receiver receives his margin he can then pay a few cents on the dollar to the creditors. I think some will prefer the general sporadic rates of payment PDVSA is so used to making.

Also it is likely that by the beginning of next year the oil prices may have picked up again. Also Exon Mobil and others have huge investments in Venezuela and are not likely lose out by polling out any time in the near future.